Annual report
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⟶ Dear Selvita Investors, Business Partners, and Friends, In 2024, we resumed our growth trajectory, reversing the negative trend of the past several quarters. As anticipated, each quarter brought steady improvements. Revenues in the second half of the year were 20% higher than in the first, enabling us to restore EBITDA margins well above 20%. We entered 2025 with strong momentum, and despite a noticeable market slowdown in the latter half of the first quarter, March backlog data indi - cates a year-on-year increase of 11% in contracting. The first half of this year holds a potential to be significantly stronger than the same period last year, and we remain committed to sustaining this positive trajectory. However, we continue to navigate an environment marked by sig - nificant uncertainty. Our growth in recent quarters has been driven primar - ily by organic expansion. During this period, we broad - ened our offerings and strengthened our sales efforts. Our strategy of increasing exposure to large pharmaceutical companies has delivered the desired results—revenues from this customer segment have grown by more than 50% year over year. We will continue on this path, rein - forcing Selvita’s foundation with long-term, prospective contracts with major pharmaceutical companies, which have strong cash reserves and are steadily expanding the scope and value of subcontracted R&D to Selvita. In terms of biotech sector financing, significantly more capital entered the market last year than in the previous two post-pandemic years. While most of these new funds were directed toward later-stage clinical projects, biotech companies benefited from the improved market sentiment and invested more confidently in the development of their early-stage R&D initiatives. Biotech companies remain our key high-margin cus - tomer segment, contributing 49% of revenues in 2024, and we will continue to actively pursue their budgets this year. This applies to both the European and U.S. markets, as the sector’s improved financing environment is evident on both sides of the Atlantic. Sales in Europe continue to dominate our revenue structure, accounting for nearly 70% of total revenues. We are capitalizing on our growing reputation in the region while also positioning ourselves to expand our presence in the U.S.—the world’s largest life sciences market. Selvita meets its customers’ needs by delivering world-class science at competitive prices. Our individual - ized approach, combined with our strategic geographic location, ensures optimal value for money—an advantage increasingly recognized by pharmaceutical companies seeking to optimize costs and streamline supply chains. We are also focused on enhancing efficiency, which is why we are continuously implementing AI-driven tools to support our scientists at every stage of their work. Cus - tomers are already seeing the added value of these inno - vations, and we are committed to further strengthening their confidence in our capabilities. In doing so, we are building a forward-looking business model. Industry forecasts clearly indicate that the future of drug discovery and development lies in AI-assisted labora- tories—an area where contract research organizations like Selvita will play an increasingly vital role. In 2024, we completed two acquisitions, and we expect to see increasing benefits from them this year. Through the acquisition of Pure Biologics’ team and assets,
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as well as Pozlab, we have extended and strengthened our value chain for customers. In the biologic drug discovery and development space, we anticipate securing our first major contracts soon, pav- ing the way for the planned profitability of this new busi - ness segment next year. Meanwhile, Pozlab has been generating operational synergies each month since the acquisition, enhancing the efficiency of the entire Group. We have also strengthened the new location with addi - tional equipment and seamlessly integrated it into our Kraków-based drug development team. At this stage, our primary focus is on driving growth within the acquired entity, and the initial results are already visible. Our goal remains clear: by the end of 2025 at the latest, Pozlab will become a meaningful contributor to the Group’s operating results. We entered 2025 with a strengthened sales stuctures— the key driver behind all our efforts. At the turn of the year, Dr. Paul Overton joined Selvita as Chief Commercial Officer, bringing over 25 years of business development experience. His international expertise will enhance our presence in key foreign markets and open doors to new high-value customers. At the same time, we have reinforced our rapidly grow- ing Drug Development segment and the newly estab - lished biologic drug discovery division, now under the direct leadership of Dr. Miłosz Gruca. This strengthened structure is designed to maximize the impact of our recent acquisitions. Selvita continues to have strong potential for organic growth. With our existing infrastructure, access to addi - tional space across various locations that can be adapted as needed, and opportunities for further optimization, we have the capacity to nearly double our current revenue levels without significant capital expenditures. This year, we will primarily reap the benefits of the resources we have invested in over the past two years. As a result, we plan to allocate only around PLN 10 million for new investments. Any decisions regarding the develop - ment of our own infrastructure will be considered in the coming years, depending on market conditions and our financial performance. Given typical investment cycles, any substantial CAPEX for infrastructure is unlikely before 2027. In 2024, funding for the broader life sciences sector— across both public and private markets—improved signif - icantly compared to the previous two years. As we enter 2025, both pharmaceutical and biotech companies have capital allocated for R&D. However, this positive outlook is tempered by the geopolitical uncertainties that have impacted markets in recent weeks. We have observed that, amid uncertainty in the United States, some clients in the drug discovery segment are taking a cautious approach, awaiting policy directions from the new administration in Washington and the response of investors whose confidence in the sector has strengthened over the past few quarters. For companies like Selvita, capital market conditions will be a key driver of growth—the stronger they are, the faster new projects will be initiated. As of this report’s publication date, our contracting pipeline suggests that the first half of the year can be significantly stronger than in 2024. However, sustaining this momentum in the sec - ond half will depend on market stabilization and broader macroeconomic sentiment. I would like to express my sincere gratitude for your continued support—and to our shareholders, for their patience. Over the past quarters, we have successfully met numerous internal targets and capitalized on an improving economic environment, allowing us to enter 2025 with strong contracting momentum. We are well-positioned to sustain our upward trajec - tory and strengthen our key metrics, driven by the increas- ing efficiency of the assets we acquired last year and our continued focus on operational leverage. Fundamentally, Selvita has all the resources needed to grow and solidify its position in the global CRO market. While we remain committed to organic growth as our primary strategy, improving profitability will surely also fuel our appetite for further acquisitions. The next stages of our journey together promise to be both exciting and rewarding. Yours sincerely, Bogusław Sieczkowski Dokument podpisany przez Bogusław Sieczkowski Data: 2025.03.26 14:01:25 CET
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 01 — Basic information on Capital Group . 1 www.selvita.com Selvita Capital Group Annual Report 2024. Part 1.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 01 — Basic information on Capital Group . 2 Table of contents SELVITA CAPITAL GROUP ANNUAL REPORT 2024 Table of contents . 2 ⟶ 01 ― Basic information on Capital Group . 5 1.1. Structure of the Capital Group 1.2. Issuer’s managerial bodies 02 ― Economic and financial highlights . 8 2.1. Main results achieved in the reporting period 2.2. Management Board’s comments on financial results 2.3. The Group’s assets and the structure of assets and liabilities 2.4. Current and projected financial condition 2.5. Significant off-balance sheet items 2.6. Explanation of differences between the financial results disclosed in the annual report and previously published forecasts of the financial results 2.7. Post balance sheet events 2.8. Unusual events occuring in the reporting period 2.9. Data regarding agreement with entity authorized to audit financial statements 2.10. Principles of preparation of annual financial statement 03 ― Information on the Group’s activity . 25 3.1. Market and competitive landscape 3.2. Drug Discovery 3.3. Drug Development 3.4. Ardigen S.A. 3.5. Changes in the basic principles of managing the Issuer’s and its Capital Group enterprise 3.6. Sponsoring and charitable activities 3.7. Employment data 3.8. Significant events 3.9. Planned development of Selvita Capita Group and new initiatives 04 ― Risk factors associated with Group’s activities . 43 4.1. Risk factors associated with Issuer’s Capital Group operational activities 4.2. Risk factors associated with the environment in which the Issuer operates 05 ― Statement regarding implementation of corporate governence principles . 49 5.1. Principles of corporate governance applying to the Issuer 5.2. Internal control and risk management systems 5.3. Management and Supervisory Boards
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 01 — Basic information on Capital Group . 3 SELVITA CAPITAL GROUP ANNUAL REPORT 2024Table of contents . 3 06 ― Statement of the Management Board regarding applicable accounting principles . 66 07 ― Statement of the Management Board together with information regarding choice of statutory auditor . 67 08 ― Other information . 68 8.1. Information on organizational or capital affiliations of the Issuer’s Capital Group with other entities 8.2. Credits and Loans 8.3. Structure of major capital deposits and investments 8.4. Court proceedings 8.5. Assurances and guarantees 8.6. Purchase of own shares 8.7. Information about owned branches (plants) 8.8. Information on risks arising from held financial instruments 8.9. Report on non-financial information
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 01 — Basic information on Capital Group . 4
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 01 — Basic information on Capital Group . 5 01 — Basic information on Capital Group Business name Selvita S.A. Registered office ul. Podole 79, 30-394 Krakow Company (ID)REGON 383040072 Company (ID)REGON 6762564595 Legal form Joint – stock company KRS Number 0000779822 Website www.selvita.com Business name Selvita Services Sp. z o.o. Registered office ul. Bobrzyńskiego 14, 30-348 Krakow Shareholders 100% of shares held by Selvita S.A. Share capital 290.000 PLN Establishing day December 2011 Business name Selvita Inc. Registered office Boston, MA, USA Shareholders 100% of shares held by Selvita S.A. Share capital 1 USD Establishing day March 2015 Business name Selvita Ltd. Registered office Cambridge, UK Shareholders 100% of shares held by Selvita S.A. Share capital 20.000 GBP Establishing day April 2015 Affiliates Parent Entity 1.1. Structure of the Capital Group
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 01 — Basic information on Capital Group . 6 Affiliates 1.2. Issuer’s managerial bodies Management Board Supervisory Board Audit Committee Business name Selvita d.o.o. Registered office Prilaz baruna Filipovića 29, HR-10000 Zagreb, Croatia Shareholders 100% of shares held by Selvita S.A. Share capital 51.000.000 HRK / 6.768.863 EUR Business name PozLab Sp. z o.o. Registered office ul. Kobaltowa 6, 62-002 Złotniki Shareholders 100% of shares held by Selvita S.A. Share capital 12.350,00 PLN Bogusław Sieczkowski President of the Management Board Miłosz Gruca Vice President of the Management Board Mirosława Zydroń Management Board Member Adrijana Vinter Management Board Member Dariusz Kurdas Management Board Member Dawid Radziszewski Management Board Member Piotr Romanowski Chairman of the Supervisory Board Tadeusz Wesołowski Vice Chairman of the Supervisory Board Paweł Przewięźlikowski Supervisory Board Member Rafał Chwast Supervisory Board Member Wojciech Chabasiewicz Supervisory Board Member Jacek Osowski Supervisory Board Member Rafał Chwast Chairman of the Audit Committee Piotr Romanowski Audit Committee Member Tadeusz Wesołowski Audit Committee Member Wojciech Chabasiewicz Audit Committee Member
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 01 — Basic information on Capital Group . 7 Remuneration Commitee Paweł Przewięźlikowski Chairman of the Remuneration Committee Jacek Osowski Remuneration Committee Member Piotr Romanowski Remuneration Committee Member During the reporting period there were no changes in Management Board and Supervisory Board.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 8 02 — Economic and financial highlights The consolidated financial statements, prepared in accord - ance with the International Accounting Standards, Interna - tional Financial Reporting Standards and the related inter - pretations announced in European Commision regulations (“IFRS”), cover the period from January 1, 2024 to December 31, 2024 with comparative period from January 1, 2023 to Decem- ber 31, 2023. As of the beginning of 2024, the Group has changed the clas- sification of operating segments. Details in point 2.1.2. On March 18, 2024, the Group decided to expand its opera - tions by launching a new service area related to the discov - ery and development of biological drugs located in Wrocław. Details in point 3.8. On May 6, 2024, the Group concluded a share purchase agree- ment, thereby acquiring 100% of shares in PozLab sp. z o.o. with its registered office in Poznań (currently in Złotniki). Details in point 2.1.3. 2.1. Main results achieved in the reporting period 2.1.1. Consolidated financial data The table below presents the consolidated financial data of the Selvita S.A. Group. Selected financial data presented in the annual report were converted to Euro as follows: 1. Items relating to the profit and loss statement and the cash flow statement were converted using the exchange rate constituting the arithmetic average of the exchange rates, applicable as of the last day of every month in the given period, based on the information published by the National Bank of Poland (NBP): — for the period from 01.01.2023 r. to 31.12.2024 r.: 4.3042 PLN, — for the period from 01.10.2023 r. to 31.12.2024 r.: 4.3101 PLN, — for the period from 01.01.2023 r. to 31.12.2023 r.: 4.5284 PLN, — for the period from 01.10.2023 r. to 31.12.2023 r.: 4.3816 PLN. 2. Balance sheet items were converted using the average exchange rate announced by the NBP applicable as at the balance sheet date; which were: — as of 31 December 2024: PLN 4.2730, — as of 31 December 2023: PLN 4.3480.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 9 Selvita S.A. Group Data in PLN thousand Data in EUR thousand Item 31.12.2024 31.12.2023 31.12.2024 31.12.2023 Total assets 642,089 636,260 150,267 146,334 Trade and other receivables 79,454 70,228 18,594 16,162 Investments valued using the equity method 62,119 63,313 14,538 14,561 Cash and other monetary assets 22,512 52,654 5,269 12,110 Other financial assets 0 311 0 71 Total liabilities 320,213 309,188 74,939 71,110 Long term liabilities* 114,632 215,419 26,827 49,554 Short term liabilities 205,581 93,769 48,111 21,566 Equity 321,877 327,071 75,328 75,223 Share capital 14,684 14,684 3,437 3,377 * As of 31.12.2024, the Group reclassified the long-term portion of bank loans in the amount of PLN 87,235 thousand to short- -term liabilities in accordance with the requirements of IFRS EU (see point 2.7). TABLE 1. The Consolidated financial data of the Selvita S.A. Group – concerning the consolidated balance sheet
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 02 — Economic and financial highlights . 10 ⟶ Selvita S.A. Group Consolidated data in PLN thousand Consolidated data in EUR thousand Item From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 Revenues from sales 342,194 346,957 97,475 86,476 79,503 76,619 22,615 19,736 Revenues from subsidies 3,569 4,895 710 366 829 1,081 165 84 Other operating revenues 491 40 185 -89 114 9 43 -20 Revenues from operating activities 346,254 351,892 98,369 86,753 80,447 77,708 22,823 19,800 Operating expenses -346,741 -335,146 -91,862 -82,986 -80,559 -74,010 -21,313 -18,940 Operating expenses (excl. incentive scheme) -343,552, -323,632, -91,365 -81,696 -79,818 -71,468 -21,197 -18,645 Depreciation -53,099 -45,452 -13,759 -11,374 -12,337 -10,037 -3,192 -2,596 Depreciation (excl. IFRS 16 impact) -36,934 -30,762 -9,544 -7,731 -8,581 -6,793 -2,214 -1,765 Incentive program valuation -3,189 -11,514 -497 -1,290 -741 -2,543 -115 -294 Profit on loss of control 0 52,564 0 52,564 0 ,11,608 0 11,997 Profit from operating activities / EBIT -487 69,311 6,507 56,332 -113 15,306 1,510 12,856 Profit from operating activities / EBIT (excl. incentive scheme) 2,702 80,825, 7,0 0 4 57,62 2 628 17,8 49 1,625 13,151 Profit before income tax -10,454 67,20 3 4,818 61,067 -2,429 14,840 1,118 13,937 Net profit -6,098 69,878 3,637 63,829 -1,417 15,431 844 14,568 Net profit (excl. incentive scheme) -2,909 81,392 4,134 65,119 -676 17,974 959 14,862 TABLE 2. The Consolidated financial data of the Selvita S.A. Group – concerning the consolidated profit and loss statement
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 02 — Economic and financial highlights . 11 ⟶ Selvita S.A. Group Consolidated data in PLN thousand Consolidated data in EUR thousand Item From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 EBITDA 52,612 114,763 20,266 67,70 6 12,224 25,343 4,702 15,452 EBITDA (excl. incentive scheme) 55,801 126,277 20,763 68,996 12,964 27,886 4,817 15,747 Net cash flows from operating activities (continuing operations) 64,069 78,980 25,478 25,914 14,885 17, 4 41 5,911 5,914 Net cash flows from investing activities (continuing operations) -36,873 -65,213 -2,929 -29,472 -8,567 -10,684 -680 -6,726 Net cash flows from financing activities (continuing operations) -57, 3 42 -30,968 -14,652 -5,855 -13,323 -6,839 -3,400 -1,336 Total net cash flows -30,147 -17 200 7,896 -,9,413 -7,0 0 4 -3,798 1,832 -2,148 Number of shares (weighted average) 18 355,474 18 355,474 18,355,474 18,355,474 18,355,474 18,355,474 18,355,474 18,355,474 Profit (loss) per share allocated to shareholders of the parent company (in PLN) -0,33 3,81 0,20 3,48 -0,08 0,84 0,05 0,79 Diluted profit (loss) per share allocated to shareholders of the parent company (in PLN) -0,33 3,81 0,20 3,48 -0,08 0,84 0,05 0,79 Book value per share allocated to shareholders of the parent company (in PLN) 17,5 4 17,82 17.5 4 17,82 4,10 4,10 4,10 4,10 Diluted book value per share allocated to shareholders of the parent company (in PLN) 17,5 4 17,82 17,5 4 17,82 4,10 4,10 4,10 4,10 Declared or paid dividend per share (in PLN) – – – – – – – –
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 12 2.1.2. Change in operating segments Due to the significant increase in revenues and contracts related to the Group’s activities in the area of analytical and regulatory research services in 2023 and the ongoing process of acquiring competences in the area of drug development services, as well as taking into account the integration within the drug discovery department between centers in Poland and Croatia, which does not justify further separate presenta- tion of results between centers that provide identical services, the Group has decided to change the method of presenting operating segments starting from January 1, 2024. In the opin- ion of the Management Board, financial information in the Drug Discovery Segment and Drug Development Segment, i.e. divi- sion based on the type of services provided instead of geo - graphical division, is more valuable and should be the main differentiator of business results in the future. In order to main- tain comparability of data, historical periods have been pre - sented according to the new layout - details were presented in the Quarterly Consolidated Report for Q1’2024 in point 2.3. The previous Segment of Services executed in Croatia is now entirely part of the Drug Discovery Segment, while the Seg - ment of Services executed in Poland is split and included in the respective parts to both segments, namely Drug Discov - ery and Drug Development. 2.1.3. Closing of agreement on acquisition by Selvita S.A. of 100% shares in PozLab Sp. z o.o. On May 6, 2024, the Management Board of Selvita S.A. con - cluded an agreement with Younick Technology Park sp. z o.o. to acquire 100% of shares in PozLab sp. z o.o. (“PozLab”) after fulfillment of the conditions specified in the conditional agreement concluded on March 27, 2024 (details in point 3.8.). PozLab is a CDMO (Contract Development and Manufacturing Organization). The company was established in 2010 on the grounds of the research and development branch in Poznań closed by the GlaxoSmithKline concern. The company has built competences and offer in three main segments: develop- ment of pharmaceutical products (including the production of medicinal products), quality control and microbiological tests. PozLab has approx. 1,700 m2 of high-class laboratories in the YouNick Technology Park in Złotniki near Poznań. It employs over 80 people. Selvita S.A. acquired shares in PozLab for a total price of PLN 25 million, of which PLN 21 million was paid on the transaction closing date. At the date of closing of the transaction, the amount of PLN 4 million was retained by the Company for a period of up to 12 months from the transaction closing date as security for any potential events or claims of third parties against PozLab, enumerated in the preliminary agreement, and for securing settlements related to the price adjustment procedure. The price for the shares was covered from the Company’s own funds. PozLab’s results is reported within the Drug Development segment. On August 9, 2024, the price adjustment amount was agreed upon, which was set at (3,068) thousand PLN (an amount that reduces the contractual price). As of December 31, 2024, the remaining withheld amount is PLN 1,500 thousand. 2.1.4. Impact of Incentive Scheme on 2021-2024 financial results On May 17, 2021 a non-diluting Incentive Scheme for 2021- 2024 for employees in the form of the right to acquire shares in the Company at a price of 0.19 PLN per share was adopted. Mr. Paweł Przewięźlikowski, – main shareholder of the Com - pany, undertook to transfer to the Company, free of charge, the shares constituting the subject of the program with an order to release them to the company’s employees in the total number of 1,247,720. The fair value of the granted shares is determined as at the grant date and recognized over the vesting period in remuneration costs in correspondence with the increase in equity at the time of vesting by employees during the program period. In 2024, no shares were distrib - uted under the Program. The valuation of the program, with regards to the shares cur - rently issued to employees as of December 31, 2024, indi - cated the total estimated cost of PLN 79,399 thousand, which is recognized in the Group’s expenses starting the second quarter of 2021 to the second quarter of 2026. The impact of the program on the reporting period result is PLN 3,189 thousand and this amount reduces the gross result, net result, EBIT and EBITDA in 2024 (the details are presented in the table below along with the disclosure of its impact on the balance sheet). The estimated impact on the following years is as follows: — 2025: PLN 1,941 thousand, — 2026: PLN 449 thousand. ⟶
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 13 Item From 01.01.2024 to 31.12.2024 including incentive scheme incentive scheme valuation From 01.01.2024 to 31.12.2024 excluding incentive scheme From 01.01.2024 to 31.12.2024 including incentive scheme incentive scheme valuation From 01.01.2024 to 31.12.2024 excluding incentive scheme Operating expenses -346 741 3,189 -343,552 -91 862 497 -91,365 EBIT -487 2,702 6,507 7,0 0 4 Gross profit / (loss) -10,454 -7,26 5 4,818 5,315 Net profit / (loss) for the period -6,098 -2,909 3,637 4,134 EBITDA 52 612 55,801 20 266 20,763 TABLE 3. The impact of the valuation of incentive program on consolidated statement of comprehensive income in 2024 in PLN thousand Item As of 31.12.2024 including incentive scheme incentive scheme valuation As of 31.12.2024 excluding incentive scheme Equity, incl: 321 877 0 321 877 Other reserve capitals 77 247 -3 189 74 058 Net profit for the period -6 098 3 189 -2 909 TABLE 4. The impact of the valuation of incentive program on consolidated statement of financial position in 2024 in PLN thousand A detailed description of the program provided in the Note 28 to the consolidated financial statements. At the same time, it is important to point out that in the analysis of individual operating segments no impact on the valuation of the incentive scheme was taken due to the one-off and non-cash nature of this event.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 14 2.2. Management Board’s comments on financial results 2.2.1. Consolidated data excluding incentive scheme impact In 2024, Selvita S.A. Capital Group achieved operating rev - enues of PLN 346,254 thousand, which means a decrease of 2% compared to the same period of the previous year, when revenues amounted to PLN 351,892 thousand. The strength - ening of the złoty against the dollar and the euro had a nega- tive impact on the Group’s revenues denominated in złoty, by an estimated 5.1 p.p., or approximately PLN 17.3 million. In Q4 2024 the revenues from operating activity increased by 13% to PLN 98,369 thousand compared to Q4 of the previous year. In the structure of external revenues for 2024, the biotech - nology and pharmaceutical sectors dominate, with their share of total external revenues amounting to 49% and 43%, respectively. Compared to 2023, the sales value to biotech - nology companies decreased relative to pharmaceutical com- panies as a whole, with a noticeable increase in the share of Big Pharma companies. As a result, the share of pharmaceuti- cal companies in the revenue mix increased compared to the share of biotechnology companies. Revenues from Big Pharma companies are growing by 29,345 thousand PLN (51%) this year compared to the previous year, reaching revenues of 86,809 thousand PLN. Looking at the organic change (excluding the impact of the acquisition of PozLab Sp. z o.o. and the establishment of a new branch in Wrocław), due to improvement in contracting in 2024 the value of commercial revenues grew from quar - ter to quarter achieving its highest dynamics in the quarter fourth of 10%, which means growth of commercial revenues from 85,133 thousand PLN in quarter three to 93,299 thousand PLN in quarter fourth. The EBITDA result of Selvita S.A. Capital Group, at the level of the entire activity after adjusting for the impact of the incen - tive program, in 2024 amounted to PLN 55,801 thousand PLN and is 24% lower when compared to EBITDA for 2023. The result was mainly affected by: lower contracting in the Drug Discovery segment (the human resources utilization rate was lower by approximately 3 p.p. y/y); a negative impact of an estimated over 1.5 p.p. appreciation of the złoty against other currencies during the year and the results of investments related to establishment of a branch in Wrocław and the acquisition of PozLab with a total negative impact of PLN 5.6 million. As a result, the EBITDA ratio in 2024 decreased by 5 p.p. to 16% compared to last year, when it amounted to 21%. In 2024, the Group recorded a sequential improvement in gen- erated EBITDA, increasing from PLN 7,844 thousand in the sec- ond quarter to PLN 15,539 thousand in the third quarter and reaching PLN 20,763 thousand in the fourth quarter. The net loss of the Selvita S.A. Capital Group in 2024, after adjusting for the impact of the incentive program, amounted to PLN -2,909 thousand. The Drug Discovery segment in 2024 recorded a 6% decrease in revenue from PLN 277,568 thousand in 2023 to PLN 260,732 thousand in 2024. The EBITDA ratio of organic growth in 2024 amounted to 14% and decreased compared to 2023 by 5 p.p. In value terms, the EBITDA ratio decreased from PLN 52,448 thou - sand to PLN 37,179 thousand in 2024, mainly as a result of a decrease in sales volume and the appreciation of the złoty against other currencies, while maintaining operating costs (including human resources) at a level enabling the realiza - tion of increases at the time of the assumed improvement in contracting. For a newly established branch in Wrocław, the recorded EBITDA ratio recorded a negative value – PLN -4.245 thousand in connection with the initial phase of developing this new area of the Group’s operations. The estimated amount of underutilized resources related to laboratory space in 2024, expressed as the sum of operating costs related to this laboratory space and the costs incurred for its maintenance and use, amounted to approximately PLN 8.6 million (comparable to 2023; in the previous year, the com- missioning of new space in the Hexagon building in Krakow took place in March 2023 and in Q3-Q4 2024 there is an increasing utilization of this space steadily increased).
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 15 Data in PLN thousand From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 Revenue – organic, including: 338,038 351,892 94,529 86,754 Drug Discovery Segment 2 57, 317, 272,813 72,615, 66,282 Drug Development Segment 73,795 67,1 16 20,684 18,578 Revenues from subsidies 3,312 4,645 651 304 Other operating revenue 105 158 20 52 Unallocated revenues from sales of administration services 2,834 6,790 435 1,535 Unallocated revenues – other 682 370 126 3 Exclusions of revenues between segments -7 – -2 – Revenue - Acquired entities* 8,216 – 3,840 – EBIT (excl. incentive scheme) – organic** 11,049 28,261 9,543 5,057 %EBIT (excl. incentive scheme) – organic 3% 8% 10% 6% EBIT – Acquired entities* -8,347 – -2,542 – EBITDA (acc. to IFRS16 excl. incentive scheme) – organic** 61,405 73,713 22,275 16,431 %EBITDA (acc. to IFRS16 excl. incentive scheme) – organic 18% 21% 24% 19% EBITDA (acc. to IFRS16) – Acquired entities* -5,604 – -1,512 – Net profit (excl. incentive scheme)** -2,909 28,828 4,134 12,554 %Net profit (excl. incentive scheme) -1% 8% 4% 14% IFRS16 impact on EBITDA 16,165 14,690 4,215 3,643 * „Acquired entities” include the established new branch in Wrocław (reported in the Drug Discovery Segment) and the acquired company PozLab Sp z o.o. (reported in the Drug Development Segment), which are consolidated in the period from April to Decem- ber in the case of the new branch and in the period from May to December in the case of PozLab Sp. z o.o. ** Excluding the gain on loss of control in Ardigen S.A. in 2023 (amounting to PLN 52,654 thousand in Q4 and for the entire year 2023) TABLE 5. Selvita S.A. Group – continuing operations
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 16 Data in PLN thousand From 01.01.2024 to 31.12.2024 Percentage share From 01.01.2023 to 31.12.2023 Percentage share Revenues from external customers 339 174 100% 339 929 100% Biotechnology companies 167 532 49% 178 932 53% Pharmaceutical companies – Big Pharma* 86 809 26% 57 464 17% Pharmaceutical companies 56 506 17% 67 447 20% Academia and Foundations 16 787 5% 20 306 6% Companies operating in the chemical and agrochemical field 6 606 2% 11 591 3% Other 4 933 1% 4 189 1% * Group qualifies Big Pharma as global pharmaceutical companies whose revenues in 2023 exceeded $5 billion. TABLE 6. Selvita S.A. Group – revenues from external customers Data in PLN thousand From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 Revenue – organic 260,661 277,568 73,270 66,603 Revenues from external customers 2 57, 317 272,813 72,615 66,282 Exclusions of revenues between segments 2 0 3 0 Revenues from subsidies 3,237 4,597 632 269 Other operating revenue 105 158 20 52 EBIT – organic -2,342 14,792 5,017 323 %EBIT – organic -1% 5% 7% 0% EBITDA (acc. to MSSF16) – organic 37,179 52,448 14,913 9,752 %EBITDA (acc. to MSSF16) – organic 14% 19% 21% 15% Revenue – Acquired entities* 71 – 33 – EBIT – Acquired entities* -4,245 – -1,650 – EBITDA (acc. to MSSF16) – Acquired entities* -3,350 – -1,340 – IFRS16 impact on EBITDA 11,184 12,625 2,802 3,123 * Refers to the period in which the Group established a new department in Wrocław, i.e. the period 01.04 – 31.12.2024 TABLE 7. Drug Discovery Segment
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 02 — Economic and financial highlights . 17 ⟶ The Drug Development segment continues to perform very well due to high contracting. The order portfolio growth of this segment has been observed since the third quarter of 2021. In 2024, revenues from services for external clients increased by 22% from PLN 67,116 thousand in 2023 to PLN 81,786 thousand in the reported period of time. The EBITDA profitability of this segment in 2024, exclud - ing the impact of the acquisition of PozLab Sp. z o.o. in May, amounted to 33%, which is comparable to the previous year. The profitability of the operating result in 2024 also remains at a comparable level to 2023. The nominal value of PozLab’s EBITDA in 2024 was negative at PLN -2,253 thousand, which is related to the concentration of activities on the operational integration and its adoption to the quality standard applicable in the Selvita Group and lower sales in the first months after joining the Group. It is worth not- ing that since the gain of control of PozLab, there has been an improvement in contracting and generated profitability which appears as increasing revenues from quarter to quarter from PLN 1.4 million in Q2 to PLN 3.0 million in Q3 and PLN 3.7 million in Q4, as well as the decreasing operating loss, which reduced from PLN 1.7 million in Q3 to PLN 0.9 million in Q4. Data in PLN thousand From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 From 01.01.2024 to 31.12.2024 From 01.01.2023 to 31.12.2023 Revenue – organic 73,870 67,16 4 20,704 18,612 Revenues from external customers 73,790 67,1 16 20,684 18,578 Revenues from subsidies 75 48 19 34 Between segments 5 – 1 – EBIT – organic 13,373 13,469 4,526 4,734 %EBIT – organic 18% 20% 22% 25% EBITDA (acc. to MSSF16) – organic 24,225 21,265 22% 6,679 %EBITDA (acc. to MSSF16) – organic 33% 32% 36% 36% Revenue – Acquired entities* 8,146 – 3,807 – Revenues from external customers 7,9 96 – 3,664 – Revenues from subsidies 7 – 2 – Other operating revenues 143 – 141 – EBIT – Acquired entities* -4,084 – -889 – %EBIT – Acquired entities* -50% – -23% – EBITDA (acc. to MSSF16) – Acquired entities* -2,253 – -174 – %EBITDA (acc. to MSSF16) – Acquired entities* -28% – -5% – IFRS16 impact on EBITDA 4,981 2,064 1,413 519 * Refers to the period in which the Group has control over PozLab Sp. z o.o., i.e. the period 01.05 – 31.12.2024 TABLE 8. Drug Development Segment
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 18 The Ardigen segment (unconsolidated operations since 01/01/2023), i.e. the associated company Ardigen S.A. (together with Ardigen Inc.), achieved revenues from external customers of PLN 49,042 thousand in 2024, which represents a 5% decrease compared to revenues achieved in the previ - ous year, which amounted to PLN 51,826 thousand. The decline is mainly a consequence of the difficult external environment and the strengthening of the zloty against the dollar and the euro. In 2024 this segment generated an operating profit of PLN 3,751 thousand, compared to an operating profit of PLN 4,880 thousand in the previous year, which results mainly from lower sales achieved on a demanding market, cost inflation not fully passed on to external customers and a significant investment in the development of foreign sales. The above also resulted in a decrease in EBITDA, which amounted to 10% in the analyzed period. In the fourth quarter of 2024, an improvement in contracting is observed as a result of external revenues rising by 19% to PLN 14,852 thousand, from PLN 12,529 thousand in the third quarter of this year. This increase in revenue, along with cost discipline, leads to improved results, consequently, EBITDA increased from PLN 2,071 thousand in the third quarter to PLN 3,498 thousand in the fourth quarter of 2024. Data in PLN thousand From 01.01.2024 to 31.12.2024* From 01.01.2023 to 31.12.2023* From 01.01.2024 to 31.12.2024* From 01.01.2023 to 31.12.2023* Revenue 49,264 53,396 14,926 13,944 Revenues from external customers 49,042 51,826 14,852 13,255 Revenues from subsidies 194 1,548 72 687 Other operating revenue 28 21 2 3 EBIT 3,751 4,880 3,311 2,727 %EBIT 8% 9% 22% 20% EBITDA (acc. to MSSF16) 4,885 6,261 3,498 3,081 %EBITDA (acc. to MSSF16) 10% 12% 23% 22% IFRS16 impact on EBITDA 632 622 138 159 Net (Loss) / Profit ** (1,194) (1,132) (244) (2,022) * Supplementary data on discontinued operations not consolidated in the financial statements due to the loss of control over this segment from January 1st, 2023 (excluding depreciation of identified assets at the date of losing control and the incentive program valuation implemented in 2024) ** Included in the consolidated financial statements under “Share of profit / loss from associated entities valued using the equity method” TABLE 9. Selvita S.A. Group – operations not consolidated
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 02 — Economic and financial highlights . 19 ⟶ Item For 2025 as of 25.03.2025 For 2024 as of 26.03.2024 Change Change % Drug Discovery Segment 150,803 138,059 12,744 9% Drug Development Segment 61,635 56,786 4,849 9% Grants 5,756 2,220 3,536 159% Total Selvita S.A. Capital Group 218,194 197,065 21,129 11% * Backlog includes the revenues already invoiced in a given year and 2025 portfolio of orders TABLE 10. Backlog* 2.2.2. Contracted (Backlog) The total of the contracted order portfolio for 2025, resulting from commercial contracts and grant agreements signed as of March 25, 2025, amounts to PLN 218,194 thousand and is 11% higher than the backlog published on March 26, 2024 for 2024. The backlog dynamics after normalizing the negative impact of the strengthening of the złoty against foreign currencies would be around +12.5%. In both segments strong growth dynamics is observed continu- ing the improvement in contracting observed since the second half of 2024, particularly in the Drug Discovery segment. In the case of the Ardigen segment, the total backlog as of 25 March 2025 amounted to PLN 27,252 thousand and remains at the similar level to 26 March 2024.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 20 2.3. The Group’s assets and the structure of assets and liabilities 2.3.1. Consolidated data The value of Selvita S.A. Capital Group assets at the end of December 2024 amounted to PLN 642,089 thousand. At the end of December 2024, the most significant items of current assets were short-term receivables amounting to PLN 79,454 thousand and cash amounting to PLN 22,512 thousand. The decrease in cash results from significant cash flows related to investment activities, in particular the acquisition of shares in PozLab Sp. z o.o., servicing financial liabilities, which exceeded positive cash flows from operating activities. Fixed assets are mostly the Laboratory Services Center in Kraków, laboratory equipment, recognized assets under the right of use, goodwill, investment in Ardigen and deferred income tax assets. The value of fixed assets increased by PLN 33,471 thousand compared to December 31, 2023 mainly as a result of an increase in assets from the right of use as a result of extending agreements for the lease of laboratory space, recognizing agreements for the lease of space rented by PozLab Sp. z o.o. and the acquisition of laboratory equip - ment, including that acquired as part of the acquisition of control over PozLab Sp. z o.o. as well as recognized goodwill on PozLab Sp. z o.o. acquisition. 31.12.2024 31.12.2023 Current ratio current assets / current liabilities including short-term provisions and deferred revenues (excl. accruals) 1,14* 1,80 Quick ratio (current assets-inventory) / current liabilities including short-term provisions and deferred revenues (excl. accruals) 1,08* 1,72 * After presentation adjustment of the long-term portion of bank loans amounting to PLN 87,235 thousand, which were recognized as short-term liabilities in the consolidated financial statements but reclassified as long-term liabilities as the repayment schedules have not changed and the loans are not due within one year TABLE 11. The assets structure demonstrates the Group’s high financial liquidity, which is confirmed by the following ratios: In the liabilities of the balance sheet, one of the largest values is equity, which as of December 31, 2024 amounted to PLN 321,877 thousand. Its decrease compared to the end of 2023 is the effect of the net loss incurred in 2024 and negative exchange differences from the translation of foreign units. Another significant source of financing are long-term liabilities, which at the end of December 2024 amounted to PLN 114,632 thousand. The largest value items of long-term liabilities is leas- ing liabilities in the amount of PLN 68,352 thousand. Short-term liabilities amounted to PLN 205,581 thousand at the end of December 2024 compared to PLN 93,769 thousand at the end of December 2023, which results mainly from the reclassifica- tion of the long-term part of bank loans in the amount of PLN 87,235 thousand to short-term liabilities in accordance with the requirements of IFRS EU in connection with exceeding the base level of one of the bank covenants from the loan agreement with Bank Pekao S.A. as at 31.12.2024. The change in the level of covenants was agreed between the bank and the Company on a date later than the balance sheet date (more in point 2.7). The total balance of long-term and short-term bank loans amounts to PLN 119,037 thousand as at 31 December 2024 compared to PLN 132,565 thousand as at 31 December 2023. For 2024, the Group plans expenditure on the acquisition of fixed assets in the amount of approximately PLN 10 million.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 21 2.3.2. Valuation of Ardigen using the equity method The calculation of the share of profit / loss of associated enti- ties valued using the equity method for Ardigen in 2024 and 2023 is as follows (Table 12.). On September 20, 2024, an incentive program for the years 2024–2028 was adopted for employees of Argiden S.A. in the form of the right to acquire shares of Ardigen S.A. at a price of PLN 1 per share in the total number of 37,400. The fair value of the shares granted is determined on the grant date and rec - ognized over the vesting period in remuneration costs in cor- respondence with the increase in equity during the vesting of rights by employees during the program. The valuation of the program, in the scope of shares currently issued to employees as at December 31, 2024, showed its total estimated cost at the level of PLN 5,889 thousand, which is rec- ognized in the costs of Ardigen S.A. starting from the fourth quarter of 2024 until the end of 2029. The impact of the pro - gram on the result achieved by Ardigen S.A. is PLN 783 thou - sand. The estimated impact for subsequent years is as follows: — 2025: PLN 2,801 thousand (quarterly at approx. PLN 700 thousand), — 2026: PLN 1,064 thousand (quarterly at approx. PLN 270 thousand), — 2027: PLN 674 thousand, — 2028: PLN 392 thousand, — 2029: PLN 175 thousand. As of December 31, 2024, the investment in Ardigen is rec - ognized in the financial statement at an amount of PLN 62,119 thousand (Table 13.). 12 months ended 31.12.2024 In thousand of PLN 12 months ended 31.12.2023 In thousand of PLN Operating revenues 49,264 53,396 Financial revenues 659 197 Operating costs 45,513 48,516 Financial costs 68 1,200 Amortization of identifiable net assets as of the date of loss of control 4,973 7,273 Valuation of incentive program 783 – (Loss) gross (1,414) (3,396) (Loss) net (2,554) (2,423) (Loss) net attributed to Selvita S.A. (46,74%) (1,194) (1,132) TABLE 12. The calculation of the share of profit/loss of associated entities valued using the equity method for Ardigen in 2024 and 2023.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 22 Changes in the value of investments valued using the equity method In thousand of PLN Cost of investment at the initial recognition 64,600 Share in (loss) in 2023 (1,132) Other comprehensive income from the translation of foreign entity (154) Balance sheet value of Ardigen S.A. as of December 31, 2023 63,313 Share in (loss) in 2024 (1,194) Balance sheet value of Ardigen S.A. as of December 31, 2024 62,119 TABELA 13. Investment in Ardigen 2.3.3. Information about the implemented tax strategy In conducting its business, the Group aims to shape ethi - cal relations with the business environment . It also ensures correct tax settlements and contacts with tax authorities in each of the jurisdictions in which the Group operates, namely Poland, the UK, the USA and Croatia. The Group is always guided by the compliance of all decisions made with the tax regulations in force at a given time and in a given tax jurisdiction, and also focuses on honesty and transparency of the tax settlements prepared and minimizing the risks related to the decisions made. The Group has devel- oped policies in this area, which are consistently followed by the Group. The Group does not apply tax schemes or tax optimization paid in individual jurisdictions, and the only elements that reduce taxable income are the use of reliefs or exemptions following the legislation in force in a given jurisdiction: 1. Selvita S.A. benefits from the R&D relief. Due to its status as a Research and Development Centre, the company has the right to treat 150% of the actual incurred costs for R&D expenditures as an additional tax-deductible cost in its tax declaration. 2. Selvita Services Sp. z o.o. benefits from tax relief for conducting business in the Special Economic Zone. The relief is calculated based on the salary costs related to the new jobs created. The company benefited from the relief of PLN 12.9 million in 2014-2024. 3. The company in Croatia Selvita d.o.o. benefits from the corporate income tax exemption in the amount of 25% of increased investment expenditures in the period from 2021 to 2023. So far, the company has used the relief of EUR 2.4 million. 4. In commercial companies located in the United States and Great Britain, taxes are paid following the regulations in those countries, due to their commercial nature, the Group does not benefit from tax exemptions there. To correctly and reliably settle tax liabilities, the Group has developed many internal mechanisms and procedures over the years in its operations, defining the Group’s approach in the following tax areas: corporate income tax, goods and ser- vices tax, withholding tax, application of tax reliefs, including, in particular, the research and development relief, real estate tax, payer’s obligations in the scope of personal income tax. The Group does not conduct business or make tax settlements in territories or countries applying harmful tax competition. The table below presents data on the amount of income tax paid by individual companies belonging to the Capital Group in individual jurisdictions for 2024 (Table 14.).
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 02 — Economic and financial highlights . 23 In thousand of PLN Poland UK US Croatia Selvita S.A. 260 Selvita Services Sp. z o.o. 2 PozLab Sp. z o.o. 22 Selvita d.o.o. 0 Selvita Inc. 1.295 Selvita Ltd. 0 Total income tax in 2024 284 0 1.295 0 TABLE 14. Income tax in 2024 in individual jurisdictions 2.4. Current and projected financial condition The Group’s financial situation at the time of preparation of the report is good. As of December 31, 2024, the value of the Group’s cash amounted to PLN 22,512 thousand, while as of March 19, 2025, the value of the Selvita S.A. Capital Group’s cash amounted to PLN 18,668 thousand. The change in cash balance compared to December 31, 2024, is driven by current Groups’ operations. The Group is currently fulfilling its obligations and maintaining a safe level of cash that allows it to maintain liquidity. Cash gener- ated from operating activities allows for the implementation of planned investments. In addition, the Group has open credit lines in current accounts (totaling EUR 3.1 million), which constitute additional security for the Group’s liquidity. Their utilization as at 31.12.2024 amounted to PLN 4,275 thousand and as at 19 March 2025 amounted to PLN 5,935 thousand. 2.5. Significant off-balance sheet items Istotne pozycje pozabilansowe zostały opisane w nocie 30 skonsolidowanego sprawozdania finansowego. 2.6. Explanation of differences between the financial results disclosed in the report and previously published forecast of the financial results The Issuer did not publish the financial forecast for 2024.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 02 — Economic and financial highlights . 24 2.7. Post balance sheet events Consent Letter Due to exceeding the base level of one of the bank covenant included in the loan agreement for acquisition and construc - tion loans concluded on December 21, 2020 with Bank Pekao S.A. as of December 31, 2024, the Group included the long- term part of this loan in the amount of PLN 87,235 thousand in short-term liabilities in accordance with the requirements of IFRS EU. The exceedance concerned the net debt to EBITDA ratio, the base level of which is set at not higher than 350%, and as of December 31, 2024, this ratio was at 364%. The group reached an agreement with Pekao S.A. Bank on February 17, 2025 (see note no. 32 in the Consolidated Finan - cial Statement) regarding the waiver of the requirements to maintain the original level of covenants contained in the credit agreement, which were increased to the levels: • not higher than 430% as of December 31, 2024, 400% as of March 31, 2025 and 380% as of June 30, 2025 for the net debt to EBITDA ratio, • and not lower than 100% as of December 31, 2024, March 31, 2025 and June 30, 2025 for the DSCR (Debt Service Coverage Ratio). • and consent to the extension of the credit lines in current accounts held by Selvita Services sp. z o.o. and Selvita d.o.o., maturing in June 2025 for the period until the end of January 2026. Considering that the material terms of the credit agreement, including in particular the repayment schedule, have not changed, and the amount of PLN 87,235 thousand is still due to the bank in periods longer than 1 year, and receiving a con- sent letter is a normal banking practice provided for in the loan agreement, the Company recognized this event as occur- ring within the ordinary course of business in the financial area. 2.8. Unusual events in the reporting period Conflict in Ukraine Due to the Russian invasion on Ukraine, the Issuer’s Manage - ment Board has analyzed the potential impact of the ongoing conflict on the Issuer’s operations. The Management Board did not identify any significant risks that could affect the Issuer’s operations as of the date of this report. In particular, it should be noted that the Issuer does not have any assets in Ukraine, and does not conduct business and operations in Ukraine and Russia. The share of entities from Ukraine, Belarus or Russia as customers and suppliers in the Issuer’s structure remains insignificant. Nevertheless, due to risks associated with Rus - sia’s actions, including the potential risk of spillover from Rus- sia’s current invasion of Ukraine into neighboring countries, and the dynamic and unpredictable nature of the current situation in Ukraine, the Management Board of the Company analyses the Issuer’s situation in the context of this geopolitical risk on an ongoing basis. Any new circumstances having a significant impact on the financial results and business situation of the Issuer will be communicated to investors. 2.9. Data regarding agreement with entity authorized to audit financial statements The Agreement with an entity authorized to audit financial statements, i.e. Pricewaterhousecoopers Polska sp. z o.o. Audyt sp.k., appointed to audit the financial statements of Selvita S.A. and the consolidated financial statements of the Selvita Capital Group was concluded for auditing financial statement for years 2022, 2023 and 2024. The remuneration of the entity authorized to audit financial statements is described in the Capter 7 in this Report. 2.10. Principles of preparation of annual financial statement These principles and assumptions of preparation of financial statements are described in consolidated financial statements of the Selvita Capital Group. ●
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 25 03 — Information on the Group’s activity 3.1. Market and competitive landscape R&D Funding in 2024 According to the Raymond James investment bank’s report, Pharma Services Insights, the start of 2024 began incredi - bly strong for biotech funding, coming off a nearly three-year downcycle. The Q1’24 jump was driven by strong follow-on activity and the long-awaited return of VCs to the market. Strong year-over-year growth continued throughout 2024 as a function of the Q1 bump, but slow sequential growth raises concerns about this cycle’s strength. While the IPO market has improved, it remains below the strength typically seen in prior upcycles. The lack of general - ist investor participation has also been highlighted as a major reason for the pause, which must be reversed if previous highs are to be achieved. Overall, R&D funding increased essentially by 51% in 2024 compared to 2023. Another market update report, “2024 Year-In-Review, Global Trends in Biopharma Transactions”, by Locust Walk, says that despite a relative slowdown throughout the latter half of 2024, capital market activity in 2024 increased by 93% from 2023. The rise of 2024 capital market activity, driven by follow-on offerings and private financings, reflects the commitment to established companies and increased public and private appe- tite for validated growth opportunities. Venture financing in FY 2024 showed continued improvement in total deal value, increasing by 59% compared to 2023. Based on Evercore ISI’s analysis of private early-stage biotech financing (discovery and pre-clinical stage only), early-stage biotech financing increased by 39.7% in 2024. It reached $11.6b compared to $8.3b in 2023. Additionally, 61% of 2024 financing was dedicated to biotechs, whose main therapeutic area was Solid Tumor oncology and/or Inflammation & Immu- nity (an increase from 40 p.p. in 2023). Over 47% of funding was received by biotechs working with small molecules, pep- tides, or therapeutic antibodies, indicating that investors are still choosing safer assets instead of investing in more risky advanced therapies. 2024 also saw increased financing for radiopharmaceuticals, which amounted to 11.7% of 2024 private early-stage biotech financing. When examining pharmaceutical companies’ R&D expendi - tures, the growth in global R&D spending has maintained a strong upward trajectory, with a compound annual growth rate (CAGR) of 9% from 2016 to 2023. This growth is projected to continue through 2030, with an expected CAGR of 3% from 2023 to 2030. Oncology remains a key therapeutic area of focus of pharma companies.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 26 100% 80% 60% 40% 20% 0% $ in billions Follow-Ons PIPEs IPOs Private Financings Q1 2022 2023 2024 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $4,780 $5,492 $4,713 $5,695 $6,939 $5,190 $7,157 $8,169 $15,900 $14,073 $11,601 $11,287 $2,793 $694 $1,170 $2,208 $3,492 $1,499 $1,384 $1,742 $2,605 $1,604 $933 $1,211 $514 $1,240 $699 $786 $269 $185 $377 $580 $1,088 $598 $1,374 $623 $108 $123 $617 $612 $1,451 $820 $661 $1,653 $3,886 $8,628 $6,417 $5,514 $5,339 $2,560 $2,417 $3,189 $2,250 $2,565 $3,794 $1,943 $3,293 $5,538 $3,913 $4,039 CHART 2. Public and Private Financing Deals by Quarter Source: “2024 Year-In Review, Global Trends in Biopharma Transactions”, Locust Walk, February 2025 120 100 80 60 40 20 0 CHART 1. Recent TTM Funding Trend By Financing Type $ in billions IPOs FOs VC PIPEs Source: “Pharma Services Insights”, Raymond James, February 2025 Q4:20 Q1:21 Q2:21 Q3:21 Q4:21 Q1:22 Q2:22 Q3:22 Q4:22 Q1:23 Q2:23 Q3:23 Q4:23 Q1:24 Q2:24 Q3:24 Q4:24 $102 $8 $33 $41 $43 $44 $45 $42 $38 $32 $27 $20 $18 $17 $16 $17 $20 $21 $22 $10 $9 $6 $5 $2 $3 $5 $6 $7 $7 $7 $7 $14 $14 $14$15$47 $54 $39 $35 $31 $20 $16 $18 $17 $19 $22 $20 $19 $24 $24 $26 $27 $18$17$14 $16$19 $11 $7 $123 $110 $103 $96 $75 $64 $58 $52 $47 $47 $45 $59 $63 $65 $67 $48 ~51% increase YoY% Change QoQ% Change (49%) (10%) (14%) (7%) (6%) (6%) (39%) (22%) (42%) (15%) (44%) (9%) (47%) (10%) (38%) (10%) (25%) (3%) (19%) (2%) (14%) (5%) (26%) (32%) (32%) (8%) (37%) (2%) (51%) (4%)
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 27 Biotech Funding and Market Sentiment – Early 2025 Update As of early 2025, biotech funding has experienced a signif - icant decline. In February 2025, total funding (IPOs and fol - low-ons) fell approximately 78% year-over-year, while year-to- date (YTD) funding declined by around 65% compared to the same period in 2024. IPO funding decreased by roughly 31% year-over-year, whereas follow-on funding saw a more sub - stantial drop of approximately 82%. In the private sector, venture capital (VC) funding reached ~$1.6 billion in February 2025, reflecting a year-over-year decline of approximately 6.1%. IPO and follow-on funding have been on a downward trajectory since September 2024, and VC funding also declined in February 2025 compared to Jan - uary. Meanwhile, pharmaceutical R&D spending increased by approximately 1.7% year-over-year - below inflation rates in the U.S. and Europe and significantly lower than the 4% growth observed in October 2024. Public market sentiment remains moderate. While the Nasdaq Biotechnology Index performed relatively well in the first three quarters of 2024, it began to decline in Q4. As of mid-March 2025, the index is up only 2.7% YTD and remains flat on a trail- ing twelve-month basis, signalling cautious investor sentiment and limited capital inflows into the biotech sector. The new U.S. administration has introduced some turbu - lence in NIH, university, and overall research funding. While the Trump administration has partially lifted a freeze that had stalled NIH grant reviews - later-stage grant reviews remain on hold. The freeze, which disrupted thousands of research applications, is part of broader efforts to restructure NIH fund- ing, raising concerns among scientists about long-term impli- cations for medical research. At present, we do not see any direct impact on Selvita’s U.S.-based clients related to pub - lic research funding issues. If these freezes remain temporary, they are unlikely to affect market significantly. 2016 Growth: 2017 2% 2018 8% 2019 6% 2020 8% 2021 17% 2022 4% 2023 17% 2024 2% 2025 4% 2026 4% 2027 3% 2028 3% 2029 3% 2030 2% $161 $171 $184 $196 $211 $247 $258 $301 $306 $317 $329 $339 $348 $357 $366 $ in billions Projections CHART 3. Global Pharma R&D Spending CAGR: 9% CAGR: 3 % Source: “Pharma Services Insights”, Raymond James, February 2025
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 28 Global Drug Discovery Outsourcing Market Overview Pharmaceutical companies now increasingly contract out parts or all aspects of the early-stage drug discovery pro - cess to an external provider, otherwise removing the need for expensive in-house manufacturing capacity. The drug discov- ery operations are typically contracted out to a third party, such as a contract research organization (CRO). The strategy of outsourcing drug discovery has the following benefits: • The ability of biopharma to focus on core competencies such as commercialization and marketing; • The CRO can provide an expansion of technological resources and expertise without having to spend money on new facilities and equipment; • Increasing the efficiency of drug discovery and hence reducing the development timeline; • With no up-front capital investment in new technology, the pharmaceutical company can experience improved cash flow; • Flexibility that outsourcing affords to pharmaceutical companies, as it allows them to devote resources that would have been tied up in development to other areas of the company; In the long and medium term, drug discovery outsourcing is a growing market because the benefits outweigh the costs for pharmaceutical and biotechnology companies. Outsourcing is still a rapidly evolving market, and therefore, CROs constantly have to adapt to pharmaceutical business needs. CROs have evolved rapidly to meet the needs of the full spec- trum of companies, from virtual biotechs companies to big pharma. In recent years, an increasing number of collabora - tions between the pharmaceutical sector and CROs has been observed. This has resulted from plans to reduce the cost of discovery and from the fact that companies are increasingly requiring specialized expertise from CROs whilst seeking to accelerate the drug discovery process. The trend is show - ing that CROs are becoming the powerhouses behind drug discovery. The evolving landscape of pharmaceutical outsourcing under- scores a rising need for external service providers, driven by the escalating intricacies of drug development, particularly in fields such as biologics, cell, and gene therapies. The COVID- 19 crisis has expedited this dependency on external resources for both drug discovery and development. Selvita should benefit from the globalization trend of out - sourcing the drug discovery and development process.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 29 Selvita’s competitive position The contract research industry is highly competitive. Selvita often competes for business not only with independent CRO companies but also with internal departments within some of our customers. Whilst there is a small number of larger outsourcing service providers that have emerged as leaders within the industry, the outsourcing market for drug discovery remains fragmented, consolidation trends are noticed. A key element in strengthening Selvita’s market position will be the development of its customer offering (described below) and sales team. In 2024, the company has made sig - nificant changes to the sales team, which should affect the company’s performance in future periods. In December 2024, Selvita hired Dr. Paul Overton as its Chief Commercial Officer to bolster its international sales structure. With over 25 years of expertise in the pharmaceutical, biotechnology, and CRO industries, Dr. Overton has an impressive track record of man- aging business development at companies such as Sygnature Discovery, Eurofins, Evotec, and Aptuit. His career has been defined by driving global sales growth, forging strategic part- nerships with biopharmaceutical companies, and steering dynamic, fast-growing organizations to success. Intensified marketing activities will support sales activities to promote brand recognition and enhance scientific reputation. This will be achieved through participation in key scientific conferences dedicated to selected therapeutic areas. In 2025, Selvita’s representatives plan to attend over 80 scientific and business conferences. Important suppliers and customers Notes to the consolidated financial statements of Selvita S.A. Group provide detailed information on the main business part- ners with turnovers exceeding 10% of income. The key suppli- ers and customers are not related to the Issuer. 3.2. Drug Discovery In 2024, Selvita’s Drug Discovery division continued to drive innovation, expand its scientific capabilities, and strengthen its position as a global leader in contract research services. This year marked significant advancements in integrated drug discovery, chemistry, pharmacology, and bioanalyti - cal sciences. Investments in high-throughput experimenta - tion, advanced automation, and novel technologies further enhanced our ability to deliver high-impact projects for phar- maceutical, biotech, and agrochemical clients. Strategic col - laborations and research expansion all contributed. The Chemistry Division made substantial progress in 2024, solidifying its role as a trusted partner for major pharmaceu - tical companies. The work was focused on novel drug can - didate development, synthesis optimization, and molecular profiling, leading to further business growth and strength - ened client relationships. A major highlight was the imple - mentation of High Throughput Experimentation, which signif- icantly increased our capacity for rapid compound synthesis and reaction screening. This allowed us to accelerate time - lines and enhance project outcomes. Additionally, laboratory automation was expanded, including upgrading the purifi - cation processes with additional SFC technology, ensuring higher efficiency and quality in the workflows. Throughout the year, the Chemistry Division expanded collaborations
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 30 with key pharmaceutical partners, leveraging our expertise to support high-impact drug design and synthesis projects. The main focus was on optimizing synthetic methodologies to enhance yield and scalability while ensuring sustainability in chemical processes. By introducing new purification and analysis techniques, greater precision in compound charac - terization was achieved, further solidifying our reputation as a premier provider of chemistry services. The development of chemical capabilities related to modal - ities outside the realm of small molecules, such as “degrad - ers” and peptides, continued. As a result, DMPK assays were optimized, and the existing offering was expanded (dual sink- PAMPA, alpha Log D HT screening, BSEP inhibition) with new tests to meet the evolving demands of pharmacology. New synthetic techniques, including photochemistry and electro - chemistry, were also developed. Investments in automation were increased by introducing a High Throughput Experimen- tation (HTE) approach. The DMPK department focused on developing bioanalytical capabilities, particularly in the rapidly growing field of oligo - nucleotide analysis. Through the development of a new plat - form based on mass spectrometry (ESI), the DMPK department introduced innovative methods for detecting, quantifying, and profiling oligonucleotides. This initiative supports Selvi - ta’s growth in the field of gene therapies, as oligonucleo - tide-based therapies are gaining importance in the treat - ment of rare diseases. Additionally, the bioanalytical team developed biomarker analyses for in vitro models and clini - cal research models, supporting a range of new opportunities in translational biomarker development. The DMPK team also placed strong emphasis on pharmacokinetics and pharma - codynamics (PK/PD) modeling, particularly PBPK simulations, which enable early forecasting of the pharmacokinetic prop - erties of compounds based on limited ADME and in vivo data. This strategic investment allows Selvita to deliver data at ear- lier stages of drug development, increasing project efficiency. Selvita demonstrated a strong commitment to AI-driven drug discovery in 2024. A dedicated AI&CDD department was established, which expanded bioinformatics capabilities, rec- ognizing the growing importance of these fields. Strengthen- ing CADD leadership and growing the modeling team have enabled more efficient design of new molecules. Selvita advanced AI and automation by developing the AI model TADAM, capable of screening billions of compounds per hour and empowering Hit Finding & Expansion. The auto - mation of the purification process to improve lab efficiency was initiated. AI-driven retrosynthesis and reaction prediction efforts aim to accelerate chemical synthesis. The joint publi - cation of a case study with CAS highlights the practical appli- cation of AI in optimizing organic synthesis workflows. Devel- oping generative models allows for AI-driven drug design. An automated QSAR/QSPR platform enables high-through - put molecular property prediction. Deployment of advanced models like DiffDock and MaSIF demonstrates a focus on cut - ting-edge technology. Through seamless integration of artifi - cial intelligence with drug discovery services, but also through laboratory automation, Selvita aim to increase efficiency and reduce costs, which will make Selvita an even better and more effective partner, delivering tailored solutions, proactive sup- port and the highest value for customers. Selvita also actively engaged with the scientific community by hosting events like webinars dedicated to AI/ML use in Drug Discovery and pub- lishing our scientific achievements. Providing AI-enhanced CADD services to many clients shows practical application and market demand. Expanding antibody development sup - port in Wroclaw. The Integrated Drug Discovery Team (IDD) oversaw the sci - entific implementation of integrated projects. Key 2024 high- lights of this team include the expansion of the IDD project pipeline, with strong prospects for the coming year, and the completion of a two-year IDD Project Leader training program. At the moment, Selvita is running several IDD projects in the Hit ID, Hit to Lead, and Lead Optimization phases, where both IDD team members and members of the other departments are actively working together. In addition to supporting inter- nal projects, the IDD team played an essential role in fostering new industry collaborations, bringing together experts from medicinal chemistry, pharmacology, and computational mod- eling to streamline drug discovery efforts. Through the inte - gration of AI-driven modeling and predictive analytics, the department has enhanced its ability to evaluate compound properties at earlier stages, significantly improving the effi - ciency of the discovery pipeline. The team also continued to refine in vivo and in vitro models to align with emerging ther- apeutic trends.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 31 The HCS team presented posters at several scientific confer - ences on highly advanced screening research (HCS) and cellu- lar senescence, highlighting the expertise of the Selvita Group scientists in screening and test development for oncology and aging studies. The HTS team significantly enhanced its capa - bilities by finalizing numerous campaigns using Selvita’s inter- nal compound library and investing in further automation of the laboratories through the installation of new equipment. These efforts increased the efficiency and throughput of both screening studies, enabling faster project execution for clients. Through advanced ADME profiling and in vivo PK studies, the DMPK team contributed to a deeper understanding of com - pound behavior in biological systems. Automation-driven high-throughput screening assays were implemented to enhance compound screening efficiency. The expansion of biotransformation studies further improved ability to pre - dict drug metabolism, enabling more accurate assessments of drug candidates’ pharmacokinetic properties. The bioan - alytical team expanded its mass spectrometry-based quan - tification capabilities to complement these efforts, ensuring precise drug exposure assessments. This work was further supported by ongoing research into novel assay formats for oligonucleotide therapeutics and targeted protein degrad - ers, reinforcing Selvita’s standing as a leader in bioanalytical research. Collaborations with international pharmaceutical companies helped refine PBPK modeling approaches, improv- ing drug development timelines and optimizing candidate selection processes. New protocols for assessing drug distri - bution and pharmacokinetics in inhaled therapies was created, significantly advancing translational respiratory research. The Oncology in vitro team supported multiple IDD projects, focusing strongly on oncology and neuroscience. Novel meth- odologies, including lipid nanocarriers, protein degraders, and ADC efficacy studies, were successfully developed. A pilot study on patient-derived tumor samples was launched, and high-throughput screening campaigns using Selvita’s propri - etary compound library were completed for European clients, with additional projects in the pipeline. Team members pre - sented high-content screening and senescence-related post - ers at ELRIG Drug Discovery, SLAS2024, BIO2024. A notable advancement in 2024 was the introduction of a kinase panel analysis to CAR-T cytotoxicity assays, an essential compo - nent in developing next-generation immunotherapies. This innovative approach enables a deeper understanding of CAR-T mechanisms and facilitates the identification of opti - mal conditions for enhancing therapeutic efficacy. Further - more, the team expanded its drug screening capabilities to include organoid-based 3D cultures, providing a more physi - ologically relevant platform for assessing novel therapeutics. Increased focus was placed on immune-oncology co-culture assays, allowing for a better understanding of tumor-immune system interactions. In the field of precision medicine, the main goal was to develop new 3D in vitro models, which serve as valuable tools for better understanding cancer biology and improving patient treatment outcomes. These models have the potential to revolutionize cancer research and contribute to the devel - opment of more personalized and effective cancer therapies. Additionally, the High Content Screening (HCS) team devel - oped and optimized tests that enabled the analysis of new biomarkers in tumor samples, significantly enhancing Selvity’s offerings in drug efficacy evaluation and mechanism of action. The In vivo Oncology team developed multiple cancer mod - els, including brain, breast, lung, and liver cancer. The team expanded its portfolio of syngeneic and further plans to develop patient-derived xenograft (PDX) models, optimizing protocols for more predictive translational outcomes. These developments enabled the precise evaluation of novel ther - apeutic agents, including small molecules, biologics, and immune modulators. A multidisciplinary in vivo offering was established through collaborations with ADME, histol - ogy, and in vitro pharmacology teams across all sites. Fur - ther advancements included establishing novel metastasis models to investigate cancer spread and therapeutic inter - vention in secondary tumor sites. In response to increasing industry interest in immuno-oncology, the team developed robust tumor microenvironment profiling techniques, allow - ing for detailed immune cell characterization in tumors and treatment response assessment. Additionally, a focus on ther- apeutic resistance mechanisms led to the generation of resist- ant tumor sublines, facilitating research on overcoming drug resistance in oncology treatment strategies. The in vivo oncology team continued to optimize human and mouse models, particularly to increase graft acceptance rates and treatment responses. In vivo imaging techniques were improved by utilizing ultrasound with Power Doppler mode to assess tumor growth and vascularization.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 32 The Selvita Group has also expanded its collaboration net - work with hospital research centers, not only those previ - ously located in Croatia but also in Poland. This expansion pro- vides access to valuable tumor samples derived from patients, allowing for the development of clinically relevant advanced models and the effective study of biomarkers across various types of cancer. The Immunology and Metabolic Diseases Department advanced its efforts in precision medicine, tailoring drug effi - cacy studies to patient-specific biomarkers. Through collabo- rations with academic institutions and hospital networks, the teams refined predictive models for therapeutic response. This approach has positioned Selvita as a leader in patient-cen- tric drug development, emphasizing translational research strategies that bridge the gap between early-stage discov - ery and clinical application. The team developed in 2024 novel fibrosis and inflammatory disorders models. Investments in imaging technology, including advanced microscopy and real- time analysis platforms, have significantly enhanced research capabilities. Also, advancements in vivo imaging techniques were implemented, including PET and µCT imaging. A signifi- cant highlight was Selvita’s positioning as a leader in research, leveraging advanced preclinical models to assess drug effi - cacy in respiratory conditions. Investments in aerosol-based drug delivery systems allowed for developing state-of-the-art inhalation platforms. The inhalation tower, which underwent rigorous validation studies, proved to be a highly effective tool for studying respiratory disease mechanisms and ther - apeutic responses. These innovations reinforced Selvita’s expertise in preclinical respiratory studies. Selvita’s ongo - ing collaborations with global biotech companies strength - ened our chronic lung disease modeling expertise. Selvi - ta’s continued investment in inhalation research underscores its commitment to being at the forefront of drug discovery for respiratory diseases. In alignment with Selvita’s technol - ogy development strategy, the Omics team established Mass Spectrometry Imaging capabilities for spatial imaging of tis - sue drug distribution, metabolites, lipids, peptides, and pro - teins. The first case study was completed, integrating Omics with in vivo pharmacology and DMPK. The Omics Laboratory also focused on creating a comprehensive approach to bio - marker discovery. This initiative allowed for a deeper under - standing of disease mechanisms and drug interactions at the molecular level, facilitating the development of targeted therapies. The Biological Drug Discovery Team joined the Selvita Cap - ital Group in April 2024, following the acquisition of person - nel, equipment, and laboratories from Pure Biologics S.A. The initial activities of the team focused on integration with Selvi- ta’s Biochemistry Laboratory, which was successfully com - pleted in the second quarter of 2024. In the following quarters, efforts were made to raise customer awareness about the new team and its services by organizing meetings with both cur - rent and potential clients. The promotion of the new segment was continued at industry conferences dedicated to biologic drugs, further supporting the team’s recognition. Promotional activities covered not only the European market but also the American and Japanese markets. As a result, there has been an increasing number of inquiries, confirming the interest in Selvi- ta’s new opportunities. The marketing campaign ran through- out the third and fourth quarters of 2024 and will continue into the first quarters of 2025 to further raise customer awareness and acquire new projects. By the end of the fourth quarter of 2024, work was com - pleted on acquiring two high-quality phage libraries, one from a commercial partner and the other created within an internal project. Additionally, as part of expanding the offer - ing, the Wrocław team began building new libraries, which will further enhance Selvita’s capabilities in antibody discov - ery. Thanks to these efforts, by the end of the fourth quarter, the team expanded its ability to carry out commercial pro - jects for clients in the field of discovering human therapeutic or diagnostic antibodies. Furthermore, the team began devel- oping and implementing new methods for characterizing and engineering antibodies, including determining “developabil - ity” parameters, which will further increase the attractiveness of the offering for clients. Research efforts to further develop these services will continue in the first quarters of 2025. Conclusion and Outlook for 2025 2024 was a year of strategic growth, scientific breakthroughs, and operational advancements for Selvita. Investments in automation, advanced drug discovery methodologies, and high-value collaborations have strengthened Selvita’s position in the market. Looking ahead to 2025, the Company antici - pates further expansion of IDD services, focusing on biophar - maceuticals and complex modalities. Increased adoption of AI-driven tools will enhance efficiency and predictive accuracy. Through strategic investments in personnel, infrastructure, and cutting-edge AI technologies, Selvita is able to accelerate
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 33 research, improve efficiency, and deliver innovative solutions to our clients. The company’s focus on both internal develop- ment and external collaborations further strengthens its posi- tion in this rapidly evolving field. Developing novel oncology models will strengthen Selvita’s competitive edge in translational research. Continued invest - ments in bioanalytical capabilities will support new drug modalities and advanced pharmacokinetics. The Pharmacol - ogy and Translational Research teams on both sites advanced their precision medicine efforts, tailoring drug efficacy stud - ies to patient-specific biomarkers. Through collaborations with academic institutions and hospital networks, the teams were able to refine predictive models for therapeutic response. 3.3. Drug Development In 2024, the activities of the Development and Contract Test- ing Department focused on the following aspects: • Execution of projects and development of competencies in the field of biological and small- molecule products • Implementation and optimization of the pharmaceutical product development service • Routine support for the Quality Control Department in analytical method transfers and certification of substances and pharmaceutical products • Execution of projects and expansion of support capabilities for clients in the agrochemical sector • Integration of PozLab into the Selvita Group In the field of services dedicated to biological drugs, the Ana- lytical Laboratory has expanded its portfolio of advanced research methods to include the characterization of bio - logical products in accordance with international stand - ards and global regulatory requirements. A key area of this development was the expansion of the platform for physico - chemical protein analysis. In 2024, new advanced analytical techniques were implemented, including Multi-Angle Light Scattering (MALS), enabling precise assessment of molecular weight and aggregate distribution, Differential Scanning Cal - orimetry (DSC), used for studying the thermal stability of pro- teins, and Dynamic Light Scattering (DLS), allowing for par - ticle size analysis and detection of conformational changes. These innovations have significantly improved the accuracy of conducted studies, providing clients with a deeper under - standing of the physicochemical properties of their products. As a result, strategic research projects have been initiated in collaboration with key industry players. Additionally, the laboratory has expanded its service portfolio by introducing high-throughput analysis of host cell proteins (HCP). The new service offering has enabled more effective support for cli - ents in optimizing tests conducted on samples collected dur- ing the production process. In 2024, research initiatives were also launched, focusing on the characterization of antisense oligonucleotides, bispecific antibody analysis, and therapeu - tic peptides. These projects encompassed innovative vaccine studies, antidiabetic drugs, and bacteriophage-based thera - pies. Collaborations established with leading pharmaceutical companies reinforce our expertise in modern biopharmaceu - tical development. As a result, long-term projects with key cli- ents have been secured until 2029, concentrating on the anal- ysis of protein-drug conjugates in biological materials, along with validation and quantitative analysis services. Additionally, ongoing long-term collaborations with clients in proteomics services continued, with a strong emphasis on both qualita - tive and quantitative research methodologies. In the field of biological analysis, efforts were primarily focused on optimizing and qualifying reporter bioassays for clients developing innovative peptide-based vaccines. Collab-
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 34 oration with one European client was expanded to include the development of biological methods for new biopharmaceuti- cals—monoclonal antibodies intended to treat patients suffer- ing from migraines and multiple system atrophy (MSA). Several projects were also carried out in the area of binding affinity analysis using Surface Plasmon Resonance (SPR). Additionally, in the field of drug impurity testing, projects were conducted for the quantitative analysis of DNA and host cell proteins in drug substance samples for clients from both Europe and the United States. In 2024, numerous analytical and biological method trans - fers were conducted, specifically designed for the study of peptides and monoclonal antibodies. These transfers encom- passed comprehensive testing to ensure the reliability of the methods and their full compliance with European Union reg - ulations. As a result, Selvita’s clients can effectively prepare their products for commercialization in the European market. Since May 2024, following Selvita’s acquisition of Pozlab, a comprehensive integration process of Pozlab into Selvita Group’s standards has been initiated. A new organizational structure was implemented to integrate scientific teams within the Group, aiming to standardize business processes. Back-office functions were also integrated. All operational IT systems of the Group were implemented for routine use, including those for contract management, accounting and payroll, time tracking, and electronic docu - ment repository. Significant investments were also made in equipment and IT infrastructure. Pozlab’s commercial offering has been fully integrated into Selvita Group’s Drug Development Small Molecules portfolio. Sales team training was conducted on the services brought by the new branch, and the Drug Development service offering standards were implemented at Pozlab. Marketing tools were also integrated. In the vast majority of cases, integration activ- ities were completed as planned in 2024. Work on integrat - ing IT, H&S, and GMP quality standards will continue in 2025 according to well-defined plans. This is due to the multifac - eted nature of these areas and certain delays that occurred at Pozlab in these matters. In the field of analytical services for small-molecule drugs, pro- jects focused on the development and validation of analytical methods, the identification of new impurities, and the detec - tion of trace-level impurities, both in the laboratory in Kraków and in Poznań. These projects utilized advanced chromato - graphic technologies, including liquid chromatography, gas chromatography, and ion chromatography, as well as mass spectrometry and plasma spectroscopy. Ongoing work con - tinued on projects requiring highly sensitive analyses using LC-MS/MS and GC-MS/MS, particularly for the identification of nitrosamines, pyrrolizidine alkaloids, and genotoxic impurities. In 2024, a new research area was also introduced—analyzing extractables and leachables (E&L) from packaging materials and matrices. The first projects in this area were successfully completed, and further studies are currently in progress. In the fourth quarter of the 2024 , the Department secured a new cli- ent from the innovative pharmaceuticals sector and initiated a project for the validation of analytical methods used in the qualitative and quantitative assessment of a product in Phase I clinical trials. This project, as part of which, scientists will sup- port the client in the area of analysis for the newly developed formulation.represents a significant step in strengthening our expertise in innovative therapies.. The team expanded its collaboration with key clients, pro - viding analytical support for the early-stage development of generic formulations. This included the determination of active ingredients and preservatives, validation of cleaning methods for gel formulations, identification of stabilizers in syrups and oral sprays, and validation of impurity detection methods in active substances of varying polarity as well as in synthesis precursors. In the field of pharmaceutical product development, collabo- ration continued with two European clients, which involved the production and release of product batches for clini - cal trials conducted in North America. Since one of the pro - jects plans also included the production of so-called primary batches for registration purposes, the facility’s GMP license was successfully expanded to include the manufacturing of commercial pharmaceutical products. This license expansion enables PozLab to produce small commercial batches of phar- maceutical products for other clients as well. Additionally, in Poznan, a long-term collaboration was carried out with one of the global clients, involving routine release testing of inno- vative pharmaceutical products in their early development phase using a gastro-intestinal model. As part of the partner - ship’s expansion, an additional substantial testing volume was contracted for the period until the end of 2025.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 35 Furthermore, in 2024, various projects involving analytical method validation waere performed, along with analytical support for the development of a new pharmaceutical prod - uct, including release testing of product batches intended for bioequivalence studies. As part of the grant-funded project Rivaroxaban 2.5 mg + Ace- tylsalicylic Acid 50 mg, hard capsules, fixed-dose combina - tion, a pilot bioequivalence study was conducted in March and April at a CRO in the Czech Republic, sponsored by PozLab. The study results confirmed the bioequivalence of PozLab’s product compared to two reference products. The final pro - ject report was submitted to the National Centre for Research and Development (NCBR) in May 2024, in accordance with the project timeline, and the project has now entered a five-year sustainability period. The company is currently conducting negotiations regarding granting a license for the commercial- ization of the PozLab product. In the area of Quality Control, the Department’s activities focused on routine physicochemical testing of active phar - maceutical ingredients, excipients, and commercial drug products, as well as microbiological services conducting in Poznan (PozLab), primarily including microbiological purity testing and sterility testing of pharmaceuticals and medi - cal devices. In 2024, the microbiology laboratory infrastruc - ture was expanded by purchasing and installing an isolator. This resulted in increased analytical capacity in this area and expanded the sterility testing offer, which enabled the devel- opment of cooperation with one of the key clients in the drug development segment in the field of sterility testing of medic- inal products – method validation has begun with the planned implementation of routine release analyses in 2025. Regular cooperation was maintained with existing partners in the areas of retesting and stability studies for marketed drugs. Several analytical method transfers were successfully con - ducted for both small-molecule and biological drugs. Towards the end of the year, new projects of a similar nature were also initiated, with the planned implementation of routine release testing in 2025. In 2024, the implementation of a new service – batch certification for imported medicinal products – was ini- tiated. To support this, a Qualified Person with the required competencies was hired, and the quality system of the division was preliminarily prepared to enable the provision of this ser- vice. The regulatory timeline for full implementation depends on securing the first contract, with the estimated launch in 2025. In the agrochemical sector, analytical activities focused on the development and validation of analytical methods, single- and five-batch analyses, impurity identification, and physico - chemical testing of active substances and formulations. This testing portfolio was significantly expanded during the year, leading to increased collaboration with agrochemical com - panies. The conducted projects also included accelerated and long-term stability studies. 3.4 Ardigen S.A. The biopharmaceutical industry faces rising costs for drug discovery and development, which have now surpassed $2.6 billion. The primary challenge is the high failure rate of clini - cal trials, averaging 90%. Ardigen addresses this global issue by combining AI technology with laboratory experiments, improving the effectiveness of the drug discovery and devel- opment process. The dynamic growth of artificial intelligence and the AI in the Drug Discovery market brings the industry closer to realizing this vision each year. Ardigen positions itself in the AI in Drug Discovery market as an AI CRO (Contract Research Organization) that is transform- ing AI in drug discovery projects carried out by pharmaceuti- cal and biotech companies. The company’s goal is to increase
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 36 the likelihood of success in the development of innovative drugs. Through its own AI solutions and technologies, Ardi - gen supports scientists in precisely answering scientific ques- tions. The answers come from large datasets encompassing biological, chemical, and clinical data. With nine years of experience and over 500 completed pro - jects with innovative companies from the USA and Western Europe, Ardigen is recognized as one of the leaders in the AI in Drug Discovery market. As a leader in AI transformation, the company plays an essential role in the ecosystem, partic- ipating in numerous innovative drug discovery programs and contributing to the introduction of precision and personalized medicine concepts. Ardigen leverages its accumulated knowledge, experience, and proprietary AI models and computational platforms by combining expertise in biology, chemistry, bioinformatics, data science, and computer science. This allows the com - pany to conduct computational studies and simulations that not only replace but also extend traditional laboratory exper- iments. As a result, the drug discovery and development pro- cess becomes faster, cheaper, and less prone to failure. Ardigen’s offerings are primarily used by leading global phar - maceutical and biotech companies, research institutions, and scientific centers working on new drugs, therapies, bio - markers, or conducting other advanced R&D work in medical biotechnology. Ardigen’s offering fits into the architecture of a modern AI-sup- ported drug discovery process. It consists of three levels: 1. Data Universe – The central hub, where datasets are stored, serving as a source of answers to scientific questions. 2. Infrastructure – This area includes laboratories (data generation) and technologies used for managing large datasets of various modalities. 3. Scientific Insights – A key area for scientists, enabling them to search for and present answers to scientific questions in the drug discovery and development process. This area is supported by AI technologies. In 2024, the company expanded its offering by adding a range of solutions dedicated to the Clinical Development stage within Drug Discovery. This strategic direction aims to con - nect the clinical world with the drug discovery world, with data (Data Universe) serving as the linking element. Diagram 1. represents the current offering map of Ardi - gen, fitting into the architecture of AI in Drug Discovery and Development. DIAGRAM 1. Ardigen’s offer map Scientific Insights Drug Discovery Clinical Development Advanced scientific insights with tailo- red AI and bioinformatics Identify better drug candidates with phenotypic profiling Start your drug program with the right target Expand the indication landscape Discover, design and improve the right small and biological molecules Optimize and automate your clinical trials to increase probability of success Leverage integrtated, indication-specific datasets to generate scientific insights Streamline the storage, management and processing of dataInfrastructure Data Universe
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 03 — Information on the Group’s activity . 37 The past year marked consistent and systematic efforts to build the Ardigen brand in the United States and Western Europe. New promotional materials were created to highlight Ardigen’s offering, positioned within the architecture of the AI-driven biotechnology company. The company participated in over 30 industry conferences, including major events such as PMWC (Santa Clara, USA), Festival of Genomics (London, UK), RNA Leaders (Boston, USA), Lab of the Future (Boston, USA), Festival of Biologics (San Diego, USA), BioTechX (Phila - delphia, USA), and BioTechX Europe (Basel). At many of these events, Ardigen had its own booth and conducted scientific presentations that generated significant interest. Throughout the year, several webinars were also held in collaboration with clients or business partners. Ardigen has been recognized in international reports as one of the industry leaders (top 5% of companies), highlighting the company’s contribution and impact in the sector, including: • AI-based Clinical Trial Solution Providers Global Market Report 2024 • Global AI in Bioinformatics Market – Latest Trends and Forecast 2024-2030 • Artificial Intelligence (AI) In Drug Discovery Global Market Report 2024 • AI-Enabled Drug Discovery and Clinical Trials Market – Trends Analysis and Forecast till 2029 • Artificial Intelligence In Genomics Market Demand, Trends and Growth Analysis 2023-2028 The year 2024 marks a significant step toward scaling Ardi - gen’s business as a global company operating in international markets. The scaling strategy is based on four pillars: a global sales network, a winning offer, satisfied customers, and an organizational culture that attracts and develops world-class talent. In February 2024, Livia Legg, assumed the role of Chief Com - mercial Officer and joined the company’s Board of Directors. She brings over 25 years of leadership experience in build - ing effective international sales teams. During this time, the sales team was also strengthened by the addition of an expe- rienced professional based in Boston. Throughout the year, the company acquired a record num - ber of new clients. This success is a result of the company’s growth strategy implemented despite significant reductions in R&D budgets in the industry over the past two years. The expanding base of new clients will be a key growth driver in the coming years, should the challenging industry situation persist. At the end of 2024, the company expanded its offerings with solutions and technologies dedicated to clinical research. This is a direct response to the market situation, where R&D budg- ets are shifting towards clinical-stage programs. It is also part of Ardigen’s strategy to progressively cover the entire drug discovery and development process, with data at the core. The success of artificial intelligence based language models such as ChatGPT accelerated clients’ readiness to adopt Large Language Models (LLM), significantly shortening the technol - ogy adaptation time. This development opens the door for Ardigen to quickly implement LLM models in various appli - cations. Over the past year, the company introduced an LLM solution in data management. In 2024, Ardigen expanded its network of technology partners. Current partners include NVIDIA, Data Bricks, Lifebit, Google, and AWS. Ardigen experts have earned certifications in lead - ing technologies. The company is open to forming additional partnerships to deliver solutions tailored to client needs. As every year, Ardigen has been actively involved in devel - oping the capabilities of Nextflow and supporting the com - munity around this rapidly developing technology. The com - pany’s experts participated in the annual nextflow-core #Hackathon, organizing a local edition in the company’s office. In 2024 the Ardigen’s employee motivation scheme was strengthened with the addition of a third pillar: a broad Stock Option Program, allowing each Ardigen employee to become a shareholder in the company. Implementing this program in the company should bring benefits in the form of increased employee retention, aligning the interests of the company and its team, as well as improving motivation and productivity. Ardigen successfully passed security audits conducted by cli- ents as well as those associated with the renewal of its ISO 27001 certification. The high level of information security is a crucial element in client partnerships.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 03 — Information on the Group’s activity . 38 ⟶ Research and development activities of Ardigen In 2024, research and development activities focused on Mor- phological Profiling (Ardigen phenAID) and Biologics. The Ardigen phenAID platform was enhanced with addi - tional modules and features in response to client needs. This included preparing and implementing the platform for very large-scale operations (increasing from 1 million to 100 mil - lion small molecules). Additionally, non-commercial collabora- tions were established with a biotech company and a leading scientific center in the USA to develop a technology compo - nent that would extend the platform’s capabilities. Work also began on building an offering for new client segments. In the Biologics field, the company observed a growing inter- est in the use of AI technologies in drug discovery. Several commercial projects progressed to laboratory validation phases. The results of laboratory experiments are helping shape the direction of the applied AI technologies. In mid-2024, a pilot project with Immudex was conducted, resulting in a collaboration agreement to build a joint offer - ing in the Biologics area: “Immune Profiling Multi-Omics Data Analysis Services.” This offering targets pharmaceutical and biotech companies focused on TCR-based (T-Cell Receptor) cell therapy. Summary and Outlook 2024 was an important year for Ardigen in terms of scalabil - ity, expansion, technology development, and strengthening its position in the global market. Key achievements include: • A record number of new clients. • Strengthening global presence, especially in the US and Western Europe. • Intensified R&D efforts in Ardigen phenAID and Biologics. Ardigen’s continued growth will be driven by scaling opera - tions through a global sales network, a comprehensive offer - ing, high customer satisfaction, and attracting world-class talent. 3.5. Changes in the basic principles of managing the Issuer’s and its Capital Group enterprise There were no such changes in the 2024 financial year. 3.6. Sponsoring and charitable activities As part of its Corporate Social Responsibility, Selvita Group, continues to build long-term relationships with local charity organizations, making an impact on local and national com - munities’ lives. Selvita Group has been continuously supporting the activities of the Krakow-based UNICORN Association, a charitable organ- ization established in 1999, which supports oncology patients and their families. The association runs the first Polish psy - cho-oncology center – a place where patients get professional psychological help to support them getting through the oncol- ogy diagnosis and treatment. In 2024, Selvita donated PLN 40 000, the organization of Family Psycho-Oncology Camps, i.e. weekly rehabilitation and respite stays, which were meant to be a time of summer rest and return to joy for families facing daily oncological stress due to the illness of a family member. During their stay, families are accompanied by a support group- psy- cho-oncologists, educators, instructors of various therapeutic methods – providing support, so necessary in the process of dealing with emotions, building courage and faith in returning to health and a good life. In addition, volunteers from Selvita employees in Krakow were directly involved in helping during one Psycho-Oncology Camp, providing their time and support for children from families struggling with oncological disease. In the summer months of 2024, Selvita employees from all locations had the opportunity to engage in a sport chal - lenge with charity aim in three categories: running, walking and cycling. The kilometers collected by all challenge partic - ipants translated into a donation, which the company made to a foundation selected by the 10 most active participants of the challenge – from several proposals, the GOPR Foundation was selected by vote (the donation paid by Selvita amounted to PLN 14,575). On the top of that, the President of the GOPR Foundation conducted a webinar for Selvita employees on safety rules during mountain trips (especially in winter).
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 03 — Information on the Group’s activity . 39 Moreover, as every year Selvita’s employees took part in a Kraków charity run (stationary in Krakow and virtually in other locations in Poland and Croatia) organized by Poland Busi - ness Run Foundation. Foundation supports people with mobil- ity impairment, provides assistance in their activation and in eliminating social barriers. Also, the foundation promotes the awareness about disabilities and tries to change the social perception of disabled people. Financial support in that area amounted in 2024 to PLN 11,800 PLN. In September 2024, southern Poland faced catastrophic floods due to extreme rain fall. In Poland, thousands of peo - ple were evacuated across the country, with the Lower and Opolian Silesian regions taking the heaviest hit. Selvita stood with all those affected by these natural disasters. To support immediate relief efforts Selvita donated 20,000 PLN to Pol - ish Red Cross. Employees of Selvita in Poland also took part in the initiative called “Letters” (organized by the Santa Claus Foundation for Seniors) and prepared 32 packages that responded to the needs and dreams of people staying in social welfare homes and other care facilities. As part of additional activities, Selvita employees were the originators of a support campaign for animals staying in shel - ters. This initiative was organized in Selvita already for the third time and attracted great interest among the company’s employees in all locations in Poland. Collections of food and accessories for animals needed in local shelters were carried out, and the funds collected in cans were donated to DIOZ (Lower Silesian Animal Protection Inspectorate) to support ani- mals that suffered during this year’s floods. In 2024, Selvita in Zagreb actively engaged in Corporate Social Responsibility through sponsorship, donations and employee engagement activities with focus on education, health, children and youth and women. Selvita supported the number of scientific conferences (e.g. 5th annual Davis-Thompson Foundation Eastern European Vet- erinary Pathology Meeting; 8th Symposium of Doctoral studies, Faculty of Science, University of Zagreb, 5th International Sym- posium of Adriatic Club for Mucosal Immunology, etc.), journal (Chemistry in industry, Croatian Society of Chemical Engineers and Technologists), books (Supramolecular and nano chemis- try, Croatian Chemical Society) and awards to young scientists in the area of medicinal and pharmaceutical chemistry. What is more, Selvita Zagreb supported women in science by participating in the Women in Science, Medicine, and Pharma Business project (organized by Women in Adria) and contrib- uted to mentoring for women by Adrijana Vinter, Selvita Global Head of Drug Discovery, for third year in a row. Selvita also took part in Women Who Are Changing Science Conference. Additionally, the company contributed to Croatia’s healthcare innovation by backing the Forward to Health Innovation pro - gram – initiative supporting innovative startups in Croatia’s healthcare sector. Selvita Zagreb continued to support with donations Interna - tional Association for Natural Health and their Healthy Chil - dren project (project for children with psychophysical diffi - culties such as hyperactivity, aggression, poor concentration and communication, withdrawal, fears, insecurity, depression, nocturnal urination, allergies, weakened immunity, bronchi - tis, asthma, speech problems, vision, motor movement prob - lems, etc.), Hope association (with the aim of supporting ther- apeutic riding for children with developmental disabilities) and Ana Rukavina Foundation with the aim of promoting volun - tary bone marrow donation bank. Donations in the activities undertaken in Croatia amount to a total of 4.800 EUR. Selvita also promoted health awareness by participating in the Zagreb Advent Run, which in 2024 focused on raising aware - ness about early detection of high cholesterol and high blood pressure. In education, Selvita’s employees from Zagreb site served as guest lecturers at universities and offered hands-on expe - rience to students through lab practice and diploma work opportunities. Furthermore, the company continued its com - mitment to employee well-being by supporting parents through educational initiatives on parenting topics. Overall, Selvita’s 2024 CSR activities in Zagreb demonstrated a strong commitment to science, education, healthcare, and community well-being. ⟶
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 03 — Information on the Group’s activity . 40 3.7. Employment data 3.8. Significant events A) During the reporting period Selvita S.A. expands operations through introduction of new type of services related to biologic drug discovery and development. The Management Board of Selvita S.A., on March 18, 2024, adopted a resolution regarding the expansion of the Compa - ny’s operations through the introduction of a new type of ser- vices related to the discovery and development of biologic drugs. The Company’s objective is to broaden its services portfolio and create entirely new revenue streams. The new activity in the field of biologic drugs will enable the Company to address the second-largest segment of the drug discov - ery market, after small molecule drugs. The Company plans to commence its operations in the biologic drugs field by pro- viding services related to the preclinical development of mon- oclonal antibodies. In connection with the planned entry into the new service area, Selvita entered into a conditional equipment purchase agreement on March 18, 2024, with Pure Biologics S.A. head - quartered in Wrocław, Poland. Under this agreement for the amount of PLN 1,976,138 net, Selvita in April 2024 acquired a set of high-quality equipment necessary to provide services related, among others, to the selection and preclinical devel- opment of biologic antibodies (“Equipment”). On March 15, 2024, the Company also concluded – condi - tioned by Consent – a 5-year lease agreement (“Agreement”) for approximately 430 square meters of laboratory space with the space owner in the Business Garden complex in Wrocław, Vastint Poland sp. z o.o. The Agreement allows the possibil - ity of increasing the laboratory space to approximately 800 square meters. Ultimately, this could create jobs for approxi - mately 50 specialists. Simultaneously, the Company employed 16 high-class special- ists in the field of biologic drug development (“Team”), with extensive experience gained, among others, from Pure Bio - logics S.A. The Team, Equipment, and laboratory space are intended to form the foundation for further expansion of Selvita’s ser - vice portfolio in biologic drugs and the gradual increase in resources in line with the increase of sales in the new area. This area will be reported under the Drug Discovery segment. Closing of an acquisition of PozLab sp. z o.o. by Selvita S.A. On May 6, 2024, the Issuer, as the buyer, entered into a pur - chase agreement (“Agreement”, “Transaction”) for the acquisi- tion of 100% of the shares (“Shares”) in PozLab sp. z o.o., head- quartered in Poznan (“PozLab”) with Younick Technology Park sp. z o.o., headquartered in Złotniki, as the seller (“Seller”), after the fulfilment of all conditions precedent indicated in the preliminary conditional agreement, i.e. after fulfilment of the following conditions: ⟶ As of 31.12.2024 As of 31.12.2023 Selvita S.A. 454 415 Selvita’s Affiliates 515 471 Total 969 886 TABLE 15. Employment data
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 03 — Information on the Group’s activity . 41 • obtaining the consent of the National Centre for Research and Development (in Polish: Narodowe Centrum Badań i Rozwoju), granted in at least documentary form, for the acquisition of all Shares by the Issuer; and • completion of the capital restructuring process of the Seller’s group by concluding, between PozLab and a third party designated by the Seller, an agreement for the sale of 100% of the shares in Applied Manufacturing Science sp. z o.o., a subsidiary of PozLab. The Issuer acquired PozLab Shares for a total price of PLN 25,000,000, with PLN 21,000,000 paid on the Transac - tion’s closing date. The Issuer will retain the amount of PLN 4,000,000 for a period of up to 12 months from the date of closing the Transaction as security for any, specifically enu - merated in the preliminary agreement, events or claims by third parties against PozLab, as well as to secure settlements related to price adjustments. The acquisition of the Shares was financed from the Issuer’s own funds. Acquisition of CDMO (Contract Development and Manufactur- ing Organization) will strengthen the Issuer’s offering in the field of small molecule drug development and allow it to enter a completely new, highly attractive area related to drug devel- opment services for early clinical trials Significant purchase orders received in 2024 In 2024, the Company and its subsidiaries received a total of 12 significant orders with an estimated total value of over 81,6 mln PLN. These orders were related to both the continuation of existing collaborations and new projects with partners in the biopharmaceutical and biotechnology industries in Euro - pean and American markets. The scope of the orders included key research and development services in the areas of drug discovery and optimization, stability studies, pharmacology, and medicinal chemistry. Below are the detailed information regarding each of the orders: March 26, 2024 (ESPI 03/2024) The Company accepted four orders from a European biophar- maceutical company covering critical studies to assess and confirm the effectiveness of the biological drug production process. • Total estimated value of the orders: 3,689,868 EUR (15,900,748 PLN)* • Value to be realized in 2024: 1,393,840 EUR (6,006,474 PLN)* • Scope: Conducting stability studies and sample analysis from the biological drug purification process. April 12, 2024 (ESPI 06/2024) The issuer received an order from a European biotechnology company for the optimization of the lead compound, a key stage in the immuno-oncology drug discovery project being implemented by the client. • Total estimated value of the order: 3,348,577 EUR (14,281,346 PLN)* • Scope: Integrated research services, including medicinal and synthetic chemistry, in vitro pharmacology, ADME, pharmacokinetics, and recombinant protein production. May 15, 2024 (ESPI 08/2024) Selvita Inc. accepted an order from an American bio-pharma - ceutical company for integrated drug discovery (IDD) services, covering the optimization of the client’s lead compound. • Total estimated value of the order: 2,461,564 USD (9,772,655 PLN)* • Value to be realized in 2024: 1,624,632 USD (6,449,959 PLN)* • Scope: Services to be provided by teams in chemistry, computer-aided drug design, in vitro pharmacology, ADME characterization (absorption, distribution, metabolism, and excretion), pharmacokinetics profiling, and in vivo pharmacology. June 24, 2024 (ESPI 12/2024) Selvita Inc. received an order as part of the expansion of coop- eration with an American bio-pharmaceutical company under the framework agreement from 2023. • Total estimated value of the order: 3,107,400 USD (12,528,726 PLN)* • Scope: Synthetic and medicinal chemistry, in vitro pharmacology, computational chemistry. July 1, 2024 (ESPI 14/2024) Selvita d.o.o. accepted three orders for ADME/DMPK studies under the framework agreement from 2022. • Total estimated value of the orders: 2,965,000 EUR (12,743,867 PLN)* ⟶
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 03 — Information on the Group’s activity . 42 • Value to be realized in 2024: 1,235,417 EUR (5,309,946 PLN)* • Scope: Integrated support services in ADME/DMPK, including physicochemical profiling, analytical services, and in-vivo PK studies for both large and small molecules, supporting the client’s research programs. September 4, 2024 (ESPI 15/2024) Selvita Inc. received an order under the framework agreement for services provided between Selvita Inc. and a U.S.-based biotechnology company. • Total estimated value of the order: 2,115,000 USD (8,193,087 PLN)* • Value to be realized in 2025: 1,946,250 USD (7,539,383 PLN)* • Scope: Support for the client’s research programs in the field of chemistry. December 4, 2024 (ESPI 19/2024) Selvita d.o.o. received an important order from a British bio-pharmaceutical company as part of the expansion of cooperation in medicinal chemistry. • Total estimated value of the order: 1,595,600 GBP (8,261,379 PLN)* • Value to be realized in 2025: 2,153,584 GBP (11,150,396 PLN)* • Scope: Support for the client’s research programs in the field of medicinal chemistry. *The values in PLN for the orders mentioned above were taken based on the average exchange rate of the National Bank of Poland on the date the orders were received. B) Events occurred between the end of reporting period until the approval of financial statement After the end of the financial year, there were no events that significantly affected the activities of the Issuer and its Cap - ital Group. Other events after the balance sheet date are described in section 2.7 of this report. 3.9. Planned development of Selvita Capita Group and new initiatives Selvita Capital Group strategy and new initiatives The Selvita Group Development Strategy for 2022-2025 announced on March 31, 2022 is focused around three main goals: • Building a comprehensive drug discovery and development offering – supplementing the drug discovery offer and building the drug development segment; • Focus on providing high-value services for the customer – specialization in selected therapeutic areas and development of unique competences; • Growth of the Group’s business in the largest markets in the United States and the United Kingdom – growing teams and potentially establishing new research locations. ●
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 04 — Risk factors associated with Group’s activities . 43 04 — Risk factors associated with Group’s activities 4.1. Risk factors associated with Issuer’s Capital Group operational activities The operations of the Selvita Capital Group, its financial sit - uation, and business results have been and may in the future be subject to negative changes due to the occurrence of any of the risk factors described below. The occurrence of even some of the below risk factors may have a significant nega - tive impact on the Group’s operations, financial situation, and financial results, and may result in the loss of part or all of the invested capital. Other risk factors and uncertainties not described below, including those the Issuer is currently una - ware of or considers insignificant, may also have a significant negative impact on the Group’s operations, financial situation, and business results, and may result in the loss of part or all of the invested capital. The risk associated with the failure of Issuer’s Capital Group Strategy The main strategic goal of the Issuer’s Capital Group is to increase value for the shareholders of Selvita S.A. Achieving this objective largely depends on financial results, which are determined, among other factors, by acquiring new clients and increasing sales both domestically and internationally. The key source of revenue for the Company and the entire Group remains foreign sales. However, the Group’s activities are exposed to a range of exter- nal factors that could impact the achievement of strategic objec- tives. These include changes in the business environment, such as legal regulations, increasing competition, declining demand for the Issuer’s services, reduction in financing for the biotech- nology sector, difficulties in expanding into new foreign mar - kets, and limited availability of highly skilled employees. The occurrence of these factors may hinder the achievement of the Group’s development plans. Despite these challenges, the Issuer anticipates dynamic busi- ness growth and active customer acquisition, which should trans- late into an increase in the Company’s market value. The Group plans to develop through both organic growth and acquisitions, which are expected to ensure optimal growth for the Issuer and its Capital Group. However, it cannot be ruled out that the implementation of strategic assumptions may face difficulties or not be fully real- ized. Acquiring new clients may involve significant investment expenditures, and the Company and its Group may face limita- tions in offering competitive conditions to potential contractors. Acquisition plans are also dependent on many factors, including the decisions of the owners of the entities intended for acquisi- tion, which the Issuer cannot influence. As a result, the pace of subsequent acquisitions may slow down or may not materialize within the expected time frame, which could affect the slower
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 04 — Risk factors associated with Group’s activities . 44 development of operations and financial results compared to the original assumptions. The success of the Group’s development strategy also depends on its ability to recruit and train new employees, effectively manage finances, and obtain external financing. Key factors also include effective marketing actions and efficient quality control of the services provided. Risk associated with loss of key customers A key aspect of Selvita’s commercial strategy is to ensure a broad customer base so that changes in customer work vol - umes and service needs do not adversely affect our longer- term revenue growth. A significant proportion of the Groups revenues are derived from contracts associated with several key customers. The loss or significant reduction in orders from these key cus - tomers would potentially reduce the revenues, profitability adversely affect market position, sales, financial results, and development prospects for the group. The management board believes that within the group there is no dependence from any one individual customer. The poten- tial loss of a key customer may cause a temporary gap in the forecasted revenue, however to the wide range of commercial activities with existing and new potential customers replac - ing any given customer would not be a long-term challenge. Risk associated with the inability to attract new customers Selvita provides integrated and standalone discovery and development service solutions to pharmaceutical, biotech - nology, academic institutions, and chemical companies. The company offers a diverse range of value creating, cost effec - tive and innovative service solutions to these customer seg - ments. The company delivers a broad set of services across the discovery and development value chain. These include protein production, computational design of novel small mol- ecules, High throughput screening (HTS) synthesis and purifi - cation, screening through the DMT cycle (Design, Make Test) with DMPK, in-vitro biology, pharmacology and scale up. The company also delivers analytical and formulation capabilities and has a discovery platform for antibodies. One of the key growth factors for the company operations is a drive to attract new customers and increase their service interaction with the company. To achieve this, it requires the company to deliver and maintain high quality services, retain key staff, and deliver strong sales and marketing activity. Failure to attract new customers may adversely affect oper - ations, our market position, sales, financial results, and the development prospects of Selvita. The Issuer operates in a sector that is heavily dependent on the availability of financing for biotechnology and pharmaceu- tical companies. An increase in the cost of capital, more dif - ficult access to venture capital funds, reduced funding from stock market investors, and changes in grant policies could negatively affect the budgets of potential clients, and thus their ability to utilize the services offered by the Issuer. A decrease in the number of M&A transactions and IPOs in the biotechnology sector could further limit the financial liquidity of entities in this industry, which would affect their willingness to outsource research and development services to external providers, including the Issuer. Failure to acquire new clients, combined with reduced demand for the Issuer’s services due to limited financing in the biotechnology sector, could negatively impact the Issu - er’s operational performance, market position, sales levels, financial results, and long-term development prospects for the Issuer and its Capital Group. In response to this risk, the Issuer is taking diversification measures by expanding its cli - ent base to include large pharmaceutical companies and aca- demic institutions, as well as investing in the development of high value-added services that can attract clients in more challenging market conditions. Risk associated with loss of managerial staff and key employees The trends identified in previous years have also continued in the reporting period and this is expected to be relevant in the near future. The risks identified by the Group are mainly located in the fol- lowing two areas: • Availability of employees with the required qualifications in individual markets in quantities adjusted to the Group’s development pace. This risk is related to the company’s demand for very specific competencies and qualifications, often with limited supply among candidates.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 04 — Risk factors associated with Group’s activities . 45 • Recruitment and retention of employees, as well as maintaining employee engagement in connection with the wage pressure noted recently, especially on the Croatian market and the impact of wage expectations on increased operating costs, On one hand, continuing wage pressure is observed, which may create a risk of increasing labor costs above the previ - ously planned level to maintain attractive working conditions for its employees. Wage expectations also apply to candi - dates and may affect the possibility of acquiring new employ- ees. Intense wage pressure is strongly present in Croatia and results from a significant revaluation of wages in the academic sector over a short period of time. On the other hand, the more complex situation in the biotech- nology market – globally and local labor markets – means that the risk of a significant outflow of staff is limited. The situation in the biotechnology market remains challenging. This is vis - ible in the supply of candidates from various countries – the Group can attract talent not only from Poland but also from other European and non-European countries and effectively interest them in local job offers in Krakow and Poznan. The possibility of acquiring candidates is ensured by several activities in the area of employer branding, such as participa - tion in job fairs and events at universities and close coopera - tion with universities, within which the Group, together with universities, shapes education programs and offers oppor - tunities for paid internships in the company, and is actively involved in building the competences of future candidates (mentoring for students, study visits or the Chemistry Acad - emy program offering a series of workshops with Selvita scientists). In maintaining employee engagement, the Group focuses on appropriately shaping the company culture and creating a friendly workplace. In addition to remuneration, Selvita offers its employees a package of benefits supporting their well-be- ing (medical care, sports cards, co-financing meals). Professional development provides access to diverse training and the opportunity to use high-class, modern equipment, techniques, and tools at work. The above systemic and long-term actions allow for effective mitigation of identified risks. Risk associated with failure to extend the lease agreements of laboratories The operations of the Issuer’s Capital Group are conducted in facilities rented from Jagiellońskie Centrum Innowacji Sp. z o.o., based in Kraków, under valid lease agreements. The standard duration of these agreements is five years, with the lessor having the right to terminate the contract early in the event of a breach of key contractual terms by the tenant. There is a risk that these lease agreements may not be extended for subsequent years, which could result in the need for additional investment expenditures related to the reloca - tion of laboratories. This risk is currently being mitigated by the construction of the Issuer’s own Research and Develop - ment Center for Laboratory Services, which was completed in March 2023. The new infrastructure provides the Issuer with additional laboratory space, enhancing the Group’s opera - tional independence. Additionally, the Issuer’s subsidiary, Selvita d.o.o., has also secured appropriate lease arrangements. As part of the share acquisition transaction in Selvita d.o.o., the lease agreement with Pliva Hrvatska d.o.o. for the main office and laboratory spaces was extended until the end of 2027. Moreover, a new agreement was signed for additional space rental, enabling further organic growth of the company in Croatia. Another factor strengthening the Group’s operational secu - rity in terms of access to laboratory infrastructure is the trans- action with Pure Biologics. As part of this transaction, on March 15, 2024, the Issuer signed a five-year lease agreement for approximately 430 m² of laboratory space in the Business Garden complex in Wrocław with the property owner, Vastint Poland Sp. z o.o. The agreement includes an option to expand the leased area to approximately 800 m² in the future, provid- ing additional operational security for the Group. This new location not only ensures stable operating conditions for lab - oratories but also supports further research and development activities, minimizing risks related to potential lack of access to key infrastructure.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 04 — Risk factors associated with Group’s activities . 46 Risk associated with the breach of trade secrets and other confidential business information The Issuer’s Capital Group, while providing services to clients, gains access to confidential information that constitutes the trade secrets of its contractors. Additionally, the research pro- cedures conducted by the Group include internally developed know-how accumulated over the years. To ensure an appropri- ate level of protection for both client information and its own scientific and business data, the Issuer and its affiliated com - panies implement appropriate security measures. There is a risk that unauthorized disclosure of confidential information could negatively impact the Issuer’s operations. Furthermore, the Group cannot entirely eliminate potential claims related to the unauthorized use or transmission of third- party trade secrets by companies within the Issuer’s Capital Group or their employees. As a result, the Issuer continuously monitors compliance with confidentiality principles and implements additional remedial measures to minimize the risk of trade secret breaches. 4.2. Risk factors associated with the environment in which the Issuer operates Risk associated with increased competition The Issuer operates in the research and development ser - vices (CRO) sector for the pharmaceutical, biotechnology, and chemical industries, which is characterized by high com - petition. The market is populated by both large, global CRO organizations offering comprehensive services at all stages of drug development, as well as smaller, specialized companies focusing on specific research segments. The increase in the number of entities providing similar services, technological advancements, and rising customer expectations may lead to intensified competition and increased price pressure. Risk associated with decline in demand for research and development services In recent years there has been an increased demand for out - sourced services both the discovery and development mar - kets. It is predicted that internal resource of Pharma compa - nies will be reduced further, and greater research investment will be placed externally. The outsourced market is relatively mature but is both diverse in terms of potential customers and Global.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 04 — Risk factors associated with Group’s activities . 47 Despite these industry predictions, Selvita cannot exclude the possibility that this long-term trend may slow down or reverse. For example, a significant reduction in pharmaceutical com - pany Research and Development (R&D) budgets caused by a financial crisis or re-prioritization of their pipelines or even a re-focus on new modalities would impact the market. Risk related to acquisitions A key element in strengthening the position of the Group will be the acquisition of other entities, which will enable signifi - cant growth of the Issuer’s business. The inability to acquire suitable acquisition targets or the inability to acquire them under terms deemed attractive by the Management Board may negatively affect the dynamics of future business growth, and thus the financial and economic situation of the Group and its market position. In the event of a lack of acquisitions or the acquisition of com- panies that are not effectively integrated into the Group, the pace of revenue growth in the Group may weaken. Possible reasons for this include: 1. Lower-than-planned profitability of the acquired entities, especially in the short term following the transaction, 2. Significant differences between the actual results achieved by the acquired entities and the results assumed when making the investment decision, 3. Staff changes and changes in relationships with business partners caused by the change of control over the acquired entity, 4. Delays in the process of integrating the acquired company into the Group’s structure, arising from factors such as market specifics or differences in organizational culture, 5. Lower-than-expected synergy benefits, 6. A smaller-than-anticipated expansion of the Group’s service portfolio with complementary services, which may prevent achieving the expected improvement in the Group’s competitive position over the long term, 7. Unforeseen changes in the business or legal environment of the acquired entity, identified during the negotiation of the transaction. The risks related to acquisitions are mitigated through thor - ough due diligence processes at the investment evaluation stage, involving dedicated teams from the Issuer and exter - nal advisors, as well as through the strong back-office of the Capital Group. Risk associated with changes of currency exchange rates The Group operates on the international market. Most of the sales revenues from services and costs and investments (lab - oratory equipment, reagents) of the Company and the Group are denominated in foreign currencies (mainly in EUR and USD). At the same time, a significant part of the costs (salaries, sal - ary mark-ups) are incurred in the Polish currency. There is a risk related to the negative impact of changes in foreign exchange rates on the financial results achieved by the Group. In order to reduce the risk of exchange rate fluctuations, the Issuer’s Management Board tries to maximize natural hedging by adjusting the purchase currency to the currencies in which the Group’s revenues are realized and by denominating signifi- cant costs. These activities are carried out, inter alia, by estab- lishing the billing currency in the lease agreements for labo - ratory space at Jagiellonian Innovation Center (Jagiellońskie Centrum Innowacji Sp. z o.o.) in EUR and conclusion of leas - ing contracts for laboratory equipment denominated in EUR. With regard to Selvita d.o.o, most of sales revenues and costs are also related to EUR and USD exchange rates. Therefore, fluctuations in the exchange rates of these currencies may have an impact on the future results of operations and cash flow (same as in case of the Issuer). In order to omit or miti - gate this risk Selvita d.o.o. uses natural hedging by adjusting the currency of purchases to the currencies of sales revenues. It is worth pointing out that as of January 2023, Croatia has adopted euro as its currency. Risk associated with interest rates Changes in market interest rates may adversely affect the financial result of the Selvita Group. The Group is exposed to this risk in the area of changes in the value of interest charged on loans and leases granted by external financial institutions. In view of the above, the Group aim to operate on the basis of variable interest rates, calculated in correlation with mar - ket (interbank) rates.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 04 — Risk factors associated with Group’s activities . 48 Risk associated with macroeconomic situation The financial situation of the Issuer and its Group depends on the macroeconomic situation of Poland as well as Croatia and other countries to which the Group’s services and prod - ucts are directed. The following factors have a direct and indi- rect impact on the financial results obtained by the Issuer: the dynamics of GDP growth, inflation (exerting pressure on the Issuer’s margins in particular), the state’s monetary and tax policy, the level of unemployment, changes in average sala - ries in the economy, and the demographic characteristics of the population. Both the above-mentioned factors, as well as the direction and level of their changes, have an impact on the achievement of the goals set by the Issuer. Risk associated with unfavorable changes in the domestic and international legal environment The Issuer and its Group conduct business in Poland and Cro- atia, primarily serving international clients. As a result, the Issuer is exposed to the risk of regulatory changes in the legal environments of Poland, Croatia, the European Union, and globally, as well as in the jurisdictions of the countries where its clients operate. Legal regulations in Poland are subject to frequent modifications, and the application of individual regu- lations by Polish courts and public administration bodies is not uniform. Ambiguities in certain regulations present an inter - pretative challenge, carrying the risk of administrative or finan- cial penalties if an incorrect legal interpretation is adopted. Recent and frequent changes in legal regulations affecting the Company’s operations include tax law, labor law, social secu- rity law, and commercial law. Both the nature and direction of these changes affect the Issuer’s Group’s ability to achieve its objectives. The Issuer operates in a sector governed by detailed legal reg- ulations primarily related to healthcare protection. There is a risk that the EU may introduce additional technical standards, which could lead to significant financial expenditures. The majority of the Issuer’s revenues are derived from services provided to the international pharmaceutical and biotechnol- ogy industries. As a result, the development of the Issuer and its Group is directly dependent on the growth of the biotech- nology industry. On a global scale, the pharmaceutical indus- try faces a changing regulatory environment and increased oversight, requiring greater certainty regarding the safety and effectiveness of medicinal products. Regulatory bodies are imposing stricter requirements on pharmaceutical companies to demonstrate the efficacy and safety of products, leading to a reduction in the number of approved products. Further - more, products already on the market are subject to periodic reassessment based on their risk-to-benefit ratio. Potential factors that may affect the Issuer and its Capital Group’s operations include changes in the tax system, tax reg- ulations, and social security regulations. Other risks The risks related to price, credit, capital, financial, market, cur- rency, interest rates, and liquidity are described in note 24 to the consolidated financial statements. ●
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 49 05 — Statement regarding implementation of corporate governence principles 5.1. Principles of corporate governance applying to the Issuer The Issuer’s Management Board declares that the Company com- plied with the corporate governance principles set out in the document “Good Practices of Listed Companies 2021,” adopted by the GPW Supervisory Board Resolution No. 13/1834/2021 on March 29, 2021 (hereinafter: “Good Practices”). The full text of the Good Practices is available on the website www.gpw.pl/ dobre-praktyki2021. Deviations from the application of the Good Practices. The Company consistently ensures adherence to corporate gov- ernance principles, aligning its actions with the applicable mar- ket standards. Recognizing the importance of the Good Prac- tices for transparency and effective management, it regularly assesses their implementation. In situations where the implemen- tation of specific corporate governance principles is not possible or justified, the Company provides clear explanations, following the principle of full transparency towards its stakeholders. In 2024, the Company did not comply with 11 out of 62 corporate governance principles, described below: Principle 1.3.1 Company integrate ESG factors in its business strategy, including in particular: environmental factors, including measures and risks relating to climate change and sustaina - ble development; The principle is not applied. Komentarz spółki: The current business strategy of the Capital Group, adopted on March 31, 2022, for the years 2022–2025 (the “Strategy”), focuses on financial and business indicators, which stems from its original wording. However, this does not imply a lack of the Capital Group’s commitment to ESG issues. The Company began reporting non-financial data in 2023 and has since consistently implemented ESG-relevant aspects into the Group’s operations. It integrates sustainability princi- ples into management processesThe Company does not rule out incorporating climate-related metrics and risks, as well as other ESG considerations, into its strategy for the coming years, thereby integrating sustainability factors into the over- all business strategy of the Capital Group.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 50 Principle 1.4. To ensure quality communications with stakeholders, as a part of the business strategy, companies publish on their website information concerning the framework of the strat - egy, measurable goals, including in particular long-term goals, planned activities and their status, defined by measures, both financial and non-financial. The principle is not applied. Explanation of the Issuer: The Company does not publish long-term goals and their per- formance metrics on its website; however, it ensures trans - parent communication with stakeholders and accountability for the established objectives. The most important informa - tion regarding the Capital Group’s plans and their implementa- tion is made available on the Company’s website, as well as in current and periodic reports. Additionally, the Company regu- larly organizes investor chats, during which stakeholders can directly ask Management Board members questions, including those related to planned activities and progress in achieving intended goals. Principle 1.4.1. ESG information concerning the strategy should among oth - ers explain how the decision-making processes of the company and its group members integrate climate change, including the resulting risks; The principle is not applied. Explanation of the Issuer: The Issuer’s Capital Group started reporting non-financial data in 2023 and has since been working on implementing a strat - egy integrating ESG factors into its general business strategy. A comprehensive explanation is provided in the commentary to Principle 1.3.1. Principle 1.4.2. ESG information concerning the strategy should among others explain present the equal pay index for employees, defined as the percentage difference between the average monthly pay (including bonuses, awards and other bene - fits) of women and men in the last year, and present informa- tion about actions taken to eliminate any pay gaps, includ - ing a presentation of related risks and the time horizon of the equality target. The principle is not applied. Explanation of the Issuer: The current business strategy of the Capital Group, adopted on March 31, 2022, for the years 2022–2025, does not include ESG indicators as it focuses on financial and business metrics, reflecting its original draft. The value of the remuneration indi- cator, along with information on actions taken to eliminate potential inequalities in this area and the presentation of asso- ciated risks, have been included in the Company’s non-finan - cial report for the year 2024. Employee compensation is determined based on objective criteria such as competencies, experience, education, and the scope of responsibilities. Salary differentiation within the Company arises from the nature and type of positions held, as well as the overall dynamics of salary variation across different specializations. For this reason, presenting generalized indica- tors could fail to accurately reflect the actual salary structure within the organization. The Company consistently applies the principle of equal pay for women and men in comparable positions, ensuring that gender does not affect employment conditions. This is evidenced by the implementation of the Company’s “Code of Conduct” policy, which includes, among other things, principles of employment based on non-discrim- inatory criteria. Principle 2.1. Companies should have in place a diversity policy applica - ble to the management board and the supervisory board, approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target dates and the monitoring systems for such goals. With regard to gender diversity of corporate bodies, the participation of the minority group in each body should be at least 30%. The principle is not applied. Explanation of the Issuer: The Company is working towards achieving goals related to the introduction of diversity standards; one-third of its Man - agement Board members are women, significantly exceeding the average for large listed companies in Europe. The Com - pany has not introduced a formal diversity policy covering the scope outlined in Principle 2.1, which would then be approved by the general meeting of shareholders. However, the Com - pany’s implemented “Code of Conduct” policy covers the same scope of principles, highlighting respect for diversity
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 51 and striving for gender equality as key values in all aspects of the Company’s operations. The Company aims to select mem- bers of corporate bodies based on experience and knowledge, with gender diversity considered as a secondary factor. The Company promotes equal opportunities for all employees and gender equality at all levels of the organization, as confirmed by the content of the “Code of Conduct” policy in place at the Company. Principle 2.2. Decisions to elect members of the management board or the supervisory board of companies should ensure that the composition of those bodies is diverse by appointing persons ensuring diversity, among others in order to achieve the tar - get minimum participation of the minority group of at least 30% according to the goals of the established diversity pol - icy referred to in principle 2.1. The principle is not applied. Explanation of the Issuer: Personnel decisions regarding the appointment of members to the Management Board or the Supervisory Board of the Company are made by the Supervisory Board and the Gen - eral Meeting of Shareholders, respectively. The main criteria for appointing members of the Management Board are the qualifi- cations for holding specific functions and professional experi- ence that enables effective management of the company and the achievement of business goals. Regarding the Supervisory Board, the Company is obliged to ensure that its composition complies with the provisions, primarily the Act on Statutory Auditors, Audit Firms, and Public Supervision. The Company ensures equal opportunities for all candidates for the positions of Management Board and Supervisory Board members, and factors such as gender or age are not determinants justifying appointment to the Company’s bodies. Principle 2.11. In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an annual report to the annual general meeting once per year. Such report includes at least the following: 2.11.5. assessment of the rationality of expenses referred to in rule 1.5; The principle is not applied. Explanation of the Issuer: The Supervisory Board prepares and submits an annual report to the annual general meeting for approval, which includes, among other things, an assessment of the Management Board’s report on the company’s activities and an evaluation of the financial statement for the previous financial year. The Supervisory Board is annually informed about the expendi - tures referred to in Principle 1.5, but it does not formally assess the rationality of such expenditures. 2.11.6. information regarding the degree of implementa - tion of the diversity policy applicable to the management board and the supervisory board, including the achievement of goals referred to in principle 2.1 The principle is not applied. Explanation of the Issuer: The Company has not implemented a formal diversity policy applicable to the Management and Supervisory Board. A com- prehensive explanation is provided in the commentary to Prin- ciple 2.2. Principle 3.3. Companies participating in the WIG20, mWIG40 or sWIG80 index appoint an internal auditor to head the internal audit function in compliance with generally accepted international standards for the professional practice of internal auditing. In other companies which do not appoint an internal auditor who meets such requirements, the audit committee (or the supervisory board if it performs the functions of the audit committee) assesses on an annual basis whether such person should be appointed. The principle is not applied. Explanation of the Issuer: The Company has not appointed an internal auditor to head the internal audit function; however functions related to the internal audit are performed by the Company’s employees within the finance and controlling department in a dispersed format. Employees involved in finance and controlling pos - sess knowledge in risk analysis, compliance monitoring, and reporting, which enables the effective conduct of operational and financial audits. Additionally, internal control procedures, the risk management system, and external audits ensure an appropriate level of oversight over the company’s activities. Principle 4.1. Companies should enable their shareholders to participate in a general meeting by means of electronic communication (e-meeting) if justified by the expectations of shareholders notified to the company, provided that the company is in a
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 52 position to provide the technical infrastructure necessary for such general meeting to proceed. The principle is not applied. Explanation of the Issuer: The Company conducts live streaming of the general meeting proceedings, however, currently, the Company does not ena- ble shareholders to participate in a general meeting by means of electronic communication (e-meeting), due to the lack of interest in such a solution among the Company’s shareholders, as well as in order to reduce the risks associated with the legit- imacy of votes cast in this way. If the Company’s sharehold - ers express their wish to participate in the general meeting by means of electronic communication (e-meeting) in the future, the Company will consider implementing such a solution and providing the necessary technical infrastructure. Principle 4.7. The supervisory board issues opinions on draft resolutions put by the management board on the agenda of the gen - eral meeting. The principle is not applied. Explanation of the Issuer: The Supervisory Board issues opinions on draft resolu- tions put the Management Board on the agenda of the Gen- eral Meeting, at least with respect to resolutions of stra- tegic importance for the Company. This opinion includes an assessment of the alignment of the resolutions with the Company’s long-term strategy, their impact on the finan- cial situation, compliance with applicable regulations, and potential risks. The Supervisory Board may also recommend changes or raise comments to optimize strategic decisions and protect shareholders’ interests. The Company fully adheres to the other corporate governance principles outlined in the Best Practices. 5.2. Internal control and risk management systems Management Board of Selvita S.A. is responsible for keep - ing the company’s accounting in accordance with the Polish Accounting Act of September 29, 1994 and in accordance with the requirements set out in the Polish Regulation of the Minis- ter of Finance of October 18, 2005 on the scope of information disclosed in financial statements and consolidated financial statements required in the prospectus for issuers based in the territory of the Republic of Poland, for which Polish account - ing principles are applicable and in the Polish Regulation of the Minister of Finance of March 29, 2018 on current and peri- odic information published by issuers of securities and condi- tions for recognizing as equivalent information required by law of the country that is not a member state, as well as in accord- ance with the International Accounting Standards and Interna- tional Financial Reporting Standards. Internal control and risk management in relation to the pro - cess of preparation of financial statements in the Selvita Cap - ital Group are carried out in accordance with the Group’s internal procedures for the preparation and approval of finan- cial statements. The company keeps documentation describ - ing the accounting principles adopted by it, which includes, inter alia, information on the method of valuation of assets and liabilities and the determination of the financial result, the method of keeping accounting books, the data protec - tion system and their files. Accounting of all economic events is made using the computerized accounting system, which is protected against unauthorized access and has functional access restrictions. Both individual and consolidated statements are prepared by employees of the accounting department with the sup - port of the controlling department, under the control of the Chief Accountant and the Chief Financial Officer. The finan - cial statements are audited by an independent statutory audi- tor selected by the Company’s Supervisory Board, while the semi-annual statements are reviewed by an independent stat- utory auditor.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 53 5.3. Management and Supervisory Boards Management Board 1. Bogusław Sieczkowski – President of the Management Board 2. Miłosz Gruca – Vice President of the Management Board 3. Mirosława Zydroń – Member of the Management Board 4. Adrijana Vinter – Member of the Management Board 5. Dariusz Kurdas – Member of the Management Board 6. Dawid Radziszewski – Member of the Management Board In 2024 there were no changes in Issuer’s Management Board. Supervisory Board 1. Piotr Romanowski – Chairman of the Supervisory Board 2. Tadeusz Wesołowski – Vice Chairman of the Supervisory Board 3. Paweł Przewięźlikowski – Supervisory Board Member 4. Rafał Chwast – Supervisory Board Member 5. Wojciech Chabasiewicz – Supervisory Board Member 6. Jacek Osowski – Supervisory Board Member In 2024 there were no changes in Issuer’s Supervisory Board. Audit Committee 1. Rafał Chwast – Chairman of the Audit Committee 2. Piotr Romanowski – Member of the Audit Committee 3. Tadeusz Wesołowski – Member of the Audit Committee 4. Wojciech Chabasiewicz – Member of the Audit Committee In 2024 there were no changes in Audit Committee. Remuneration Committee 1. Paweł Przewięźlikowski – Chairman of the Remuneration Committee 2. Jacek Osowski – Member of the Remuneration Committee 3. Piotr Romanowski – Member of the Remuneration Committee In 2024 there were no changes in Renumeration Committee.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 54 Members of the Audit Committee in the indicated composi - tion met the independence criteria and other requirements specified in Art. 129 sec. 1, 3, 5 and 6 of the Act of 11 May 2017 on statutory auditors, audit firms and public supervision. Moreover, the Management Board of the Company indicates that in the scope of the Audit Committee operating within the Company: 1. Persons who meet the statutory criteria of independence are: Mr. Rafał Chwast, Mr. Piotr Romanowski, Mr. Wojciech Chabasiewicz. 2. A person with knowledge and skills in accounting or auditing of financial statements is Mr. Rafał Chwast. 3. All Audit Committee’s Members are the persons with knowledge and skills in the industry in which the Issuer operates. Main provisions of Policy for selecting an audit company which will carry out the statutory audit of financial statements of Selvita S.A. and Selvita Capital Group 1. The audit company which will carry out the statutory audit of Selvita’s (“Company”) and Selvita Capital Group’s financial statements is selected by the Supervisory Board of the Company. 2. When selecting the entity authorized to audit, the Supervisory Board of the Company will get acquainted with the recommendations submitted by the Company’s Audit Committee. 3. The Supervisory Board of the Company is in no way bound by the recommendations of the Company’s Audit Committee indicated in par. 2 above. In particular, it may select an entity other than that proposed by the Audit Committee in its recommendations. Any contractual clauses in the agreements concluded by the Company that is limiting the possibility of selecting an audit company for the purpose of carrying out the statutory audit of financial statements by the Supervisory Board for example to the specific lists of audit companies or specific categories of such companies shall be deemed illegal and invalid. 4. When selecting an audit company which will conduct the audit of the Company, the following principles should be observed (in particular): a. the impartiality and independence of the audit company; b. the quality of the audit work performed; c. knowledge of the industry in which Selvita and Selvita Capital Group operate; d. the previous experience of the audit company in auditing reports of public interest entities; e. professional qualifications and experience of persons directly providing services in the scope of the conducted research; f. the ability to provide the required scope of services; g. the territorial scope of the audit company and the international nature of the network in which it operates (operating in most countries in which the Company and Selvita Capita Group operate); h. the proposed price of the service provided 5. The Audit Committee of the Company may request information, explanations and documents necessary to perform its tasks related to the selection of the audit company. 6. The Company’s Audit Committee may submit recommendations aimed at ensuring the reliability of the audit company selection process. The main goals of Issuer’s policy on the permitted non-audit services provided by the audit company which conducts the statutory audit of Selvita S.A.’s and Selvita Capital Group’s financial statements or by the entities associated with this company and by a member of the audit company’s network 1. Neither the statutory auditor nor an audit company which carries out the statutory audit of Selvita S.A. (,,Company”) and Selvita Capital Group or an entity affiliated with this audit company, nor any of the members of the network to which the statutory auditor or the audit company belongs, shall not provide, directly or indirectly, any prohibited non-audit services or financial audit activities to the Company or its affiliated entities (if any). 2. A detailed catalogue of prohibited services is specified in Article 5 of the Regulation of European Parliament and of the Council (EU) No 537/2014 of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/WE.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 55 3. The prohibited services referred to in point 2 above are not the services indicated in art. 136 sec. 2 of the Act on statutory auditors and their self- government, entities authorized to audit financial statements and on public supervision („Permitted non-audit services”). 4. Providing of Permitted non-audit services is possible only to the extent unrelated to the tax policy of the Company, after the Audit Committee will assesses the threats and safeguards to auditors’ independence. 5. Providing of services other than audit will be carried out in accordance with the independence requirements specified for such services in the rules of professional ethics and standards for performing such services. The auditing company auditing the Issuer’s and Issuer’s Capi - tal Group’s financial statements, that is Pricewaterhousecoop- ers Polska sp. z o.o. Audyt sp.k., did not provide the Issuer with permitted non-audit services in the period covered by this report and in the period after the balance sheet date (state - ment made as of the date of this Report) except those men - tioned in point 7. Shares held by members of management and supervisory bodies Shareholder Series A* Other Series No. of shares % of share capital No. of votes % votes at GM Management Board Bogusław Sieczkowski 550,000 392.417 942.417 5,13% 1.492.417 6,83% Miłosz Gruca – 60.760 60.760 0,33% 60.760 0,28% Mirosława Zydroń – 42.909 42.909 0,23% 42.909 0,20% Adrijana Vinter – 12.000 12.000 0,07% 12.000 0,05% Dawid Radziszewski – 4.472 4.472 0,02% 4.472 0,02% Dariusz Kurdas – 4.286 4.286 0,02% 4.286 0,02% Supervisory Board Paweł Przewięźlikowski 2 932.000 11 150 2 943 150 1 6 , 0 3 % 5.875.150 26,90% Tadeusz Wesołowski (through Augebit FIZ) – 847.738 847.738 4 , 6 2 % 847.738 3,88% Tadeusz Wesołowski (directly) – 84.975 8 4 . 9 7 5 0 , 4 6 % 8 4 . 9 7 5 0,39% Rafał Chwast – 121.115 121.115 0,66% 121.115 0,55% Piotr Romanowski – 60 000 60 000 0,33% 60 000 0,27% * Series A Shares are privileged – one share gives the right to two votes at the General Meeting of Selvita S.A. TABLE 16. Shares held by members of the Management and Supervisory Board of Selvita S.A. as of 31.12.2024
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 56 Shareholder Series A* Other Series No. of shares % of share capital No. of votes % votes at GM Management Board Bogusław Sieczkowski 550.000 394 617 944.617 5,14% 1. 494. 617 6,84% Miłosz Gruca – 60.760 60.760 0,33% 60.760 0,28% Mirosława Zydroń – 42.909 42.909 0,23% 42.909 0,20% Adrijana Vinter – 12.000 12.000 0,07% 12.000 0,05% Dawid Radziszewski – 6.652 6.652 0,04% 6.652 0,03% Dariusz Kurdas – 4.286 4.286 0,02% 4.286 0,02% Supervisory Board Paweł Przewięźlikowski 2 932.000 11 150 2 943 150 1 6 , 0 3 % 5.875.150 26,90% Tadeusz Wesołowski (through Augebit FIZ) – 847.738 847.738 4 , 6 2 % 847.738 3,88% Tadeusz Wesołowski (directly) – 84.975 8 4 . 9 7 5 0 , 4 6 % 8 4 . 9 7 5 0,39% Rafał Chwast – 121.115 121.115 0,66% 121.115 0,55% Piotr Romanowski – 60 000 60 000 0,33% 60 000 0,27% * Series A Shares are privileged – one share gives the right to two votes at the General Meeting of Selvita S.A. TABLE 17. Shares held by members of the Management and Supervisory Board of Selvita S.A. as of the day of report’s publication Shares % (Shares) Votes % (Votes) Shareholder Paweł Przewięźlikowski 2 943 150 16,03% 5 875 150 26,90% Nationale Nederlanden OFE 1.901.959 1 0 , 3 6 % 1.901.959 8,71% TFI Allianz Polska 2.093.826 1 1 , 4 1 % 2.093.826 9,59% Bogusław Sieczkowski 942.417 5 , 1 3 % 1.492.417 6,83% Tadeusz Wesołowski (with Augebit FIZ) 9 3 2 . 7 1 3 5 , 0 8 % 9 3 2 . 7 1 3 4,27% TABLE 18. Shares held by significant shareholders of the Company as of 31.12.2024
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 57 Shares % (Shares) Votes % (Votes) Shareholder Paweł Przewięźlikowski 2 943 150 16,03% 5 875 150 26,90% Nationale Nederlanden OFE 1.901.959 1 0 , 3 6 % 1.901.959 8,71% TFI Allianz Polska 2.093.826 1 1 , 4 1 % 2.093.826 9,59% Bogusław Sieczkowski 944 .617 5 , 1 4 % 1. 494. 617 6,84% Tadeusz Wesołowski (with Augebit FIZ) 9 3 2 . 7 1 3 5 , 0 8 % 9 3 2 . 7 1 3 4,27% TABLE 19. Shares held by significant shareholders of the Company as of the day of report’s publication CHART 1. Shareholders structure as of the day of report’s publication Share in capital (%) 50,38 16,03 5,14 11,41 10,36 5,081,88 Share in votes (%) 42,35 26,90 6,84 9,59 8,71 4,271,58 Shareholders structure as of the day of report’s publication Paweł Przewięźlikowski TFI Allianz Polska Bogusław Sieczkowski Nationale Nederlanden OFE Remaining Management Board and Supervisory Board Members Remaining Shareholders Tadeusz Wesołowski (with Augebit FIZ)
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 58 Restrictions on the exercise of voting rights Not applicable. Restrictions on the transfer of ownership of the issuer’s securities Not applicable. Description of the rules concerning the appointment and dismissal of managing persons and their rights, in particular the right to decide on the issue or buyback of shares Pursuant to § 24 sec. 1 of Company’s Articles of Association and § 2 sec.1. of Bylaws of the Management Board, Members of the Management Board are appointed and dismissed by Supervisory Board. Pursuant to § 27 sec. 1 and 2 of Company’s Articles of Associ- ation the Management Board manages the Company’s busi - ness and represents the Company. The scope of activities of the Management Board comprises in particular all of the Com- pany’s matters that are not clearly reserved for the competen- cies of the General Meeting or the Supervisory Board. Accord- ing to §3 of Bylaws of the Management Board, Management Board’s responsibilities include in particular: 1. The Management Board manages the Company’s activities, handles the Company’s matters, manages the Company’s property and represents the Company. 2. The Management Board looks after the transparency and effectiveness of the management system in the Company and handles its matters in accordance with the law and good practices. 3. The Management Board’s responsibilities include all Company matters which are not reserved for the competence of the General Shareholders’ Meeting or Supervisory Board, including, in particular: a. defining business goals and financial assumptions for the Company’s activities; b. defining the Company’s development strategy; c. handling the Company’s matters; d. concluding contracts; e. shaping the Company’s employment policy; f. compliance with information obligations of a public company; g. convening General Shareholders’ Meetings within deadlines stipulated by the law or resulting from the Company’s needs; h. preparing financial statements and written reports on the Company’s operations (Directors’ Reports) and providing them to the General Shareholders’ Meeting and Supervisory Board; i. implementing and complying with corporate governance rules; j. reporting changes relating to the Company to the Register of Entrepreneurs of the National Court Register; k. ensuring the correct maintenance of the Company’s documentation, including in particular the share register, book of resolutions of the Management Board, book of minutes of the General Shareholders’ Meetings. Description of the rules for changing the Issuer’s Articles of Association Pursuant to § 19 sec. 1 letter h of Company’s Articles of Asso - ciation, amendment of Company’s Articles of Association is an exclusive competency of General Meeting.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 59 The manner of operation of the general meeting and its basic competencies Competencies of General Meeting are described in Company’s Articles of Association: „General Meeting of the Shareholders § 14 1. The General Meeting of Shareholders will be convened as an ordinary or extraordinary meeting. 2. The Ordinary General Shareholders Meeting will be convened by the Company’s Management Board, at least once a year, but no later than six months after the end of each financial year. 3. The Extraordinary General Meeting of Shareholders will be convened by the Company’s Management Board on its own initiative or at the written request of the Supervisory Board or the shareholders representing at least one-twentieth of the share capital, no later than within two weeks of the date of submitting the respective application to the Management Board in writing or in electronic form. 4. The Supervisory Board may convene the Ordinary General Meeting of Shareholders if the Management Board does not convene it in the regulatory period referred to in section 2 and an Extraordinary General Meeting of Shareholders, if it considers it advisable. § 15 The General Meeting of Shareholders may be held in the Company’s registered office, in Łódź, Katowice or in Warsaw. § 16 Resolutions of the General Meeting of Shareholders are passed by an absolute majority of votes, unless the Commercial Compa- nies Code or these articles of Association stipulate otherwise. § 17 1. Voting at the General Meeting of Shareholders is by open ballot. 2. A secret ballot will be ordered in elections and in voting motions to dismiss members of the Company’s bodies or liquidators, or to call them to account for their acts, and in personal matters. § 18 1. The General Meeting will be opened by the Chairman of the Supervisory Board or the Deputy Chairman, and subsequently, the Chairman will be elected from among the persons authorized to participate in the General Meeting. In the event of the absence of those persons, the General Meeting will be opened by the Chairman of the Management Board or a person appointed by the Management Board. 2. The General Meeting of Shareholders passes its rules that determine in detail the procedures for conducting the Meeting. § 19 1. Apart from the issues described in the legal regulations and in other provisions of the Articles of Association the General Meeting’s competencies comprise: a. purchasing and disposing of real estate, permanent usufruct or share in real estate or permanent usufruct; b. reviewing and approving the Directors’ Report and the financial statements for the prior financial year; c. passing a resolution on profit appropriation or offset of los d. discharging the members of the Company’s bodies from liability; e. taking decisions relating to claims to remedy any damage caused in the course of forming the Company or its management or supervision;
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 60 f. disposing of and leasing the enterprise or its organized part and placing restricted property rights upon them; g. passing a resolution, in accordance with Article 394 of the Commercial Companies Code related to the conclusion of an agreement on the acquisition of any assets for the Company and for a subsidiary or cooperative subordinated to the Company for price exceeding one-tenth of the paid-up share capital, from the Company’s founder or shareholder, or for a company or cooperative subordinated to the Company’s founder or shareholder, if the agreement is to be concluded before two years have passed since the date of the Company’s registration; h. amending the Company’s Articles of Association; i. increasing or reducing the share capital; j. appointing and dismissing members of the Supervisory Board, in recognition of § 20 section 3; k. approving the Rules of the Supervisory Board; l. determining the principles for remunerating members of the Supervisory Board and the amount of the remuneration; m. determining the amount of remuneration of members of the Supervisory Board delegated to perform constant individual supervisory functions; n. setting up and reversing reserves; o. merging the Company with other companies, transforming or demerging the Company; p. dissolving the Company.” Description of the operation of the Issuer’s management, supervisory or administrative bodies and their committees Management Board Composition of the Management Board 1. Members of the Management Board are appointed and dismissed by the Supervisory Board. 2. The Management Board consists of 1 (one) to 7 (seven) people, including the President of the Management Board. In the case of the Management Board consisting of several people, a Vice President or Vice Presidents and Members of the Management Board can be appointed. 3. The number of members of the Management Board in each term of office will be determined by the Supervisory Board. 4. Both shareholders and non-shareholders may be appointed to the Management Board. 5. The term of office of the Management Board is five years. Members of the Management Board are appointed for a common term of office. The mandate of a Member of the Management Board appointed before the end of a given term of the Management Board expires upon the expiry of the mandates of the other members of the Management Board. 6. Any Member of the Management Board can be dismissed at any time. 7. Dismissal of a Member of the Management Board does not prejudice his/her claims under an employment agreement or another legal relationship related to his/ her function as a Member of the Management Board. Meetings of the Management Board 1. Meetings of the Management Board are convened and chaired by the President of the Management Board, and in the President’s absence – by the Vice President of the Management Board. 2. The President of the Management Board, and in the President’s absence – the Vice President of the Management Board calls meetings of the Management Board on his/her initiative, at the request of a Member of the Management Board, or at the request of the Supervisory Board. 3. Meetings of the Management Board may be attended by people invited from outside the Management Board, after prior arrangement with the person convening the meeting. The invited people may not vote at the meetings.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 61 4. The date and time of a meeting of the Management Board is notified to Members of the Management Board in writing, by fax, e-mail or in another agreed way, at least 1 (one) day before the date of the meeting Adopting of the resolutions 1. Resolutions of the Management Board are adopted at meetings of the Management Board 2. Resolutions of the Management Board are passed by an absolute majority of votes. If voting results in a tie, the President has the casting vote. 3. Resolutions may be adopted if all members of the Management Board have been correctly notified of the meeting. 4. The appointment of a proxy requires the consent of all members of the Management Board. A proxy can be dismissed by any Member of the Management Board. Minutes of the meetings 1. Minutes are drawn up of all meetings of the Management Board. 2. The minutes of the meeting are taken by one of the members of the Management Board or a person from outside the Management Board appointed for this function. 3. The minutes should specify at least: a. the date of the meeting; b. names of Members of the Management Board and other people attending the meeting; c. agenda of the meeting; d. texts of resolutions passed and information about other matters which were not subject to resolutions; e. the number of votes cast for specific resolutions and dissenting opinions 4. The minutes are signed by Members of the Management Board present at the meeting and the person who took the minutes. Obligations of the Members of the Management Board 1. All members of the Management Board are obliged and entitled to handle jointly the Company’s matters. 2. A Member of the Management Board in all his/her dealings is obliged to perform his/her duties with due care appropriate for the actions performed in business trading, in strict compliance with the law and the provisions of the Company’s Articles of Association. 3. A Member of the Management Board may not, without the permission of the Supervisory Board, engage in competitive interests or participate in a competitive undertaking as a partner of a partnership or a member of a body of a corporate entity, or participate in another competitive legal entity as a member of its body. This ban also covers participation in a competitive company, if a Member of the Management Board holds at least 10% of shares or the right to appoint at least one Member of the Management Board. 4. In the event of a conflict of interest of the Company with the interest of a Member of the Management Board, his/her spouse, relatives or next of kin to the second degree and people with whom he/she is personally related. A Member of the Management Board should refrain from participation in the consideration of such matters and may request a respective mention in the minutes. Supervisory Board 1. The Supervisory Board comprises from 3 (three) to 9 (nine) persons, and from the moment the Company becomes a public company the Supervisory Board will comprise from 5 (five) to 9 (nine) persons. 2. Members of the Supervisory Board, including its Chairman, are appointed and dismissed by the General Meeting of Shareholders. 3. Members of the Supervisory Board are appointed for a joint five-year term. 4. In respect of the voting for members of the Supervisory Board in individual groups, the Chairman of the Supervisory Board is selected from among the members of a particular group. 5. If the mandate of a member of the Supervisory Board expires before the end of the term of office, the Management Board is required to immediately convene a General Meeting of Shareholders to complete the composition of the Supervisory Board. 6. The Supervisory Board adopts the Rules that it submits to the General Meeting of Shareholders for approval.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 62 7. The Supervisory Board exercises continuous supervision over the Company’s operations. 8. In particular, the competencies of the Supervisory Board comprise: a. assessing the Company’s financial statements, the Directors’ Report and the respective conclusions as to the appropriation of profit and offset of loss, and submitting the annual reports on the results of the assessments; b. appointing an independent statutory auditor to audit the Company’s financial statements and the Group consolidated financial statements; c. appointing and dismissing members of the Company’s Management Board; d. determining the principles for remunerating members of the Management Board and the amount of the remuneration; e. representing the Company in agreements and disputes between the Company and members of the Management Board unless the General Meeting appoints a plenipotentiary for this purpose; f. approving the Rules of the Management Board; g. approving the financial plan prepared by the Management Board; h. granting consent to members of the Management Board for engaging in activities competitive against the Compa ny’s or to participate in companies or ventures competitive against the Company. 9. The Supervisory Board will hold meetings at least once a quarter. 10. The members of the Supervisory Board will exercise their rights and responsibilities in person. The Supervisory Board may delegate members to individually perform particular supervisory activities. Those members will receive separate remuneration, the amount of which will be decided by the General Meeting of Shareholders. Those members are required to meet non-competition obligations. 11. In order for the Supervisory Board’s resolutions to be valid, it is necessary to invite all the Supervisory Board members to the meeting and to ensure that at least one-half of all Supervisory Board members are present at the meeting. 12. The resolutions of the Supervisory Board are passed by an absolute majority of votes of the Supervisory Board members. In the event of an equal number of votes, the Chairman of the Supervisory Board has the casting vote. Audit Committee Audit Committee is operating within the Supervisory Board. 1. Members of the Audit Committee are appointed among the members of the Supervisory Board. 2. The Audit Committee consists of at least three members. 3. Most members of the Audit Committee, including its chairman, meet the criterion of independence, in particular within the meaning of Art. 129 section 3 of the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Oversight (Journal of Laws of 2017, item 1089), and at least one member of the Audit Committee, shall meet the knowledge and skills criteria specified in art. 129.1.5 of the abovementioned Act. 4. The tasks of the Audit Committee include in particular: a. monitoring of: — the financial reporting process; — effectiveness of internal control systems and risk management systems as well as the internal audit, also in respect of financial reporting; — carrying out financial audit activities, in particular audits carried out by an audit company, taking into account all the conclusions and findings of the Audit Supervision Commission which result from an inspection carried out in the audit company; b. controlling and monitoring the independent status of the auditor and the audit company, in particular when other, non-audit services are provided to the public interest company by the audit firm; c. informing the supervisory board or another supervisory or controlling body of the public interest entity of the results of the audit and explaining how the audit contributed to the reliability of the financial reporting in the public interest entity, and the role of the audit Committee in the auditing process; d. reviewing the independence of the auditor and giving consent to permitted non-audit services provided by him to the public interest entity; e. drawing up a policy for selecting an audit company to be charged with the audit of the company;
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 63 f. drawing up a policy for providing permitted non- audit services by the audit company which conducts the audit, its related entities, and by a member of the audit company’s network; g. determining the procedure for the public interest entity selecting an audit company; h. presenting the supervisory board or another supervisory or controlling body, or the body referred to in Art. 66 (4) of the Accounting Act of 29 September 1994, the recommendations referred to in Art. 16 (2) of Regulation 537/2014, in accordance with the policies referred to in points and 6; i. submitting recommendations aimed at ensuring the reliability of the financial reporting process in the public interest entity. 6. The principles of the Supervisory Board’s operation, i.e. in particular holding meetings and adopting resolutions by the Supervisory Board shall apply accordingly to the functioning of the Audit Committee, unless the Audit Committee decides otherwise. 5. The principles of the Supervisory Board’s operation, i.e. in particular holding meetings and adopting resolutions by the Supervisory Board shall apply accordingly to the functioning of the Audit Committee, unless the Audit Committee decides otherwise. Remuneration Committee Remuneration Committee is operating within the Supervi - sory Board 1. The Supervisory Board appoints and dismissed members of the Remuneration Committee, including its Chairman. 2. Members of the Remuneration Committee, including its Chairman, are appointed among the Supervisory Board Members. 3. The Remuneration Committee consists of at least three Members. 4. In particular, the competencies of the Supervisory Board comprise: a. Regarding the remuneration of members of the Company’s Management Board: — assessing the basic salary, bonuses and share- based compensation received by members of the Company’s Management Board in relation to the scope of duties of members of the Company’s Management Board and the manner of their performance, as well as market conditions, — presenting proposals to the Supervisory Board regarding appropriate forms of contracts with members of the Company’s Management Board and the amount of their remuneration, b. Regarding directors and senior employees’ remuneration: — making a general assessment of the correctness of the Company’s policy regarding remuneration of the directors and senior employees, — issuing general recommendations to the Company’s Management Board regarding the level and of remuneration for directors and senior employees, — monitoring the level and structure of remuneration for directors and senior employees based on rele c. Regarding share-based compensation that can be granted to members of the Management Board and employees of the Company: — discussing the general principles for implementing equity incentive programs based on shares, share options, subscription warrants, — presenting proposals to the Supervisory Board in this respect, — presenting proposals to the Supervisory Board regarding equity incentive programs. 5. The principles of the Supervisory Board’s operation, in particular holding of meetings and the adoption of resolutions by the Supervisory Board shall apply accordingly to the Remuneration Committee, unless the Remuneration Committee decides otherwise. Agreements signed between the Issuer and managing persons, providing for compensation in the event of their resignation or dismissal The Issuer has not concluded any agreements with managing persons providing for compensation in the event of their resig- nation or dismissal from their position without valid reason.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 05 — Statement regarding implementation of corporate governence principles . 64 Remuneration of the members of management and supervisory bodies Remuneration for performing functions in the Management Board Remuneration for employment contracts concluded with the Issuer Renumeration for contracts concluded with subsidiaries Total remuneration in 2023 Members of the Management Board Bogusław Sieczkowski 515 200,00 120 202,92 286 000,00 921 402,92 Miłosz Gruca 682 700,00 – 404 023,35 1 086 723,35 Mirosława Zydroń 330 700,00 – 280 547,91 611 247,91 Dariusz Kurdas 237 800,00 120 795,75 159 500,00 518 095,75 Dawid Radziszewski 348 700,00 – 298 950,80 647 650,80 Adrijana Vinter* 1 258 634,46 1 258 634,46 *Remuneration converted from EURO according to the average exchange rate of the National Bank of Poland as of 31 December 2024 1 EUR = 4.273 PLN. TABLE 20. Remuneration of the members of the Management Board of Selvita S.A. for period 1.01.2024-31.12.2024 [in PLN] Remuneration for performing functions in the Supervisory Board Total remuneration in 2023 Members of the Supervisory Board Paweł Przewięźlikowski 55 825,00 55 825,00 Piotr Romanowski 72 572,50 72 572,50 Tadeusz Wesołowski 63 250,00 63 250,00 Rafał Chwast 57 140,89 57 140,89 Wojciech Chabasiewicz 55 825,00 55 825,00 Jacek Osowski 55 000,00 55 000,00 TABLE 21. Renumeration of the members of the Supervisory Board of Selvita S.A. for period 1.01.2024-31.12.2024 [in PLN]
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 05 — Statement regarding implementation of corporate governence principles . 65 System of control of employee share scheme The incentive scheme based on the Company’s shares donated by Mr. Pawel Przewieźlikowski, operating from 2021 to 2024, was approved by the General Meeting on May 17, 2021. Implementation of the program is directly supervised by the Supervisory Board and the Company’s management board. The diversity policy implemented by the Issuer with regard to its administrative, management and supervisory bodies The aim of the diversity policy implemented by the Com - pany is to build awareness and organizational culture open to diversity, which leads to increased work efficiency and pre - vents discrimination. When selecting the Company’s governing bodies and key managers, the Company strives to ensure comprehensive - ness and diversity, particularly in terms of gender, educa - tional background, age, and professional experience. The foundation of diversity management is the provision of equal opportunities for professional development and promotion. Currently, the Management Board of Selvita S.A. consists of two women and four men, while the Supervisory Board is composed exclusively of men. The primary criteria for selec - tion are qualifications, professional competence, and expe - rience; however, the Company actively supports diversity at all levels of the organization. These principles are part of the Company’s implemented Code of Conduct Policy, which commits to equal treatment, preventing discrimination and mobbing, and fostering an inclusive work environment. ● Affiliated entity Manner of affiliation Transaction details Transaction value [PLN] Chabasiewicz Kowalska i Wspólnicy Spółka Komandytowo-Akcyjna Wojciech Chabasiewicz (key managerial personnel – member of the Supervisory Board) Purchase of advisory services 20.385 TABLE 22. Transactions concluded by the Issuer with affiliated entities in 2024
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 06 — Statement of the Management Board regarding applicable accounting principles . 66 06 — Statement of the Management Board regarding applicable accounting principles The Management Board of Selvita S.A. confirms that, to the best of its knowledge, the annual financial statements of Selvita Capita Group have been prepared in accordance with the applicable accounting principles and reflect in a true, reli- able and clear manner the financial situation of Selvita Capital Group and its financial results. Report of the Management Board on the activities of Selvita S.A. and Selvita Capital Group contains a true picture of the development and achievements as well as Group’s situation, including a description of the basic threats and risks. ●
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 07 — Statement of the Management Board together with information regarding choice of statutory auditor . 67 07 — Statement of the Management Board together with information regarding choice of statutory auditor Management Board of Selvita S.A. with its registered office in Krakow, declares that the entity authorized to audit finan - cial statements auditing the annual financial statements for the financial year 2023 was selected in accordance to the provisions of law and that the entity and the statutory auditors auditing these statements met the conditions for expressing an impar- tial and independent opinion on the audit, pursuant to relevant provisions of national law and professional standards. Management Board of Selvita S.A. hereby informs that the selection of the audit company conducting the audit of the annual financial statements, i.e. Pricewaterhousecoopers Pol- ska sp. z o.o. Audyt sp.k. (“PWC”), was made in accordance with the applicable law, including those relating to the selection and selection procedure of an auditing company, and also: a. the audit company and members of the team conducting the audit met the conditions for the preparation of an impartial and independent report from the audit of the annual financial statements in accordance with the applicable regulations, professional standards and professional ethics rules, b. the Issuer complied with all of the applicable regulations regarding the rotation of the audit company and the key statutory auditor as well as the mandatory grace periods, c. the Issuer adopted a policy for the selection of an audit firm and a policy for additional nonaudit or review services, including services conditionally exempt from prohibition of providing services by audit company, provided to the issuer by the audit company, entity affiliated to the audit company or a member of its network. ● Items As at 31/12/2024 As at 31/12/2023 Mandatory audit of the financial statements 414 300 Interim financial statement reviews 179 169 Audit of the financial statement of subsidiaries 203 199 Other attestation services 30 30 Tax advisory services – – Other services 13 10 Total 839 708 TABLE 23. Remuneration of the entity authorized to audit financial statements (PWC and PWC Croatia) [in thousand PLN]
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 08 — Other information . 68 08 — Other information 8.1. Information on organizational or capital affiliations of the Issuer’s Capital Group with other entities The Capital Group of Selvita S.A. as of December 31, 2024 includes: • Selvita S.A. – parent entity; • Selvita Services sp. z o.o. – affiliate, 100% of shares held by Selvita S.A.; • Selvita Inc. – affiliate, 100% of shares held by Selvita S.A.; • Selvita Ltd. – affiliate, 100% of shares held by Selvita S.A.; • Selvita d.o.o. – affiliate, 100% of shares held by Selvita S.A. • PozLab Sp. z o.o. – affiliate, 100% of shares held by Selvita S.A. The Capital Group of Selvita S.A. as at the publication date of this Report includes: • Selvita S.A. – parent entity; • Selvita Services sp. z o.o. – affiliate, 100% of shares held by Selvita S.A.; • Selvita Inc. – affiliate, 100% of shares held by Selvita S.A.; • Selvita Ltd. – affiliate, 100% of shares held by Selvita S.A.; • Selvita d.o.o. – affiliate, 100% of shares held by Selvita S.A. • PozLab Sp. z o.o. – affiliate, 100% of shares held by Selvita S.A. 8.2. Credits and Loans Currently, the Issuer (and Selvita Services sp z o.o. together with Selvita d.o.o. as guarantors) is a party to the facility agreement with Bank Polska Kasa Opieki S.A. with its regis - tered office in Warsaw, under which the creditor granted the Issuer: a. a) a term credit in the total amount of EUR 21,840,000 to finance the acquisition of 100% shares in Selvita d.o.o., consisting of credit A in the amount of up to EUR 16,340,000 and credit B in the amount up to EUR 5,500,000, b. b) a construction credit in the maximum amount of up to PLN 65,000,000 for the construction of a new Research and Development Center for Laboratory Services in the area of drug discovery and development in Krakow at Podole Street in Krakow along with laboratory equipment. Total value of these loans is PLN 104,265 thousand as of 31.12.2024. 8.3. Structure of major capital deposits and investments Investments in financial assets include deposits of cash for the purpose of effective management of these funds. During the current financial year, the Capital Group invested cash in term deposits with a fixed interest rate. As at the balance sheet date, Capital Group had no cash in deposits. During the current financial year the Capital Group made investments in tangible and intangible fixed assets worth PLN 56,587 thousand – these were mainly purchases and transfers into the register of laboratory equipment, as well as new lab- oratory space lease agreements or those taken over as part of the acquisition of PozLab Sp. z o.o.
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 08 — Other information . 69 8.4. Court Proceedings In the fiscal year 2024, neither the Issuer nor its subsidiaries were parties to any legal proceedings, arbitration proceed - ings, or proceedings before public administration authori - ties that, in the opinion of the Issuer’s Management Board, could have a significant adverse impact on the financial situ - ation, operational activities, or cash flows of the Issuer or its subsidiaries. 8.5. Assurances and guarantees Selvita Services sp. z o.o. and Selvita d.o.o. are guarantors of the facility agreement concluded on December 21, 2020 with Bank Polska Kasa Opieki S.A. with its registered office in Warsaw. The facility agreement contains a mechanism of extending the liability for obligations under it to the Issuer’s affiliate, in case the Issuer’s and Guarantor’s share in the con- solidated EBITDA of the Selvita Capital Group fell below 75%. On June 26, 2024, Selvita Services Sp. z o.o. signed an over - draft facility agreement up to EUR 1.9 million for the period until June 26, 2025. The guarantor is Selvita S.A. As at Decem- ber 31, 2024, the debt balance amounted to EUR 990 thou - sand (PLN 4,275 thousand). 8.6. Purchase of own shares Event did not occur in 2024. 8.7. Information about owned branches (plants) Company does not own any branches. 8.8. Information on risks arising from held financial instruments The Group does not have written guidelines and recommen - dations for financial risk management that define its over - all operational strategies, risk tolerance level and overall risk management philosophy, but has developed procedures to ensure timely and detailed monitoring and control of hedg - ing transactions. The procedures in force in the Group are reviewed by the Management Board of the Company once a year. The companies included in the Group do not use hedge accounting. The risks arising from financial instruments held are described above in point 4.2 and in the consolidated financial statements in note 22. 8.9. Selvita Group Sustainability Report for 2024 The Company has prepared a report on non-financial infor - mation for its Capital Group – a document named “Report of the Management Board of Selvita S.A. on the activities of the Selvita Capital Group. Part 2. Selvita Group’s Sustainability Report for 2024” – in the form of a separate document which constitutes an integral part of this activity report. ●
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 The annual report of Selvita Capital Group for the financial year 1 January 2024 – 31 December 2024 is hereby approved. Management Board Bogusław Sieczkowski PRESIDENT OF MANAGEMENT BOARD Adrijana Vinter MEMBER OF MANAGEMENT BOARD Miłosz Gruca VICE-PRESIDENT OF MANAGEMENT BOARD Dariusz Kurdas MEMBER OF MANAGEMENT BOARD Mirosława Zydroń MEMBER OF MANAGEMENT BOARD Dawid Radziszewski MEMBER OF MANAGEMENT BOARD Krakow, March 26, 2025 Dokument podpisany przez Dariusz Kurdas Data: 2025.03.26 13:18:16 CET Dokument podpisany przez Dawid Patryk Radziszewski Data: 2025.03.26 13:29:56 CET Digitally signed by Adrijana Vinter Date: 2025.03.26 13:49:15 CET Dokument podpisany przez Mirosława Monika Zydroń Data: 2025.03.26 14:10:37 CET Dokument podpisany przez Miłosz Kazimierz Gruca Data: 2025.03.26 14:50:28 CET Dokument podpisany przez Bogusław Sieczkowski Data: 2025.03.26 14:53:38 CET
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 07 — Statement of the Management Board together with information regarding choice of statutory auditor . 71
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SELVITA CAPITAL GROUP ANNUAL REPORT 2024 ⟶ 07 — Statement of the Management Board together with information regarding choice of statutory auditor . 72 investor relations: ir@selvita.com media: media@selvita.com Your partner of choice in integrated research www.selvita.com Selvita S.A. Podole 79 30-394 Krakow Uniw. Poznańskiego 10 61-614 Poznań Legnicka 48E 54-202 Wrocław Selvita Ltd. CB1 Business Centre Nine Hills Road Cambrige CB2 1GE Selvita Inc. East Coast USA, One Broadway, 14th Floor Cambridge MA 02142 West Coast USA 611 Gateway Blvd, Suite 120 South San Francisco, CA 94080 Selvita d.o.o. Prilaz baruna Filipovića 29 10000 Zagreb Ardigen S.A. Leona Henryka Sternbacha 1 (Budynek L1) 30-394 Krakow Selvita Services Sp. z.o.o. Bobrzyńskiego 14 30-348 Krakow PozLab Sp. z o.o. Kobaltowa 6, Złotniki 62-002 Suchy Las
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Report of the Management Board of Selvita S.A. on the activities of Selvita Capital Group Part 2. Selvita Group's Sustainability Report for 2024 www.selvita.com
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Table of contents SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 Table of contents . 2 General information . 06 1.1. Basis for the sustainability report . 07 1.2. Management structure in Selivta Group . 09 1.3. Sustainability management . 14 1.4. Selvita Group's business model . 16 1.5. Selvita Group's v alue chain . 29 1.6. Selvita Group's strat egy . 31 1.7. Material ESG impacts, risks and opportunities . 34 1.8. ESRS Compliance T ables . 61 Environmental information . 71 2.1. Climate change . 72 2.2. Pollution . 77 2.3. Water and marine resources . 79 2.4. Biodiversity . 81 2.5. Resource use and the circular economy . 83 2.6. EU taxonomy . 86 Information on social issues . 93 3.1. Selvita Group Employees . 94 3.2. Employees in the value chain . 108 3.3. Impacted communities . 109 3.4. Consumers and end-users . 110 Information on corporate governance . 112 4.1. Corporate culture and business practice . 113 4.2. Supplier relationship management . 124 4.3. Payment practices . 125 03 04 01 02 Key events 2024 . 03 Key targets for 2025 . 04 Letter from the Chief Operating Officer of the Selvita Capital Group. 05
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 Key events 2024 Key events 2024 . 3 23 training hours per employee 942/1000 CyberVadis score1500 projects >14 600 hours of specialist training implementing a business continuity plan implementation of the supplier code of conduct full double materiality analysis calculation of the carbon footprint in three scopes 77% of people employed under a permanent employment contract 0 serious and fatal accidents
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 Key targets for 2025 Key targets for 2025 . 4 Update of the Group's Strategy for 2026+ continued development of comprehensive drug discovery and development services with the highest quality standards continuing to develop the unique competencies of team members strong presence in major markets in the United States and the United Kingdom strong specialized staff 1 2 3 4 • specialization in therapeutic areas • development of competences in the field of oncological and neurological diseases • strengthening the position of the CRO providing integrated drug discovery services • expanding competences in supporting the drug discovery process with artificial intelligence models and structural biology • biopharmaceutical development services Development of a sustainable development strategy as part of the Group's strategy for 2026+, based on the calculation of the carbon footprint in three emission scopes and a double materiality analysis, taking into account ESG risks.
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Letter from the Member of the Management Board . 5 SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 Selvita Group's mission is to support the development of innovative therapies that can change the lives of patients around the world. We meet these goals by providing high-quality services in the area of development of new therapeutic molecules and regulatory research in vari - ous therapeutic areas. At the same time, guided by our st rategy and values, we have been striving for many years to ensure that the organization has a positive impact on society and builds responsibility towards the natural envi- ronment and compliance with good corporate govern - ance principles along with the economic value for our sh areholders. In 2024, we conducted a Double Materiality Analysis (DMA), which helped us look at sustainability issues from the perspective of financial and environmental and social materiality in order to more effectively manage risk, make strategic decisions and build transparency towards stake- holders, thus strengthening the resilience and long-term va lue of the organization. I am pleased to present to you the first report of the Selvita Group, based on the CSRD (Corporate Sustainabil- ity Reporting Directive), which transparently organizes our ac tivities and business practices from the perspective of sustainable development, in accordance with the Euro - pean Sustainability Reporting Standards (ESRS). This report de scribes our sustainability efforts in 2024, covering the social, environmental and corporate governance areas. In 2024, we not only continued to invest in the devel- opment of research infrastructure and technologies in the or ganisation, while taking into account the impact of the investment on the natural environment, but also undertook initiatives to optimise processes, reduce energy consump- tion and reduce waste generation. We have also carried ou t for the first time the calculation of the carbon footprint in three scopes, in accordance with GHG (Greenhouse Gas Protocol), which is the basis for identifying areas where it is possible to reduce greenhouse gas emissions. As we are convinced that the success of Selvita Group is built by our employees and associates, in 2024 we paid special attention to providing development programs, workplace safety (including digital) and career develop - ment opportunities in a dynamically developing team. Ou r goal is to create conditions in which our scientific and administrative staff will be able to develop in accord- ance with the values that are the foundation of our busi - ness. In line with the CSRD, we have engaged in dialogue wi th stakeholders to identify topics that are relevant to them and have been involved in many initiatives in local communities. We also introduced a number of management improve- ments aimed at better risk management and improved effi- ciency and transparency of our operations, which is abso- lutely necessary to achieve the ambitious goals of the or ganization. Among other things, we have implemented a Business Continuity Plan and a code of conduct for sup - pliers. Increasing transparency and accountability in busi - ness decisions are priorities for us, which must go hand in hand w ith our commitments to stakeholders. In the coming years, we plan to continue the imple - mentation of our mission, in which Selvita remains not only an industry leader, but also a responsible and conscious participant in social and economic life. Sustainability is a process of continuous striving for excellence in every dimension of our business: from business development to employee development, environmental protection and corporate responsibility. I invite you to read the report, which is proof of our commitment to sustainable development. Together, we want to build a future where innovation and responsibility go hand in hand. Yours sincerely, Mirosława Zydroń Chief Operating Officer Member of the Management Board responsible for the area of sustainable development of Selvita Group Dear Shareholders and Friends of Selvita,
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1 General information 1.1. Basis for the sustainability report . 07 1.2. Management structur e in Selivta Group . 09 1.3. Sustainability management . 14 1.4. Selvita Group 's business model . 16 1.5. Selvita Group 's value chain . 29 1.6. Selvita Group 's strategy . 31 1.7. Mat erial ESG impacts, risks and opportunities . 34 1.8. ESRS C ompliance Tables . 61
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 7 1.1. Basis for the sustainability report 1.1. Basis for the sustainability report [BP-1] Reporting Standard The Sustainability Report has been prepared for Selvita S.A. Capital Group (hereinafter: Selvita Group, Group or Selvita) in accordance with Articles 49b and 55(2b)-(2c) of the Accounting Act of 29 September 1994 (i.e. Journal of Laws of 2023, item 120) and in accordance with Regula - tion (EU) 2020/852 of the European Parliament and of the Co uncil of 18 June 2020 on the establishment of a frame - work to facilitate sustainable investment, amending Reg - ulation (EU) 2019/2088. This report has been prepared on th e basis of the ESRS standards (introduced by Commis - sion Delegated Regulation (EU) 2023/2772), which are man- datory for the Selvita S.A. Capital Group from the financial yea r 2024. Consolidation The information, data, indicators and statements con - tained in the report refer to Selvita Group, unless other - wise indicated. Where data were not available, the estima- tion method was used. The report includes sustainability in formation for Selvita Group for the period from January 1, 2024 to December 31, 2024. The scope of consolidation in these financial statements is the same as in the consol - idated financial statements for the last financial year. The Su stainability Report is produced on an annual basis. As of December 31, 2024, the Selvita Group consisted of 6 companies (parent company Selvita S.A. and 5 subsid- iaries of Selvita S.A.) Subsidiaries Headquarters, Country Business Type Shares as at 31 December 2024 Selvita Services sp. z o.o. Krakow (Poland) Service 100% Selvita d.o.o. Zagreb (Croatia) Service 100% Selvita Ltd. Cambridge (United Kingdom) Service 100% Selvita Inc. Cambridge (United States) Service 100% PozLab sp. z o.o. Złotniki (Poland) Service 100% TABLE 1. Subsidiaries
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 8 [BP-2] Scope and comparability of data The Group has analysed double materiality in both its own operations and its upstream and downstream value chain, based on qualitative data. The report uses the transitional provision related to Chapter 5 Value Chain, which results from the diversified supplier base and the lack of produc - tion processes in the Group's operations. The business mo del and distinctive service business, where customers often make choices, and the dispersed supplier base cur - rently do not allow for the detailed development of value cha in metrics. The Group has used all reasonable and doc- umentable information, such as analyses and other proxies, and plans to take action to improve this area in the future. The planned activities are described in Chapter 4.2. None of the quantitative measures and monetary amounts cor - respond to a high level of measurement uncertainty. Th e methodology for estimating part of the Scope 3 GHG emissions data is described in Chapter 2.1.3. Selvita Group did not take advantage of the possibil - ity of omitting specific information regarding intellectual pr operty, know-how or innovation results. The Group has not deviated from the medium and long-term time horizons set out in ESRS 1, section 6.4. The short-term period is understood as the deadline until the end of 2025, the medium-term period until the end of 2030 and the long-term period set after 2030. This is the first report of the Selvita Group prepared based on the European Sustainability Standards (ESRS) and therefore the Group does not report any changes in the preparation or presentation of the sustainability statement or errors from previous periods. External verification This Selvita Group Sustainability Report has been externally verified. The verification was carried out by the audit com- pany Grant Thornton Polska PSA in accordance with the Na tional Standard for Sustainability Reporting Validation Services 3002PL. 1.1. Basis for the sustainability report
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 9 1.2. Management structure in Selvita Group [GOV-1] Members of the Management Board of Selvita Group As of December 31, 2024, the Management Board of Selvita S.A. was composed of 6 members. Bogusław Sieczkowski, CEO and co-founder of Selvita, has over 25 years of experience in leading organizations from the high-tech sector. He is also a member of the Supervi - sory Board of Ardigen S.A. In the ESG area, he is responsible for overall supervi - sion of the ESG strategy and for the integration of sustain- able development goals into the Group's operations. Pr ior to founding Selvita, he gained management experience in various companies for over 10 years. He began his professional career in the 1990s, supervising computerization in the companies of the German Bahlsen group. From 2000, as the Vice President of the Manage - ment Board of Comarch Internet Ventures S.A., he created th e first ASP service platform in Poland. As the direc - tor of the largest subsector employing over 250 people, Co march S.A. was responsible for the work of teams imple- menting implementations for leading research centres and gl obal leaders of the financial sector. Honoured with the Knight's Cross of the Order of Res- titution Polish, he holds an MBA for executives from the Wha rton School, an MBA from Teesside University and the Krakow School of Economics, and a master's degree from the Jagiellonian University and a Project Management Pro- fessional (PMP) certificate. Dr . Miłosz Gruca currently holds the position of Global Head of Drug Development & Protein Sciences, overseeing the drug development segment and the area of services dedicated to biological drugs. Until the end of 2024, as Commercial Director, he was responsible for a wide range of business development activities, including the creation and development of the drug discovery and regulatory services offering, building relationships with Selvita's cus- tomers, as well as the operational management of the inte- grated Business Development Department. It supports transparency in communication with stake- holders in the field of ESG, develops the service offer and mana ges customer relations. He has been associated with Selvita since 2007, and as Director of the Biology Department, he was responsible for introducing comprehensive biological and analytical ser - vices to Selvita's portfolio and for the strategic manage - ment of the analytical, biochemical and molecular biology la boratories. Dr. Miłosz Gruca is a graduate of the Jagiellonian Uni - versity, where he obtained a master's degree in biotech - nology with a specialization in molecular biology and a do ctoral degree in biochemistry. Dr. Miłosz Gruca also completed two-year Executive MBA studies at the Stock - holm University School of Business and the Krakow School of B usiness at the University of Economics. Bogusław Sieczkowski CHIEF EXECUTIVE OFFICER, PRESIDENT OF THE MANAGEMENT BOARD Dr. Miłosz Gruca CHIEF COMMERCIAL OFFICER, VICE-PRESIDENT OF THE MANAGEMENT BOARD 1.2. Management structure in Selvita Group
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 10 Dr. Eng. Mirosława Zydroń has been associated with Selvita since 2009. Until 2021, she was responsible for the creation and dynamic growth of the Chemistry Division, strategic development of chemical services in the area of drug dis - covery and development, supervision of ongoing projects to en sure the highest quality of services offered, as well as pre- senting Selvita's offer and building relationships with clients fr om the pharmaceutical, biotechnology, chemical and agro- chemical industries in Europe, the United States and Asia. In February 2022, Dr. Eng. Mirosława Zydroń took the position of Chief Operating Officer at Selvita Group. Her key responsibility is to support the Group's further dynamic development and manage the growing scale of operations while maintaining the effectiveness of implemented pro - jects, through continuous improvement of the organiza - tion, processes and business tools, as well as investments in t he development of modern infrastructure and innova - tive technologies. Sh e is responsible for implementing ESG strategies in line with business objectives, complying with environ - mental regulations, preparing a decarbonisation strategy sc ope analysis and reporting in accordance with regula - tions. She is responsible for building ESG awareness in the org anization and developing infrastructure and technolog- ical innovations that support sustainable development. Pr ior to joining Selvita, Dr. Eng. Mirosława Zydroń worked in the R&D structures of Pliva (later Barr Pharma - ceuticals) as a Laboratory Manager and was responsible for an alytical and preformulation research at the stage of drug form development, as well as supervised the drug pack - aging process during pilot production under GMP (Good Ma nufacturing Practice) conditions; then she worked as an Optimization Project Manager in the Production Depart - ment and in the area of Quality Control (TEVA). Dr . Eng. Mirosława Zydroń is a graduate of the Silesian University of Technology, where she obtained a master's degree in chemical engineering with a specialization in polymer chemistry and a Ph.D. in chemistry. Her doctoral dissertation received a distinction from the Committee on Analytical Chemistry of the Polish Academy of Sciences for the best doctoral dissertation in the field of analytical chemistry in Poland in 2004–2005. In 2009, she completed a two-year MBA at the Rotterdam School of Management at Erasmus University Rotterdam. Dr. Adrijana Vinter has held the position of Managing Director at Fidelta, a subsidiary of Selvita, since 2017. In February 2022. she took the position of Global Head of Drug Discovery and was appointed to the Management Board of Selvita. As Global Head of Drug Discovery, Dr. Adrijana Vinter is responsible for the strategic development of the Group's drug discovery offering, managing interdisciplinary research teams, as well as supervising ongoing projects to ensure the highest quality of services. She supports the implementation of modern technolo- gies and processes in line with ESG goals and oversees stra- tegic development in the area of drug discovery. Dr . Adrijana Vinter started her professional career at PLIVA in 2002 working as a scientist in the field of medici- nal chemistry. After Fidelta was formed, she moved to the bu siness development department, which she led until 2017. She then took the position of Managing Director and Chair- man of the Board of Directors at Fidelta and was responsible fo r operational management in this company. She success- fully supervised the organic growth of the Croatian com - pany, contributing to the growth of its revenues. Dr . Adrijana Vinter holds a Ph.D. in Organic Chemistry in the field of novel macrolide antibiotics from the University of Zagreb, as well as an MBA from Cotrugli Business School in Croatia. She is the author of many scientific publications. Dr. Eng. Mirosława Zydroń CHIEF OPERATING OFFICER, MEMBER OF THE MANAGEMENT BOARD Dr. Adrijana Vinter GLOBAL HEAD OF DRUG DISCOVERY, MEMBER OF THE MANAGEMENT BOARD 1.2. Management structure in Selvita Group
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1 — General information . 11 SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 Dawid Radziszewski joined Selvita in 2015 and within a few years he was promoted to the position of Director of the Legal Department, taking responsibility for all legal matters of the Selvita Capital Group. Dawid Radziszewski is respon- sible for a wide range of corporate activities at Selvita, in cluding issues related to the protection of intellectual property rights; He also deals with capital market issues. Since 2019, he has been a Member of the Management Board of Selvita S.A., directly responsible for the Group's corporate development and M&A transactions. He is responsible for the compliance of ESG activities with legal requirements, supervises ESG reporting and compliance with labour law and corporate governance regulations. Prior to joining Selvita, he gained experience at the Warsaw law firm WKB Wierciński, Kwieciński, Baehr, spe - cializing in M&A transactions and corporate law, and also wo rked at the Allerhand Institute. Dawid Radziszewski is an attorney-at-law, a graduate of the Jagiellonian Univer - sity and the University of Heidelberg, where he obtained th e title of LL.M. He also studied at the University of Zurich. Dawid Radziszewski is a laureate of the "RISING STARS Law- yers – tomorrow's leaders 2018" competition. Dar iusz Kurdas took the position of Chief Financial Officer at Selvita S.A. in August 2019, taking responsibility for the Group's financial activities. He supervises the analysis of ESG-related financial risks, taxonomy and the implementation of the Group's business continuity plan. Prior to joining Selvita, he gained managerial experi - ence in international companies, including KPMG, where he ma naged a team of auditors. As a financial controller at Nowy Styl Group, he was responsible for monitoring and planning financial liquidity, developing and controlling the implementation of budgets, as well as financial cov - enants of subsidiaries in Germany. In 2016, he joined Liu - gong Dressta Machinery, where he served as Chief Finan - cial Officer and Vice President of the Management Board, re sponsible for managing the accounting, finance and con- trolling teams. Dar iusz Kurdas graduated in finance from the Uni - versity of Economics in Krakow and the University of Til - burg (the Netherlands). He is a registered auditor and a licensed stockbroker. There is no representative of employees and other people providing work on the Management Board. Throughout the reporting period, 67% of the members of the Management Board of Selvita S.A. were men and 33% were women. 4 men and 2 women. 5 members of the Board were eligible for the age group between 30–50 years (80%). 1 member of the Management Board was eligible for the age group over 50 years (20%) Dariusz Kurdas CHIEF FINANCIAL OFFICER, MEMBER OF THE MANAGEMENT BOARD Dawid Radziszewski GENERAL COUNSEL, MEMBER OF THE MANAGEMENT BOARD men women CHART 1. Members of the Management Board – by gender (%) Management Board 67 33 1.2. Management structure in Selvita Group
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1 — General information . 12 SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 Members of the Supervisory Board of Selvita Group As of December 31, 2024, the Supervisory Board of Selvita S.A. was composed of 6 members. Dr. Piotr Romanowski, is the Chairman of the Supervi - sory Board of Selvita S.A. He has many years of experi - ence in investment advisory in the field of biotechnology, adv anced technologies and financial services. He also has over 20 years of experience in strategic management con- sulting, which he gained in various industries, where he sp ecialized in M&A strategy in financial services, oil and gas, pharmaceuticals and healthcare. As a partner at McKinsey Company, specializing in strategy, restructuring and capital transactions, he sup - ported two of the largest mergers in the oil industry in Cen tral Europe, as well as clients from the pharmaceuti - cal and healthcare sectors. He was also a member of the Ma nagement Board of Bank Millennium S.A., responsible for the Corporate Banking Division. He was a partner in the consulting and investment company Metropolitan Capital Solutions. He also worked as a Partner at PwC, where he headed the consulting and M&A department for Central and Eastern Europe and the Commonwealth of Independ- ent States. Pi otr Romanowski holds a PhD in molecular biology from the University of Cambridge and a PhD in medical sciences with a specialisation in cancer genetics from the Medical University of Gdańsk. Doctor of technical sciences, graduate of the Warsaw Uni- versity of Technology. After obtaining his diploma, he con- tinued his scientific work at the university, obtaining the pos ition of assistant professor. In 1990, he founded and then managed PROSPER, which, after merging with Torfarm S.A., since 2009 has been part of the NEUCA S.A. Capital Group – the leader of the pharmaceutical distribution market in Poland. The company started its activity by importing para-pharma - ceuticals and OTC drugs from Western European coun - tries, gradually expanding its range and scope of activity to i nclude the distribution of pharmaceuticals. He has repeatedly advised and participated in the creation of new ventures on the pharmaceutical market. Paweł Przewięźlikowski is the co-founder and CEO of Ryvu Therapeutics, a biotechnology company that was estab - lished as a result of the division of Selvita S.A. into two ind ependent companies. Ryvu Therapeutics operates in the therapeutic area of oncology, and Paweł Przewięź - likowski is responsible for strategic management and busi- ness development. He is also a co-founder and former Pr esident of the Management Board of Selvita S.A. Paweł Przewięźlikowski is also the Chairman of the Supervisory Board of Ardigen S.A. He started his career in the IT com - pany Comarch in 1994, where he managed departments of fering applications for the pharmaceutical, banking, industrial and service industries. He was a co-founder and the first President of the Management Board of the third largest Internet portal in Poland – Interia.pl. He is a graduate of the AGH University of Science and Technology in Krakow, where he obtained a diploma in Computer Science, and MBA studies at Teesside University and the University of Economics in Krakow. He also studied at the Technical University of Berlin. Paweł Przewięźlikowski was awarded the Knight's Cross of the Order of Polonia Restituta Polish and the EY Entrepreneur of the Year award in the New Technologies/ Innovation category. Dr. Piotr Romanowski CHAIRMAN OF THE SUPERVISORY BOARD Paweł Przewięźlikowski MEMBER OF THE SUPERVISORY BOARD Dr. Tadeusz Wesołowski DEPUTY CHAIRMAN OF THE SUPERVISORY BOARD 1.2. Management structure in Selvita Group
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1 — General information . 13 A graduate of the University of Economics in Krakow (majoring in accounting) and the AGH University of Sci - ence and Technology in Krakow (majoring in computer sc ience). From 1997 to 2007, he served as Vice President of the Management Board and Chief Financial Officer of Comarch. He was responsible for financial supervision of the group's companies, raising capital through the stock exchange for Comarch and Interia.pl and acquiring CDN, currently one of the key divisions of Comarch's business (software sec - tor for small and medium-sized enterprises). In the years 2003–2006, he was also the President of the Management Bo ard of the Association of Listed Companies and was a Member of the Capital Market Council (operating at the Prime Minister's Office). Currently, he is the Vice President of the Management Board of the Nowy Styl furniture group and a member of the supervisory board of the listed company NG2 S.A. A graduate of the Jagiellonian University at the Faculty of Law and Administration. In 2005, he was entered on the list of attorneys-at-law. In the years 2005–2009, he was a partner in the law firm Tomasik, Chabasiewicz i Wspólnicy sp.k. Currently, he is a partner in the law firm Chabasiew - icz, Kowalska & Partners. Si nce the beginning of his professional career, Wojciech Chabasiewicz has been advising m.in on public and private issues of shares and bonds, mergers and acqui- sitions and restructuring transactions. He also deals with al l types of proceedings related to corporate conflicts. In addition, he is a judge of the Court of Arbitration at the National Depository for Securities S.A. Jacek Osowski is an investment advisor and auditor with extensive experience in building investment strategies and conducting capital transactions. In 2007–2008, he was the Vice-President of the Man - agement Board of IPOPEMA TFI S.A., then he worked as the De puty Director of the Treasurer's Office at PZU S.A./PZU Życie S.A. (2008–2009), and in the years 2009–2011 he was the Vice-President of the Management Board, CIO, Direc - tor at PZU Asset Management S.A. Ja cek Osowski is a graduate of the Warsaw School of Economics (finance and banking). In 2005–2006, he obtained an MBA degree at the University of Warsaw and the University of Illinois. In addition, he holds an invest - ment advisor license, a Chartered Financial Accountant (C FA) certificate and has been entered on the list of statu- tory auditors. The percentage of independent members of the Supervisory Board is 50%. Throughout the reporting period, 100% of the Supervisory Board members were men. Rafał Chwast INDEPENDENT MEMBER OF THE SUPERVISORY BOARD Wojciech Chabasiewicz INDEPENDENT MEMBER OF THE SUPERVISORY BOARD Jacek Osowski INDEPENDENT MEMBER OF THE SUPERVISORY BOARD men Supervisory Board CHART 3. Supervisory Board members – by gender (%) 50 60 Other members Independent members CHART 2. Members of the Supervisory Board(%) 50 SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1.2. Management structure in Selvita Group
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 14 1.3. Sustainability management [GOV-1] [GOV-2] [GOV-5] Selvita integrates the principles of sustainable develop - ment into management processes, ensuring supervision and control over the achievement of goals. The statutory bodies of Selvita S.A. and its organizational units partic - ipate in the process of shaping the sustainable develop - ment strategy. Su stainable development issues are of interest to both the Management Board, the Supervisory Board and the managerial staff. Responsibility for ESG issues is assigned to a Member of the Management Board – Chief Operating Officer, who oversees the area of sustainable development and issues related to climate change. Management Board The Management Board is responsible for directing the over- all activities of the Group, representing it externally, manag- ing all matters relating to Selvita, and handling its assets. Gi ven that the scope of sustainable development touches all areas of the Group's operations, the highest level to which ESG management is subordinated is the President of the Management Board, who coordinates and assigns responsibilities to designated members of the Man- agement Board. Th e Chief Operating Officer is responsible for imple - menting the ESG strategy in line with business objectives, co mplying with environmental regulations, preparing a decarbonisation strategy scope analysis and reporting in accordance with regulations. The COO is also respon - sible for building ESG awareness within the organization and developing infrastructure and technological innova - tions that support sustainable development. Th e Chief Financial Officer is responsible for financial risks related to ESG, taxonomy, and the implementation of the Business Continuity Plan. The General Counsel ensures ESG activities com - ply with legal requirements, oversees ESG reporting, and en sures adherence to labour law and corporate govern - ance regulations. ES G-related issues are reported to the responsible Management Board members during meetings and reviews. During the analysis of significant ESG topics, the Manage - ment Board utilized the expertise of an external consulting fi rm and provided a certified platform for collecting data on the Group's carbon footprint. Additionally, designated Management Board members participate in training and webinars on sustainable development. In the 2024 finan - cial year, the Chief Operating Officer and the Chief Finan - cial Officer participated in ESG training. In 2024, the Management Board fully discussed and validated the material topics listed in chapters 1.7.3 and 1.7.4. Supervisory Board The primary responsibility of the Supervisory Board is to constantly supervise the functioning of Selvita in all areas of its operations. The Supervisory Board performs one of the key func - tions in supervising the development of the sustainable de velopment strategy, ensuring its compliance with busi- ness and regulatory objectives. The Supervisory Board ap proves the Group's sustainability report, and the imple- mentation of the sustainability objectives will be assessed at meetings. General Meeting of Shareholders The Shareholders' Meeting plays an important role in the management process by approving key strategies and evaluating the results of Selvita S.A. Shareholders have the opportunity to express their expectations and opinions on activities related to sustainable development during gen - eral meetings, which allows the Group's activities to be al igned with international practices and standards. In addi- tion, through resolutions, they can influence the direction of the strategy and the way resources are allocated to sus- tainable development activities. Management Staff Given that sustainable development applies to all areas of Selvita Group's operations, representatives of the man- agement staff and employees from various departments and levels are also involved in the process, providing direct substantive and organizational support in the implementa- tion of tasks in the field of sustainable development. Coop- eration with stakeholders is delegated to designated units. Th e frequency of contact and the way in which stakehold- ers are involved depends on the organisational units con - cerned. Directors and heads of organisational units are re sponsible for implementing and adhering to the princi - ples of due diligence. ESG Committee To increase the effectiveness of ESG activities, an ESG Committee has been established, consisting of the Chief Operating Officer, Health, Safety and Environment Man - ager, Process Improvement Manager and ESG Manager. 1.3. Zarządzanie zr ównoważonym rozwojem
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 15 The Committee coordinates ESG initiatives and monitors their implementation. In December 2024, an ESG Manager was hired, whose task is to analyse ESG risks and implement mechanisms to mitigate them. The ESG Manager collaborates with key organizational units to coordinate and ensure compliance with ESG regulations and standards. A newly hired ESG Manager, within the scope of their duties, provides information on significant impacts, risks and opportunities, the implementation of due diligence and the results and effectiveness of policies, activities, metrics and goals adopted in the field of sustainable devel- opment. The risks identified and described during the sus- tainability materiality test in 2024 will be included in the Gr oup's Business Continuity Plan in 2025. Responsibility for follow-up, analysis, follow-up and monitoring has been assigned to the ESG Manager. Further analysis of ESG risks and implementation of mechanisms to mitigate them will also be carried out in cooperation with key organizational units and representatives of the Management Board. Work on the compliance procedure, which will include internal control with respect to the sustainability reporting process, is also scheduled to be completed in 2025. Employee representatives In November and December 2024, elections were held in which employees from the Group's Polish companies (Selvita S.A., Selvita Services Sp. z o.o. and PozLab Sp. z o.o.) elected their representatives for general affairs and to the occupational health and safety committee. In Croatia, on the other hand, there is a collective agreement that repre- sents employees. Both groups participated in interviews and surveys on sustainability, having a direct impact on the selection of relevant topics. [GOV-3] [E1.GOV-3] Remuneration of Management Board and Supervisory Board Members The remuneration of members of the Supervisory Board and the Management Board is regulated by the Remuner - ation Policy, available on the website. Mem b ers of the Supervisory Board are entitled to a fixed monthly salary, not related to sustainable development. The remuneration of the Management Board members consists of: • fixed remuneration, constituting a monthly cash remuneration, paid for serving on the Management Board; and • variable remuneration, which is supplementary remuneration paid on a quarterly basis or less frequently; It is additional remuneration depending on the results, achievement of management goals or obtaining exceptional effects of the actions taken. When determining the amount of variable remuneration of Management Board members, the Supervisory Board takes into account management objectives, including in particu- lar the implementation of short-, medium- and long-term ta sks resulting from the business strategy, respectively, as well as the achievement of quantitative or qualitative objectives in a given area for which a given Management Board Member is responsible. Management objectives are defined annually by the Supervisory Board and take into account Selvita's current operational and strategic objectives for a given period, including criteria (measures) for their implementation. Currently, four members of the Management Board have ESG-related goals, representing between 5 and 15% of var- iable remuneration. [GOV-4] Due Diligence Statement (Table 2.) 1.3. Sustainability management Basic elements of the due diligence process Points in the sustainability statement Embedding due diligence in corporate governance, strategy and business model 1. 7.4., 4.1.2. Engaging with stakeholders affected by the entity at all key stages of the due diligence process 1. 3, 3.1. Identification and assessment of adverse impacts 1.7 , 1.7 .3 Taking action to mitigate identified adverse impacts 1 .7. 3 Monitor and provide relevant information on the effectiveness of these efforts 1. 7 .4, 4.1.2, 4.1.3., 4.1.4 TABLE 2. GOV-4 Elements of due diligence
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 16 1.4. Selvita Group's business model [SBM-1] Selvita is one of the largest CRO – Contract Research Organization companies in Europe. The Group aims to create a comprehensive range of services that enable research that combines the early stage of drug discovery with the stage of clinical trials. The beginnings of the Group Selvita Group, founded in 2007, has undergone an impres- sive transformation – from a small start-up to a global or ganization. From the very beginning, the company has consistently placed emphasis on close cooperation with customers, effectively solving complex research challenges. Selvita Group offers a wide range of services, both independent and fully integrated, in the fields of drug dis- covery and development. Thanks to its specialist knowl - edge and extensive experience, Selvita supports client res earch in various therapeutic areas. Selvita provides comprehensive services at every stage of the drug devel opment process – from the early discovery phase to the sel ection of a clinical candidate. For almost 18 years of operation, Selvita has cre - ated an international team of over 900 professionals wh o are among the best experts in the industry. Selvita operates internationally – the Group's laboratories are in Krakow, Poznań, Złotniki, Wrocław and Zagreb. It also has sales offices in the world's leading biotechnology centers, including the Boston and San Francisco metropol- itan regions in the United States and in Cambridge, the United Kingdom. 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 17 Selvita in numbers 26 nationalities 1500 projects >270 people with a doctoral degree 18 years in the industry >900 employees 17,000m2 of research space >370 customers 7 locations 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 18 Selvita Group Services Drug Discovery Department Selvita Group offers its clients professional support in the field of Drug Discovery, based on extensive experience in the discovery of small molecule drugs, from target valida- tion to clinical candidate selection. The Group successfully ex ecutes fully integrated drug discovery programs, com - bining all of Selvita's core biology and chemistry skills, and pr ovides semi-integrated or independent services using selected areas of know-how best suited to the specific needs of its customers. In the Drug Discovery area, there are significant advances in integrated drug discovery, chemistry, phar - macology, and bioanalytical sciences. Investments in hi gh-throughput experiments, advanced automation, and novel technologies enhance the ability to deliver projects of high importance to customers in the pharmaceutical, biotechnology, and agrochemical industries. The work of the Drug Discovery Division focuses on the development of new drug candidate drugs, synthesis opti- mization, and molecular profiling. In 2024, high-through - put technologies have been implemented that significantly in crease the ability to rapidly synthesize compounds and screen analyses. This allows you to speed up the schedule and improve test results. In addition, work is underway to develop automation in the laboratory, including, for m.in, modernizing the purification processes with SFC technol - ogy, ensuring higher efficiency and quality of work. In 2024, Dr ug Discovery expanded its collaboration with key phar- maceutical partners, leveraging its expertise to support dr ug design and synthesis projects with high therapeu - tic potential. Dedicated teams work to optimize synthesis me thodologies to increase process efficiency and scalabil- ity. By introducing new purification and analysis techniques, gr eater precision is achieved in compound characteriza - tion, which strengthens the Group as a leading provider of ch emical services in the field of drug discovery. Drug Discovery Based on Artificial Intelligence The Group created a dedicated AI&CDD (Artificial Intel - ligence & Computational Drug Discovery) department and expanded its bioinformatics capabilities, recogniz - ing the growing importance of these fields. Strengthen - ing the leadership position of CADD (Computer-Aided Dr ug Design) and expanding the modeling team supports advanced computational approaches in the drug dis - covery process. Selvita has developed the Target Aware Dr ug Affinity Model (TADAM) capable of screening bil - lions of chemicals per hour and supporting hit detection and expansion. Automation of the purification process was initiated to improve laboratory efficiency. Retrosyn - thesis and reaction prediction activities based on artifi - cial intelligence are aimed at accelerating chemical syn - thesis. A joint case study publication with CAS (Chemical Abstracts Service, the numerical designation of a particu - lar chemical) highlights the practical application of artifi - cial intelligence in the optimisation of organic synthesis pr ocesses. The development of generative models allows for the design of drugs based on artificial intelligence. An automated QSAR / QSPR (Quantitative structure-activity relationship / quantitative structure-property relationship) Drug Discovery Drug Development Drug discovery, which is an initial stage in the process of developing new therapies; This process involves the development of chemical or biological substances that are potentially effective in treating specific diseases. It is a complex and multi-stage process that requires an interdisciplinary approach of scientists. An area of drug development, focusing on analytical, microbiological and drug formulation tests in the GxP quality system (general good practices), i.e. a system compliant with regulatory standards, including risk assessment, documentation and corrective actions. The research concerns small molecules and biological substances with diverse therapeutic effects and may include: development and validation of analytical methods, formulation development, quality control, batch releases, stability studies, bioanalytical tests and production in accordance with Good Manufacturing Practices (GMP). TABLE 3. Selvita Group Services 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 19 platform enables high-throughput prediction of molecular properties. Advanced models such as DiffDock (a state-of- the-art generative model used for drug discovery that pre- dicts the three-dimensional structure of the protein-ligand co mplex) and MaSIF (an advanced tool for molecular anal- ysis of protein structure) were also implemented. Selvita or ganizes webinars on the use of Artificial Intelligence or Machine Learning (AI/ML) in Drug Discovery and publishes scientific achievements. Providing AI-assisted CADD ser - vices to many customers demonstrates the practical appli- cation and market demand. Sel vita conducts several Integrated Drug Discovery (IDD) projects in the phase of identification of chemical compounds that are active against a specific biological tar- get (Hit ID), in the phase of transformation of these active co mpounds into compounds with the status of drug can - didates (Hit-to-Lead, H2L, transformation of hits into lead co mpounds) and in the phase of modification of the struc- tures of selected drug candidates in order to improve their ph armacological and physicochemical properties (Lead Optimization, LO, lead compound optimization), in which the members of the Drug Discovery team work closely together. By integrating AI-driven modeling and predictive analytics, the department is increasing its ability to evalu- ate the properties of compounds upstream, improving the ef ficiency of the drug discovery process. Improvements in vivo and in vitro models are also continued to adapt them to emerging therapeutic trends. Through advanced ADME (Absorption, Distribution, Metabolism, Excretion, a key four processes that describe the entry of drugs and chemicals into the body, their fate in the body, and how they are removed) profiling and in vivo pharmacokinetic studies, project has developed a better understanding of the behaviour of compounds in biologi - cal systems. Based on high-throughput automation, screen- ing tests were implemented to increase the efficiency of co mpound screening. Expansion of biotransformation stud- ies improved the ability to predict drug metabolism, ena - bling a more accurate assessment of the pharmacokinetic pr operties of drug candidates. Mass spectrometry-based quantification was expanded, providing precise assess - ment of potential exposure to adverse drug effects / their me tabolites. This work was further supported by ongo - ing research into new assay formats for therapies for oli - gonucleotide therapies and targeted protein degraders. Col laboration with multinational pharmaceutical compa - nies has helped to improve the approach to PBPK model - ling, reduce drug development time and optimise candi - date selection processes. New protocols were developed to assess drug distribution and pharmacokinetics in inhaled therapies, advancing translational research on the respira- tory system. Th e in vitro oncology team has supported many IDD projects, focusing mainly on oncology and neurosci - ence. Novel methodologies were successfully developed, in cluding lipid nanocarriers, protein degraders and ADC efficacy studies. A pilot study on cancer samples taken from patients has been launched, and high-throughput screening campaigns for European customers have been completed, using Selvita's proprietary library of com - pounds, and further projects are in the pipeline. A Mul - tidrop dispenser was purchased to further automate the screening processes. Th e in vivo oncology team is developing multiple mod- els of cancer, including brain, breast, lung and liver cancers. Th e team has expanded its portfolio of syngeneic prod - ucts and plans to further develop patient-derived xeno - graft (PDX) models, optimising protocols for more predic- tive translational outcomes. These achievements enabled the precise evaluation of new therapeutics, including small molecules, biologics and immune modulators. By collab - orating with ADME, histological and pharmacological in vi tro teams, a multidisciplinary in vivo offering was cre - ated at all sites. Further advances included the develop - ment of new models of metastasis to study cancer spread an d therapeutic intervention at secondary tumour sites. In response to the industry's growing interest in immuno-on- cology, techniques were developed to profile the tumour mi croenvironment, allowing for detailed characterisation of immune cells in tumours and assessment of response to treatment. In addition, the focus on the mechanisms of therapeutic resistance led to the generation of resist - ant tumour sublineages, which facilitated research on over- coming drug resistance in cancer treatment strategies. Th e Department of Immunology and Metabolic Dis - eases in the field of precision medicine adapts drug effi - cacy studies to patient-specific biomarkers. Through 1.4 . Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 20 collaboration with academic institutions and hospital net- works, predictive models of therapeutic response were im proved. With this approach, Selvita is becoming a leader in the development of patient-centered medicines, emphasizing translational research strategies that bridge the gap between early discovery and clinical application. New models of fibrosis and inflammatory disorders were developed. Investments in imaging technology, including advanced microscopy and real-time analysis platforms, sig- nificantly increase research capabilities. Advanced in vivo ima ging techniques are also being implemented, including PET (Positron Emission Tomography) imaging, an imaging technique that uses a radioactive tracer to show the meta- bolic activity of tissues and organs. It is often used to diag- nose, monitor, and treat a variety of conditions, such as ca ncer, heart disease, and brain disorders, and μCT (Com- puted Microtomography) is a 3D imaging technique that us es X-rays to create detailed images of the internal struc- tures of objects on a very small scale. It is similar to the CT scan used in hospitals, but offers much higher resolu - tion, allowing it to examine small samples with submicron acc uracy.) The use of advanced preclinical models to assess the efficacy of drugs in respiratory diseases supports work in the field of inhalation research. Investments in aerosol drug delivery systems allow for the development of state-of- the-art inhalation platforms. The inhalation tower, which has undergone rigorous validation studies, has proven to be a highly effective tool for studying the mechanisms of respiratory diseases and therapeutic responses. This inno- vation strengthens Selvita's competence in preclinical res- piratory research and strengthens the Group's position as a pr eferred partner for pharmaceutical companies devel - oping novel respiratory treatments. Ongoing cooperation wi th global biotechnology companies strengthens Selvita's expertise in modeling chronic lung diseases. Investments in inhalation research are helping to discover drugs for res- piratory diseases. AA ALAC (Association for Assessment and Accredita - tion of Laboratory Animal Care International) is a private, non -profit organization that promotes the humane treat - ment of animals in science through a voluntary accredita - tion program. It evaluates and accredits institutions that us e animals for research, testing, and education, ensur - ing that they meet high standards of animal care. Work on AAALAC accreditation in Krakow is progressing, and as a result of an inspection visit to Zagreb, Selvita has been re-accredited. The Selvita team makes an impor - tant contribution to global scientific discussions by pre - senting its work at leading conferences, including BIO2024, Immun o-Oncology Summit and ELRIG Drug Discov - ery. In addition, he publishes in renowned journals such as Frontiers in Pharmacology, where an article entitled "Translational Pathology in Drug Discovery" was published, and in books such as Mouse Models of Cancer: Methods and Protocols. In line with Selvita's technology development strategy, Mass Spec Imaging tools (mass spectrometry imaging) have been developed for spatial imaging of drug distribu- tion in tissues, metabolites, lipids, peptides and proteins. Th e first case study was completed to integrate omics with in vivo pharmacology and DMPK (Drug Metabolism and Pharmacokinetics). The Omics Lab also focused on devel - oping a comprehensive approach to biomarker discovery. Th is initiative allows for a deeper understanding of disease mechanisms and drug interactions at the molecular level, facilitating the development of targeted therapies. Fund - ing was secured for major European research initiatives, su pporting continued progress in oncology, neurosciences and skin diseases. 2024 was a year of strategic growth, scientific discov- ery, and operational progress for Selvita Group. Invest - ments in automation, advanced drug discovery method - ologies and high-value collaborations have strengthened it s position on the market. Looking ahead to 2025, we anticipate further developing Integrated Drug Discovery (IDD) services, focusing on biopharmaceuticals and com - plex modalities. The increased use of AI-based tools will in crease efficiency and predictive accuracy. Through stra- tegic investments in personnel, infrastructure, and cut - ting-edge AI technologies, Selvita is able to accelerate re search, improve efficiency, and deliver innovative solu - tions to customers. The company's focus on internal devel- opment and external cooperation strengthens its position in t his rapidly growing field of Drug Discovery. The development of novel oncology models will strengthen Selvita's competitiveness in translational research. Continued investment in bioanalytical technolo- 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 21 gies will support new treatments and advanced pharma - cokinetics. The pharmacology and translational research te ams at both sites have stepped up their precision medicine efforts by aligning drug efficacy studies with patient-specific biomarkers. By collaborating with aca - demic institutions and hospital networks, the teams were ab le to refine predictive models for therapeutic response. With this approach, Selvita has become a leader in the development of patient-centered medicines, emphasiz - ing translational research strategies that bridge the gap be tween early discovery and clinical application. With a solid scientific foundation and a clear vision, Selvita is prepared to advance innova- tion and research in the coming years. 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 22 Drug Development Department Selvita Group's Drug Development Department provides comprehensive contract services in the area of pharma - ceutical development and finished product quality testing, su pporting entities from the pharmaceutical and biophar - maceutical sectors at every stage of the medicinal product lif e cycle. Thanks to the modern analytical infrastructure and compliance with GMP requirements, the Department provides solutions that meet the highest quality and reg - ulatory standards. The contract business model and the lac k of private labels, as well as extensive and constantly developed expertise and flexibility in relation to customer requirements, are a competitive advantage of this segment of the company on the contract services market. Development of Small Molecule Medicinal Products The Group offers a comprehensive contractual service for the development and optimisation of medicinal product formulations, adapting the manufacturing technology to the specificity of active substances and regulatory require- ments. The company offers services in the field of com - position and process design, physicochemical character - ization of formulations and assessment of critical process par ameters (CPP) to ensure optimal bioavailability and sta- bility of the medicinal product. The main area of the Com- pany's expertise are non-sterile forms: oral solids, as well as s emi-solid and liquid forms. At the same time, key areas of customer support include the development and validation of analytical methods for product quality assessment, stability test - ing in accordance with ICH (International Council for Har - monisation) guidelines and the characterization of impuri- ties, thus enabling the determination of the shelf life of the pro duct. In addition, the Group supports its customers by offer- ing contract manufacturing of investigational medicinal pr oducts, thus enabling the implementation of clinical trials in the drug development process. The scale of production offered by the Company allows for effective work with a relatively small amount of active substance, thus reducing production costs and the amount of waste generated. Thanks to many years of experience and an interdis - ciplinary team of experts, Selvita provides comprehen - sive CMC (Chemistry, Manufacturing and Control) support, ena bling effective conduct of drug product registration processes and ensuring their compliance with the require- ments of global regulatory agencies. Biological Drugs Research Platform The Analytical Laboratory specializing in the study of large molecules and biopharmaceuticals offers comprehensive testing and control services covering a wide range of bio- logical drugs, including innovative proteins, biosimilars, th erapeutic peptides, enzymes, biomarkers, monoclonal antibodies, hormones, nucleic acids and other complex macromolecules. These services include comprehensive characterization and structural analysis of large molecules, enabling precise determination of their structure and prop- erties. As part of these studies, first-ary, secondary, and hi gher-order structure analysis are performed. The group offers detailed amino acid composition analysis, peptide mapping, disulfide bridge determination and glycosylation study. It identifies and locates post-translational modifica- tions, allowing for a complete understanding of the struc- ture and potential changes in the analyzed substances. The gr oup also offers a wide range of physicochemical tests necessary to assess key molecular attributes. It analyzes the molecular weight, isoelectric point and charge profile of the tested substances. The services also include solubil- ity, thermal stability, chemical and pH tests. In addition, it ass esses aggregation and conformational stability, which is crucial for the efficacy and safety of biologics. The labora- tory also performs analysis of product purity and integrity an d identification of contaminants. The research includes the quantitative analysis of related substances, the assess- ment of impurities arising from the production process and th e characterization of degradation products. This makes it possible to precisely determine the quality and stability of the tested substances and their compliance with reg - ulatory requirements. The laboratory also supports the de velopment of CMC and the process of developing for - mulations of biological drugs. Selvita performs preformu - lation tests, packaging leak tests (CCIT) and assessment 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 23 of the functionality of drug delivery systems. Focusing on the early stages of formulation development and clinical production, it provides comprehensive laboratory exper - iments, process optimization and prototype design. At ev ery stage of research, it offers the development, optimi- zation, verification and validation as well as transfer of ana- lytical methods in accordance with the international ICH gu idelines and general pharmacopoeial requirements. The Biological Research Laboratory, which is part of the platform, specializes in providing advanced R&D and analytical services in the field of biological drugs, supporting the process of their development, optimiza - tion and quality control. The scope of services offered in cludes the development of cell models for the analysis of the activity of biological drugs, conducting research on cell models enabling a detailed analysis of the mech - anisms of action of biological drugs, and supporting res earch and development processes of new therapies. The team carries out work related to the optimization and validation of cellular and biophysical methods used for the qualitative analysis of biological products, including peptides and proteins, which are in the clinical trial phase. In addition, the services provided include the optimiza - tion and validation of methods for the determination of co ntaminants in biological products, such as proteins and DNA of cellular origin, using ELISA and qPCR methods, in accordance with the international ICH guidelines. In cooperation with the Quality Control Laboratory, com - prehensive quality analysis of a batch of biological drugs, in cluding peptides, growth factors and monoclonal anti - bodies, is also offered, using cellular and biochemical me thods (ELISA, SDS-PAGE, Western blot, IEF), in accord- ance with the principles of Good Manufacturing Prac - tice (GMP). The laboratory also deals with the transfer of biological methods for medicinal products in accord - ance with GMP requirements, which enables the effective im plementation of new analytical procedures and pro - vides support to customers in releasing drugs to the mar - ket. Stability and forced degradation studies of biologi - cal drugs allow to determine the durability and resistance of p reparations to various external factors, ensuring their safety and effectiveness. Small Molecule Drug Testing Platform Apart from the analytical work supporting the devel - opment of small molecule medicinal products, the labo - ratories located in Kraków and Poznań conduct separate an alytical projects involving the development of research methods, validation, transfers and routine analyses of small molecule active substances, raw materials and fin - ished pharmaceutical products. As part of these studies, we offer comprehensive analytical support at every stage of the development of a new drug or generic (CMC). As part of FTE projects, Selvita experts develop and opti - mize analytical methods for testing the content, purity, re lease processes and stability analysis of formulations. The Group works in accordance with the highest quality standards – following the GMP principles, applying the lat- est ICH guidelines and implementing elements of a mod - ern approach to the development of QbD methods, adapt- ing to dynamically changing market trends. Wi th highly qualified staff and advanced analytical infrastructure, we help our clients to identify and test con- taminants including genotoxic substances, nitrosamines and pyrrolizidine alkaloids. Precise trace analyses allow us to ensure the highest quality and demonstrate the safety of the tested materials. 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 24 Quality Control Laboratories Quality Control Laboratories operate in accordance with the principles of Good Manufacturing Practice (GMP) and are responsible for the control of materials in accordance with the applicable pharmaceutical law. The purpose of these activities is to verify whether the materials (active substances, raw materials, formulation components, for - mulations) meet the required quality standards before they ar e released for subsequent stages of production. Quality Control works in the area of both small molecule products and biological drugs. The scope of the audit includes: • Raw Material Testing: Analysis of raw materials and packaging materials to confirm their quality before being transferred to further production processes. • Intermediate Product Testing: Evaluation of intermediate products from various manufacturing stages to verify the correctness of the production process. • Finished Product Testing: Before a medicine is placed on the market, finished products are tested for compliance with the relevant documentation. • Stability Testing: Tests to confirm the safety of use and quality of products on the market. Conducting tests in an environment that complies with GMP certification requires development and adherence to detailed documentation of all control activities. The main task of the Laboratories is to provide reliable data enabling the correct assessment of the drug in terms of its quality and safety of use, which is verified during periodic audits carried out at the Group. All tested materials must meet specific quality crite - ria, as specified in standards, monographs, material spec - ifications and registration documentation. Inspection pro- cesses include physicochemical tests, functional tests and mi crobiological tests to ensure that the product complies with the relevant documentation. The microbiological laboratory conducts tests of air purity, surfaces and personnel, offering services in the field of monitoring the production environment. For starting materials and final products, the microbiology laboratory provides services for checking microbiological purity and determining sterility and endotoxin levels. Regular testing is essential to ensure the safety and quality of pharma - ceutical products and to meet regulatory requirements. Co nducting these tests requires strictly controlled aseptic conditions so that the samples are not contaminated by environmental influences, which is achieved through the appropriate design of the laboratory infrastructure. Quality Control Laboratories play a key role in ensur - ing the safety, efficacy and purity of medicines adminis - tered to patients, operating in a highly regulated operating en vironment in Krakow and Poznań. Agrochemical Laboratory Although Selvita focuses mainly on the pharmaceutical industry, our specialized analysis groups, machinery and extensive experience in drug development is highly useful to support customers in the agrochemical industry. To this end, a dedicated Laboratory has been established within the Development and Contract Research Department to provide high-quality chemical analysis and support for the agricultural sector and the agrochemical industry. The laboratory's activities include single- and five- batch analyses, development and validation of analytical methods, certification of technical materials and formula - tions, stability analyses, determination of physicochemical par ameters of formulations and identification of unknown impurities. A key element of the laboratory's activity is to conduct research in accordance with the principles of Good Lab - oratory Practice (GLP). All tests are documented in Study Pl ans and Reports. The laboratory uses high-quality analytical equipment, which is subject to regular checks and qualifications. The latest analytical solutions are used in the analyses, and the quality of the determinations is controlled by regular GLP audits. 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 25 Description of significant markets and customer groups served As a leading Contract Research Organisation (CRO), the Group provides comprehensive services in the field of drug discovery and development. Expertise includes tar - get validation, in vitro and in vivo studies, safety and effi - cacy studies, and pharmacokinetics. We also offer a full ra nge of analytical support for pharmaceutical customers, release studies in quality control of investigation and com- mercial products, and formulation development for small mo lecule products. Below is an overview of the key mar - kets and customer segments: 1. Pharmaceutical Companies Large and mid-sized pharmaceutical companies: We part- ner with established pharmaceutical companies, acceler - ating their preclinical processes and offering end-to-end so lutions – from goal validation to clinical candidate selec- tion. Our services help you reduce time-to-market and re duce the risks associated with R&D investments. Addi - tionally, we provide DMPKs that support the evaluation of dr ug metabolism and pharmacokinetics to optimize lead candidates. In addition, we offer finished product qual - ity testing, as well as the development and validation of ana lytical and biological methods at every stage of drug development and implementation. We provide a compre- hensive service of development and optimization of formu- lations of small molecule medicinal products and contract ma nufacturing of investigational medicinal products, thus enabling the implementation of clinical trials in the drug development process. Young biopharmaceutical companies: Smaller and vir - tual pharmaceutical companies use our infrastructure and ex pertise to develop innovative therapies without the need to maintain their own preclinical resources. We also provide comprehensive services in the area of analytical and bioanalytical method development, validation, and quality testing of active substances and finished biologi - cal products, supporting entities in the biopharmaceutical sec tor. 2. Biotechnology Companies Biotechnology start-ups: Dynamic biotech entities rely on our custom research projects and expertise in areas such as oncology, infectious diseases, inflammation, metabolic diseases such as obesity and diabetes, and fibrosis to vali- date the goals and progress of clinical trial candidates. We of fer comprehensive characterization and structural anal - ysis of large molecules, a wide range of physicochemical te sts, analysis of purity and integrity of products, and iden- tification of impurities. Hig hly specialized biotechnology companies: We help companies focusing on small molecules and advanced modalities, including PROTACs, molecular adhesives, tar - geted protein degraders, antibody-drug conjugates (ADCs), and RNA-based therapies, by providing tailored preclin - ical models and deep scientific knowledge. We develop cel l models for the analysis of biological drug activity, sup- port the CMC process, the preformulation and formulation st ages of biological drugs, and the evaluation of the func- tionality of drug delivery systems. 3. Agrochemical and cosmetic industry Agrochemical manufacturers: We offer chemical and ana- lytical services to support the development of crop pro - tection products. Our capabilities include the identification an d synthesis of impurities, the synthesis and identifica - tion of metabolites, and the development of new synthe - sis pathways. Method validations, certifications and sin - gle- and five-batch analyses are performed in GLP quality. Cosmetic Industry : Our team provides custom synthesis and analytical chemistry services for cosmetic ingredient development. While we do not provide GLP-compliant ser- vices in this sector, our offerings include laboratory-scale sy nthesis and comprehensive chemical analysis to ensure product quality and foster innovation. 4. Academic and Research Institutions Universities and Academic Laboratories: We engage in basic research and projects in translational science, help - ing to transform fundamental scientific discoveries into pr actical applications. Our services provide access to advanced technologies such as high-throughput screen - ing and specialised disease models (facilitating the journey fr om bench to beds, facilitating the science from the lab table to the bedside). We are also partners of these insti - tutions under various scientific grants. 1.4 . Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 26 1.4. Selvita Group's business model Geographic markets We operate globally with a strong presence in key mar - kets that drive innovation and demand for preclinical test- ing services: Un ited States (US): A major market for biotechnology innovation and pharmaceutical R&D. United Kingdom (UK): A market known for academic excellence and pioneering research, especially in the fields of oncology, rare diseases and advanced therapies. Switzerland: Some of the world's leading pharmaceu- tical and life sciences companies. Eu ropean Union (EU) Member States: Biotech start-ups and large pharmaceutical corpora - tions. Our services meet the region's demand for inno- vation-driven preclinical research. We a lso operate in the following areas: Japan: A global leader in pharmaceutical research, bio- technology and precision medicine, with a growing de mand for external preclinical expertise. South Korea: Growing strength in biopharma and inno- vative drug development, particularly in biosimilars, cel l and gene therapies, and small molecule therapies.
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 27 Distribution of the Group's revenues Other European Union countries PLN 126.8 million Switzerland PLN 49.4 million United Kingdom PLN 45.3 million United States PLN 92 million Poland PLN 14.6 million Other countries PLN 14.1 million Drug Discovery segment: PLN 260.7 million Drug Development segment: PLN 82 million Unallocated revenues: PLN 3.5 million Total revenue in the Group: PLN 346.2 million CHART 4. Distribution of the Group's total revenues: Poland: PLN 14.6 million Switzerland: PLN 49.4 million Other European Union countries: PLN 126.8 million United Kingdom: PLN 45.3 million United States: PLN 92 million Other countries: PLN 14.1 million Total revenue in the Group: PLN 346.2 million CHART 5. Sales structure by geography: PLN 346.2 million PLN 346.2 million Drug Discovery segment PLN 260.7 million Unallocated revenues PLN 3.5 million Drug Development segment PLN 82 million 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 28 The parent company is Selvita S.A. with its registered office in Krakow – the main area of activity is Drug Discovery and, to a lesser extent, Drug Development. The subsidiaries that have been consolidated in the financial statements are: Selvita Services Sp. z o .o. focuses primarily on drug development services, including analytical development of small and large molecules, qual- ity control of large molecules, cell and molecular biology, and bioanalytics. Selvita d.o.o. is exclusively involved in drug discovery services, includ - ing chemical research, DMPK (Drug Metabolism and Phar - macokinetics), in vitro pharmacology and translational re search, in vivo pharmacology and toxicology. Selvita Inc. sales offices in Boston and San Francisco. Selvita Ltd. sales office in Cambridge. PozLab Sp z o.o. a CDMO (Contract Development and Manufacturing Organ- isation). The company has built competencies and offerings in three main segments: pharmaceutical product develop- ment (including the manufacture of medicinal products), qu ality control, and microbiological testing. Selvita S.A. also holds 46% of shares in Ardigen S.A., the company has not been consolidated in the financial state- ments. Ardigen is an AI CRO company that, thanks to its ow n platforms based on AI tools, supports scientists in discovering innovative drugs and developing the concept of personalized medicine. In analytical reports, Ardigen is listed in the top 5% of companies operating on the global AI in Drug Discovery market. As of 31.12.2024, the Selvita group employed 969 people in individual locations. — Po land – 735 people — Cr oatia – 213 — Ot her – 21 Selvita Group does not operate in the following sectors: fossil fuels, production of chemicals, production of con - troversial types of weapons, cultivation and production of to bacco. DIAGRAM 1. Diagram of all companies belonging to the Selvita Group (as of 31.12.2024) Selvita S.A. Poland Selvita Services Sp. z o. o. PozLab Sp z.o.o Croatia Selvita d.o.o. USA Selvita Ltd.UK Selvita Inc. CHART 6. Employment by location 969 735 213 21 Poland Croatia Other 1.4. Selvita Group's business model
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 29 1.5. Selvita Group's value chain [SBM-1] Selvita Group's development is based on a full value crea- tion model – from links and capitals upstream, i.e. supplies of necessary reagents, substances, materials, equipment, mineral resources, fuels, energy, services and capitals constituting the foundation for the Group's operations, through the main processes taking place in the Group's operating activities – to the main results and effects for stakeholders downstream, where it was confirmed who the Group's customers are, what the services provided by the Group are used for, and what are the main categories of waste generated as part of its operations. The final ele- ment for the Group's business is a service in the form of a pr oject carried out with the client. The presented value chain model, based on the analysis of material flows, was the source of the process of calculating greenhouse gas emissions. 1.5. Selvita Group's value chain
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 30 Business model and value creation in the Selvita Group Identified key stakeholders present at the various stages of the value chain Suppliers of substances, reagents, products, materials, services, equipment, accessories, ethical committee, natural environment (resources), landlords of premises Selvita employees, affiliated companies, investors, shareholders, supervisory board, funding institutions, competition, industry organizations, ethical committee Customers, competition, investors, shareholders, supervisory board, funding institutions, regulatory authorities, media, industry organizations, society, waste recipients, natural environment Upstream: supply of essential raw materials, materials, equipment, services. Capitals essential for the Group's operations. Operations of the Selvita Group: business model and key processes in the Selvita Group. Downstream: key outcomes and impacts for stakeholders. Section Capitals Section Capitals Section Capitals a. "Fine chemicals” products, reagents, s ubstances b. Co nsumable materials, and accessories, laboratory glassware, research accessories c. Co mputer components, apparatus, and specialized equipment, technical gases d. GM O and GMM laboratory animals e. Ser vices and utilities (energy, water, cleaning, maintenance and servicing, logistics) f. Per mits, certifications, regulations, and guidelines g. Of fice and laboratory spaces 1. Br oadly defined financial capital: own and acquired capital 2. Op erating capital: 7 sites in Poland and abroad, technical, research, and laboratory infrastructure, IT systems 3. In tellectual capital: research process know-how, specialized knowledge, compliance with regulations and standards 4. Hu man capital: specialized employees of own organizational units, experts 5. Soc ial and relational capital: customer trust, brand reputation and recognition in the industry, collaborations with the scientific community 6. En vironmental capital: energy, raw materials, water, laboratory animals Realization of projects in key areas: a. Dr ug Discovery: a multi-stage, interdisciplinary process of developing chemical or biological substances b. Dr ug Development: analytical research and formulation in GxP system c. In tegration and optimization of R&D, IT, AI, in-vivo, in-vitro research, and scientific knowledge and resources processes d. Re search and development processes in the field of agrochemistry e. Pr oject management, monitoring, and documentation f. Su pporting processes withing the organization (administration, management, HR, IT, etc.) g. Sa les, customer service, marketing, and communication 1. Br oadly defined financial capital: results related to current operations at the project implementation level, expenditure, and investment acquired funds 2. Op erating capital: unique laboratory resources, resource management, scaling up operations 3. In tellectual capital: quality uniqueness, efficiency, and adequacy of executed projects, patents, know-how, specialized knowledge 4. Hu man capital: qualified workforce – over 960 employees, number of PhD holders, experience, diversity of skills 5. Soc ial / relational capital: partnerships with clients, universities, social organizations, internships, and doctoral programs a. Pr oject Acquisition, Customer Service, Transparent Communication with the Market and Investors b. Gl obal Partnerships with Clients (business clients), Collaborations, and Expert Networks for Innovation in the Industry c. Ac tions Ensuring compliance with Regulations, Standards, and Best Practices d. Hi gh Standards for Animal Welfare in Laboratory Animals e. Ra tional Resource Utilization: No stockpiles, striving for process efficiency and building a culture of continuous improvement, automation & AI 1. Fi nancial results: Profit, turnover, dividends, return, and financial stability 2. Hu man and intellectual capital: Satisfaction of individuals involved in the projects, employee development, providing attractive workplaces, innovation, contribution to the advancement of biotechnology, pharmacology and agrochemistry 3. So cial capital: • Sup port for education through collaborations with universities • Re cognition from satisfied, returning cusomers • St renghtening the image of a strong, stable, and trustworthy brand, global growth • Hi gher social purpose of the activities: positive impact on the fight against the diseases, including cancer, neurological, and infectious diseases 4. En vironmental capital: responsible managment of waste and the environmental impact of our economy → → 1.5. Selvita Group's value chain
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 31 1.6. Selvita Group's strategy [SBM-1] The current development strategy of Selvita Group is valid for the years 2022–2025. Selvita's goal is to strengthen its position as a leading global preclinical CRO (Contract Research Organization), accelerating access to new therapies for patients through a focus on the disease and professional and effective imple- mentation of projects in the field of drug discovery and dev elopment, using extensive experience, state-of-the-art research technologies and artificial intelligence tools. Strategic goals for 2022–2025: Development of comprehensive services in the field of drug discovery and development: Development of services of the highest quality and unique competences: Strong presence in major markets in the United States and the United Kingdom 1 2 3 • Specialization in selected therapeutic areas • Development of competences in the field of oncological and neurological diseases • Strengthening the position of the CRO providing services in the area of integrated projects on the market • To develop competences in supporting the drug discovery process with artificial intelligence models and structural biology • Biopharmaceutical development services • Complement your Drug Discovery offering • Expansion of the Drug Development segment 1.6. Selvita Group's strategy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 32 The Group's mission as an organization providing services in the field of research in the discovery phase (Drug Discov- ery) and drug development (Drug Development) focuses on achieving one of the key premises of the Sustainable Development Goals (SDG) of the UN Agenda – good health and quality of life. This premise focuses on ensuring that all people have access to quality healthcare, thereby con- tributing to improving the quality of life as well as reduc - ing health inequalities worldwide. Through the implemen- tation of innovative research and development projects, th e Group actively participates in the creation of new, safe and effective therapies that have a real impact on improv- ing public health. Th e Group's strategy focuses on implementing activ - ities in accordance with taxonomic guidelines, with an em phasis on investing in the development of research and development infrastructure. In this context, the Group completed the design of a new building in 2023, which serves as a modern research and development center. The investment was aimed at creating advanced infrastructure enabling research at the highest level. The building has optimised resource and energy consumption through the introduction of LED bulbs, the use of energy from renewa- ble sources in the form of photovoltaic panels, and reduced wa ter consumption through taps with motion sensors. The building is primarily equipped with the latest technologies, which enables the optimization of research and develop - ment processes and provides appropriate conditions for th e implementation of complex projects in the field of drug discovery and development. As a result, the Group increases its innovation capabilities and becomes more competitive on the international market. One of the key elements of the Group's strategy is also to invest in data processing using the latest technol - ogies, including artificial intelligence (AI). These technolo- gies allow for faster and more precise analysis of data sets, wh ich is invaluable in the context of discovering new ther- apies. AI is used to model and forecast research results, whic h significantly speeds up analytical processes and enables more accurate results. Thanks to artificial intelli - gence, the Group can optimize research processes, min- imize the risk of errors and accelerate the introduction of ne w drugs to the market. These activities are an impor - tant element of the strategy, which not only supports the ac hievement of research and development goals but also fits in with the global trend of digitization and automation of processes in the field of science and medicine. Another important pillar of the Group's strategy is investing in the development of specialized scientific staff, considered one of the key elements of its further develop- 1.6. Selvita Group's strategy Assumptions of the development strategy in the area of drug discovery Strong scientific staff – potential for further growth We are creating the future by leveraging our extensive experience combined with dynamic growth and a solid market position: • Many years of experience in the field of drug discovery supported by successes in the form of clinical candidates. • Translational research in drug discovery projects. • Tracking market trends. • Passion for discovering new therapies. • Dynamic development. Selvita Group's growing reputation and attractiveness as an employer: • Presence in attractive scientific centers: Krakow, Poznań, Wrocław, Zagreb, Cambridge, Boston. • The growing level of life science education in Poland – new specializations. • Attractiveness of the labour market in Poland, HR – decreasing distance to Western European countries. • A stable scientific team with great potential for further development. • The growing experience of the team has the potential for further growth of revenue per employee. The impact of artificial intelligence (AI) on the drug discovery process Access to research space as a critical factor in further development Advanced use of AI and machine learning tools in the drug discovery process as key differentiators of the offering: • Improve the efficiency of ongoing projects and open up new opportunities, especially for rare rare diseases. • The process can be faster and cheaper = the possibility of introducing more new drugs. Along with the development of the biotechnology sector, there has been a saturation of space available fo r rent in technology centers. For medium and large companies, owning some of the laboratories is the optimal solution: • Cost effectiveness – renting specialized space is more expensive. • Independence from the landlord, security of business continuity. TABLE 4. Key elements of the overall strategy relating to sustainability issues
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 33 ment. A strong scientific workforce is the foundation for further growth and innovation in the area of research. The Group notices the growing level of education in the field of life sciences in Poland, where new specializations are emerging, which is conducive to the development of com- petences in the area of life sciences. In addition, the Group no tices an increase in the attractiveness of the labour mar- ket in Poland and Croatia, where the distance to Western Eu ropean countries is decreasing, which affects the greater mobility of qualified employees and attracting talent. The Group's scientific team is stable and has great potential for further development, which provides a solid basis for achieving ambitious research and development goals. Attention to the development of staff competences and investment in innovative technologies allow the Group to maintain a strong position on the market and contrib - ute to progress in the field of medicine, and thus to the im provement of the quality of life of people around the world. The objectives of the strategy are pursued, among others, from own funds, external financing, subsidies and other forms of public support or from increasing sales. The design of the Research and Development Center in Krakow was awarded a distinction for innovative architec- ture that combines modern design with functionality and su stainable development. The building has been equipped with infrastructure, installations and solutions adapted to the needs of modern technologies used in the life-science industry, m.in. continuous and emergency ventilation sys - tems, pressure cascades, or extractors and fume hoods to en sure safe operation, while using space effectively and using ecological materials and technologies. In 2025, the Group plans to develop a strategy that includes elements of sustainable development, based on, m.in other things, the results of the Double Materiality Anal- ysis (DMA) and the analysis of significant impacts, risks and op portunities (IROs), as well as the carbon footprint cal - culated in three scopes (Scope 1, 2 & 3). The strategy will in clude the climate goals that the Group will develop to prepare the organization to join the SBTI (Science Based Targets Initiative). Joining SBTi will allow for the verifica - tion of scientifically set goals and will support the Group's ac tivities in the intention to improve its environmental pro- tection activities. Due to the high interest in the SBTi initi- ative, the accession process may be time-consuming and may n ot be completed until the following years. 1.6. Selvita Group's strategy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 34 1.7. Material ESG impacts, risks and opportunities 1.7.1. Materiality Assasment [IRO-1] In 2024, Selvita Group, in compliance with the require - ments of the CSRD Directive and the European ESRS re porting standard, performed the first double material - ity analysis of sustainability issues, based on the due dil - igence process, fully compliant with the ESRS methodol - ogy. A consulting company was supported in carrying out this analysis. Significant influences of Selvita Group are those that are related to its business, including situations in which they arise from the Group's activities, are initiated by it or are directly related to its operations, projects or ser - vices within the framework of a business relationship. Th ese influences are not limited to geographical proximity or contracts, but relate to processes at various stages of the value chain that affect Selvita Group's activities, pro - jects or services, or result from their use or final applica - tion. In order to ensure full assurance that all relevant fac - tors were taken into account when using the quantitative im pact assessment method, an additional qualitative anal- ysis was carried out, including additional arguments. To assess the probability of the occurrence of influ - ences, it was first determined whether the influence has al ready materialized, in which case it has been considered real, or whether there is a possibility of its occurrence in the future, then it was classified as potential. The proba bility assessment concerned only potential impacts and wa s carried out in three time periods: short-term (up to a year), medium-term (from 1 to 5 years) and long-term (over 5 years). In each of these periods, the probability of a given impact was assessed on the basis of established criteria. At the same time, the impact was considered unlikely if the chance of its occurrence was less than 20%, the probability in the range of 20% - 40% was considered low, the medium chance was considered to be in the range of 40% - 60%, and the probability was considered high when the prob - ability was 60% - 80%. The highest category was a rating ind icating a very high probability, i.e. above 80%. She sources of information on impacts, risks and opportunities in the value chain were primarily the expert knowledge and experience of employees who took part in the workshops and have experience in working with sup - pliers and customers. In addition, the expert knowledge of an external consulting company was used, which con - ducted workshops on materiality analysis and publicly av ailable industry and market analyses. In 2025, in parallel to the work on the analysis of data for the 2025 ESG report, the Group plans to update the Business Continuity Plan (BCP), which will take into account risks and the ESG management method in accordance with the adopted methodology. 1.7. Material ESG impacts, risks and opportunities
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 35 Double Materiality Analysis – The Basis for Sustainability Disclosure The assessment of the materiality of issues related to sus - tainable development was carried out taking into account al l companies and divisions of the Group, in the following stages: 1. Analysis of the Group's sustainability context, business model and upstream and downstream value chain (operational activities, development strategy, business relationships, validation of the value creation model) 2. Identification of topics for analysis, stakeholder perspective (including a dedicated survey on stakeholders' opinions on the impact of the Group's operations on the environment, society and issues related to business ethics) and industry analysis (including benchmark, business environment, industry standards and guidelines, scientific studies). 3. Workshops on the assessment of impacts, risks and opportunities related to sustainability issues in the entire value chain (IRO, Influences, Risks, Opportunities) in the environmental, social and business conduct areas, conducted by a consulting company with representatives of Selvita Group's substantive units relevant from the perspective of individual ESG areas. 4. Acknowledgment of topics and sub-themes relevant to be disclosed in the sustainability statement. 5. Summarize results, select material topics and subtopics to report on – from the perspective of material inflows (risks and opportunities), outward (impacts) or both. Defining the areas of occurrence of negative impacts and taking preventive and mitigating negative effects. 6. Approval of the adopted methodology for materiality analysis and validation of material topics with the Management Board. 7. Selection of appropriate disclosure points for material topics 1.7.2. Significant stakeholders [SBM-2] In preparation for effective management of sustainability issues and to solicit stakeholder input in identifying mate- rial ESG topics, the Group carried out a stakeholder map - ping process assessing two key parameters for each of the id entified groups: • The strength of the influence of a given stakeholder group on the operations of Selvita Group • Level of interest of a given stakeholder group in the activities of Selvita Group Both parameters were rated on a scale from 1 to 5, with 5 being the highest impact or level of interest. On this basis, key and other stakeholders were identified. For each group, the channels and forms of communication, its fre - quency, areas of cooperation and substantive units respon- sible for this cooperation were defined. As a result of the materiality study, Selvita's key stake- holders were identified, which include 8 main groups: cus- tomers, investors, employees, suppliers, financial institu - tions, supervisory authorities and regulators, universities, and t he media. Exercising due diligence in the process of identifying and assessing impacts, risks and opportunities and select- ing topics relevant to Selvita Group's sustainability report- ing, the process took into account the stakeholder per - spective obtained as part of the conclusions collected fr om the sources of the dialogue conducted on a continu- ous basis (the results of the Pulse Check survey, the results of the regular manager assessment, regular meetings with shareholders), conclusions from the regular review of publicly available channels reporting breaches of the Selvita Group, including from the channel dedicated only to employees called "Suggestion form" and a dedicated stakeholder perspective survey (conducted in the form of an anonymous survey, in-depth interviews and focus group meetings conducted by an external consulting company). Key stakeholders of the Selvita Group identified on the basis of the map of impact and interest were invited to par- ticipate in the dedicated survey, including: employees, cus- tomers, suppliers, scientific communities (universities, sci- entific institutions), financial institutions and investors. Th e data obtained as part of both the existing commu- nication channels and the dedicated stakeholder opinion sur vey were a valuable contribution during the IRO (pro - cess of identification and assessment of impacts, risks and op portunities) workshops conducted as part of the dou - ble materiality analysis with the Group's employees – own- ers of individual substantive areas related to sustainable dev elopment. 1.7. Material ESG impacts, risks and opportunities
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 36 Key stakeholders Areas of cooperation and their purpose Forms of engagement Main communication channels Responsibility in the area of communication Customers • planning and conducting research in the area of Drug Development and Drug Discovery • preparation of documentation required by regulatory authorities • collection of scientific data as part of commissioned projects • long-term contracts • framework agreements • research reports • e-mail • telephone • meetings: TC, directly at the Group's headquarters, during industry conferences • Chief Commercial Officer • Owners of business areas within Drug Development & Drug Discovery or employees designated by them, e.g. Project Managers Investors • reporting • strategy implementation • isk management • market analysis • defining trends in the industry • ESG responsibility • compliance • raising knowledge about the specifics of the industry • quarterly, semi-annual and annual reporting • current reports (ESPI) • presentation of results • general and extraordinary meetings of shareholders • meetings with institutional investors and analysts • earnings conferences, industry conferences and roadshows • interviews, articles, ESG initiatives / non-financial reports • e-mails to investors on results and extraordinary events, newsletters • website (Investor Relations) • social media (LinkedIn, Facebook) • e-mail • face-to-face meetings • Management Board • Legal Department TABLE 5 Significant stakeholders 1.7. Material ESG impacts, risks and opportunities
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 37 Key stakeholders Areas of cooperation and their purpose Forms of engagement Main communication channels Responsibility in the area of communication Employees • onboarding • vailable salary and benefits package • development of skills and competences- • well-being of employees • combining work and personal life • equal access to opportunities to achieve professional goals • equal treatment • communication about the situation in the company • forms of employee appreciation • employees' impact on the company - suggestions, changes • ensuring safe working conditions in accordance with the law and common standards • analysis of the health and safety condition • thematic townhalls for all employees (quarterly) and for individual departments • surveys – general (engagements) and on individual topics • audits and OHS trainings • annual summaries • weekly newsletter • reports and records of the results of working environment measurements • Intranet • e-mail • telephone • meetings: TC, directly at the Group's headquarters • People & Culture • HR & Payroll • Health, Safety and Environmental Protection • Line Managers 1.7. Material ESG impacts, risks and opportunities TABLE 5 Significant stakeholders
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 38 Key stakeholders Areas of cooperation and their purpose Forms of engagement Main communication channels Responsibility in the area of communication Provider Suppliers of goods • supply of reagents, consumables and other key goods necessary for the continuation of the company's operations • delivery of licenses for the use of business and scientific software • supply of computer hardware, network equipment, infrastructure cabling, data center equipment (storage, compute) • supply of audio-video equipment • Long-term contracts • framework agreements • orders for deliveries to a specific project • e-mail • telephone • meetings: TC, directly at the Group's or the Tenant's headquarters • Chief Operating Officer • Procurement and Infrastructure Director • Chief Information & Technology Officer Service Providers • delivery of services necessary to maintain the continuation of the company's operations and research services • delivery of services other than necessary to maintain the company's operations • delivery of services located in cloud computing (Microsoft, AWS, Google) • provision of consulting services • leasing of programming services • Long-term contracts • framework agreements • e-mail • telephone • BDO platform • Chief Operating Officer • Procurement and Infrastructure Director • Chief Information & Technology Officer Landlord • rental and adaptation of infrastructure, use of common infrastructure - social and laboratory • management of laboratory infrastructure • compliance with regulations and industry standards • adaptation of space to changing needs • organization of scientific events and workshops • joint research initiatives • exchange of experience and know-how • Long-term leases • Infrastructure development partnerships • Renovation schedules • e-mail • telephone • meetings: TC, directly at the Group's headquarters or at the office • Chief Operating Officer • Procurement and Infrastructure Director 1.7. Material ESG impacts, risks and opportunities TABLE 5 Significant stakeholders
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 39 Key stakeholders Areas of cooperation and their purpose Forms of engagement Main communication channels Responsibility in the area of communication Provider Waste recipients • management of waste generated by the SLV Capital Group • selection of authorized entities for further waste management (verification of permits, decisions, certificates, BDO register) • conducting business in compliance with the principles of sustainable development (KZR certificate) • evidence documents on waste management • invoices confirming the collection and disposal of waste • summary in the field of waste management • description of the processes of utilization, neutralization and recycling by waste recipients • e-mail • telephone • BDO platform • Health, Safety and Environmental Protection Manager Financial institutions • maintaining bank accounts • servicing business payment cards, crediting, leasing of laboratory equipment • liability insurance, professional liability insurance, property insurance and others • obtaining external sources of financing for the development of business – • settlement, monitoring, control of co-financed projects, reporting • audits • control visits to the Group's headquarters • financial reports and documentation • e-mail • telephone • TC meetings (or occasionally at the Group's headquarters) • electronic banking systems • Treasury Department Manager • Grant Projects Department • Chief Financial Officer • Chief Accountant Supervisory authorities Tax Office • tax settlements • financial reporting • inspection reports • declarations • official letters • response to inquiries and calls • electronic mail • traditional mail (official correspondence) • electronic tax platforms • Chief Financial Officer • Chief Accountant • Quality Director WSE KNF • compliance with capital market regulations • transparency of reporting • protection of investors' rights • compliance with ethical principles and compliance with industry standards • management of risks related to investments • membership of the Local Ethics Committee on Animal Experiments • submission of research approval applications • regular ethical reviews • development of policies and procedures • ethics and animal welfare training • dedicated reports and documentation • meetings at the WSE headquarters • e-mail • dedicated communication platforms • Chief Financial Officer • Legal Department 1.7. Material ESG impacts, risks and opportunities TABLE 5 Significant stakeholders
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 40 Key stakeholders Areas of cooperation and their purpose Forms of engagement Main communication channels Responsibility in the area of communication Regulators WIF Chemicals Bureau GIF • ensuring compliance with the principles of GMP and GLP in the area of Development and Contract Research • acts and regulations of the Minister of Health in the field of GMP, GLP, Pharmaceutical Law, Chemical Substances and Drug Addiction Prevention • cooperation as part of inspections, corrective actions, regulatory consultations • compliance with legal regulations (EU directives) • ubmitting applications for permission to study (preparation of documentation; assessment of the validity of the study) • application of the 3R and 6R principles • audits and inspections • training • monitoring and reporting of studies • retrospective assessments • risk and safety assessments • monitoring of animal welfare – education and training • publications and announcements of the Chief Pharmaceutical Inspectorate • membership of the Local Ethics Committee on Animal Experiments • submission of research approval applications • regular ethical reviews • development of policies and procedures • ethics and animal welfare training • dedicated reports and documentation • audits • control visits to the Group's headquarters • e-mail • telephone • TC meetings (or occasionally at the Group's headquarters) • Head of Animal Facility • Legal Department 1.7. Material ESG impacts, risks and opportunities TABLE 5 Significant stakeholders
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 41 Key stakeholders Areas of cooperation and their purpose Forms of engagement Main communication channels Responsibility in the area of communication Universities • potential client in the area of Drug Discovery • joint research projects • grants • scientific consortia • testing innovations • technology transfer • education • development of study programs • work on syllabus • providing infrastructure, conducting analyses • services of a niche nature • recruitment programs • internship programs • implementation • doctorates- organization of joint courses and • trainings - mentoring • participation in clusters and innovation networks and in Social Councils • internship programs and apprenticeships • mentoring programs • conferences • workshops • seminars • meetings of Social Councils • e-mail • telephone • TC meetings • direct meeting at the Group's headquarters or at the university • Chief Operating Officer • Grants Projects Department • Owners of business areas within Drug Development & Drug Discovery or employees designated by them Media • creating a positive image of CRO as a trusted partner in the pharmaceutical and research industry • responding to crisis situations • cooperation on industry initiatives • organizing events and conferences • cooperation through an investor relations agency fully responsible for our relations with the media (and investors) • presentations at significant corporate events • interviews • expert articles • promotional activities • social media campaigns • cooperation with industry journalists • media partnerships • e-mail • phone • TC meetings • press releases • social media • Marketing & Communications Director 1.7. Material ESG impacts, risks and opportunities TABLE 5 Significant stakeholders
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 42 1.7.3. Material impacts, risks and opportunities [SBM-3] The Group has considered the outflows (external) and finan- cial (internal) perspectives separately and discloses indicators fo r topics identified as material from both perspectives and information relevant to only one of them. In order to identify individual issues, the require - ments of the ESRS standard, a contextual analysis of the Gr oup, the market and the sector were taken into account, external regulations that have a significant impact on the Group's operations and a wide catalogue of internal doc - uments were taken into account. Th e sources of information on impacts, risks and opportunities in the value chain were the expert knowl - edge and experience of employees participating in the wo rkshops, the Group's general knowledge of the sec - tor and industry of its operations, and the expertise of an ex ternal consulting company conducting materiality anal- ysis workshops. Th e materiality audit identified 34 issues that the Group has a significant impact on or that have a material impact on the Group's operations. In order to determine the level of materiality and intensity of activities and the allocation of appropriate resources, the identified sustainability issues have been divided into 3 groups with different management priorities: H High The issue should be managed first and organizational resources should be directed primarily towards it. This cat- egory includes issues that have not been managed by the com pany so far, but are of key importance, or are already managed by the company, but are a priority from the per- spective of the company, stakeholders, policies and legal re gulations. This issue is subject to reporting. M Medium The issue should be managed and the organizational resources associated with it should be increased, although its priority is lower than that of the first group. This cate - gory includes issues that are material but not a top priority fr om the perspective of the company, stakeholders, poli - cies and regulations. This issue is subject to reporting. N Normal The issue should be managed with the same intensity and with similar resources as before. This category includes issues that are not crucial, or are already managed with appropriate intensity. This issue is subject to reporting. 1.7. Material ESG impacts, risks and opportunities
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 43 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Climate change E.1.2. Climate change mitigation The Group's operations, including energy and fuel consumption and transport, contribute to greenhouse gas emissions, which contributes to climate change. Greenhouse gas emissions are related to the production of reagents, other demand and downstream transport. The use of energy from non-renewable sources is associated with CO2 emissions, which have a long-term impact on the natural environment. The use of renewable energy sources and the optimisation of operational processes are steps towards reducing this impact and support sustainable development. The Group adapts its operations to emission regulations and customer expectations, setting ESG goals and implementing projects to reduce emissions. These activities can improve the Group's competitiveness, operational efficiency and reduce energy costs. They will also strengthen their position in the market, increasing their attractiveness in the eyes of customers and partners. Failure to comply risks a decrease in competitiveness and additional fees for emissions. Optimisation of energy consumption and greenhouse gas emissions is becoming a key element of the Group's strategy. Currently, these activities are part of the optimization of operational processes, but in the future they will be of key importance for the business strategy for 2026+. The Group is taking concrete steps to improve energy efficiency, including the implementation of renewable energy sources, optimization of resource consumption and the development of a sustainable supply chain, which supports sustainable development and adaptation to changing regulations. Own Operations, Upstream, Downstream H E.1.3. Energy TABLE 6. Significant impacts identified in the materiality study 1.7. Material ESG impacts, risks and opportunities
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 44 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Pollution E.2.5. Substances of concern The Group uses and manufactures key chemicals in laboratory and production processes, such as solvents, catalysts and reagents. These substances can pose a risk to human health and the environment, especially in the event of leakage or mismanagement. Inadequate handling or transport of reagents can lead to environmental pollution, posing risks to workers' health and ecosystems. The Group effectively manages hazardous substances in accordance with established procedures, minimizing the risk of leakage and health risks. Constant supervision, hazard identification and preventive measures ensure safety in the use of chemical substances. Selvita complies with legal standards, minimizing the risk of serious consequences. The Group plans to continue best practices and strengthen preventive measures to effectively manage the risks associated with their application. The management of hazardous substances is an integral part of the Group's activities, including work in laboratories and production processes. The Group applies waste management procedures that include safe storage, transport and disposal of chemicals. Systematic employee training and simulations of emergency situations are elements of the safety management strategy. These activities are in line with the Group's business model, which assumes responsible management of risks related to chemical substances, ensuring the protection of the health of employees and the environment. Own Operations, Upstream, Downstream H E.2.6. Substances of very high concern E .2 .7. Microplastics The Group does not generate microplastics directly in laboratory processes, but it can appear indirectly from waste from plastic equipment and chemical reagent packaging. The accumulation of these materials can negatively affect human health and the environment, including agriculture, food, drinking water and air quality. Microplastics can penetrate the body, posing a potential health risk. The Group is becoming increasingly aware of the need to properly segregate waste and reduce plastic. Microplastics are a threat to the environment, which affects waste management activities. In the future, the Group expects the development of recycling technologies and the introduction of stricter regulations on microplastics. It is also expected that the Group's employees and environment will increase awareness of waste management. The impact of microplastics is not directly related to the Group's operations, but it is an important environmental aspect. The Group plans to implement good practices related to waste segregation and to look for ways to reduce the negative impact of plastic on the environment. The Group's document does not regulate this issue, but the development of practices related to proper segregation is planned. Own Operations, Upstream, Downstream H 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 45 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Water and marine resources E.3.1.1. Water consumption Laboratory processes that use purified and softened water lead to its formation as a by-product. Water is also needed to dilute hazardous waste. It is an important raw material for the Group's suppliers and customers. Although the Group does not operate in water-stressed areas, its demand is crucial. Excessive consumption can limit access to drinking water and affect agricultural and industrial production. The group draws water from the municipal network and does not discharge pollutants into the sewage system, so it does not need water law permits. The Group monitors water consumption and related costs, which allows us to control its use. In the future, it will be possible to implement technologies that reduce water consumption and stricter regulations on water management. Such actions can improve ecosystems and reduce costs. Awareness campaigns among employees are also planned, covering the management of water resources in private life. Water consumption is an integral part of the Group's business processes. Currently, there is no internal procedure for water management, but water consumption is linked to the business model. In the future, the Group plans to implement measures to optimise the use of water resources and improve efficiency as part of its sustainable development strategy. Own Operations, Upstream, Downstream 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study Biodiversity and ecosystems E.4.1. Direct drivers of biodiversity loss E.4.1.1. Climate change Climate change, caused by greenhouse gas emissions, is leading to a warming climate, which poses a threat to biodiversity and ecosystems. These changes disrupt habitats and ecosystem processes, reducing genetic diversity and destabilising ecosystems. Pollution, including improper waste disposal, affects biodiversity indirectly, by generating waste transformed in violation of environmental protection standards. Medical and veterinary waste is disposed of in accordance with regulations by thermal transformation, but the overall impact on ecosystems depends on the practices of waste recipients and how patients dispose of medicines. The Group is conducting a scoping analysis of the strategyand the reduction of greenhouse gas emissions. Compliance with environmental regulations and customer expectations in terms of sustainable development will increase the Group's competitiveness. Inimplementing a sustainable development and resource management strategy, it will reduce the carbon footprint and improve the efficiency of processes. Responsible waste management, including cooperation with recipients who comply with environmental protection standards, will have a positive impact on biodiversity and ecosystems. Reducing emissions and striving for climate neutrality are currently not directly linked to the business model, although they are an important element of the company's development strategy. They will be one of the most important aspects in the future strategy. Currently, the environmental impact is managed through optimization projects, such as: optimization of resource and energy consumption (LED bulbs, photovoltaic panels, motion sensor taps), digitization of quality and data recording systems, and work on a more efficient and sustainable supply chain (purchase of solvents in larger packages, coordinated deliveries). The company manages chemical and biological waste responsibly and works to reduce the use of solvents and process waste. Although biodiversity issues are not currently regulated by policies, the company takes steps to improve the value chain and cooperate with waste recipients. Own Operations, Upstream, Downstream H E.4.1. Direct factors influencing biodiversity loss E.4.1.5. Pollution Own Operations, Upstream, Downstream N H
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 46 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Circular economy E.5.1. Input resources, including resource use The Group's circular economy affects the consumption of water, which is a key raw material in laboratory operations. The water is used for laboratory processes, hygienic and sanitary and consumption purposes and comes from external suppliers. Improper management of medical, veterinary, and hazardous waste can lead to water, soil, and air pollution, which poses a risk of poisoning and infectious diseases. Selvita Group gives waste to specialized companies, so the company's impact on the environment is indirect. Waste that is not suitable for recycling is handed over for disposal to authorized entities that have the appropriate equipment and means to safely and effectively carry out the disposal process. Excessive water consumption can lead to the depletion of water resources, especially in areas with limited access, which could trigger an environmental crisis and negatively affect the company's image. Water-saving efforts can support prudent use of resources, win the recognition of sustainable customers, and help avoid regulations on water conservation. The Group has waste management procedures in place and cooperates with certified hazardous waste disposal companies that provide high quality services. Improper management of waste, especially hazardous waste, can lead to environmental contamination, public health risks and violations of legal regulations, which would result in a loss of customer trust. The Group analyses the waste discharged and plans to reduce the production of hazardous waste by implementing innovative methods of its treatment. Such actions can improve the Group's reputation and make it more attractive in the eyes of environmentally conscious investors and consumers. Water consumption is an integral part of the Group's processes, although there is no internal procedure to regulate these activities. Water consumption is linked to the Group's business model. Disposal of waste resulting from the services provided is also related to the Group's operations. The impact on this area is managed in accordance with the waste management procedure and monitored by decisions of external bodies. Own Operations, Upstream, Downstream H E.5.2. Resources related to products and services E.5.3. Waste 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 47 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Working conditions S.1.1.1. Job security The Group provides stable and long-term employment, which affects the sense of financial security of employees and allows for better planning of the future. 77% of employees have permanent contracts, which contributes to their loyalty and commitment. Long-term employment improves the quality of life of employees, providing stability and motivation for professional development. Work in the Group is flexible and task-oriented, which allows for better adjustment of professional duties to private life. However, this form of work comes with challenges such as time pressure and the stress of completing challenging tasks. Overtime may occur during periods of increased work orders, which increases the workload of employees. Adequate remuneration is an important motivational element. The Group is trying to adjust salaries to market standards, although in some regions, such as Croatia, wage pressure is ahead of the Group's capabilities, which may lead to dissatisfaction and increased turnover. Long-term and stable employment in Selvita Group fosters employee loyalty, increasing their commitment and productivity, which has a positive impact on the efficiency of the organization and the stability of business relationships. Employees are more motivated to develop in the long term, which improves the atmosphere in the team and cooperation. Flexible working arrangements support task completion and work-life balance, although they can lead to stress due to ambitious goals. The Group is adjusting its wage grid to the market environment, although in the past of high inflation the pace of wage adjustment has not kept pace with price increases, which has caused dissatisfaction. The company is taking steps to make up for these differences by steadily increasing wages. In the future, the Group plans to continue its flexible working arrangements, which will allow it to become more competitive, attract and retain talent, supporting long- term growth. The company takes measures for the well-being of employees to minimize the stress associated with ambitious tasks. In the face of growing competition for talent, the Group will be forced to continue to adapt its remuneration structure to changing market conditions, while optimizing costs. Hiring specialists in the diverse structure of the Selvita Group is a key element of the company's operations. Job security results from the Group's day-to-day processes and business model. The company provides appropriate employment conditions, attracting qualified people. The form of employment, tailored to the needs of the employee and the requirements of the positions, is an important element of the Group's operations. The work process is regulated by documents such as the Work Regulations and Remote Work Regulations. The Group attaches great importance to pay adequacy, and the HR and Payroll Departments take steps to improve the situation related to differences in pay scales in different countries. Own operations H S.1.1.2. Working time S.1.1.3. Adequate pay 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 48 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Working conditions S.1.1.4. Social dialogue (Dialogue with the workers) The Group takes into account the opinions and expectations of employees through surveys, annual interviews and evaluations. A system for reporting ideas and violations has been implemented, ensuring anonymity, which allows for the identification of areas for improvement and the participation of employees in improving working conditions. There are trade unions in the Croatian branch, and in Poland a few years ago the Workers' Council was established, whose term of office expired. The Group encourages employees to create a new representation. The right to consultation and participation has a positive impact on employee engagement and builds trust and transparent cooperation. In Croatia, there is a collective agreement covering all employees, while in Poland there are no collective agreements, which does not adversely affect working conditions. In Poland, Employee Representatives for general affairs and the Occupational Health and Safety Committee have been appointed, which allows for an open dialogue. The Group enables employees to influence change through direct contact, which increases their engagement and supports the development of the organization, creating an attractive and competitive workplace. Good internal communication and cooperation with employee representatives foster trust, minimize conflicts and solve problems faster, which affects the stability and efficiency of the organization. Regular meetings and communication of strategic decisions ensure transparency, building stronger bonds within the company. The development of transparency leads to an increase in employee loyalty and strengthens the positive image of the Group, which directly affects its development and competitiveness. Periodic evaluations and employee feedback, coordinated by the Human Resources Operations and Organizational Culture Department, are crucial in creating appropriate working conditions. In Poland, cooperation with employee representatives, and in Croatia with trade union representatives, supports decision-making processes. In 2024, Employee Representatives for General Affairs and the Occupational Health and Safety Committee were appointed, supported by the EHS Manager and the Director of the Human Resources Operations and Organizational Culture Department. Freedom of association of employees is an integral part of the Group's business model. Employee representation can submit ideas and suggestions for work improvements, and transparent cooperation based on trust and honesty is the foundation of an engaged community. So far, the activities of representatives have been carried out through appointed commissions. Own operations N S.1.1.5. Freedom of association, existence of works councils and workers' rights to information, consultation and participation S.1.1.6. Collective bargaining, including the proportion of employees covered by collective agreements 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 49 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Working conditions S.1.1.7. Work-life balance The impact in this area is bidirectional, both positive and negative. Employees can freely take parental leave, and those who need more time at home can work from home, which is positively received. At the same time, the task-based work system and project work, in periods of increased number of orders, are associated with time pressure and overtime, which leads to less free time, stress, negatively affects health and reduces the quality of life. Flexible employment is conducive to the performance of tasks and allows you to maintain a balance between private and professional life, but it can also be associated with stress resulting from individual duties. The Group will continue to offer this form of employment to best meet the needs of employees and support their well-being. The form of employment, tailored to the needs of the employee and the requirements of the tasks, is an important element of the Group's operations. The task-based work process is regulated by the Work Regulations and the Remote Work Regulations, and the impact results from the Group's business model. Own operations N S.1.1.8. OSH The impact in this area is two-way – positive and negative. The Group provides health support, including additional medical care, vaccinations, psychological counselling, benefits and campaigns promoting a healthy lifestyle. However, working in a laboratory or animal house can negatively affect the health and safety of employees. The Group has not recorded any serious accidents at work or cases of work-related ill health. The implementation of the best OHS and environmental protection practices affects the high quality of work in the laboratory. Despite this, there is a risk of occupational diseases related to the nature of work. The Group intends to continue to implement best practices to minimise health risks to employees. Care for the health and safety of employees is a priority for the Group. The EHS department monitors updates to the regulations, regulations, procedures and instructions that are part of the Occupational Health and Safety Management System. These activities are in line with the Group's business model. Own operations H 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 50 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Equal treatment and equal opportunities for all S.1.2.1. Gender equality and equal pay for work of equal value The group emphasizes gender equality and diversity, counteracting all forms of discrimination. It ensures equal pay by making the pay gap dependent on the level of positions. It promotes the integration of generations and nationalities by offering support, including assistance to foreigners. Inclusion and diversity are key to organizational culture, fostering a better working atmosphere, innovation and intergenerational cooperation. The Group has implemented a system of training and professional development, enabling employees to improve their competences and change industries. In addition, it counteracts violence, mobbing and harassment at work by implementing appropriate procedures and mandatory training, which helps to create a safe working environment. Equal pay and anti-discrimination policies have a positive impact on employee morale, minimizing feelings of injustice and fostering competitiveness. Noticeable employee turnover, especially in Croatia, indicates the need to adjust wages faster to rising inflation. The Diversity and Inclusion Policy strengthens the organisational culture, attracting talented employees from different nationalities and generations, which improves the Group's competitiveness. Foreign workers are supported in adaptation, which increases their commitment. Continuing the pay equity and diversity policy will help keep the organization competitive in the long term. The diversity of the age structure is conducive to the exchange of experience and innovation, which will affect the dynamic development of the Group. Increasing the competence and motivation of employees through training has a positive impact on the effectiveness of the organization and the matching of talents to its needs. Increased employee engagement is conducive to achieving results, and the continuation of development programs supports the achievement of the company's strategic goals. The implementation of the policy of counteracting violence and mobbing improves the atmosphere in the company, building trust and loyalty of employees, which strengthens the image of the Group as a responsible organization. Continued development of the training system will allow the Group to better adapt to changing market conditions, increasing its competitiveness. Effective implementation of anti-mobbing procedures and anti-violence training will attract the best talent and minimize legal and reputational risks, fostering long-term employee loyalty and improving the atmosphere in the company. High inflation and changes in legislation require a quick response from the Group. The company is adjusting its wage scale to market conditions, although the slower pace is due to rising operating costs. The group has established a unit for the integration of expats, creating documentation and structures to support new employees in adaptation. These activities are part of a business model that attracts talent. The Group has implemented a training platform that allows the selection of training courses according to individual needs, managed in accordance with the Training and Development Policy. An Anti-Mobbing Policy and a Procedure for Counteracting Discrimination were developed, emphasizing the priority of caring for the well-being of employees and respect for human rights. The procedure ensures confidentiality and follow-up for incident reporters. Own operations H S.1.2.5. Diversity S.1.2.2. Training and skills development N S.1.2.4. Measures to prevent violence and harassment at work 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 51 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Other rights and issues related to work S.1.3.4. Privacy (Right to Privacy) The Group has implemented a Data Protection Policy covering the entire organization. The IT Systems Administrator and the Data Protection Officer were appointed. Every new employee receives training in data protection. The Group does not use monitoring systems or employee search practices so as not to violate their privacy and not to adversely affect morale and trust. Protection against data loss and security breaches is crucial for the Group, which implements the latest data protection technologies. Regular security audits monitor the effectiveness of protective measures, and training for employees maintains awareness of risks and best practices. Thanks to these activities, the Group strengthens business relationships and builds a strong reputation. An effective data protection system avoids the serious consequences of privacy breaches, which translates into the stability and competitiveness of the organization. The area of the right to privacy is governed by the Personal Data Protection Policy, supplemented by internal documents, such as the Rules for the Functioning of Video Surveillance, which describe data processing processes. Own operations H Own indicator. Development of specialized staff, implementation of innovative projects, work on high-quality, unique laboratory equipment The Group creates workplaces that attract ambitious individuals, innovation leaders and pioneers. Working in the Group enables the creation of inventions, patents, the use of modern laboratory technology and conducting innovative research, such as the discovery of drugs for difficult or incurable diseases. The Group's projects affect the position of employees in the industry and on the labour market. The reputation of the Group's research goes beyond Poland, and employees are also valued abroad, in renowned pharmaceutical corporations. High competitiveness, investment in employee development and equipment upgrades, and stronger relationships with customers, partners and research institutions contribute to the company's success. The Group intends to continue best practices, striving to be an industry leader, maintain a high market position and implement advanced and profitable projects. This impact is due to the Group's business model. High-quality equipment in laboratories enables the development of knowledge and competences of employees, creating an attractive workplace. The Group's goal is to maintain the highest standards, which directly affects its business profile – drug discovery & development. Own operations N 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 52 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Other social issues related to the local community Own indicator Work on new substances that can contribute to the development of drugs for diseases that are so far difficult or not at all curable The Group's activities focus on the discovery of drugs for oncological diseases and new drugs. The scale of the impact is the highest because it concerns human health and prevention of civilization diseases. The scope is global, covering societies around the world. The group focuses on attracting investors and business partners, investing in research and development, and collaborating with leading academic institutions. Building a reputation as an industry leader fosters strong business relationships and attracts top talent. The products developed by the Group have the potential to revolutionize the treatment of incurable diseases, ensuring increased importance and customer satisfaction. This impact is due to the Group's business model. As an innovative CRO, the Group plays a key role in global research into new medicines. Its activities focus on supporting the discovery and development of medicinal substances in areas of high unmet medical demand, such as oncology, neurology, infectious diseases, inflammation, fibrosis and respiratory diseases. Research and development contributes to improving public health by providing innovative therapeutic solutions, reducing the global burden of disease and improving the quality of life of patients. Own operations H 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 53 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Business conduct G.1.1. Corporate culture The Group implements a process for managing aspects of sustainable development. Conscious management takes time and resources, and establishing appropriate structures can burden some groups of employees. Full value chain management mechanisms have not yet been implemented. Failure to comprehensively vet suppliers may affect stakeholders, operational efficiency and the Group's reputation in the context of compliance with ESG requirements. Increasing the resources and involvement of employees in the analysis of the scope of decarbonization goals will contribute to the sustainable development of the Group. Aligning with these goals will enable you to gain a competitive advantage, reduce your carbon footprint and improve your indicators. Failure to comply with standards may result in a loss of willingness to cooperate on the part of customers. The Group's sustainable development strategy will become an integral element of the strategy for 2026+. The topics developed during the materiality audit form the basis for achieving the Group's objectives. An analysis of the scope of the decarbonisation strategy is planned, and the employment of an ESG Manager will enable the creation of a coherent compliance system to support ESG activities in all units of the Group. Own Operations, Upstream, Downstream H G.1.2. Protection of whistleblowers The Group has implemented anonymous mechanisms for reporting breaches, available to employees and external persons. This has a positive impact on stakeholders, especially those on whom the Group exerts the greatest influence. The Group ensures anonymity, data security and proper execution of procedures, building trust and promoting a culture of transparency and accountability, which has a positive impact on the company's reputation. The continuation of effective whistleblower protection practices will avoid incidents of breaches of the law, fostering long-term stability and maintaining the Group's strong position in the market. The basis for the Group's responsibility for the safety and anonymity of whistleblowers is the Whistleblower Protection Policy. It regulates whistleblowing processes and provides a secure reporting platform, guaranteeing confidentiality and anonymity. The awareness of the importance of confidentiality and the need for proper investigation results directly from the Group's business model. Own Operations, Upstream, Downstream N G.1.3. Animal welfare Currently, there are no effective methods of discovering medicinal substances without involving living organisms. The group conducts research with animals, in accordance with strict guidelines on animal living conditions and research, agreed with the Ethics Committee on Animal Experiments. The experiments are approved by the Local Ethics Committee, which evaluates the animal welfare and scientific value of the project. The group adheres to the highest ethical standards, often exceeding them, treating animals as an important value. The question of the balance between human and animal health is controversial, but there are currently no effective alternatives to the approach. The Group conducts research in accordance with the highest ethical and regulatory standards, cares for its reputation and relations with consumers and business partners, especially in the context of growing pro-animal awareness. In addition, he conducts research using computer modelling and in vitro studies. The Group plans to continue the best practices, ensuring the highest quality of proceedings. The issue of animal welfare is controversial, which is why transparency and reliability in activities are crucial. This impact is due to the Group's business model. Each experiment is evaluated by an independent Local Ethics Committee, and compliance with the procedures is ensured by an internal Animal Welfare Authority, governed by the Animal Welfare Team's Operating Procedure. Employees working in animal facilities undergo comprehensive training, both internal and external. The acquisition of new skills is documented and regularly reviewed in accordance with the Procedure for New Employee Training and Employee Skills Development. The Group strives to maintain the highest ethical and operational standards in animal research, ensuring compliance with animal welfare requirements. Own Operations, Upstream, Downstream N 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 54 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Business conduct G.1.5. Supplier relationship management, including payment practices The Group's Supplier Code of Conduct regulates ESG issues in the supply chain, including principles relating to human rights, labour rights, environmental protection and business integrity. The Group has started verifying suppliers through surveys, monitoring compliance with ESG requirements, although audits are not being conducted. A diversified supplier base makes it difficult to implement systemic solutions. Lack of completeness of data upstream of the chain results in a lack of reported data at subsequent stages of the business. The Group is planning activities aimed at a more thorough analysis of suppliers. Failure to comply with standards in the value chain can lead to a loss of customer trust. Compliance with the standards allows for a positive impact in the Group's value chain. The Group publishes on its website the Code of Conduct for suppliers, which defines the rules of cooperation with contractors. So far, there has been no complete verification of these assumptions. Based on analyses and preliminary surveys, the Group plans to implement the Procurement Policy, which will regulate management, taking into account the principles of sustainable development. Own Operations, Upstream, Downstream H G.1.6. Corruption and bribery G.1.6.1. Prevention and detection, including training The Group has implemented a procedure to prevent corruption and bribery, but is aware that the problem of corruption may occur due to the human factor. So far, there have been no corruption incidents, but the Group considers the prevention and detection of corruption to be a key area of activity. The Group has developed procedures for reporting corruption and monitoring compliance with anti-corruption policies, providing clear guidance in the event of incidents. Maintaining the trust of business partners and customers is crucial, which is why the Group continues to follow the best practices to prevent corruption. The anonymous whistleblowing system allows for easy reporting of incidents, and failure to detect such incidents could damage relationships with partners and affect future cooperation. The Anti-Corruption and Anti-Bribery Policy sets out the rules of conduct in the event of suspected violations. The Whiblo platform, available on the website, allows anonymous reports for employees and people outside the organization. In the event of an incident of corruption or bribery, follow-up would be a top priority. Own operations H G.1.6. Corruption and bribery G.1.6.2. Incidents H 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 55 ESG issue / Issue identified Description of the impact on people and / or the environment Expected effects of the impact on the Group How to manage the impact Where the impact originates Management priority Other business conduct issues Own indicator. Cybersecurity The Group bases its operations on data and analysis, which are information with the highest degree of confidentiality. Despite numerous security procedures, there is a risk of data leakage as a result of a cyberattack, which can lead to a breach of personal data, confidentiality or laboratory results. Such incidents can negatively affect data security but should not jeopardise the continuity of processes or pose a threat to society. The Group invests in advanced security systems and regularly conducts cybersecurity training for employees. Implemented incident response plans enable an effective response to threats. Continuing best practices will help prevent the loss of confidential information, breaches of customer privacy, and minimize the risk of legal sanctions and loss of trust. Ensuring cybersecurity principles is an integral part of the Group's operations, and data security is a priority. The rules of conduct are defined in the Information Security Policy. Regular training raises employee awareness, ensuring a high level of safety. This impact is due to the Group's business model. In 2024, the Group obtained the CyberVadis Certificate, obtaining 942 points out of 1000 possible. Own operations H 1.7. Material ESG impacts, risks and opportunities TABLE 6. Significant impacts identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 56 1.7.4. Managing material ESG risks and opportunities OV-5] [IRO-1] During the materiality assessment, risks and opportunities related to sustainable development were identified, includ- ing areas E, S and G. Their identification and effective man- agement is intended to help the Group avoid adverse ev ents and prevent their adverse effects in the event of risks, and to increase the positive effects of the Group's operations in the event of opportunities. Each organizational unit of the Group has specific objectives pursued in accordance with the scope of responsibilities and impact on the Group's value chain. Selvita Group is subject to regular audits and external audits in the field of environmental protection, occupa - tional health and safety, quality and regulatory compliance. ES G reviews and reporting will improve the ongoing opti- mization of processes and the improvement of sustainable dev elopment strategies. In 2024, the company developed a Business Continuity Plan (BCP), which is the development of a business continu- ity system. The BCP is designed to ensure that all foreseea- ble disruptions can recover from all foreseeable disruptions wi thin an acceptable timeframe, as defined in the Business Impact Analysis (BIA). The CFO has overall responsibility for ensuring continued recovery capability, including testing and exercises, staff training and awareness, in accordance with current good practice as set out in industry guide - lines and national and international standards. The docu - ment provides a detailed planned response to a business in terruption and related information. The BCP is a source of guidance in the event of a crisis. Supplementary documentation has been developed for BCP: • Business Impact Analysis (BIA) – assessment of the impact on operations and risks. A document that helps explain how a major incident can affect your business and provides the basis for business continuity planning by determining recovery times for key activities. • Continuity Risk Assessment – assessment of business continuity risk. The assessment looks specifically at a subset of risks in the company that have a high im pact and low probability. • Business Continuity Management Framework – which is a framework for managing business continuity. A framework document setting out arrangements to en sure the effectiveness of the Business Continuity Management System (BCMS). The risks identified and described during the sustainabil - ity materiality test conducted with the consulting firm in 20 24 will be included in the Group's Business Continuity Plan in 2025. Responsibility for further analysis, follow-up and monitoring has been entrusted to the ESG Manager. Further analysis of ESG risks and implementation of mech- anisms to mitigate them will also be carried out in cooper- ation with key organizational units and representatives of th e Management Board. As part of the materiality study, 11 risks / opportunities were identified. Below is a presentation with the expected effects and ways of managing them. 1.7. Material ESG impacts, risks and opportunities
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 57 Risk or opportunity Description Expected impact How to manage risk or opportunity Time horizon Environmental risks and opportunities Climate change risks (own, upstream, downstream operations) Transition risk, regulatory, reputational, transformational risk. Possible loss of contracts. Loss of competitiveness. Possible increase in the prices of ordered goods due to increasing emissions and environmental fees and the occurrence of additional fees in connection with these emissions. Risk of non-compliance with regulatory and business requirements to reduce greenhouse gas emissions throughout the Group's value chain. The risk arises from the issues generated by the Group and the lack of calculated emission values in the three scopes to date. The Group is required to take action to analyse the scope of its decarbonisation strategy (reducing its carbon footprint and adapting to the stricter emission requirements of its customers). The Group's capital expenditures, once a sustainable development plan are developed, may help to achieve the objectives related to the Company's activities in accordance with the EU Taxonomy, but at the same time will result in an increase in the costs of doing business. Current activities: calculation of emissions in three scopes for 2024. Activities planned: joining the SBTi, development and implementation of a transition plan to achieve climate neutrality by 2050, data-driven supply chain management. Short – Medium – Long Social risks and opportunities Employment security risks (own operations) Risks related to insufficient human resources or the availability of qualified employees. Risk related to the attracting, retaining and building of the team and adjusting the planned pace of the Group's development to the demand for specialists. The risk results from the Group's business model, not from a specific impact. The group offers doctorates and development paths, but this is also offered by other entities in the industry. The Group's budget includes the continuation of activities related to the projects of the HR Operations and Organizational Culture Department and the HR and Payroll Department, providing training and development opportunities. Current activities: Maintaining the standard of activities in HR processes, taking into account the existing benefits. Planned activities: Development of competences through investments in specialized equipment and development of training resources. Investment in the employee. Short – Medium – Long Risk related to adequate pay (own operations) Wage pressure, unification of the salary grid, increased employment costs. The Group noted wage pressure on the European market. Failure to adjust rates in the market can lead to higher employee turnover, which can generate higher costs for recruitment, training, absenteeism, and backlogs. It can also reduce efficiency, team morale, and lead to talent loss, which increases operating costs and affects the company's competitiveness. Current and planned activities: Work on adjusting financial expectations to the market situation began in 2024 and its implementation is continuing. Short – Medium – Long Work-Life Balance Opportunity (own operations) No location restrictions in acquiring qualified specialists, a skilfully implemented system of work in the Home Office formula. The Group has been successfully using the hybrid/remote work formula since 2020. Flexibility increases productivity and efficiency, leading to faster project completion and higher revenue. Maintaining work-life balance reduces employee turnover, which reduces recruitment and training costs. Investments in the areas of Human Resources Operations and Organizational Culture, as well as Human Resources and Payroll contribute to more effective personnel management, which allows for the optimization of costs related to human resources. Current and planned activities: the Group plans to continue the assumptions for remote work. The hybrid work module works well in every location of the Group. The Group can take advantage of this opportunity by expanding its recruitment to include specialists from various locations, which will allow it to attract the best talent from around the world. The flexibility of remote and hybrid work gives employees more control over their work-life balance and attracts ambitious candidates. Short – Medium – Long TABLE 7. Significant risks and opportunities identified in the materiality study 1.7. Material ESG impacts, risks and opportunities
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 58 1.7. Material ESG impacts, risks and opportunities Risk or opportunity Description Expected impact How to manage risk or opportunity Time horizon Social risks and opportunities Gender equality and equal pay risks (own operations) Legal and reputational risk related to wage pressure, employment turnover. The Group noted wage pressure on the European market. This risk is monitored on an ongoing basis in the context of changes in legal regulations. If it occurs, differences in remuneration may arise, especially when the Group expands or incorporates new entities into the organizational structure. Possible financial consequences include penalties for wage inequality, the cost of adapting wages to applicable regulations, and a decrease in work efficiency. Current and planned activities: The Group takes care of the right approach in this area in the existing branches, while it takes a lot of time to adjust the remuneration in the new/acquired branches. High inflation and regulatory changes have led to increased turnover and a deterioration of the employer's image on the Croatian market. Work on adjusting financial expectations to the market situation is carried out continuously and will be continued in the coming years. Short – Medium – Long A Diversity Opportunity (own operations) Actively promoting the diversity of employment in the Group. In its employment policy, the Group focuses on competences, regardless of social or religious affiliation, nationality, age, etc. Experienced people are willing to share their knowledge and competences, thanks to which they improve the qualifications of the team. The Group employs people from 26 different countries. Opening up to specialists from all over the world increases competitiveness and business development opportunities. Hiring international professionals and investing in human resources management activities can result in higher recruitment, training and diversity management costs, but also increase the efficiency, innovation and competitiveness of the company, which can lead to higher revenues and savings. Current and planned activities: In the context of risk management, the Group focuses on hiring people on the basis of competence, which reduces the risk of inefficiency or mismatch between employees and positions. Openness to broad recruitment areas allows us to attract talented candidates from different regions, which minimizes the risk of a lack of adequate human resources. In addition, the Group offers support in the assimilation process, not only professional, but also social, which reduces the risk of turnover and increases employee engagement. Short – Medium – Long Training and skills development opportunity (own operations) Investments in employee development, career paths, internal promotions, and offering opportunities for internal rebranding. The Group offers a wide range of professional development opportunities and a publicly available training platform. Participation in projects with higher margins, increased competitiveness, faster implementation of processes, interchangeability of teams in terms of competences and ability to perform tasks are key elements that contribute to the success of the organization. The Group's budget includes the continuation of training activities that will enable further development of employees and create promotion opportunities within the Selvita Group. Current and planned activities: The Group plans to continue good practices related to employee development through mandatory, additional, group and individual training. The Group can seize this opportunity by investing in training that develops the skills of employees and internal leaders. This will make the company better suited to changing market and technology requirements, allowing for more complex and profitable projects. Competence development fosters innovation, improved processes and operational efficiency, as well as builds a stronger organizational culture, increasing employee motivation for further development. Short – Medium – Long TABLE 7. Significant risks and opportunities identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 59 1.7. Material ESG impacts, risks and opportunities Risk or opportunity Description Expected impact How to manage risk or opportunity Time horizon Social risks and opportunities An opportunity related to the development of specialized staff, implementation of innovative projects, work on high-quality, unique laboratory equipment (own operations) Specialized and modern laboratory equipment enabling the creation of inventions, patents and undertaking innovative research in the field of drug discovery by employees. This opportunity is driven by the Group's business model rather than a specific impact. The associated financial implications include the costs of maintaining modern laboratories and specialised equipment, which have been budgeted. At the same time, thanks to participation in unique projects, the Group can gain the trust of customers, acquire higher-margin projects, increase competitiveness and accelerate processes, which leads to potential higher revenues and profits. Current and planned activities: The Group in Poland is a leader, and also has a significant position in the industry in terms of equipment and research capabilities. It constantly undertakes activities aimed at developing the competences of employees and providing them with appropriate work facilities. The Group can seize this opportunity by focusing on further improving the quality of its R&D activities by investing in new technologies. Increasing research capabilities and offering employees access to advanced equipment allows innovative projects to be implemented faster. This allows the Group not only to strengthen its leading position, but also to attract the attention of investors and business partners, which will provide access to profitable markets. By increasing the competences of its employees, the Group also gains flexibility, better adaptation to market changes and greater innovation in its services. Short – Medium – Long Management risks and opportunities Corporate culture risks (own operations, downstream) Reputational and regulatory risks and/or costs related to irregularities resulting from the lack of an implemented sustainability management system. The Group is in the process of implementing the process of managing aspects of sustainable development, and the objectives, activities and resources related to this are at the stage of their creation. If ESG standards are not met, the Group could lose contracts with key customers, and this would result in the inability to implement the development strategy. On the other hand, the correct implementation of ESG standards may translate into cooperation with the largest entities in the pharmaceutical industry operating under a large regulatory regime and result in contracts of significant value. The Group has taken action towards sustainable development, starting with the creation of ESG structures. In 2025, efforts to join the SBTi initiative are planned, this action will constitute an effort to develop the Group's Sustainable Development Goals. Current activities: In 2024, ESG gaps were diagnosed and paths were set to fill them. The Group has started intensive work on building ESG management structures and procedures. An ESG committee has been formed, an ESG Manager has been hired, and the new development strategy will be integrated with sustainability issues. Planned activities: The Group plans to join the SBTi initiative. Short – Medium TABLE 7. Significant risks and opportunities identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 60 1.7. Material ESG impacts, risks and opportunities Risk or opportunity Description Expected impact How to manage risk or opportunity Time horizon Management risks and opportunities Animal welfare risks (own, upstream, downstream operations) The risks arise from the Group's business model, not from a specific impact. The question of the balance between human and animal health is controversial, but there are currently no effective alternatives to the approach. Reputational and social risk related to the objection to animal testing, the risk of investors moving away as a result of protests and media messages. Risk of non-compliance with good animal welfare practices and procedures at our suppliers. Failure to comply with animal welfare rules could adversely affect the Group's image and result in the loss of customers or investors. The group could incur expenses for image repairs, PR campaigns and damages. Compliance with the applicable rules by investing in trained staff and ensuring appropriate conditions makes it possible to prevent such risks. Current and planned activities: There are currently no known effective methods of discovering medicinal substances without involving living organisms. Appropriate procedures and training exclude the possibility of non-compliance with good practices within the Group's structures. Research activities are preceded by provisions in accordance with the resolutions issued by the Local Ethics Committee. Reporting is carried out before the National Commission. Internal supervision over the procedures carried out is performed by a dedicated animal welfare team. The group cooperates only with certified suppliers, and conducts research on genetically modified animals that have no possibility of survival in the natural environment. Medium – Long Cybersecurity risk (own, upstream, downstream operations) Reputational risk, cyberattacks, financial penalties as a result of leakage of confidential data, research results. The risk results from the Group's business model, not from a specific impact. A data leak would result in a high risk, having a wide range in the Group's value chain, and could lead to high costs related to repairing damages, including legal penalties or the need to implement costly remedial actions. The Company, being aware of the need for data security, takes into account in its plans the costs related to the proper security of IT areas and training in the field of proper data handling. Current and planned actions: A well-developed data protection system effectively prevents the possibility of data leakage. However, the human factor and increasingly specialized methods of cyberattacks remain in the element of potential risk. Ensuring cybersecurity principles is an integral part of the Group's operations, and data security is a priority. In 2024, the Group obtained the CyberVadis Certificate, obtaining 942 points out of 1000 possible. Short – Medium – Long TABLE 7. Significant risks and opportunities identified in the materiality study
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 61 1.8. ESRS Compliance Tables [IRO-2] Based on the results of the materiality test, the Group has established a list of material topics that it discloses in this statement in accordance with the table below. The topics ESRS E4 Biodiversity and ecosystems, ESRS S2 Workers in the value chain, ESRS S3 Affected communi- ties, ESRS S4 Consumers and end-users, according to the st udy were considered irrelevant. Despite the lack of signif- icance in the issue related to biodiversity, it is also affected by climate change and pollution, which in turn are topics important for the Group, which is why the compliance table includes disclosures indirectly relating to biodiversity and ecosystems. The list of social issues and business conduct includes disclosures specific to individuals. In addition, the Group's activities, resulting from its business model and the essence of its operations, consist in discovering substances for the treatment of difficult or completely incurable diseases, which affects the quality of life and health of patients and societies around the world. In the process of discovering these substances, the Group works on specialised, glob - ally innovative equipment, while at the same time provid- ing unique know-how to develop, patent and innovate to it s employees – this is also disclosed as part of its own indi- cator. Working with sensitive data with the highest level of security and confidentiality requires appropriate security. Therefore, the issue of cybersecurity has been given special attention as part of the Group-specific disclosure. 1.8. ESRS Compliance Tables
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 62 Part of the statement Disclosure number Disclosure name Chapter in the report General information ESRS 2 – General disclosure BP-1 General basis for preparing a sustainability statement 1.1. BP-2 Disclosure of information in relation to special circumstances 1.1. GOV-1 Role of administrative, management and supervisory bodies 1.2., 1.3., 4.1. GOV-2 Information provided to the administrative, management and supervisory bodies of entities and the sustainability issues they address 1.3. GOV-2 Disclosure of how management bodies ensure that an appropriate monitoring mechanism is in place 1.3. GOV-3 Integrating sustainability-related performance into incentive schemes 1.3. GOV-4 Due Diligence Statement 1.3. GOV-5 Risk management and internal controls over sustainability reporting 1 .7. 4. SBM-1 Strategy, business model and value chain 1.4., 1.5., 1.6. SBM-2 Interests and views of stakeholders 1 .7.2 . SBM-3 Material impacts, risks and opportunities and their interrelationship with the strategy and the business model 1 .7. 3. IRO-1 Description of the process for identifying and assessing material impacts, risks and opportunities 1 .7. IRO-2 ESRS disclosure requirements covered by the entity's sustainability statement 1.8. IRO-2 Disclosure of a list of data points from other EU legislation and their location in the sustainability statement 1.8. TABLE 8. ESRS Compliance Chart 1.8. ESRS Compliance Tables
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 63 Part of the statement Disclosure number Disclosure name Chapter in the report Environmental information ESRS E1 – Climate change E1.GOV-3 Integration of sustainability-related results into incentive schemes 1.3. E1-3 Transition plan for climate change mitigation 2.1. E1.SBM-3 Material impacts, risks and opportunities and their interrelationship with the strategy and the business model 2.1.1. E1.IRO-1 Description of processes for identifying and assessing climate-related significant impacts, risks and opportunities 2.1.1. E1-2 Policies related to climate change mitigation and adaptation 2.1. E1-3 Actions and resources in relation to climate policy 2.1. E1-4 Climate change mitigation and adaptation objectives 2.1. E1-5 Energy consumption and energy mix 2.1.2. E1-6 Gross scope 1, 2 and 3 greenhouse gas emissions and total greenhouse gas emissions 2.1.3. ESRS E2 – Pollution E2 IRO-1 Description of processes for identifying and assessing relevant pollution-related impacts, risks and opportunities 2.2. E2-1 Pollution policies 2.2. E2-2 Pollution Activities and Resources 2.2. E2-3 Pollution targets 2.3. E2-4 Air, water and soil pollution 2.3. E2-5 Substances of concern and substances of very high concern 2.5.3. TABLE 8. ESRS Compliance Chart 1.8. ESRS Compliance Tables
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 64 Part of the statement Disclosure number Disclosure name Chapter in the report Environmental information ESRS E3 – Water and marine resources E3 IRO-1 Description of processes for identifying and assessing significant impacts, risks and opportunities related to water and marine resources 2.3. E3-1 Policies related to water and marine resources 2.3. E3-2 Water and marine activities and resources 2.3. E3-3 Water and marine resources objectives 2.3. E3-4 Water consumption 2.3.1. ESRS E4 – Biodiversity and ecosystems E4 SBM-3 Material impacts, risks and opportunities and their interrelationship with the strategy and the business model 2.4. E4 IRO-1 Description of processes for identifying and assessing relevant impacts, risks, dependencies and opportunities related to biodiversity and ecosystems 2.4. ESRS E5 – Resource use and circular economy E5 IRO-1 Description of the processes for identifying and assessing material impacts, risks and opportunities related to resource use and the circular economy 2.5. E5-1 Policies related to the use of resources and the circular economy 2.5.1. E5-2 Resource use and circular economy activities and resources 2.5.1. E5-3 Resource use and circular economy objectives 2.5.1. E5-4 Input resources 2.5.2. E5-5 Resources discharged 2.5.3. 1.8. ESRS Compliance Tables TABLE 8. ESRS Compliance Chart
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 65 Part of the statement Disclosure number Disclosure name Chapter in the report Informations on social issues ESRS S1 – Own employee resources SBM-2 Interests and views of stakeholders 3.2, 3.3 SBM-3 Material impacts, risks and opportunities and their interrelationship with the strategy and the business model 3.2, 3.3 S1-1 Policies related to own employee resources 3.1. S1-2 Procedures for cooperation with own employee resources and employee representatives on issues of influence 3.1. S1-3 Processes for remedying the effects of negative impacts and channels for reporting concerns by own employee resources 3.1. S1-4 Take action on material impacts on your own workforce and use approaches to manage material risks and take advantage of material opportunities related to your own workforce and the effectiveness of these actions 3.1. S1-5 Objectives for managing material adverse impacts, enhancing positive impacts, and managing material risks and opportunities 3.1. S1-6 Characteristics of the unit's employees 3.1.1. S1-7 Characteristics of non-employees constituting the entity's own employee resources 3.1.1. S1-8 Scope of collective bargaining and social dialogue 3.1.2. S1-9 Diversity Metrics 3.1.5. S1-10 Adequate pay 3.1.2. S1-11 Social protection 3.1.2. S1-13 Training and skills development metrics 3.1.3. S1-14 Health and safety measures 3.1.4. S1-15 Work-Life Balance Metrics 3.1.2. 1.8. ESRS Compliance Tables TABLE 8. ESRS Compliance Chart
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 66 Part of the statement Disclosure number Disclosure name Chapter in the report Informations on social issues ESRS S1 – Own employee resources S1-16 Salary metrics (pay gap and total salary) 3.1.5. S1-17 Incidents, complaints and serious impacts on human rights 3.1. Own indicator Development of specialized staff, implementation of innovative projects, work on high-quality, unique laboratory equipment 3.1 .3. Own indicator Patient Health: Discovering Substances for the Treatment of Previously Difficult or Incurable Disease Entities 3.4 . Corporate governance information ESRS G1 – Business conduct G1.IRO-1 Description of processes for identifying and assessing material impacts, risks and opportunities 4.1. G1.GOV-1 Role of administrative, management and supervisory bodies 4.1. G1-1 Business Conduct Policies and Corporate Culture 4.1., 4.1.1., 4.1.3. G1-2 Supplier relationship management 4.2. G1-3 Preventing and detecting corruption and bribery 4.1.1 G1-4 Corruption or bribery incidents 4.1.1 G1-6 Payment practices 4.3. Own indicator Cybersecurity 4.1.4. 1.8. ESRS Compliance Tables TABLE 8. ESRS Compliance Chart
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 67 Disclosure requirement and associated data point Reference to the Regulation on sustainability-related disclosures in the financial services sector (chapter in the report) ESRS 2 GOV-1 Gender differentiation of members of the Management Board paragraph 21(d) 1.2. ESRS 2 GOV-1 Percentage of body members who are independent point 21(e) 1.2. ESRS 2 GOV-4 Due Diligence Statement, paragraph 30 1.3. ESRS 2 SBM-1 Participation in activities related to fossil fuels paragraph 40(d)( i) Not applicable ESRS 2 SBM-1 Participation in activities related to the production of chemicals point 40(d)( ii) Not applicable ESRS 2 SBM-1 Involvement in activities related to controversial weapons point 40(d)( iii) Not applicable ESRS 2 SBM-1 Participation in activities related to the cultivation and production of tobacco point 40(d)( iv) Not applicable ESRS E1-1 Transition plan to achieve climate neutrality by 2050, para. 14 2.1. ESRS E1-1 Entities excluded from the scope of Paris-aligned benchmarks, point 16(g) Not applicable ESRS E1-4 Greenhouse gas emission reduction targets paragraph 34 2.1. ESRS E1-5 Fossil energy consumption disaggregated by source (only applicable to sectors with significant climate impacts) paragraph 38 2.1.2. ESRS E1-5 Energy consumption and energy mix paragraph 37 2.1.3. ESRS E1-5 Energy intensity linked to activities in sectors with a significant climate impact paragraphs 40 to 43 2.1.3. ESRS E1-6 Gross scope 1, 2, 3 and energy-intensive greenhouse gas emissions paragraph 44 2.1.4. ESRS E1-6 Gross GHG intensity paragraphs 53 to 55 2.1.4. ESRS E1-7 Greenhouse gas removals and carbon credits, paragraph 56 Not applicable ESRS E1-9 Exposure of the reference portfolio to climate-related physical risks, paragraph 66 Not applicable TABLE 9. List of data points included in the horizontal and thematic standards 1.8. ESRS Compliance Tables
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 68 Disclosure requirement and associated data point Reference to the Regulation on sustainability-related disclosures in the financial services sector (chapter in the report) ESRS E1-9 Disaggregation of monetary amounts by sudden and long-term physical risk paragraph 66(a) ESRS E1-9 Location of significant assets with material physical risk paragraph 66(c) Art. Not applicable ESRS E1-9 Breakdown of the book value of real estate by energy efficiency class, paragraph 67(c) Not applicable ESRS E1-9 Portfolio exposure to climate-related opportunities, paragraph 69 Not applicable ESRS E2-4 Quantity of each pollutant listed in Annex II of the E-PRTR (European Pollutant Release and Transfer Register) emitted into air, water and soil, para. 28 2.2. E SRS E3-1 Water and marine resources para. 9 2.3. ESRS E3-1 Special Policy paragraph 13 Not applicable ESRS E3-1 Sustainable practices in the field of seas and oceans paragraph 14 Not applicable ESRS E3-4 Total amount of water recycled and reused, point 28(c) 2.3.1. ESRS E3-4 Total water consumption in m3 per net revenue from own operations paragraph 29 2.3.1. ESRS 2 SBM 3-E4 paragraph 16(a)(i) Not applicable ESRS 2 SBM 3-E4 paragraph 16(b) Not applicable ESRS 2 SBM 3-E4 paragraph 16(c) Not applicable ESRS E4-2 Sustainable land/agriculture practices or policies paragraph 24(b) Not applicable ESRS E4-2 Sustainable ocean/marine practices or policies paragraph 24(c) Not applicable ESRS E4-2 Anti-deforestation policies paragraph 24(d) Not applicable ESRS E5-5 Wastes not recycled, paragraph 37(d) 2.5.3. TABLE 9. List of data points included in the horizontal and thematic standards 1.8. ESRS Compliance Tables
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 69 Disclosure requirement and associated data point Reference to the Regulation on sustainability-related disclosures in the financial services sector (chapter in the report) ESRS E5-5 Hazardous and radioactive waste, paragraph 39 2.5.3. ESRS 2 SBM-3-S1 Risk of forced labour paragraphs 14(f) Not applicable ESRS 2 SBM-3-S1 Risk of child labour, paragraph 14(g) Not applicable ESRS S1-1 Human Rights Policy Commitments para. 20 3.1. ESRS S1-1 Due Diligence Strategies for Matters Covered by International Labour Organization's Core Conventions Nos 1-8, para. 21 3.1. ESRS S1-1 Procedures and measures to prevent trafficking in human beings para. 22 3.1. Indicator 11 of Table 3 of Annex I ESRS S1-1 Management policy or system to prevent accidents at work paragraph 23 3.1.4. ESRS S1-3 Grievance mechanisms para. 32(c) 4.1.1. ESRS S1-14 Number of work-related deaths and number and rate of work-related accidents, paragraph 88(b) and (c) 3.1.4. ESRS S1-14 Number of days lost due to injuries, accidents, fatalities or illnesses paragraph 88(e) 3.1.4. ESRS S1-16 Unadjusted gender pay gap, paragraph 97(a) 3.1.5. ESRS S1-16 Excessive remuneration of the Director-General paragraph 97(b) 3.1.5. ESRS S1-17 Cases of discrimination paragraph 103(a) 3.1. ESRS S1-17 Non-compliance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines, paragraph 104(a) 3.1. ESRS 2 SBM-3-S2 Significant risk of child labour and/or forced labour in the value chain point 11(b) 3.1. ESRS S2-1 Human Rights Policy Commitments para. 17 4.2 ESRS S2-1 Policies related to persons performing work in the value chain, paragraph 18 4.2 ESRS S2-1 Non-compliance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines, para. 19 4.2 1.8. ESRS Compliance Tables TABLE 9. List of data points included in the horizontal and thematic standards
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 70 Disclosure requirement and associated data point Reference to the Regulation on sustainability-related disclosures in the financial services sector (chapter in the report) ESRS S2-1 Due Diligence Strategies for Matters Covered by International Labour Organization's Core Conventions Nos 1-8, para. 19 4.2 ESRS S2-4 Upstream and downstream human rights issues and incidents related to the value chain, para. 36 4.2. ESRS S3-1 Human Rights Policy Commitments, para. 16 4.2. ESRS S3-1 Non-compliance with the UN Guiding Principles on Business and Human Rights, ILO Principles or OECD Guidelines, para. 17 4.2. ESRS S3-4 Human rights issues and incidents, para. 36 3.1. ESRS S4-1 Consumer and End-User Policy, paragraph 16 3.4. ESRS S4-1 Non-compliance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines, para. 17 3.1. ESRS S4-4 Human Rights Issues and Incidents, para. 35 3.1. ESRS G1-1 United Nations Convention against Corruption, paragraph 10(b) 4.1. ESRS G1-1 Whistleblower protection point 10(d) 4.1.1. ESRS G1-4 Fines for infringements of anti-corruption and anti-bribery rules para. 24(a) 4.1.1. ESRS G1-4 Anti-corruption and anti-bribery standards, paragraph 24(b) 4.1.1. 1.8. ESRS Compliance Tables TABLE 9. List of data points included in the horizontal and thematic standards
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 71 2 Environmental information 2.1. Climate change . 72 2.2. Pollution . 77 2.3. Water and marine resources . 79 2.4. Biodiversity . 81 2.5. Resource use and the circular economy . 83 2.6. EU taxonomy . 86
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 72 2.1. Climate change [E1.IRO-1] The process of assessing materiality in the climate area carried out by the Group included a number of activities aimed at identifying and assessing climate risks and green- house gas emissions, as well as identifying opportunities rel ated to the transition to a low-carbon economy. The process of identifying and quantifying greenhouse gas emissions related to the Group's operations includes both direct and indirect emissions. In the current report, the Group presents for the first time the results of the cal- culation of the carbon footprint in all three scopes, for the ye ar 2024 (GHG Protocol, Scope 1, 2 & 3). In 2025, based on the data obtained from the calculations, the Group will work on a strategy that takes into account the analy - sis of climate risks – physical and transient, as well as on the method of managing and monitoring them – in order to analyse the scope of the decarbonisation strategy for the Group. In the process of double materiality analysis, the main impacts, risks and opportunities related to climate change were identified, based on the Group's previous operations, experience, general knowledge and qualitative data, tak - ing into account the Group's most important entities (com- panies located in Poland and Croatia). The qualitative assessment was given numerical values based on its own analysis and publicly available data contained in: IPCC report "Climate change 2022 – Risks, adaptation and vulnerability" World Economic Forum report "Global Risk Report 2024" Copernicus Climate Change Service report "Global Climate Highlights" [E1.SBM-3] [E1-1] Climate change risks In the current period, the Group has not developed a tran- sition plan to mitigate climate change or carried out a resil- ience analysis (in accordance with ESRS 2 IRO-1). In 2025, Sel vita intends to start preparations to join the SBTi ini - tiative. Work is also planned on a scenario risk analysis, in cluding objectives, management methodology and mon- itoring of activities related to this process. Th e currently identified climate risks are presented in the table Material impacts identified in the materiality study, in Section 1.7.3. 2.1.1. Environmental policy and strategy [E1-2] [E1-3] [E1-4] The group is considering developing policies related to climate change mitigation and adaptation in parallel with preparations for joining the SBTi initiative. The analysis will include energy efficiency criteria when selecting infra - structure, technology, logistics or processes. At the same 2.1. Climate change
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 73 time, investment projects are already planned with these aspects in mind (planning the transition to LED lighting, investments in laboratory equipment that can operate in ECO mode, solutions to minimize water consumption, pho- tovoltaic installations, etc.). [E1-7] The Group does not have any projects to remove green - house gases and reduce greenhouse gas emissions finan ced with carbon dioxide emission credits. 2.1.2. Fuel and energy consumption [E1-5] As a result of the materiality research, the area related to the mix of fuels and energy was identified as material. The impact is associated with high energy consumption in own operations, mainly fossil energy, resulting in CO2 emissions and climate change impacts. Energy from non-renewable sources contributes to increased greenhouse gas emis - sions and thus to significant climate change, and indirectly also ha s an impact on ecosystems. Total energy consumption in Selvita Group in 2024 amounted to 18.928,91 MWh. Of this, 2.619,04 MWh came from certified sources for which the company purchased certificates of origin. The Group will receive the certificate from the supplier in May 2025. In one of the company's locations, there is a photovol- taic installation that generated 10,90 MWh of electricity in the r eporting year, but its share in total energy consump - tion is minimal. 2024 is the base year for which the Group provides measures for energy consumption in accordance with the European Sustainability Reporting Standards. 2024 Total energy consumption within the scope of the conducted activity 54,68 M Wh/1 million PLN TABLE 11. Energy intensity on net revenues Unit 2024 01. Consumption of fuel from coal and coal products MWh 0,0 0 02. Fuel co nsumption from petroleum and petroleum products MWh 2,99 03. Fuel co nsumption from natural gas MWh 1.583,68 04. Fuel co nsumption from other fossil sources MWh 0,00 05. Cons umption of purchased or obtained electricity, heat, steam and cooling from fossil sources MWh 14.7 12,30 06. Total fossil energy consumption MWh16.298,97 Share of fossil sources in total energy consumption % 86,11 07. Nuclear energy consumption MWh 0,00 Share of nuclear energy consumption in total energy consumption % 0,00 08. Fuel co nsumption for renewable sources, including biomass (also including industrial and municipal waste of biological origin, biogas, renewable hydrogen, etc.) MWh 0,00 0 9. Cons umption of purchased or obtained electricity, heat, steam and cooling from renewable sources MWh 2.6 19,04 10. Self-p roduced renewable energy consumption without the use of fuel MWh 10,90 11. Total consumption of renewable and low-carbon energy MWh 2.629,94 Share of renewables in total energy consumption % 13,89 Total Energy Consumption MWh18.928,91 TABLE 10. Energy consumption and energy mix 2.1. Climate change
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 74 2.1.2. Greenhouse gas emissions [E1-6] In 2024, an analysis of the carbon footprint, i.e. greenhouse gas emissions in accordance with the international GHG Protocol Corporate Accounting and Reporting Standard, was carried out for the entire Group in scopes 1, 2 and 3. Therefore, 2024 has been adopted as the base year for setting carbon footprint reduction targets in individual scopes. Scope of emissions reporting In the case of data for the entire Group, the reported emis- sions include: Scope 1 these are direct emissions, i.e. from the combustion of fuels in energy, technological and means of transport that belong to the organisation and are controlled by it, but also emis- sions related to the loss of refrigerants, e.g. from air condi- tioning equipment; Scope 2 these are indirect emissions that are related to electricity, heat, process steam or cold purchased by the organization. Therefore, these are emissions that arise outside the organi- zation, in sources owned or controlled by other entities; Scope 3 emissions related to, among others, the purchase of goods and services and transport, as well as waste management, business trips and employee commuting. Emission reporting limits Data for the Capital Group: includes the parent company, i.e. Selvita S.A., but also all other subsidiaries of the Selvita Group according to operational control (100% of the issue of each unit). Methodology and assumptions The emissions were calculated using a certified data col - lection and sustainability management tool. The platform pr ovided by an external provider bases its tool on the GHG Protocol and ISO 14064-1. Included in the GHG Protocol, emission values are reported in tonnes (Mg) per standard unit of carbon dioxide equivalent (CO2e). Among Scope 1 emissions, more than half of the emis- sions are due to the use of fuels in vehicles used by Selvita Gr oup, the rest are emissions from the combustion of fuels used for heating buildings, and the rest are Scope 1 emis - sions due to the leakage of refrigerants from chillers used in H VAC systems. Indirect emissions, i.e. Scope 2 emissions, were presented in two ways according to the GHG Protocol: • Location-based method – based on the average CO₂ emission factor for the entire power system of a given country or region. • Market-based method – takes into account the actual sources of energy purchased by the company, including green energy. 2.1. Climate change TABLE 12. GHG intensity per net revenue 2024 Total GHG emissions (based on location) to net revenues 1, 70 tCO2eq/PLN Total GHG emissions (based on a market-based approach) to net revenues 1, 69 tCO2eq/PLN Net revenues used to calculate greenhouse gas intensity PLN 342.7 million Net revenue (other) PLN 3.5 million Total Net Revenue PLN 346.2 million TABLE 13. Net revenues 2024 Total GHG emissions (by location-based methodology) per project 38,96 tCO2eq/project Total GHG emissions (market-based methodology) per project 38,65 tCO2eq/project TABLE 14 GHG intensity per project 2024
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 75 The vast majority of greenhouse gas emissions generated in Selvita Group's operating activities are in Scope 3. The largest, and therefore the most significant, Scope 3 emis - sions were from purchased materials and raw materials us ed for laboratory processes in all business units provid - ing drug discovery and development services. The next hi ghest emissions in scope 3 are waste management emis- sions, which were generated as a result of processes car - ried out in laboratories and business trips of our employees. Th e remaining share is emissions from employee commut- ing and from downstream transport and distribution. Th e above-mentioned shares of individual emission sources indicate how important the actions taken to increase energy efficiency and increase the share of energy from renewable energy sources will be. The following assumptions were made when calculating Scope 3 emissions: Category 1. Purchased goods and services. Each purchase of goods or services is registered in the internal system. Corresponding cost items are assigned to individual goods and services, assigning a given purchase. A report of purchases made in 2024 was generated from the system, along with the cost categories to which the purchase was assigned. In addi - tion, a questionnaire with questions about the carbon foot- print was sent to key suppliers. Category 2. Capital goods, or capital goods, are physical assets used for production with a useful life of more than one year, increasing productivity and enabling the production of more goods and services. Data was generated primarily for IT equipment and laboratory equipment in accordance with the records of funds. Category 3. Fuel and energy activities not included in Scope 1 or 2 – not disclosed in the case of the Group. All fuels and energy are shown in scopes 1 and 2. Category 4. Transport of products purchased by the Group during the reporting period between the supplier and that company by vehicles or equipment not owned by the reporting company. The data was obtained from third-party trans - port providers. For transport companies that did not send dat a on the carbon footprint generated, the expenditure method was used. For shipments for which data was not included in the service providers' reports, internal par - cel records were used to calculate the carbon footprint. On t heir basis, the average distance between the point of departure and the point of collection was estimated, tak - ing into account the most optimal route possible to be co vered by a given means of transport. In addition, the total weight of transported goods was averaged, based on unit values collected from transport documents. The same methodology was applied to the upstream and down - stream processes. Category 5. Waste generated by the operation. Data is collected in individual units by means of electronic waste databases, which are a collection of all authorized entities in waste management, starting from the producer, transporter and collector, who subjects waste to appropriate further pro - cesses related to its disposal. The records include both in formation about the waste generated, i.e. categories in accordance with the applicable waste catalogues, and the quantities generated and transferred, which are also con - firmed by our certified recipients. Category 6. Business trips. The data comes from travel booking sys - tems, business expense reports and travel records. Each bu siness trip is recorded taking into account the means of transport, distances traveled and dates. The data is veri - fied and then analysed using the specific emission factors fo r each mode of transport (e.g. air, rail, car) provided by the computing platform. Category 7. Commuting of employees. The information was collected on the basis of internal surveys on the manner and frequency of commuting to work, data from HR systems and programs supporting sustainable transport. The data collected were aggregated and standardised to take into account different modes of transport (car, bicycle, public transport). Category 9. Transportation of products in non-proprietary vehicles. The scope of the data is described in Category 4. Category 15. Investments. Greenhouse gas emissions from the activities of subsidiaries, unconsolidated on the basis of the propor- tion of emissions attributed to shares in the parent com - pany, which is 46.74% 2.1. Climat e change
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 76 Base year – 2024 Scope 1 greenhouse gas emissions Gross scope 1 greenhouse gas emissions 3 59.6 tCO2eq Proportion of Scope 1 GHG emissions from regulated emissions trading systems (%) 0,00 Scope 2 greenhouse gas emissions Location-based Scope 2 gross GHG emissions 1 2.961,0 tCO2eq Scope 2 gross GHG emissions according to the market-based approach 1 2.490,9 tCO2eq Significant Scope 3 greenhouse gas emissions Total indirect gross (scope 3) greenhouse gas emissions 4 5.117 ,4 tCO2eq Category 1. Purchased goods and services 3 4.988,25 tCO2eq [Optional sub-category: Cloud and data centre services Category 2. Capital goods 5.584,68 tCO2eq Category 3. Fuel and energy activities (not included in scope 1 or 2) 0,00 Category 4. Upstream transport and distribution 45.41 tCO2eq Category 5. Waste generated by the operation 110.14 tCO2eq Category 6. Business trips 513.19 tCO2eq Category 7 . Employee commuting to work 194.97 tCO2eq Category 8. Leased Senior Assets 0,00 Category 9. Downstream transport 23.27 tCO2eq TABLE 15. Greenhouse gas (GHG) emissions Base year – 2024 Category 10. Processing of sold products not applicable Category 11. Use of sold products not applicable Category 12. Processing of sold products at the end of their useful life not applicable Category 13. Downstream assets subject to leases 0,00 Category 14. Franchise 0,00 Category 15. Investments 3.657 ,54 tCO2eq Total greenhouse gas emissions Total GHG emissions (location-based method) 58.438,0 tCO2eq Total GHG emissions (market-based method) 57.967 ,9 tCO2eq 2.1. Climate change
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 77 2.2. Pollution [E2.IRO-1] The topic of pollution and waste was indicated as one of the most important in the Group's operations. To iden - tify pollution-related impacts, risks and opportunities, a de tailed review of Selvita Group's operations in differ - ent locations was conducted. The analysis covered the Gr oup's operations and its value chain at various levels. The aim was to determine how the Group's activities affect the environment through the emission of pollutants into the air, water and soil, and how these impacts relate to the various stages of the value chain. The results of a ded- icated stakeholder survey, the results of legally required rep orts and projections of future impacts depending on changing market, regulatory and technological conditions are taken into account. The Group does not have quanti - tative or indicative data on pollution generated by service pr oviders and users. The results of the study will be taken into account in the further stages of the sustainability man- agement process and in the development of effective solu- tions and plans for managing risks related to environmen - tal pollution. Sel vita Group uses chemical reagents, solvents or cat- alysts for the synthesis and purification of chemical struc - tures with therapeutic potential as raw materials in labora- tory processes. All chemical substances and mixtures must me et the highest quality standards, legal requirements to ensure a high level of health and environmental protection, and information on properties and potential hazards, classi- fication, labelling and packaging, as well as for road, rail, air and s ea transport. The principles of solvent and other reagent management in Selvita Group include:: • reviews and risk assessments of reagents through systematic audits and analyses that will allow for ongoing monitoring and identification of those substances that require special attention and make decisions about their potential substitution; • Assessing the chemicals and solvents used in the processes before they are used in order to use substances with the least possible impact on health and the environment. • implementation of modern, less harmful alternatives (such as formaldehyde or acrylamide) • striving to reduce the amount of substances used by optimizing processes to minimize the use of chemicals. The Group's environmental policy includes procedures and instructions aimed at avoiding incidents and limiting their impact on people and the environment, e.g. in the event of unexpected emissions of chemicals into the environment, e.g. during internal transport or in the event of chemical reagent breakage. As part of this approach, we use: • maintaining constant supervision over processes, which allows for quick identification of potential threats and implementation of preventive measures; • immediate activation of the procedure, which allows for quick response and control of the situation, minimizing the negative effects on the health of employees and the environment; 2.2. Pollution
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 78 • Systematic training and emergency simulations that ensure that our employees are well prepared to effectively manage incidents. Thanks to the above activities, the company not only mini- mizes the risk of incidents, but also guarantees a quick and ef fective response, which is crucial for the protection of human health and the environment. The value chain analysis was based on qualitative data on the sector and industry in which Selvita operates, pre - sented in the following reports: Environmentally Persistent Ph armaceutical Pollutants (EPPPs), Understanding the envi- ronmental impact of the pharmaceutical industry, Sustain- able business transformation in Life Sciences – KPMG Bel - gium; Environmental protection in 2023 – data from the Ce ntral Statistical Office (GUS). In 2025. The Group plans to implement a process of collecting environmental data, m.in. pollution, from suppli- ers, but given the fact that the group of Selvita suppliers is very large and highly diversified, it is difficult to guaran- tee full availability of data in the supply chain. As far as end us ers are concerned, the characteristics of the Group's ser- vices do not allow for any influence on the probability of en vironmental pollution at the stage of their end-use. We also see an opportunity to increase the recycling of plastic waste and waste containing hazardous sub - stances. In addition, we are investigating the use of chem- ical solvents produced from natural raw materials, such as pl ants, which are more environmentally friendly. Conscious management of raw material orders will allow you to reduce the quantities of materials ordered, which will indi- rectly contribute to reducing environmental pollution. [E2-1] [E2-2] [E2-3] Currently, the Group does not have a Policy for managing material impacts, risks and opportunities related to envi - ronmental pollution. Nor have specific actions and goals be en set in this regard. However, the Group is considering the development and implementation of an Environmental Policy that would cover the management of this area. [E2-4] To reduce the negative impact of microplastics on the environment and health, it is worth using circular econ - omy solutions. Selvita Group does not directly emit mi croplastics from laboratory processes. The only source of microplastics may be waste containing plastic labora - tory equipment and plastic packaging of chemical rea - gents. All these wastes are classified as hazardous and are se nt for disposal or recycling to the appropriate entities that transform the waste with due care, eliminating the risk of microplastics appearing in the environment. Reducing the amount of chemicals used and replac - ing them with less harmful ones aims to reduce pollution. Th ese activities are partly due to environmental protection regulations (compliance with norms and emission report - ing) and partly are voluntary – they go beyond the mini - mum legal requirements and are aimed at additional envi- ronmental protection. 2.2. Pollution
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 79 2.3. Water and marine resources [E3.IRO-1] A review of Selvita Group's resources and activities was carried out in order to identify actual and potential impacts and risks related to water and marine resources and to understand how the Group's activities in its own processes, including the use of water in laboratories, pollutant emis - sions, or impact on aquatic ecosystems, may affect water and marine resources in the regions where the Group's operations are carried out. The analysis process included an overview of resources and operations in its own opera- tions. As part of the double materiality analysis, the Group co nducted a dedicated stakeholder perspective study, which also asked about water and marine resources. The Group does not have quantitative data or indicator values on water and marine resource dependencies and impacts on water and marine resources – including in terms of their consumption – in the value chain. An assessment of actual and potential risks associated with water use was carried out, taking into account, m.in others, climate change, overexploitation of water, water pollution, as well as potential changes in the availability of water resources. The Group does not identify any oppor - tunities related to water and marine resources. The aim of the study was to thoroughly analyse the findings and incorporate them into the sustainability man- agement process in order to develop effective solutions and p lans for managing water-related risks. [E3-1] [E3-2] [E3-3] The Group does not have a Policy for managing mate - rial impacts, risks and opportunities related to water and ma rine resources, and no activities and objectives have been set in the indicated area. 2.3.1. Water consumption [E3-4] [E3-4] Water in Selvita Group's operations is mainly used for lab- oratory processes and for hygienic, sanitary and con - sumption purposes, and comes from external suppliers. We monitor water consumption in each of our business units on an annual basis. Currently, some of the results presented in the report include both actual data obtained 2024 Total water consumption [m3] 33,824 The intensity of water consumptiony [m3 / 1 mln PLN] 97,70 TABLE 16. Total water consumption 2.3. Water and marine resources
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 80 from meters and expenditure data related to fees resulting from liabilities in the field of rented laboratory space from external suppliers. In the reporting year, the Group consumed a total of 33,824 m3 of water. Selvita Group does not have locations in areas with high water deficits. Selvita Group collects water on the premises of its facilities mainly for fire-fighting purposes. The total amount of water collected for fire-fighting purposes is 310 m 3. In addition, the facility in Krakow is equipped with a rainwa- ter retention reservoir with a usable capacity of 293 m3. In front of the tank, there is a separator of petroleum deriv - atives with a sand pit, used to treat rainwater from hard - ened areas before discharge to the receiver. Rainwater col- lected in the retention tank is used to water the greenery on the premises. The intensity of water consumption is (total water con- sumption per PLN 1 million of revenue): 97. 70 m3/ PLN 1 million. 2.3. Water and marine resources
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 81 2.4. Biodiversity [E4.SBM-3] Greenhouse gas emissions directly affect climate change, leading to climate warming and posing a potential threat to biodiversity and ecosystems, disrupting natural habi - tats and ecosystem processes and threatening biodiver - sity. In the future, the intensification of these changes may le ad to a decrease in genetic diversity and destabilization of ecosystems. Medical waste, on the other hand, including veteri - nary waste, does not directly affect populations of living or ganisms or ecosystems, as it is disposed of in accordance with regulations through thermal transformation. However, the waste disposal process can indirectly affect biodiver - sity and ecosystems, depending on the methods used by wa ste recipients. The Group has no real influence on how patients dispose of medicines, which can also have an indi- rect impact on the environment. [E4.IRO-1] The assessment of material impacts, risks and opportuni - ties related to biodiversity and ecosystems was made tak- ing into account all companies belonging to the Group and co vered by the financial statements, broken down by the main types of activities and geographical regions in which the Group's operations are located. The Group does not have locations in biodiversity-sensitive areas, nor has it been identified that it is necessary to implement measures to mit- igate biodiversity loss. Th e Group currently does not have data or indicator values on ecosystem dependencies and impacts on biodi- versity and ecosystems in the value chain. During the study, repo rts of organizations focused on biodiversity and envi- ronmental protection were reviewed: the WWF Report and th e Global Assessment Report on Biodiversity and Ecosys- tem Services. An analysis of actual and potential impacts resulting from possible threats was carried out, based on the analy- sis of the Group's operations. Both current and past activi- ties and plans for the future are taken into account. Th e Group has made a qualitative assessment of the risks and opportunities related to biodiversity, taking into account the scope of its operations, previous experience and potential future events affecting biodiversity. This assessment was based on our own analysis and publicly available data. The Group did not conduct a scenario anal- ysis on biodiversity and ecosystems to identify and assess mat erial risks in the short, medium and long term. The Act of 15 January 2015 on the Protection of Animals Used for Scientific or Educational Purposes, which is bind- ing on Selvita Group, is a legal act related to the protection 2.4. Biodiversity
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 82 of biodiversity and ecosystems. The Group fulfils all liabili- ties related to the above act and at the end of the reporting per iod did not identify systemic risks in this area. Selvita has all relevant environmental permits for its operations, they are also related to the parameters and assessment of the Group's impact on biodiversity. The group does not consult with affected communities on an ongoing basis. As part of the materiality analysis, a dedicated stakeholder perspective survey was conducted, in which stakeholders were asked about the environmen - tal aspects of the Group's operations, including the impact on biodiversity. The aim of the study was not only to obtain opinions, but also to analyse them thoroughly and take them into account in further stages of the process of managing sustainable development and developing effective solutions and plans for managing the impact and risk associated with biodiversity. 2.4. Biodiversity
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 83 2.5. Resource use and the circular economy [E5.IRO-1] The use of resources and the Circular Economy are impor- tant areas that the Group is increasingly consciously man- aging. It monitors these aspects and plans optimizations to a chieve the best possible results. Analysis of laboratory and operational processes allowed to determine the consumption of resources and their impact on the environment. Data on ordered materi- als, chemical reagents, equipment, waste generated and co nsumption of consumables were analyzed. The double significance analysis made it possi - ble to assess areas that can increase operational effi - ciency, including rational ordering of reagents and coop - eration with business partners. The actual and potential im pacts, risks and opportunities related to resource effi - ciency, waste management and environmental pollution we re identified. The implementation of circular economy solutions will allow for minimizing risks and increasing efficiency. 2.5.1. Circular economy [E5-1] [E5-2] [E5-3] The circular economy is a global concept aimed at the rational use of resources and maintaining the value of manufactured products. The most important assumption is to strive for all substances to circulate constantly in the economy, without the need to obtain them to an exces - sive extent from primary sources. Services or products sh ould be made from recycled or sustainably produced raw materials, and at the end of their life cycle they should be reusable either in the form of components or recycled raw materials. The implementation of the principle of circular economy development (reducing the use of primary resources and increasing the use of secondary resources) can take place through the following activities: • mplementation of design principles in accordance with the principles of the circular economy in all design processes where it is possible, • implementation of criteria for the selection of commercial goods, • in the case of non-repairable products, ensuring that they are made exclusively from reusable or recyclable materials, • optimization of the number and weight of packaging used, both at the stage of logistics from suppliers and from and to customers, • using packaging made from recycled raw materials that is recyclable, • designing and equipping new spaces with infrastructure, accessories and equipment suitable for reuse or partial recovery, 2.5. Resource use and the circular economy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 84 • Waste reduction by conducting continuous monitoring of the quantities that are generated by individual organizational units, which should help identify areas where it will be possible to use a higher share in the recycling of waste containing di chloromethane residues. Reference to the waste hierarchy: prevention, preparation for reuse. 2.5.2. Resources introduced into the organisation [E5-4] Group-wide resources include products that have been used to provide services to our customers as part of ongo- ing drug discovery and development projects and for sma ll-scale manufacturing of medicinal products in one of our business units. These were mainly purchased chemi - cal reagents or biological consumables used in laboratory wor k. The introduced resources also include devices used in laboratories, but also IT devices used by our employees. Due to the specific nature of the business and the related large number of orders, the weight of all goods intro - duced to the company has not been recorded so far. The Gr oup did not purchase biological materials such as plant raw materials, biomass, biofuels, vegetable oils, starch, wood, natural fibres or biopolymers. The Group also did not use any renewable bio-based materials in its operat - ing activities. Th e group is currently only able to provide data on the weight of parts of the reagents used in the design pro- cesses. This information comes from the purchasing sys - tem and is presented as the sum of the amount of reagent tha t was ordered at the time. For products whose weight was not specified in the order, the company does not have weight data. The reagent is the main raw material for the Group's services. In 2024, the approximate total weight of the reagents introduced was 178 Mg. For reported, selected resources, Selvita Group has actual data obtained from the procurement system records. The Group is analysing the possibility of introduc- ing monitoring and reporting systems in order to improve th e aggregation of the resources introduced. 2.5.3. Resources discharged from the organisation, including waste [E5-5] Currently, waste management in Selvita Group is coordi - nated individually for individual organizational units, taking in to account local regulations governing this area. Organ- izational units have separate environmental decisions that st rictly determine what quantities and types of waste may be generated as a result of processes carried out in labo - ratories. The department responsible for aspects related to environmental protection is responsible for ongoing monitoring of the amount of waste generated and ongo - ing records of all waste generated and subjected to further ut ilization, recovery or recycling. In addition, a collective report is prepared annually via the platform, taking into account the amount of waste generated in each unit, bro- ken down into individual categories of waste. Wa ste streams can vary depending on the specific research activities, but generally include the following categories: 1. Chemical waste: Includes spent or expired chemicals/reagents, solvents (halogenated/non- halogenated), solid waste containing hazardous substances or mixtures, packaging containing residues or contaminated with hazardous substances, used oils from equipment. 2. Biological (medical) waste: Biological materials such as tissues, cell cultures, biological fluids used in pharmacological or toxicological studies, human tissue samples, research animals; In part, this group also includes genetically modified organisms or biological agents from group 1 and/or 2 that require specific disposal procedures to avoid environmental pollution; 3. Devices (IT equipment, laboratory instruments, laboratory equipment); 4. Waste classified as non-hazardous such as cardboard, plastic, glass, old discarded furniture/ metals. Waste that is not suitable for recovery or recycling is dis - posed of by specialized companies in an environmentally saf e manner. Hazardous waste generated as a result of our services does not end up in landfills. Waste segregation is carried out at source, i.e. at the place of its generation in individual organizational units, and temporary storage takes place in designated, marked and adapted ware - houses. The Group systematically assesses the impact of wa ste on the environment and looks for new opportunities for recovery, recycling and disposal in cooperation with the main waste recipients. 2024 The approximate total weight of the reagents 17 8 Mg TABLE 17. The approximate total weight of the reagents 2.5. Resource use and the circular economy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 85 [E2-5] The table below presents the total amount of waste gen - erated from own operations, broken down into hazardous and n on-hazardous waste in all organizational units. The waste generated is handed over for disposal to author- ized entities that have the appropriate apparatus, devices an d means to carry out the disposal process in a safe and effective manner. Where possible, we also recycle or recover waste. Among other things, hazardous waste con- taining dichloromethane residues, as well as some waste co ntaining residues of organic compounds, including organic solvents, are recycled. Some of the waste from the processes carried out in the laboratories is also recy - cled, mainly hazardous waste containing plastic labora - tory equipment, packaging of hazardous substances, but al so disposable gloves. As a result of the recovery of these types of waste, an ingredient for the production of alter - native fuel RDF is produced, which is a substitute for fossil fu els in cement plants. Other groups of waste, including waste classified as medical waste, which cannot be recy - cled, are disposed of by thermal transformation. In 2025, th e main goal in the area of waste management, as part of the implementation of current initiatives, will be to assess the potential for expanding the scope of waste recycled and recovered. Mg Hazardous waste for which disposal has been avoided 56,74 Non-hazardous waste avoided disposal 1 7,10 Hazardous waste prepared for reuse 0,00 Non-hazardous waste prepared for re-use 0,00 Hazardous waste avoided disposal as a result of recycling 2 7,97 Non-hazardous waste avoided disposal as a result of recycling 0,00 Hazardous waste avoided by other recovery operations 0,03 Non-hazardous waste avoided disposal as a result of other recovery operations 1 7,10 Hazardous waste sent for disposal 133,66 Hazardous waste sent for disposal by incineration 133,66 Non-hazardous waste sent for disposal 62,07 Non-hazardous waste sent for disposal by incineration 62,07 Total non-recycled waste 224,90 Total non-recycled waste 83% Hazardous waste sent for disposal by landfilling 0,00 Hazardous waste sent for disposal by other disposal processes 0,00 Total amount of radioactive waste 0,00 TABLE 19. Hazardous and non-hazardous waste according to the management method in Selvita Group [Mg] 2.5. Resource use and the circular economy Mg Total waste generated from own operations in 2024 expressed 269,59 Hazardous waste 190,41 Non-hazardous waste 79,18 TABLE 18. Waste [Mg]
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 86 2.6. EU taxonomy In the report for 2024, we present information on the compliance of Selvita Group's revenues and costs with the criteria of Regulation (EU) 2020/852 of the Euro - pean Parliament and of the Council of June 18, 2020 on th e establishment of a framework to facilitate sustainable investments (EU Taxonomy). Scope of EU Taxonomy disclosures Regulation (EU) 2020/852 of the European Parliament and of the Council transposes the European Union's climate and environmental objectives into Technical Screening Cri- teria for assessing whether an activity can be considered su stainable in relation to six environmental objectives: cli- mate change mitigation, climate change adaptation, sus - tainable use and protection of water and marine resources, tr ansition to a circular economy, pollution prevention and its control, protection and restoration of biodiversity and ecosystems. The Taxonomy is a classification system that allows to examine and disclose the extent to which Selvita Group's operations are environmentally sustainable. Environmen - tally sustainable activity is one that at the same time: • makes a significant contribution to one or more environmental objectives; • does not cause significant harm to any of the environmental objectives, • is conducted in accordance with the Minimum Guarantees, • technical qualification criteria. Identification of the activity The Group's activities were reviewed, including the parent company and its subsidiaries, in order to examine which of the activities qualify for the taxonomy. To identify indi - vidual types of activities, their descriptions included in th e annexes to Commission Delegated Regulation (EU) 2021/2139 and 2023/2486 were used. In the absence of sufficient clarity of the description, the statistical classifi - cation of economic activities NACE was used. The analysis of compliance with the taxonomy in Selvita Group was made on the basis of: 1. Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to Climate Change Mitigation (CCM) or Climate Change Adaptation (CCA), and determining whether this economic activity does not cause significant harm to any of the other environmental objectives (Do No Significant Harm, DNSH), with updates: — Co mmission Delegated Regulation (EU) 2022/1214 of 9 March 2022 which introduced requirements for activities related to the generation of energy using gaseous fuels and nuclear energy, — Co mmission Delegated Regulation (EU) 2023/2485 of 27 June 2023 which introduced new activities and amendments to certain technical screening criteria 2.6. EU taxonomy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 87 2. Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing Technical Screening Criteria for determining the conditions under which an economic activity qualifies as making a substantial contribution to the sustainable use and protection of water and marine resources (WC), to the transition to a circular economy (CE), in the prevention and control of pollution or in the protection and restoration of biodiversity and ecosystems (BIO), as well as in determining whether those economic activities do significant harm to any of the other environmental objectives, and amending Commission Delegated Regulation (EU) 2021/2178 as regards the public disclosure of specific information in relation to those economic activities. As a result of the analysis, the areas of activity eligible for the Taxonomy were identified: • 4.1 Production of electricity using photovoltaic technology and 7.5 Installation, maintenance and repair of instruments and equipment for measuring, regulating and controlling the energy performance of the building, for which no costs or revenues were incurred in 2024. • 7.6 Installation, maintenance and repair of renewable energy technology systems and 6.13 Personal mobility infrastructure, bicycle logistics, for which costs have not exceeded the materiality threshold. • 6.5 Transport by motorcycles, passenger cars and light commercial vehicles and 8.1. Data processing; management of websites (hosting) and similar activities for which turnover and expenditure are shown. The analysis was made on the basis of the Commission Del- egated Regulation (EU) 2021/2178 of 6 July 2021 supple - menting Regulation (EU) 2020/852 of the European Par - liament and of the Council by specifying the content and pr esentation of the information on environmentally sustain- able economic activities to be disclosed by undertakings su bject to Article 19a or 29a of Directive 2013/34/EU and specifying the methodology for complying with this dis - closure obligation i.e.: A. Minimum Warranties Pursuant to Article 18 of Regulation 2020/852, the Minimum Safeguards referred to in Article 3(c) are the procedures applied by an enterprise conducting business activities to ensure compliance with the OECD Guidelines for Multina - tional Enterprises and the UN Guiding Principles on Busi - ness and Human Rights, including the principles and rights se t out in the eight fundamental conventions indicated in the International Labour Organization's Declaration on Fun- damental Principles and Rights at Work and principles and ri ghts set out in the International Bill of Human Rights. 1. The Minimum Safeguards cover human rights due diligence processes, including labour rights, corruption, taxation and fair competition – An internal verification of the existence and operation of elements of the due diligence process resulting from the framework set out in the documents listed in the definition of the Minimum Guarantees has been carried out. Regulation (EU) 2020/852 of the European Parliament and of the Council is primarily influenced by the provisions of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, including the principles and rights set out in the eight fundamental conventions set out in the International Labour Organization's Declaration on Fundamental Principles and Rights at Work and the principles and rights set out in the International Bill of Human Rights. Applying the standards of responsible conduct is an integral part of the Group's culture. In its business practice, Selvita implements the assumptions of the above documents in many internal procedures and processes. The Group's key documents in this respect are: I. Selvita Group's Code of Conduct, II. Code of Conduct for Suppliers, III. Work regulations, IV. Anti- corruption and anti-bribery policy, III. Policy for preventing discrimination, mobbing and irregularities in the workplace, IV. Whistleblower Protection Policy, V. Data Protection Policy. The Group's due diligence activities are constantly developed and implemented. In 2024, the Group performed a double materiality analysis, identifying impacts, risks and opportunities in its own operations and in the value chain. In the coming periods, the Group anticipates further improvement of due diligence processes aimed at updating and then monitoring the implementation of activities under the Group's Business Continuity Plan (BCP), as well as establishing a strategy for managing the Group's sustainable development. Ultimately, due to the fact that some of the disclosures will only appear for the first time in the sustainability report for 2024, it can be concluded that the Group did not meet all the minimum guarantee requirements in 2024. 2.6. EU taxonomy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 88 2. The Company has not been held liable or found to be in violation of labour law or human rights – no final convictions have been issued in relation to the persons listed in the content of the premise during which the verification relates. 3. No reports to the OECD database (OECD NCP) in relation to the Group in the period covered by the verification. Verification of the OECD NCP notification database [http:/ /mneguidelines.oecd.org/database/]. was carried out. 4. No reports to the Business and Human Rights Resource Centre (BHRRC) – A review of the Business and Human Rights Resource Centre (BHRRC) database was carried out, which showed no reports in relation to the Group in the period covered by the verification. [https:/ /www.business-humanrights.org/en/ companies]. B. Technical eligibility criteria Verification of compliance with the Technical Screen - ing Criteria was carried out for the two identified activ - ities eligible for the Taxonomy (6.5 Transport by motor - cycles, passenger cars and light commercial vehicles; 8.1. Dat a processing; management of websites (hosting and similar activities) and consists of the analysis of the cri - teria for significant contribution, in accordance with the re levant provisions of Commission Delegated Regulation (EU) 2021/2139 and 2023/2486. The analysis shows that the Group does not disclose activities eligible for the Taxon - omy, for which it has been found that the criteria in ques - tion are met. As a result, no DNSH (do no significant harm) ana lysis was undertaken. Activity categories The Taxonomy compliance test allowed to divide the activities of Selvita Group into the following categories, for which the percentage of turnover, capital expendi - tures (CapEx) and operating expenditures (OpEx) was then det ermined: Environmentally sustainable operations, for which the Group did not identify turnover, ca pital expenditures or operating expenditures in 2024, En vironmentally unsustainable activities (eligible, but not in line with the taxonomy) fr om which in 2024 originated: 0.35% of turn- over, 0.34% of capital expenditures and 17.38% of o perating expenses of Selvita Group, Activities not eligible for taxonomy, which in 2024 accounted for: 99.65% of turnover, 99.66% of capital expenditures and 82.62% of Selvita Group's operating expenses. Th e following accounting policies are used to calculate the percentage of turnover, CapEx and operating expenditure (OpEx) eligible and compliant with the Taxonomy: 1. Turnover – the denominator was the consolidated operating income of Selvita Group in 2024, excluding other operating income. Revenues from taxonomy-eligible activities have been assigned to the numerator, 2. Capital expenditures (CapEx) – the basis was capital expenditures settled in individual companies from the Selvita Capital Group. The total amount of capital expenditures is presented in notes 10.1 and 12.1 to the Consolidated Financial Statements for 2024. The numerator is allocated the part of capital expenditure that relates to Taxonomy-eligible activities, 3. Operating expenses (OpEx) – the basis was the non-capitalized costs related to the ongoing maintenance of Selvita Group's property, plant and equipment (plant, equipment), necessary to ensure the continuous and effective operation of these assets. The numerator is allocated the proportion of operating expenditure included in the denominator that relates to assets or processes related to taxonomy-aligned economic activities, including other human resources adjustment needs, and direct non-capitalised costs. The data used for the calculations came from the financial and accounting system of Selvita S.A. and from the finan - cial and accounting systems of individual subsidiaries of th e Selvita Group. The Group avoided double counting when allocating turn- over and capital expenditures by making appropriate con- solidation exclusions, in accordance with the applicable ac counting regulations. In the case of operational expend- iture, which in the Commission Delegated Regulation (E U) 2021/2178 is defined in a way that does not refer to international financial reporting standards, all accounts in the Group's accounting system were reviewed and then the identified items meeting the definition of OpEx were assigned each time to a given type of activity eligible for taxonomy or to a set of other operational expenditure (not eligible for systematics). The data is presented in tables as follows. 2.6. EU taxonomy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 89 Financial year 2024 Criteria for significant contribution DNSH criteria "Do No Significant Harm" Business activity Code or codes Rotation (absolute value) Part of the market, year 2024 Climate change mitigation Adapting to climate change Water and marine resources Circular economy Pollution Biodiversity and ecosystems Climate change mitigation Adapting to climate change Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum Warranties Share of Taxonomy -aligned (A.1.) or Taxonomy-eligible (A.2.) activities Turnover, year 2023 Category (support activities) Category (transitional activities) PLN ‘000 % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. Taxonomy-eligible activities A.1. Environmentally sustainable acivities (Taxonomy-aligned) N/A N/A 0 0% N/EL N/EL N/EL N/EL N/EL N/EL N N N N N N N 0% Turnover from environmentally sustainable activities (Taxonomy A.1) 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% Including a supportive 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% E Including for the transition 0 0% N N N N N N N 0% T A.2. Taxonomy-eligible but environmentally unsustainable activities (non-Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Data processing; website management (hosting) and similar activities CCM 8.1 1,210 0,35% EL N/EL N/EL N/EL N/EL N/EL 0,40% Turnover from Taxonomy-eligible but environmentally unsustainable activities (non-Taxonomy-aligned activities) 1,210 0,35% 0.35% 0% 0% 0% 0% 0% 0,40% A. Turnover from Taxonomy-eligible activities (A.1+A.2) 1,210 0,35% 0.35% 0% 0% 0% 0% 0% 0,40% B. Taxonomy-non-eligible activities Turnover from non-Taxonomy-eligible activities 340,984 99,65% Total (A+B) 342,194 100% TABLE 20. Turnover 2.6. EU taxonomy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 90 Financial year 2024 Criteria for significant contribution DNSH criteria "Do No Significant Harm" Business activity Code or codes Capital expenditure in absolute terms Rotation part Climate change mitigation Adapting to climate change Water and marine resources Circular economy Pollution Biodiversity and ecosystems Climate change mitigation Adapting to climate change Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum Warranties Share of Taxonomy- aligned (A.1.) or Taxonomy-eligible (A.2.) activities Capital expenditure, 2023 Category (support activities) Category (transitional activities) PLN ‘000 % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (in line with the Taxonomy) N/A N/A 0 0% N/EL N/EL N/EL N/EL N/EL N/EL N N N N N N N 0% Capital expenditure on environmentally sustainable activities (in line with Taxonomy A.1) 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% Including a supportive 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% E Including for the transition 0 0% N N N N N N N 0% T A.2. Taxonomy-eligible but environmentally unsustainable activities (non-Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Transportation by motorcycles, passenger cars and light commercial vehicles CCM 6.13 190 0,34% EL N/EL N/EL N/EL N/EL N/EL 0% Construction of new buildings CCM 7.1 – – – – – – – – 18,69% Capital expenditure from Taxonomy-eligible but environmentally unsustainable activities (non-Taxonomy-aligned activities) (A.2) 190 0,34% 0% 0% 0% 0% 0% 0% 18,69% A. Capital expenditure for Taxonomy-eligible activities (A.1+A.2) 190 0,34% 0,32% 0% 0% 0% 0% 0% 18,69% B. Taxonomy-non-eligible activities CapEx related to Taxonomy-ineligible activities 56,397 99,66% Total (A+B) 56,587 100% TABLE 21. Capital expenditure (CapEx) 2.6. EU taxonomy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 91 Financial year 2024 Criteria for significant contribution DNSH criteria "Do No Significant Harm" Business activity Code or codes Operating expenditure in absolute terms Rotation part Climate change mitigation Adapting to climate change Water and marine resources Circular economy Pollution Biodiversity and ecosystems Climate change mitigation Adapting to climate change Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum Warranties Share of Taxonomy- aligned (A.1.) or Taxonomy-eligible (A.2.) activities Capital expenditure, 2023 Category (support activities) Category (transitional activities) PLN ‘000 % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (in line with the Taxonomy) N/A N/A 0 0% N/EL N/EL N/EL N/EL N/EL N/EL N N N N N N N 0% Operational expenditure from environmentally sustainable (Taxonomy-aligned) activities (A.1) 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% Including a supportive 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% E Including for the transition 0 0% N N N N N N N 0% T A.2. Taxonomy-eligible but environmentally unsustainable activities (non-Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Construction of new buildings CCM 7.1 2,295 1 7, 3 8% EL N/EL N/EL N/EL N/EL N/EL 11,30% OpEx from Taxonomy-eligible but environmentally unsustainable activities (non-Taxonomy-aligned activities) (A.2) 2,295 1 7, 3 8% 0,12% 0% 0% 0% 0% 0% 11,30% A. Taxonomy-eligible OpEx (A.1+A.2) 2,295 1 7, 3 8% 0,12% 0% 0% 0% 0% 0% 11,30% B. Taxonomy-non-eligible activities Operational expenditure from non-Taxonomy-eligible activities 10,912 82,62% Total (A+B) 13,207 100% TABLE 22. Operating expenditure (OpEx) 2.6. EU taxonomy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 92 Within the Selvita Capital Group, revenues are generated primarily from preclinical research services commissioned by clients. The Group's consolidated sales revenues in 2024 amounted to PLN 342.2 million, of which PLN 1.2 million is eligible for the Taxonomy. in the course of trading related to activities 8.1 Data processing; website management (hosting) and similar activities, which accounts for 0.35% of turnover. These activities do not meet the criteria for a significant contribution to climate change mitigation, so the turnover associated with these activities was consid - ered eligible but not in line with the Taxonomy. In 2024, Selvita Group made capital expenditures of PLN 56.6 million, of which PLN 0.2 million is eligible for the Tax- onomy. For activity 6.5 Transport by motorcycles, cars and li ght commercial vehicles, it was found that the criteria of significant contribution and non-significant harm were not met and therefore the capital expenditure related to this activity was considered eligible but not in line with the Taxonomy. In 2024, Selvita Group incurred operating expenses of PLN 13.2 million, which were 82.62% ineligible for taxon - omy. OpEx related to Taxonomy-eligible activities relates to 7.1 Construction of new buildings, which accounts for 17.38% of OpEx and does not make a significant contribu- tion to climate change mitigation. 2.6. EU taxonomy
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 2 — Environmental information . 93 3 Information on social issues 3.1. Selvita Group Employees . 94 3.2. Employees in the value chain . 108 3.3. Impacted communities . 109 3.4. Consumers and end-users . 110
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 94 3.1. Selvita Group Employees [S1.SBM-2] [S1.SBM-3] Material impacts, risks and opportunities and their inter - relationship with the strategy and business model, as well as the interests and opinions of interested parties, are detailed in the table of material impacts identified in the materiality study, in section 1.7.3. At Selvita, we distinguish different groups of employees depending on the nature of their jobs and their duties. We distinguish employees of scientific departments – scientists, specialists, laboratory support employees, as well as leaders and managers in this area. This is a group that directly carries out research work on behalf of the compa- ny's clients. Another group are support and sales employ- ees, who do not perform direct research work for custom- ers and whose work is of an office and administrative nature. Th e nature of the work of individual groups of employees translates into conditions and risks in the area of health and safety and work ergonomics. The way work is organized and protected against harmful factors has been adapted to the nature of the work of the separated groups. [S1-1] Regardless of the affiliation to the group of employees – due to the nature of the work, but also the place of work – geographical location, Selvita complies with the applica- ble labor laws, rules and regulations (the Labor Code for in dividual countries in which the group operates and other locally applicable laws) and undertakes to respect human rights resulting from: the International Labor Organization (ILO) Declaration on Fundamental Principles and and the Universal Declaration of Human Rights. The prohibition of forced labour, human trafficking, slav - ery and the exploitation of employees (collectively referred to as "forced labour") is therefore strictly complied with within the Group. The Company does not engage in the direct or indirect acquisition of goods, goods, articles or components produced wholly or partially as a result of forced labor. The basic documents in the Group in the area of employee rights are: • Code of Conduct – a document available on the website applicable to Selvita Group employees regardless of the form of employment or position held, containing guidelines on conducting business in accordance with laws, relevant regulations and national and international standards of business ethics. The Code is divided into three sections: — I. Activities. Rules governing Selvita's relations with co ntractors, suppliers and competitors, as well as rules related to Selvita's position and presence on the market. This section also includes a declaration of compliance with the law, relevant regulations and ordinances. — II . Employees. Selvita is committed to treating its employees wi th respect and in accordance with the highest ethical standards. The section is dedicated to Selvita's responsibilities towards its employees. It includes provisions on diversity and inclusion, non-discrimination or harassment, a healthy and safe working environment, and employee privacy. 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 95 — III. Financial integrity and p rotection of Selvita's assets. This section describes Selvita's commitment to t ake all necessary measures to protect its assets and proprietary information and to prevent unauthorized disclosure of confidential information, both internal and provided to Selvita by business partners. • Work Regulations – establishing the organization and order of work and defining the rights and obligations of the employer and employees, regardless of the type of work performed or the position held. • Policy for preventing discrimination, mobbing and irregularities in the workplace – described in the section below • and Whistleblower Protection Policy – available on the Group's website and further described in Section 4.1.1. report. [S1-2] In addition to the applicable legal regulations, Selvita Group shapes the work environment based on the adopted values. These values were developed in cooperation with employees – during the so-called "Brexit" process. focus groups involving representatives from all departments of the company. These values, which are the foundation of the corpo - rate culture in the Selvita group, are: cooperation, excel - lence, passion, commitment and integrity. Va lues are communicated to employees from the first days of work – as part of the implementation program and promoted through various types of development activities (e.g. manager training) or initiatives rewarding work per - formance (the "Selvita Super Powers" recognition program bas ed on values). By shaping the work environment in line with the above-mentioned values, Selvita takes care of regular communication with employees through the use of vari - ous channels. In tranet pages are updated on an ongoing basis, to which all employees have access, and a newsletter is regu- larly sent to summarize the most important events and initi- atives in the company. Meetings of the Company's Manage- ment Board with all employees are organized periodically (t he so-called TownHalls, on a quarterly basis). During these meetings, the company's Management Board informs employees about business results and shares information on key aspects of the company's operations, including business goals. These meetings are also an opportunity to answer questions from employees, collected anonymously through the MS Forms questionnaire. Various types of questionnaires and surveys are also used if the company wants to know the opinion of employ- ees on a specific topic (e.g. preferences and sugges - tions for training and development initiatives). Every year, em ployees have the opportunity to provide feedback (also in the form of an anonymous survey) on the evaluation of cooperation with their superiors. Managers then receive reports summarizing the feedback received. At least once every two years, a broad, in-depth satis- faction survey is conducted, the results of which are shared by the company with employees. Based on the results of the surveys, action plans are also developed that take into account the suggestions of employees. In the Croatian company, dialogue is also conducted as part of cooper - ation with trade union representatives. In turn, in Polish co mpanies, in order to strengthen direct dialogue, Selvita supported employees in creating a group of employee representatives. A group of people elected in general elec- tions in 2024, which includes representatives of all compa- nies, creates a forum to submit employee ideas and consult th e employer's initiatives. The HR Operations and Organ - izational Culture Department, headed by the Director of Hum an Resources Operations and Organizational Culture, is responsible for the coordination of the above-described activities in the area of dialogue with employees. [S1-3] Selvita also attaches great importance to creating a work environment free from any form of discrimination and har- assment on the grounds of gender, race, color, religion, se xual orientation, national origin, citizenship, marital sta - tus, family status, age and other categories protected by la w. To this end, the prevention of discrimination, nobbing and irregularities in the workplace policy has been devel - oped. The policy ensures that employees are protected fr om possible retaliation. The Company makes every effort to ensure that the provisions of this policy are reflected in real working con - ditions, through, m.in example, mandatory training (all emp loyees have been trained and each new employee also undergoes such training). The training comprehen - sively discusses the assumptions of the policy, as well as teac hes how to recognize the manifestations of mistreat - ment and indicates ways of reacting. In addition to training, the company organizes additional activities (e.g. webinars) aimed at increasing awareness in this area. Employees have access to a secure, anonymous way to report irregularities through the dedicated Whiblo platform or, if they prefer, through direct contact with employees of the HR Opera - tions and Organizational Culture department. Reports are an alysed by a committee consisting of a representative of the Human Resources Operations and Organizational Cul - ture Department, the Legal Department and a person indi- cated by the person reporting the irregularity. Th e Group conducts activities aimed at building employee awareness and shaping a work environment conducive to diversity, also through promotion and edu - cation, e.g. as part of the global diversity month. Last year, we f ocused on generational diversity, and the year before that, on cultural diversity related to the country of origin – promoting educational materials, organizing webinars and moderated discussions. Worker risks and opportunities [S1-4] [S1-5] Employee engagement translates significantly into Selvi - ta's business activity – the quality and scope of services pr ovided. Therefore, the identification of risks and oppor- tunities related to employees is particularly important. Th e risks we have identified are mainly in the following two areas: • Availability of employees with the required qualifications in individual markets in the number adapted to the pace of the Group's development. This risk is related to the company's demand for very 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 96 specific competencies and qualifications, often with a limited supply among candidates. • Recruitment and retention of employees, as well as maintaining employee engagement in connection with the recent wage pressure, in particular on the Croatian market and the impact of salary expectations on the increased costs of doing business. Th e company takes a systemic approach to reducing the impact of the following risks, properly shaping the compa- ny's culture and creating a friendly workplace, as well as bu ilding recognition and employer brand. As far as the employer is financially able, salary increases are carried out on an annual basis, linked to the performance appraisal system. In addition to remuneration, Selvita offers its employ- ees a package of benefits that support their well-being (m edical care, sports cards, meal subsidies). Professional development provides access to a diverse range of train - ing courses and the opportunity to use high-class, modern eq uipment, techniques and tools at work. The possibility of acquiring candidates is ensured by a number of activities in the area of the so-called employer branding, such as participation in job fairs and events at universities, close cooperation with universities, as part of which we jointly shape educational programs and offer opportunities for paid internships in the company, to active involvement in building the competences of future candi - dates (mentoring for students, study visits or the Chemis - try Academy program offering a series of workshops with sci entists Selvita). The opportunities we have identified in the area of employment are related to access to specialized and state-of-the-art laboratories enabling employees to partic- ipate in innovative research in the field of drug discovery, of ten unique on a Polish or Croatian scale. In addition, the diversity of the work environment creates a place open to hiring people from different countries and cultures, which attracts candidates, also from regions with a less attrac - tive labor market. A s ummary of risks and opportunities to take advan - tage of significant opportunities can be found in the table of s ignificant risks and opportunities in chapter 1.7.4. 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 97 3.1.1. Employment structure [S1-6] The presented data reflect the employment status at the end of the period, i.e. as at 31.12.2024 and are presented in full-time equivalents. Selvita Group employs employees in several countries. Countries with 50 or more employees are Poland and Croatia. [S1-7] The presented data reflect the state of employment and cooperation at the end of the period, i.e. as at 31.12.2024 and are presented per person. Number of persons who are not employees of their own employee resources: • Self-employed: 24 persons (3 women and 21 men) on the basis of a B2B contract. These resources are mainly people from the IT and legal industries. • Persons provided by entrepreneurs dealing mainly with employee activity: 2 persons employed through an employment agency (persons performing work from outside the territory of Polish). • and 4 people on a contract of mandate. 3.1. Selvita Group Employees women men CHART 7. Number of employees by gender (%) 2024 68 32 2024 Total number of employees (employment contract) 939 100% TABLE 23. Number of employees by gender By gender 2024 men 303 32% women 636 68% Type of employment women men amount B2B contract 3 21 24 contract of mandate 1 3 4 agency 1 1 2 amount 5 25 30 TABLE 24. Number of persons who are not employees of their own employee resources
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 98 CHART 8. Human capital – Breakdown by employment basis (%) permanent employment contract B2B contract others temporary employment contract 2024 77,3 19,6 2,5 Type of employment women men amount employment contract, including: 636 303 939 for an indefinite period of time 513 236 749 for a definite period of time 123 67 190 TABLE 27. Information about employees by contract type and gender Total churn rate 13,6% Voluntary departure rate 9,53% Number of departures 130 TABLE 26. Total number of employees who left the entity during the reporting period and employee turnover ratio Country where the group employs >= 50 employees Women Men Poland 472 263 Croatia 161 52 TABLE 25. Number of workers in countries with 50 or more employees 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 99 [S1-8] In the Selvita group, 23% of all employees are covered by a collective agreement. They are employees of the Croa - tian company Selvita d.o.o. - all employees (100%) are sub- ject to the aforementioned agreement. In addition, peo - ple employed in individual European countries – Germany, It aly and Spain (7 people in total) are also subject to col - lective agreements. There are no collective agreements in th e remaining companies. All employees of Selvita d.o.o. are represented by trade unions. In turn, all employees (100%) of Selvita S.A., Selvita Services sp. z o.o. and PozLab sp. z o.o. are represented by Employee Representatives for General Affairs, elected in universal suffrage by employees. Freedom of association of employees is an integral part of the Group's business model. Employee representa- tion can submit ideas and suggestions for work improve - ments, and transparent cooperation based on trust is the fo undation of engagement. The Group enables employ - ees to influence change through direct contact, which in creases their engagement and supports the develop - ment of the organization. Good internal communication an d cooperation with employee representatives foster trust, minimize conflicts and solve problems faster. Reg - ular meetings and communication of strategic decisions en sure transparency, building stronger bonds. [S1-9] Selvita Group defines the highest level of management as members of the Management Board of Selvita S.A. 6 Number of employees (number of people) at the highest management level: 6 0,6 Percentage of employees at the highest management level: 0.6% In the reporting period, 67% of the members of the Man - agement Board of Selvita S.A. were men and 33% were wo men. 4 men and 2 women. 5 members of the Manage - ment Board were eligible for the age group between 30-50 ye ars (80%), 1 member of the Management Board was eligi- ble for the age group over 50 years (20%). 3.1. Selvita Gr oup Employees 2024 Total number of employees (employment contract) 939 100% TABLE 28. Number of employees by age Breakdown by age 2024 <30 288 31% >30≤50 582 62% >50 69 7% CHART 9. Number of employees – Breakdown by age (%) 10%0% 20% 30% 40% 60%50% 7% 62% 31% > 50 > 30 ≤ 50 ≤ 30 2024
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 100 3.1.2. Working conditions [S1-10] All employees (100%) employed by companies in Selvita Group receive adequate remuneration, i.e. not lower than the remuneration required by local regulations in individual countries in which the Group operates. [S1-11] All employees are covered by public income loss benefit schemes: • due to illness (contractors employed on the basis of civil law contracts have the status of pupils or students and are not currently covered by benefits) • due to unemployment, starting from the moment when one's own employee works for the company (contractors employed on the basis of civil law contracts have the status of pupils or students and are not currently covered by benefits) • as a result of an accident at work and acquired incapacity for work (contractors employed on the basis of civil law contracts have the status of a pupil or student and are not currently covered by benefits) • in connection with parental leave (contractors employed under civil law contracts are covered by public income benefit schemes) • in connection with retirement (contractors employed under civil law contracts are covered by public pension benefit schemes in the event of loss of income due to retirement). The Group has no knowledge of whether self-employed persons are covered by such benefits. Contractors employed under civil law contracts have the status of pupils or students and are currently not covered by ben - efits. Contractors employed under civil law contracts are co vered by public pension schemes for loss of income due to retirement. 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 101 3.1.3. Employee development and education [S1-13] Development, training, exchange of knowledge and experi- ence are an important area of activities undertaken at Selvita. Em ployees are offered the following forms of development: — New E mployee Onboarding Program — So ft skills training — Sp ecialist training — La nguage training — Globa l thematic initiatives The Selvita onboarding program includes: • General onboarding, which consists of a series of meetings and e-learning: — Hea lth and Safety Training — Wel come to Selvita! – an introductory presentation, including information about the company's mission, strategy, code of conduct and ethics — IT I ntro – meeting with a representative of the IT team, familiarization with the basic systems in the company — Cy ber Security Intro – Overview of Digital Security Principles in the Company — HR I ntro – introduction to general HR processes and initiatives, presentation of the benefit offer — Dr ug Discovery Process at Selvita – getting to know the company's business area regarding the services and processes offered — An ti-harassment e-learning – training on recognizing prohibited behaviors such as mobbing, discrimination or harassment and how to prevent them. • Departmental onboarding – straining related to the duties (as well as necessary procedures) at a given position, conducted by the manager or a person designated by him. • Buddy program – each new employee is assigned a Buddy, who provides support, answers any questions and helps them acclimatize to the company for the first 3 months of work. • Meeting with the HR Operations and Culture team / onboarding survey – during the first few weeks of work, a meeting between the new employee and a representative of the HR Operations and Culture team takes place and/or an onboarding questionnaire is sent. The aim of this activity is to gather feedback on the implementation process and to provide additional support in adapting to the new working environment if necessary. Soft skills training includes the following programs: • SELVITA SMART Professional Development Program – training available to employees regardless of their position in the structure in the following areas: — Ti me management — Pr esentations and public speaking — Co operation in change — As sertive communication in the team — As sertive communication in a team – continuation — Co ping with stress — Self -motivation and commitment — Em otional intelligence and communication Training and skills development metrics Qualitative measures of training and skills development – selected measures of evaluation of training carried out by external entities Scale 1-5 Women Men During the training, I learned new things 4,8 The evaluation questionnaires were anonymous – gender data wa s not collected What I have learned will be useful for me in my work 4,5 The trainer is an expert in the subject and was well prepared for the workshop 4,8 I w as involved in the training 4,7 Selected quantitative measures of training and skills development Number of training hours Number of training hours – women Number of training hours – men Selvita Onboarding Program 702 473 229 Soft skills training 4452 2979,5 1472,5 Specialist training 14606 9741 4865 Language training 2391 1418 973 TABLE 28. Measures of training and skills development 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 102 — Feedback in your daily work — Ex pectation management and personal responsibility • SELVITA First Time Leader Academy – an annual program addressed to employees who are preparing for the role of a leader or who have recently taken on the role of a leader • SELVITA Manager Academy – training for executives • Training in cultural differences • Initiatives for the exchange of knowledge and experience between employees (e.g. Managers' Forum). Al l soft skills training at Selvita is planned and implemented based on previously diagnosed needs and expectations of employees. The needs research is both quantitative and qualitative and is conducted by the method of surveys and in-depth interviews. Specialist training is training carried out within the thematic areas of individual departments. Employees are encouraged to take advantage of external training and to undertake their own knowledge-sharing initiatives (e.g. cyclical training carried out in the Department of Chemis- try "Molecule of the Week" or "MedChem Essentials"). Th e IDD (Integrated Drug Discovery) training program is an interdisciplinary training program for researchers who are currently participating in or preparing to participate in or lead Integrated Drug Discovery projects (complex pro- jects involving more than one department). The main goal is to gain knowledge about the entire drug discovery pro- cess and key scientific knowledge from departments out- side your area of expertise. Gl obal thematic initiatives are activities aimed at building awareness and exchanging knowledge and experience in socially important areas. In 2024, the following initiatives were implemented: • Diversity Month – a series of webinars and discussions between employees representing different generations. • Mental Health Month – a series of webinars whose topics have been chosen by employees. • International Women's Day – a webinar on how to achieve your goals. At Selvita d.o.o. in Zagreb, there are also initiatives on the subject of parenthood. They are in the form of lectures for employees who are parents of children aged 7–12. All development programs and trainings are carried out by both external suppliers and Selvita employees (HR Operations and Organizational Culture Department and employees who are experts in specific substantive areas). The trainings are conducted in Polish, English and Croatian. Their duration is adapted to the specifics of work and the time capabilities of employees. Selvita also has a support program for people pre - paring a doctoral dissertation, which allows to cover all or pa rt of the costs related to the preparation of the thesis and its defense (m.in. financial support for the costs of uni- versity administrative fees, costs related to the use of the co mpany's infrastructure or analytical analyses carried out within the company). In 2024, the learning and development management process was improved by implementing an LMS (Learn - ing Management System) internally called Selvita Learn - ing Hub. The new system, which is available to all employ- ees, will make it easier to record and manage training (for bot h employees and their managers), share educational materials between departments and promote a culture of learning. Training provided by external suppliers and new training in the area of soft skills conducted internally are evaluated. It usually takes the form of an anonymous sur - vey. Both quantitative and qualitative data. In addition, se lected training programs are evaluated through in-depth interviews with training participants. In Selvita Group, the process of performance and work evaluation takes place on an annual basis. All employees who meet the criteria at the beginning of the cycle are included in the performance and career interviews in the first half of the year. These criteria are related to the length of service (at least 6 months of employment) and the status of an active employee (i.e. not on maternity leave/long- term sick leave or is not in the notice period). Total Training Hours Total training hours/woman Total training hours/men Average number of training hours 25440 16910.5 8529.5 Average number of training hours per person for employees 23 24 21 TABLE 29. Average number of training hours [by gender] and average number of training hours per person for employees Women (%) Men (%) Other Not disclosed Total Scheduled 82.3% 79.8% 0 0 81.4% Completed 57. 3% 46.5% 0 0 53.3% TABLE 30. Regular performance and career development assessments 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 103 3.1.4. Health and safety at work [S1-14] Material impacts, risks and opportunities and their interre- lationship with the strategy and business model, as well as the interests and opinions of stakeholders, are detailed in the table of material impacts identified in the materiality study. At Selvita, we distinguish different groups of employ- ees depending on the nature of their jobs and their duties. Fo r these groups, the main risks related to the implemen- tation of their tasks have been identified. We distinguish empl oyees of scientific departments – scientists, special - ists, laboratory support employees, as well as leaders and ma nagers in this area. This is a group that directly car - ries out research work on behalf of the company's clients. An other group are support and sales employees, who do not perform direct research work for clients whose work is of an office and administrative nature. The nature of work of individual groups of employees translates into condi - tions and risks in the area of health and safety and work erg onomics. The way work is organized and protected against harmful factors has been adapted to the nature of the work of the selected groups. Regardless of the membership in the group of employ- ees – due to the nature of work and geographical location – S elvita complies with applicable labor laws, rules and regulations (Labor Code for individual countries in which the group operates and other locally applicable laws), and is committed to respecting human rights resulting from the International Labor Organization (ILO) Declaration on Fun- damental Principles and Rights at Work, and Universal Dec- laration of Human Rights. In organizational units located in Poland and Croatia, health and safety management is regulated through an internal system that is based on carefully developed poli- cies and procedures. This system covers 100% of employ- ees constituting our own resources and also regulates the wor k of employees of external companies providing ser - vices in our organizational units to a certain extent. The OH S Management System has been designed to effectively identify, minimise and eliminate risks associated with work at individual positions. This system includes, m.in: OHS Policy, defining the main principles and obligations of the company in the field of occupational health and safety, operational procedures adapted to the specifics of the business, including work in laboratories, handling of chem- ical and biological substances, work in sterile conditions an d operation of specialized equipment, occupational and process risk assessment system, including regular analyses of hazards related to the tasks performed by our employ- ees, mechanisms for reporting hazards, incidents and acci- dents, allowing for quick response and implementation of co rrective and preventive actions, health and safety train- ing programs, including both initial, periodic and special- ist training tailored to the nature of the work performed at individual workplaces, emergency procedures, regulat- ing the procedure in situations such as potential leakage of hazardous substances, failures of ventilation systems or hazards biological, regular internal audits aimed at moni - toring the effectiveness of implemented procedures and co mpliance with applicable regulations and rules, coopera- tion with subcontractors and suppliers in the field of occu- pational health and safety, including the determination of oc cupational safety requirements for external companies operating in our organizational units. In addition, in 2024, an occupational health and safety committee was established, comprising employee repre- sentatives, employer representatives and safety special - ists, who meet regularly to discuss current issues related to oc cupational health and safety, such as the analysis of acci- dents and accidents, the development and implementation of new procedures and changes in workplaces. The meet- ings are also attended by invited industry specialists, such as o ccupational medicine doctors and toxicologists. Accidents In total, 15 accidents at work were recorded in Selvita Group in 2024, all of which were classified as individual and minor. The total number of days lost due to accidents at work is 102 days. In addition, 3 accidents related to the way to work were recorded, as a result of which employ- ees were unable to work for 95 days. In addition, an anal- ysis of causes and circumstances was carried out for 20 ne ar-miss incidents, for which corrective actions were developed and implemented. In 2024, no serious or fatal accidents were recorded among employees belonging to our own resources, nor were any accidents recorded by employees of external companies that carry out work on the premises of our organizational units. Index = (number of accidents / number of hours worked) *1,000,000. Index = (15/13870609:51:21) *1.000.000 = 1.08142324. There have been no reported cases of reportable work-related ill health, subject to legal restrictions on data collection. 2024 Total number of accidents at work 15 Total Days Lost to Work-Related Injuries 102 Work-related injury rate 1,08 Index = (number of accidents / number of hours worked) * 1,000,000 Index = (15 / 13870609 hours) * 1.000.000 = 1.08142324 TABLE 31. Accidents at work 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 104 Training Each newly hired employee undergoes initial training in occupational health and safety. During initial train - ing, employees are informed about the risks and how to mi nimize the risk. In addition, all employees qualified for individual job groups undergo periodic training related to occupational health and safety. Due to the increased risk, laboratory workstations undergo periodic training every year in order to update their knowledge, m.in. on how to safely perform work with the use of protective measures. Initial OHS training Periodic OHS training Total number of employees trained 223 403 TABLE 32. OHS trainings 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 105 3.1.5. Equal treatment and equal opportunities [S1-15] All full-time employees of the company are entitled to fam- ily leave for labour law and other regulations and social pol icies in force in a given country. The percentage of full-time employees in Selvita Group (including those employed by agencies on the basis of an employment contract) is 97% (941/969 people). Therefore, we assume that this percentage of employees was entitled to family leave in 2024. In 2024, the percentage of eligible employees who took family leave was 7% (66 out of 941 people). [S1-16] The CEO Pay Ratio indicator expresses the ratio of the high- est earner in the organization to the median salary of all ot her employees. In 2024, it was 10.3. The Gender Pay Gap was calculated on the basis of the average gross hourly wage of women divided by the average gross hourly wage of men, weighted by the number of employees in each of the companies, expressed as a percentage. GPG in 2024 amounted to 16.8% for all employees of the Group. Due to the fact that the ordinary, unadjusted pay gap does not reflect the real situation related to equal pay in the company, Selvita also calculates the adjusted gap, calculated in accordance with the assumptions of Direc - tive (EU) 2023/970 of the European Parliament and of the Co uncil of 10 May 2023 on strengthening the application of the principle of equal pay for equal work or work of equal value for men and women through mechanisms sal- ary transparency and enforcement mechanisms – broken do wn into grades functioning in the company. The com - pany implements a remuneration policy based on grades on several development paths: academic path (S), mana - gerial path – senior level (M), support function (F). Groups of positions in which representatives of 1 gender are cur - rently employed – only women or only men – have been ex cluded from the calculations, so it is not possible to cal- culate the gap. The adjusted pay gap, calculated accord- ing to the above calculations, is 4.56% for Selvita group em ployees. The adjusted pay gap allows for a more ade - quate reflection of the actual remuneration policy in the co mpany, i.e. care to link remuneration with the scope of responsibility and required competences for a given posi- tion, regardless of gender. 2024 CEO Pay ratio 10,3 Gender Pay Gap 16.8% Corrected Pay Gap 4.56% TABLE 34. Salary ratios (pay gap and total salary) 2024 Man Woman Amount Number of people who have taken family leave 21 45 66 Number of employees entitled to family leave 304 637 941 Percentage of eligible employees who have taken family leave 6.9 1% 7.0 6% 7.01% TABLE 33. Percentage of eligible employees who have taken family leave (maternity, family, paternity) by gender 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 106 Number of cases of discrimination Selvita Group 0 TABLE 35. Number of cases of discrimination [S1-17] In 2023, the Group implemented a global corporate pol - icy aimed at counteracting mobbing and other undesirable be haviours. In addition, in Poland and Croatia, local proce- dures have been implemented to prevent discrimination and other improper activities, which precisely describe the methods and channels used to report cases of mobbing and other undesirable behaviours. One of the additional channels is also the Whiblo platform, which allows anony- mous reporting of irregularities. In 2023, mandatory e-learning training was also intro- duced for all employees - discussing the problem of mob- bing and how to react in such situations. In the same year, ne arly 860 employees completed the training. In 2024, another 251 people were trained. Training has become a mandatory onboarding element for all new hires. In accordance with the Policy, we protect those who make reports in good faith and ensure that they do not suffer negative consequences as a result. In the event of mobbing, we provide assistance to the person who has become its victim, and we also take appropriate discipli - nary measures against the perpetrators of mobbing. In or der to comply with the obligation to counteract mob - bing, we have implemented a number of solutions. In par- ticular, we enable employees to anonymously report any in cidents and offer assistance in solving situations related to mobbing. We examine the needs of employees and the cur - rent situation as part of a cyclical engagement survey and pulse checks, we promote building positive relation - ships between employees. In 2024, the HR Operations and Organizational Culture team conducted a webinar for employees employed in Poland, the subject of which referred to equal treatment and emotional safety (the most important aspects of the local policy and procedure regarding the prevention of discrimination were also dis - cussed). Similar webinars are planned for the next year in ot her countries of the company's operation. In 2024, information was provided on 4 events of an employee conflict. Investigations were taken in all reports, and corrective actions were taken in three of them. The number of complaints submitted to the OECD National Contact Points for Multinational Enterprises was 0. The amount of material penalties, penalties and compensation for damage ca used by violations of social factors and human rights was 0. The number of serious human rights problems and incidents related to one's own workforce was 0. Th e number of serious human rights issues and incidents related to one's own workforce, which constitute cases of non- compliance with the UN Guiding Principles and the OECD Guidelines for Multinational Enterprises, was 0. The amount of significant fines, penalties and damages for serious human rights is sues and incidents related to own human resources was 0. 0 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 107 3.1.6. Development of specialized staff, implementation of innovative projects, work on high-quality, unique laboratory equipment [S1-OWN INDICATOR] Specialized and modern laboratory equipment is the foun- dation for innovative research, invention and patent cre - ation in the field of drug discovery. Thanks to advanced eq uipment and technology, the Group's employees have the opportunity to implement groundbreaking research and development projects that can have a significant impact on the development of new therapies and services. This opportunity, which stems directly from the Group's business model, is not the result of a specific external influence, but of the organisation's strategic approach to investing in innovation. As a Contract Research Organization (CRO) company, Selvita provides an excellent environment for the develop- ment of researchers' careers thanks to its strong focus on in novation, collaboration, and professional development. The company offers access to state-of-the-art laborato - ries, advanced technologies and a variety of research pro- jects in the pharmaceutical and biotechnology industries. Re searchers have the opportunity to work on the discov- ery and development of new drugs, gaining valuable expe- rience in a dynamic and challenging environment. Wo rking in Selvita Group allows you to come into con- tact with technologies that are rarely found in academic la boratories due to their relatively high operating costs. Examples of such technologies used in Polish companies of the Selvita Group are High Throughput Screening (HTS) and High Content Screening (HCS). These advanced plat- forms are advancing drug discovery, biotechnology, and bi omedical research. They enable scientists to rapidly ana- lyse thousands of compounds, providing valuable infor - mation on biological mechanisms, disease pathways and po tential therapeutic targets. The High Throughput Screening (HTS) platform is a fully robotic technology for testing the bioactivity of chem- ical compounds. HTS allows large chemical libraries to be rapi dly tested for interactions with biological targets, sig- nificantly accelerating the early stages of drug discov - ery. HCS complements this by providing detailed informa- tion at the cellular and molecular level in a short period of ti me. The High Content Screening (HCS) platform is a robotic imaging system capable of testing thousands of compounds per day. HCS enables multi-parameter analysis by recording detailed cellular responses such as morphol- ogy, biomarker expression and functional activity, allow - ing for a better understanding of complex biological sys - tems. Both platforms integrate automation and advanced ima ging technologies, ensuring high reproducibility of results and minimizing human error in large-scale experi - ments. The combination of HTS and HCS improves deci - sion-making by identifying the most promising drug can - didates early, reducing the risk of costly failures in later st ages of development. By leveraging the HTS and HCS platforms, Selvita researchers can accelerate scientific discovery, streamline drug development processes, and improve therapeutic outcomes for patients. These technol- ogies continue to revolutionize biomedical research, pav- ing the way for next-generation therapies and precision me dicine solutions. Another modern technology used at Selvita is mass spectrometry imaging (MSI). It is an advanced molecular imaging technique that enables the spatial visualization of a wide range of chemical compounds, including drugs, metabolites, lipids, proteins, and glycans. It can be used for various types of samples, such as human and animal tissues, three-dimensional in vitro and ex vivo cultures, plant tissues, polymers, biofilms, biota, and food and envi- ronmental samples. MSI has become a key spatial biology to ol in pharmacological research, contributing to break - throughs in drug discovery, disease diagnosis and evalua- tion of therapeutic effectiveness. In 2024, a state-of-the-art SynaptXS mass spectrome- ter was installed at Selvita d.o.o. in Zagreb. This advanced de vice is equipped with a variety of inlet systems, allow - ing scientists to choose the most appropriate technique de pending on the class of target molecules and exper - imental requirements. The Selvita team has undergone sp ecialized training conducted by certified service engi - neers and application specialists to ensure full proficiency in operating the new equipment. Through practical case studies, staff were able to discover the full potential of this instrument and its groundbreaking applications in pharma- cological and biomedical research. Th is area is not governed by politics, but by business decisions made to provide the best equipment and devel- opment opportunities. The goals and activities to date re sulted from decisions based on the adopted strategy, focusing on the development of the staff. The implementa- tion of future activities will be related to the development of a new strategy, which is an integral part of the Group's business model. These activities will be carried out on a continuous basis, taking into account current needs and long-term development. 3.1. Selvita Group Employees
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 108 3.2. Employees in the value chain [S2.SBM-2] Selvita Group pays attention to respecting employee rights in its own organization, but its intention is to transfer these values to its suppliers and business partners, which it will do in the coming years. The first step in this direction was the creation of a Code of Conduct for Suppliers and a sur- vey with representatives of entities in the Group's value cha in, which was carried out as part of the materiality study. Impacts on employees in the value chain were one of the potentially relevant topics studied. As a result of tak- ing into account the impact of Selvita Group on employ - ees in the value chain, it is working to regulate relations wi th suppliers through the implementation of appropriate procedures and policies. These activities are described in Chapter 4.2. Supplier relationship management. [S2.SBM-3] The diversified supplier base of the Group, resulting from the specific nature of the Group's operations, has a nega- tive impact on the effective systemic actions that are pos- sible in cooperation conducted in a permanent cooper - ation system. The topic was considered by the Group as un important due to the lack of previous management. 3.2. Employees in the value chain
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 109 3.3. Impacted communities [S3.SBM-2] [S3.SBM-3] According to the ESRS Standards, affected communi - ties are: "People or groups living or working in the same ar ea that are or may be affected by the reporting entity in its operations or at all levels of its value chain. Affected communities can live both in areas adjacent to the places where the individual carries out activities (local commu - nities) and at a greater distance. Affected communities in clude indigenous peoples who may be affected by real and potential impact." In the study of the materiality of Selvita Group, the issue of local communities was considered irrelevant, as the Group's current business model does not contribute to the negative impacts on the affected communities. 3.3. Impacted communities
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 110 3.4. Consumers and end-users [S4.SBM-2] [S4.SBM-3] Due to the service nature of Selvita Group, Customers have a direct impact on the end users, who are patients. There- fore, this topic was considered irrelevant for the Group. Nev ertheless, the following own indicator emphasizes the essence of the conducted activity in relation to indirect impacts, treating them as a positive aspect of the impact on human health. 3.4.1. Patient health Discovery of substances for the treatment of difficult or incurable diseases [S4-OWN INDICATOR] As an innovative contract research organization (CRO), Selvita plays a key role in the global drug discovery eco - system. Our efforts are focused on supporting the discov- ery and development of therapeutic substances in areas wi th significant unmet medical needs, including oncology, neurology, infectious diseases, inflammation, fibrosis, res- piratory diseases, and metabolic disorders such as obesity and diabetes. As such, all drug discovery and therapeu - tic development activities are an integral part of day-to- day operations, with no dedicated policies or separate regulations. In line with the United Nations Sustainable Devel - opment Goal 3 – Good Health and Wellbeing – our R&D ef forts aim to improve public health by providing inno - vative therapeutic solutions. These efforts are aimed at re ducing the global burden of disease and improving the quality of life of patients. Below we present research on new therapies and key areas of activity. Oncology Cancer remains a huge challenge in modern medicine. Recent developments have revolutionized cancer treat - ment, including small molecules, peptide drugs, monoclo- nal antibodies, immune checkpoint inhibitors, and CAR-T th erapies. Selvita contributes to these innovations by offering comprehensive in vitro, in vivo, and translational research capabilities, including biomarker analyses and in vivo tumor models. The Group, through its activities, can thus influence: • facilitating the development of personalised therapies • Improving cancer treatment • accelerating the discovery of new anti-cancer drugs Infectious diseases Bacterial and viral infections continue to pose major global health threats, as evidenced by the COVID-19 pandemic. Selvita actively participates in in vitro, in vivo and trans - lational studies on new antibiotics, antiviral drugs and im mune therapies, evaluating their effectiveness against over 2000 bacterial strains and in vivo models in the treat- ment of respiratory tract infections and sepsis. 3.4. Consumers and end-users
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 111 Our contribution to sustainability In 2024, the Group achieved its existing goals, which sig - nificantly strengthened its position in the market, and the fo recasts for 2025 include further development of services, with a focus on biopharmaceuticals, artificial intelligence and innovative approaches in precision medicine. These activities are aimed at both improving research efficiency and accelerating processes, which will directly affect the quality of services provided and the acquisition of new projects with higher margins. Our initiatives show that medical research and inno - vation are an integral part of sustainability, improving the qu ality of life for patients around the world. The objec - tives and activities related to the development of the area of discovery of substances for the treatment of difficult or incurable diseases are an inseparable, long-term goal of the entire Group's operations. Specific medium-term objectives will be set during the strategy update. The Group, through its activities, can thus influence: • progress in the development of novel antimicrobial therapies • supporting research into vaccine efficacy • addressing the global challenge of antibiotic resistance Neurology An ageing population has led to an increase in neurodegen- erative diseases, strokes and neuroinflammatory disorders. Se lvita supports the development of new therapies in this field by offering in vitro models such as iPSC-based cell mod- els, proteomic and transcriptomic studies, and GPCR and ne uroinflammation functional assays. The Group, through its activities, can thus influence: • Advancing research into the treatment of Alzheimer's and Parkinson's diseases • Discovering innovative approaches to stroke therapy • developing treatments to alleviate neuroinflammation Respiratory diseases Conditions such as COPD, asthma, pulmonary hyperten - sion and pulmonary fibrosis pose significant challenges to he althcare systems. Selvita conducts in vitro, in vivo and translational research, including inhaled drugs, using state- of-the-art inhalation towers for nebulization and intranasal exposure studies. The Group, through its activities, can thus influence: • Identification of new classes of inhaled drugs • improving the quality of life of patients with lung diseases • supporting the development of anti-inflammatory therapies in respiratory diseases Metabolic diseases The prevalence of metabolic disorders, especially obesity and type 2 diabetes, is increasing worldwide, leading to increased morbidity and mortality. Selvita addresses these pressing health issues using in vitro and in vivo models to characterize biochemical and molecular changes in obe - sity and diabetes. Our capabilities include in vivo readings, bio chemical assays, and molecular analyses to evaluate the efficacy of potential therapeutics. • and contributing to the development of therapies targeting obesity and diabetes, a better understanding of the metabolic mechanisms of disease • striving to reduce the global burden of metabolic disorders Advancing innovative research into the treatment of diseases with high unmet medical needs Working with global partners to facilitate the efficient and effective deployment of innovative medicines Reducing the time and cost of preclinical trials, thus accelerating patient access to modern therapies 3.4. Consumers and end-users
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4 Information on corporate governance 4.1. Corporate culture and business practice . 113 4.2. Supplier relationship management . 124 4.3. Payment practices . 125
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 113 4.1. Corporate culture and business practices [G1.IRO-1] [G1.GOV-1] In the process of analysing the materiality of the topics, all Group companies covered by the reporting and all loca - tions of the Group's operations were taken into account. Qu alitative data on business relationships were also taken into account – in accordance with the Group's mapped value chain. Selvita's main units are located in Polish and Croatia. Sales departments are located in the United King- dom and the United States. As p art of the implementation of the regulations in force in Poland, individual departments are responsible – the Legal Department and the newly hired ESG Manager. In Croatia, this position is taken over by the Compliance Officer and the unit managers responsible in their respec- tive areas. In addition to the regulations applicable to enterprises, such as the Commercial Companies Code, the Labor Code, the Civil Code, the GDPR or OHS, the following are particu- larly important for the Selvita Group industry: • Quality regulations, • Directive 2004/10/EC of the European Parliament and of the Council – Principles of good laboratory practice, • Commission Directive 2003/94/EC – Guidelines for Good Manufacturing Practice, Human Tissue Act 2004/2019, • Regulation of the Minister of Health of 9 November 2015 on the requirementsof Good Manufacturing Practice, • The Act of 15 January 2015 on the Protection of Animals Used for Scientific or Educational Purposes, • Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (the "MAR"), • and EHS (health and safety) regulations. A review of the practices and procedures implemented on the basis of the above regulations contributed to the iden- tification of influences, risks and opportunities related to th e subject of business conduct. A special aspect of the Group's operations is a diver- sified supplier base, which proves that the continuation of the company's operations is secured, and the special demand of customers resulting from the industry, which is often formulated in individual provisions of contracts with contractors. For the purposes of the double material- ity analysis, the group assessed the upstream and down - stream impacts, risks and opportunities based on the av ailable knowledge and experience of the employees par- ticipating in the IRO workshops. The criteria were applied ba sed on past events, the Group's current situation and the procedures and best practices implemented, while indus- try and corporate knowledge were taken into account in te rms of potential impacts, risks and opportunities. [G1-1] Selvita has adopted the Code of Business Conduct, which defines the basic standards of conduct in the Selvita Group, in accordance with the highest standards of eth - ics. The principles set out in this Code guide and basis for al l decisions and actions taken by any person working in or on behalf of Selvita Group. The Code applies to mem - bers of the Management Board and Supervisory Board of 4.1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 114 all Selvita Group companies, as well as to members of the management team, employees and persons working under civil law contracts. By adopting the Code of Business Conduct, Selvita Group has made a clear statement to its contractors and the public that it undertakes to apply all the principles set out in this Code and to promote them in its business relations. The Code of Business Conduct is complemented by procedures and policies: • Anti-corruption and anti-bribery policy, • Code of Conduct for the Prevention of Insider Trading and Market Manipulation; • Whistleblower protection policy. Information about Selvita Group's core values and corpo- rate culture is an integral part of the onboarding process fo r new employees and people working under civil law contracts. In addition, Selvita Group promotes its corporate cul- ture through the Supplier Code of Conduct, which defines st andards of conduct for suppliers in relation to: business ethics, labor and human rights, environment, health and safety, management systems. 4.1.1. Anti-corruption and anti-bribery. Whistleblower protection [G1-1] In Selvita Group, we have a zero-tolerance policy towards all forms of corruption – we do not tolerate offering, prom- ising or accepting any payment, benefit or incentive of a co rrupt nature against any person, regardless of whether they are a government official, employee or representa - tive of a customer, supplier or competitor. Guidelines for id entifying and mitigating corruption risk and rules of con- duct are set out in the Anti-Corruption and Bribery Policy ado pted by Selvita Group. The Anti-Corruption and Anti-Bribery Policy does not list the functions (positions) that are particularly exposed to the risk of corruption and bribery. He emphasizes that in Selvita Group, all members of the Management Board and Supervisory Board, as well as all employees and associates (persons cooperating on the basis of civil law contracts) are obliged to comply with this policy. Specific areas of risk may be departments related to procurement, as well as the area of research services that are necessary for the approval of medicines for marketing. With regard to the methods and procedures for reporting business conduct incidents and corruption and bribery incidents, both the Code of Conduct and the Anti-Corruption and Bribery Policy refer to the Whis - tleblower Protection Policy. Selvita Group undertakes to in vestigate all reported and detected incidents; all direc - tors, officers and employees of Selvita Group are required to cooperate in such investigations, including providing access to data and devices used in the course of their business. Selvita Group attaches particular importance to the proper organization of the whistleblower reporting system, which is reflected in the aforementioned Whistleblower Protection Policy. This policy was updated in September 2024 to align it with the solutions adopted in Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019, which was implemented into the Polish legal system by the Act of 14 June 2024 on the protection of whistleblowers. The updated Whistleblower Protection Policy was announced to employees on 24 September 2024 and came into effect a week later. Selvita d.o.o., in addi - tion to the policy for the entire Selvita Group, also has its ow n local policy, which has been implemented to ensure compliance with Croatian laws, which are the implemen - tation of the EU Whistleblower Protection Directive. Sel vita Group's Whistleblower Protection Policy is publicly available on Selvita's website. This is important because reports can be made not only by employees, but also by other authorized persons indicated in the policy, including suppliers, customers, business partners, contrac- tors, consultants and their employees and associates, as wel l as shareholders of Selvita S.A. The Whistleblower Protection Policy indicates a wide range of issues that may be the subject of a report. This catalogue covers all issues required by the Polish Whis - tleblower Protection Act – m.in. corruption, counteracting mo ney laundering and terrorist financing, product safety and compliance, environmental protection, animal health and welfare, protection of privacy and personal data, secu- rity of networks and ICT systems. In addition, the report may relate to a serious violation of ethical standards and rules (in particular those established in the Selvita Group Code of Conduct), serious circumstances that may harm the organization or society (such as, for example, misuse of public money or grants), serious errors and omissions, as well as bullying and harassment. The internal reporting procedure, described in the Whistleblower Protection Policy, is intended to ensure: • secure and confidential receipt of reports, • proper handling of received reports, • appropriate follow-up by authorised persons, • whistleblowers of the follow-up actions taken. Selvita Group provides whistleblowers with the opportu - nity to use various communication channels. A report can be made electronically, via the dedicated Whiblo platform, as well as by traditional mail (the report form is attached to the Whistleblower Protection Policy). It is also possi - ble to report a breach during a meeting with an author - ised person if the whistleblower is interested in such a so lution. 4.1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 115 Selvita Group ensures that the identity of the per - son who made the report is protected and does not dis - close it – without the express consent of that person – to any person who is not authorized to manage reports and take corrective actions. This also applies to any other information from which the whistleblower's identity can be identified. Authorised persons have been appointed to process reports and are required to follow up with due diligence. Importantly, if the report concerns an authorized per - son, he or she is excluded from considering such a report. Sel vita Group verifies and follows up on reports in accord- ance with the principle of impartiality and also ensures the ri ght of defence (including the right to be heard) to each person concerned. At the same time, Selvita Group cares about the principle of speed of proceedings – if the whis- tleblower provides an address through which they can be contacted, confirmation of receipt of the report will be made within 7 days of its receipt, while feedback on planned or taken follow-up actions will be provided to the whistleblower within 3 months. The Whistleblower Protection Policy also explains how to make an external report, i.e. to the Ombudsman. The Whistleblower Protection Policy adopted by Selvita Group prohibits retaliation, understood as a direct or indirect act or omission in a work-related context, which is caused by a report and which causes or may cause unjustified damage to the person making the report. The policy also sets out an exemplary catalogue of retaliatory actions that are prohibited. Selvita Group has undertaken to keep a record of breaches, in accordance with confidentiality require - ments and applicable law. So far, no report has been reco rded. [G1-3] The basic procedures used to prevent, detect and respond to allegations or cases of corruption or bribery described above are: Anti-Corruption and Bribery Policy and Whi- stleblower Protection Policy. In addition, the following practices and procedures are in place: • Selvita Group maintains accurate accounting books and records, in accordance with internal financial controls and related procedures and policies. Each director, officer or employee is obliged to fully and truthfully answer any questions of internal and/or independent auditors of Selvita Group; • Selvita Group conducts due diligence (also in terms of compliance with anti-corruption regulations) in connection with acquisitions, joint ventures and involvement of third parties. Selvita Group will not enter into any transaction or involve any third party until any corruption concerns or issues have been fully and satisfactorily resolved; • Selvita Group encourages its employees to report, without fear of retaliation, any known or suspected cases of corruption or bribery; • Selvita Group will investigate all reports of known or suspected cases of corruption or bribery. Investigations into incidents of corruption or bribery may be conducted on the basis of: • Anti-corruption and anti-bribery policies – in this case, the person conducting the proceedings is the Compliance Officer; in 2024, this function was performed by the Chief Legal Counsel, i.e. one of the members of the Management Board. The Compliance Officer may appoint other persons to conduct this investigation. The Group's intention is that the investigation activities will be carried out by persons and units separate from those to which the reports relate. • Whistleblower Protection Policy – Selvita Group has appointed authorized persons to investigate whistleblower reports (including corruption or bribery incidents) and conduct investigations. These individuals are separated from the management involved in preventing and detecting corruption or bribery. • Selvita Group's policies, including the Code of Conduct, Anti-Corruption and Anti-Bribery 4.1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 116 Policy, and Whistleblower Protection Policy, are communicated to employees and available on the internal intranet. It is the responsibility of every employee to read and comply with internal policies. In 2024, no training was held in the field of business con - duct, anti-corruption and bribery, and whistleblower pro- tection, but internal training was planned for 2025 in the fo rm of mandatory e-learning, available on the training plat- form for all employees. These trainings will address each of the above-mentioned issues in detail (business conduct, anti-corruption and bribery, and whistleblower protection) and include examples (case-studies). In addition, the training will end with a mandatory knowledge test. [G1-4] In 2024, Selvita Group will: Number of corruption and bribery reports and incidents: 0 Nu mber of corruption and bribery litigation conducted: 0 Nu mber of convictions or fines for violating anti-corruption laws: 0 Selvita Group monitors anti-corruption and anti-brib - ery laws and updates its policies (as indicated above, in 20 24 in particular, the Whistleblower Protection Policy has been updated). 4. 1. Corporate culture and business practices 0
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 117 4.1.2. Due diligence process. Good Clinical, Laboratory and Manufacturing Practices Good Clinical Practice, Good Laboratory Practice, Good Manufacturing Practice (GxP) play a key role in the activ - ities of Contract Research Organizations (CROs). Adher - ence to these standards is essential to ensure the high qu ality, safety and efficacy of pharmaceutical products, as well as to protect the health of patients and clinical trial participants. In addition, it is an important mechanism to protect against the risk of fraud, including corruption. In particular, in the context of clinical and preclinical research, the pos- sibility of manipulating or influencing research results for per sonal or financial gain is a serious threat that can under- mine confidence in the entire research process. Co mpliance with GxP is a guarantee that all activities carried out by Selvita Group are free from unethical prac- tices and carried out in accordance with the highest indus- try standards. At Selvita Group, we have integrated quality principles throughout our organization and developed a Quality Man- ual that defines our policy and Quality Management Sys - tem (QMS). Our goal is to effectively serve our customers wh ile supporting the continuous improvement of the qual- ity of our services. Th e main objectives of our quality policy and quality management system (QMS) are: to provide only excellent and high-quality services to customers, to continuously improve the quality of service and company performance, and to maintain GxP certification. The Quality Assurance department is responsible for shaping a quality-oriented culture throughout the organiza- tion. As a key component of the Quality Management System (Q MS), it ensures compliance with GLP, GMP and GCP regula- tory requirements while promoting Good Research Practice (GR P) in all activities. This also includes ensuring that unreg- ulated research is conducted, documented, and archived in an appropriate manner to maintain the integrity of decisions based on accurate and reliable scientific data. The implementation and continuous improvement of our Quality Management System is aimed at ensuring com- pliance with regulatory requirements and customer expec- tations. Selvita is committed to identifying and meeting cu stomer needs while fostering innovation in research design, therapeutic development, and scientific expertise. Our QMS is based on a process approach, using continu - ous improvement methods such as the Plan-Do-Check-Act (P DCA) cycle to ensure its effectiveness. Each department follows Standard Operating Proce - dures (SOPs), which contain detailed descriptions of sys - tem processes and their interrelationships. Quality planning is a collaborative effort in which all Selvita departments participate. 4.1. Corporate culture and business practices DIAGRAM 2. PDCA Cycle Check Do Act Plan Adopt/standarize process/ change (orrepeat the cycle) Implement CAPA Audit processes Analyze data/evaluate proces Compare to objectives Management review Establish objectives Assess situation Propose process/change Determine resources Execute plan Monitor/measure output Document actions
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 118 As an organization, we are committed to the effective implementation of our Quality Management System (QMS) to ensure compliance with various international standards and regulations, including: FDA 21 CFR Part 820 – Quality System Regulation Good Clinical Practice ICH E6 (R3) OECD Series on Good Laboratory Practice and Compliance Monitoring – ENV/MC/CHEM(98)17 FDA 21 CFR Part 58 – Good Laboratory Practice for Non-Clinical Laboratory Studies Regulatory science research needs (version1.0) EMA/705364/2021 FDA 21 CFR Part 210/211 – cGMP in Manufacturing, Processing, Packing, or Holding of Drugs and Finished Pharmaceuticals Human Tissue Act 2004/2019 Directive 2004/10/EC of the European Parliament and of the Council – Principles of good laboratory practice Regulation (EU) 2016/679 of the European Parliament and of the Council – General Data Protection Regulation Commission Directive 2003/94/EC – Guidelines for good manufacturing practice Regulation (EU) 2018/1725 of the European Parliament and of the Council – Protection of natural persons with regard to the processing of personal data EudraLex Volume 4, EU Guidelines on Good Manufacturing Practice for Medicinal Products for Human and Veterinary Use; Parts I, II, III and appendices 4.1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 119 We maintain the effectiveness of our Quality Management System (QMS) through internal inspections, risk assess - ment, management reviews, corrective and preventive ac tions (CAPA), and external audits. Audits are key management tools for verifying objec- tive evidence, assessing the effectiveness of imple - mentation, monitoring progress towards set objectives and identifying areas for improvement. In addition to reporting nonconformities and corrective actions, qual - ity audits also highlight best practices, fostering knowl - edge sharing between departments and driving contin - uous improvement. A risk-based approach is applied to ch anges, deviations and other quality processes to ensure that the potential effects of a given risk are systemati - cally assessed, minimised and controlled. By integrating ri sk management principles, we improve decision-mak - ing, prioritize actions based on their criticality, and pre - vent unintended consequences that could jeopardize pr oduct quality or regulatory compliance. In addition, CAPA activities are implemented to effectively address root causes and prevent recurrences of the same devia - tions or audit non-compliance, reinforcing our commit - ment to a robust and proactive quality culture. In 2024, Sel vita was audited 31 times. Twenty-five audits were car- ried out by pharmaceutical companies and six by biotech- nology companies. There were no critical comments, only no rmal or low priority comments that were addressed in accordance with the approved corrective action plans. In addition, in 2024, Selvita's laboratories in Krakow were inspected by the Polish regulatory authority – the Chief Pharmaceutical Inspectorate, which issues GMP certificates in Poland. It was a planned GMP inspection carried out on November 20-21, 2024. No important or critical inconsist- encies were detected. The audit was successfully com - pleted with the issuance of a renewed GMP certificate for Se lvita (as of the date of preparation of the report, the new certificate had not yet been submitted to Selvita). In terms of certification, Selvita Group companies have the following certificates and permits (table 36). Compliance with Selvita's GxP principles is essential to ensure the quality and security of the services provided, as well as to maintain trust among both customers and research participants. Good clinical, laboratory and manu- facturing practices are the foundations on which an effec- tive and responsible process of discovering and bringing ne w medicines to market is based. 4.1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 120 Name Number (Scope) Issuing Authority Release date GMP Certificate (Krakow) WTC/0377 _01_01/14 (Quality control studies for human medicinal products) Chief Pharmaceutical Inspectorate 04.02.2025 GMP Certificate (Krakow) WTC/0377 _01_01/15 (Quality control studies for veterinary medicinal products) Chief Pharmaceutical Inspectorate 04.02.2025 GMP Certificate (Krakow) WTC/0377 _01_01/16 (Quality control studies for investigational medicinal products) Chief Pharmaceutical Inspectorate 04.02.2025 GLP Certificate (Krakow) 28/2023/DPL (Physicochemical studies, toxic studies, mutagenic studies, other studies: chemical analyses, cytotoxicity studies, bioanalytical and pharmacokinetic studies) Bur eau of Chemicals 03.11.2023 GLP Certificate (Zagreb) 534-09-2/1-23-06 (Bioanalytical and pharmacokinetic studies) Ministry of Health of the Republic of Croatia 07 .04.2023 Manufacturing and import permit (Krakow) 096/0377 /15 (Quality control studies for human medicinal products, veterinary medicinal products and investigational medicinal products) Chief Pharmaceutical Inspectorate 17.04.2020 GMP Certificate (Poznan) WTC/0421_01_01/95 (Quality control testing of medicinal products for humans) Chief Pharmaceutical Inspectorate 29.05.2023 GMP Certificate (Poznan) WTC/0421_01_01/96 (Quality control tests for veterinary medicinal products) Chief Pharmaceutical Inspectorate 29.05.2023 GMP Certificate (Poznan) WTC/0421_01_01/97 (Quality control testing of investigational medicinal products (IMPs), production of non-sterile IMPs – tablets, granules, extrudate, packaging – primary packaging and outer packaging) Chief Pharmaceutical Inspectorate 29.05.2023 GMP Certificate (Poznan) WTC/0421_01_01/45 (Quality Control Testing for Investigational Medicinal Products (IMPs), Production of Non-Sterile IMPs – Capsules, Packaging – Immediate Packaging) Chief Pharmaceutical Inspectorate 07.03.2024 Manufacturing and import permit (Poznań) 035/0421/15 (Quality control studies for human medicinal products, veterinary medicinal products and investigational medicinal products, manufacture of non-sterile forms of IMPs – tablets, capsules, granules, extrudates; packaging in immediate packaging – capsules, tablets) Chief Pharmaceutical Inspectorate 11.10.2024 TABLE 36. Certificates and authorizations 4.1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 121 4.1.3. Animal welfare [G1-1] The Group conducts laboratory research with animals, act- ing in accordance with very strict guidelines on the living co nditions of animals in animal houses and the rules for conducting experiments, which are established in full com- pliance with the Ethics Committee on Animal Experiments. Se lvita S.A. is committed to providing animals with an opti- mal, safe and comfortable environment, in accordance wi th the requirements of the European Directive 2010/63/ EU and local regulations. Each experiment conducted at Selvita must be meticulously planned and reviewed by an independent Local Ethics Committee (LKE), which evalu - ates the applications based on scientific validity, animal welf are and adherence to the 3Rs: Reduce, Refine and Replace. In addition, Selvita S.A. has established an internal Ani- mal Welfare Authority (AWB) to review LKE applications an d ensure regular compliance with approved procedures. The composition, responsibilities and activities of the AWB are set out in the Standard Operating Procedure (SOP) enti- tled 'Procedures of Animal Welfare Authorities'. Sel vita annually reports the number of animals used to the Ministry of Science and Higher Education, documenting any damage observed during experiments. The company is also implementing a Tissue Sharing Program to further support the reduction of animal use. Selvita is committed to continuously improving animal welfare through a variety of initiatives, including providing a variety of environmental enrichments, maintaining ongo- ing veterinary care, and proactively mitigating potential ri sks to animals. To ensure the highest standards of care, all employ - ees of the Animal House undergo comprehensive training pr ograms, both internal and external. The successful acqui- sition of new skills is documented and verified in accord - ance with the SOP "Training of new employees and devel- opment of employee skills". Th rough these continuous efforts, Selvita S.A. strives to maintain the highest ethical and operational standards in animal testing. Selvita d.o.o. is committed to the responsible care and use of animals in science, and the continued accreditation of the AAALAC-I program for the care and use of animals demonstrates its willingness to go beyond the minimum requirements set out in the European Directive 2010/63/EU (the Directive) and local animal protection laws. Each in vivo experiment conducted at Selvita d.o.o. must be planned, designed and verified by an institutional Ethics Committee, which conducts a harm-benefit analy - sis and the scope of application of the 3Rs (Reduce, Refine and R eplace) principles in the practice of in vivo research in each individual case. Subsequently, in vivo projects are authorized by the autonomous and superior National Ethics Committee, granting Selvita d.o.o. permission to conduct in vivo pro- jects for a period of 5 years. Post-approval management, st atistical analysis, and in vivo reporting of studies are con- ducted in accordance with the PREPARE and ARRIVE best prac tice guidelines, and post-approval monitoring is pro- vided through annual internal inspections, external vet - erinary inspections, and customer inspections, as well as on -site visits by AAALAC-I inspectors. Scientists conducting preclinical research have a moral and scientific obligation to reduce pain and suffering in laboratory animals used for scientific purposes, and their attitudes and commitment to animal welfare and research quality are nurtured through the continuous professional development of research staff provided internally, which is equivalent to the education and training function of FELASA (Federation of European Scientific Societies for Labora - tory Animals) and modular training specific to the tasks, in accordance with the requirements of the Directive. At Selvita Group, we review and compare our approach to humane treatment with current and emerg - ing best practices in veterinary, surgical and research to st ay at the forefront of preclinical animal research in the CRO sector. In 2024, Selvita d.o.o. continued to prove its excellence by providing continuous full accreditation after the regular AAALAC-I SV in March. The continued accredi- tation of the AAALAC-I program of animal care and use of Sel vita d.o.o. since 2009 promotes scientific validity and demonstrates the Group's true commitment to the humane care and use of animals, ensuring animal welfare and, con- sequently, the quality of animal-related science and its con- tinuous improvement. 4.1.4. Cybersecurity [G1-OWN INDICATOR] The Group works with data and analyses, which are the value of its business and are information with the highest degree of confidentiality. Despite many security procedures in place, a potential cyberattack is a possibility of data leak- age, personal data breaches, confidential data breaches, or la boratory work results, which could negatively affect data security. A potential data leak would result in a high risk, with a wide range in the Group's value chain. Continuous investment in security systems, regular employee training, and implemented incident response plans help to avoid dangerous attacks. Ensuring cyberse- curity rules is an integral part of Selvita Group's daily oper- ations. Data security is a high priority. A well-developed dat a protection system effectively prevents the possibility of data leakage, while the human factor and increasingly specialized methods of cyberattacks remain in the element of potential risk. 4.1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 122 The implemented and updated "Information Security Pol- icy" ensures the confidentiality, integrity and availability of information and the prevention of any potential attacks. The policy contains a number of sub-policies that aim to cover all the most important branches: Security requirements policy The organization defines standards and protocols to ensure secure storage, transfer, and access to data. It only allows encrypted methods and multi-factor authentication, ensur- ing a high level of data security. IT logging and monitoring policy Selvita Group has implemented mechanisms that allow not only for quick response during a potential attack, but also for a number of preventive actions. It uses advanced "Enter- prise" class solutions and automation algorithms for imme- diate response. A dedicated "Security Operations Center" wo rks 24/7 to provide permanent protection. Backup Policy Selvita Group ensures data continuity and integrity. The implemented solutions for creating backup and their archiving are an effective defense against attempts of attacks by malicious objects trying to encrypt data. Iso - lated data storage areas, protected from the elements, al low you to survive and maintain business continuity in the event of a disaster. Data classification policy Ensures the correct division of data and their classification. This is particularly important to ensure an appropriate level of data confidentiality and to manage its lifetime (storage, retention, etc.). Security Incident Reporting and Response Policy Defines how incidents are handled and is based on a dedicated ticketing system, where each request is han - dled by the security team. Thanks to the stored history of re quests, they are easy to trace in the event of a potential incident. A process of drawing conclusions on the security incident reporting and response policy Each confirmed incident, after being analyzed by the secu- rity team, is the basis for introducing changes to avoid it s recurrence. These are activities consisting in addi - tional insurance, implementation of a solution or preven - tive actions. In this way, Selvita Group minimizes the risk of an other incident. IT security and risk management policy A secure organization is primarily one in which the risk of an incident is minimized. That is why Selvita Group regu - larly updates the software it uses in both hardware and ap plications. It periodically verifies the level of risk through internal and external security audits. Regular vulnerabil - ity tests are also carried out by specialized and certified en tities, any vulnerabilities are immediately removed and retests confirm their absence. Cloud Provider Security Management Policy – Selvita Group uses cloud solutions for the exchange of information and data. In this regard, appropriate mechanisms are also in place to ensure data integrity, such as the necessary certificates of the cloud solution provider and high encryption standards for data storage, transfer and access based on multi-factor authentication. Malware and antivirus software policy Is of particular importance for data protection in Selvita Group. It is based on deployed devices and software that, thanks to constant updates, is able to detect and remove malware or code. These are high-end firewalls and ded - icated, centrally managed antivirus software. IT disaster rec overy and business continuity policy – ensuring busi - ness continuity is one of the most important aspects of bu siness operations. Selvita Group has introduced a num- ber of solutions to ensure it. In terms of data, it is the pro- cess of creating and recovering data in the event of a dis- aster. In terms of power supply, redundant independent pow er lines, redundant uninterruptible power supplies, the so-called UPS and redundant power generators. Regular disaster crisis scenarios are also carried out. Information Security and Training Policy The awareness of Selvita Group employees in the field of cybercrime threats is currently a fundamental aspect of increasing the security of the organization. In addition to awareness-raising induction training for new employees, Selvita Group also provides a regular training program. As part of the training program held on a quarterly basis, the employee receives a dedicated training that must be com- pleted with a positive test result. In the next stage of this cy cle, three simulated phishing attacks are sent to employ- ees, with links, attachments, etc. to verify the level of kn owledge and awareness. The best employees, i.e. those who recognized the attack and did not allow themselves to be manipulated, are rewarded with gifts, and the win - ner receives a voucher worth PLN 1000. 4. 1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 3 — Information on social issues . 123 Remote work policy In Selvita Group, employees have the option of work - ing remotely, which is why the organization has made su re that remote work takes place in a safe manner. This is defined by the rules of the so-called Screen and Desk." The connection to corporate resources is always encrypted and multi-factor authenticated, and the screen locks automatically after a certain period of inactivity. IT Resources Management Policy – all computer hardware, network and software in Selvita Group are registered in the central resource system. This allows you to fully con - trol resources, software versions, licenses, define allowed so ftware, etc. data stored on devices and, above all, their deletion for retired devices. Access control policy On its basis, mechanisms are implemented to secure and supervise access not only to data, but also to physical facil- ities and rooms. It is based on unique accounts and pass - words registered in directory services and access cards. Per missions define the levels of access to data, and stra - tegic rooms such as data centers are protected by dupli - cated, independent access systems. The facilities are wa tched and monitored by CCTV supported by alarm systems and operated by physical security of the facili - ties in 24/7 mode. Mobile Device Management Policy – pr ovides control over the data stored and processed on devices such as mobile phones. Selvita Group, through a dedicated, centrally managed tool, enforces an appro - priate secure policy in the use of mobile phones. Remote mana gement allows for immediate response in the event of loss of a mobile device by blocking it or permanently deleting work data. IT change management policy Computerized systems managed by the IT team in Selvita Group are strictly under full control. This is possible through continuous monitoring, but also through a sanc - tioned change management process. Each change in the sy stems requires the addressing and approval of the per- son responsible for the business area. system for the pro- vision of a history of changes or for audit purposes. The capacity management process Computer and server hardware, cloud services used by Selvita Group require verification of the saturation of resources they have. That is why the organization moni - tors resources in terms of their use and conducts preventive me asures to ensure the continuity of business processes. This involves ensuring adequate inventory of equipment, licenses, planning purchases in advance, scaling services, etc. In July 2024, Selvita Group conducted an audit of informa- tion processing security. It was conducted by the exter - nal company CyberVadis, and its result is as many as 942 poi nts out of 1000, which puts the Selvita Group among mature and organizational. Selvita Group is aware of the fact that ensuring cyber- security is a continuous process related to the dynamic de velopment in this industry. That is why it regularly and successively implements new solutions aimed at increas - ing the security of processed information. The area is com- prehensively managed by the IT Department, reporting di rectly to the President of the Management Board. At the beginning of the year, the so-called Security RoadMap is defined, which defines and plans the imple - mentation of further projects tailored to the current ne eds, guidelines or trends that prevail in the world of cybersecurity. In 2024, the following completed projects were included in the Safety RoadMap: • Academy of Education and Building Awareness about Cybersecurity, • Implementation of two automations in the SIEM system, • Implementation of Conditional Access to O365 for over 200 employees, • The first phase of the implementation of the Mobile Device Management tool, • Implementation of security systems in the branch in Poznań, • Cybersecurity and information processing audit. The Safety RoadMap for 2025 provides for the implementation of the following projects: • Adding another authentication method for external O365 accounts, • Implementation of the next two automations in the SIEM system, • Conducting penetration tests in the entire Selvita Group, • Further implementation of the Mobile Device Management tool, • Developing a policy on the use of AI tools, • Data management analysis and strategy, • Monitoring of all network traffic outside the organization. 4. 1. Corporate culture and business practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 124 4.2. Supplier relationship management [G1-2] The document that regulates all ESG issues in the supply chain is the Code of Conduct for Suppliers of the Selvita Group. It sets the standards of conduct for Selvita Group's suppliers in relation to issues related to human rights, labor rights, environmental issues and principles of business integrity. Selvita Group requires suppliers to comply with the basic principles of ethical conduct. The Supplier Code of Conduct is part of Selvita Group's approach to responsible purchasing, cover - ing all goods and services. We expect our suppliers to st rictly adhere to the commitments and recommended behaviors. In the part concerning business ethics, the Group draws attention to operating in accordance with the prin- ciples of fair competition and compliance with regulations on international trade, anti-bribery, anti-money laundering, and includes issues related to conflicts of interest and data protection. Selvita requires suppliers to respect all internationally recognized human rights, as expressed in the UN Guid - ing Principles on Business and Human Rights, both in their op erations and in their own value chains. The Group draws attention to the fair and dignified treatment of employees, the prohibition of any form of child labour, the freedom to choose employment, appro- priate wages and working hours, as well as the freedom of ass ociation and representation. The Supplier Code of Conduct also includes highly rel- evant topics such as environmental and health and safety au thorisations and reporting, environmental regulations and standards, and environmental policies. It also cov - ers issues related to the measurement of the release of su bstances or emissions into the environment, as well as climate change and sustainable development, including carbon footprint management, also in scope three. In addi- tion, it is important for providers to provide training, cri - sis management, and emergency precautions. The Code al so highlights the importance of safety measures and risk assessment, ensuring a safe and healthy workplace, pro - tecting workers (including the use of protective clothing – PP E) and ensuring adequate working conditions. Currently, suppliers are not subject to audits, but the Group has taken the first steps to properly verify their activities. Surveys have been carried out to collect relevant information to obtain the necessary data. These activities will allow for more accurate monitoring of suppliers' com- pliance with requirements, including those related to the en vironment, health and safety and other standards appli- cable in the Group. The general terms and conditions of co ntracts and the rules for internal provisions of contracts are also being updated. 4.2. Supplier relationship management
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 4 — Information on corporate governance . 125 4.3. Payment practices [G1-6] Selvita Group currently does not have formal payment policies, but applies the principle of equality in terms of payment terms applied to similar groups of suppliers. The approach is regulated by internal policies, such as the pro- cedure for the circulation of financial and accounting doc- uments. In the area of settling liabilities, the Group com - plies with the contractual provisions contained in individual co ntracts with suppliers. The contractual terms are: from prepayments to 90 days. The average payment deadline for the Group is 29 days. This deadline depends on the type of provider. The average time to settle an invoice was calculated on the basis of cost invoices in 2024. It has been assumed that the standard payment term, i.e. the period from the date of issuing the invoice to the date of its actual payment, is 30 days. The percentage of payments below the standard payment terms is 63% of total payments. 0 There are 0 pending legal proceedings concerning late payment. 4.3. Payment practices
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 Approval for publication This Selvita Capital Group's Sustainability Report for 2024 has been approved by the Management Board Krakow, 26 March 2025 Zarząd Spółki . 126 Bogusław Sieczkowski PRESIDENT OF THE MANAGEMENT BOARD Miłosz Gruca VICE PRESIDENT OF THE MANAGEMENT BOARD Mirosława Zydroń MEMBER OF THE MANAGEMENT BOARD Adrijana Vinter MEMBER OF THE MANAGEMENT BOARD Dariusz Kurdas MEMBER OF THE MANAGEMENT BOARD Dawid Radziszewski MEMBER OF THE MANAGEMENT BOARD Approval for publication . 126 Dokument podpisany przez Dariusz Kurdas Data: 2025.03.26 13:11:45 CET Dokument podpisany przez Dawid Patryk Radziszewski Data: 2025.03.26 13:34:33 CET Digitally signed by Adrijana Vinter Date: 2025.03.26 13:55:12 CET Dokument podpisany przez Mirosława Monika Zydroń Data: 2025.03.26 14:12:31 CET Dokument podpisany przez Miłosz Kazimierz Gruca Data: 2025.03.26 14:48:23 CET Dokument podpisany przez Bogusław Sieczkowski Data: 2025.03.26 14:54:56 CET
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SELVITA GROUP'S SUSTAINABILITY REPORT FOR 2024 1 — General information . 127
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www.selvita.com Your partner of choice in integrated research Selvita S.A. 79 Podole Street 30-394 Krakow, Poland
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Consolidated financial statements of Selvita S.A. Group for the period 01/01/2024 – 31/12/2024 0 SELVITA S.A. GROUP CONSOLIDATED FINANCIAL STATEMENTS Prepared for the period from 01/01/2024 to 31/12/2024 in accordance with the International Financial Reporting Standards as endorsed by the European Union It is the translation of Polish original document It is the translation of Polish original document
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Consolidated financial statements of Selvita S.A. Group for the period 01/01/2024 – 31/12/2024 1 Table of Contents Page Consolidated statement of comprehensive income 4 Consolidated statement of financial position 5 Consolidated statement of changes in equity 6 Consolidated statement of cash flows 7 Notes to the consolidated financial statements 8
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Page 1 General information 8 2 International Financial Reporting Standards 10 3 Summary of significant accounting policies 12 4 Significant accounting judgements and estimates 16 5 Sales revenue 19 6 Operating segments 22 7 Finance cost and revenues 26 8 Income taxes on continuing operations 27 9 Earnings per share 30 10 Tangible fixed assets and right of use assets 31 11 Goodwill 34 12 Other intangible assets 40 13 Subsidiaries 42 14 Investments valued using the equity method 43 15 Financial instruments 45 16 Other non-financial assets 45 17 Trade and other receivables 46 18 Leases 48 19 Share capital 50 20 Credit facilities and loans 51 21 Trade and other liabilities 53 22 Financial instruments 54 23 Employee benefit liabilities 62 24 Deferred income 62 25 Related party transactions 63 26 Cash and cash equivalents 65 Notes to the Consolidated Financial Statements 2
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27 Average headcount in the Group 65 28 Share-based payments 66 29 Capital commitments 70 30 Contingent liabilities 70 31 Notes on the consolidated statement of cash flow 71 32 Significant events after the end of the financial year until the date of approval of the consolidated financial statements 72 33 Approval of the financial statements 73 3
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Note Year ended 31/12/2024 Year ended 31/12/2023 Continuing operations 000'PLN 000'PLN Sales revenue 5 342,194 346,957 Grant income 5 3,569 4,895 Total revenue 345,763 351,852 Amortization and depreciation 5.5 (53,099) (45,452) Consumption of materials and supplies (74,190) (71,158) External services (54,419) (50,626) Employee benefit expense 5.5 (147,982) (143,571) Costs of the incentive program 28 (3,189) (11,514) Other expenses (10,923) (10,370) Taxes and charges (2,441) (2,115) Total operating expenses (346,242) (334,807) Other operating revenue 491 40 Other operating expenses (499) (339) Profit from loss of control 13.1 - 52,564 Operating (loss)/profit (487) 69,311 Financial revenue 7 3,670 10,851 Financial expenses 7 (12,444) (11,826) Share in the profit/loss of associates valued using the equity method 14 (1,194) (1,132) (Loss)/Profit before income tax (10,454) 67,203 Income tax expense 8 4,356 2,675 Net (loss)/profit (6,098) 69,878 Net other comprehensive income, which will be reclassified to profit or loss Foreign subsidiaries results translation differences (2,285) (16,498) Total net other comprehensive income (2,285) (16,498) (8,383) 53,380 Net profit/loss attributed to: Majority shareholders 9 (6,098) 69,878 Non-controling shareholders - - Majority shareholders (8,383) 53,380 Non-controling shareholders - - (expressed in PLN cents per share) 9 With continued operations: Basic (0.3) 3.8 (0.3) 3.8 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM 1 JANUARY 2024 TO 31 DECEMBER 2024 Total income attributed to: Earnings per share TOTAL INCOME FOR THE PERIOD The consolidated statement of comprehensive income should be analyzed together with the explanatory notes constituting an integral part of the consolidated financial statement Diluted 4
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000'PLN 000'PLN ASSETS Non-current assets Tangible fixed assets 10 198,812 207,255 Right of use assets 10 121,590 100,519 Goodwill 11 89,638 72,065 Other intangible assets 12 26,949 29,559 Investments valued using the equity method 14 62,119 63,313 Deferred tax asset 8 16,750 10,992 Other financial assets 1,679 1,310 Total non-current assets 517,538 485,014 Current assets Inventory 6,855 6,540 Short-term receivables 17 79,454 70,228 Contract assets with customers 5.3 9,472 14,755 Other financial assets - 311 Other assets 16 6,258 6,757 Cash and other monetary assets 26 22,512 52,654 Total current assets 124,551 151,245 Total assets 642,089 636,260 EQUITY AND LIABILITIES Equity Share capital 19 14,684 14,684 Share premium 19 86,448 86,448 Own shares 19 - - Reserve capital resulting from the acquisition of OPE 19 22,994 22,994 Other reserve capitals 19 77,247 74,058 Currency differences on translation of foreign operations (12,097) (9,812) Retained earnings 138,700 68,822 Net (loss)/profit for the period (6,098) 69,878 Total equity 321,877 327,071 Long-term liabilities Credit facilities and loans 20;22.8 7,472 112,879 Lease liabilities 18;22.8 68,352 64,973 Liabilities due to retirement benefits 811 988 Deferred tax provision 8 3,289 3,568 Deferred income 24 34,708 33,011 Total long-term liabilities 114,632 215,419 Short-term liabilities Trade and other liabilities 21 46,051 30,590 Contract liabilities with customers 5.3 4,187 2,582 Lease liabilities 18;22.8 31,148 27,207 Short-term loans and bank credits 20;20.8 111,565 19,686 Current tax liabilities 283 75 Employee benefit liabilities 23 9,357 9,838 Deferred income 24 2,991 3,791 Total short-term liabilities 205,581 93,769 Total liabilities 320,213 309,188 Total equity and liabilities 642,089 636,260 CONSOLIDATED STATEMENT OF FINANCIAL POSITION PREPARED AS AT 31 DECEMBER 2024 Note Balance as at 31/12/2023 Balance as at 31/12/2024 The consolidated statement of financial position should be analyzed together with the explanatory notes constituting an integral part of the consolidated financial statement 5
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Note Share capital Share premium Reserve capital resulting from the acquisition of OPE Other reserve capitals Own shares Currency differences on translation of foreign operations Retained earnings/ Accumulated losses from previous years Retained earnings Equity attributed to majority shareholders Equity attributed to non-controling shareholders Total equity 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN Balance as at 1 January 2024 14,684 86,448 22,994 74,058 - (9,812) 68,822 69,878 327,071 - 327,071 Net (loss) for the period - - - - - - - (6,098) (6,098) - (6,098) Other comprehensive income - - - - - (2,285) - - (2,285) - (2,285) Creation of reserve capital as part of the incentive program 28 - - - 3,189 - - - - 3,189 - 3,189 Transfer of result from previous years - - - - - - 69,878 (69,878) - - - Balance as at 31 December 2024 14,684 86,448 22,994 77,247 - (12,097) 138,700 (6,098) 321,877 - 321,877 Balance as at 1 January 2023 14,684 86,448 22,994 62,544 - 6,686 38,513 30,309 262,178 10,983 273,161 Net profit for the period - - - - - - - 69,878 69,878 - 69,878 Other comprehensive income - - - - - (16,498) - - (16,498) - (16,498) Creation of reserve capital as part of the incentive program 28 - - - 11,514 - - - - 11,514 - 11,514 Transfer of result from previous years - - - - - - 30,309 (30,309) - - - Cessation of consolidation of Ardigen S.A. - - - - - - - - - (10,983) (10,983) Balance as at 31 December 2023 14,684 86,448 22,994 74,058 - (9,812) 68,822 69,878 327,071 - 327,071 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE REPORTING PERIOD ENDED 31 DECEMBER 2024 The consolidated statement of changes in equity should be analyzed together with the explanatory notes constituting an integral part of the consolidated financial statement 6
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Note Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN PCash flows from operating activities Net (loss)/profit for the period, including: (6,098) 69,878 - from continuing operations (6,098) 69,878 - from discontinued operations - - Adjustments: Amortization and depreciation and impairment losses on fixed assets 53,099 45,452 Exchange gains (losses) (2,845) (3,571) Interest and profit-sharing (dividends), net 12,266 10,840 Change in receivables 31 (1,445) 14,829 Change in inventory (315) 1,261 Change in short-term liabilities and provision excluding credits and loans 31 15,336 (3,519) Change in deferred income and employee benefit liabilities 31 (3,486) (11,501) Profit from loss of control 13.1 - (52,564) Share in the profit/loss of associates valued using the equity method 14 1,194 1,132 Change in provisions 31 (606) 1,812 Change in other assets 31 (5,223) (5,076) Costs of the incentive program 28 3,189 11,514 Corporate income tax paid (996) (1,507) Net cash flows from operating activities, including: 64,069 78,980 - from continuing operations 64,069 78,980 - from discontinued operations - - Cash flows from investing activities Purchase of tangible and intangible fixed assets (18,710) (73,781) Proceeds from subsidies to fixed assets 3,559 25,861 Return of grants to fixed assets - (153) Purchase of other financial assets 311 (311) Acquisition of shares in Pozlab sp. z o.o after taking into account the acquired cash (22,033) - Cash over which control has been lost - (16,833) Interest received - 4 Net cash flows from investing activities, including: (36,873) (65,213) - from continuing operations (36,873) (48,380) - from discontinued operations - (16,833) Cash flows from financing activities Repayment of finance lease liabilities 18.1 (34,065) (30,818) Proceeds from credits and loans 31 10,298 24,804 Repayment of credits and loans (20,837) (14,110) Interest paid 7 (12,738) (10,844) Net cash flows from financing activities (57,342) (30,968) - from continuing operations (57,342) (30,968) - from discontinued operations - - Net increase in cash and cash equivalents (30,147) (17,200) Cash and cash equivalents at the beginning of the period 52,654 74,157 Net currency differences on cash and cash equivalents 5 (4,303) Cash and cash equivalents at the end of the period 26 22,512 52,654 - from continuing operations 22,512 52,654 - from discontinued operations - - CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM 1 JANUARY 2024 TO 31 DECEMBER 2024 The consolidated statement of cash flows should be analyzed together with the explanatory notes constituting an integral part of the consolidated financial statement 7
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Management Board: Bogusław Sieczkowski - Miłosz Gruca - Vice-President of the Management Board Mirosława Zydroń - Member of the Management Board Dariusz Kurdas - Member of the Management Board Dawid Radziszewski - Member of the Management Board Adrijana Vinter - Member of the Management Board Supervisory Board: Piotr Romanowski - Tadeusz Wesołowski - Vice- Chairman Rafał Chwast - Wojciech Chabasiewicz - Member Przewięźlikowski Paweł - Member Osowski Jacek - Member Registered office Number of shares Percentage interest in capital Paweł Przewięźlikowski Poland 2,943,150 16.03% TFI Allianz Polska Poland 2,093,826 11.41% Nationale -Nederlanden Open-End Pension Fund Poland 1,901,959 10.36% Bogusław Sieczkowski Poland 942,417 5.13% Tadeusz Wesołowski (with Augebit FIZ) Poland 932,713 5.08% Other shareholders (less than 5% of votes at the GM) 9,541,409 51.98% Total 18,355,474 100.00% 26.90% Chairman Member 6.83% 9.59% As at 31 December 2024, the shareholder structure of the parent company was as follows: Percentage share in voting rights As at 31 December 2024 1.1. The parent company NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PREPARED AS AT 31 DECEMBER 2024 1. General information The parent company of the Selvita Capital Group was established in 2019 on the basis of a notarial deed of 22 March 2019 prepared at B. Lipp's notary office (Rep. A No. 670/2019). The parent company has its registered office in Poland. Currently, the company is registered in the National Court Register in the District Court for the City of Kraków - Środmieście, 11th Commercial Department under the number KRS 0000779822. In 2024, the name of the Company was not changed. Composition of the parent’s management and supervisory bodies as at the date of these consolidated financial statements: President of the Management Board The seat of the Parent Company, Selvita Spółka Akcyjna, is located at 30-394 Kraków, ul. Podole 79. 43.69% 100.00% 4.27% 8.71% 8
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Registered office Number of shares Percentage interest in capital Paweł Przewięźlikowski Poland 2,970,815 16.18% TFI Allianz Polska Poland 2,015,577 10.98% Nationale -Nederlanden Open-End Pension Fund Poland 1,901,000 10.36% Bogusław Sieczkowski Poland 942,417 5.13% Tadeusz Wesołowski (with Augebit FIZ) Poland 932,713 5.08% Other shareholders (less than 5% of votes at the GM) 9,592,952 52.27% Total 18,355,474 100.00% % of capital held Poland 100.00% USA 100.00% UK 100.00% Croatia 100.00% Poland 100.00% 100.00%Pozlab Sp. z o.o. 27.03% 6.83% 9.23% 43.93% 100.00% 4.27% 8.71% 1.2. The Capital Group As of the balance sheet date, Selvita S.A. Capital Group consists of Selvita S.A. as the parent entity and 5 subsidiaries - Selvita Services Spółka z o.o., Selvita Inc., Selvita Ltd., Selvita d.o.o. and Pozlab Sp. z o.o. In January 2023, Selvita S.A. lost control over Ardigen S.A. and Ardigen Inc. In May 2024, Selvita S.A. acquired shares in Pozlab Sp. z o.o. (details in the Note 13.1). 100.00% 100.00% Registered Office As at 31 December 2024 As at 31 December 2023 As at 31 December 2023, the shareholder structure of the parent company was as follows: Percentage share in voting rights 1.3. Functional and reporting currency Selvita Services Spółka z ograniczoną odpowiedzialnością Selvita Inc. Selvita Ltd. Selvita d.o.o. % of voting rights Selvita S.A. Group is a capital group from the biotechnology industry that provides multidisciplinary support in solving unique research challenges in the area of drug discovery, regulatory research, as well as research and development. The core business of the Capital Group comprises research and development in biotechnology. The Parent Company's financial year is the calendar year. Consolidation of subsidiaries covers the period from 01.01.2024 to 31.12.2024, i.e. the period in which the Parent Company had control over these entities, excluding Pozlab Sp. z o.o., which is subject to consolidation from May 2024, i.e. from the beginning of the month in which control was acquired. The duration of the Capital Group companies is not fixed. The financial statements of all controlled entities have been prepared as af 31 December 2024, using consistent accounting principles. 100.00% 100.00% These consolidated financial statements have been prepared in the Polish zloty (PLN). The Polish zloty is the functional and reporting currency of the Capital Group. Figures in the financial statements are expressed in thousand of Polish zlotys unless it is stated otherwise. 9
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2. Information on the principles adopted when preparing the consolidated financial statements The accounting principles (policies) applied to prepare the consolidated financial statements are consistent with those applied to prepare the annual consolidated financial statements of the Group for the period ended 31 December 2023. These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS") approved by the European Union ("IFRS EU"). These consolidated financial statements for the period from January 1, 2024 to December 31, 2024 are financial statements containing disclosures in accordance with the International Financial Reporting Standards approved by the European Union (hereinafter referred to as "IFRS"). 2.1.1. Reporting period and scope 2.1. Statement of compliance 2.2. Changes in the applied accounting principles Impact of International Financial Reporting Standards on the consolidated financial statements 10
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2.3. The following standards and interpretations were published by the International Accounting Standards Board, but are not applicable to these financial statements (i.e. for the financial statements for the period ended December 31, 2024) a) Amendments to IAS 21 Effects of Changes in Foreign Exchange Rates The published changes apply to financial statements for periods beginning on or after 1 January 2025. b) Changes in the classification and measurement of financial instruments – Amendments to IFRS 9 and IFRS 7. The published changes apply to financial statements for periods beginning on or after 1 January 2026. As at the date of these financial statements, these changes have not yet been approved by the European Union. (c) Annual amendments to IFRS The Annual Amendments to IFRS amend IFRS 1 Application of International Financial Reporting Standards for the First Time, IFRS 7 Financial Instruments: Disclosures, IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, and IAS 7 Statement of Cash Flows. As at the date of these financial statements, these changes have not yet been approved by the European Union. d) Agreements relating to electricity dependent on natural factors: Amendments to IFRS 9 and IFRS 7. In December 2024. The Board published amendments to help companies better capture the financial impact of contracts relating to naturally dependent electricity, which often take the form of power purchase agreements (PPAs). (e) IFRS 18 Presentation and Disclosures in Financial Statements In April 2024. The Governing Board published a new standard IFRS 18 "Presentation and disclosures in financial statements". The Standard is intended to replace IAS 1 – Presentation of Financial Statements and will be effective from 1 January 2027. The changes from the replaced standard mainly concern three issues: the statement of profit or loss, the required disclosures regarding performance measures, and issues related to the aggregation and disaggregation of information contained in financial statements. The published standard will apply to financial statements for periods beginning on or after 1 January 2027. As at the date of these financial statements, these changes have not yet been approved by the European Union (f) IFRS 19 Non-Governmental Subsidiaries: Disclosures In May 2024. The Board issued a new accounting standard, IFRS 19, which can be adopted by certain subsidiaries that use IFRS to improve the effectiveness of disclosures in their financial statements. The new standard introduces simplified and reduced disclosure requirements. As a result, the qualifying subsidiary applies the requirements of other IFRS accounting standards except for the disclosure requirements and instead applies the limited disclosure requirements set out in IFRS 19. As at the date of these financial statements, these changes have not yet been approved by the European Union. (g) IFRS 14 Regulatory Accruals This standard allows entities that prepare financial statements in accordance with IFRS for the first time (on or after 1 January 2016) to recognize amounts arising from regulated pricing activities, in accordance with the accounting policies applied so far. IFRS 14 will not be approved by the European Union. h) Amendments to IFRS 10 and IAS 28 regarding the sale or contribution of assets between an investor and its associates or joint ventures. The amendments address the current inconsistency between IFRS 10 and IAS 28. Accounting treatment depends on whether the non monetary assets sold or contributed to an associate or joint venture constitute a 'business'. The changes were published on September 11, 2014. As at the date of these financial statements, the approval of this amendment is deferred by the European Union. The Company decided not to take advantage of the possibility of early application of the above changes. As at the date of approval of these financial statements for publication, the Management Board does not expect that their introduction will have a material impact on the accounting policies. 11
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3.3.1 Grants 3.3.2 Revenues from research service contracts concluded with clients Revenues, except for government grants, are recognized in accordance with IFRS 15. The Group recognizes revenue in a way that represents the transaction of transferring promised goods or services to the customer, in an amount that reflects the value of the consideration that the Company expects in exchange for those goods or services. In view of the above, it is crucial to correctly determine the moment and amount of revenue recognized by the Company. The financial statements have been prepared on the assumption of continuing operations for a period of at least 12 months following the date of signing these consolidated financial statements. As at the date of preparation of the consolidated financial statements, there are no circumstances indicating a threat to the continuation of business operations by the Group Entities. In connection with exceeding the base level of one of the indicators contained in the credit agreement concerning acquisition and construction loans as at 31.12.2024, excluding its adjusted level confirmed with the bank in the Letter of Arrangements dated 17.02.2025 (see note 20.1), the Group included as at 31.12.2024 the long-term part of these bank loans in the amount of PLN 87,235 thousand in short-term liabilities in accordance with the requirements of EU IFRS. The applicable repayment schedule for the aforementioned bank loans has not changed and the amount of PLN 87,235 thousand is still payable by the bank in periods exceeding 1 year. In addition, the Group received the bank's consent to extend the current current account loans (totaling EUR 3.1 million) from the end of June 2025 to the end of January 2026. These loans constitute additional liquidity security for the Group. The consolidated financial statements have been prepared in accordance with the historical cost concept, with the exception of shares in Ardigen S.A., which are valued at fair value at the time of loss of control, and as of December 31, 2024, using the equity method. The most important accounting policies applied by the Group are presented below. 3. Summary of significant accounting policies 3.1. Going concern Two types of subsidy are received: research subsidies and infrastructure subsidies. In research grants, eligible costs may be the remuneration of employees related to co-financed projects, external services, depreciation of equipment, etc. Revenue from subsidies is calculated in proportion to the eligible costs incurred, the co-financing ratio in accordance with the signed grant agreement.If, under the subsidy, the Company is entitled to a bonus, e.g. due to publication of the results of work, the Management Board of the Company each time assesses whether there is reasonable certainty that the conditions for obtaining the bonus are met, and if there is such justified certainty, it recognizes the revenue from the subsidy, taking into account the Company's right. The purchase of fixed assets is co-financed in infrastructural subsidies. Revenue from subsidies is calculated in proportion to the depreciation costs, co-financing rate in accordance with the signed subsidy agreement. Accrued income from subsidies is refereed to other receivables (receivables from subsidies). Cash that flows into the bank account is referred to deferred income. 3.3. Revenue recognition Subsidies are recognized in accordance with IAS 20. Subsidies are not recognized until there is reasonable certainty that the Group will meet the necessary conditions and will receive such subsidies, government subsidies are recognized at their fair value as deferred income. Government subsidies for a given cost item are recognized as revenue from subsidies systematically, for each period in which the Group recognizes expenses as costs, the compensation of which is to be a subsidy. If the subsidy relates to an asset, then its fair value is recognized as deferred income, and then gradually, through equal annual write-offs, recognized in the income from the subsidy over the estimated useful life of the related asset. 3.2. Basis of preparation 12
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3.4 Interest and dividend income Dividend income is recognised when the shareholder's right to receive it is established (provided that it is probable that the Group will obtain economic benefits and that the amount of the income can be reliably measured). Interest income is settled over time in relation to the outstanding principal amount and using the effective interest rate, which is the rate that discounts future cash flows forecasted over the economic useful life of the financial asset to the carrying amount of the asset at initial recognition. 3.5 Leases The Group as a lessee Assets due to the right of use The Group has signed lease agreements for a standard period of 5 years. 80% of the signed contracts have extension options. The Group does not use these options. When valuing lease liabilities, a discount rate of 2.1% to 8.9% was adopted. Assets resulting from the right of use are depreciated as follows: - Premises – 5-10 years, - Other fixed assets – from 4 to 10 years, - Means of transport – 5 years. Short-term leases and leases of low-value assets The Group applies the short-term lease exemption to its short-term leases (i.e. leases with a lease term of 12 months or less from the commencement date and no purchase option). The Group also applies the exemption to the recognition of leases of low-value assets, i.e.: up to an amount of less than USD 5 thousand. Lease payments for short-term leases and leases of low- value assets are recognised as an expense on a straight-line basis over the lease term. Significant judgements and estimates relating to leases are described in Note 4.1. 13
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EUR / PLN 4.2730 4.3480 USD / PLN 4.1012 3.9350 GBP / PLN 5.1488 4.9997 CHF / PLN 4.5371 4.6828 JPY / PLN 0.0262 0.0277 3.7 Tangible assets 3.6 Foreign currencies Transactions in currencies other than the functional currency (foreign currency transactions) are presented at the exchange rate ruling at the transaction date. As at the end of the reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling as at that date. Non-monetary items measured at fair value and denominated in foreign currencies are measured at the exchange rate effective as at the date of fair value measurement. Non- monetary items are measured at historical cost. Exchange differences on monetary items are recognized in profit or loss for the period when they occur, except exchange differences on assets under construction intended to be used for manufacturing purposes in the future, which increase the cost of such assets and are treated as adjustment to interest expense related to foreign currency loans. As at 31/12/2024 As at 31/12/2023 3.6.1 Exchange differences from translation of foreign operations As at the balance sheet date, the assets and liabilities of these foreign subsidiaries are translated into the currency of the Group's presentation at the exchange rate as at the balance sheet day, and their statements of comprehensive income are translated at the weighted average exchange rate for the financial period. Exchange rate differences resulting from such a conversion are recognized in other comprehensive income and accumulated in a separate item of equity. Upon the disposal of a foreign entity, exchange differences accumulated in equity regarding a given foreign entity are recognized in profit or loss. Fixed assets, except land, are depreciated on a straight-line basis over a period corresponding to their estimated useful economic life, which is as follows: • Buildings, premises and civil and water engineering structures – from 10 to 40 years, • Technical equipment and machinery – from 3 to 40 years, • Means of transport – 5 years, • Other fixed assets – from 3 to 20 years. Machinery and equipment are recorded at purchase price less depreciation and total impairment losses. Depreciation is recorded in such a way as to write off the cost or valuation of an asset (other than land and fixed assets under construction) to its residual value using the straight-line method. 14
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3.9 Stocks Inventories are valued at the lower of cost or realizable value. Inventory costs are determined using the FIFO method. Realizable value is the estimated selling price of inventories reduced by any estimated costs of completing production/providing services and costs necessary to make the sale effective. Purchased materials are included directly in operating costs and are valued at the balance sheet date according to the above principles based on the inventory carried out. The Group's inventories are reagents and laboratory materials used in the implementation of research work for clients. 3.10 Cash and cash equivalents Cash and short-term deposits shown in the balance sheet include cash at bank and in hand, cash in split payment accounts and short-term deposits with an original maturity of three months or less. The cash and cash equivalents balance shown in the consolidated cash flow statement consists of the cash and cash equivalents specified above, less outstanding overdrafts. 3.8 Intangible assets Intangible assets are depreciated on a straight-line basis over the period corresponding to their estimated useful life or over the shorter of the two periods: useful life or right of use, which is as follows: • Software - HD - 10 years, • Other intangible assets - from 1.5 to 5 years, • Customer base - 13.5 years 15
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4. Significant accounting judgements and estimates 4.1 Professional judgment in accounting The key judgments other than those related to estimates (see Note 4.2) made by the Management Board in the process of application of the entity’s accounting policies, having the most significant effect on the amounts recognized in the financial statements, are presented below. The Company applied the following judgments and estimates: Lease period for contracts with extension options The Company determines the lease term as an irrevocable lease period, including periods covered by the option to extend the lease, if it can be assumed with sufficient certainty that the option will be exercised, and periods covered by the option to terminate the lease, if it can be assumed with sufficient certainty that the option will not be exercised. The Company has the option, under some lease contracts, to extend the duration of the asset lease. The Company applies a judgment when assessing whether there is sufficient certainty about using the extension option. This means that it takes into account all relevant facts and circumstances that constitute an economic incentive to extend it or an economic penalty for not extending it. After the commencement date, the Company reassess the lease period if there is a significant event or change in circumstances under its control and affects its ability to exercise (or not exercise) the extension option (e.g. change of business strategy). The Company has included the extension period as part of the leasing period for the leasing of business premises and parking spaces due to the importance of these assets for operations. Lease period for contracts of unlimited duration The Company has lease contracts concluded for an indefinite period and contracts that have evolved into indefinite contracts in the situations provided for in the Civil Code, in which both parties have the option to terminate. When determining the leasing period, the Company determines the period of contract enforceability. Leasing ceases to be enforceable when both the lessee and the lessor have the right to terminate the contract without having to obtain permission from the other party without incurring more than insignificant penalties. The Company assesses the significance of broadly understood penalties, i.e. apart from strictly contractual or financial matters, it takes into account all other significant economic factors discouraging the termination of the contract (e.g. significant investments in leasing, availability of alternative solutions, relocation costs). If neither the Company as the lessee nor the lessor incurs a significant penalty for termination (broadly understood), leasing ceases to be enforceable and its period constitutes the notice period. However, in a situation where either party - in accordance with professional judgment - incurs a significant penalty for termination (broadly understood), the Company determines the leasing period as sufficiently reliable (i.e. the period for which it can be assumed with sufficient certainty that the contract will last). Lessee's marginal interest rate The Company is not able to easily determine the interest rate for leasing contracts, which is why it uses the lessee's marginal interest rate when measuring the leasing liability. This is the interest rate that the Company would have to pay to borrow for a similar period, in the same currency and with similar collateral, the funds necessary to purchase an asset with a similar value as the asset due to the right to use in a similar economic environment. Recognition of grants The Group recognizes revenue from subsidies from the commencement of work related to a given subsidy agreement. The Management Board makes a judgment for each grant agreement whether it is reasonable assurance that the Group is able to meet all the conditions resulting from the subsidy agreement and will not be obliged to return received subsidies. Revenues from subsidies are recognized over time in the period of works related to the subsidy. Leasing - the Group as a lessee When applying the accounting policies adopted by the Group, the Management Board of the parent is obliged to make estimates, judgments and assumptions regarding measurement of individual assets and liabilities. Estimates and the related assumptions are based on past experience and other factors which are considered to be material. The actual figures may be different from the adopted estimates. The estimates and the underlying assumptions are subject to ongoing review. Changes in estimates are recognized in the period of review if they apply to that period only, or in the current and future periods if the changes apply equally to such periods. 16
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4.2 Uncertainty of estimates Presented below are the main assumptions concerning the future and other uncertainties as at the end of the reporting period, which pose a considerable risk of material adjustments to the carrying amounts of assets and liabilities in the following financial year. As regards the incentive program, detailed judgments and estimates are presented in Note 28. In terms of goodwill impairment, detailed judgments and estimates are presented in note 11.2. Provisions for bonuses are presented in Note 23. Provisions for bonuses are estimated in line with an algorithm based on the obtained and realized margin and revenue in individual departments and segments. The Management Board estimates the value of bonuses to be paid on the basis of the results of the aforesaid calculations. The Management Board considers numerous factors, such as the current and anticipated economic and financial position of the Group. Bonuses are discretionary. The Group recognizes a deferred tax asset based on the assumption that a tax profit will be available in the future to allow its use. Deterioration of tax results in the future could cause that this assumption would become unjustified. The Group carefully assesses the nature and extent of evidence justifying the conclusion that it is probable that future taxable income will be sufficient to deduct the unused tax losses, unused tax credits or other negative temporary differences. When assessing whether it is probable that future taxable profit will be achieved (probability above 50%), the Group shall take into account all available evidence, both confirming the existence of probability and evidence of its absence. 4.2.1 Provisions for bonuses 4.2.2 Useful lives of property, plant and equipment As described in Note 3.7 and Note 3.8, the Group reviews the estimated useful lives of items of property, plant and equipment and intangible assets at the end of each annual reporting period. In the current financial year, the Management Board did not identify the necessity to reduce the value in use of any assets. 4.2.3 Accounting for long-term contracts using the estimated stage-of-completion method As described in Note 3.3.2, the Group determines the stage of completion of long-term contracts by comparing the project costs incurred thus far with the total estimated project costs. Due the nature of the Group’s projects and the possibility of unexpected difficulties in project completion, it may turn out that the total actual project costs differ from the estimates. A change in the estimates of the total costs of project implementation may result in the fact that the stage of completion of the project as at the balance sheet date, and thus the recognized revenue, should be set at a different value. Project costs are updated on an ongoing basis by the project manager, which reduces the risk of large deviations of actual costs from the forecast ones. 4.2.4 Deferred tax asset Based on the forecasts for the following years, the Management Board of the Parent Company makes a decision on calculating the deferred tax asset. Asset due to tax relief in the Special Economic Zone in Selvita Services Sp. z o.o. the amount of 50% of the average annual remuneration for newly created jobs is calculated for a period that can be used, not longer than 24 months. Tax relief asset at Selvita d.o.o. it is charged in the amount of 25% of the deductible investment costs incurred. The tax relief can be settled within 10 years. 4.2.5 Tax settlements Regulations regarding value added tax, corporate income tax and social security charges are subject to frequent changes. These frequent changes result in a lack of well-established benchmarks, inconsistent interpretations, and few precedents established that could apply. There are no explicit interventions clearly defining tax regulations and relations between both state authorities as well as state authorities and enterprises. Tax settlements and other areas of activity may be subject to control by authorities that are entitled to impose penalties and fines, and any additional tax obligations resulting from the control must be paid together with interest. These conditions cause increased tax risk. Consequently, the amounts presented and disclosed in the financial statements may change in the future as a result of the final decision of the tax inspection authority. 17
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4.2.8 Recognition of loss of control over Group entities As of December 31, 2023, the operating segment called Bioinformatics (constituting Ardigen S.A. and Ardigen Inc.), was a discontinued operations. Detailed disclosures regarding the assets of these companies, the circumstances of the loss of control and information on their segment are presented in note 13.1. 4.2.7 Revenue recognition Judgments made by the Group that significantly affect the determination of the amount and timing of obtaining revenues from contracts with clients are presented in note 3.3.2. On July 15, 2016, the Tax Code was amended to take into account the provisions of the General Fraud Prevention Clause (GAAR). GAAR is to prevent the emergence and use of artificial legal structures created to avoid payment of tax in Poland. GAAR defines tax avoidance as an act performed primarily to achieve a tax benefit, which is in conflict with the subject and purpose of the provisions of the Tax Act. According to GAAR, this does not result in a tax benefit if the method of operation was artificial. Any occurrence of (i) unjustified division of operations, (ii) the involvement of intermediaries despite the lack of economic or economic justification, (iii) elements that mutually abolish or compensate each other, and (iv) other activities similar to those mentioned above, may be treated as a premise for existence artificial activities subject to GAAR. The new regulations will require much more judgment when assessing the tax consequences of individual transactions. The GAAR clause should be applied to transactions made after its entry into force and to transactions that were carried out before the GAAR clause entered into force, but for which benefits were or are still being achieved after the date of entry into force of the clause. The implementation of the above provisions will enable Polish tax inspection authorities to question the legal arrangements and agreements implemented by taxpayers, such as the restructuring and reorganization of the group. The Group recognizes and measures current or deferred tax assets or liabilities using the requirements of IAS 12 Income tax based on profit (tax loss), tax base, unused tax losses, unused tax credits and tax rates, taking into account the uncertainty associated with settlements tax. If, in the opinion of the Group, it is likely that the Group's approach to the tax issue or group of tax issues will be accepted by the tax authority, the Group determines taxable income (tax loss), tax base, unused tax losses, unused tax credits and tax rates taking into account the approach to taxation planned or applied in your tax return. Assessing this probability, the Group assumes that the tax authorities authorized to audit and challenge the tax treatment will carry out such control and will have access to all information. If the Group determines that it is not probable that the tax authority will accept the Group's approach to the tax issue or group of tax issues, then the Group reflects the effects of uncertainty in accounting terms of tax during the period in which it determined it. The Group recognizes an income tax liability using one of the following two methods, depending on which of them better reflects the way in which uncertainty can materialize: · The Group determines the most likely scenario - this is a single amount among the possible outcomes or · The Group recognizes the expected value - it is the sum of probability weighted amounts among the possible results. 4.2.6 Impairment of trade receivables and contract assets The Group uses reserve matrices to value the write-down for expected credit losses in relation to trade receivables and contract assets. In order to determine the expected loan losses, trade receivables and contract assets were grouped based on the similarity of the credit risk characteristics. The Group uses its historical data on credit losses, adjusted, where appropriate, by the impact of future information. 18
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Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN 163,743 153,543 175,430 186,387 2,834 6,790 187 238 342,194 346,957 1. Agreements based on the fixed price model. In the "fixed price" model under the concluded contract, the Group provides specific services for a specific amount of remuneration. In such cases, invoicing usually takes place in the following pattern: a certain percentage of the advance (the so- called upfront payment) and the remainder at the time of the contract. In accordance with the Group's policy, some of this type of contracts were measured in accordance with the cost-advanced method as long-term contracts. These types of contracts is considered individually in the context of the moment of fulfilling the obligation to perform the service and thus the impact on the moment of recognition of revenues. 2. Agreements based on the FTE (Full-Time Equivalent) model Under the contract, the Group provides appropriately qualified employees. Revenue is defined as the working time of employees of the Group measured at the rate from the contract. Invoices in accordance with the contract are issued at the end of the set settlement period (usually monthly). The Group's obligation to perform the service is therefore met at the time the employees render the service. 3. Sale of administrative services The Group provides administrative services for Ryvu Therapeutics S.A. (the scope of which was limited during 2024) and Ardigen S.A. Contract research - FTE agreements The above analysis does not reflect the Group's operating segments, which are described in note 6. 5. Sales revenue The sales revenues obtained by the group can be divided into 3 types: Analysis of the Group’s sales revenue for the period from 1 January 2024 to 31 December 2024: 5.1. Revenues Operating income (excluding grants) Revenues from the sale of administrative services Other income Contract research - fixed priced agreements 19
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Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN 2,480 1,753 1,089 3,142 3,569 4,895 As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN 14,755 15,204 112,768 51,210 (118,051) (51,658) 9,472 14,755 As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN 2,582 3,351 571 - 8,256 6,543 (7,223) (7,311) 4,187 2,582 5.3. Contract assets and liabilities with customers The scope of changes of contract assets with customers Grants for research Balance at the end of the reporting period Revenues from subsidies Balance at the beginning of the reporting period Invoiced revenues Balance at the beginning of the reporting period Revenue accrued in proportion to the costs incurred Balance at the end of the reporting period Contracts acquired as part of the Pozlab purchase Execution of contracts without invoicing 5.2. Revenues from subsidies Infrastructure subsidies The amount of revenues from subsidies is presented in the table below: Invoicing beyond the obligation to provide The scope of changes of contract liabilities with customers 20
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Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Poland 14,593 14,345 EU members 126,782 132,555 USA 92,053 85,873 Switzerland 49,373 35,193 UK 45,294 59,575 Other countries 14,099 19,416 Total 342,194 346,957 Amortization and impairment Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Amortization of tangible assets 25,715 17,649 Amortization of equipment usage rights 7,801 9,683 Amortization of rights to use the premises and cars 16,086 14,654 Amortization of intangible assets 861 679 Amortization of contractor base 2,636 2,787 Total amortization expense 53,099 45,452 Employee benefit expense Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Salaries and wages 121,734 116,808 Social security charges 19,820 18,010 Medical and other benefits 5,340 7,681 PPK 1,088 1,071 Employee benefit expense 147,982 143,571 Research and development costs included in the result when incurred Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Research and development costs included in the result when incurred* 44,343 49,076 Revenue from external customers The Group operates in two major geographical regions – in Poland, where its registered office is located, and in Europe. In regards to other countries, the United States are a major market. 5.4 Geographical information Group’s revenue from external customers by geographical area: * in the consolidated statement of comprehensive income, research and development costs are included in operating costs 5.5. Operating expenses 21
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6. Operating segments 6.1 Products and services representing a source of revenue of the reporting segments For management purposes, the Group has been divided into parts based on the services provided. There are therefore two operating segments. The first segment accounting for the major part of the Group’s revenue is the Segment of Drug Discovery. Services provided to external contractors are in the field of chemistry, biochemistry, DMPK, in-vivo and in-vitro, and also integrated research and development projects. The second segment is the Segment of Drug Development, which provides services in the fields of analytics, regulatory, and, after the acquisition of Pozlab Sp. z o.o., pharmaceutical product development, including manufacturing of medicinal products, quality control, and microbiological testing, including biological drugs. The Management Board monitors separately segment operating results to take appropriate decisions concerning resources allocation, to assess results of resource allocation and segment performance results. The basis for the assessment is segment operating profit or loss. Group financing (including finance costs and finance income) and deferred tax are monitored at the level of the Group and are not allocated to individual segments. In the case of subsidiaries assigned entirely to a given segment, the allocation of their statement of financial position items is made to all their assets and liabilities. Changes to operating segments Following the increase of importance within the Group and significant revenue growth in 2023 and the expected acquisition in related or similar areas concerning analytical and regulatory research services within the Group, the Group decided to change the operating segments starting from January 1st, 2024. The Management Board determined that the provision of financial information by Drug Discovery and Drug Development is more meaningful to the readers of the consolidated financial statements because it believes that these two areas where the Group operates should be the main business performance differentiator going forward. For the sake of comparability, historical periods have been restated. 22
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Year ended 31/12/2024 Year ended 31/12/2023 Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN 000'PLN 000'PLN Segment 1 - Drug Discovery, including 260,731 277,567 (8,607) 6,330 revenue from external customers (FTE) 160,855 177,620 revenue from external customers (fixed price) 96,533 95,192 intersegment revenue 2 - grant income 3,236 4,597 other operating income 105 158 Segment 2 - Drug Development, including 82,016 67,164 8,120 10,417 revenue from external customers (FTE) 14,575 8,766 revenue from external customers (fixed price) 67,211 58,350 intersegment revenue 5 - grant income 82 48 other operating income 143 - Unallocated revenues, including: 3,515 7,161 revenues from sales of administrative services 2,834 6,790 other revenues (including subsidies) 681 371 Elimination of intersegment revenue 6 - Total from continuing operations 346,254 351,892 (487) 16,747 Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Segment 1 - Drug Discovery, including 269,338 271,237 amortization and depreciation 37,780 34,869 depreciation of the customer base 2,636 2,787 costs of central administration, Management Board remuneration and selling costs 61,038 59,174 intersegment expenses 5 - Valuation of the incentive program 2,020 8,462 Segment 2 - Drug Development, including 73,896 56,747 amortization and depreciation 12,683 7,796 costs of central administration, Management Board remuneration and selling costs 13,150 11,269 intersegment expenses 2 - Valuation of the incentive program 1,169 3,052 Unallocated revenues, including: 3,515 7,161 revenues from sales of administrative services 2,834 6,790 other revenues (including subsidies) 681 371 Elimination of intersegment expenses 6 - Total from continuing operations 346,741 335,145 6.2 Segment revenue and profit or loss Analysis of the Group’s reporting segment revenue and profit or loss: Operating profitRevenue Expenses Administrative costs arise in individual administrative units assigned to individual segments. The allocation of costs to individual segments remains at the level of individual subsidiaries or various allocation keys based on, among others, sales markets, the number of operational employees. The accounting principles applied to the operating segments are the same as the Group’s accounting policies presented in Note 3. Segment profit is profit generated by individual segments after the allocation of the costs of central administration and the remuneration of the management as well as the selling costs. This result does not include other profits and losses as well as revenues and financial costs. This information is provided to persons deciding about the allocation of resources and assessing the financial results of the segment. The transaction prices used in transactions between operating segments are established on an arm's length basis, as in transactions with unrelated parties. 23
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN 410,781 460,230 segment name Drug Development 142,732 88,914 553,513 549,144 not allocated 88,576 87,116 642,089 636,260 143,300 138,665 segment name Drug Development 61,497 39,328 204,797 177,993 not allocated 115,416 131,195 320,213 309,188 ● ● ● 6.3 Segment assets and liabilities Segment 2 Segments assets Segment 1 segment name Drug Discovery Total assets Total liabilities Total segment assets Unallocated assets include: investment in Ardigen S.A., and not allocated in the previous steps: deferred tax assets and public law receivables. Unallocated liabilities include: loans, and not allocated in the previous steps: deferred tax provision and public law liabilities. in the last step, other assets and liabilities are assigned using the direct allocation method in the case of use by a specific segment or using a cost allocation key. in the next step, the remaining items are assigned to the operating segments: - goodwill, non-current receivables, cash and cash equivalents, property, plant and equipment, inventories, trade receivables, trade receivables and assets arising from long-term contractcs; - trade liabilities, liabilities under long-term contracts, provisions for liabilities and financial leases; in the first step, in the case of all assets and liabilities of Selvita d.o.o. they are fully assigned to the Drug Discovery, Segment liabilities Segment 1 segment name Drug Discovery Total segment liabilities For purposes of monitoring segment performance and allocating resources: Segment 2 24
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Year ended 31/12/2024 Year ended 31/12/2023 Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN 000'PLN 000'PLN Continuing operations: Segment 1 segment name Drug Discovery 40,416 37,656 23,170 80,621 Segment 2 segment name Drug Development 12,683 7,796 33,417 16,075 Total (Continuing and Discontinued operations) 53,099 45,452 56,587 96,696 Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Segment I - Drug discovery Customer A** 34,995 19,058 Customer B* 16,073 26,556 Segment II - Drug development Customer C 17,356 8,319 Customer D* 7,600 11,677 Total 76,024 65,610 * The client did not exceed 10% of the segment's sales revenue in 2024. ** The client did not exceed 10% of the segment's sales revenue in 2023. 6.4 Other segment information 6.5 Major customers Depreciation and amortization Fixed assets additions 25
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Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Finance cost due to financial instruments 6,877 8,126 Interest 7,265 7,286 Amortized cost valuation (388) 840 Other finance cost 5,567 3,700 Interest on leases 5,390 3,558 Other 177 142 Total finance cost 12,444 11,826 7. Finance cost Financial income in 2024 results mainly from exchange rate differences in the amount of PLN 3,653 thousand. In 2023, it mainly concerned exchange rate differences in the amount of PLN 10,339 thousand and interest received in the amount of PLN 103 thousand. 26
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Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Current income tax: 1,682 1,582 Current income tax charge 1,579 1,582 Income tax for 2023 paid in Croatia 103 - Deferred income tax (6,038) (4,255) Tax charge presented in the statement of comprehensive income (4,356) (2,673) Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN Gross profit before tax (10,454) 67,203 Tax at the statutory tax rate applicable in Poland, 19% (1,986) 12,768 Tax relief for activities in the economic zone - (2,348) The tax relief for investments in Croatia (368) (2,017) Costs of the incentive program 606 2,188 Subsidies costs 534 925 Permanent non-taxable costs (representation costs, PFRON and other NKUP costs) 561 370 Permanent non-taxable income (subsidies) (534) (925) Change of R&D tax relief (4,970) (4,286) Change of the SEZ tax relief (329) 1,655 Change of the tax relief for investments in Croatia 400 (1,851) Profit from loss of control - (9,987) Share in the profit/loss of associates valued using the equity method 227 215 Tax relief used in Croatia (381) Loss on capital gains in Poland 735 Tax paid in Croatia for 2023 103 - Minimum tax paid in Poland 283 - Tax from dividend paid in USA 581 Other (including the difference in tax rates of 18% in Croatia and 30% in the USA) 183 620 Tax at the effective tax rate (4,356) (2,673) 8. Income taxes on continuing operations 8.1 Income taxes presented in the statement of comprehensive income 8.2 The effective tax rate reconciliation is as follows: 27
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As at As at As at As at 31/12/2024 31/12/2024 31/12/2024 31/12/2023 short-term long-term total 000'PLN 000'PLN 000'PLN 000'PLN Deferred tax asset 12,248 4,503 16,751 10,992 Deferred tax liability 587 2,702 3,289 3,568 11,661 1,801 13,462 7,424 DTA as at DTA as at Change in DTA recognized in profit and loss account for the period Change in DTA recognized in equity As at 31/12/2024 As at 31/12/2023 from 01/01 to 31/12/2024 from 01/01 to 31/12/2023 - fixed assets and intangible assets (excluding leasing) 27 - 27 - - due to SEZ 4,503 4,174 329 (1,655) - the tax relief for investments in Croatia 1,451 1,851 (400) 1,851 - trade and other receivables and liabilities (negative FX differences) 106 323 (217) (671) - customer contracts 626 299 327 (1,592) - payables for future reserves 630 251 379 (23) - retirement provision 71 188 (117) 87 - bonus provision 617 845 (228) (551) - unused holiday provision 725 1,024 (299) (77) - liability under the right of use 9,799 8,204 1,595 (219) - R&D relief to be settled in the following years 9,560 4,590 4,970 4,286 - other 782 5 777 5 - tax losses to be settled in subsequent years 7,451 5,256 2,195 5,256 Netting (19,597) (16,018) (3,579) (5,799) Total 16,751 10,992 5,759 898 8.3 Deferred income tax Basis for temporary differences – 19% deferred tax on the difference between the tax value and carrying amount of: Analysis of the deferred tax asset / (liability) in the consolidated statement of financial position: The SEZ relief can be accounted for through 2026. Tax relief for investments made in Croatia can be settled until 2032. The Group did not recognize a deferred tax asset of PLN 1,515 thousand for losses on capital gains in Poland. 28
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Year ended 31/12/2024 Year 2023 5,256 - 2,628 2027 2,628 2028 2024 2,195 - 1,098 2028 1,097 2029 Year ended 31/12/2024 Year 2022 2,667 2,363 304 2028 2023 4,286 - 4,286 2029 2024 4,970 - 4,970 2030 DTL DTL Change in DTL recognized in profit and loss account for the period Change in DTL recognized in equity As at 31/12/2024 As at 31/12/2023 from 01/01 to 31/12/2024 from 01/01 to 31/12/2023 - fixed assets and intangible assets (excluding leases) 247 738 (491) 533 - trade receivables and liabilities and others (positive exchange differences) 1,427 2,051 (624) 1,780 - difference between tax and balance sheet depreciation 6,210 2,542 3,668 1,700 - customer contracts 359 1,160 (801) 120 - right of use assets 10,201 8,066 2,135 - - contractor databases 4,442 5,029 (587) (1,089) Netting (19,597) (16,018) (3,579) (5,799) Total 3,289 3,568 (279) (2,755) Basis for temporary differences – 19% deferred tax on the difference between the tax value and carrying amount of: 8.6 Deferred tax liability Loss amount Use Possible to use Max period of use Max period of use 8.5 Accrued R&D relief to be settled Relief amount Use Possible to use 8.4 Tax losses to be used in subsequent periods 29
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Year ended 31/12/2024 Year ended 31/12/2023 PLN per share PLN per share (0.3) 3.8 - - (0.3) 3.8 (0.3) 3.8 - - (0.3) 3.8 Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN (4,570) 69,878 - - (4,570) 69,878 Year ended 31/12/2024 Year ended 31/12/2023 pcs pcs 18,355,474 18,355,474 From discontinued operations 9.2 Dividends paid and proposed The Management Board of the parent company is not recommended to pay dividends for period from 1 January to 31 December 2024. There will be no dilutive instruments in 2024 or 2023. From continuing operations Total diluted earnings per share 9.1 Basic earnings per share Earnings and weighted average number of ordinary shares used for calculation of basic earnings per share: Current year (loss)/profit attributable to equity holders of the parent company Current year profit attributable to non-controlling interest (Loss)/Profit used for calculation of total basic earnings per share 9. Earnings per share Basic earnings per share: From continuing operations Total basic earnings per share Diluted earnings per share: From discontinued operations Weighted average number of ordinary shares used for calculation of earnings per share 30
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Net carrying amount As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Land 21,165 21,207 Buildings 51,291 52,153 Machinery and equipment 47,714 50,317 Vehicles 84 113 Other tangible assets (including lab equipment) 76,516 77,674 Assets under construction 2,043 5,792 Total fixed assets 198,812 207,255 Other tangible assets usage rights (including lab equipment) 69,805 57,293 Rights to use the premises 50,636 41,963 Car usage rights 1,149 1,263 Right of use assets 121,590 100,519 The increase in rights to use other fixed assets at the end of December 2024 compared to the end of 2023 results from the purchase and acceptance into the register of laboratory equipment, including the acquisition of Pozlab Sp. z o.o. On the other hand, the increase in rights to use premises results mainly from the acquisition of Pozlab Sp. z o.o. together with lease agreements for laboratory space in which the company conducted its operations and from the opening of a new location in Wrocław (as part of the expansion of the Parent Entity's operations by launching a new area of services related to the discovery and development of biological drugs). 10. Tangible fixed assets and right of use assets 31
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Gross value at the beginning of the period 21,207 55,694 60,407 254 121,047 5,792 81,393 74,020 2,800 422,615 Increases in gross value: - 1,176 3,669 146 33,107 38,703 28,254 24,273 455 129,783 - Purchases - - - - - 38,703 - 16,460 439 55,602 - Transfer from assets under construction - 1,136 2,792 146 18,494 - 19,449 - - 42,017 - Modification of the lease agreement - - - - - - 137 (876) 16 (723) - Acquisition of Pozlab Sp. z o.o. - - 877 - - - 3,694 8,689 - 13,260 - Movement between groups - 40 - - 14,613 - 4,974 - - 19,627 Decreases in gross value: 42 - 5,287 146 10,740 42,453 12,038 83 - 70,788 - Transfer from assets under construction - - - - - 42,017 - - - 42,017 - Disposals - - - 146 5,760 - - - - 5,906 - Liquidation - - 2,314 - - - - - - 2,314 - Movement between groups - - 2,750 - 4,629 345 11,903 - - 19,627 - Exchange differences from the translation of the financial statements of foreign entities 42 - 223 - 350 91 135 83 - 924 Gross value at the end of the period 21,165 56,870 58,790 254 143,414 2,042 97,609 98,211 3,255 481,610 Accumulated depreciation at the beginning of the period - 3,541 10,090 141 43,373 - 24,100 32,057 1,537 114,839 Increases: - 2,038 5,176 29 25,224 - 7,801 15,517 569 56,354 - Depreciation charge for the period - 2,002 5,176 29 18,508 - 7,801 15,517 569 49,602 - Movement between groups - 36 - - 6,716 - - - - 6,752 Decreases: - - 4,190 - 1,698 - 4,098 - - 9,986 - Disposals - - - - 1,698 - - - - 1,698 - Liquidation - - 1,536 - - - - - - 1,536 - Movement between groups - - 2,654 - - - 4,098 - - 6,752 Accumulated depreciation at the end of the period - 5,579 11,076 170 66,899 - 27,804 47,574 2,106 161,208 Net carrying amount at the beginning of the period 21,207 52,153 50,317 113 77,674 5,792 57,293 41,963 1,263 307,776 Net carrying amount at the end of the period 21,165 51,291 47,714 84 76,516 2,042 69,805 50,636 1,149 320,402 10.1. Changes in the value of fixed assets by type in the current financial period from 1 January to 31 December 2024 Item Land Buildings Machinery and equipment Vehicles Other tangible assets (including lab equipment) Total Other tangible assets usage rights (including lab equipment) Car usage rights Rights to use the premises Assets under construction 32
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Gross value at the beginning of the period 18,744 8,600 15,028 307 72,044 85,410 73,889 68,797 2,915 345,735 Increases in gross value: 2,463 47,094 48,671 - 53,174 80,914 18,088 15,997 190 266,591 - Purchases - - - - - 80,914 - 14,761 296 95,971 - Transfer from assets under construction 2,463 47,094 48,671 - 43,957 - 18,109 - - 160,294 - Modification of the lease agreement - - - - - - (21) 1,236 (106) 1,109 - Modernization - - - - 33 - - - - 33 - Movement between groups - - - - 9,184 - - - - 9,184 Decreases in gross value: - - 3,292 53 4,171 160,532 10,584 10,774 305 189,711 - Transfer from assets under construction - - - - - 160,294 - - - 160,294 - Disposals - - 453 53 1,336 - - - - 1,842 - Liquidation - - - - - - 204 10,074 305 10,583 - Movement between groups - - 13 770 - 9,171 - - 9,954 - Exclusion Ardigen S.A. - - 2,449 - 469 - 258 - - 3,176 - Exchange differences from the translation of the financial statements of foreign entities - - 377 - 1,596 238 951 700 - 3,862 Gross value at the end of the period 21,207 55,694 60,407 254 121,047 5,792 81,393 74,020 2,800 422,615 Accumulated depreciation at the beginning of the period - 1,927 8,670 163 28,465 - 19,365 28,063 1,255 87,908 Increases: - 1,614 3,949 31 16,722 - 9,683 14,068 586 46,653 - Depreciation charge for the period - 1,614 3,949 31 12,055 - 9,683 14,068 586 41,986 - Movement between groups - - - - 4,667 - - - - 4,667 Decreases: - - 2,529 53 1,814 - 4,948 10,074 304 19,722 - Disposals - - 444 53 1,231 - - - - 1,728 - Liquidation - - - - - - 204 10,074 304 10,582 - Movement between groups - - 13 - - - 4,654 - - 4,667 - Exclusion Ardigen S.A. - - 2,072 - 583 - 90 - - 2,745 Accumulated depreciation at the end of the period - 3,541 10,090 141 43,373 - 24,100 32,057 1,537 114,839 Net carrying amount at the beginning of the period 18,744 6,673 6,358 144 43,579 85,410 54,524 40,734 1,660 257,827 Net carrying amount at the end of the period 21,207 52,153 50,317 113 77,674 5,792 57,293 41,963 1,263 307,776 Vehicles 10.2. Changes in the value of fixed assets by type in the financial period from 1 January to 31 December 2023 Total Other tangible assets (including lab equipment) Other tangible assets usage rights (including lab equipment) Rights to use the premises Car usage rightsBuildings Machinery and equipment Assets under constructionLandItem 33
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN At cost 89,638 72,065 Accumulated impairment - - 89,638 72,065 11.1 Goodwill from consolidation of subsidiaries in the current reporting period COMPANY Goodwill at the beginning of the period Increase due to acquisition of company Change in the value due to changes in foreign exchange rates Change in value due to revaluation of estimated goodwill Goodwill at the end of the period Impairment allowances Selvita Services sp. z o.o. 281 - - - 281 - Selvita d.o.o. 71,784 - (1,238) - 70,546 - Pozlab Sp. z o. o. - 18,811 18,811 Total goodwill 72,065 18,811 (1,238) - 89,638 - PLN/EUR rate Valuation of goodwill on Selvita d.o.o. As at 31/12/2023 4.348 71,784 As at 31/12/2024 4.273 70,546 (1,238) On May 6, 2024, the Parent Company, as the buyer, concluded an agreement with Younick Technology Park sp. z o.o. with its registered office in Złotniki as the seller to acquire 100% of shares ("Shares") in PozLab sp. z o.o. with its registered office in Poznań ("PozLab"), in view of the fulfillment of all conditions precedent indicated in the preliminary conditional sale agreement concluded on March 27, 2024. Selvita S.A. acquired the PozLab Shares for a total price of PLN 25 million, whereby on May 6, 2024, it paid the amount of PLN 21 million. The remaining amount (PLN 4 million) was retained by Selvita S.A. for a period of up to 12 months from the date of acquisition of the Shares as security for any potential, enumerated in the preliminary agreement, events or claims of third parties against PozLab and securing settlements related to the price adjustment procedure. The price for the Shares was covered from Selvita S.A.'s own funds. On August 9, 2024, the amount of the price adjustment was agreed, which was set at PLN (3,068) thousand (the amount reducing the amount of the contractual price). As of December 31, 2024, the remaining retained amount is PLN 1,500 thousand. PozLab was established in 2010 on the grounds of the closed research and development branch of the GlaxoSmithKline concern in Poznań. The company has built competences and an offer in three main segments: development of pharmaceutical products (including the production of medicinal products), quality control and microbiological tests (including biological drugs). It has approx. 1,700 m2 of high-class laboratories in the YouNick Technology Park in Złotniki near Poznań. It employs over 80 people. The acquisition of the CDMO (Contract Development and Manufacturing Organisation) company will significantly expand the Group's offer in the development of small-molecule drugs, and will also allow it to enter a completely new, very attractive area related to the production of drugs for the needs of early clinical trials. Pozlab is reported within the Drug Development segment. As part of the acquisition settlement, the Group allocated the entire excess of the price paid over the value of the acquired net assets to goodwill. Change in value due to changes in exchange rates recognized in 11. Goodwill The goodwill of Selvita d.o.o. based in Croatia was created as a result of the acquisition of that company on January 4, 2021 from Galapagos NV based in Belgium and increases the assets of the Drug Discovery segment. 34
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000'PLN Acquired assets Tangible fixed assets 877 12,383 Other intangible assets 13 346 Trade and other receivables 2,866 36 Cash and cash equivalents 7 Total assets 16,528 Acquired liabilities 126 23 343 Lease liabilities 9,840 1,891 571 613 Total liabilities 13,407 Net assets 3,121 Acquired percentage of share capital 100% Purchase price (Price for Shares) 25,000 (3,068) 18,811 Other intangible assets (backlog) Other non-financial assets Deferred tax provision Employee benefit liabilities As at 06/05/2024 Right-of-use assets The fair values of the company's identifiable assets and liabilities as of the date of acquisition of control are as follows: Estimated value of the company as at the date of taking over control, i.e.: 06/05/2024 Pension benefit liabilities Contract liabilities Trade and other liabilities Bank loans and credits Purchase price adjustment due to net cash and working capital paid on August 9, 2024 35
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11.2. Goodwill - impairment test used in the model % borderline % used in the model % borderline % used in the model % borderline % used in the model % borderline % Selvita d.o.o. 9.50% 13.24% 2.5% -3.5% 9.15% 7.4% 24.83% 21.39% As indicated in the table above, the model adopted for the analysis used a discount rate of 9.5% and the growth rate for the residual period of 2.5%. Each time an impairment test requires an estimation of the value in use of the cash-generating unit to which goodwill is allocated. Estimating the value in use consists in determining the future cash flows generated by the center and determining the discount rate, which is then used to calculate the present value of these flows. A company not listed on an active market - Selvita d.o.o. PLN A sensitivity analysis was performed for the impairment test prepared as at December 31, 2024, consisting in the calculation of the value in use. This analysis examined the impact of the change: ▪ the discount rate used in the model; ▪ residual growth rate as a factor affecting the recoverable amount of the cash-generating unit; ▪ revenues; ▪ EBITDA profitability; assuming that other factors remain unchanged. The aim of the sensitivity analysis was to investigate what value the selected parameters of the model would have to have in order for the estimated value in use of the cash-generating units to be equal to the carrying value of Selvita d.o.o. (called "borderline" in the table). The results of the analysis as at December 31, 2024 are presented in the table below. Cash flow growth rate over the residual period Cumulative annual growth rate revenue Average profitability EBITDA In the case of Selvita d.o.o., a company not listed on an active market, the recoverable amount is determined based on its value in use, which is estimated using the discounted free cash flow model for equity owners and creditors (FCFF). When calculating Selvita d.o.o.'s value in use, the following assumptions were made: ▪ in the subsidiary, the so-called the business units that together make up the budget and forecasts for the entire subsidiary; ▪ the detailed forecast covers the period of 5 years, during which increases in flows in subsequent years were assumed, for the rest of the operating period of the units, the residual value was calculated with the assumed growth rate of 2.5%; ▪ the assumed increases in cash flows depend on the strategy for the entire Group, tactical plans of the unit and take into account the conditions of individual geographic markets, reflecting the current and potential order portfolio at the same time. The potential order portfolio assumes maintaining current and attracting new customers. Conservative assumptions were made regarding the dynamics of revenue growth achieved in the forecast period, where the cumulative annual revenue growth rate is 9.15% (calculated from 2024 to 2029). In the case of EBITDA profitability, its level of 18.65% was assumed for 2025, which improves over the forecast period, reaching 28.85% in 2029. ▪ the discount rate is in line with Selvita d.o.o.'s weighted average cost of capital. The individual components of this rate were estimated on the basis of market data with risk-free rates, the value of the beta coefficient, which was leveraged based on the market debt / equity structure and the value of the expected rate of return from the market. The performed impairment tests consisting in estimating the value in use using the discounted free cash flow model for owners of equity and creditors (the so-called FCFF) showed that the value in use of Selvita d.o.o. exceeds its book value. The carrying amount of the center Discount rate 140,173 Goodwill – estimates 36
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-1.0% -0.5% 0% +0.5% +1% 268,517 246,257 227,149 210,564 196,030 128,343 106,084 86,976 70,391 55,857 -1.0% -0.5% 0% +0.5% +1% 203,607 214,593 227,149 241,637 258,539 63,433 74,420 86,976 101,463 118,366 -10% -5% 0% +5% +10% 117,743 172,462 227,149 181,902 336,622 (22,431) 32,289 86,976 141,729 196,449 -10% -5% 0% +5% +10% 164,513 195,847 227,149 258,517 289,852 24,339 55,674 86,976 118,344 149,678 Surplus / Deficiency over the book value of the center (in PLN) change in growth rate (change in percentage points) change in the discount rate (change in percentage points) Surplus / Deficiency over the book value of the center (in PLN) Present value FCFF (in PLN) Surplus / Deficiency over the book value of the center (in PLN) Present value FCFF (in PLN) Selvita d.o.o. Selvita d.o.o. Selvita d.o.o. Selvita d.o.o. change in achieved EBITDA profitability (change by the given percentage of the base percentage) change in revenue (change by the given percentage) Present value FCFF (in PLN) Surplus / Deficiency over the book value of the center (in PLN) Present value FCFF (in PLN) The table below presents the sensitivity analysis of the models calculating Selvita d.o.o.'s recoverable amounts to changes in discount rates (the applied discount rate was changed in the range of 0.5 pp to 1 pp in plus and minus), to changes in the growth rate for the residual period (the applied growth rate was changed in the range of 0.5 pp. up to 1 pp in plus and in minus) and on the change in revenues (the adopted revenue levels were changed by 5% or 10% plus or minus) and on the change in the achieved EBITDA profitability (the adopted EBITDA profitability was changed by 5% or 10% of the base percentage value plus or minus). 37
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used in the model % borderline % used in the model % borderline % used in the model % borderline % used in the model % borderline % Drug Development Segment 11.73% 20.08% 2.50% -19.35% 15.32% 13.11% 29.59% 24.06% Drug Development Segment, which includes Pozlab sp. z o.o. In the case of the Drug Development segment, the recoverable value is determined based on its value in use, which is estimated using the discounted free cash flow model for owners of equity and creditors (FCFF). In calculating the value in use of this segment, the following assumptions were made: ▪ the so-called business units were analyzed, which together constitute the budget and forecasts of the entire Drug Development segment; ▪ the detailed forecast covered a 5-year period, during which increases in cash flows were assumed in the following years, for the rest of the segment's period of operation the residual value was calculated at an assumed growth rate of 2.5%; ▪ the assumed cash flow increases depend on the strategy for the entire Group, the segment's tactical plans and take into account the conditions of individual geographic markets, while reflecting the current and potential order portfolio. The potential order portfolio assumes the maintenance of current and acquisition of new customers. Conservative assumptions were made regarding the dynamics of revenue growth achieved in the forecast period, where the cumulative annual revenue growth rate is 15.32% (calculated from 2024 to 2029). In the case of EBITDA profitability, its level of 27.24% was assumed for 2025, which is improving in the forecast period, reaching 31.40% in 2029. ▪ the discount rate is consistent with the weighted average cost of capital of the Selvita S.A. Capital Group. The individual components of this rate were estimated based on market data on risk-free rates, the value of the beta coefficient, which was leveraged based on the market debt/equity structure and the value of the expected rate of return from the market. The impairment tests performed, consisting in estimating the value in use using the discounted free cash flow to equity owners and creditors (FCFF) model, showed that the value in use of the Drug Discovery segment exceeds its book value. For the impairment test prepared as of December 31, 2024, consisting in calculating the value in use, a sensitivity analysis was performed. This analysis examined the impact of changes in: ▪ the discount rate used in the model; ▪ the cash flow growth rate in the residual period, as a factor influencing the recoverable value of the cash-generating unit; ▪ revenues; ▪ EBITDA profitability; assuming that other factors remain unchanged. The purpose of the sensitivity analysis was to examine the value selected model parameters would have to take in order for the estimated value in use of the cash-generating units to equal the carrying value of the Drug Development segment (referred to as the "limit" value in the table). The results of the analysis as of December 31, 2024 are presented in the table below. The carrying amount of the center Discount rate Cash flow growth rate over the residual period Cumulative annual growth rate revenue Average profitability EBITDA PLN 82,399 As indicated in the table above, the model adopted for the analysis used a discount rate of 11.73% and a growth rate for the residual period of 2.5%. 38
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-1.0% -0.5% 0% +0.5% +1% 186,499 175,481 165,633 156,775 148,762 104,100 93,082 83,234 74,376 66,363 -1.0% -0.5% 0% +0.5% +1% 144,550 154,061 165,633 180,017 198,380 62,151 71,662 83,234 97,618 115,981 -10% -5% 0% +5% +10% 75,413 120,523 165,633 210,744 255,854 (6,986) 38,124 83,234 128,345 173,455 -10% -5% 0% +5% +10% 121,110 143,372 165,633 187,895 210,157 38,711 60,973 83,234 105,496 127,758 Surplus / Deficiency over the book value of the center (in PLN) change in the discount rate (change in percentage points) change in growth rate (change in percentage points) change in revenue (change by the given percentage) change in achieved EBITDA profitability (change by the given percentage of the base percentage) Surplus / Deficiency over the book value of the center (in PLN) Present value FCFF (in PLN) Surplus / Deficiency over the book value of the center (in PLN) Present value FCFF (in PLN) Surplus / Deficiency over the book value of the center (in PLN) Drug Development Segment Drug Development Segment Drug Development Segment Drug Development Segment Present value FCFF (in PLN) The table below presents the sensitivity analysis of the models calculating Drug Development's recoverable amounts to changes in discount rates (the applied discount rate was changed in the range of 0.5 pp to 1 pp in plus and minus), to changes in the growth rate for the residual period (the applied growth rate was changed in the range of 0.5 pp. up to 1 pp in plus and in minus) and on the change in revenues (the adopted revenue levels were changed by 5% or 10% plus or minus) and on the change in the achieved EBITDA profitability (the adopted EBITDA profitability was changed by 5% or 10% of the base percentage value plus or minus). Present value FCFF (in PLN) 39
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As at 31/12/2024 As at 31/12/2022 Carrying amount Sotfware - Data Warehouse 210 253 Other intangible assets (including backlog) 1,896 1,366 Contractor database 24,843 27,940 26,949 29,559 Item Contractor database Other intangible assets Total Gross value at the beginning of the period 36,391 3,756 40,147 Increases in gross value: (461) 1,348 887 - Purchases - 985 985 - Acquisition of Pozlab Sp. z o.o. - 346 346 - Exchange differences from the translation of the financial statements of foreign entities (461) 17 (444) Decreases in gross value: - 221 221 - Liquidation - 221 221 Gross value at the end of the period 35,930 4,882 40,812 Accumulated depreciation at the beginning of the period 8,451 2,137 10,588 Increases: 2,636 861 3,497 - Depreciation charge for the period 2,636 861 3,496 Decreases: - 221 221 - Liquidation - 221 221 Accumulated depreciation at the end of the period 11,087 2,776 13,863 Net carrying amount at the beginning of the period 27,940 1,619 29,559 Net carrying amount at the end of the period 24,843 2,106 26,949 12.1 Changes in the value of intangible assets by type in the financial period from 1 January to 31 December 2024 12. Other intangible assets The contractor database concerns contacts acquired as part of the purchase of the Croatian company Selvita d.o.o. The value of the database was estimated based on the previous cooperation parameters. The depreciation coefficient was set at 13.5 years as the average expected period of cooperation. Other intangible assets mainly concern acquired software and the backlog identified at the time of taking control over Pozlab Sp. z o.o. 40
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Item Contractor database Other intangible assets Total Gross value at the beginning of the period 38,845 3,258 42,103 Increases in gross value: (2,454) 687 (1,767) - Purchases - 725 725 - Exchange differences from the translation of the financial statements of foreign entities (2,454) (38) (2,492) Decreases in gross value: - 189 189 - Liquidation - 189 189 Gross value at the end of the period 36,391 3,756 40,147 Accumulated depreciation at the beginning of the period 5,664 1,648 7,312 Increases: 2,787 678 3,465 - Depreciation charge for the period 2,787 678 3,465 Decreases: - 189 189 - Liquidation - 189 189 Accumulated depreciation at the end of the period 8,451 2,137 10,588 Net carrying amount at the beginning of the period 33,181 1,610 34,791 Net carrying amount at the end of the period 27,940 1,619 29,559 12.2 Changes in the value of intangible assets by type in the financial period from 1 January to 31 December 2023 41
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As at 01/01/2023 000'PLN 23,060 10,983 41 64,600 52,564 13.1 Changes in the Group's ownership - shares in subsidiaries In 2024, the Group acquired 100% of shares in Pozlab Sp. z o.o. (Note 11.1). As of January 17, 2023, Selvita S.A. ceased to be the parent company of Ardigen within the meaning of Article 4 § 1 item 4 letter a) of the Commercial Companies Code. Thus, the Parent Entity assessed that it no longer had control over Ardigen within the meaning of Article 5-9 of International Financial Reporting Standard 10 - Consolidated Financial Statements. Considering that the loss of control over the investment occurred within a short period of time from the end of 2022 and that no events occurred during this period that significantly affected the net assets and/or revenues and costs of Ardigen, the Parent Entity, considering that this would not significantly affect the consolidated financial statements for 2023, discontinued consolidation of Ardigen as a subsidiary as of 1 January 2023. At the time of loss of control over the subsidiary, the Parent Entity recognized a gain on loss of control, which was presented in the item Gain on loss of control in 2023. Ardigen S.A. including Ardigen Inc. Carrying amount of Ardigen's net assets Ardigen's net assets attributable to non-controlling interests Amounts reclassified from other comprehensive income Fair value of Ardigen shares held by the Parent Company Gain on loss of control From the date of loss of control, the investment in Ardigen is recognised in the consolidated financial statements as an associated entity (Note 14) and is valued using the equity method. 13. Subsidiaries 42
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Profit (loss) allocated to non-controlling interests As at 31/12/2024 Ardigen S.A. Research and development in the field of other natural and technical sciences 30-394 Kraków ul. Sternbacha 1 46.74% / 46.22% Ardigen Inc. Research and development in the field of other natural and technical sciences Stan Delaware w USA 46.74% / 46.22% As at 31/12/2024 As at 31/12/2023 Carrying amount 000'PLN 000'PLN Ardigen S.A 62,119 63,313 62,119 63,313 As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Total assets 48,788 52,017 Total liabilities 13,410 14,087 Net assets 35,378 37,930 16,535 17,729 45,584 45,584 Net assets attributable to Selvita S.A. (46.74%) Goodwill (included in carrying amount of investments) The summary financial information in respect of investments accounted for using the equity method is as follows: 46.74% / 46,22% 46.74% / 46,22% Details of associates accounted for using the equity method are as follows: 14. Investments valued using the equity method Name of subsidiary Core business Place of registration and operations Cumulative value of non-controlling interest As at Ardigen S.A. 31/12/2023 43
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Revenue 49,923 53,593 Costs 51,337 56,989 (Loss) net (1,414) (3,396) (Loss) net (2,554) (2,423) (1,194) (1,132) 000'PLN 64,600 (1,132) (154) 63,313 (1,194) 62,119 (Loss) net attributable to Selvita S.A. (46.74%) Changes in the value of investments accounted for using the equity method: Share of profit/(loss) in 2024 Carrying amount of Ardigen S.A. as at 31/12/2024 Ardigen S.A. Share of profit/(loss) in 2023 Carrying amount of Ardigen S.A. as at 31/12/2023 Ardigen S.A. Investment cost at initial recognition Other comprehensive income from foreign translation 44
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P1 - Quotes from active markets P2 - Significant Observable Data P3 - Relevant data unobservable carrying amount fair value hierarchy level Financial assets for which fair value is disclosed: Trade and other receivables 70,092 70,092 P3 Other short-term financial assets - - P3 Financial liabilities for which fair value is disclosed: Trade payables 32,260 32,260 P3 Investment liabilities 2,524 2,524 P3 Interest-bearing loans and credits, including: 119,365 119,365 P3 global credit card limit 469 469 P3 Current portion of interest-bearing loans and borrowings, including: 111,565 111,565 P3 credit card debt 140 140 P3 carrying amount fair value hierarchy level Financial assets for which fair value is disclosed: Trade and other receivables 54,908 54,908 P3 Other short-term financial assets 311 311 P3 Financial liabilities for which fair value is disclosed: Trade payables 22,305 22,305 P3 Investment liabilities 1,123 1,123 P3 Interest-bearing loans and credits, including: 132,868 132,868 P3 global credit card limit 469 469 P3 Current portion of interest-bearing loans and borrowings, including: 19,686 19,686 P3 credit card debt 166 166 P3 As at 31/12/2024 As at 31/12/2023 Carrying amount: 000'PLN 000'PLN Licenses 2,068 2,962 Insurance 355 520 Equipment qualification 1,726 1,943 Other 1,567 502 Deferred expenses 542 830 6,258 6,757 15. Financial instruments The table below presents the individual classes of financial assets and liabilities broken down into levels of the fair value hierarchy as at December 31, 2024. Due to the nature of these items, fair value does not differ significantly from the carrying amount. The table below presents the individual classes of financial assets and liabilities broken down into levels of the fair value hierarchy as at December 31, 2023. Due to the nature of these items, fair value does not differ significantly from the carrying amount. 31/12/2024 31/12/2023 16. Other non-financial assets 45
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Trade receivables 70,549 55,218 The allowance for expected credit losses (863) (808) 69,686 54,410 Tax (VAT) receivables 9,362 15,320 406 498 79,454 70,228 Balance of unpaid receivables and contract assets as at the balance sheet date The rate of expected credit losses (adjusted) The amount of the allowance for expected credit losses Overdue 67,630 0.22% 147 1-30 days after the deadline 10,158 1.00% 102 31-60 days after the deadline 1,108 1.00% 11 61-90 days after the deadline 119 2.00% 2 91-180 days after the deadline 432 6.00% 26 181-365 days after the deadline 257 100.00% 257 More than 365 days after the deadline 318 100.00% 318 Total 80,021 863 17. Trade and other receivables 17.1 Trade receivables and contract assets with customers In regards to trade receivables and contract assets with customers, the Group estimated the expected credit loss as at 31 December 2024 on the basis of a provision matrix defined based on historical data concerning credit losses. It was recognised that receivables and contract assets with customers of particular customers are characterised by a similar level of risk, they were not divided into groups. The Company creates a 100% allowance for the expected credit losses when the receivables are brought to court or when it obtains information about the possible bankruptcy of the client. Other – receivables from employees, security deposits The table below presents the calculation of expected credit losses with respect to trade receivables and contract asssets: Year ended 31/12/2024 46
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Balance of unpaid receivables and contract assets as at the balance sheet date The rate of expected credit losses (adjusted) The amount of the allowance for expected credit losses Overdue 53,734 0.04% 22 1-30 days after the deadline 11,492 0.10% 12 31-60 days after the deadline 1,510 0.61% 9 61-90 days after the deadline 1,581 1.21% 19 91-180 days after the deadline 667 5.54% 37 181-365 days after the deadline 309 9.36% 29 More than 365 days after the deadline 680 100.00% 680 Total 69,973 808 Year ended 31/12/2024 Period ended 31/12/2023 000'PLN 000'PLN Balance at the beginning of the period 808 458 55 350 - - Balance at the end of the period 863 808 The average repayment period for receivables from the sale of goods and services in the period from 1 January 2024 to 31 December 2024 is 29 days, and in the period from 1 January 2023 to 31 December 2023 it was 38 days. Before accepting a new customer, the Group assesses their creditworthiness. Due to the specific nature of its operations, the Group cooperates with entities known in the industry, which affects the credit risk assessment. Payment terms are an element of the offer presented to the contractor. The allowance for expected credit losses Year ended 31/12/2023 Reversal of the allowance for expected credit losses The allowance for expected credit losses 47
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18.1. The Group as a lessee Leases for buildings, premises and vehicles Leasing of machinery and equipment Total As at 1 January 42,351 49,828 92,179 New leases and lease modifications 15,956 16,144 32,100 Increases as a result of the purchase of the company Pozlab Sp. z o.o. 8,689 1,151 9,840 Revaluation (foreign exchange differences) (175) (380) (555) Interests 2,857 2,533 5,390 Payments (18,106) (21,349) (39,455) As at 31 December 51,572 47,928 99,500 Short-term 15,561 15,587 31,148 Long-term 36,011 32,341 68,352 Leases for buildings, premises and vehicles Leasing of machinery and equipment Total As at 1 January 44,136 42,978 87,114 New leases and lease modifications 16,187 22,219 38,406 Revaluation (foreign exchange differences) (2,863) (2,180) (5,043) Interests 1,537 2,021 3,558 Cessation of consolidation of Ardigen S.A. (869) (169) (1,038) Payments (15,777) (15,041) (30,818) As at 31 December 42,351 49,828 92,179 Short-term 12,015 15,192 27,207 Long-term 30,336 34,637 64,973 18. Leases The Group has lease agreements for office premises and laboratories, machinery and equipment, office equipment and cars. The leasing period is on average 60 months, except for office equipment, which qualifies as short-term leasing or as low-value contracts. Some leases include options to extend or terminate the lease. The Group also concludes contracts for an indefinite period. The management board makes a judgment to determine the period over which it can be assumed with reasonable certainty that such contracts will continue (see note 3.5). The Group also has lease contracts for individual premises with a lease term of 12 months or less, and low value office equipment lease contracts. The Group uses the exemption for short-term leases and leases for which the underlying asset is of low value. The Group's liabilities under the lease contracts are secured by the lessor's ownership of the subject of the lease. In general, the Group is not entitled to transfer leased assets in subleasing or to assign rights it is entitled to under lease contracts. The balance sheet values of the right-of-use assets and their changes during the reporting period are shown in note 10. The carrying amounts of leasing liabilities and their changes during the reporting period: The maturity analysis of leasing liabilities is presented in Note 22.8 Liquidity risk. The carrying amounts of leasing liabilities and their changes during the period from 1 January 2023 to 31 December 2023: 2024 2023 48
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01.01.2024 - 31.12.2024 01.01.2023 - 31.12.2023 Cost of depreciation of right-of-use assets (16,086) (14,654) Interest costs on lease liabilities (2,857) (1,537) Costs of negative exchange differences due to balance sheet valuation of lease liabilities 175 2,863 The total amount recognized in the consolidated income statement / statement of comprehensive income (18,768) (13,328) 01.01.2024 - 31.12.2024 01.01.2023- 31.12.2023 Depreciation of leased assets (7,801) (9,683) Interest expense on lease liabilities (2,533) (2,021) Costs of negative exchange differences due to balance sheet valuation of lease liabilities 380 2,180 The total amount recognized in the consolidated income statement / statement of comprehensive income (9,954) (9,524) Amounts of revenues, costs, profits and losses resulting from leasing (regarding buildings, premises and vehicles) included in the consolidated profit and loss account / statement of comprehensive income are presented below: Amounts of revenues, costs, profits and losses resulting from leasing (regarding machinery and equipment) included in the consolidated profit and loss account / statement of comprehensive income are presented below: 49
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Registered share capital 14,684 14,684 14,684 14,684 19.1 Share capital as at the end of the reporting period As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Number of shares 18,355,474 18,355,474 Par value per share 0.80 0.80 Share capital 14,684 14,684 19.2. Own shares As at 31/12/2024 As at 31/12/2024 As at 31/12/2023 As at 31/12/2023 pcs 000'PLN pcs 000'PLN Own shares under the Incentive Program 0 0 3,559 0 Total 0 0 3,559 0 19.3 Reserve capitals As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Payments for the transfer of shares to employees 237 237 Other - incentive program 2021-2024 77,010 73,821 Total Other Reserve Capitals 77,247 74,058 19.4 Reserve capital As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN 86,448 86,448 22,994 22,994 Total Reserve Capital 109,442 109,442 In 2021, the Company started the implementation of the incentive program in place in the years 2021-2024. Detailed information is disclosed in note 28. Reserve capital is constituted by : a) supplementary capital created from the surplus of the issue price of Series C shares, b) supplementary capital of Subsidiaries acquired under OPE, including the statutory 8% resulting from the Commercial Companies Code. Share premium Reserve capital created from purchase of OPE 19. Share capital As of December 31, 2024, the Company does not hold any treasury shares. The treasury shares held at the end of 2023 resulted from the implementation of the Incentive Program (see note 28). In light of paragraph 33 of IAS 32, considering that the cost of acquiring these shares was zero zlotys (received free of charge by the Company as a donation from Mr. Paweł Przewięźlikowski), their value as of the balance sheet date was zero zlotys. Information on the ownership structure is described in note 1.1. 50
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Uncollateralized: Used credit card limits (ii) 4,275 - Credit card limit usage 140 166 4,415 166 Collateralized: Bank loans (i), including: 104,265 123,727 acquisition loan* 54,237 65,839 construction loan* 50,028 57,888 Finance lease liabilities (iii) 10,356 8,672 114,621 132,399 Total: 119,036 132,565 Current liabilities 111,565 19,686 Non-current liabilities* 7,472 112,879 20. Credit facilities and loans 20.1 Loan agreements (i) The Company has an acquisition loan taken out in connection with the acquisition of Selvita d.o.o. in the total amount of EUR 21.84 million and a construction loan for the implementation of the investment "Research and Development Center for Laboratory Services" in Bank Pekao S.A. in the maximum amount of PLN 65 million, which were concluded in the form of a single credit agreement on December 21, 2020. The acquisition loan was granted for 7 years, and it consists of loan A in the amount of EUR 16.34 million granted until December 31, 2027 and loan B in the amount of EUR 5.5 million granted until December 31, 2027. The interest rate on these loans is variable and is the sum of the EURIBOR3M rate + bank margin. The construction loan was granted for 7 years starting from the end of the utilization period, but no later than until December 31, 2029. The interest rate of this loan is variable and is the sum of the EURIBOR3M rate + bank margin. The acquisition loan is secured by: a) registered and financial pledge, as well as power of attorney to dispose of the accounts of the Borrower and the Guarantor (Selvita Services Sp. z o.o.) in Bank Pekao, b) assignment of rights from selected agreements of the Borrower and the Guarantors (Selvita Services Sp. z o.o. and Selvita d.o.o.), including in particular the conditional agreement for the acquisition by the Company of 100% of shares in Selvita d.o.o., c) declaration of submission to enforcement by the Borrower and the Guarantor (Selvita Services Sp. z o.o.) pursuant to Article 777 §1 sec. 5 of the Code of Civil Procedure, d) registered pledge on a set of selected commercial receivables of the Borrower and the Guarantor (Selvita d.o.o.), e) security on shares and assets of Selvita d.o.o., including in particular a registered pledge on 100% of shares in Selvita d.o.o. and on its fixed assets, f) an agreement under Croatian law concerning pledges on bank accounts held at Raiffeisen Bank with its registered office in Zagreb (Croatia), g) assignment of Selvita d.o.o. insurance agreements concerning the secured assets in favour of the bank. In addition, the construction loan is secured by a mortgage on real estate located in Krakow at ul. Podole, where the Research and Development Center for Laboratory Services project will be implemented and assignment of rights from the insurance contract of the Research and Development Center for Laboratory Services. Until conversion to EUR, the loan was secured by a deposit of PLN 2 million. After conversion of the first tranche the security was reduced to PLN 311 thousand and returned in 2024. * Due to the exceedance of the base level of one of the indicators contained in the credit agreement (covenants) as of 31.12.2024, excluding its adjusted level confirmed in the Letter regarding Arrangements dated 17.02.2025 (see note 20.1), the Group included the long-term part of bank loans in the amount of PLN 87,235 thousand in current liabilities as of 31.12.2024. 51
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In accordance with the provisions of the credit agreement concerning the above loans, the Group is required to meet the following conditions (base level of indicators): • the net debt to EBITDA ratio (excluding the impact of IFRS 16) cannot be higher than 350%, • the ratio of cash flows from operating activities to net financial costs excluding IFRS 16 ("DSCR") cannot be lower than 120%, • the sum of the achieved EBITDA values (excluding the impact of IFRS 16) of the Group companies that are guarantors must be no lower than 75% of the total EBITDA value (excluding the impact of IFRS 16) of the entire Group. On 17 February 2025, the Group signed a Letter of Understanding with the bank (see note 32) regarding the level of the indicators contained in the credit agreement (covenants), which were increased to the following levels: • not higher than 430% as of 31 December 2024, 400% as of 31 March 2025 and 380% as of 30 June 2025 for the net debt to EBITDA ratio, • and not lower than 100% as of 31 December 2024, 31 March 2025 and 30 June 2025 for the DSCR. In 2023, the Group met all financial indicators for debt specified in the credit agreement. However, as at 31.12.2024, the permissible base level of one of the indicators was exceeded (for more information, see note 22.1.2). (ii) On 26 June 2024, Selvita Services Sp. z o.o. signed a current account credit agreement for up to EUR 1.9 million for the period ending on 26 June 2025. On 24 May 2024, Selvita d.o.o. signed a current account credit agreement for up to EUR 1.2 million for the period ending on 30 June 2025. The interest rate on these loans is variable and is the sum of the EURIBOR1M rate + bank margin. Both loans 49 are secured by issued bills of exchange. In addition, the loan granted to Selvita Services Sp. z o.o. is additionally guaranteed by Selvita S.A., and the bank has been granted a power of attorney to debit all bank accounts in order to make a possible repayment of the receivables. Both loans do not have restrictive conditions. As of December 31, 2024, there is an unpaid balance of PLN 4,275 thousand in Selvita Services Sp. z o.o., and there is no unpaid balance in Selvita d.o.o. (iii) The Company concludes secured loans (financial leaseback agreements). This form is selected in a situation where it is the most operationally efficient form of carrying out a transaction to purchase a fixed asset and obtain financing for it. 52
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21. Trade and other liabilities As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Trade liabilities 32,260 22,305 Liabilities due to taxes, insurance (social security, personal income tax, PFRON) 4,636 5,066 Liabilites due to salaries and wages and other liabilities to employees 6,631 1,759 Investment liabilities 2,524 1,123 Other non-financial liabilities - 337 46,051 30,590 The average payment term for the purchase of goods and materials is approximately 29 days. After this term, interest is not usually charged on unpaid liabilities. In the event of charging, the interest rate is applied as for statutory interest. 53
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Debt (i) 320,213 309,188 Cash and cash equivalents 22,512 52,654 Net debt 297,701 256,534 Equity (ii) 321,877 327,071 Net debt to equity 0.92 0.78 22.1.2 Covenants in the loan agreements Until the third quarter of 2024, the Group complied with the restrictive covenants in the loan agreements described in note 20.1. As of 31.12.2024, the Group did not meet the net debt to EBITDA ratio at its base level of no more than 350%, but did not exceed its increased level of no more than 430%, agreed with the bank in a letter dated 17.02.2025. As of 31 December 2024, the net debt to EBITDA ratio (excluding the impact of IFRS 16) was 364% (116% as of 31 December 2023) and the DSCR ratio was 139% (205% as of 31 December 2023), and the guarantors' share was 106% of the Group's EBITDA (excluding the impact of IFRS 16) as of 31 December 2024 (92% as of 31 December 2023). The debt ratio reached is within the expected and accepted by the Management Board. The Group is not subject to any external capital requirements except for the one imposed by Article 396 §1 of the Code of Commercial Companies, which the parent is obliged to comply with, whereby supplementary capital has to be created for purposes of offsetting losses. No less than 8% of the profit for the financial year has to be transferred to the supplementary capital until its value reaches at least one third of the share capital. That part of the supplementary capital (retained earnings) may not be distributed to the shareholders. 22. Financial instruments 22.1 Capital risk management The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing its profitability through optimization of the debt to equity ratio. The capital structure as well as the level and maturity of liabilities are reviewed on a regular basis. The said reviews comprise analyses of the cost of capital and the risk associated with its individual categories. The key items analysed by the Company are: • cash and cash equivalents, as disclosed in Note 26, • equity, including reserve capitals and retained earnings, as disclosed in Note 19. (i) Debt comprises long- and short-term debt. (ii) Equity comprises the equity presented in the statement of financial position. 22.1.1 Net debt to equity ratio The Company reviews its capital structure periodically. The said reviews comprise analyses of the cost of capital and the risks associated with each category of capital. 54
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN 93,877 108,685 22,512 52,654 Other long-term assets - deposits 1,679 1,310 69,686 54,410 - 311 250,796 247,050 Interest bearing credit facilities and loans (Note 20) 119,036 132,565 Finance lease liabilities (Note 18) 99,500 92,180 Trade and other liabilities (Note 21) 32,260 22,305 Financial assets Financial instruments measured at amortized cost method: 22.2 Categories of financial instruments Trade receivables and liabilities were not measured at fair value. According to the Management Board, their carrying amount is a reasonable approximation of their fair value. Selvita Group is exposed on financial instruments risks, which includes: - market risk comprising currency risk and interest rate risk; - credit risk; and - liquidity risk. Each risk has been presented in the following notes. Cash (Note 26) Trade and other receivables (Note 17) Other financial assets - bank deposit 22.4 Market risk The Group’s activities expose it to currency risk (see Note 22.5) and interest rate risk (see Note 22.6). The Group does not use any derivative instruments for purposes of currency or interest rate risk management as natural hedges are sufficient to minimize the risk it is exposed to. Exposure to all market risk categories is measured by means of a sensitivity analysis. 22.3 Financial risk management objectives Credit, liquidity and market risks (including mainly currency risk and interest rate risk) occur in the ordinary course of the Group’s business. Financial risk management at the Group is primarily aimed to minimize the effect of market factors, such as foreign exchange and interest rates, on the key financial parameters approved in the Group’s budget for the year (profit and cash flows) with the use of natural hedges. Financial liabilities Financial instruments measured at amortized cost method: 55
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Liabilities Liabilities Assets Assets As at 31/12/2024 As at 31/12/2023 As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN 000'PLN 000'PLN EUR 213,697 228,062 55,002 51,969 USD 2,982 1,358 9,348 26,272 Other 264 165 2,011 10,123 22.5 Foreign currency risk management The Group enters into certain transactions denominated in foreign currencies. Hence, it is exposed to the risk of changes in foreign exchange rates. The said risk is managed by means of natural hedges. The carrying amounts of the Group’s foreign currency monetary assets and liabilities as at the end of the reporting period: 22.5.1 Sensitivity to currency risk The Group is mainly exposed to risk related to EUR and USD. Group's sensitivity to 15% increases and decreases in the PLN exchange rate has been presented in the table below. 15% is the sensitivity rate used for purposes of internal currency risk analyses conducted for key executives and reflecting the Management Board’s estimates concerning possible changes in foreign exchange rates. The sensitivity analysis focuses only on outstanding foreign currency monetary items and adjusts their translation at the end of the period by a 15% change in foreign exchange rates. Positive values in the table below indicate a rise in profit and an increase in equity accompanying appreciation of PLN relative to foreign currencies by 15%. If the Polish currency depreciated against a foreign currency by 15%, the values would be negative and the effect on profit and equity the opposite. 56
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Effect of EUR Effect of EUR Effect of USD Period ended 31/12/2024 Period ended 31/12/2023 Period ended 31/12/2024 Period ended 31/12/2023 (for 12 months) (for 12 months) (for 12 months) (for 12 months) 000'PLN 000'PLN 000'PLN 000'PLN ASSETS Exchange rate increase 15% 8,250 7,795 1,402 3,941 Exchange rate increase 10% 5,500 5,197 935 2,627 Exchange rate increase 5% 2,750 2,598 467 1,314 Exchange rate decrease -5% (2,750) (2,598) (467) (1,314) Exchange rate decrease -10% (5,500) (5,197) (935) (2,627) Exchange rate decrease -15% (8,250) (7,795) (1,402) (3,941) LIABILITIES Exchange rate increase 15% 32,055 34,209 447 204 Exchange rate increase 10% 21,370 22,806 298 136 Exchange rate increase 5% 10,685 11,403 149 68 Exchange rate decrease -5% (10,685) (11,403) (149) (68) Exchange rate decrease -10% (21,370) (22,806) (298) (136) Exchange rate decrease -15% (32,055) (34,209) (447) (204) EFFECT ON PROFIT Exchange rate increase 15% (23,804) (26,414) 955 3,737 Exchange rate increase 10% (15,869) (17,609) 637 2,491 Exchange rate increase 5% (7,935) (8,805) 318 1,246 Exchange rate decrease -5% 7,935 8,805 (318) (1,246) Exchange rate decrease -10% 15,869 17,609 (637) (2,491) Exchange rate decrease -15% 23,804 26,414 (955) (3,737) Effect of USD The Group’s exposure to currency risk changes throughout the year depending on the volume of foreign currency transactions. Nevertheless, the above sensitivity analysis may be regarded as representative for determination of the currency risk exposure. 57
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Period ended 31/12/2024 PLN Bank loan (EUR) Change in the interest rate +0,5% (521) Change in the interest rate -0,5% 521 Overdrafts (EUR) Change in the interest rate +0,5% (21) Change in the interest rate -0,5% 21 Leasing (EUR) Change in the interest rate +0,5% (437) Change in the interest rate -0,5% 437 Leasing (other currencies) Change in the interest rate +0,5% (60) Change in the interest rate -0,5% 60 Leaseback liability (EUR) Change in the interest rate +0,5% (51) Change in the interest rate -0,5% 51 Leaseback liability (other currencies) Change in the interest rate +0,5% (1) Change in the interest rate -0,5% 1 Total impact Change in the interest rate +0,5% (1,091) Change in the interest rate -0,5% 1,091 22.6 Interest rate risk management The Group is exposed to interest rate risk resulting from floating rate lease agreements. Hedging activities are subject to regular reviews so that they are brought into line with the current interest rate situation and predefined risk appetite, and to ensure that an optimum hedging strategy is in place. 22.6.1 Sensitivity to changes in interest rates Sensitivity analyses are based on the degree of exposure to interest rate risk relating to financial instruments (lease liabilities) as at the end of the reporting period. For purposes of the analysis it is assumed that outstanding liabilities with floating interest rates at the end of the reporting period had not been paid for the whole year. Internal analyses of interest rate risk conducted for key executives are based on changes by 50 bps up and down, which reflects the management’s judgment concerning probable interest rate fluctuations. In the current and previous financial period, the vast majority of lease contracts were signed in EUR. In the analysis of the hypothetical impact of changes in interest rates on the balance of liabilities as at the balance sheet date, a fluctuation of 50 basis points was assumed, without taking into account the impact of restrictive clauses on negative interest rates. In the case of the acquisition bank loan and the construction bank loan (from the moment of completion of construction when it was converted to EUR from PLN), the currency of which is EUR, the Group estimated the impact of a potential change in the interest rate also by 50 basis points. As in the case of leasing agreements, in the analysis of the hypothetical impact of a change in interest rates on the bank loan balance, a fluctuation of 50 basis points was assumed, without taking into account the impact of limiting clauses concerning negative interest rates. Increase/ decrease by percentage points Impact on gross profit or loss (for 12 months) 58
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Bank name As at 31/12/2024 As at 31/12/2023 Rating Perpective 000'PLN 000'PLN Bank A 75 77 BBB ip. stable Bank B 4,553 5,617 BBB+ stable Bank C 711 13,500 A- ip. stable Bank D 152 121 BBB ip. stable Bank E 1,344 6,655 B stable Bank F 10,779 10,731 A- ip. stable Bank G 1,364 696 A- ip. stable Bank H 3,489 15,091 A2 stable Bank I 45 0 BBB+ stable 22,512 52,488 22.7.1 Sensitivity to the expected credit loss rate An increase or decrease in the adjustment for the impact of future factors used to estimate expected credit losses by 10% would result in an increase or decrease, respectively, in the allowance for credit losses by PLN 21.8 thousand (31.12.2023: PLN 13.9 thousand). Credit risk related to liquid assets is limited as the Group’s contracting parties are banks with a high credit rating assigned by international rating agencies. Data on receivables as at the balance sheet date can be found in Note 17 and data on the contract assets are provided in Note 5.3. List of banks where the Group has funds on bank accounts: 22.7 Credit risk management Credit risk is the risk that a contracting party will default on its contractual obligations, resulting in the Group’s financial losses. The Group enters into transactions only with creditworthy contracting parties. If necessary, the risk of financial losses due to default is reduced by collateral. While assessing its major customers, the Group also uses other publicly available financial information and internal transaction data. The Group’s exposure to counterparty credit risk is monitored on an ongoing basis and the aggregate value of concluded transactions is distributed over approved contracting parties. Trade receivables comprise amounts due from a number of customers operating in different industries and geographies. Regular credit analyses are also performed considering the status of receivables. Excludnig the Group’s major customers (information on revenue has been presented in Note 6.5), the Group is not exposed to considerable credit risk with respect to a single counterparty. Each of these customers is an international company with a stable financial position, which considerably reduces credit risk. The concentration of credit risk with respect to other customers does not exceed 10% of gross monetary assets during the year. 59
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As at 31/12/2024 As at 31/12/2023 Financial assets (+) 92,198 107,375 69,686 54,410 22,512 52,654 - 311 253,320 248,173 Interest bearing credit facilities and loans 119,036 132,565 Finance lease liabilities 99,500 92,180 Trade liabilities 34,784 23,428 (161,122) (140,798) Interest bearing credit facilities and loans* - - 119,036 109,368 2,196 111,564 7,472 - 7,472 119,036 - - 99,500 6,802 24,346 31,148 51,264 17,088 68,352 99,500 Trade liabilities 7,026 533 27,225 27,225 - 34,784 - - - 34,784 Total 7,026 533 245,761 143,395 26,542 177,496 58,736 17,088 75,824 253,320 Current:Not due as at 31/12/2024 Financial liabilities (-) Exposure to liquidity risk Maturity of the Company’s financial liabilities as at 31 December 2024: Type of liability Non-current: 22.8 Liquidity risk management The ultimate responsibility for liquidity risk management rests with the Management Board, which has developed a suitable management system for short-, medium- and long-term funding and liquidity requirements. The Group’s liquidity management consists in maintaining the reserve capital at an appropriate level, keeping stand-by lines of credit, ongoing monitoring of projected and actual cash flows and alignment of the maturity of financial assets with that of financial liabilities. Receivables Cash Other financial assets Liabilities – carrying amount Total non- current liabilities Finance lease liabilities * Due to the exceedance of the base level of indicators contained in the credit agreement (covenants) as at 31.12.2024, excluding their adjusted levels confirmed in the Letter of Arrangements dated 17.02.2025 (see note 20.1), the Group included the long-term part of bank loans in the amount of PLN 87,235 thousand as at 31.12.2024 to short-term liabilities due within 3 months. Within 3 months 3-12 months Total current liabilities 1-5 years Over 5 years Overdue from 3 to 12 months Overdue up to 3 months 60
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Interest bearing credit facilities and loans - - 132,565 3,962 15,724 19,686 89,212 23,667 112,879 132,565 - - 92,180 6,715 20,492 27,207 48,934 16,039 64,973 92,180 Trade liabilities 1,258 134 22,036 22,036 - 23,428 - - - 23,428 Total 1,258 134 246,781 32,713 36,216 70,321 138,146 39,706 177,852 248,173 As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Unsecured overdrafts payable on demand Amount utilized 4,275 - Amount available 8,971 - 13,246 - Unsecured credit card overdraft limits Amount utilized 140 166 Amount available 329 303 469 469 Collateralized investment facilities Amount utilized 114,621 132,399 Amount available - - 114,621 132,399 Current:Not due as at 31/12/2023 Maturity of the Company’s financial liabilities as at 31 December 2023: Type of liability Non-current: Liabilities – carrying amount Within 3 months 3-12 months 22.8.1 Available external sources of funding Total current liabilities 1-5 years Over 5 years Total non- current liabilities Finance lease liabilities Overdue from 3 to 12 months Overdue up to 3 months 61
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Accrual for holidays 5,116 5,392 Accrual for bonuses 4,241 4,446 9,357 9,838 Short-term 9,357 9,838 Long-term - - As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Grants (i) revenue recognition according to IAS 20 37,648 35,827 Advances on services 51 975 37,699 36,802 Short-term 2,991 3,791 Long-term 34,708 33,011 37,699 36,802 (i) Grants include payments received resulting from subsidy contracts signed. These are subsidies for fixed assets and are settled over the depreciation period of a given fixed asset. The expected period of settlement of the funds in the subsidy in the Group's revenues is approximately 40 years. 23. Employee benefit liabilities 24. Deferred income 62
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Sales of goods and services Sales of goods and services Purchases of goods and services Purchases of goods and services Year ended 31/12/2024 Year ended 31/12/2023 Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN 000'PLN 000'PLN Ryvu Therapeutics S.A. POA 4,943 11,025 88 657 Dawid Radziszewski POZ 5 5 299 299 Chabasiewicz, Kowalska i Partnerzy Radcowie Prawni PORN - - 20 19 Ardigen S.A. JS 852 921 - - 5,800 11,951 407 975 Amounts due from related parties Amounts due from related parties Amounts due to related parties Amounts due to related parties As at 31/12/2024 As at 31/12/2023 As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN 000'PLN 000'PLN Ryvu Therapeutics S.A. POA 1,618 1,982 43 11 Dawid Radziszewski POZ 3 3 31 31 Ardigen S.A. JS 314 257 - - 1,935 2,242 74 42 The group of related entities was established for the purposes of preparing these consolidated financial statements in accordance with International Accounting Standard 24, constituting an annex to Commission Regulation (EC) No. 1126/2008 of November 3, 2008. (OJ L 320, 29/11/2008, p. 1, as amended). Personal connections based on the connections of Members of the Management Board and Members of the Supervisory Board were determined in accordance with the instructions in point 9 above International Accounting Standard 24. During the financial year, the Group companies entered into the following commercial transactions with related parties (including those related personally) other than Group companies: Balances at the end of the reporting period: The type of association The type of association Sales to related entities include revenues from research services, revenues from administrative services and re-invoicing of incurred costs. Purchases from related entities include the purchase of research, advisory and administrative services. In the financial year, the Group identified the following commercial transactions with related parties. Personal connections based on connections between Members of the Management Board and Members of the Supervisory Board. Binding type: POA - personal relationship through shares held by the Shareholder PORN - personal connection by a Member of the Supervisory Board POZ - personal connection through a Member of the Management Board JS - associate 25. Related party transactions Transactions concluded between the Company and its subsidiaries being related parties were eliminated in the course of consolidation and have not been presented in this note. Detailed information regarding transactions between the Group and other related parties (including those related personally) is presented below. 25.1 Commercial transactions 63
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Share-Based Payments Salary** Total Share-Based Payments Salary** Total 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN 000'PLN Management Board 157 5,451 5,609 775 5,858 6,633 Bogusław Sieczkowski - 921 921 136 1,101 1,237 Miłosz Gruca - 1,087 1,087 104 1,092 1,195 Mirosława Zydroń - 611 611 97 644 741 Dariusz Kurdas - 518 518 32 591 623 Dawid Radziszewski - 349 349 34 373 407 Anna Leja - 126 126 - - - Natalia Walas - Marcinek - 15 15 - - - Tomasz Narojczyk - 42 42 - - - Adrijana Vinter 105 1,259 1,364 249 1,456 1,705 Marija Gradečak Galović 52 524 576 124 602 726 Supervisory Board 0 360 360 0 391 391 Piotr Romanowski - 73 73 - 79 79 Tadeusz Wesołowski - 63 63 - 69 69 Paweł Przewięźlikowski - 56 56 - 61 61 Rafał Chwast - 57 57 - 61 61 Wojciech Chabasiewicz - 56 56 - 61 61 Jacek Osowski - 55 55 - 60 60 157 5,811 5,968 775 6,249 7,024 Number of shares % of capital held Number of shares % of capital held Management Board Bogusław Sieczkowski 942,417 5.13% 942,417 5.13% Miłosz Gruca 60,760 0.33% 60,760 0.33% Mirosława Zydroń 42,909 0.23% 42,909 0.23% Adrijana Vinter 12,000 0.07% 12,000 0.07% Dawid Radziszewski 4,472 0.02% 4,472 0.02% Dariusz Kurdas 4,286 0.02% 4,286 0.02% Supervisory Board Paweł Przewięźlikowski 2,943,150 16.03% 2,970,815 16.18% Tadeusz Wesołowski* 932,713 5.08% 932,713 5.08% Rafał Chwast 121,115 0.66% 121,115 0.66% Piotr Romanowski 100,000 0.54% 100,000 0.54% Compensation of members of the Management Board and other executives in the financial year: 25.2 Executive compensation Year ended 31/12/2024 Year ended 31/12/2023 Year ended 31/12/2024 Year ended 31/12/2023 *directly and via Augebit FIZ ** The Group presents remuneration in this note based on the amounts actually paid (cash approach). Shares held by members of the Management Board and members of the Supervisory Board 64
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Cash in hand and at bank 22,512 52,654 Credit card limit usage (140) (166) Overdraft facilities (4,275) - 18,097 52,488 Year ended 31/12/2024 Period ended 31/12/2023 White collar employees 897 847 Blue collar employees - - Total headcount 897 847 As of 31.12.2024, restricted cash amounted to PLN 554 thousand (31.12.2023: PLN 825 thousand). As of the balance sheet date, cash accumulated in bank accounts is not adjusted for the risk of impairment, because it is accumulated in banks belonging to large capital groups with an established market position. 27. Average headcount in the Group 26. Cash and cash equivalents For purposes of preparation of the statement of cash flows, cash and cash equivalents consist of cash in hand and cash at bank, including open overdraft facilities. Cash and cash equivalents at the end of the financial year, presented in the consolidated statement of cash flows, can be reconciled with the consolidated balance sheet items in the following manner: At the balance sheet date, funds collected on bank accounts are not adjusted due to risk of impairment as these funds are accumulated in banks belonging to large capital groups with an established market position. 65
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28. Share-based payments 28.1.1 Detailed description of the incentive program based on subscription warrants On May 17, 2021, the General Meeting resolved to adopt an Incentive Scheme for employees in the form of the right to purchase shares at a preferential price. The program covers a total of 1,247,720 ordinary shares of Selvita S.A. provided free of charge by Paweł Przewięźlikowski, owned by him and constituting a total of 25% of the Company's shares held by him. The scheme provides employees with the right to acquire shares at a preferential price of PLN 0.19 per share. Employees who have a business relationship with the company are eligible to participate in the program. The eligible persons are required to remain in a business relationship with the company and not to dispose of the shares granted under the scheme, for a period not shorter than 12 months and not longer than 36 months from the date of acquiring the shares, subject to exceptional circumstances when the employee may be released from these obligations. Purpose of the Program The purpose of implementing the universal incentive program as proposed will be: i) ensuring optimal conditions for the long-term increase in the value of the Company by creating a general employee shareholding structure; ii) creating an incentive that will motivate employees to act even more actively in the interest of the Company and its shareholders, and encourage them to stay in a long-term relationship with the Company; iii) building a modern organization in which the increase in the value of the Company will translate directly into the increase in the wealth of the employees and associates of the Company. Recognition of the 'donation' transaction from the Shareholder - founder of the Program. Taking into account the specificity and legal and formal framework of the Incentive Program and IFRS standards, the Company treated the transaction of free transfer of shares ("donation") from the founder of the program, Paweł Przewięźlikowski, as a separate transaction, which in the light of par. 33 IAS 32, taking into account the acquisition cost of these shares amounting to PLN 0, was not presented in the statement of financial position and the shares received free of charge also had no impact on the statement of comprehensive income, statement of changes in equity or statement of cash flows. 66
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17/05/2021 29/03/2022 02/06/2023 07/10/2024 07/10/2026 1,247,720 1,131,981 Date of granting the program ("grant date") Phase I of the program (90% of the pot) Date of granting the program ("grant date") Phase II of the program (5% of the pot) 28.1.2 The fair value of the share options granted during the year The fair value of the options granted is determined as at the grant date and recognized over the vesting period in remuneration costs in correspondence with the increase in equity at the time of vesting by employees during the program period. Summary of data about the program: The total cost of the program was estimated on the basis of the estimated value of the shares to which employees will acquire rights during the duration of the program. The fair value of the program was determined using the Black-Scholes-Merton valuation model, taking into account the following parameters: In case of I Phase of program: • option exercise date: 09.07.2021 for 650 shares; 09.07.2022 for 481.091 shares; 09.07.2023 for 479.036 shares; 09.07.2024 for 8.305 shares. • option exercise price: PLN 0.19; • share price as at the valuation date: PLN 71; • continuous dividend rate: 0% • risk-free interest rate in continuous capitalization: 1.96% • coefficient of variation: 75% - obtained as a standard deviation from a sample of logarithmic changes in historical prices of shares listed on the WSE in the period from October 16, 2019 to the valuation date. Number of shares in the program The maturity date of the program Expected number of shares after taking into account employee turnover ratio and available data as at December 31, 2024: Date of granting the program ("grant date") Phase III of the program (5% of the pot) Date of granting the program ("grant date") Phase IV of the program (5% of the pot) 67
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In case of II Phase of program: • option exercise date: 28.03.2023 for 18.574 shares; 28.03.2024 for 18.574 shares; 28.03.2025 for 18.574 shares; • option exercise price: PLN 0.19; • share price as at the valuation date: PLN 64.30; • continuous dividend rate: 0% • risk-free interest rate in continuous capitalization: 4.82% • coefficient of variation: 45% - obtained as a standard deviation from a sample of logarithmic changes in historical prices of shares listed on the WSE in the period from October 16, 2019 to the valuation date. In case of III Phase of program: • option exercise date: 01.06.2024 for 33.121 shares; 01.06.2025 for 32.186 shares; 01.06.2026 for 12.313 shares; • option exercise price: PLN 0.19; • share price as at the valuation date: PLN 70.90; • continuous dividend rate: 0% • risk-free interest rate in continuous capitalization: 5.86% • coefficient of variation: 49% - obtained as a standard deviation from a sample of logarithmic changes in historical prices of shares listed on the WSE in the period from October 16, 2019 to the valuation date. In the case of Phase IV of the program: • option exercise date: 07.10.2025 for 14,778 shares; 07.10.2026 for 14,778 shares. • option exercise price: PLN 0.19; • share price on the valuation date: PLN 58; • continuous dividend rate: 0%; • risk-free interest rate in continuous capitalization: 4.93%; • coefficient of variation: 44.7% - obtained as the standard deviation from the sample of logarithmic changes in historical share prices listed on the WSE in the period from 16.10.2019 to the valuation date. As at 31 December 2024 the weighted average period remaining until the end of the contractual duration is 2.1 months. 68
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Tranche number Number of shares Date of purchase of the shares 2021 2022 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 2026 Total impact Tranche no 1 650 09/07/2021 46 - - - - - - - - - 46 Tranche no 2 481,091 09/07/2022 20,153 13,914 - - - - - - - - 34,067 Tranche no 3 479,036 09/07/2023 11,039 15,075 7,741 - - - - - - - 33,855 Tranche no 4 8,305 09/07/2024 230 192 223 112 - - - - - - 757 Tranche no 5 18,574 29/03/2023 - 904 287 - - - - - - - 1,191 Tranche no 6 18,574 28/03/2024 - 452 596 144 - - - - - - 1,191 Tranche no 7 18,574 28/03/2025 - 301 397 398 95 - - - 95 - 1,191 Tranche no 8 33,121 01/06/2024 - - 1,394 1,006 - - - - - - 2,401 Tranche no 9 32,186 01/06/2025 - - 697 926 281 193 - - 474 - 2,097 Tranche no 10 12,313 01/06/2025 - - 178 304 72 72 73 73 290 121 894 Tranche no 9 14,778 07/10/2025 - - - 199 211 213 215 16 655 - 854 Tranche no 10 14,778 07/10/2026 - - - 100 105 107 108 108 427 328 855 Total 1,131,981 31,469 30,838 11,514 3,189 763 585 396 197 1,941 449 79,399 2025 3,189 28.1.3 Estimated impact of the incentive program on financial results (in PLN thousand): The recognized costs of the incentive program as at the balance sheet date are as follows: Year ended 31/12/2024 28.1.4 The recognized costs of the incentive program: 11,514 11,514 Year ended 31/12/2023 Program costs recognized at fair value 3,189 The valuation of the program, in terms of shares currently issued to employees as at 31.12.2024, showed its total estimated cost at PLN 79,399 thousand, which is included in the Group's costs starting from the second quarter of 2021 until the second quarter of 2026. The impact of the program on the result of the reporting period is PLN 3,189 thousand and this amount reduces the gross result, net result and profit on operating activities in the entire year 2024. The estimated impact for subsequent years is as follows: - 2025: PLN 1,941 thousand, - 2026: PLN 449 thousand. 69
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As at 31/12/2024 As at 31/12/2023 000'PLN 000'PLN Commitments to purchase property, plant and equipment 3,176 6,224 30.1 Contingent liabilities In the period covered by the financial statements, the Group incurred contingent liabilities necessary to receive the subsidy and the loan taken out. Contingent liabilities consist of: - bills of exchange liabilities - covering the amount of the granted subsidy together with interest in the amount specified as for tax arrears calculated from the date of transfer of funds to the account until the date of repayment. In the period covered by the statement, the amount of PLN 4,622 thousand was transferred to bank accounts from the subsidy. As of the balance sheet date 31.12.2024, the total amount of cash received from the subsidy amounts to PLN 56,908 thousand. Selvita Services Sp. z o.o. obtained permits to conduct business activity in the special economic zone Kraków Technology Park. The Company incurred the investment expenditure required in the permit in the amount of over PLN 7,320 thousand and created the required new jobs. The company is obliged to maintain 30 new jobs created by 31.12.2022 until 31.12.2025 and to maintain 15 new jobs created by 30.06.2023 until 30.06.2026. As of 31.12.2024, PLN 12,895 thousand of income tax relief was used for operations in the Special Economic Zone. Selvita d.o.o. has provided bank guarantees for a total amount of PLN 2,647 thousand. The guarantees apply to newly rented laboratory premises in Zagreb 29. Capital commitments Commitments to purchase property, plant and equipment arise from orders for the purchases of fixed assets. 30. Contingent liabilities 70
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Items Year ended 31/12/2024 Year ended 31/12/2023 000'PLN 000'PLN (1,445) 14,829 - (13,942) 2,865 - (4,310) 28,771 15,336 (3,519) - 6,959 - change in liabilities resulting from the purchase of Pozlab Sp. z o. o. (2,462) - - change in income tax liabilities 996 1,507 - reclassification of Pozlab loan 941 - 17,273 (21,782) 88 9,797 (1,500) - (3,486) (11,501) - 1,883 - change in employee benefit liabilities resulting from the purchase of Pozlab Sp. z o.o. (343) - 416 12,324 (3,559) (25,861) - return of subsidies for fixed assets - 153 (606) 1,812 - (44) (149) - (457) 1,856 (5,223) (5,076) - (899) 36 - (5,259) (4,177) (20,837) (14,110) - 40 (613) - (13,528) 6,714 2,544 3,942 399 - 659 - (10,298) (24,804) - change in deferred income resulting from discontinued operations The change in provisions results from the following items: - change in pension benefit liabilities and deferred tax provision resulting from discontinued operations The change in other assets results from the following items: - change in other financial and non-financial assets and deferred tax assets resulting from discontinued operations - change in other non-financial assets resulting from the purchase of Pozlab Sp. z o.o. Change in credit and loan status: - change in credits and loans resulting from discontinued operations - change in credits and loans resulting from the balance sheet 31. Notes on the consolidated statement of cash flow Explanation of the reasons for significant differences between changes in certain items in the balance sheet and changes in the same items disclosed in the the consolidated statement of cash flow: The change in trade receivables and other receivables results from the following items: - change in receivables resulting from discontinued operations - change in receivables from deliveries and services resulting from the purchase of Pozlab Sp. z o.o. The change in liabilities, except for loans and borrowings, results from the following items: - change in liabilities from discontinued operations Change in deferred income and employee benefit liabilities results from the following items: - revenues from subsidies for fixed assets - exchange rate differences resulting from the valuation of credits and loans - change in credits and loans resulting from the purchase of Pozlab Sp. z o.o. - inflows from credits and loans - change in pension benefit liabilities and deferred tax provision resulting from the purchase of Pozlab Sp. z o.o. - change in pension benefit liabilities and deferred tax provision resulting from the balance sheet - change in receivables from deliveries and services and other receivables, assets from contracts with customers and other assets resulting from the balance sheet - change in liabilities resulting from the balance sheet - change in investment commitments - change in liabilities arising from settlements of the purchase price of Pozlab Sp. z o.o. - change in the balance of deferred income and employee benefit liabilities resulting from the balance sheet - change in other financial and non-financial assets and deferred tax assets resulting from the balance sheet - unpaid IRR interest on the loan - reclassification of Pozlab loan 71
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32. Significant events after the end of the financial year until the date of approval of the consolidated financial statements Letter regarding Arrangements On 17.02.2025, the Group signed a Letter regarding Arrangements with Pekao S.A. bank regarding: - the level of indicators included in the credit agreement (covenants), which were increased to the levels: • not higher than 430% as of 31.12.2024, 400% as of 31.03.2025 and 380% as of 30.06.2025 for the net debt to EBITDA ratio, • and not lower than 100% as of 31.12.2024, 31.03.2025 and 30.06.2025 for DSCR. - consent to extend the current account facilities held by Selvita Services sp. z o.o. and Selvita d.o.o., maturing in June 2025 for the period until the end of January 2026. 72
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Bogusław Sieczkowski - President of the Board Signatures of Members of the Management Board: 33. Approval of the financial statements The consolidated financial statements were approved by the management board of the parent company on 26 March, 2025. Prepared by: Elżbieta Kokoć Miłosz Gruca - Vice-President of the Board Mirosława Zydroń - Member of the Board Dariusz Kurdas - Member of the Board Dawid Radziszewski - Member of the Board Adrijana Vinter - Member of the Board Cracow, 26 March 2025 73 Dokument podpisany przez Elżbieta Kokoć Data: 2025.03.26 11:45:20 CET Dokument podpisany przez Dariusz Kurdas Data: 2025.03.26 12:14:56 CET Dokument podpisany przez Dawid Patryk Radziszewski Data: 2025.03.26 13:32:30 CET Digitally signed by Adrijana Vinter Date: 2025.03.26 13:53:13 CET Dokument podpisany przez Mirosława Monika Zydroń Data: 2025.03.26 14:09:27 CET Dokument podpisany przez Miłosz Kazimierz Gruca Data: 2025.03.26 14:47:42 CET Dokument podpisany przez Bogusław Sieczkowski Data: 2025.03.26 14:54:26 CET
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Skonsolidowane s prawozdanie finansowe Grupy Kapitałowej Selvita za rok obrotowy 21.03.2019 - 31.12.2019 1 CONTACT INVESTOR RELATIONSHIP ir@selvita.com MEDIA media@selvita.com
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Oświadczenie Rady Nadzorczej Selvita S.A. dotyczące funkcjonowania Komitetu Audytu oraz firmy audytorskiej w Selvita S.A. oraz Grupie Kapitałowej Selvita Statement of the Supervisory Board of Selvita S.A. regarding the functioning of the Audit Committee and the Auditor at Selvita S.A. and Selvita Capital Group Rada Nadzorcza Selvita S.A. z siedzibą w Krakowie („Spółka”) działając na podstawie § 70 ust. 1 pkt 7) i 8) oraz § 71 ust. 1 pkt 7) i 8) Rozporządzenia Ministra Finansów z dnia 29 marca 2018 r. w sprawie informacji bieżących i okresowych przekazywanych przez emitentów papierów wartościowych oraz warunków uznawania za równoważne informacji wymaganych przepisami prawa państwa niebędącego państwem członkowskim (Dz. U. z 2018 r. poz. 757) w związku z publikacją jednostkowego oraz skonsolidowanego raportu rocznego za 2024 rok oświadcza, że: The Supervisory Board of Selvita S.A. with its registered office in Kraków (the "Company") acting pursuant to § 70.1.7 and 8 and § 71.1.7 and 8 of the Regulation of the Minister of Finance of 29 March 2018 on current and periodic information published by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non - member state (Journal of Laws of 2018 item 757) in connection with the publication of the standalone and consolidated annual report for year 2024, declares that: a) w Spółce oraz Grupie Kapitałowej Selvita są przestrzegane przepisy dotyczące powołania, składu i funkcjonowania Komitetu Audytu, w tym dotyczące spełnienia przez jego członków kryteriów niezależności oraz wymagań odnośnie posiadania wiedzy i umiejętności z zakresu branży, w której działa Spółka, a także w zakresie rachunkowości oraz badania sprawozdań finansowych, a) the legal requirements regarding the establishment, composition and functioning of the Audit Committee, including the fulfilment by its members of the independence criteria and requirements regarding the possession of knowledge and skills in the industry in which the Company operates, as well as in the field of accounting and auditing financial statements have been met at the Company and at Selvita Capital Group, b) Komitet Audytu wykonywał zadania Komitetu Audytu przewidziane w obowiązujących przepisach, b) the Audit Committee performed the tasks of the Audit Committee provided for in applicable regulations, c) Firma audytorska, tj. Pricewaterhousecoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. oraz członkowie zespołu wykonującego badanie spełniali warunki do sporządzenia bezstronnego i niezależnego sprawozdania z badania rocznego jednostkowego oraz skonsolidowanego sprawozdania finansowego zgodnie z obowiązującymi przepisami, standardami wykonywania zawodu i zasadami etyki zawodowej, c) the Auditor, i.e. Pricewaterhousecoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. and members of the audit team met the conditions for preparing an impartial and independent audit report on annual standalone and consolidated financial statements in accordance with applicable regulations, professional standards and ethics, d) w Spółce oraz Grupie Kapitałowej Selvita są przestrzegane obowiązujące przepisy związane z rotacją firmy audytorskiej i kluczowego biegłego rewidenta oraz obowiązkowymi okresami karencji, d) the legal requirements related to the rotation of the audit company and key statutory auditor as well as the mandatory grace periods have been met at the Company and at Selvita Capital Group,
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e) Selvita S.A. posiada politykę w zakresie wyboru firmy audytorskiej oraz politykę w zakresie świadczenia na rzecz Spółki przez firmę audytorską, podmiot powiązany z firmą audytorską lub członka jego sieci dodatkowych usług niebędących badaniem, w tym usług warunkowo zwolnionych z zakazu świadczenia przez firmę audytorską. e) Selvita S.A. has adopted a policy for selection of an audit company to carry out a statutory audit of the Company financial statements and the policy for the provision of additional non -audit services by the audit company, an entity affiliated to the audit company or a member of its network, including services conditionally exempt from the prohibition of provision of the services conducted by the audit company. Piotr Romanowski Przewodniczący Rady Nadzorczej Chairman of the Supervisory Board
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Oświadczenie Rady Nadzorczej Selvita S.A. dotyczące funkcjonowania Komitetu Audytu oraz firmy audytorskiej w Selvita S.A. oraz Grupie Kapitałowej Selvita Statement of the Supervisory Board of Selvita S.A. regarding the functioning of the Audit Committee and the Auditor at Selvita S.A. and Selvita Capital Group Rada Nadzorcza Selvita S.A. z siedzibą w Krakowie („Spółka”) działając na podstawie § 70 ust. 1 pkt 7) i 8) oraz § 71 ust. 1 pkt 7) i 8) Rozporządzenia Ministra Finansów z dnia 29 marca 2018 r. w sprawie informacji bieżących i okresowych przekazywanych przez emitentów papierów wartościowych oraz warunków uznawania za równoważne informacji wymaganych przepisami prawa państwa niebędącego państwem członkowskim (Dz. U. z 2018 r. poz. 757) w związku z publikacją jednostkowego oraz skonsolidowanego raportu rocznego za 2024 rok oświadcza, że: The Supervisory Board of Selvita S.A. with its registered office in Kraków (the "Company") acting pursuant to § 70.1.7 and 8 and § 71.1.7 and 8 of the Regulation of the Minister of Finance of 29 March 2018 on current and periodic information published by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non - member state (Journal of Laws of 2018 item 757) in connection with the publication of the standalone and consolidated annual report for year 2024, declares that: a) w Spółce oraz Grupie Kapitałowej Selvita są przestrzegane przepisy dotyczące powołania, składu i funkcjonowania Komitetu Audytu, w tym dotyczące spełnienia przez jego członków kryteriów niezależności oraz wymagań odnośnie posiadania wiedzy i umiejętności z zakresu branży, w której działa Spółka, a także w zakresie rachunkowości oraz badania sprawozdań finansowych, a) the legal requirements regarding the establishment, composition and functioning of the Audit Committee, including the fulfilment by its members of the independence criteria and requirements regarding the possession of knowledge and skills in the industry in which the Company operates, as well as in the field of accounting and auditing financial statements have been met at the Company and at Selvita Capital Group, b) Komitet Audytu wykonywał zadania Komitetu Audytu przewidziane w obowiązujących przepisach, b) the Audit Committee performed the tasks of the Audit Committee provided for in applicable regulations, c) Firma audytorska, tj. Pricewaterhousecoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. oraz członkowie zespołu wykonującego badanie spełniali warunki do sporządzenia bezstronnego i niezależnego sprawozdania z badania rocznego jednostkowego oraz skonsolidowanego sprawozdania finansowego zgodnie z obowiązującymi przepisami, standardami wykonywania zawodu i zasadami etyki zawodowej, c) the Auditor, i.e. Pricewaterhousecoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. and members of the audit team met the conditions for preparing an impartial and independent audit report on annual standalone and consolidated financial statements in accordance with applicable regulations, professional standards and ethics, d) w Spółce oraz Grupie Kapitałowej Selvita są przestrzegane obowiązujące przepisy związane z rotacją firmy audytorskiej i kluczowego biegłego rewidenta oraz obowiązkowymi okresami karencji, d) the legal requirements related to the rotation of the audit company and key statutory auditor as well as the mandatory grace periods have been met at the Company and at Selvita Capital Group,
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e) Selvita S.A. posiada politykę w zakresie wyboru firmy audytorskiej oraz politykę w zakresie świadczenia na rzecz Spółki przez firmę audytorską, podmiot powiązany z firmą audytorską lub członka jego sieci dodatkowych usług niebędących badaniem, w tym usług warunkowo zwolnionych z zakazu świadczenia przez firmę audytorską. e) Selvita S.A. has adopted a policy for selection of an audit company to carry out a statutory audit of the Company financial statements and the policy for the provision of additional non -audit services by the audit company, an entity affiliated to the audit company or a member of its network, including services conditionally exempt from the prohibition of provision of the services conducted by the audit company. Piotr Romanowski Przewodniczący Rady Nadzorczej Chairman of the Supervisory Board
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Ocena Rady Nadzorczej Selvita S.A. dotycząca sprawozdań Zarządu z działalności oraz sprawozdań finansowych Selvita S.A. i Grupy Kapitałowej Selvita za rok 2024 Statement of the Supervisory Board of Selvita S.A. regarding the Management Board's reports on the operations and financial statements of Selvita S.A. and Selvita Capital Group for 2024 Rada Nadzorcza Selvita S.A. z siedzibą w Krakowie („Spółka”) mając na względzie § 70 ust. 1 pkt 14) oraz § 71 ust. 1 pkt 12) Rozporządzenia Ministra Finansów z dnia 29 marca 2018 r. w sprawie informacji bieżących i okresowych przekazywanych przez emitentów papierów wartościowych oraz warunków uznawania za równoważne informacji wymaganych przepisami prawa państwa niebędącego państwem członkowskim (Dz. U. z 2018 r. poz. 757) rozpatrzyła i dokonała oceny: Supervisory Board of Selvita S.A. with its registered office in Kraków (the "Company"), acting pursuant to § 70.1.14 and § 71.1.12 of the Regulation of the Minister of Finance of 29 March 2018 on current and periodic information published by issuers of sec urities and conditions for recognizing as equivalent information required by the law of a non -member state (Journal of Laws of 2018, item 757) considered and assessed: • sprawozdania Zarządu z działalności • Selvita S.A. za rok obrotowy 2024, • sprawozdania finansowego Selvita S.A. za rok obrotowy 2024, • sprawozdania Zarządu z działalności Grupy Kapitałowej Selvita za rok obrotowy 2024, • skonsolidowanego sprawozdania finansowego Grupy Kapitałowej Selvita za rok obrotowy 2024. • Management Board’s report on the operations of Selvita S.A. for the financial year 2024, • financial statements of Selvita S.A. for the financial year 2024, • Management Board’s report on the operations of Selvita Capital Group for the financial year 2024, • consolidated financial statements of Selvita Capital Group for the financial year 2024. Po analizie wymienionych dokumentów oraz uwzględnieniu sprawozdania biegłego rewidenta z badania rocznego sprawozdania finansowego Selvita S.A. oraz skonsolidowanego sprawozdania finansowego Grupy Kapitałowej Selvita za rok obrotowy 2024, a także sprawozdania biegłego rewidenta z atestacji sprawozdawczości zrównoważonego rozwoju Rada Nadzorcza oświadcza, że: After an analysis of aforesaid documents and taking into account the independent auditor's report on the annual financial statements of Selvita S.A. and the consolidated financial statements of Selvita Capital Group for the financial year 2024 and independent auditor's reports on the certification of sustainable development reporting the Supervisory Board declares that: • sprawozdanie Zarządu z działalności Selvita S.A. za rok obrotowy 2024 , w skład w którego wchodzi sprawozdanie zrównoważonego rozwoju, • Sprawozdanie finansowe Selvita S.A. za rok obrotowy 2024, • sprawozdanie Zarządu z działalności Grupy Kapitałowej Selvita za rok obrotowy 2024, • skonsolidowane sprawozdania finansowe Grupy Kapitałowej Selvita za rok obrotowy 2024, • Management Board’s report on the operations of Selvita S.A. for the financial year 2024, including the sustainability report, • financial statements of Selvita S.A. for the financial year 2024, • Management Board’s report on the operations of Selvita Capital Group for the financial year 2024, • consolidated financial statements of Selvita Capital Group for the financial year 2024, zostały sporządzone w sposób zgodny z księgami i dokumentami, jak i ze stanem faktycznym oraz zgodnie z przepisami prawa, jak również zawierają kompletny, have been prepared in a manner consistent with the books and documents, as well as with the facts and in accordance with the law, as well as contain a complete,
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rzetelny i porównywalny obraz sytuacji operacyjnej i finansowej Selvita S.A. oraz Grupy Kapitałowej Selvita. reliable and comparable view of the operational and financial situation of Selvita S.A. and Selvita Capital Group. Sprawozdania Zarządu z działalności Selvita S.A i Grupy Kapitałowej Selvita za rok obrotowy 2024 zostało sporządzone we wszystkich swoich istotnych aspektach na podstawie danych finansowych zawartych w sprawozdaniu finansowym i skonsolidowanym sprawozdaniu finansowym za rok obrotowy 2024. Sprawozdania Zarządu z działalności Selvita S.A. oraz Grupy Kapitałowej Selvita zawierają kompletny opis wszystkich istotnych zdarzeń mogących mieć wpływ na sytuację majątkową i finansową Selvita S.A., co najmniej w perspektywie kolejnych kwartałów, jak również opis istotnych ryzyk i zagrożeń. Management Board's reports on the operations of Selvita S.A. and Selvita Capital Group for the financial year 2024 have been prepared in all its material aspects based on the financial data contained in the standalone and consolidated financial statement for the financial year 2024. Management Board's reports on the operations of Selvi ta S.A. and Selvita Capital Group contain a complete description of all significant events that may affect the financial standing of Selvita S.A., at least in the perspective of the upcoming quarters, as well as a description of significant risks and threats. Piotr Romanowski Przewodniczący Rady Nadzorczej Chairman of the Supervisory Board
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TRANSLATORS’ EXPLANATORY NOTE The English content of this report is a free translation of the statutory auditor’s report of the below-mentioned Polish Company. In Poland statutory accounts as well as the auditor’s report should be prepared and presented in Polish language and in accordance with Polish legislation, and the accounting principles and practices generally adopted in Poland. The accompanying translation has not been reclassified or adjusted in any way to conform to the accounting principles generally accepted in countries other than Poland, but certain terminology current in Anglo-Saxon countries has been adopted to the extent practicable. In the event of any discrepancies in interpreting the terminology, the Polish language version is binding. PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. , International Business Center, ul. Polna 11, 00-633 Warsaw, Poland, T: +48 (22) 746 4000, www.pwc.pl PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. is entered into the National Court Register maintained by the District Court for the Capital City of Warsaw, under KRS number 0000750050, NIP 526 -021-02-28. The seat of the Company is in Warsaw at Polna 11. Independent Statutory Auditor’s Report To the General Meeting and Supervisory Board of Selvita S.A. Report on the audit of consolidated financial statements Our opinion In our opinion the accompanying annual consolidated financial statements: • give a true and fair view of the financial position of the Selvita S.A. (the “Parent Company”) and its subsidiaries (together the “Group”) as at 31 December 2024 and the Group’s financial performance and the consolidated cash flows for the year then ended in accordance with the applicable International Financial Reporting Standards as adopted by the European Union and the adopted accounting policies; • comply in terms of form and content with the laws applicable to the Group and the Parent Company’s Articles of Association. Our opinion is consistent with our additional report to the Audit Committee issued on the date of this report. What we have audited We have audited the annual consolidated financial statements of Group Selvita S.A. which comprise: • the consolidated statement of financial position as at 31 December 2024; and the following prepared for the financial year then ended 2024: • the consolidated statement of financial position; • the consolidated statement of changes in equity; • the consolidated statement of cash flows, and • the notes to consolidated financial statements. Basis for opinion We conducted our audit in accordance with the National Standards on Auditing as adopted by the resolutions of the National Board of Statutory Auditors and the resolution of the Council of the Polish Agency for Audit Oversight (“NSA”) and pursuant to the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Oversight (the “Act on Statutory Auditors”) and the Regulation (EU) No. 537/2014 of 16 April 2014 on specific requirements regarding the statutory audit of public interest entities (the “EU Regulation”).. Our responsibilities under NSA are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with “the Handbook of the International code of ethics for professional accountants (including International independence standards) (Code of ethics) as adopted by resolution of the National Board of Statutory Auditors and other ethical requirements that
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are relevant to our audit of the consolidated financial statements in Poland. We have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of ethics. During the audit, the key statutory auditor and the audit firm remained independent of the Group in accordance with the independence requirements set out in the Act on Statutory Auditors and in the EU Regulation. Our audit approach Overview As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the Parent Company’s Management Board made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the consolidated financial statements as a whole, as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on the consolidated financial statements as a whole. • The overall materiality threshold adopted for the purposes of our audit was set at PLN 3450 thousand PLN. • We conducted a full audit of the consolidated financial statements of the capital group Key audit matters include: • correct revenue recognition • impairment in the area of goodwill valuation Materiality Group scoping Key audit matters
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3 Overall Group materiality PLN 3 450 thousand How we determined it 1% of the Group’s operating revenue Rationale for the materiality benchmark applied We have adopted revenue as the basis for determining materiality because, in our opinion, the level of revenue is a generally accepted benchmark and can be used by users of financial statements to assess the Group's activities. We set materiality at the level of 1% because, based on our professional judgment, it falls within the range of acceptable quantitative materiality thresholds. We agreed with the Audit Committee of the Parent Company that we would report to them misstatements of the consolidated financial statements identified during our audit about 345 thousand PLN (for classification misstatements in the balance sheet i.e. not affecting the result or equity, with a value exceeding twice the overall materiality), as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. How we tailored our Group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. They include the most significant identified risks of material misstatements, including the identified risks of material misstatement resulting from fraud. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon. We do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Revenue recognition The Group generates revenues from the provision of research services mainly in the "fixed price" or "FTE" formula. In 2024, sales revenues amounted to PLN 342 194 thousand (in 2023 PLN 346 957 thousand). Accounting policies and disclosures regarding revenues are presented in notes: 3.3.2, 4.2.7, 5.3 and 5.4 to the consolidated financial statements. Sales revenues are one of the key figures demonstrating the results of the Group's operating activities, they indicate the degree of coverage of fixed costs of the conducted activities and are a determinant of market share. Additionally, part of the revenue relates to the execution of research service contracts that are not completed as of the balance sheet Our procedures included: • understanding and assessing the processes and internal controls related to the recognition, valuation, and presentation of sales revenue; • evaluating the compliance of applied accounting policies with relevant financial reporting standards; • analysing selected contracts entered into by the Company; • testing a selected sample of recognized revenue during the fiscal year through independent confirmations with customers concerning the occurrence of selected sales transactions, their value, and payment by the customer; • independently confirming existence and value of selected accounts receivable as of the balance sheet date (for a selected sample);
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4 date, which requires estimating the degree of contract completion (fulfillment of each performance obligation stipulated in the contract) to determine the amount of revenue due using a cost-based method, while maintaining the matching principle. For this reason, there is a risk of financial statement distortion due to error or intentional inflation of sales revenue in the consolidated financial statements, for example, by incorrectly determining the stage of service completion (incorrectly determining the degree of performance fulfillment) or recording fictitious sales transactions. Considering the above, we have deemed this a key issue for our audit. • testing, on a selected sample, the documents adjusting the value of sales revenue during and after the end of the audited fiscal year; • evaluating significant estimates and accounting judgments made by management; • conducting control tests related to updating cost budgets; • based on the size of transactions and their risk, a detailed test was performed for a selected sample of sales transactions at the turn of the balance sheet year, ensuring that they were recognized in the appropriate period; • testing a selected sample of contract asset balances; • test of all material journal entries impacting sales revenues during the year that meet certain, defined criteria; • assessing disclosures in the consolidated financial statements related to sales revenue and associated judgments and estimates. Impairment in the area of goodwill valuation Goodwill shown in the consolidated balance sheet as at 31 December 2024 (PLN 89 638 thousand) includes goodwill arising from the acquisition of 100% of shares in Selvita d.o.o in 2021 (PLN 70 546 thousand) and goodwill arising from the acquisition of 100% of shares in PozLab Sp. z oo in 2024 (PLN 18 811 thousand). Goodwill of Selvita d.o.o is part of the Drug Discovery segment and goodwill of PozLab Sp. z o.o. is part of the Drug Development segment. In note 11 to the consolidated financial statements the Group presented disclosures regarding the impairment test, including test results, sensitivity analysis and a description of the assumptions adopted. The test conducted as at 31 December 2024 did not indicate any impairment. The impairment test requires adoption of a number of assumptions and judgments by the Group's Management Board, including, among others, financial forecasts and cash flow forecasts for subsequent years, including after the period covered by detailed forecasts, as well as macroeconomic and market assumptions. Given the materiality of the items in the financial statements and due to the subjective nature of the assumptions made we have deemed this a key issue for our audit. Our procedures included, in particular: • understanding and assessing the correctness of the method used to conduct the test, including evaluating the appropriateness of determining the cash-generating unit; • verifying the mathematical accuracy and methodological consistency of the valuation model prepared by the Group's Management based on discounted cash flows; • critical assessment of the assumptions made by the Group Management Board and the estimates made to determine the recoverable amount of the CGU, including: - the period of projection of future cash flows and the assumed level of revenues, operating margin and future capital expenditures, - the applied discount rate, - the marginal growth rate after the forecast period; • evaluating the sensitivity analysis of the test results conducted by the Management concerning the assumptions made; • assessing the accuracy and completeness of the disclosures in the financial statements.
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5 Responsibility of the Management and Supervisory Board for the consolidated financial statements The Management Board of the Parent Company is responsible for the preparation of the annual consolidated financial statements that give a true and fair view of the Group’s financial position and results of operations, in accordance with International Financial Reporting Standards as adopted by the European Union the adopted accounting policies, the applicable laws and the Parent Company’s Articles of Association, and for such internal control as the Management Board determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the Parent Company’s Management Board is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management Board either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The Parent Company’s Management Board and members of the Supervisory Board are obliged to ensure that the consolidated financial statements comply with the requirements specified in the Accounting Act of 29 September 1994 (“the Accounting Act”). Members of the Supervisory Board are responsible for overseeing the financial reporting process. Auditor’s responsibility for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the NSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence economic decisions of users taken on the basis of these consolidated financial statements. The scope of the audit does not include an assurance on the Group’s future profitability nor the efficiency and effectiveness of conducting its affairs by the Parent Company’s Management Board, now or in future. As part of an audit in accordance with NSA, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control; • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Parent Company’s Management Board; • conclude on the appropriateness of the Parent Company’s Management Board’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on th e Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern;
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6 • evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation; • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We are responsible for the direction, supervision and review of the work performed for the group audit and are solely responsible for our audit opinion. We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other information Other information Other information comprises: • a Report on the Group’s operations for the financial year ended 31 December 2024 (“the Report on the operations”) and the corporate governance statement which is a separate parts of the Report on the operations, • other documents constituting the Annual Report for the financial year ended 31 December 2024 (the “Annual Report”), (together, “Other Information”). Other information does not include the consolidated financial statements and the auditor’s report thereon. Responsibility of the Management and Supervisory Board The Management Board of the Parent Company is responsible for the preparation of the Other Information in accordance with the law. The Parent Company’s Management Board and the members of the Supervisory Board are obliged to ensure that the Report on the operations including its separate part complies with the requirements of the Accounting Act. Statutory auditor’s responsibility Our audit opinion on the consolidated financial statements does not cover Other information. In connection with the audit of the consolidated financial statements, our obligation under the KSB is to read Other information and, in doing so, consider whether it is materially inconsistent with the consolidated financial statements, with our knowledge obtained during the audit or otherw ise appears
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7 to be materially misstated. If, based on the work performed, we identify a material misstatement of Other information, we are obliged to report this in our audit report. Our obligation, in accordance with the requirements of the Act on Statutory Auditors, is also to issue an opinion on whether the Report on the operations, except for its sustainability report section, has been prepared in accordance with the regulations, whether it is consistent with the information included in the annual consolidated financial statements and to issue a statement on whether, in the light of the knowledge about the Group and its environment obtained during the audit, any material misstatements have been identified in the Report on the operations, except for the sustainability reporting section, and to indicate what each such material misstatement consists of. In addition, we are required to issue an opinion on whether the Group has included the required information in its corporate governance statement. Statement on the Other information We confirm that in light of the knowledge about the Group and its environment obtained during our audit, we have not identified any material misstatements in the Report on the operations (excluding the sustainability reporting section), and in the remaining Other information. The sustainability reporting section of the Report on the operations was the subject of a separate limited assurance engagement performed by another auditor. Opinion on the Report on the operations to the extent not related sustainability reporting Based on the work performed during the audit, in our opinion, the Report on the operations, to the extent not related to sustainability reporting: • has been prepared in accordance with the requirements of Article 49 of the Accounting Act and paragraph 71 of the Regulation of the Minister of Finance of 29 March 2018 on Current and Periodic Information Provided by Issuers of Securities and Conditions for Recognizing as Equivalent Information Required by the Law of a Non-Member State (the “Regulation on Current Information”); • is consistent with the information contained in the consolidated financial statements. Opinion on the corporate governance statement In our opinion, in its corporate governance statement, the Group included information set out in para. 70.6 (5) of the Regulation on current information. In addition, in our opinion, information specified in paragraph 70.6 (5)(c)–(f), (h) and (i) of the said Regulation included in the corporate governance statement are consistent with the applicable provisions of the law and with information included in the consolidated financial statements. Report on other legal and regulatory requirements Report on the compliance of the marking up of consolidated financial statements with the requirements of the European Single Electronic Format (“ESEF”) In connection with the audit of consolidated financial statements we have been engaged by the Parent Company’s Management Board as part of our audit engagement letter to conduct a reasonable assurance engagement to express an opinion whether the consolidated financial statements of the Group as at and for the year ended 31 December 2024 prepared in the single electronic format contained in the file named 25940057WQ9YP5MOQF28-2024-12-31-0-pl.zip (the “consolidated financial statements in the ESEF format”) was marked up in accordance with the requirements in the article 4 of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the “ESEF Regulation”).
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8 Description of a subject matter and applicable criteria The consolidated financial statements in the ESEF format were prepared by the Parent Company’s Management Board to comply with the technical requirements regarding the specification of a single electronic reporting format and marking up, which are set out in the ESEF Regulation. The subject matter of our assurance engagement is the compliance of the consolidated financial statements in the ESEF format with the requirements of the ESEF Regulation and the requirements of this regulation, in our view, constitute appropriate criteria to form an opinion. Responsibility of the Management Board and the Supervisory Board of the Parent Company The Parent Company’s Management Board is responsible for the preparation of the consolidated financial statements in the ESEF format in accordance with the technical requirements regarding the specification of a single electronic reporting format which are set out in the ESEF Regulation. This responsibility includes the selection and application of appropriate markups in iXBRL using taxonomy specified in the ESEF Regulation. The responsibility of the Management Board of the Parent Company also includes designing, implementing and maintaining internal controls relevant for the preparation of the consolidated financial statements in the ESEF format which are free from material non-compliance with the requirements of the ESEF Regulation and their marking-up in compliance with these requirements. Members of the Parent Company’s Supervisory Board are responsible for overseeing the financial reporting process, which also includes the preparation of the consolidated financial statements in accordance with the format that is compliant with legal requirements. Our responsibility Our objective was to express an opinion, based on the conducted reasonable assurance engagement, whether the consolidated financial statements prepared in the ESEF format were marked up, in all material respects, with the requirements of the ESEF Regulation. We conducted our engagement in accordance with the National Standard on Assurance Engagements other than Audit and Review 3001PL – “Audit of financial statements prepared in the single electronic reporting format” (“KSUA 3001PL”) and where relevant with the National Standard on Assurance Engagements 3000 (R) in the wording of the International Standard on Assurance Services 3000 (Revised) - ‘Assurance Engagements other than Audits and Reviews of Historical Financial Information’ (“KSUA 3000(R)”). These standards require that we plan and perform procedures to obtain reasonable assurance whether the consolidated financial statements in the ESEF format were marked up, in all material respects, in compliance with the specified criteria. Reasonable assurance is a high level of assurance, but it does not guarantee that the engagement performed in accordance with KSUA 3001PL and, where relevant, in accordance with KSUA 3000 (R) will always detect the material misstatement (significant non-compliance with the requirements). The selection of the procedures depends on the auditor's judgement, including the auditor's assessment of the risk of material misstatements, whether due to fraud or error. In performing the assessments of this risk, the auditor shall consider the internal control related to the preparation of the consolidated financial statements in the ESEF format in order to plan appropriate procedures to provide the auditor with sufficient evidence appropriate to the circumstances. The assessment of the functioning of the internal control system was not carried out in order to express an opinion on the effectiveness of its operation. Quality management and ethical requirements We apply the National Standard on Quality Control 1 in the wording of the International Standard on Quality Management (PL) 1 – “Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements” as issued by the International Auditing and Assurance Standards Board and adopted by the resolution of the Council of
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9 the Polish Agency for Audit Oversight (“NSQC 1”). In accordance with the requirements of NSQC 1, we operate a system of quality management including documented policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. When performing the engagement, we have complied with the independence and other ethical requirements in the Code of ethics. The Code of ethics is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. We also complied with other independence and ethical requirements that apply to this assurance engagement in Poland. Summary of the work performed Our planned and performed procedures were aimed at obtaining reasonable assurance whether the consolidated financial statements in the ESEF format were marked -up, in all material respects, in compliance with the applicable requirements. Our procedures included in particular: • obtaining an understanding of the process of preparation of the consolidated financial statements in the ESEF format, including the process of selection and application by the Group of the XBRL tags and ensuring the compliance with the ESEF Regulation, including understanding the mechanism of the internal control system related to this process; • reconciliation, on a selected sample, of the marked-up information contained in the consolidated financial statements in the ESEF format to the audited consolidated financial statements; • evaluating of compliance with the technical standards regarding the specification of a single electronic reporting format, including the use of XHTML, using a specialised IT tool; • evaluating the completeness of marking up the consolidated financial statements in the ESEF format using the iXBRL tags; • evaluating the appropriateness of the use of XBRL tags selected from the taxonomy defined in the ESEF Regulation and whether the extension markups were used appropriately where no suitable element in taxonomy defined in the ESEF Regulation has been identified; • evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy from the ESEF regulation; We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, based on the procedures performed, the consolidated financial statements in the ESEF format were marked-up, in all material respects, in compliance with the requirements of the ESEF Regulation. Statement on the provision of non-audit services To the best of our knowledge and belief, we declare that non-audit services prohibited under Article 5, (1) of the EU Regulation and Article 136 of the Act on Statutory Auditors were not provided, and the non-audit services that we provided to the Parent Company and entities controlled by it within the European Union are compliant with the laws and regulations in force in Poland. The non-audit services that we provided to the Parent Company and entities controlled by it within the European Union in the period from the beginning of the audited period to the issuance of the audit report were listed in the Group's activity report. Appointment We were selected for the first time to audit the Group's consolidated financial statements by the resolution of the Supervisory Board of the Parent Entity of 14 April 2022 (by the same resolution we were also selected to audit the Group's consolidated financial statements for the financial year ended
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10 31 December 2023 and 31 December 2024). We have been auditing the Group's consolidated financial statements continuously since the financial year ended 31 December 2022, i.e. for 3 consecutive years. The Key Statutory Auditor responsible for the audit on behalf of PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k., a company entered on the list of audit firms with the number 144., is Tomasz Reinfuss. The original report is signed in the Polish language. Tomasz Reinfuss Key Statutory Auditor No. in the registry 90038 Cracow, 26 March 2025