Mabion S A : Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

MABION S.A.

CONDENSED INTERIM FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD OF 3 AND 9 MONTHS ENDED 30 SEPTEMBER 2023

Konstantynów Łódzki, 14 November 2023

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

CONDENSED INTERIM

STATEMENT OF COMPREHENSIVE INCOME

		1 July 2023	1 January 2023	1 July 2022	1 January 2022
in PLN thousand, unless otherwise indicated	Notes	- 30 September	- 30 September	- 30 September	- 30 September
2023	2023	2022	2022
		(not audited)	(not audited)	(not audited)	(not audited)
Income from sales	7	27,952	100,410	14,084	53,900
Income from settling the purchase of materials	7	1,593	2,449	23,113	62,577
Lease income	7	34	2,295	1,285	4,557
Total income		29,579	105,153	38,482	121,034
Cost of sales	7	(4,828)	(21,654)	(6,801)	(22,041)
Own cost of purchased materials	7	(1,593)	(2,449)	(23,113)	(62,947)
Total costs		(6,421)	(24,103)	(29,914)	(84,988)
Gross profit on sales		23,158	81,050	8,568	36,046
Research and development costs	9	(1,314)	(5,097)	(7,783)	(12,628)
General administration costs	8	(10,950)	(29,834)	(6,477)	(19,393)
Other operating income	10	187	498	583	1,946
Other operating costs	10	(225)	(251)	(1,325)	(2,209)
Operating profit (loss)		10,855	46,367	(6,434)	3,763
Financial income	11	275	629	1,954	5,134
Financial costs	11	(275)	(4,426)	(580)	(1,397)
Gross profit/(loss)		10,856	42,569	(5,061)	7,499
Income tax	23	-	-	-	-
NET PROFIT/(LOSS)		10,856	42,569	(5,061)	7,499
Other comprehensive income		-	-	-	-
TOTAL COMPREHENSIVE INCOME/(LOSS)		10,856	42,569	(5,061)	7,499
Basic and diluted profit/loss per one share		0.67	2.63	(0.31)	0.46
(in PLN per share)

The explanatory notes presented on pages 5 to 23 form an integral part of these condensed interim financial statements.

1

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

CONDENSED INTERIM

STATEMENT OF FINANCIAL POSITION

in PLN thousand	Notes	30 September 2023	31 December 2022
(not audited)
Intangible assets	12	575	741
Property, plant and equipment	12	102,824	89,720
Long-term receivables	14	264	220
Deferred tax asset	23	13,310	13,310
Total fixed assets		116,972	103,991
Inventories	13	7,749	8,477
Trade receivables	14	10,794	7,746
Other receivables	14	8,155	6,522
Prepayments and accrued income	15	3,209	5,800
Cash and cash equivalents		83,518	53,638
Assets held for trading		44	-
Total current assets		113,468	82,184
TOTAL ASSETS		230,440	186,175
Share capital	16	1,616	1,616
Share premium		237,443	237,443
Supplementary capital	16	23,192	-
Accumulated losses		(143,174)	(162,552)
Total equity		119,076	76,507
Deferred income from grants	18a)	31,201	31,172
Loans and borrowings	20	262	377
Lease	21	3,498	3,816
Total long-term liabilities		34,961	35,366
Repayable advances on distribution rights	19	1,803	1,824
Trade liabilities	22	4,436	12,812
Other liabilities	22	3,319	3,250
Provisions	22	6,806	3,349
Loans and borrowings	20	47,392	136
Deferred income from grants	18a)	230	228
Other deferred income	18b)	54	69
Liabilities arising from the implementation of agreements	17	10,445	49,683
Lease	21	1,678	1,846
Lease prepayments	17	239	1,105
Total short-term liabilities		76,403	74,302
TOTAL LIABILITIES		111,364	109,668
TOTAL LIABILITIES AND EQUITY		230,440	186,175

The explanatory notes presented on pages 5 to 23 form an integral part of these condensed interim financial statements.

2

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

CONDENSED INTERIM

CASH FLOW STATEMENT

	1 January 2023	1 January 2022
in PLN thousand	- 30 September 2023	- 30 September 2022
	(not audited)	(not audited)
Gross profit	42,569	7,499
Adjustments for items:
Depreciation and amortisation	5,485	7,067
Interest income	(557)	(111)
Interest costs	611	1,147
Income from grants	(170)	(741)
Costs of the share-based incentive scheme	-	2
Lease payment measurement	(584)	(394)
Change in assets and liabilities
Change in inventories	728	1,601
Change in trade and other receivables	(4,680)	(70,127)
Change in prepayments and accrued income	(1,314)	1,567
Change in assets held for sale	(44)	-
Change in trade and other liabilities	(43,077)	22,401
Change in deferred income	(13)	2,029
Change in repayable advances on distribution rights	(21)	104
Change in other financial liabilities	49	3,403
Cash flows from operating activities	(1,018)	(24,552)
Proceeds from grants	199	1,540
Interest received	557	111
Interest paid	(611)	(1,352)
Net cash flows from operating activities	(873)	24,253
Disposal of property, plant and equipment	-	525
Acquisition of property, plant and equipment and intangible assets	(18,942)	(7,058)
Net cash flows from investing activities	(18,942)	(6,533)
Repayment of borrowings	(111)	(5,432)
Repayment of bank loans	(14,395)	-
Proceeds from loans	65,553	-
Repayment of lease principal	(1,352)	(1,856)
Net cash flows from financing activities	49,695	(7,288)
Net increase/(decrease) in cash and cash equivalents	29,880	(38,075)
Cash and cash equivalents - opening balance	53,638	48,707
Change in cash due to exchange rate differences	-	-
Cash and cash equivalents - closing balance	83,518	10,633

The explanatory notes presented on pages 5 to 23 form an integral part of these condensed interim financial statements.

3

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

CONDENSED INTERIM

STATEMENT OF CHANGES IN EQUITY

in PLN thousand	Share capital	Share	Supplementary	Other	Cumulative	Total equity
premium	capital	reserves	losses
As at 1 January 2022	1,616	237,443	-	731	(186,477)	53,313
Net profit / total comprehensive income	-	-	-	-	7,499	7,499
Measurement of the incentive scheme	-	-	-	2	-	2
based on shares
Closure of the share-based	-	-	-	-	-	-
incentive scheme
As at 30 September 2022 (not audited)	1,616	237,443	-	733	(178,978)	60,813
As at 1 January 2023	1,616	237,443	-	-	(162,552)	76,506
Net profit / total comprehensive income	-	-	-	-	42,569	42,569
Carry-forward of net profit for 2022	-	-	23,192	-	(23,192)	-
As at 30 September 2023 (not audited)	1,616	237,443	23,192	-	(143,174)	119,076

The explanatory notes presented on pages 5 to 23 form an integral part of these condensed interim financial statements.

4

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

ADDITIONAL INFORMATION

1. Company

Mabion S.A. (Mabion or Company) was established on 30 May 2007 as a limited liability company. The legal form of the Company changed on 29 October 2009 as a result of the transformation of the limited liability company into a joint-stock company established in accordance with the law of the Republic of Poland. Currently, Mabion is entered on the Register of Entrepreneurs of the National Court Register kept by the District Court for Łódź- Śródmieście in Łódź, 20th Commercial Division of the National Court Register with KRS number 0000340462. The Company was assigned tax identification number NIP 7752561383 and statistical identification number REGON 100343056. The Company's registered office is Konstantynów Łódzki, ul. gen. Mariana Langiewicza 60.

The Company's shares are listed on the Warsaw Stock Exchange. Mabion is a Polish biopharmaceutical company that provides services as a contract development and manufacturing organisation (CDMO) in the scope of development, analytics, and manufacturing of biologic medicines.

On 18 April 2023, the Management Board of Mabion S.A. adopted the Company's Strategy for 2023-2027("2023-2027 Strategy"). In line with its strategy, the Company's Management Board intends to continue the Company's development towards a fully CDMO with a biological profile. As a target, the Company will provide the full range of services typical of an integrated CDMO to clients who need support at various stages of their product development and commercialisation (from early-stage projects to commercial-scale manufacturing).

2. Basis of preparation

1. Basis of preparation

These condensed interim financial statements do not include all the information required in the full financial statements compliant with IFRS as adopted for application in the European Union ("IFRS") and should be read in conjunction with the audited financial statements of the Company for the financial year ended 31 December 2022, published on 18 April 2023.

The condensed interim financial statements of Mabion S.A. as at and for the period of 3 and 9 months ended 30 September 2023 have been drawn up in accordance with the going concern principle (further information on the assumptions concerning the Company's ability to continue operations is provided in Note 3).

The most important accounting policies that have been applied in these financial statements are presented in Note 4. The same policies were applied in each financial year, unless explicitly stated otherwise.

The condensed interim financial statements have been drawn up in accordance with the historical cost principle,

except for certain assets and liabilities and equity measured at fair value pursuant to the IFRS.

Significant accounting estimates and judgements of the Management are presented in Note 5.

These financial statements were authorised for publication by the Company's Management Board on 14 November 2023.

1. Statement of compliance

These interim condensed financial statements have been drawn up in accordance with the requirements of International Accounting Standard 34 "Interim Financial Reporting" as endorsed by the EU ("IAS 34").

The scope of the interim condensed financial statements is consistent with the Minister of Finance Regulation of 29 March 2018 on current and periodic reporting by issuers of securities and the rules of equal treatment of the information required by the laws of non-member states (consolidated text: Polish Journal of Laws 2018, item 757, "Regulation") and covers the interim reporting period from 1 July to 30 September 2023 and from

1 January to 30 September 2023, and the comparable periods from 1 July to 30 September 2022 and from 1 January to

30 September 2022 for the profit and loss account and statement of comprehensive income, the interim reporting period from

1 January to 30 September 2023 and the comparable period from 1 January to 30 September 2022 for the statement of changes in equity and the statement of cash flows, and the balance-sheet data as at 30 September 2023 and comparable figures as at

31 December 2022.

The figures presented for the quarterly period from 1 July to 30 September 2023 and cumulatively for the nine months ended 30 September 2023 and for the comparable periods have not been reviewed by the auditor.

3. Going concern principle

In the current reporting period, the Company's operational focus was mainly on the implementation of its contract manufacturing Master Contract Manufacturing Agreement (Manufacturing Agreement or MCMA) with Novavax Inc. under which it manufactured or provided manufacturing readiness, in compliance with GMP (Good Manufacturing Practice) standard, for Novavax's COVID-19 vaccine antigen under the name of Nuvaxovid®. As part of that agreement, the Company also provided to Novavax other services as a CDMO, including services complementary to manufacturing, under individual orders (SOW, Statements of Work).

The MCMA agreement (with subsequent amendments, including an annex of 22 September 2022) was entered into for a fixed term until the end of 2026, with a guaranteed period of unconditional commitment by the counterparty to provide remuneration for the performance until Q2 2024.

5

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

The period of unconditional remuneration for performance provided for in the agreement guarantees that the Company will receive remuneration for the manufactured batches of product or remuneration for the readiness to manufacture the product.

The remuneration for the manufactured batch of product results from the agreement and is reduced by the value of the materials used to produce the batch in question. The amount of charge for available manufacturing capacity represents an equivalent of the unit price per manufactured batch, adjusted for the value of the production materials. With prepayments and other exceptions as indicated in the schedule to the agreement included, fees for available manufacturing capacity are payable, as a rule, on a regular basis - monthly, apart from the agreed period of facility's upgrade. Starting from January 2023, the Company is entitled to annual indexation until the end of the agreement in respect of the agreed unit price per batch and capacity made available, by the inflation rate published by the Statistics Poland.

In the period of 9 months of 2023, the Company received payments under the agreement amounting to USD 13,620 thousand and EUR 251 thousand. After the balance-sheet date, the Company received further payments under agreements in progress in the amount of USD 2,693 thousand. Overall, payments received since the commencement of cooperation with Novavax up to the date of the financial statements amounted to USD 71,775 thousand and EUR 251 thousand.

As at the date of these financial statements, there are no overdue receivables from Novavax.

On 9 November 2023, the Company's key counterparty, Novavax, published its report for Q3 2023, in which it stated that its financial statements had been drawn up on a going concern basis within one year as of the date of publication of the report1. At the same time, the Company's counterparty stressed that the cash flow forecast indicates that Novavax has sufficient capital to fund its operations in 2023. The existing agreement between the Company and Novavax is guaranteed until Q2 2024 and, regardless of the execution of manufacturing orders, the Company receives manufacturing capacity availability payments.

As at the date of the financial statements, there are no arrears under the agreement and a significant portion thereof, regarding the services provided, has been paid in advance.

intended in particular to finance the expansion and upgrade of the Company's current facility located in Konstantynów Łódzki and the development of IT infrastructure to support the commercial contract manufacturing carried out under the agreement with Novavax, as well as the implementation of other potential CDMO projects. On 28 September 2023, in line with the payment request, the Company received the entire funding amount of USD 15,000 thousand. The first instalment of the funding was repaid on 29 September this year and amounted to USD 3,300 thousand. It was repaid in accordance with the applicable terms and conditions of the agreement. The nominal value of the financing as at the balance-sheet date was USD 11,700 thousand and the loan was fully utilised.

The Company is planning to finance its operating and investing activities with proceeds from sources such as the implementation of contracts and orders in the area of the Company's core business, i.e. CDMO, and also debt financing, grants, subsidies, targeted funds for new projects.

As at the date of these financial statements, the Company holds letters of support received from the key shareholders (Twiti Investments Limited, Glatton Sp. z o.o, Polfarmex S.A.), whose contents indicate that these shareholders are willing and able to continue their financial support for the Company's day-to-day operations in the near future covering a period of at least another 11 months from the date of signing of these financial statements, should the Company's financial situation so require, which, according to the Management Board's current knowledge, will not be the case.

Following the analysis, no significant uncertainties have been identified that may cast doubt on the Company's ability to continue as a going concern.

These financial statements have been drawn up in accordance with the going concern principle, which provides that the Company will continue to operate in the foreseeable future - not shorter than 12 months as of the date of drawing up the financial statements. Therefore, no adjustments have been made to the financial statements which might be necessary should the going concern assumption be unjustified.

4. Key accounting principles

Pursuant to the Company's Strategy for 2023-2027, the Management Board has started to transform the Company into a fully integrated CDMO, whereas the growth dynamics will mainly depend on the available new production and research capacity that the Company is developing or plans to develop, and on the acquisition of new clients and new contracts.

1. Functional and presentation currency

The functional and presentation currency of the Company is Polish zloty. The financial statements are presented in thousands of Polish zloty, rounded to the nearest whole thousand, unless indicated otherwise.

On 6 February 2023, the Company entered into a loan	b)	Transactions and balances in foreign currencies
Transactions expressed in foreign currencies have been presented
agreement with the European Bank for Reconstruction and
Development ("EBRD") for USD 15,000 thousand. The loan is	as at the transaction date in PLN using the exchange rate

• Novavax Q3 2023 report, as available at: https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&ref=317853683&type=PDF&symbol=NVAX&cdn=e0118217df5536a0ffe58cda22ea6ad9&co mpanyName=Novavax+Inc.&formType=10-Q&dateFiled=2023-11-09

6

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

applicable as at that date. Cash assets and liabilities in foreign currencies were translated into PLN at the end of the reporting period using the exchange rate for that date set by the National Bank of Poland (NBP).

Foreign exchange gains and losses on the settlement of transactions in foreign currencies, as well as those resulting from the periodic conversion of cash assets and liabilities, are recognised in the financial result.

Foreign currency non-cash items measured at historical cost are translated into PLN using the exchange rate of the National Bank of Poland as at the date of initial recognition of the item in question.

1. Accounting principles applied by the Company

A description of the relevant accounting principles applied by Mabion S.A. can be found in the financial statements for the year ended 31 December 2022, published on 18 April 2023.

The material accounting principles applied by the Company in these interim condensed financial statements were consistent with those described in the annual financial statements for 2022, except for new or revised standards and interpretations effective for annual periods beginning on or after 1 January 2023. New standards or amendments effective as of 1 January 2023 are as follows:

• IFRS 17 Insurance contracts and amendments to IFRS 17;
• Amendments to IAS 1 Presentation of Financial Statements: Disclosure of accounting policies;
• Amendments to IAS 8 Accounting policies, changes in accounting estimates and errors: Definition of accounting estimates;
• Amendments to IAS 12 Income Taxes: Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction.

The revised standards and interpretations which apply for the first time in 2023, have no material impact on the Company's interim condensed financial statements.

1. New standards and interpretations that have been published but are not yet effective

The following standards and interpretations have been issued by the International Accounting Standards Board or the International Financial Reporting Interpretation Committee, but are not yet effective:

• Amendments to IAS 21: Effects of Changes in Foreign
  Exchange Rates: Lack of Exchangeability (issued on 15 August 2023) - not endorsed by the EU until the date of approval of these financial statements - effective for annual periods beginning on or after 1 January 2025;
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier finance arrangements (issued on 25 May 2023) - not endorsed by the EU until the date of approval of these financial statements
  - effective for annual periods beginning on or after 1 January 2024;

• Amendments to IAS 12 Income Taxes: International Tax Reform ‐ Pillar Two Model Rules (issued on 23 May 2023)
  - not endorsed by the EU until the date of approval of these financial statements - effective for annual periods beginning on or after 1 January 2024;
• Amendments to IFRS 16 Leases - Sale and leaseback obligations (issued on 22 September 2022) - not endorsed by the EU until the date of approval of these financial statements - effective for annual periods beginning on or after 1 January 2024.
• Amendments to IAS 1: Presentation of financial statements: Classification of Liabilities as Current or Non‐current (issued on 23 January 2020), Classification of Liabilities as Current or Non‐current - deferral of effective date (issued on 15 July 2020), Non‐current Liabilities with Covenants (issued on 31 October 2022) - not endorsed by the EU up to the date of approval of these financial statements - effective for annual periods beginning on or after 1 January 2024.

The effective dates result from the content of the standards announced by the International Financial Reporting Council. The application dates of the standards in the European Union may differ from the application dates resulting from the content of the standards and are announced at the time of endorsement for application by the European Union. The Company has not chosen to early adopt any standard, interpretation, or amendment that has been published but is not yet effective. The analysis of the impact of the aforementioned amendments on the financial statements is under way at the Company.

5. Major estimates and judgements

In applying the accounting policies described in the financial statements, the management makes estimates, judgements and assumptions relating to the recognition and measurement of particular assets and liabilities. The estimates and related assumptions are based on past experience, the management's expectations or other factors considered relevant. Actual results may differ from the estimates. Estimates and related assumptions require regular review. Changes in accounting estimates are recognized prospectively from the period in which they are made. The key estimates and judgements made by the management that have the most significant effect on the amounts recognized in the financial statements are as follows.

1. Recognition of lease under the applicable agreement with Novavax

The existing agreement with Novavax has been identified as containing a lease and is accordingly recognised in the financial statements considering the fulfilment of the following conditions:

• There are identified assets that are used by the Company to manufacture for Novavax
• Novavax has assessed whether the Company's production facility is ready for contract manufacturing, and therefore the existing manufacturing assets have been approved by the counterparty.
• The equipment additionally purchased by the Company to implement the agreement had to be approved by Novavax.

7

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

• The Company does not hold any material right to substitute fixed assets earmarked for the implementation of an agreement with the counterparty, because it would not economically benefit from exercising the right to substitute the asset (i.e. the economic benefits of substituting the asset would exceed the costs of substituting it). Moreover, in any case the replacement of the asset requires consent from the counterparty, so in reality the Company does not have a rationale or right to replace it.
• The premises of the factory building where manufacturing takes place is a physically separate part of the whole building and therefore also meets the criteria of an identified asset.
• Novavax has the right to derive substantially all of the economic benefits from the use of the identified asset over its useful life. The Company is bound by contractual restrictions on the use of fixed assets intended for implementing the contract manufacturing agreement for other purposes (including manufacturing for third parties or for the Company's own needs) without prior written consent of the counterparty. Novavax has the right to derive all of the economic benefits from the use of the identified assets over its useful life.
• Pursuant to the agreement in force, Novavax has the right to direct the use of the identified asset throughout its useful life by commissioning the production (i.e. it determines if and when these assets are used for production and determines the quantity of production).

For the CDMO contract product manufacturing agreements in place, the Company has accounted for the lease elements of the contract manufacturing agreements as operating leases. This is because the majority of production assets:

1. has an alternative use and the Company plans and has the ability to utilise it after completion of the agreement,
2. the lease term does not cover most of the economic useful life of the majority of the underlying assets.
3. the ownership of the majority of production assets is not transferred to the counterparty at the end of lease;
4. the contracting party does not have a possibility to purchase those assets,
5. the current amount of lease payments is materially lower than the fair value of the fixed assets provided by the Company. Moreover, fixed assets that are owned by the Company and used for contract manufacturing constitute a single lease, representing closely interrelated and interdependent manufacturing assets.

It was assumed that the lease period was the period of unconditional implementation of the contractual manufacturing agreement relating to the active substance. Termination of the agreement in this period involves substantial, wide-ranging financial consequences for the parties, which makes it reasonably certain that the agreement will not be terminated early.

The fee for the lease under the agreement with Novavax was calculated on the basis of relative unit sales prices. The unit sales prices were determined on the basis of costs and the market margin, i.e. the amount of depreciation costs and the expected market margin for renting this type of fixed assets.

1. Income recognition estimates and classification of inventories under the agreement with Novavax

Income from contractual manufacturing services relating to active substances of medicinal products is recognised by the Company over time based on the progress of the service. The Company has selected the progress measurement method as in its opinion it best represents the entity's performance in providing the service.

The input-based method of measuring progress reflects the Company's performance to date in relation to the complete fulfilment of the performance obligation. Under the input-based method, the Company has excluded the effects of any inputs that, in accordance with the objective of measuring progress, do not reflect the Company's results in transferring control of the goods or services to the customer. The progress measure adjustment was taken into account in the agreement value estimation model with the assumption that the cost incurred is not commensurate with the entity's progress in fulfilling its performance obligation.

The Company has analysed whether in case of early termination for reasons other than non-performance it is entitled to receive a payment that at least compensates the Company for the performance to date.

The Company recognises income in an amount equal to the cost of goods acquired to fulfil the performance obligation as the entity expects that all of the following conditions will be met:

1. the good in question is not separate;
2. Novavax expected to acquire control of the item of goods in question substantially earlier than when they receive services relating to the good;
3. the value of the acquired good is significant in relation to the total expected cost of complete fulfilment of the performance obligation;
4. The Company was not significantly involved in the design and development of the active substance produced as part of contract manufacturing.

Following the input-based method, raw materials purchased by the Company are recognised in the profit and loss account immediately upon purchase rather than when actually used in production. Consequently, the Company does not recognise purchases of raw materials acquired for the purpose of contract manufacturing in the balance-sheet under inventories. As regards the cost of raw material used, income is recognised up to the cost of such raw materials if all of the following criteria are met, i.e.:

• the raw material is not separate (i.e. a material service is needed for integration of the raw material with the manufacturing service provided by the Company)
• The contracting party acquires control of raw materials well in advance of receiving the services related to the raw materials;

8

MABION S.A. - Condensed interim financial statements as at and for the period of 3 months and 9 months ended 30 September 2023

• the cost of the raw material transferred is significant in relation to the total expected cost of complete fulfilment of the performance obligation;
• The Company procures the raw material from a third party and is not significantly involved in the design and manufacture of the raw material.

Raw materials purchased by the Company for the purposes of contract manufacturing are immediately recognised in the profit and loss account as cost of sales because:

• the raw materials have no alternative use (i.e. the Company does not have the right to use the raw materials for purposes other than contract manufacturing, and other circumstances also indicate that control over the raw materials is transferred to the contracting party by the Company),
• contract manufacturing of an active substance meets the criteria for income recognition over time, thus costs incurred in relation to the fulfilment of the Company's performance obligation are recognised in the profit and loss account when incurred, including the raw material purchased specifically for the purpose of the agreement.

In the statement of financial position as at 30 September 2023, the Company did not capitalise the expenditure on the purchase of raw materials, but recognised this expenditure as a cost of meeting the performance obligation, due to the nature of the purchase and the nature of the agreement referred to above.

Income recognised using the input-based method reflects: the profit margin earned by the Company from the onset of manufacturing in line with the agreement in force and the incurring of manufacturing costs other than just the use of raw materials or activities conducted to confirm the effectiveness of the transfer of technology.

1. Deferred tax assets relating to income tax relief

As a biopharmaceutical company, in the previous reporting periods Mabion S.A. developed and manufactured its own medicines using the recombinant protein technology, which formed the basis for state-of-the-art preparations designed to fight the most serious diseases, for example in oncology, neurology, or autoimmunity (targeted therapies). Since 2021, the Company has also used the technologies it has developed to execute commercial orders for Novavax as part of the CDMO formula.

The Company has built a fully-equippedScientific-Industrial Complex in the Łódź Special Economic Zone (LSEZ). Pursuant to the Act on Special Economic Zones, business activities carried out within a special economic zone under a permit are exempt from corporate income tax up to the limit resulting from the available public aid and incurred eligible costs. The basis for the exemption is the amount of incurred eligible costs, which must not exceed the maximum value specified in the permit granted by the LSEZ Board. Mabion is entitled to the exemption until

31 December 2026, the last year of operation of the LSEZ under applicable law. To retain the right to the exemption, the Company had to meet the investment sustainability criterion and the employment volume criterion until 31 December 2021.

The investments covered by the permits issued in 2010 and 2012 were completed, and the Company's fulfilment of the conditions entitling it to the tax relief was positively verified during audits conducted by the LSEZ.

At the end of 2016, the Company obtained the third authorisation, No. 301, which relates to a new investment in the expansion of an existing facility. On 10 August 2021, the Company received a decision of the Minister of Development, Labour and Technology on the amendment of permit no. 301 to conduct activity in the Łódź Special Economic Zone. By virtue of the above mentioned decision, on the Company's request the deadline for incurring investment expenditure within the meaning of § 6.1 of the Regulation of the Council of Ministers of 10 December 2008 on public aid granted to entrepreneurs operating on the basis of a permit to conduct business in special economic zones, in the amount of at least PLN 20 000 thousand, was extended from

30 June 2021 to 31 December 2024. The Company has requested the aforementioned deadlines to be changed in view of the need to update the schedule of planned investments, based on the Company's current needs.

As at 30 September 2023, the expenditure incurred under the investment covered by permit no. 301 amounted to PLN 4,217 thousand (as at 31 December 2022, it was PLN 4,217 thousand) In 2022, the Company used PLN 6,659 thousand of the available tax relief (tax exemption). In relation to the remaining portion of the available tax relief, the Company has estimated the value of the realisable relief before the expiry of tax reliefs (i.e. 31 December 2026) taking into account the expected tax profits.

The tax asset as at 31 December 2022 was estimated at PLN 13,310 thousand and was not updated as at the balance-sheet date of 30 September 2023 due to the absence of significant changes in assumptions relative to the level estimated and recognised

in the financial statements for the previous financial year. The Management Board has examined the estimates of tax costs and income as part of zone operations for 2023 and confirmed the possibility of using the tax relief at the estimated amount, while keeping tax losses incurred as part of out-of-zone operations unactivated.

The Company has historically realised significant negative temporary differences, resulting mainly from ongoing research and development work that will reduce the income tax base in the future. In addition, the Company holds zone permits and the resulting gross subsidy equivalents and has generated deductible tax losses from non-zone activities in the last 5 years. The existing entitlements to exercise the deduction from the tax base and the right to benefit from public aid have been verified, considering the expected income from both the activities within the zone and outside it in a most probable scenario.

The tax asset realisable in the coming periods is estimated on the basis of the expected income resulting from the implementation of the agreements in place (a period of unconditional obligation of the contractor to accept the performance was assumed) and the expected tax-deductible costs, broken down into individual zone and non-zone activities,

9