Other income / (expenses), net

Grants from governmental agencies and non-governmental organizations are recognized where there is reasonable assurance that the grant will be received, and the Group will comply with all conditions.

Grant monies received as reimbursement of approved research and development expenses are recognized as other income when the respective expenses have been incurred and there is reasonable assurance that funds will be received. Advance payments received under such grants are deferred and recognized when these conditions have been met. Advanced payments received which need to be repaid are recognized as borrowings (see Note 5.24.1).

Government grant monies received to support the purchase of property, plant and equipment are included in non-current liabilities as deferred government grants and are credited to the income statement on a straight-line basis over the expected lives of the related assets.

In 2019 the Group signed a funding agreement with CEPI. Valneva will receive up to $23.4 million for vaccine manufacturing and late-stage clinical development of a single-dose, live attenuated vaccine (VLA1553) against chikungunya. In line with CEPI’s commitment to equitable access, the funding will underwrite a partnership effort to accelerate regulatory approval of Valneva’s single-dose chikungunya vaccine for use in regions where outbreaks occur and support WHO prequalification to facilitate broader access in lower- and middle-income countries. Valneva has to pay back part of the consideration, upon achievement of certain milestones. The refundable consideration is accounted for as loan and measured in accordance with IFRS 9 (see Note 5.24.1). The difference between the proceeds from CEPI and the carrying amount of the loan is treated under IAS 20 and presented as “Borrowings”. The amount which Instituto Butantan benefits from the CEPI grant, is recognized as revenue (refer to Note 5.1). In 2021, due to a change in estimate of the likelihood of repayment milestones, minus €0.9 million of grant income related to CEPI (2020: €5.8 million).

Research and development tax credits granted by tax authorities are accounted for as grants under IAS 20. As a consequence, the portion of the research tax credit covering operating expenses is recognized in the income statement under “Grants” in “Other income and expenses, net” and the portion covering capitalized development expenditures under “Intangible assets” is recorded as deduction from the assets relating to fixed assets.

Other income and expenses, net include the following:

Income tax income / (expense)

The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively. The current Income tax income/(expense) is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, based on amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized, or the deferred income tax liability is settled.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not be reversed within the foreseeable future.

Income tax income/(expense) is comprised of current and deferred tax.  

The individual entities’ reconciliations – prepared on the basis of the tax rates applicable in each country while taking consolidation procedures into account – have been summarized in the reconciliation below. The estimated tax charge is reconciled to the effective tax charge disclosed.

The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated companies as follows:

Although the Group operates at a loss overall, there are profitable jurisdictions.

As at December 31, 2021, the deferred tax assets of €153.8 million (December 31, 2020: €126.3 million) were not recognized as there was not sufficient evidence that adequate taxable profit will be available against which the unused tax losses can be utilized in the foreseeable future. Deferred tax assets were only recognized for entities where sufficient evidence has been provided that adequate taxable profit will be available against which the unused tax losses can be utilized in the foreseeable future.

As at December 31, 2021, the Group had tax losses carried forward of €628.3 million (December 31, 2020: €529.5 million), of which €234.9 million were related to Valneva SE (December 31, 2020: €192.0 million), €380.0 million were related to Valneva Austria GmbH (December 31, 2020: €321.1 million), €0 million were related to Valneva USA, Inc. (December 31, 2020: €0.4 million), €0.8 million were related to Valneva Scotland, Ltd. (December 31, 2020: €3.1 million) and €12.6 million were related to Valneva Sweden AB (December 31, 2020: €12.9 million).

Tax losses carried forward in France, Austria, United Kingdom and Sweden have no expiry date, whereas the tax loss from US entities will begin to expire in the year 2033 if unused.

The gross movement on the deferred income tax account was as follows:

The deferred tax assets and liabilities are allocable to the various balance sheet items as follows:

The corporate income tax rate in the United Kingdom was 19% and will be increased to 25% in 2023.

The corporate income tax rate in France will be gradually reduced over the next years to 25%. The rate was 26.5% in 2021 and will be reduced to 25% from 2022 onward on the full amount of taxable profits.

The deferred tax assets and liabilities presented above as at December 31, 2021 and December 31, 2020 have been adjusted for these changes in tax rates.

Trade receivables and other assets are initially recognized at fair value.

The carrying amount of trade receivables is reduced through an allowance for doubtful account. When a trade receivable is considered uncollectible, it is written off against this allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in the profit or loss.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods, or services directly to a debtor with no intention of trading the receivable.

They are included in current assets, except those with maturities beyond 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are classified as “trade receivables and other assets” in the balance sheet.

Trade receivables include the following:

In 2021 and 2020, no material impairment losses were recognized. As at December 31, 2021, the amount of trade receivables past due amounted to €21.2 million (2020: €0.4 million) and mainly related to accounts receivable due from highly rated governmental authorities. In the months of January 2022 and February 2022 this amount of trade receivables past due of €21.2 million was lowered by €18.7 million due to payments received in the months of January 2022 and February 2022.

Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

As at December 31, 2021, trade receivables included €40.9 million (December 31, 2020: €18.7 million) receivables from contracts with customers.

The Group recognizes a liability and an expense for bonuses. The Group recognizes a liability when it has assumed a contractual obligation or when there is a past practice that has created a constructive obligation.

Schedule of tax and employee related liabilities

A refund liability has to be recognized when the customer already provided a consideration which is expected to be refunded partially or totally. It is measured at the amount the Company has an obligation to repay or amounts which did not meet the criteria for revenue recognition in the past, but there are no remaining goods and services to be provided in future.

Development of refund liabilities:

As at December 31, 2021, €79.6 million (thereof €75.2 million non-current) related to the collaboration with Pfizer Inc. (see Note 5.1), €166.9 million (thereof €77.3 million non-current) related to the UK Supply Agreement (see Note 5.5.2), €6.4 million (thereof €6.3 million non-current) related to the expected payment to GSK related to the termination of the SAA in 2019 (see Note 5.1). Other releases related to reductions in refund liabilities in the wake of revaluations that increased contract liabilities.

As at December 31, 2020, €81.9 million (thereof €70.0 million non-current) related to the collaboration with Pfizer Inc. (see Note 5.1), €20.9 million (all non-current) related to the UK Supply Agreement (see Note 5.5.2), €6.3 million (all non-current) related to the expected payment to GSK related to the termination of the SAA in 2019 (see Note 5.1) and €2.3 million related to refund liabilities to customers related to rebate programs and right to return products.

Expected cash outflows for refund liabilities are disclosed under Note 5.2.5.

The following table shows the adjustments to reconcile net loss to net cash generated from operations:

In 2021, other non-cash (income)/expense mainly related to net foreign exchange gains.

In 2020, other non-cash (income)/expense included €3.3 million expenses from disposal of Lyme VLA15 (see Notes 5.1 and 5.12), €1.6 million income from a revaluation of lease liabilities and right of use assets and €2.6 million net foreign exchange losses.

The following table shows the adjustments to reconcile profit/loss from the disposal of property, plant, equipment and intangible assets to proceeds from the disposal of fixed assets:

Schedule of disposal of property, plant, equipment

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were (or future cash flows will be) classified in the Group’s consolidated statement of cash flows as cash flows from financing activities. For development of lease liabilities see Note 5.13.

The amendments listed above did not have any impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods.

The interpretations listed above did not have any material impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods.

The Group did not elect for early application of the following new standards, amendments and interpretations which were issued by the IASB but not mandatory as at January 1, 2021:

These standards are not expected to have a material impact on the entity in the current reporting periods and on foreseeable future transactions.

The amendments listed above did not have any impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods.

Income statement by segment for the year ended December 31, 2019

Schedule of income statement by segment

Income statement by segment for the year ended December 31, 2020

Income statement by segment for the year ended December 31, 2021

Revenues as presented in the Consolidated Income Statement and in the Segment Reporting (see Note 5.4) include both revenues from contracts with customers and other revenues (mainly subleases), which are out of scope from IFRS 15:

Schedule of disaggregated revenue information

Type of goods or service

Schedule of type of goods or service

Commercialized products are sold via the following sales channels:

Schedule of commercialized products

The consolidated income statement line items cost of goods and services, research and development expenses, marketing and distribution expenses and general and administrative expenses include the following items by nature of cost:

 Schedule of cost of goods and services, research and development expenses, marketing and distribution expenses and general and administrative expenses

					Year ended December 31,
€ in thousand		Notes			2021				2020				2019
Consulting and other purchased services						169,158				65,212				29,840
Cost of services and change in inventory						105,648				10,778				5,320
Employee benefit expense other than share-based compensation		5.7				85,334				58,264				46,219
Share-based compensation expense		5.7				14,678				6,328				2,552
Raw materials and consumables used						14,676				12,434				9,844
Depreciation and amortization and  impairment		5.12/5.13/ 5.14				14,281				9,939				8,607
Building and energy costs						10,960				8,140				6,995
Supply, office and IT costs						7,409				3,333				3,281
License fees and royalties						4,865				4,384				7,553
Advertising costs						2,176				2,496				6,801
Warehousing and distribution costs						1,419				1,898				3,013
Travel and transportation costs						538				529				1,921
Other expenses						1,309				822				1,399
Operating expenses						432,452				184,558				133,345

Employee benefit expenses include the following:

Other income and expenses, net include the following: