4. Segment information

Financial statements
Galapagos NV • Annual Report 2017

The group holds two reportable segments in 2016 and 2017, R&D and fee-for-service business.

Segment information for the year 2017

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(thousands of €)

R&D

Fee-for-services

Inter-segment elimination

Group

(1)

The unallocated expenses of €16,278 thousand are composed of (a) €16,536 thousand of warrant costs, (b) €258 thousand of reduced cost from the IAS19R Employee Benefits reclassification of actuarial losses on long term defined post-employment benefit obligations, from profit or loss accounts to other comprehensive income. The above listed items are not presented to management in our management reporting as segment results, and are, therefore, presented on the line “unallocated expenses” in our segment reporting.

(2)

Financial results and taxes information are not being provided to management in our management reporting as segment results and therefore, their aggregate amount is disclosed at the level of the group in our segment reporting.

External revenue

118,262

8,825

 

127,087

Internal revenue

 

5,104

(5,104)

–

Other income

28,815

15

 

28,830

Revenues & other income

147,077

13,945

(5,104)

155,918

 

 

 

 

 

Segment result

(73,610)

86

 

(73,524)

Unallocated expenses(1)

 

 

 

(16,278)

Operating loss

 

 

 

(89,802)

Financial (expenses) / income(2)

 

 

 

(25,705)

Result before tax

 

 

 

(115,507)

Income taxes(2)

 

 

 

(198)

Net loss

 

 

 

(115,704)

Segment information for the year 2016

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(thousands of €)

R&D

Fee-for-services

Inter-segment elimination

Group

(1)

The unallocated expenses of €10,841 thousand are composed of (a) €11,034 thousand of warrant costs, (b) €193 thousand of reduced cost from the IAS19R Employee Benefits reclassification of actuarial losses on long term defined post- employment benefit obligations, from profit or loss accounts to other comprehensive income. The above listed items are not presented to management in our management reporting as segment results, and are, therefore, presented on the line “unallocated expenses” in our segment reporting.

(2)

Financial results and taxes are not information being provided to management in our management reporting as segment results and therefore, their aggregate amount is disclosed at the level of the group in our segment reporting.

External revenue

121,616

7,903

 

129,519

Internal revenue

 

4,379

(4,379)

 

Other income

21,922

171

 

22,093

Revenues & other income

143,538

12,453

(4,379)

151,612

 

 

 

 

 

Segment result

1,138

(1,787)

 

(649)

Unallocated expenses(1)

 

 

 

(10,841)

Operating loss

 

 

 

(11,491)

Financial (expenses) / income(2)

 

 

 

65,737

Result before tax

 

 

 

54,246

Income taxes(2)

 

 

 

(235)

Net income

 

 

 

54,012

Segment assets and liabilities are not information being provided to management on a recurring basis. This information is therefore not disclosed in our segment information.

Geographical information

In 2017 our operations were mainly located in Belgium, Croatia, France and the Netherlands.

In 2017 our top 10 customers represented 97% of the revenues. Our client base in 2017 and 2016 included seven of the largest pharmaceutical companies in the world.

Following table summarizes our revenues by destination of customer:

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Year ended 31 December

(thousands of €)

2017

2016

North America

82,050

88,628

Europe

45,037

40,884

Asia Pacific

–

6

Total revenues

127,087

129,519

Following table summarizes our revenues by major customers:

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Year ended 31 December

 

2017

2016

 

(thousands of €)

%

(thousands of €)

%

Gilead

 

 

 

 

North America

80,687

63%

87,813

68%

AbbVie

 

 

 

 

Europe

34,049

27%

32,596

25%

Total revenues from major customers

114,736

90%

120,409

93%

Following table summarizes our revenues by destination of our entity:

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Year ended 31 December

(thousands of €)

2017

2016

Galapagos NV (Belgium)

118,244

121,703

Galapagos SASU (France)

18

84

Fidelta d.o.o. (Croatia)

8,825

7,732

Total revenues

127,087

129,519

In 2017, we held €89 million of non-current assets (€76 million in 2016) distributed as follows:

  • Belgium: €47 million (€37 million in 2016)
  • France: €34 million (€31 million in 2016)
  • Croatia: €4 million (€4 million in 2016)
  • The Netherlands: €4 million (€4 million in 2016)

The increase in non-current assets was mainly explained by the increase in non-current R&D incentives receivables (see note 15).