Half year financial report

Transcription

1 2009 Half year financial report

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3 2009 HALF YEAR FINANCIAL REPORT SUMMARY I CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3 II ACTIVITY REPORT 35 III - INFORMATION ON RELATED PARTIES 47 IV RISKS FACTORS 48 V STATUTORY AUDITOR S REVIEW REPORT ON THE 2009 HALF YEARLY CONSOLIDATED FINANCIAL STATEMENTS 49 VI ATTESTATION OF THE PERSON RESPONSIBLE FOR THE HALF YEAR FINANCIAL REPORT 50

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5 I CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Condensed consolidated income statement Notes 30 June June 2008 Sales , ,371 Other revenues ,933 53,713 Total revenue , ,084 Cost of goods sold (115,283) (112,686) Reserch and development expenses (91,518) (87,313) Selling expenses (186,142) (164,854) General and administrative expenses (44,753) (40,746) Other operating income and expenses 7 (4,757) 1,633 Amortisation of intangible assets 8 (5,473) (1,211) Restructuring costs - - Impairment losses - - Operating income , ,907 Investment income 1,641 15,820 Cost of financing (3,460) (908) Net finance cost 9.1 (1,819) 14,912 Other financial income and expenses 9.2 (2,851) (11,526) Income taxes 10.1 (21,970) (32,731) Share of profit/(loss) from associated companies - (5,226) Net profit from continuing operations 98, ,336 Net profit/(loss) from discontinued operations 523 (225) Consolidated net profit 99, ,111 - Attributable to shareholders of Ipsen S.A. 98, ,836 - Minority interests Basic earnings per share, continuing operations (in euros) Diluted earnings per share, continuing operations (in euros) Basic earnings per share, discontinued operations (in euros) (0.00) Diluted earnings per share, discontinued operations (in euros) (0.00) Basic earnings per share (in euros) Diluted earnings per share(in euros) The accompanying notes form an integral part of these condensed consolidated financial statements. 3/50

6 Statement of recognised income and expenses 30 June June 2008 Consolidated net profit 99, ,111 Income and expenses recognised directly in equity Exchange differences, net of tax 7,899 (*) (9,937) (*) Revaluation of hedging instruments, net of tax (4,288) (*) - Actuarial gains or losses on defined benefit schemes, net of tax - - Share of income and expenses from associated companies recognised directly in equity, net of tax - - Other items, net of tax 58 (*) - Total income and expense recognised directly in equity 3,669 (9,937) Consolidated net profit and recognised income and expense 102, ,174 - Attributable to shareholders of Ipsen S.A. 102, ,895 - Attributable to minority interests (*) These items are not subject to deferred taxes. The accompanying notes form an integral part of these condensed consolidated financial statements. 4/50

7 Condensed consolidated balance sheet Before allocation of net profit Notes 30 June December 2008 (*) ASSETS Goodwill , ,816 Other intangible assets , ,935 Property, plant & equipment , ,860 Equity investments 3,033 2,650 Investment in associated companies - - Non-current financial assets 14 3,819 3,810 Other non-current assets 14 9,247 8,039 Deferred tax assets ,498 98,343 Total non-current assets 915, ,453 Inventories , ,782 Trade receivables , ,845 Current tax assets 15 18,358 49,509 Other current assets ,235 63,383 Current financial assets ,528 Cash and cash equivalents , ,584 Total current assets 589, ,631 Assets of discontinued operations 667 1,333 TOTAL ASSETS 1,505,826 1,564,417 EQUITY & LIABILITIES Share capital ,068 84,060 Additional paid-in capital and consolidated reserves 780, ,976 Net profit for the period 98, ,563 Foreign exchange differences (34,624) (44,567) Equity - attributable to shareholders of Ipsen S.A , ,032 Minority interests 1,810 1,580 Total shareholders equity 930, ,612 Retirement benefit obligation 12,713 11,530 Long term provisions 18 57,837 34,739 Bank loans ,941 Other financial liabilities 19 12,749 13,803 Deferred tax liabilities ,668 5,296 Other non-current liabilities , ,560 Total non-current liabilities 289, ,869 Short term provisions 18 3,373 8,952 Bank loans 19 4,000 4,000 Financial liabilities 19 3,992 4,346 Trade payables , ,835 Current tax liabilities 15 13,883 36,315 Other current liabilities , ,345 Bank overdrafts 16 1,150 2,259 Total current liabilities 283, ,052 Liabilities of discontinued operations 3,492 4,884 TOTAL EQUITY AND LIABILITIES 1,505,826 1,564,417 (*) The figures at 31 December 2008 presented above have been restated for the final adjustments to the goodwill arising on the acquisition of Vernalis Inc. and the remaining interests in Tercica Inc.. A reconciliation with the published balance sheet at 31 December 2008 is provided in note The accompanying notes form an integral part of these condensed consolidated financial statements. 5/50

8 Condensed consolidated statement of cash flows Notes 30 June June 2008 Consolidated net profit 99, ,111 Net profit from discontinued operations (523) 225 Share of profit or loss of associated companies - 5,226 Net profit from continuing operations before share from associated companies 98, ,562 Non-cash and non-operating items - Depreciation, amortisation, provisions and impairment losses 40,872 17,843 - Change in fair value of derivative financial instruments 2,650 8,092 - Net gains or losses on disposal of non-current assets 794 (16,089) - Share of government grant released to profit and loss (47) (47) - Exchange differences 1,705 2,422 - Change in deferred taxes (23,411) 8,535 - Share-based payment expense 4,169 3,259 - Gain or loss on disposals of treasury shares 255 (355) - Other non-cash items (4,018) 1,079 Cash flow from operating activities before changes in working capital 121, ,301 - (Increase)/decrease in inventories 15.1 (A) 6,735 (1,189) - (Increase)/decrease in trade receivables 15.1 (A) (33,731) (36,848) - (Decrease)/increase in trade payables 15.1 (A) 5,983 (3,026) - Net change in income tax liability 15.1 (A) 8,552 26,085 - Net change in other operating assets and liabilities 15.1 (A) 38,190 (2,189) Change in working capital related to operating activities 15.1 (A) 25,729 (17,167) NET CASH FROM OPERATING ACTIVITIES 147, ,134 Acquisitions of property, plant & equipment 13 (14,703) (26,199) Acquisitions of intangible assets 12 (10,922) (7,972) Proceeds from disposal of intangible assets and property, plant & equipment ,180 Acquisition of investments in non-consolidated companies - - Convertible notes subscriptions 14 (A) (2,000) (10,203) Payments to post-employment benefit plans (1,343) (975) Impact of changes in the scope of consolidation Other cash flows related to investing activities 14 (A) (151) 2,109 Change in working capital related to investing activities 15.1 (B) (4,823) (12,624) Deposits paid 14 (A) Change in short-term cash investments - 6,000 NET CASH FROM INVESTING ACTIVITIES (32,437) (32,424) Additional long-term borrowings 19 (A) - - Repayment of long-term borrowings 19 (B) (151,062) (4,565) Net change in short-term borrowings 19 (C) - - Treasury shares (6,115) (5,495) Dividends paid by Ipsen 17.4 (58,033) (55,027) Dividends paid by subsidiaries to minority interests (141) (115) Change in working capital related to financing activities 15.1 (C) (2,222) 308 NET CASH FROM FINANCING ACTIVITIES (217,573) (64,894) Impact of operations due to be sold or discontinued (234) (977) CHANGE IN CASH AND CASH EQUIVALENTS (103,007) 25,839 Opening cash and cash equivalents , ,907 Impact of exchange rate fluctuations 4,755 (3,090) Closing cash and cash equivalents , ,656 The accompanying notes form an integral part of these condensed consolidated financial statements. 6/50

9 Condensed consolidated statement of changes in equity 1 January to 30 June 2009 Share capital Share premiums Consolidated reserves Treasury shares Net profit for the period Cumulative translation reserve Equity - attributable to equity holders of the parent Minority interests Total equity Balance at 1 January 2009 (1) 84, ,994 25,318 (35,336) 146,563 (44,567) 885,032 1, ,612 Net profit for the period ,667-98, ,062 Income and expenses recognised directly in equity (2) - - (4,230) - - 7,923 3,693 (24) 3,669 Consolidated net profit and income and expenses recognised directly in equity - - (4,230) - 98,667 7, , ,731 Allocation of net profit for the prior period ,543 - (146,563) 2, Capital increase 8 - (8) Share-based payments - - 4, ,168-4,168 Purchases and disposals of own shares (6,115) - - (5,861) - (5,861) Dividends - - (58,033) (58,033) (141) (58,174) Other changes Balance at 30 June , , ,749 (3) (41,451) 98,667 (34,624) 928,403 1, ,213 (1) The figures at 31 December 2008 presented above have been restated for the final allocation to the goodwill arising on the acquisition of Vernalis Inc. and the remaining interests in Tercica Inc.. A reconciliation with equity as presented in the published balance sheet at 31 December 2008 is provided in note (2) See statement of recognised income and expense for details. (3) Including impact of restructuring in reserves Legal restructuring in ,995 Recognition in 2006 of deferred tax assets in respect of one of the items accounted for under the restructuring 15,205 Impact in 2007 of the change in tax rate on deferred taxes (2,106) Impact of the restructuring in reserves 17,094 The accompanying notes form an integral part of these condensed consolidated financial statements. 7/50

10 Condensed consolidated statement of changes in equity 1 January to 30 June 2008 Share capital Share premiums Consolidated reserves Treasury shares Net profit for the period Cumulative translation reserve Equity - attributable to equity holders of the parent Minority interests Total equity Balance at 1 January , ,994 (100,385) (26,052) 150,611 (17,350) 799,862 1, ,109 Net profit for the period , , ,111 Income and expenses recognised directly in equity (1) (9,941) (9,941) 4 (9,937) Consolidated net profit and income and expenses recognised directly in equity ,836 (9,941) 100, ,174 Allocation of net profit for the prior period ,008 - (150,611) (397) Capital increase Share-based payments - - 3, ,260-3,260 Purchases and disposals of own shares - - (355) (5,495) - - (5,850) - (5,850) Dividends - - (55,027) (55,027) (115) (55,142) Other changes Balance at 30 June , ,994 (540) (2) (31,547) 110,836 (27,688) 844,099 1, ,504 (1) See statement of recognised income and expense for details. (2) Including impact of the restructuring in reserves Legal restructuring in ,995 Recognition in 2006 of deferred tax assets in respect of one of the items accounted for under the restructuring 15,205 Impact in 2007 of the change in tax rate on deferred taxes (2,106) Impact of the restructuring in reserves 17,094 The accompanying notes form an integral part of these condensed consolidated financial statements. 8/50

11 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 9/50

12 Contents Note 1. Significant events and transactions during the period Partnerships Government measures Note 2. Changes in the scope of consolidation Merger of Tercica Inc. and Ipsen Pharmaceuticals Inc. (formerly Vernalis Inc.) Business and asset transfer Note 3. Principles and accounting methods and declaration of conformity Basis of preparation and declaration of conformity Accounting and presentation changes Other standards and interpretations applicable as of 1 January Note 4. Seasonal effects Note 5. Operating Segments Operating profit by operating segment Total revenue Total revenue by operating segment Sales by operating segment Other revenue Balance sheet items by operating segment Other information Note 6. Personnel costs Note 7. Other operating income and expenses Note 8. Amortisation of intangible assets Note 9. Financial income/(expense) Net finance cost Other financial income and expenses Note 10. Income taxes Breakdown of the tax charge Effective tax rate Deferred tax assets and liabilities Note 11. Goodwill Net goodwill carried in the balance sheet Determination of Tercica Inc. and Vernalis Inc. goodwill after fair value adjustments Breakdown of assets and liabilities acquired Reconciliation between the published balance sheet at 31 December 2008 and the balance sheet at 31 December 2008 after final adjustments to the Tercica Inc. and Vernalis Inc. goodwill Note 12. Other intangible assets Note 13. Property, plant & equipment Note 14. Other non-current assets Note 15. Analysis of changes in working capital items Movements Breakdown Other current assets and current financial assets Other current and non-current liabilities...29 Note 16. Net cash and cash equivalents Note 17. Consolidated equity Share capital Equity attributable to equity holders of the parent Earnings per share Dividends Note 18. Provisions Note 19. Financial liabilities Note 20. Derivative financial instruments Note 21. Information on related parties Note 22. Commitments and contingent liabilities Note 23. Subsequent events /50

13 Note 1. Significant events and transactions during the period 1.1. Partnerships On January 7, The Group announced that the U.S. Food and Drug Administration (FDA) provided notification that the Prescription Drug User Fee Act (PDUFA) action date for its type A botulinum toxin Biologics License Application (BLA) in aesthetic indications (glabellar lines) has been extended to April 13, On January 28, The Group announced that it had signed an agreement with Novartis for the co-promotion in France of the antihypertensive drug Exforge. On February 2, The Group and its partner Galderma announced that Azzalure, a muscle relaxant specifically developed for aesthetic use, has received the collective green light from 15 European countries Health Authorities for the granting of national marketing authorizations. The assessment was based on clinical trials involving more than 2,600 patients, which confirmed the safety and efficacy of Azzalure. Subsequently, the Group and Galderma announced that Azzalure received a marketing authorization from the Medicines and Healthcare products Regulatory Agency (MHRA) in the UK on March 12, 2009, from the Agence Française de Sécurité Sanitaire des Produits de Santé (AFSSAPS) in France on March and from the Bundesinstitut für Arzneimittel und Medizinprodukte in Germany on June 26, On April 14, The Group and its partner Medicis announced both companies were in active discussion with the US Food and Drug Administration ( FDA ) on the label and Risk Evaluation and Mitigation Strategy ("REMS") related to the type A botulinum toxin Biologics License Application ( BLA ) in both therapeutic and aesthetic indications. On April 28, The Group announced it had reached an agreement with Bayer on a dispute related to the end of a royalty paying period date. Under this agreement, Bayer will resume payments for the disputed period and subject to the level of Bayer s Kogenate sales over the remainder of the agreed royalty-paying period, Ipsen should receive in 2009 approximately 36 million from Bayer. On April 30, The Group and its partner Medicis announced the U.S. Food and Drug Administration s (FDA) approval of the Biologics License Application (BLA) for DYSPORT (abobotulinumtoxina), an acetylcholine release inhibitor and a neuromuscular blocking agent. The approval includes two separate indications, the treatment of cervical dystonia to reduce the severity of abnormal head position and neck pain, and the temporary improvement in the appearance of moderate to severe glabellar lines in adults younger than 65 years of age. On June 15, The Group and Pharnext SAS, a biopharmaceutical company specializing in the development of innovative treatments, announced they had entered into an exclusive research, development and marketing agreement regarding innovative drug candidates intended for the treatment of Charcot Marie-Tooth disease, issued from the Pleotherapy technology Government measures European governments continued to introduce measures in 2008 and 2009 to reduce public health spending, which could have an impact on the Group's sales and results in the first half of 2009 and beyond. At the end of August 2009, the Group was informed that a generic of Smecta could be launched in France following the issuance by the Agence Française de Sécurité Sanitaire des Produits de Santé («afssaps») of a marketing authorisation to a generic drug manufacturer. In 2008, Smecta sales in France reached c. 28 million. The Group estimates that c.25% of French Smecta sales are prescription free. Note 2. Changes in the scope of consolidation 2.1. Merger of Tercica Inc. and Ipsen Pharmaceuticals Inc. (formerly Vernalis Inc.) On 31 December 2008, the shareholders of Tercica Inc. and Ipsen Pharmaceuticals Inc. (formerly Vernalis Inc.) approved the merger of the two companies with effect from 1 January 2009, as well as the merged entity's new name (Tercica Inc.). This internal legal restructuring had no impact on the Group's condensed interim consolidated financial statements Business and asset transfer In order to simplifying and rationalising the Group's legal, administrative and regulatory structure, Ipsen Limited, a UK subsidiary, transferred its UK business and corresponding assets to Ipsen Developments Limited. This internal legal restructuring had no impact on the Group's condensed interim consolidated financial statements. 11/50

14 Note 3. Principles and accounting methods and declaration of conformity Preliminary remarks: The condensed consolidated interim financial statements are expressed in thousand of euros, unless stated otherwise. The reporting date for the condensed consolidated financial statements is 30 June each year. The individual financial statements of consolidated subsidiaries are prepared on the same reporting date, i.e. 30 June, and cover the same period. The Group's condensed consolidated financial statements were approved by the Board of Directors on 27 August Basis of preparation and declaration of conformity As required by European regulation no. 1606/2002 of 19 July 2002, the Ipsen Group's consolidated financial statements for the year ended 31 December 2008 were prepared in accordance with the international accounting standards endorsed by the European Union on the date of preparation and mandatory on that date. They may be consulted on the Group's website: International accounting standards include International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC). The condensed consolidated financial statements for the six months to 30 June 2009 have been prepared in accordance with IAS 34 Interim Financial Reporting, as endorsed by the European Union, which requires the disclosure of selected explanatory notes only. The condensed financial statements do not include all the disclosures required for annual financial statements and should therefore be read in conjunction with the consolidated financial statements for the year ended 31 December All the texts adopted by the European Union are available on the European Commission's website: market/accounting/ias_fr.htm Accounting and presentation changes The accounting policies applied in the interim financial statements are the same as those applied in the 2008 annual financial statements, with the exception of the following standards and amendments which are applicable as of 1 January Presentation change: IAS 1 Revised "Presentation of Financial Statements". The Group has adopted IAS 1 Revised (2007) "Presentation of Financial Statements", applicable as of 1 January Accordingly, all owner changes in equity are disclosed only in the statement of changes in equity whilst non-owner changes are also disclosed in the statement of recognised income and expense. This presentation has been applied in the condensed consolidated financial statements for the six months to 30 June The comparative information for 2008 has been restated accordingly. Accounting changes: IAS 23 Revised "Borrowing costs". Before 1 January 2009, the Group expensed all borrowing costs as incurred. As of 1 January 2009, in line with IAS 23 Revised, borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset, when the settlement date for capitalisation is on or after 1 January This accounting change had no impact on the condensed consolidated financial statements. IFRS 8 "Operating Segments" which replaces IAS 14 "Segment reporting". IFRS 8 "Operating Segments" defines an operating segment as a component of an entity: - that engages in business activities from which it may earn revenues and incur expenses; - whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and - for which discrete financial information is available. In light of these criteria, the Group has retained its segmentation by geographical area but has introduced a new "North America" segment following its acquisitions in the United States during the second half of Consequently, application of this standard had no material impact on the published information at 30 June The application of IFRS 8 is an accounting change. 12/50

15 3.3. Other standards and interpretations applicable as of 1 January 2009 Other amendments and interpretations applicable as of 1 January 2009 either do not concern the Group or did not have a material impact on the condensed consolidated financial statements for the six months to 30 June 2009: IAS 1 and IAS 32 Amended Puttable financial instruments and obligations arising on liquidation; IFRS 2 Amended Share-based Payment - Vesting Conditions and Cancellations; IFRS 7 Amended Fair Value and Liquidity Risk, not endorsed by the European Union; IFRIC 11 Group and Treasury Share Transactions, applicable in 2009 according to the European Union; IFRIC 13 - Customer Loyalty Programmes; IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, applicable in 2009 according to the European Union; IFRIC 15 Agreements for the Construction of Real Estate; IFRIC 16 - Hedges of a Net Investment in a Foreign Operation; IFRS annual improvements published in May The Group elected not to early adopt the standards and interpretations that were not mandatory as of 1 January Note 4. Seasonal effects The Group's business is not subject to any material seasonal effects. Note 5. Operating Segments Internal reporting to the main operating decision maker, i.e. the Executive Committee, is based on the Group's management structure, which is organised on a geographical basis. Accordingly, the operating segments as defined by IFRS 8 are the geographical areas in which the Group operates. The only change arising from the adoption of IFRS 8 is the creation of a new "North America" operating segment following the Group's acquisitions in the second half of Consequently, the adoption of IFRS 8 had little impact on the comparative interim information for the six months to 30 June The operating segments existing at 30 June 2009 were: Major Western European countries: France, Italy, Spain, United Kingdom and Germany; Rest of Europe: all other countries in Western and Eastern Europe; North America: mainly the United States; Rest of the world: all other countries Operating profit by operating segment 30 June June 2008 Amount % Amount % Major Western European countries 119, % 120, % Rest of Europe 49, % 52, % North America (15,087) -7.6% 3, % Rest of the world 45, % 37, % Total allocated 199, % 213, % Unallocated (74,356) (67,681) Total 125, ,907 Unallocated operating income includes expenses and income that is not attributable to a specific operating segment, principally other operating income and expenses, most research and development expenses, and unattributable Group expenses. 13/50

16 5.2. Total revenue Total revenue by operating segment 30 June June 2008 Amount % Amount % Major Western European countries 289, % 301, % Rest of Europe 115, % 124, % North America 24, % 3, % Rest of the world 102, % 89, % Total allocated 532, % 519, % Unallocated 40,584 31,249 Total 573, ,084 Within total revenue, only sales of goods and co-promotion income have been allocated. Other revenue (see note 5.2.3) has not been allocated as it does not lend itself to this type of analysis Sales by operating segment 30 June June 2008 Amount % Amount % Major Western European countries 283, % 281, % Rest of Europe 114, % 124, % North America 20, % 2, % Rest of the world 102, % 89, % Total 521, % 497, % Other revenue 30 June June 2008 Royalties received 36,915 23,726 Milestone payments received 10,961 24,121 Research and development expenses billed back to partners Co-promotion income 3,697 5,533 Total 51,933 53,713 The changes in this item are mainly due to: Recognition at 30 June 2009 of royalties due in respect of the Kogenate and Helixate licence ( 36.4 million versus 23.1 million at 30 June 2008). Under the agreement reached with Bayer, the first half of 2009 includes the seven months of Kogenate and Helixate royalties not received by the Group in the previous year ( 22.0 million) and royalties due in the first half of Recognition at 30 June 2008 of royalties received under agreements with Tercica Inc., which no longer exist at 30 June 2009 following the Group's acquisition of Tercica Inc. in the second half of 2008, as well as a non-recurring gain related to the disposal of Ginkor Fort. 14/50

17 5.3. Balance sheet items by operating segment Major Western European countries Rest of Europe 30 June 2009 North America (*) Rest of the world Goodwill 143,819 18, ,788 26, ,801 Property, plant & equipment 177,738 37,504 18,094 11, ,660 Inventories 69,447 23,834 13,620 2, ,384 Trade receivables 249,039 33,761 14,406 9,696 (52,724) 254,178 Total segment assets 640, , ,908 49,989 (52,724) 899,023 Trade payables 120,150 16,703 3,392 23,328 (52,724) 110,849 Total segment liabilities 120,150 16,703 3,392 23,328 (52,724) 110,849 (*) Goodwill allocated to the "North America" segment comprises the goodwill relating to Tercica Inc. ( 98.4 million) and Vernalis Inc. ( 3.4 million). Major Western European countries Rest of Europe 31 December 2008 North America Rest of the world Goodwill 143,819 18, ,803 26, ,816 Property, plant & equipment 173,169 37,690 18,804 8, ,860 Inventories 70,445 25,526 18,339 1, ,782 Trade receivables 209,357 28,341 18,085 7,469 (45,407) 217,845 Total segment assets 596, , ,031 43,624 (45,407) 862,303 Trade payables 116,502 17,051 4,331 11,358 (45,407) 103,835 Total segment liabilities 116,502 17,051 4,331 11,358 (45,407) 103, Other information Total Total Major Western European countries Rest of Europe 30 June 2009 North America Rest of the world Eliminations Eliminations Unallocated Capital expenditure (11,069) (1,639) (816) (1,179) (10,922) (25,625) Depreciation, amortisation and provision charges (excluding financial) 31,873 1,135 (797) 618 7,402 40,231 Share-based payment expense with no impact on cash flow ,169 4,169 Total Major Western European countries Rest of Europe 31 December 2008 North America Rest of the world Unalloc ated Capital expenditure (47,010) (10,514) (2,929) (992) (33,762) (95,207) Depreciation, amortisation and provision charges (excluding financial) 35,335 3,615 3, ,711 49,694 Share-based payment expense with no impact on cash flow ,585 6,585 Total 15/50

18 Note 6. Personnel costs The following table shows a breakdown of personnel costs, which are split in the income statement between the cost of goods sold, selling expenses, general and administrative expenses and research and development expenses: 30 June June 2008 Wages and salaries (114,630) (94,157) Social security charges and payroll taxes (42,309) (36,319) Sub-total (156,939) (130,476) Employee benefits expense (2,080) (1,916) Interim accounting expenses associated with share-based payment expense (3,957) (3,259) Social security charges on share-based payments (212) - Sub-total share-based payment expense (4,169) (3,259) Employee profit-sharing (5,939) (4,717) Total (169,127) (140,368) The average rate of employer social security contributions is 36.9% of gross payroll (38.6% at 30 June 2008). At 30 June, employee benefits expense is recognised on the basis of estimates made at the beginning of the period. The increase in share-based payment expense is mainly due to the impact of stock option and share award plans granted by the Board of Directors on 22 January 2009, 27 February 2009 and 30 March On 22 January 2009, the Board of Directors awarded 99,540 bonus shares or the cash equivalent to employees who (i) are employed by the Group on a permanent or fixed-term contract or are executive officers in a Group company exercising the functions referred to in article L , II of the French Commercial Code, and (ii) have been employed by the Group for at least three months. The vesting period for the shares is two years for French tax residents and four years for non-french tax residents. Vested shares are subject to a two-year lock-up period for French tax residents. There are no performance conditions. On 27 February 2009, the Board of Directors awarded 29,000 bonus shares to the Chairman and Chief Executive Officer of the Company and members of the Company's Executive Committee. The awards are subject to performance conditions and, in the Chief Executive Officer's case, a lock-up period. On 30 March 2009, the Board of Directors awarded 148,300 stock options and 24,730 bonus shares to certain employees of the US subsidiaries, Biomeasure and Tercica Inc.. There are no performance conditions but eligible employees must have completed four years' service with the Group. Note 7. Other operating income and expenses Other operating income and expenses in the first half of 2009 amounted to (4.8) million, mainly comprising rent on unoccupied space in the head office and certain non-recurring costs related to the integration of the North American operations. Other operating income and expenses in the first half of 2008 amounted to 1.6 million, mainly related to the sale of land not used in the business. Note 8. Amortisation of intangible assets This item comprises amortisation of intangible assets other than software. The increase is due mainly to a 4.6 million amortisation charge for the licence recognised as an intangible asset upon the final adjustments to the Tercica Inc. fair values and goodwill (see note 11). 16/50

19 Note 9. Financial income/(expense) 9.1. Net finance cost 30 June June 2008 Proceeds of sale of short-term investments 1,696 5,058 Financial income on interest rate option 34 3 Total income from financial assets at fair value through profit or loss 1,730 5,061 Other financial income and expenses (1) (89) 10,759 Total income from loans and receivables (89) 10,759 Financial income 1,641 15,820 Interest on debt (2) (2,964) (534) Interest on employees profit sharing fund (220) (374) Total interest on financial liabilities measured at amortised cost (3,184) (908) Financial expenses on rate option (276) - Total expenses on financial assets at fair value through profit or loss (276) - Financial expenses (3,460) (908) Net finance cost (1,819) 14,912 (1) Other financial income and expenses at 30 June 2008 mainly comprised (i) interest on the convertible notes issued by Tercica Inc., which were converted on 22 July 2008, calculated at the nominal rate ( 0.7 million) and the effective interest rate ( 9.5 million); (ii) the revaluation at fair value (market value) of financial assets at fair value through profit or loss, money market mutual funds and certificates of deposits with a maturity of less than months ( (0.3) million). (2) The increase in interest on debt is due to the (2.5) million of interest paid on the loan taken out to finance the North American acquisitions. The loan was drawn in the sum of million in October 2008 and repaid in full on April 2009 (see note 19) Other financial income and expenses 30 June 30 June Changes in the fair value of the warrant and conversion options - (6,265) Exchange differences on the fair value of the warrant and the conversion options - (1,039) Other exchange differences (2,189) (4,243) Income and expenses on financial assets and liabilities measured at fair value (2,189) (11,547) Impairment of investments in non-consolidated companies Impairment of other financial assets - - Income and expenses on available-for-sale financial assets Financial income on employee benefit plans Interest cost on employee benefit plans (625) (386) Other financial income and expenses (423) (74) Total other financial income and expenses (2,851) (11,526) The change in other financial income and expenses was mainly due to the early exercise and conversion of the Tercica Inc. warrant and convertible notes on 22 July In the first half of 2008, this had led to the recognition of a (7.3) million fall in fair value and (2.0) million in foreign exchange losses, whereas no transaction of this kind was carried out in the first half of /50

20 Note 10. Income taxes Breakdown of the tax charge 30 June June 2008 Current taxes (45,381) (24,196) Deferred taxes 23,411 (8,535) Actual tax charge (21,970) (32,731) Effective tax rate 30 June June 2008 Net profit from continuing operations 98, ,336 Share of profit or loss from associated companies - (5,226) Profit from continuing operations before share of profit or loss from associated companies 98, ,562 Income taxes (21,970) (32,731) Profit from continuing operations before tax and share of profit or loss from associated companies 120, ,293 Effective tax rate 18.23% 21.92% In the first half of 2009, the effective tax rate was 18.2% of pre-tax profit from continuing operations compared with 21.9% in the same period of The significant decrease was mainly due to the recognition of tax losses carried by Tercica Inc., which has been fully consolidated since October The Group was also subject to a tax audit which was completed in June The impact of tax reassessments in the first half of 2009 was largely offset by a rebate related to the reduced rate of tax on sub-licence royalties in prior years Deferred tax assets and liabilities Movements in the first half of 2009 Movements during the period 31 December 2008 (*) Exchange differences Changes in scope of consolidation Deferred taxes recognised directly in equity Expenses / income in the income statement Other movements 30 June 2009 Deferred tax assets 98, ,446 7, ,498 Deferred tax liabilities (5,296) (504) - 1,155 5,965 (7,988) (6,668) Net assets/(liabilities) 93, ,155 23, ,830 (*) The figures at 31 December 2008 presented above have been restated for the final adjustments to the goodwill arising on the acquisition of Vernalis Inc. and the remaining interests in Tercica Inc.. A reconciliation with the published balance sheet at 31 December 2008 is provided in note The change recorded under "Expense/income in the income statement" includes 13.9 million related to the change in Tercica Inc.'s recognised deferred tax assets based on tax loss carryforwards, temporary differences and the recognition of an intangible asset reflecting the value of Tercica Inc.'s product licence. 18/50

21 Movements in the first half of 2008 Movements during the period 31 December 2007 Exchange differences Changes in scope of consolidation Deferred taxes recognised directly in equity Expenses / income in the income statement Other movements 30 June 2008 Deferred tax assets 61,393 (2,227) - - (8,077) 50 51,139 Deferred tax liabilities (3,932) (458) (50) (4,207) Net assets/(liabilities) 57,461 (1,994) - - (8,535) - 46,932 Note 11. Goodwill Net goodwill carried in the balance sheet Movements in the first half of December 2008 (*) Increases Decreases Movements during the period Changes in scope of consolidation Exchange differences 30 June 2009 Gross goodwill 298, ,325 Impairment losses (7,748) (776) (8,524) Net goodwill 290, (15) 290,801 (*) The figures at 31 December 2008 presented above have been restated for the final adjustments to the goodwill arising on the acquisition of Vernalis Inc. and the remaining interests in Tercica Inc.. A reconciliation with the published balance sheet at 31 December 2008 is provided in note Movements in the first half of December 2007 Increases Decreases Movements during the period Changes in scope of consolidation Exchange differences 30 June 2008 Gross goodwill 199, (891) 198,307 Impairment losses (10,185) (9,294) Net goodwill 189, ,013 19/50

22 11.2. Determination of Tercica Inc. and Vernalis Inc. goodwill after fair value adjustments Tercica Inc. Vernalis Inc. Total Cash paid (241,296) (1,566) (242,862) Direct transaction costs (6,688) (872) (7,560) Conversion/exercise of financial instruments (99,106) - (99,106) Elimination of reciprocal transactions 19,411-19,411 Total acquisition cost (327,679) (2,438) (330,117) Share of net assets and liabilities acquired 168,474 (1,080) 167,394 Goodwill generated at 31 December 2008 (159,205) (3,518) (162,723) Fair value adjustments to identifiable assets/liabilities acquired (*) 61, ,189 (*) Other (269) (269) (*) Goodwill generated (98,386) (3,417) (101,803) (*) See note 11.4 On allocation of the Tercica Inc. and Vernalis Inc. purchase price, the Group made the following fair value adjustments: Revaluation of the intangible asset recognised on the acquisition of an interest in Tercica Inc. in October 2006, corresponding to the fair value of Tercica Inc.'s product licence which had not been capitalised by the company as of the transaction date; Revaluation of Tercica Inc.'s inventories at their sale price less selling costs, completion costs and a reasonable margin to compensate the acquirer for its selling effort based on the margin observed for similar work-in-progress and finished goods, as well as a write-down of free samples; Recognition of a contingent liability corresponding to a milestone payable by Tercica Inc. under a third-party licence agreement; Recognition of deferred tax assets based on the historical tax loss carryforwards and temporary differences of Tercica Inc. and Vernalis Inc.. 20/50

23 11.3. Breakdown of assets and liabilities acquired Fair value Tercica Inc. (100%) Vernalis Inc. (100%) Carrying amount Change Fair value Carrying amount Change Assets Goodwill 22,385-22, Intangible assets 149,486 79,738 69,748 (*) Property, plant & equipment 1,163 1, Financial assets Equity investments Deferred tax assets 104,247 57,201 47,046 (*) (*) Receivables 3,822 3, Inventories 18,707 18, (*) Cash and cash equivalents 70,294 70, Intercompany accounts - Intragroup eliminations Total assets 370, , ,253 2,478 2, Liabilities Bank loans and financial liabilities Provisions for employee benefits Deferred tax liabilities 60,997 31,674 29,323 (*) Other liabilities 1,242 1, Bank overdrafts 10,451 10,451-3,442 3,442 - Intercompany accounts - Intragroup eliminations Total liabilities 72,690 43,367 29,323 3,457 3,457 - Contingent liabilities recognised 7,371-7,371 (*) Net assets/(liabilities) 290, , ,558 (979) (1,080) 101 (*) see note /50

24 11.4. Reconciliation between the published balance sheet at 31 December 2008 and the balance sheet at 31 December 2008 after final adjustments to the Tercica Inc. and Vernalis Inc. goodwill Adjustments Tax loss 31 Dec. Impact 31 Dec. carry 2008 on net 2008 Contingent / tempo- Total Other forwards publishetories final Inven- profit for after Licence adjustments liability rary quarter differences 2008 ASSETS Goodwill 351,736 (31,085) (33) 3,301 (33,372) (61,189) ,816 Other intangible assets 163,911 69, ,748 - (724) 232,935 Property, plant & equipment 237, ,860 Equity investments 2, ,650 Investment in associated companies Non-current financial assets 3, ,810 Other non-current assets 8, ,039 Deferred tax assets 111,439-1,395 2,948 42,804 47,147 (60,332)* 89 98,343 Total non-current assets 879,445 38,663 1,362 6,249 9,432 55,706 (60,063) (636) 874,453 Inventories 115, (236) 115,782 Trade receivables 217, ,845 Current tax assets 49, ,509 Other current assets 63, (269) - 63,383 Current financial assets 2, ,528 Short-term investments Cash and cash equivalents 239, ,584 Total current assets 689, (269) (236) 688,631 Assets of discontinued operations 1, ,333 TOTAL ASSETS 1,569,840 38,663 1,436 6,249 9,432 55,780 (60,332) (871) 1,564,417 EQUITY & LIABILITIES Share capital 84, ,060 Additional paid-in capital and consolidated reserves 680,216 10, (1,121) 9,432 19,086 (326) - 698,976 Net profit for the period 147, (601) 146,563 Exchange differences (44,535) (32) (44,567) Equity - attributable to shareholders of Ipsen S.A. 866,905 10, (1,121) 9,432 19,086 (326) (633) 885,032 Minority interests 1, ,580 Total equity 868,485 10, (1,121) 9,432 19,086 (326) (633) 886,612 Retirement benefit obligation 11, ,530 Long term provisions 27, ,371-7, ,739 Bank loans 148, ,941 Other financial liabilities 13, ,803 Deferred tax liabilities 36,404 27,898 1, ,323 (60,006)* (425) 5,296 Other non-current liabilities 142, ,560 Total non-current liabilities 380,419 27,898 1,425 7,371-36,694 (60,006) (238) 356,869 Short term provisions 8, ,952 Bank loans 4, ,000 Financial liabilities 4, ,346 Trade payables 103, ,835 Current tax liabilities 36, ,315 Other current liabilities 156, ,345 Bank overdrafts 2, ,259 Total current liabilities 316, ,052 Liabilities of discontinued operations 4, ,884 TOTAL EQUITY AND LIABILITIES 1,569,840 38,663 1,436 6,249 9,432 55,780 (60,332) (871) 1,564,417 * Position net of deferred taxes 22/50

25 Note 12. Other intangible assets Movements in the first half of 2009 Movements during the period 31 Change in 30 June December scope of Exchange Other (*) 2008 Increases Decreases 2009 consolidation differences movements Intellectual property 278,008 6,340 (2,103) - 3,269 4, ,335 Intangible assets in progress 1, ,018 Advance payments 10,650 3, (4,604) 9,896 Cost 289,672 10,922 (2,103) - 3, ,249 Depreciation (40,117) (7,402) (47,125) Impairment losses (16,620) (40) - (15,804) Net 232,935 3,520 (1,035) - 3, ,320 (*) The figures at 31 December 2008 presented above have been restated for the final adjustments to the goodwill arising on the acquisition of the remaining interests in Tercica Inc.. A reconciliation with the published balance sheet at 31 December 2008 is provided in note Movements in intellectual property reflect payments made under the Group's partnerships, mainly with Novartis (Exforge) and the University of Rotterdam. Movements in depreciation include a 4.6 million charge for the period in respect of the licence recognised as an intangible asset following the final adjustments to the Tercica Inc. goodwill (see note 11). Movements in the first half of December 2007 Increases Decreases Movements during the period Change in scope of consolidation Exchange differences Other movements 30 June 2008 Intellectual property 129,972 4,465 (555) - (1,991) 2, ,489 Intangible assets in progress 781 1, (4) (522) 1,335 Advance payments 4,719 2, (2,039) 5,107 Cost 135,472 7,972 (555) - (1,995) ,931 Depreciation (25,837) (2,690) (3) (28,078) Impairment losses (20,466) (41) - (20,368) Net 89,169 5, (2,000) 34 92,485 23/50

26 Note 13. Property, plant & equipment Movements in the first half of 2009 Movements during the period 31 Change in 30 June December scope of Exchange Other 2008 Increases Decreases 2009 consolidation differences movements Land 16, ,517 Buildings 149, (220) , ,333 Plant & equipment 191,936 1,412 (402) - 4,685 6, ,553 Other assets 92,733 1,799 (1,673) ,717 95,376 Assets in progress 63,226 11, ,686 (22,490) 55,655 Advance payments (2) (84) 270 Cost 513,845 14,703 (2,295) - 10,008 (557) 535,704 Depreciation (275,977) (13,933) 1,712 - (2,836) (2) (291,036) Impairment losses (8) (8) Net 237, (583) - 7,172 (559) 244,660 Movements in the first half of December 2007 Increases Decreases Movements during the period Change in scope of consolidation Exchange differences Other movements 30 June 2008 Land 16, (187) 21 16,315 Buildings 159,765 1,313 (958) - (1,755) 3, ,297 Plant & equipment 189,549 3,571 (846) - (5,313) 7, ,230 Other assets 85,104 1,647 (2,783) 174 (1,067) 1,166 84,241 Assets in progress 52,851 19,539 (331) - (2,333) (12,099) 57,627 Advance payments (266) 339 Cost 504,224 26,199 (4,918) 174 (10,653) ,049 Depreciation (282,190) (13,091) 3,827 (106) 3,213 (34) (288,38 1) Impairment losses (143) (39) Net 221,891 13,108 (989) 68 (7,438) (11) 226,629 24/50

27 This document is classified as "Strictly Confidential Ipsen" - RAPPORT FINANCIER SEMESTRIEL 2009 VA.doc Note 14. Other non-current assets Movements in the first half of December 2008 Cash flows related to investing activities Cash flows related to financing activities Change in plan assets Movements during the period Reclassification of derivatives Fair value changes in profit and loss Discounting Exchange differences Other movements (A) (B) (C) (D) (E) (F) (G) (H) 30 June 2009 Conversion options attached to the convertible notes Warrants Derivative instruments recognised at fair value Net assets of post-employment benefit plans 3, ,819 Non-current financial assets (financial assets at fair value) 3, ,819 Convertible notes (1) - 2, ,000 Liquidity agreement (2) 1, ,484 Loans to non consolidated companies 156 (1) Other financial assets 1, ,574 Deposits (3) 4,983 (981) ,034 Other non-current assets (loans, receivables and other assets) (4) 8,039 1, ,247 (1) (2) (3) (4) The movement in this item is mainly due to Ipsen's subscription to the convertible note issue made by Pharnext (see note 1). The movement in the liquidity agreement is due to the use of cash at 31 December 2008 to purchase treasury shares in 2009 under the liquidity agreement entered into in February 2007 and renewed on 17 December The decrease in deposits stems from discounting the security deposit paid on the Boulogne-Billancourt head office and repayment of the security deposit on the Spanish subsidiary's research and development centre. Impairments of loans and receivables are not included as they are not material. The fair value of loans and receivables is their carrying amount in the balance sheet (value on the transaction date less any impairments recognised after testing on each reporting date). 25/50

28 This document is classified as "Strictly Confidential Ipsen" - RAPPORT FINANCIER SEMESTRIEL 2009 VA.doc Movements in the first half of 2008 Movements during the period 31 December 2007 Cash flows related to investing activities (A) Cash flows related to financing activities (B) Change in plan assets Reclassification of derivatives Fair value changes in profit and loss Discounting Exchange differences Other movements (5) 30 June 2008 Conversion options attached to the convertible notes (4) 14, (4,396) - (548) Warrants (4) 6, (2,212) - (491) (9,955) (4,236) - - Derivative instruments recognised at fair value 21, (6,608) - (1,039) (14,191) - Net assets of post-employment benefit plans 4, (174) (8) - 3,863 Non-current financial assets (financial assets at fair value) 25, (174) - (6,608) - (1,047) (14,191) 3,863 Convertible notes (1) 47,845 10, (2,014) (56,034) - Liquidity agreement (2) 2,542 (2,249) Loans to non consolidated companies Other financial assets 1, (39) - 1,456 Deposits 3,799 (8) (40) - - 3,751 Other non-current assets (loans, receivables and other assets) (3) 55,632 8, (40) (2,053) (55,915) 5,710 Total other non-current assets 81,515 8,086 - (174) - (6,608) (40) (3,100) (70,106) 9,573 (1) (2) (3) (4) (5) The change is mainly due to amortisation calculated at the effective interest rate, accrued interest and exchange differences during the period. Cash flows related to investing activities include early recognition of interest calculated at the effective interest rate over the period given the method used to value the Tercica Inc. convertible notes, which takes account of the fact that the notes were converted on 22 July 2008, ahead of their maturity date on 12 October The change is due to the use of cash held at 31 December 2007 to purchase treasury shares in the first half of 2008 under the February 2007 liquidity agreement. Impairments of loans and receivables are not included as they are not material. The fair value of loans and receivables is their carrying amount in the balance sheet (value on the transaction date less any impairments recognised after testing on each reporting date). Fair value is measured using the Black & Scholes model. Other movements in convertible notes, the attached conversion options and the warrant are due to their reclassification as current assets given their conversion and exercise for Tercica Inc. shares on 22 July /50