Dear Samsung Biologics employees,
As you may have already heard, there have been media reports since March 29 that the Financial Supervisory Service (FSS) will re-examine the accounting procedures of Samsung Biologics’ IPO. We, however, have not yet received any official notification from the FSS to initiate a formal investigation.
On March 30, we disclosed our position on our website in response to such press coverage. Several major accounting firms in Korea participated directly and indirectly in the 6-month IPO process, and we also received review from the Korean Institute of Certified Public Accountants (KICPA). The whole listing process was conducted transparently, in accordance with relevant laws and procedures.
The accounting treatment of Bioepis that was reported in the media is hard for the layman to understand, and could raise unnecessary misunderstandings and speculations. Therefore, here is a brief explanation of the facts and our company’s position:
1. Under a joint venture agreement, our joint venture partner Biogen has a call option right that enables Biogen to purchase up to a total of 49.9% of Bioepis’ shares. In 2015, biosimilar approvals filed by Bioepis were granted in Europe and Korea. The value of the company significantly increased, along with the likelihood that Biogen would exercise its call option. Under the International Financial Reporting Standards, the likely call option right of Biogen was recognized as actual shares. In other words, though SBL still had 91.2% of Bioepis shares (as of 2015), SBL’s books reflected the high likelihood of Biogen exercising its call option right, and recorded SBL as having 50% plus one share of Bioepis after a sale of Bioepis shares to Biogen.
2. Our company underwent an IPO process as strict and transparent as if it listed on the NASDAQ. In addition to numerous accounting firms, five domestic and overseas securities firms ? including Citibank, JP Morgan, Credit Suisse, and Korea Investment & Securities ? participated as underwriters, and five top-notch domestic and overseas law firms ? including Simpson Thacher, and Cleary ? conducted legal review and executed the relevant contracts for the IPO.
Our company’s IPO has been praised as one of the most successful IPOs in Korea’s healthcare industry. Furthermore, SBL recently received recognition for the best IPO of the year several times, from home and abroad.
3. Since the IPO, our company’s stock price has risen steadily. In particular, overseas investors, who started with a 9% stake, gradually increased their share percentage to 12.4% (50% of the publicly tradeable shares), showing a strong interest in our company. It would be unfortunate if we were to receive FSS audit review after this positive response from the market.
As such, here is my message to our SBL employees:
① SBL has undergone a strict accounting review and rigorous listing review during the IPO process, and I am confident that a FSS audit review will prove nothing more.
② There is no such official process called “special audit review” as was reported in the media. The process is just to conduct additional review of the IPO process. Please be careful not to deliver exaggerated or wrong information to our investors or clients.
③ SBL is actively and promptly providing any explanations necessary to our global investors and clients. Please be ready to actively respond if necessary, and do not hesitate to ask for support from the relevant departments whenever needed.
④ Our company has grown into one of the most sought-after companies, at home and abroad. We, as SBL’s employees, should always act in compliance with all legal and ethical standards. I ask for your continuous attention and consideration on other socially sensitive issues.
4. The company will endeavor to clearly prove the legality of our bookkeeping standards and facilitate a quick resolution to any FSS audit review. I sincerely ask for everyone’s active cooperation.
Thank you.
April 3, 2017
Tae Han Kim
CEO & President
Dear Samsung Biologics employees,
As you may have already heard, there have been media reports since March 29 that the Financial Supervisory Service (FSS) will re-examine the accounting procedures of Samsung Biologics’ IPO. We, however, have not yet received any official notification from the FSS to initiate a formal investigation.
On March 30, we disclosed our position on our website in response to such press coverage. Several major accounting firms in Korea participated directly and indirectly in the 6-month IPO process, and we also received review from the Korean Institute of Certified Public Accountants (KICPA). The whole listing process was conducted transparently, in accordance with relevant laws and procedures.
The accounting treatment of Bioepis that was reported in the media is hard for the layman to understand, and could raise unnecessary misunderstandings and speculations. Therefore, here is a brief explanation of the facts and our company’s position:
1. Under a joint venture agreement, our joint venture partner Biogen has a call option right that enables Biogen to purchase up to a total of 49.9% of Bioepis’ shares. In 2015, biosimilar approvals filed by Bioepis were granted in Europe and Korea. The value of the company significantly increased, along with the likelihood that Biogen would exercise its call option. Under the International Financial Reporting Standards, the likely call option right of Biogen was recognized as actual shares. In other words, though SBL still had 91.2% of Bioepis shares (as of 2015), SBL’s books reflected the high likelihood of Biogen exercising its call option right, and recorded SBL as having 50% plus one share of Bioepis after a sale of Bioepis shares to Biogen.
2. Our company underwent an IPO process as strict and transparent as if it listed on the NASDAQ. In addition to numerous accounting firms, five domestic and overseas securities firms – including Citibank, JP Morgan, Credit Suisse, and Korea Investment & Securities – participated as underwriters, and five top-notch domestic and overseas law firms – including Simpson Thacher, and Cleary – conducted legal review and executed the relevant contracts for the IPO.
Our company’s IPO has been praised as one of the most successful IPOs in Korea’s healthcare industry. Furthermore, SBL recently received recognition for the best IPO of the year several times, from home and abroad.
3. Since the IPO, our company’s stock price has risen steadily. In particular, overseas investors, who started with a 9% stake, gradually increased their share percentage to 12.4% (50% of the publicly tradeable shares), showing a strong interest in our company. It would be unfortunate if we were to receive FSS audit review after this positive response from the market.
As such, here is my message to our SBL employees:
① SBL has undergone a strict accounting review and rigorous listing review during the IPO process, and I am confident that a FSS audit review will prove nothing more.
② There is no such official process called “special audit review” as was reported in the media. The process is just to conduct additional review of the IPO process. Please be careful not to deliver exaggerated or wrong information to our investors or clients.
③ SBL is actively and promptly providing any explanations necessary to our global investors and clients. Please be ready to actively respond if necessary, and do not hesitate to ask for support from the relevant departments whenever needed.
④ Our company has grown into one of the most sought-after companies, at home and abroad. We, as SBL’s employees, should always act in compliance with all legal and ethical standards. I ask for your continuous attention and consideration on other socially sensitive issues.
4. The company will endeavor to clearly prove the legality of our bookkeeping standards and facilitate a quick resolution to any FSS audit review. I sincerely ask for everyone’s active cooperation.
Thank you.
April 3, 2017
Tae Han Kim
CEO & President
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