Interim Report, 1st Quarter of 2009

Transcription

1 Interim Report, 1st Quarter of 2009 Consistent orientation to customers through new corporate structure Prospective working programme Agenda 2015

2 Contents 3 Celesio at a Glance 4 Milestones Chairman s Letter to Shareholders 6 Agenda Share 10 Management Report on Interim Period 10 New corporate structure 11 Economic environment 12 Revenue and earnings development 16 Patient and Consumer Solutions division 18 Pharmacy Solutions division 20 Manufacturer Solutions division 22 Financial position 23 Assets position 24 Employees 24 Supplementary report 24 Outlook 27 Condensed Interim Financial Statements 27 Group income statement 28 Group statement of comprehensive income 29 Group statement of financial position 30 Group statement of cash flows 31 Group statement of changes in equity 32 Condensed Notes 41 Review Report 42 Financial Calendar and Contacts 2

3 Celesio at a Glance Key figures 1st quarter 1st quarter Change Change of 2008 of 2009 on a in local euro basis currency in % in % Revenue* in m 5, , EBITDA in m Profit before tax in m Net profit in m Earnings per share in Employees** 37,462 37,947 Pharmacies** 2,322 2,332 Wholesale branches** * Previous year s value adjusted due to a change in accounting method for the Movianto business area ** Values refer to the date at the end of the reporting period. Information on share Number of shares outstanding (as at 31 March 2009) 170,100,000 ISIN code DE000CLS1001 Securities ID code CLS 100 German stock exchange code CLS1 Reuters code CLSGn Bloomberg code CLS1 GR Indices MDAX, MSCI Germany Index About Celesio Celesio is a leading international company which covers the spectrum of pharmaceutical trade and pharmaceutical-related services. The group is active in 14 countries and employs around 38,000 people in its three divisions Patient and Consumer Solutions, Pharmacy Solutions and Manufacturer Solutions. Over 2,300 of Celesio s own pharmacies, as part of Patient and Consumer Solutions, serve over 550,000 customers in seven countries every day. In its wholesale activities, which are part of Pharmacy Solutions, around 120 wholesale branches deliver to over 35,000 pharmacies in twelve European countries day in, day out. In the Manufacturer Solutions division, Celesio offers pharmaceutical manufacturers logistics and distribution solutions and supports them in sales and marketing. 3

4 Milestones 2009 January March Patient and Consumer Solutions Pharmacy Solutions Manufacturer Solutions New corporate structure with the business divisions Patient and Consumer Solutions, Pharmacy Solutions and Manufacturer Solutions introduced AGENDA 2015 Prospective working programme Agenda 2015 presented Majority takeover of the personnel and marketing services provider pharmexx announced Dirk Raes acquired, the leading cold chain logistics service provider in the Benelux countries DocMorris mail-order pharmacy set a new record of orders picked in one day Europe-wide outsourcing of the group s IT infrastructure started April June July September October December 4

5 Chairman s Letter to Shareholders Ladies and gentlemen, The global financial and economic crisis remained the generally dominant topic at the start of Companies from almost all industries find themselves confronted with reductions in demand large ones in some cases. Here at Celesio we also suffered a decline in revenue and EBITDA in the first quarter, as we expected. The main reasons for this were the persistent weakness of the pound sterling and, in some countries, a decline in sales of non-prescription products due to the economic environment. Nevertheless, Celesio is still in comparatively good shape. It is precisely at this time that our strategy in recent years of concentrating more on pharmaceutical ranges and less on drugstore ranges is paying off. We are therefore maintaining our relatively optimistic outlook for In times of crisis, in particular, it is crucial to focus more intensely on one s customers. This is why we introduced a new corporate structure from 1 January. With our three new divisions Patient and Consumer Solutions, Pharmacy Solutions and Manufacturer Solutions we have oriented our activities in such a way that our customers can get the maximum benefit from our service portfolio, even when their requirements and demands change. In this way, we aim to make even better use of the numerous opportunities for value-creating growth in the healthcare and pharmaceutical market. One of many growth opportunities for us is the potential liberalisation of additional pharmacy markets. We are pleased that the European Court of Justice (ECJ) intends to clarify this question in terms of European law on 19 May. Regardless of the ECJ s decision, we are very well positioned. If the German pharmacy market is opened up, we have a very promising starting position in the form of Apotheke DocMorris. Medium- and long-term prospects are more important to us than short-term developments, however. For we want to make our profits grow sustainably. This is why we presented our prospective working programme Agenda 2015 in March. The programme provides the guidelines for our future development. Our goal is to generate EBITDA of over one billion euros in 2015 an ambitious but realistic target, and one which we will have to work hard for. The fact that we are amongst the few companies which are able to announce such a working programme at this stage, right in the middle of the financial and economic crisis, is testament to the robustness of Celesio s business model and its strategic cornerstones. Thanks to our strong products and services, solid financial management, committed employees and clear business targets, we are superbly equipped to continue creating value in the future. Yours sincerely, Dr Fritz Oesterle Chairman of the Management Board 5

6 Agenda 2015 Generating profitable growth Celesio is a growth company. We work on the basis of a long-term oriented business model which we continue to develop consistently. This is why we presented our pro - spective working programme Agenda 2015 in March. The plan provides the guidelines for the future growth of the Celesio Group regardless of the upcoming decision by the ECJ over the liberalisation of the German and Italian pharmacy markets. The goal of Agenda 2015 is to gradually and sustainably increase the earnings power of the entire Celesio Group. By doing so, we intend to generate EBITDA of over one billion euros in the year Our prospective working programme rests upon three pillars: Organic growth and efficiency Growth in existing business in current and new geographical markets Growth through new business 1. Organic growth and efficiency We want to grow organically through our existing business. We have the right conditions to do so, as the pharmaceutical market remains a constant growth market with growth rates in the single-digit percentile range. The main drivers are pharmaceutical innovations and demographic development in the Western industrial nations. In addition, the healthcare market, which comprises products and services to improve people s health, may become considerably more important. This market is characterised by higher growth rates than the pharmaceutical market, on the one hand, but a much greater dependence on economic developments on the other hand. 6

7 Agenda 2015 At the same time, in order to support our organic growth, we intend to continuously increase efficiency throughout the group. This also involves implementing measures on the costs side. We have initiated numerous group-wide measures in order to be even more efficient in the future and to work even more economically with the capital that is invested. One example of a project to cut costs is the Europe-wide outsourcing of our IT infrastructure from the second quarter of This will allow us, over a seven-year period starting from 2010, to save around 200 million euros in total compared to our present costs. 2. Growth in existing business in current and new geographical markets We want to grow our existing business and this includes making acquisitions. We have tied this aim to certain concrete criteria: we will only enter into new geographical markets if we are able to attain a significant market position there and if the return-risk profile suits Celesio. In those markets where we are already present, we will only complete acquisitions if we can improve our strategic position by doing so. A further criterion is that growth through acquisitions must serve to reduce the relative influence of the pound sterling and that of government-regulated remuneration structures on our business in the long term. One example of how this strategic goal is being implemented is the takeover of the leading Belgian cold chain logistics service provider, Dirk Raes, in March. 3. Growth through new business The third pillar of our prospective working programme is growth through new business areas. Such growth is made possible by the transition of the pharmaceutical markets, which creates a demand for novel products and services. We will offer our customers added value through new solutions which we will develop out of our existing activities and our current strategic orientation. A further possibility is acquisitions which will allow us to develop new business activities. Here, too, the general rule is that new business activities should fundamentally contribute to reducing the relative influence of the pound sterling exchange rate and that of government-regulated remuneration structures. An example of this is the majority takeover of the personnel and marketing services provider pharmexx, which we announced in March. This has allowed us to enter a new, international business area in our Manufacturer Solutions division. 7

8 Share Stock markets still under pressure at the start of the year The global financial and economic crisis intensified in the first quarter of The international stock markets were also affected by this development, and considerable price losses could be observed in many cases. For instance, the German blue-chip index DAX fell significantly up to the start of March, closing on 6 March on 3, points its lowest level since the end of Despite subsequent short-term gains, the DAX lost a total of around 15 per cent of its value in the first quarter of The price of the MDAX, in which the Celesio share is listed, fell even further in the same period by almost 21 per cent. Celesio share burdened by speculations over ECJ decision The Celesio share was not able to escape the general negative capital markets envi - ronment either. Its development was largely in line with the comparative indices. The situation was aggravated by speculation over the decision of the ECJ over whether to liberalise the German pharmacy market. After beginning Xetra trading on 2 January at euros, our share closed at euros on 31 March, despite intermittent rallies. This equates to a drop of around 26 per cent in the share price. On the last trading day of the quarter, Celesio s market capitalisation was 2,361.0 million euros (previous year 5,334.3 million euros). The average Xetra trading volume was 426,551 shares per day, which is considerably lower than the same period last year, when an average of 666,189 shares were traded each day. Performance of Celesio share, MDAX, DAX 1st quarter of 2009, scaled to January 1 February 1 March Celesio share MDAX DAX 60 8

9 Share Investor Relations activities enhanced In times of economic difficulty, in particular, great importance is attached to open, transparent and prompt capital market communication. Celesio s Investor Relations team is therefore in constant contact with existing and potential institutional and private investors and analysts particularly through investor conferences and road shows in international financial centres, but also through many one-on-one conversations here at Celesio. One focus in the first quarter, in addition to conferences in New York and Frankfurt, was the Analyst and Investor Conference in Stuttgart on 30 March, which involved the presen tation of the 2008 financial statements and which was attended by approximately 30 capital market representatives. Further details on the Celesio share as well as important dates and publications can be found online at under Investor Relations. Key figures 1st quarter 1st quarter Change Change of 2008 of 2009 on a euro basis in local currency in % in % Earnings per share in EBITDA per share in Closing price* in Market capitalisation* in m 5, , * Values refer to the date at the end of the reporting period. 9

10 Management Report on Interim Period New corporate structure As previously announced, we have changed the organisational structure of the Celesio Group as of 1 January The new group structure applies to the structure of this interim report, and to our future financial reporting. In Patient and Consumer Solutions, Pharmacy Solutions and Manufacturer Solutions, we have created three divisions with product and service portfolios clearly tailored to the demands and requirements of our three most important customer groups: patients and consumers, pharmacies, and pharmaceutical manufacturers. Patient and Consumer Solutions Our range in this division comprises retail pharmacies, on the one hand, with brands such as Lloydspharmacy in the UK and Vitusapotek in Norway, and mail-order activities on the other hand, with brands such as Apotheke DocMorris and Lloydspharmacy. The retail pharmacies which are brought together in the Patient and Consumer Solutions division make us one of Europe s largest pharmacy operators. In addition, we have bundled franchise models such as Apotheke DocMorris in Germany into this division. Pharmacy Solutions Here the focus is on our wholesale business, in which we are represented by subsidiaries with strong market positions in twelve European countries. Another component of our wholesale business is the organisation and management of pharmacy cooperations such as gesund leben-apotheken in Germany. The Rudolf Spiegel Versand mail order company for pharmacy supplies is also part of the Pharmacy Solutions division. Manufacturer Solutions We support pharmaceutical manufacturers at certain points along the pharmaceutical supply chain which they often do not count amongst their own core competencies anymore. For instance, with Movianto we operate as a specialist in pharmaceutical logistics and logistics-related services such as storage, transport and packaging. We also offer personnel management and marketing solutions, such as field sales to medical practices or call centre activities, through pharmexx. In the UK, our Evolution Homecare business specialises in providing patients with medicines at home. This work is carried out for medicines which are complicated and difficult to administer often on behalf of the relevant pharmaceutical manufacturer. 10

11 Management Report on Interim Period Corporate structure since 1 January 2009 Divisions Patient and Consumer Solutions Pharmacy Solutions Manufacturer Solutions Business areas Retail Pharmacies Wholesale Movianto Mail-order Pharmacies Franchise Systems Mail-order Pharmacy Equipment... pharmexx Homecare In this interim report, we are applying the structure of our three new business divisions Patient and Consumer Solutions, Pharmacy Solutions and Manufacturer Solutions for the first time. From now on, we will also be reporting on the business development, revenue and profit figures of individual business areas within these divisions which have a significant bearing on the consolidated financial statements. In this way, we are increasing the level of detail and the transparency of our financial reporting. Business areas which are not reported on separately will be discussed in the other business areas section of each division. Economic environment The global economic downswing, which accelerated considerably in 2008 due to the crisis in banking sector, continued at the same rapid pace in the first quarter of The European healthcare and pharmaceutical markets were not able to escape from this trend entirely their overall development was poor. This was exacerbated by new legislative measures in the pharmaceutical market which were initiated in numerous European countries in 2008 and continued to affect Celesio s business development in the first quarter of this year. The weak exchange rate of the pound sterling compared with the same quarter of the previous year also had a negative influence, as did that of the Norwegian krone, albeit to a lesser extent. 11

12 Management Report on Interim Period Revenue and earnings development As previously announced, the Celesio Group s revenue and EBITDA in the first quarter of 2009 did not reach the levels of the previous year. Revenue* stood at 5,116.9 million euros and was therefore 2.7 per cent below the previous year s value. This was primarily due to currency effects, and as such, revenue in local currency increased by 2.2 per cent. A positive influence for the first quarter was that, unlike last year, Easter fell in the second quarter and therefore did not hamper revenue. Group revenue by country* on a euro basis, in m 2,000 1, , ,800 1,600 1,400 1, , ,200 1, France UK Germany Austria Norway Others 1st quarter of st quarter of 2009 * Prior year values adjusted due to a change in accounting method for the Movianto business area. Further information on page 35 12

13 Management Report on Interim Period Revenue in UK in local currency* in m st quarter of , st quarter of ,200 1, * Prior year value adjusted due to a change in accounting method for the Movianto business area Gross profit decreased by 1.2 per cent (plus 7.9 per cent in local currency) to million euros. The gross profit margin of per cent was slightly above the previous year s value of per cent.** Other income decreased to 33.9 million euros. The previous year s value of 41.7 million euros included a one-off effect from the sale of a company in the Norwegian wholesale business. Other expenses amounted to million euros, which represents a 1.1 per cent increase over the previous year (8.9 per cent in local currency). Influencing factors here included one-off IT costs and advertising expenditure for Apotheke DocMorris. Personnel expenses decreased by 4.2 per cent to million euros. In local currency, this equates to an increase of 4.1 per cent. Due primarily to the market valuation of our stake in the listed company Andreae-Noris Zahn AG (ANZAG), income from investments decreased by 52.0 per cent to 1.2 million euros. At million euros, EBITDA (earnings before interest, taxes, depreciation and amortisation) was 3.6 per cent below the previous year s value. As expected, the sustained weakness of the pound sterling in the first quarter had an impact here, placing a burden of around 15 million euros on EBITDA. As such, when calculated in local currency we recorded an EBITDA increase of 7.2 per cent. Furthermore, the figure from the first quarter of 2008 included non-recurring gains from the sale of a company in our Norwegian wholesale business. ** The gross profit margin relates to revenue. Due to the change in accounting method for the Movianto business area from 1 January 2009, the corresponding value from the previous year has been adjusted. 13

14 Management Report on Interim Period With a share of 51.1 per cent (previous year 44.1 per cent), the pound sterling zone made the biggest contribution to group EBITDA once more. The increase in the pound sterling s EBITDA contribution shows that we were able to compensate for the negative currency development in the UK with a good performance in our operating business. This was driven by positive government measures in the first quarter. Group EBITDA by currency in % Euro 44.5 Pound sterling 44.1 Euro 39.3 Pound sterling 51.1 Others 1.8 Norwegian krone 9.6 Others 2.2 Norwegian krone 7.4 1st quarter of st quarter of 2009 Depreciation and amortisation amounted to 27.1 million euros. This remained at roughly the same level as the first quarter of 2008, when depreciation and amortisation of 27.5 million euros were recorded. The balance from the items interest expenses, interest income and other financial results makes up the financial result. This improved from 33.8 million euros to 27.9 million euros. The decisive factors here were lower average indebtedness, reduced interest rates and the influence of the pound sterling. Profit before tax saw a slight increase of 1.0 per cent (14.0 per cent in local currency) to 89.5 million euros. Tax expense increased by 1.6 per cent to 31.5 million euros. At 35.1 per cent, the tax rate remained around the level of the previous year. Net profit increased slightly by 0.8 per cent to 58.0 million euros (plus 15.2 per cent in local currency). At 0.34 euros, earnings per share stood just above the previous year s value of 0.33 euros. 14

15 Management Report on Interim Period Celesio Group revenue and earnings development 1st quarter 1st quarter Change Change of 2008 of 2009 on a euro basis in local currency in % in % Revenue* in m 5, , Gross profit in m EBITDA in m Profit before tax in m Net profit in m Earnings per share in * Prior year s value adjusted due to a change in accounting method for the Movianto business area 15

16 Management Report on Interim Period Patient and Consumer Solutions division Market environment The market for prescription medicines, in which Celesio has a comprehensive product and service portfolio, is directly influenced by economic developments only to a small extent. The market for non-prescription products (OTC products) varied from one country to another. In the UK and Ireland, in particular, demand for these products decreased. In other European countries, a stable or even a slight upward trend could be observed. Business development The Retail Pharmacies business area, which comprises the activities of all our fixedlocation pharmacies, revealed a mixed picture between the individual national companies. In the UK, the increased pharmacy fee for prescription medicines had a positive effect on business development. The fee was raised by the British government for a limited period up to the end of the first quarter of This effect was counteracted, however, by the weak exchange rate of the pound sterling in the first quarter and a decline in OTC sales. Business in Norway developed positively overall. In Ireland, we benefited from a court decision to overturn a fee reduction ordered by the government last October. Our pharmacies in the Netherlands suffered a drop in profits which was primarily due to the tenders for generic medicines ( Preference Policy ) introduced by the Dutch health insurance funds in General price reductions also had a negative impact in Italy. Between January and March, we bought nine pharmacies (previous year 55 pharmacies) and opened two new pharmacies (previous year three pharmacies). The considerably lower number of new pharmacies compared to the first quarter of 2008 was a reaction to the financial and economic crisis; we are currently deferring pharmacy acquisitions which are not strictly necessary in strategic terms. 16 pharmacies (previous year nine pharmacies) were closed or divested. As at 31 March 2009, we were operating 2,332 pharmacies throughout Europe. This total stood at 2,322 pharmacies as at 31 March The Mail-order Pharmacies business area reflects the mail-order activities of companies such as Apotheke DocMorris and Lloydspharmacy. In March, Apotheke DocMorris was able to set a new record for the average number of orders picked per day. Despite the development of the economy, Apotheke DocMorris also increased its sales of OTC products. The mail-order business of Lloydspharmacy also developed positively, but at a lower level. Other business areas in the Patient and Consumer Solutions division developed positively. 16

17 Management Report on Interim Period Revenue and earnings development Revenue in this division stood at million euros, decreasing by 5.7 per cent compared with the first quarter of Currency effects in the Retail Pharmacies business area were responsible for this revenue decrease. In local currency, we were able to increase the revenue of this division by 6.9 per cent. The Mail-order Pharmacies business area developed well, boosting its revenue by 10.1 per cent to 58.3 million euros. It therefore made a 7.1 per cent contribution to the total revenue of the Patient and Consumer Solutions division. With a decline of 2.2 per cent (an increase of 11.7 per cent in local currency) to million euros, gross profit did not match the level of the previous year. The main reason for this development was the weakness of the pound sterling. We were able to increase EBITDA in this division by 8.4 per cent (26.5 per cent in local currency) to 72.0 million euros. The main reason was EBITDA growth of 10.4 per cent in the Retail Pharmacies business area, which can be largely attributed to positive government measures in the UK. In the Mail-order Pharmacies business area, advertising expenditure for Apotheke DocMorris placed a burden on EBITDA. Attention-grabbing media campaigns are an important investment in the brand awareness of Apotheke DocMorris. Revenue and earnings development in the Patient and Consumer Solutions division 1st quarter of st quarter of 2009 Change Change on a in local in % in % euro basis currency in m of revenue in m of revenue in % in % Retail Pharmacies Revenue Gross profit EBITDA Mail-order Pharmacies Revenue Gross profit EBITDA Other business areas Revenue Gross profit EBITDA Total Revenue Gross profit EBITDA

18 Management Report on Interim Period Pharmacy Solutions division Market environment The trend towards new distribution models in the European wholesale market could also be observed at the start of the 2009 fiscal year. In Germany, a slight decline of discount competition in the wholesale market could be detected. The French market was marked by margin cuts which the government introduced in Business development National variations could be observed in the Wholesale business area. Our German business developed well, particularly compared to the weak first quarter of Here, our wholesaler GEHE was able to counteract the burdens of discount competition through flexible pricing and thus regain market share. In the UK, the performance of AAH was satisfactory. Business development for OCP in France was notably more modest than in the previous year. One reason for this was the above-average business development in the first quarter of The main cause, however, was the reduction of the wholesale margin, which the government introduced in 2008 and which is now taking full effect. Regulatory intervention was also responsible for the modest business development in Portugal. In Austria, we saw increased competition and a higher level of discounts. The other business areas of this division include the mail-order company for pharmacy and laboratory supplies, Rudolf Spiegel Versand. This business developed very positively, and has been active in France since January, as well as in Germany, Austria and Switzerland. 18

19 Management Report on Interim Period Revenue and earnings development Largely due to currency effects and the development of the Wholesale business area in France and Austria, revenue in the Pharmacy Solutions division decreased by 2.1 per cent to 4,204.1 million euros. When calculated in local currency, revenue increased by 1.2 per cent. The other business areas were able to boost their revenues by 25.5 per cent compared with the previous year to 1.2 million euros. Gross profit in this division matched the previous year s level, reaching million euros (previous year million euros). In local currency, we achieved growth of 4.1 per cent. A positive factor was the good business development of GEHE in Germany. At 88.3 million euros, EBITDA was 1.3 per cent below the previous year s value. Here, too, the weakness of the pound sterling in the first quarter made itself felt. In local currency, we generated an increase of 3.6 per cent. Revenue and earnings development in the Pharmacy Solutions division 1st quarter of st quarter of 2009 Change Change on a in local in % in % euro basis currency in m of revenue in m of revenue in % in % Wholesale Revenue 4, , Gross profit EBITDA Other business areas Revenue Gross profit EBITDA Total Revenue 4, , Gross profit EBITDA

20 Management Report on Interim Period Manufacturer Solutions division Market environment The pharmaceutical industry is currently facing a series of major challenges. Examples include the expiry of numerous patents combined with the declining number of newly developed medicines reaching market readiness. As a result, lower growth rates must be expected compared with those seen in the past. Many companies in the pharmaceut - ical industry are therefore striving to outsource activities which are not part of their core business. This development is creating a growing demand for services and solutions a demand which we address through our Manufacturer Solutions division. Business development Our Movianto business area was not able to keep its development in the first quarter of 2009 at the pace it set the prior-year quarter. This is due to optimisation measures taken with the goal of improving internal business processes and quality processes. We are currently working on aligning structures and procedures Europe wide and integrating them more thoroughly at group level. Here we have a particular focus on France and the UK. By the end of this year, Movianto wants to present a new portfolio strategy at a European level which will make our services more attractive to our customers. We have also seen international growth in the first quarter: in March, Movianto took over the Belgian com - pany Dirk Raes NV, the leading cold chain logistics service provider for the pharmaceutical industry in the Benelux countries. In order to strengthen the Manufacturer Solutions division, we announced in March that we are increasing our stake in pharmexx GmbH by 35 per cent to 65 per cent. pharmexx is a globally active personnel and marketing services provider for the pharmaceutical industry. As at the end of March, the company employed around 5,500 people and was present in 26 countries worldwide. According to preliminary figures, pharmexx generated revenue of around 269 million euros in The increase in our pharmexx stake is still subject to the approval of the cartel authorities. Once the company has been fully consolidated, we will report on pharmexx as a separate business area. For the first quarter of 2009, the pro rata profit of pharmexx is taken into account in the other business areas of this division. Also included in other business areas is the UK company Evolution Homecare. The expansion of this business went according to plan in the first quarter; our focus was on investments in management and infrastructure. 20

21 Management Report on Interim Period Earnings development The Manufacturer Solutions division generated gross profit* of 38.8 million euros in the first quarter of 2009, after having made 39.6 million euros in the first quarter of the pre - vious year. The decline of 1.9 per cent was essentially a result of currency effects. In local currency, we were able to improve gross profit by 4.2 per cent. EBITDA in this division decreased from 3.2 million euros to 1.7 million euros. This decline of 45.8 per cent (49.7 per cent in local currency) is a result of the costs of optimisation measures for Movianto and the expenditure for the expansion of Evolution Homecare in the UK. Earnings development in the Manufacturer Solutions division 1st quarter of st quarter of 2009 Change Change on a in local in % of in % of euro basis currency in m gross profit in m gross profit in % in % Movianto Gross profit EBITDA Other business areas Gross profit EBITDA Total Gross profit EBITDA * For the Manufacturer Solutions division, the absolute gross profit instead of revenue is the relevant perfor - mance metric. This is because our customers normally pay performance-related fees. Trading revenue is generated only in a very few cases. The gross profit is calculated as the sum of fee income plus the trading margin. The gross profit margin is not a meaningful figure for the Movianto business area due to the particular structure of its revenue. 21

22 Management Report on Interim Period Financial position Between January and March, Celesio generated a net cash flow from operating activ - ities of 10.8 million euros. The decrease of 89.5 per cent compared with the same period of the previous year is a result of higher net working capital at the end of the first quarter. This increase in net working capital can be attributed to the later payment date of the National Health Service in the UK compared with the previous year. Without this effect, trade receivables, inventories, and trade payables all declined. This was due to lower business volumes compared with the fourth quarter of Net cash flow from investing activities was reduced from a negative million euros to a negative 53.6 million euros. Payments for company acquisitions declined considerably from million euros to 31.8 million euros. The main reason for this was a smaller number of pharmacy acquisitions. We significantly reduced these acquisitions in light of the financial and economic crisis in order to save resources for projects of greater strategic importance. The acquisition of Dirk Raes had the opposite effect on net cash flow from investing activities. We spent 27.4 million euros (previous year 31.7 million euros) on other investments such as improving our wholesale branch network, redesigning and relocating pharmacies, and expanding our IT structures. Proceeds from the disposal of non-current assets and subsidiaries totalled 5.6 million euros (previous year 12.9 million euros). Net cash flow from financing activities fell from 27.0 million euros to 4.8 million euros. This total is made up of net interest payments of 29.8 million euros and net new borrowing of 34.6 million euros. Celesio Group statement of cash flows* 1st quarter of st quarter of 2009 in m in m Net cash flow from operating activities Net cash flow from investing activities Net cash flow from financing activities Net change in cash and cash equivalents Net foreign exchange difference Change in cash and cash equivalents * In the interests of improved comparability and clarity, from the first quarter of 2009, we are presenting the statement of cash flows of the Celesio Group in a different form. Values from previous years have been adjusted accordingly. More detailed information on this change can be found in the notes on page

23 Management Report on Interim Period Assets position Celesio s operating business was supported by a very solid statement of financial position once again in the first quarter of Primarily due to currency effects of 95.2 million euros, total assets grew by 55.5 million euros to 7,578.8 million euros compared with 31 December Gearing, which is the key financial figure used to measure the debt to equity ratio, stood at 0.97 (previous year 0.86). Non-current assets rose by 61.1 million euros to 3,348.2 million euros. The main reason was an increase in intangible assets, which largely resulted from the takeover of Dirk Raes and nine pharmacy acquisitions. Current assets stood at 4,230.6 million euros, which is slightly below the level of 4,236.2 million euros at 31 December Whilst our inventories declined by 88.2 million euros, trade receivables grew by 61.4 million euros and remaining receivables and other assets grew by 48.5 million euros. The non-current assets of 7.7 million euros which are available for sale consist of IT hardware. This hardware is being sold to Hewlett-Packard as part of the outsourcing of our IT infrastructure from 1 April Compared with the statement of financial position date of the 2008 fiscal year, shareholders equity increased by 90.3 million euros to 2,359.9 million euros. Apart from the net profit in the first quarter, this was due to the increase in translation reserves. This raised Celesio s equity ratio from 30.2 per cent to 31.1 per cent. Our non-current liabilities decreased by 35.9 million euros to 2,221.6 million euros. The main influence here was the 34.9 million euro reduction in non-current financial li - abilities. Current liabilities, on the other hand, saw a slight increase of 1.1 million euros. Trade payables declined significantly by million euros. This reduction was offset by an increase in current financial liabilities of 57.3 million euros and an increase in other liabilities of 60.4 million euros. Financing Despite the persistence of the financial crisis in the first quarter, we have a stable financing structure which provides us with sufficient scope for appropriate investments and acquisitions. Our international bank portfolio is widely diversified: no bank accounts for more than 10 per cent of all our loan commitments and only 50 per cent of all credit lines are with the top 10 banks. There have not been any cases of default to date. Further - more, the current debt of the Celesio Group is fully funded up to the year Once again, our Bankers Day, which was held in Stuttgart on 3 April this year, formed part of the long-term, trusting dialogue we maintain with our banks. 23

24 Management Report on Interim Period Employees As at 31 March 2009, 37,947 people (previous year 37,462 people) were employed by the Celesio Group. In the Patient and Consumer Solutions division, 23,060 people were employed at the end of the first quarter, the Pharmacy Solutions division accounted for 12,948 employees, and the Manufacturer Solutions division had 1,686 employees. Almost all of the remaining 253 employees were working at the company headquarters. The employees of pharmexx have not yet been taken into account, as the company has not been included in the consolidated financial statements of the first quarter of Supplementary report There were no events to report after the statement of financial position date. Outlook Economic development Statements on the development of the economy over the whole of 2009 and beyond are currently marked by great uncertainty. However, economic research institutes expect the economic environment in Europe to remain difficult, with declines in economic perfor mance and gross national product. The healthcare and pharmaceutical market is not directly affected by this development to the same extent as cyclical economic sectors. However, parts of the market will not be able to escape the trend entirely. Opportunities and risks In order to identify opportunities and risks at an early stage, to evaluate them and to monitor them, we have implemented appropriate and effective management systems. This is presented in detail in the Opportunity and Risk Report of our Annual Report The following opportunities and risks in particular apply to the current fiscal year: Additional opportunities may arise from a liberalisation of European pharmacy markets. Opportunities will arise from the measures to increase efficiency which we have initiated. One example is the outsourcing of our IT infrastructure to Hewlett-Packard, which will allow us to cut operating costs and thus free up resources for investments. Opportunities could also arise from an amendment to the Medical Products Act (AMG) in Germany. In this context, there is a discussion about requiring pharmaceutical wholesalers by law to ensure provision of medicines, which would bring about a supply requirement in pharmaceutical wholesale. 24

25 Management Report on Interim Period Certain currency risks exist due to our presence in countries which are not part of the European Monetary Union. A potential sustained weakness of the pound sterling and the Norwegian krone could place a burden on Celesio s revenues and earnings. Potential changes in the share price of ANZAG, which is listed on the Frankfurt Stock Exchange, may affect our income from investments. For every euro that its share price changes, there is an impact of 1.3 million euros on our income from investments. In light of the current stock market volatility, it is not possible to predict the extent of this risk. Due to lower share prices and volatile capital markets developments, there is a chance that the valuation of capital assets held in order to cover pension commitments may change. The buying resistance which can be observed in the current economic crisis, particularly in the UK and Ireland, could extend to other countries in which we are active. This would have an impact on our revenues in the OTC sector. However, OTC products only account for 10 to 20 per cent of our gross profit. In general, there is a chance of further government regulatory measures in the short and medium term which would affect Celesio s business activities. The legislators have already decided to introduce such measures in Italy and the Netherlands. Business development For the Patient and Consumer Solutions division, we currently anticipate that further burdens may arise from the declining OTC business in certain countries due to the economic environment will be a challenging year for the Pharmacy Solutions division. In France, in particular, the business environment and competitive conditions for the wholesale sector have deteriorated considerably. Nevertheless, as the market leader in this country, our operating business is well positioned to continue on its successful course. Throughout 2009, the Manufacturer Solutions division will be marked first and foremost by the optimisation measures in the Movianto business area, the integration of pharmexx, and the expansion of Evolution Homecare. Our goal is to have a stronger presence on the market by 2010 thanks to improved structures and an expanded port - folio. For this reason, this division s business development and contribution to income will not be able to match the levels of the previous year in

26 Management Report on Interim Period Investments We anticipate group-wide investments of around 140 million euros in 2009, primarily in intan gible assets; property, plant and equipment; and new pharmacy openings. Added to this will be expenditure on pharmacy acquisitions, although these will remain below the level of the previous year. Investments in additional acquisitions are also a possibility, as long as they meet the criteria we have outlined in our prospective working programme Agenda 2015 and are feasible in financing terms earnings forecast Despite the manifold challenges for business development, we confirm our relatively optimistic outlook for the fiscal year We still expect to perform relatively well in the current fiscal year, both in comparison with other industries and in comparison with competitors which rely more heavily on drugstore ranges. Nevertheless, several external factors will also have an influence on Celesio s earnings development in 2009: As things stand, we anticipate that government measures will place a burden in the middle tens of millions on our business in If the exchange rates for the foreign currencies relevant to us remain on average at the same level as at the end of 2008, a negative currency effect of up to 50 million euros is to be expected in the current fiscal year. In addition, our profits may be affected by a change in the market valuation of our stake in ANZAG and by greater personnel and interest expenses from pension commitments. All things considered, we expect that EBITDA for the entire year may lie below the level of the previous year. Disregarding the external factors listed above, and despite the burden of 20 to 25 million euros on our OTC business, we anticipate EBITDA in 2009 to remain at the level of Stuttgart, 6 May 2009 The Management Board 26

27 Condensed Interim Financial Statements Group income statement for the 1st quarter of in m in m Revenue* 5, ,116.9 Own work capitalised Total operating performance 5, ,117.2 Cost of raw materials, consumables and supplies and of purchased goods 4, ,542.9 Gross profit Other income** Other expenses** Personnel expenses Income from investments accounted for using the equity method Net income from other investments EBITDA Amortisation of intangible assets and depreciation of property, plant and equipment EBIT Interest expense Interest income Other financial result Profit before tax Income taxes Net profit Profit attributable to minority interest Profit attributable to equity holders of Celesio AG Earnings per share basic (in ) Earnings per share diluted (in ) * Previous year s value adjusted due to a change in accounting method for the Movianto business area ** Other income and expenses are shown seperately since fourth quarter of

28 Condensed Interim Financial Statements Group statement of comprehensive income for the 1st quarter of in m in m Net profit Sundry result Gains/losses from available-for-sale financial assets of which income tax Gains/losses from derivative financial instruments to hedge cash flows of which income tax Exchange differences Sundry result Comprehensive income Share in comprehensive income attributable to minority interest Share in comprehensive income attributable to equity holders of Celesio AG

29 Condensed Interim Financial Statements Group statement of financial position as at 31 March 2009 Assets 31/12/ /03/2009 in m in m Non-current assets Intangible assets 2, ,504.3 Property, plant and equipment Associates accounted for using the equity method Other financial assets Income tax receivables Deferred tax assets , ,348.2 Current assets Inventories 1, ,365.0 Non-current assets held for sale Trade receivables 2, ,548.5 Income tax receivables Other receivables and other assets Cash and cash equivalents , ,230.6 Total assets 7, ,578.8 Equity and liabilities 31/12/ /03/2009 in m in m Equity Issued capital Capital reserves 1, ,113.0 Revenue reserves 1, ,357.2 Revaluation reserves Equity attributable to shareholders of Celesio AG 2, ,349.9 Minority interest , ,359.9 Liabilities Non-current liabilities Financial liabilities 1, ,947.7 Pension provisions Other non-current provisions Other liabilities Deferred tax liabilities , ,221.6 Current liabilities Financial liabilities Trade payables 2, ,016.3 Other current provisions Income tax liabilities Other liabilities , ,997.3 Total equity and liabilities 7, ,

30 Condensed Interim Financial Statements Group statement of cash flows for the 1st quarter of in m in m Profit before tax Financial result EBIT Amortisation of intangible assets and depreciation of property, plant and equipment EBITDA Net result from disposal of non-current assets and subsidiaries Impairment of items of operating assets Non-cash change in pension provisions Other non-cash income and expenses Income taxes paid Change in operating assets Change in operating liabilities Net cash flow from operating activities Proceeds from the disposal of non-current assets Investment in non-current assets Proceeds from the disposal of subsidiaries Cash paid for acquisitions of subsidiaries Net cash flow from investing activities Proceeds from borrowings Repayment of borrowings Interest paid Interest received Net cash flow from financing activities Net change in cash and cash equivalents Net foreign exchange difference Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period The cash flow from operating activities includes dividend payments of 3.6 million euros (previous year 2.9 million euros). 30