The history of a family

Transcription

1 2011

2 Contents The history of a family Becoming a major player in the world of the medicine A specific French know-how Boiron medicines Working together with healthcare professionals Research efficiency The internationally The Boiron approach A new stage of industrial development Key figures Boiron financial Report

3 The history of a family > Thierry BOIRON > Henri BOIRON > Jean BOIRON Our company was created in 1932 when Jean and Henri Boiron, entrepreneurs and scientists, began exploring the field of homeopathy. In 2012, Boiron remains an independent family pharmaceutical company in which, today, Thierry Boiron serves as Chairman of the Board, Christian Boiron ensures the Senior Management function and Michèle Boiron serves as pharmacist and consultant for the group. Since March, Anabelle Flory-Boiron leads the «Boiron France» management team. Regarding Christine Boyer-Boiron, who is also a pharmacist, a major portion of her career was devoted to the history of homeopathy. This family history, one of the exceptions in the global pharmaceutical landscape, allows Boiron to guide its strategic choices. > Christian BOIRON > Michèle BOIRON > Anabelle FLORY-BOIRON > Christine BOYER-BOIRON 3

4 Becoming a major player in the world of the medicine > Philippe GOURET Boiron s history is part of the evolution and progress of modern scientific medicine, in the tradition of Hippocrate and Hahnemann. > Valérie POINSOT In order to pursue that path, we now must continually improve our know-how, which consists of producing medications that are both effective and safe in an environment where the healthcare and drug regulations are increasingly complex. To become each day a more useful participant in the world of medicine, we still need to increase our research efforts and continue our industrial and marketing investments. We must therefore identify new resources to ensure the independence necessary for the success of the Boiron project. > Philippe MONTANT Christian BOIRON General Manager > Gilles CHAUFFERIN > Christine PLACE > Jean-Christophe Bayssat 4

5 Becoming a major player in the world of the medicine A specific French know-how Boiron medicines Homeopathic dilutions: a unique know-how. 5

6 Becoming a major player in the world of the medicine A specific French know-how Boiron medicines A specific French know-how Our medicines, the vast majority of which are produced in France, are prepared from vegetable, animal, mineral or chemical substances which are highly diluted and dynamized. Each substance dilution is an active ingredient in its own right. At our 5 production sites (Sainte-Foy-lès-Lyon, Messimy, Montrichard, Montévrain, Harzé) and at our 49 establishments in 58 countries, good manufacturing practices are applied as at any pharmaceutical laboratory. But the very high dilutions required demand preparation methods and an environment fully designed for the management of infinitesimal quantities. We have 80 years of experience in this field. And we continue to innovate, for example, with new product packaging which are safer and more practical, for all or our specialties. 6

7 A specific French know-how Boiron medicines Working together with healthcare professionals The dilution process is at the heart of the production of our medicines. 7

8 A specific French know-how Boiron medicines Working together with healthcare professionals Boiron medicines There are two large families of homeopathic medicines: those associated with precise therapeutic indications and dosage. They can be found in the form of tablets, syrups, single-dose liquids, ointments and other presentations. those that do not mention a therapeutic indication or dosage. Each of these medicines may be used in the framework of individualized treatment that might involve different pathologies. They are generally presented in the form of tubes or granular tubes or cellular doses. 8

9 Boiron medicines Working together with healthcare professionals Research efficiency Working together with healthcare professionals Doctors throughout the world are discovering homeopathic medicines thanks to university learning or private schools. In Bulgaria, for example, all medical schools include courses in homeopathy. In France, midwives obtained the right to prescribe all homeopathic medicines as of October Our pharmaceutical networks are in contact with 20,000 pharmacies. Our certified network of 90 medical representatives meet annually with 23,000 doctors and 300 hospitals at which, little by little, homeopathic medicines are slowly assuming their rightful place. We support their development by taking a difficult path with conviction and humility: toward the contribution of homeopathic medicines in the field of serious diseases, most notably cancer. Our medicines can in fact reduce the side effects of conventional treatments and improve the quality of life for patients. 9

10 Boiron medicines Working together with healthcare professionals Research efficiency Working together with healthcare professionals 40 % of Belgians use homeopathic medicines. Source: IPSOS 2011 Boiron Homeopathic medicines are naturally recommended by pharmacists as the first course of action. Their effectiveness, lack of toxicity and therefore their public health interest are highly regarded by pharmacists and the public themselves. Thus, 82% of Spanish users of homeopathic medicines describe themselves as «satisfied» or «very satisfied» with the results obtained (Netquest 2011), and 56% of the French (vs. 39% in 2004) are users of homeopathic medicines (Ipsos 2004 et 2012). At both the doctor s office and the pharmacy, a change in the profile of patients has been observed with, for example, the noticeable arrival of men and young adults. Similarly, all socio-professional categories are represented among the users of homeopathy. 10

11 Working together with healthcare professionals Research efficiency The internationally In our research laboratory which was inaugurated in 2011, we are multiplying our efforts towards the development of new medicines. Gilles CHAUFFERIN Deputy General Manager 11

12 Working together with healthcare professionals Research efficiency The internationally Research efficiency Boiron research programs have the following objectives: to pursue the evaluation of the effectiveness and usefulness of our human and veterinary specialties, to create new medicines, most notably in those fields where the public healthcare issues are significant, to evaluate the public health care interests of our medicines, to improve and refine their manufacturing method. Our research programs involve teams of university hospitals and medical practitioners from numerous countries; 70 programs are currently in process, in basic research, preclinical, clinical and pharmacoepidemiology. In 2011, projects were launched in the USA, Russia, Poland, Spain and Italy. These projects are primarily piloted by Boiron France. 12

13 Research efficiency The internationally The Boiron approach Valérie POINSOT Deputy General Manager Throughout the world, more than 1,000 employees contribute to the development of the Boiron project

14 Research efficiency The internationally The Boiron approach Boiron medications were created 80 years ago. Since they are developed, making their way across the centuries and cultures and at a time when medicine Their leadership is already a reality and pharmacy made decisive progress globally. However, their use has grown and their therapeutic value appears ever more relevant. in Italy (Euphralia n 1 in eye drops), France, Slovakia, Belgium (Oscillococcinum n 1 anti-influenza), etc. 14

15 The internationally The Boiron approach Nouvelle étape du développement industriel The business and social aspects are closely related and interdependent. All of our company agreements begin with observation. Christine PLACE Deputy General Manager 15

16 The internationally The Boiron approach A new stage of industrial development The fulfilment of each for the success of all We believe that management by fulfilment is much more effective than management by stress. We put this idea into practice by paying special attention to the personal development of each employee, making sure to establish clear and effective rules of the game (32 enterprise agreements), by integrating the artistic process and openness to differences within the heart of our daily activity. In 2011, a workshop on the question of «well-being at the workplace» was initiated in order to gain perspective on professional practices and work better both individually and collectively. 16

17 The Boiron approach A new stage of industrial development Key figures Boiron 2011 The Sainte-Foy-lès-Lyon site. The dosage preparation and packaging of Oscillococcinum. 17

18 The Boiron approach A new stage of industrial development Key figures Boiron 2011 A new stage of industrial development We re convinced of the tremendous growth potential of our medicines throughout the world. Because of that, for several years, we have been preparing for the future by investing heavily in our production facilities. In 2011, more than 24 million euros were invested at our production sites. 18

19 The Boiron approach A new stage of industrial development Key figures Boiron 2011 The Messimy site. Near Lyon, the site covers 17 hectares. 19

20 The Boiron approach A new stage of industrial development Key figures Boiron 2011 Our presence in the world Boiron s subsidiaries Boiron s distributors 20

21 Key figures Boiron 2011 Distribution of sales by product category Change in sales in millions of euros (IFRS data) Nonproprietary homeopathic medicines 50.8% OTC specialties 49.2% In 2011, group sales increased by 0.5%. International decreased by 4.3% and increased by 4.7% on France. Sales of specialities increased by 2.3%, now making 49.2% of sales. Sales of nonproprietary homeopathic medicines decreased by 0.7%. Consolidated sales International consolidated sales Simplified consolidated statement of income in millions of euros Distribution of sales by geographical area in millions of euros France: Europe excluding France: North America: Others: Variation Sales % Operating Income % Taxes and other items (21.45) (23.38) -8.3% Net Income (Group share) % 21

22 Key figures Boiron 2011 Change in earning per share in euros - adjusted data 2.78 Investments and cash flow in millions of euros Earnings per share are determined after deducting the number of shares held by the company over the year Cash flow Gross Investments Change in dividend per share in euros - adjusted data Simplified balance sheet in millions of euros Fixed assets Shareholder s equity (Group share) 0.22 Minority interests Current assets Fixed liabilities Current liabilities assets liabilities 22

23 Financial Report

24 Contents Person responsible for the Reference Document Financial report Board of Director's Report Consolidated financial statements and notes Statutory auditor's report on the consolidated financial statements Corporate Governance Chairman's report on internal control Statutory Auditors' report Internal Board Procedures Statutory Auditors Fees paid to Statutory Auditors Legal information Organization chart of Boiron group Legal identity of Boiron, distribution of profits and Shareholders' Meetings Share capital, voting rights, thresholds Draft Resolutions put to the Ordinary Shareholders' Meeting of May 24, 2012 Description of the new share buypack program List of information published or made public during the past 12 months Table of concordance During the time of validity of the present reference document, the statutes, the auditors reports and the financial statement of the last three years, as well as any reports, mails and other documents, historic financial information of Boiron and its subsidiaries of the last three years, the evaluations and the statements did by an expert, when these documents was foreseen by the law and any statutory document, can be consulted in the head office: 20 rue de la Libération Sainte-Foy-lès-Lyon - FRANCE

25 25 Person responsible for the Reference Document Person responsible for the Reference Document Philippe MONTANT Deputy General Manager Declaration by the Person Responsible for the Reference Document I declare that to the best of my knowledge, and having taken the appropriate measures to ensure such is the case, the information in this reference document is true and accurate, and does not contain any omission that could alter its import. I declare that to the best of my knowledge, these financial statements were prepared according to the applicable financial standards and give a true and fair view of the businesses, financial position, and income of all entities in the company s scope of consolidation. I also declare that to the best of my knowledge, the attached Management Report (pages 26 to 68) gives a true and fair view of the business trends, financial position, and income of all entities in the company s scope of consolidation, as well as a discussion of their primary risk factors. I have received an end-of-assignment letter from the statutory auditors stating that they have confirmed the financial statements and financial position given in this reference document, and have read the document as a whole. This letter does not include observations. The historical financial information presented in this Reference Document is the subject of the Statutory Auditors reports appearing on page 118 and 126 those incorporated on page 116 and 139 of Annual Report 2010 and on page 108 and 131 of Annual Report The report on the 2009 consolidated financial statements included an observation related to changes in accounting methods applied as of the 2009 period. Concerning the 2010 period, statutory auditors commented upon the change in the presentation of the impact of exchange rates on trading operations which Boiron implemented as of January 1, Sainte-Foy-lès-Lyon April 04, 2012 Philippe MONTANT According to the article 28 of the European regulation n 809 / 2004, the following information is incorporated by reference in this reference document: - The financial consolidated statements and the statutory auditors report relative to the past financial year on December 31, 2010 and appearing on pages 116 and 139 of Annual Report 2010 N deposited with the Authority of Financial markets on April 12, 2011; - The financial consolidated statements and the statutory auditors report relative to the past financial year on December 31, 2009 and appearing on pages 108 and 131 of Annual Report 2009 N deposited with the Authority of Financial markets on April 9, 2010.

26 26 Financial report Board of Director s Report Board of Director s Report March 14, 2012 Highlights Significant events in 2011 In France Since March, Camilia, which is indicated for teething pain, is also available in a 30 dose format. In May, Arnigel was advertised for the first time on television. Oscillococcinum in a 30 dose format was launched in September. Sedatif PC was presented in a new commercial and poster campaign during the fall of The capital expenditures programme further proceeded at the various sites: Launch of a production unit for Oscillococcinum in Messimy, continued work to expand our production facilities at the Montevrain site to increase the production capacity for single-dose (Camilia, Homéoptic ). The redesign of our IT system is in process: - The Sage X3 software system related to the financial and purchasing functions has been operational since January Our new IT programme (Arpege) has now been implemented at all of our 31 processing-distribution sites. The construction of a 200 m 2 research laboratory in Messimy was completed in June of The purpose of the laboratory is to perform fundamental and applied industrial research. On May 2, 2011, the rate paid by the French National Health Insurance for reimbursed drugs changed from 35% to 30%. On October 12, 2011, a decree from the French Health Ministry permits midwives to prescribe homeopathic medicines to women. Those prescriptions can be reimbursed by the French national health insurance. Within the framework of our relations with the Medical and Maieutic faculty at the University of Lyon Sud - Charles Mérieux, we contributed to the funding for the renovation of one of the amphitheatres. The Boiron amphitheatre was inaugurated on June 21, The Board of Directors, at its meeting on May 19, 2011, decided upon the following changes which took effect on July 1, 2011: - Thierry Boiron, General Manager, has been appointed to be the Chairman of the Board of Directors thereby replacing Christian Boiron who has been appointed to be the General Manager. - Philippe Gouret s mandates as both Deputy General Manager and Chief Pharmacist have been renewed. - Valerie Poinsot has been appointed Deputy General Manager. - Philippe Montant has been appointed as Deputy General Manager. On December 1 st, 2011, the French court of final appeal definitively ended litigation related to the legality of the Additional Tax on Direct Sales which had been filed by Boiron against the French Social Security Agency (URSSAF). The amount of 12,956 thousand received by Boiron in 2010 has therefore been realized as a receipt and will favourably impact income in the period. On December 29, 2011, a ministerial decree which modified the schedule of authorized margins for pharmaceutical wholesalers was published in the Official Journal, effective as of January 1, The new schedule permits price increases on several reimbursable medicines for the first time in 23 years.

27 27 Financial report Board of Director s Report In United States In order to adapt to changes in its market, the subsidiary has reorganized and reduced its workforce by 15 persons. Boiron USA has been the target of consumer complaints related to some of its drugs. These complaints have resulted in class action law suits. In Italy The subsidiary is continuing the reorganization of its customer service function by combining all of its teams on a single site in Milan. In Poland In light of declining sales, Boiron Poland decided to reorganise and reduced its workforce by nine persons as of year-end In Russia In Russia, Arnigel has been marketed since the month of June Post closing events On December 13, 2011, the Board of Directors at Boiron Italy decided to close sites in Bologna and Pioltello (Milan). The company s management presented the restructuring plan to employee representatives on January 30, That plan should result in a reduction in the workforce by 33 persons and the installation of new facilities at the Segrate site in Milan in order to support the distribution functions. This reorganization, the full impact of which is currently being assessed, should be implemented by the month of June No other post-closing events which might have a material impact on the Group s financial statements have been identified. In Brazil In Brazil, Stodal has been available for sale since the month of March Following launches in Italy, Belgium and France, Oscillococcinum in the 30 dose format was launched in the United States, Canada, Slovakia and Czech Republic in the second half of 2011.

28 28 Financial report Board of Director s Report Changes in consolidated income ACTIVITY IN 2011 The criteria below used to allocate sales is the same as those used for sales data disclosed quarterly. The criteria for assigning assets related to realised sales is used for segment reporting in the notes to the consolidated financial statements. CONSOLIDATED SALES 2010 / 2011 Sales (in thousands of euros, IFRS) var. 2011/2010 France 292, , % France 282, , % Caribbean 5,777 5, % Reunion 2,728 2, % Others in France 1, % Europe excluding France 185, , % Italy 55,675 54, % Russia 44,669 48, % Spain 25,255 26, % Belgium 19,490 20, % Poland 6,655 10, % Switzerland 3,714 3, % Others in Europe 29,556 29, % North America 38,416 41, % USA 27,920 30, % Canada 10,496 11, % Others 7,604 6, % Brazil 1, % Others 6,264 5, % Total Boiron Group 523, , % Total Boiron Group at constant exchange rates +0.9%

29 29 Financial report Board of Director s Report SALES TRENDS IN 2011 BY GEOGRAPHIC REGION AND PRODUCT CATEGORY (IN thousands OF EUROS AND AS A %, EXCLUDING OTHER REVENUES ) Non-Proprietary Non-Proprietary Evolution OTC OTC Variation in Homeopathic Homeopathic 2011/2010 Specialties Specialties OTC Specialties Medicines 2011 Medicines /2010 BOIRON GROUP 265, , % 257, , % TOTAL FRANCE* 197, , % 94,021 81, % TOTAL EUROPE (excluding FRANCE) 53,637 54, % 130, , % TOTAL NORTH AMERICA 13,400 14, % 26,669 27, % OTHERS 1,378 1, % 6,154 4, % *Métropolitan and overseas In France, sales of non-proprietary medicines remained stable. Growth in sales was driven by OTC specialities which increased by 15.5%. Above all, it should be noted that the increase in sales of Camilia in the first quarter of 2011 and of Oscillococcinum in the second half of 2011 occurred thanks to the introduction of new 30 dose formats. The decrease in sales in the Europe excluding France region was related to non-proprietary medicines and OTC specialities. It was mainly based in Hungary, Belgium, Poland and Russia, in a context of low winter illnesses. In addition, in Poland and Russia, customers attempted to gradually reduce their inventories. Finally, business increased in Italy and the Czech Republic. In North America, the group has three players: Boiron USA, Boiron Canada and Unda, the group s subsidiary in Belgium that exports to the United States and Canada. Sales in this region are declining, mainly in the USA: Sales revenue has been primarily impacted by provisions for product returns and discounts which have been recorded for business realized in the mass market. The growth of OTC specialities in the region Other Countries is mainly based on sales in Brazil, South Africa and Tunisia.

30 30 Financial report Board of Director s Report CHANGES IN CONSOLIDATED INCOME 1 BOIRON Group Income Statement Variation Consolidated (in thousands of euros) 2011/2010 Sales 523, , % Operating income 63,695 66, % Net income - Group share 42,248 43, % Cash flow 86,045 99, % In 2011, Group income benefited from the reversal of the provision created in 2010 in light of the litigation between the French Social Security Agency (URSSAF) and Boiron related to the Additional Tax on Direct Sales. On December 1 st, 2011, the French Court of Final Appeal definitively put an end to that litigation. The amount of 12,956 thousand which was received by Boiron in 2010 has thereby been realized. The reversal of the provision impacted operating income by 9,960 thousand ( 6,887 thousand after the deduction of profit sharing and other partnership interests related to this profit) and other financial income by 2,996 thousand. Moreover, a reversal of the provision for 1 million euros for litigation with the URSSAF related to this dispute was recorded. Finally, in the United States, a provision for 4,311 thousand was recorded related to the class action legal processes between Boiron USA and consumers for various drugs. Group operating income amounted to 63,695 thousand as compared to 66,650 thousand in 2010 or 12.2% of sales versus 12.8% in Production costs amounted to 118,596 thousand as compared to 111,277 in The increase was due to an increase in personnel expenses, depreciation expenses as well as consulting fees related to the continued development of production resources. 1 - The accounting standards, amendments and interpretations required in 2011 are not applicable or do not have any material impact. There were no changes in accounting standards made in the annual financial statements. Preparation and distribution costs amounted to 142,105 thousand versus 139,425 thousand in Those have mainly been impacted by increases in personnel expenses in France as well as in Italy where a restructuring was performed during the first half of 2011 (the combination of customer services at a single site in Milan). They also include costs associated with implementation of the new IT programme Arpège. Promotion costs amounted to 124,035 versus 128,756 thousand in Following an increase of 6.8% in the first half of 2011, costs for the full year decreased by 3.7%. Notably, advertising expenditures in the second half of 2011 decreased in the U.S., France and Italy. Research expenditures amounted to 4,558 thousand, a decrease of 28.1% as compared to 2010, mainly due to delays in certain research programmes. Expenses related to regulatory affairs were level and amounted to 5,777 thousand versus 5,673 in Costs for support functions amounted to 73,610 thousand. Their 10.5% increase as compared to 2010 was primarily attributable to: - The increase in personnel costs in France and at the subsidiaries. - The growth in sub-contracting expenses related to the continuation of IT projects, especially in the first half of Increases in the amortization of IT programs. Other operating income amounted to 14,226 thousand versus 6,785 thousand in Those mainly included the reversal of the 9,960 thousand provision for the dispute related to the Additional Tax on Direct Sales and a research tax credit of 1,178 thousand. Other operating expenses amounted to 5,302 thousand versus 2,640 thousand in They included a provision of 4,311 thousand related to the class action legal process in the US. Interest income amounted to 917 thousand, an increase of 312 thousand. The increase was the result of increases in interest rates earned on the group s cash. Other financial income and expense included net income of 2,845 thousand, of which 2,996 thousand corresponded to the reversal of the provision for the Additional Tax on Direct Sales (portion related to late payment penalties). The effective tax rate amounted to 37.3% versus 35.3% in The increase can mainly be explained by the increase in the applicable tax rate in France (from 34.43% to 36.10%). Net income amounted to 42,248 thousand versus 43,274 thousand in Net income per share decreased from 2.02 in 2010 to 1.97 in 2011.

31 31 Financial report Board of Director s Report Net income by geographic area is as follows: Net income Variation (in thousands of euros) 2011/2010 France 40,259 35,330 4,929 France 39,570 34,760 4,810 Caribbean Reunion Europe (excluding France) 8,650 11,844-3,194 Italy 3,785 3, Russia 2,863 4,863-2,000 Spain 2,148 2, Belgium Poland ,435 Switzerland Others in Europe North America -3,374-1,351-2,023 United States -3,705-1,582-2,123 Canada Others -3,287-2, Brazil -3,338-2, Others Total Boiron Group 42,248 43,274-1,026 BOIRON FRANCE, THE PARENT COMPANY Income in France comes primatily from Boiron France, the parent company. RESTATED FINANCIAL STATEMENTS 2 Consolidated sales increased by 4.3% as compared to 2010 amounting to 318,442 thousand. In France, sale increased by 4.6%: Sales of nonproprietary medicines were stable and sales of OTC specialities increased by 15.5%, thanks to increases in Oscillococcinum and Camilia. Regarding Direct exports, sales increased by 1.9% to 36,135 thousand. Declining sales in Hungary were offset by increases in most of the other countries, including the Czech Republic, Slovakia and Bulgaria. Production costs followed the trend in sales. Preparation and distribution costs were up 2.6%, impacted by increased personnel expenses and by costs related to the implementation of the new ARPEGE software. Promotional expenditures amounted to 65,073 thousand and were flat as compared to Contributive to the consolidated financial statements

32 32 Financial report Board of Director s Report Research expense amounted to 3,829 thousand, a decrease of 2,058 thousand as compared to the prior year. The support function costs amounted to 49,693 thousand, up 14.3%, mainly due to higher personnel costs and costs associated with IT projects. Other operating income amounted to 12,659 thousand versus 4,520 thousand in Those mainly included the reversal of the 9,960 thousand provision for the dispute related to the Additional Tax on Direct Sales and a research tax credit of 1,178 thousand. Operating income amounted to 58,108 thousand versus 53,811 thousand in Interest expense and income from financial investments combined to income of 807 thousand as compared to income of 434 thousand in 2010, due to interest rate increases which increased the interest earned on cash and cash equivalents. Other financial income and expense amounted to income of 2,811 thousand versus a net expense 391 thousand in 2010 and includes the reversal of the provision for the Additional Tax on Direct Sales of 2,996 thousand (portion related to late payment penalties). Given an effective tax rate of 36.0%, net income amounted to 39,523 thousand, an increase of 13.8% as compared to CORPORATE FINANCIAL STATEMENTS Sales amounted to 396,064 thousand versus 387,415 thousand in Operating income amounted to 71,814 thousand, a decrease of 1,599 thousand compared to the prior year. It was impacted by an increase in personnel expenses of 6,124 thousand and increases in provisions for amortization and impairment of 3,520 thousand. Financial income amounted to a profit of 5,221 thousand versus a loss of 668 thousand in It includes the reversal of the provision for the Additional Tax on Direct Sales of 2,996 thousand (portion related to late payment penalties) and favourable trends in exchange rates and investment instrument income. Exceptional items amounted to 7,503 thousand versus 598 thousand in 2010 and mainly included the reversal of the provision of 9,960 thousand on the Additional Tax on Direct Sales. Because of this exceptional income, the profit-sharing amount increased by 2,053 thousand. The effective tax rate amounted to 33.5% versus 32.4% in Corporate net income amounted to 45,551 thousand versus 40,147 thousand in Under the provisions of Article 39.4 of the General Tax Code, the company recorded depreciation of 146, for the portion of the purchase price of passenger vehicles exceeding 18,300 (as compared to 121, in 2010) Expenditures non-deductible for tax purposes (Article 223 of the General Tax Code).

33 33 Financial report Board of Director s Report EUROPE (EXCLUDING FRANCE) ITALY The data commented on below are those of Boiron SRL, Boiron s operating subsidiary in Italy. Sales reached 53,547 thousand, an increase of 3.1% on non-proprietary medicines and specialities. Operating income amounted to 6,307 thousand versus 5,677 thousand in 2010, benefiting from the increased business activity. Moreover, advertising expenses decreased by 732 thousand and specific costs related to the reorganization of customer services by 650 thousand. Net income after application of a 40.1% tax rate reached 3,826 thousand versus 3,449 thousand in RUSSIA Sales amounted to 44,669 thousand, a decrease of 8.5%. Operating income amounted to 3,868 versus 6,214 thousand in 2010, due to the decrease in business activity and the increase in advertising expenses of 1,418 thousand. Net income amounted to 2,863 thousand versus 4,863 thousand in SPAIN Sales amounted to 25,245 thousand, down 3.4% as compared to 2010, mainly on non-proprietary medicines. Operating income in 2011 amounted to 2,912 thousand versus 3,461 thousand in 2010 due to the impact of the sales decrease. Net income amounted to 2,148 thousand versus income of 2,518 thousand in BELGIUM Unda sales decreased by 5.2%, essentially on the domestic market (- 5.8%). Operating income amounted to a profit of 761 thousand versus 33 thousand in It benefited from savings achieved on overall operating costs and reversals of provisions for claims and returns. Net income amounted to 404 thousand versus 18 thousand in POLAND Sales were down by 37.7% at current exchange rates and amounted to 6,655 thousand versus 10,685 thousand in Operating income amounted to a loss of 959 thousand versus income of 802 thousand in 2010, impacted by a decrease in sales and a reorganization that led to the departure of nine persons. On the other hand, cost savings were realized on advertising expenditures. Net income amounted to a loss of 732 thousand versus income of 703 thousand in 2010.

34 34 Financial report Board of Director s Report SWITZERLAND Sales amounted to 3,714 thousand, an increase of 3.2% at the current exchange rate and a decrease of 7.9% at a constant exchange rate. Operating income ended at a loss of 202 thousand versus 152 thousand in 2010 despite the savings achieved on advertising expenses. Net income amounted to a loss of 203 thousand as compared to a loss of 153 thousand in AMERICA UNITED STATES Sales at Boiron Inc. amounted to 27,176 thousand versus 29,861 thousand in 2010, a decrease of 9.0%. Sales decreased by 4.6% in dollars mainly due to expanded terms of sale which impacts sales deductions made in the mass market. CANADA Sales at the subsidiary amounted to 9,481 thousand versus 10,196 thousand in 2010, mainly impacted by cooperative marketing initiatives. Conversely, there was a decrease in advertising expenses. Operating income amounted to a loss of 5,866 thousand (compared to a loss of 2,461 thousand in 2010). Besides the impact of decreased sales, it included legal fees and the creation of a provision of 4,311 thousand related to the class action lawsuit in process. Moreover, it should be noted that advertising expenditures decreased from 6,407 thousand in 2010 to 3,511 thousand in Operating income reached 516 thousand versus 347 thousand in Net income/loss amounted to a loss of 3,705 thousand versus a loss of 1,582 thousand in Net income amounted to 331 thousand versus 231 thousand in OTHERS COUNTRIES BRAZIL Sales reached 1,338 thousand versus 707 thousand in 2010, an increase of 89.2% due to the growth of Oscillococcinum and Sedatif PC and the launch of Stodal in March The operating loss reached 3,392 thousand versus 2,630 thousand in 2010, due to the increase in transportation costs related to the growth in business and personnel expenses (the strengthening of teams in 2010). Net income amounted to a loss of 3,338 thousand as compared to a loss of 2,612 thousand in 2010.

35 35 Financial report Board of Director s Report Consolidated cash flow Cash flows from operating activities amounted to 58,821 thousand versus 51,638 thousand in Cash generated by operating activities reached 86,045, a decrease of 13,299 compared to the prior year, and represents 16.4% of sales versus 19.1% in It includes the encashing of 12,956 related to the Tax on Direct Sales ( Taxe sur les ventes directes ). Taxes paid for 2011 amounted to 21,554 thousand, increase by 20,982 thousand compared to It should be noted that tax payments made in 2010 were calculated based on the significant income realized in 2009 in most of the group companies. Changes in working capital requirements amounted to a requirement of 5,670 thousand which was near the 2010 level. It should be noted that the increase in customer accounts receivable was in line with the increased sales revenue realized in France during the fourth quarter and the increase in social charges and tax liabilities. Cash flows from investment activities were 53,172 thousand versus 37,307 thousand in Purchases of fixed assets amounted to 39,204 thousand and were made mainly in France. They included buildings as well as manufacturing and packaging equipment at the production sites in Messimy and Montévrain. Investments in intangible assets reached 14,050 thousand and mainly concerned IT projects being conducted at Boiron France. No sites were divested in 2011, whereas site divestitures amounted to 4,573 thousand in Cash flows from financing activities consist primarily of dividends paid by Boiron France in Those amounted to 15,035 thousand as compared to 15,024 thousand in 2010 and correspond to a dividend of 0.70 per share for both years. The Group s net cash reached 89,801 thousand at 2011 year-end versus 97,897 thousand at the end of Consolidated balance sheet At December 31, 2011, the balance sheet totalled 587,606 thousand versus 558,339 thousand at the end of The main changes in balance sheet items are as follows: Regarding assets, tangible and intangible assets increased respectively by 20,573 thousand and 8,048 thousand as a result of investments (mentioned above) and partially offset by depreciation recorded during the year. Inventories and work in progress increased by 3,969 thousand, notably in Russia. Trade receivables increased by 7,077 thousand in line with the increase in sales recorded in France in the fourth quarter. The tax receivables decreased by 7,190 thousand: At year-end 2010 in France, Italy and Russia, tax receivables resulted from advance payments made in excess of the income taxes due on fullyear income. Regarding liabilities, shareholders equity reached 368,651 thousand at December 31, Provisions for employee commitments increased by 6,390 thousand, primarily in France (retirement indemnities and the retirement preparation agreement). Non-current provisions decreased by 14,366 thousand after taking into account the reversal of the provision related to the Tax on Direct Sales. Current provisions increased by 3,178 thousand as a result of the provision for litigation in the United States. Other current liabilities increased by 10,840 thousand, mainly due to fiscal and social liabilities: Increase in profit sharing, participation, and in charges for French social security.

36 36 Financial report Board of Director s Report Outlook This chapter contains the group s outlooks which are based on estimates and expectations. Actual results may differ materially from these guidelines, especially in light of the risks and uncertainties described below. From January 1 st 2012 Boiron France was able to increase selling prices on a number of reimbursable non-proprietary homeopathic medicines for the first time in 23 years. This should result in an improved profitability. The reorganizations in Poland and in the United Sates undertaken in 2011 should improve the profitability of the two subsidiaries in The roll-out of the reorganization plan in Italy is planned to take place in the first half of 2012 and should favourably impact the second half. Boiron foresees expanding its industrial site in Messimy and is planning on the acquisition of land in This multi-year investment project should be effectively launched in 2013 and will provide for an increase in production capacity in France. In 2012, despite the difficult economic environment, Boiron is aiming at increasing its sales and profitability.

37 37 Financial report Board of Director s Report Proposed distribution of net income Profit for the 2011 fiscal year 45,550, Allocation to the legal reserve within the limits of 10 % of capital - + Retained earnings 16,740, = Distributable profits 62,290, Dividend of 0.70 per share on the basis of 21,482,556 shares 15,037, = Remaining sum 47,253, Other reserves 32,000, = Balance carried forward 15,253, The Board of Directors is recommending a dividend of 0.70 in respect of the 2011 fiscal year, a payout ratio of 35% of earnings per share. The full dividend distribution is eligible for the 40% allowance (Article 158-III-2 of the French General Tax Code). Treasury shares held at the dividend payment date of june 4 th, 2012 shall not be eligible for dividends. The dividends attributable to these shares shall be credited to earnings carried forward. The following table summarizes the dividends paid over the past three fiscal years. Fiscal Year amount of revenue eligible for the 40% amount of revenue of allowance under Article 158-III-2 not eligible for the 40% allowance Dividends (1) Other distributed revenue ,040, ,037, ,037, (1) Of which carried forward: - 154, in 2008, - 13, in 2009, - 2, in in respect of not paid out dividends on treasury shares.

38 38 Financial report Board of Director s Report Results of Boiron France during the last five fiscal years (Art R of the French Commercial Code) Data converted in Euro I Capital at the end of fiscal year a Share Capital 22,006,286 21,947,566 21,734,528 21,482,556 21,482,556 b Number of existing ordinary shares 22,006,286 21,947,566 21,734,528 21,482,556 21,482,556 c Number of existing preferred shares (without right to vote) d Maximal number of future shares to be emitted d1 by conversion of bonds d2 by exercise of application rights II Operations and results of the fiscal year a Sales 337,306, ,837, ,675, ,414, ,064,341 b Result before taxes, employees profit-sharing, depreciations, reversal and provisions 56,330,629 73,349,407 93,678,594 98,396,035 85,387,258 c Income tax 13,814,282 13,458,792 21,581,655 19,234,065 22,971,914 d Employee profit-sharing for the fiscal year 3,582,651 3,947,893 5,545,903 4,977,247 5,568,866 e Result after taxes, employees profit-sharing, depreciations and provisions 24,252,436 31,714,626 50,093,411 40,147,157 45,550,782 f Distributed profit 12,071,161 13,040,717 15,037,789 15,037,789 15,037,789 (a) III Profits by share a Result after taxes, employees profit-sharing, but before depreciations and provisions b Result after taxes, employees profit-sharing, depreciations and provisions c Dividend distributed by share (a) IV Personnel a Average workforce during the fiscal year 2,577 2,560 2,699 2,722 2,670 b Amount of the payroll for the fiscal year 79,321,572 80,450,410 86,736,497 91,832,556 95,504,190 c Amount paid, during the fiscal year, concerning social benefits (Social Security, charitable works, etc...) 37,582,849 38,832,104 42,993,137 46,240,738 48,693,002 (a) According to the resolutions proposed by the annual Ordinary Shareholders Meeting, the dividend amounts to 0.70.

39 39 Financial report Board of Director s Report Subsidiaries and interests as of December 31, 2011 (décret of Novembre 29 th, 1983, article 24-11) Local Capital Shareholders equities Share Book value of Loans and Loans and Pledges and Average Sales Profit or loss Dividends currency Share except capital share, of the the held securities advances advances approvals exchange of the last of the last received including result before held gross in net in granted received given rate for fiscal year fiscal year during the Observations in local profits distribution capital thousand thousand in thousand in thousand in thousand the fiscal in local in local fiscal year in Subsidiaries and interests currency in local currency in % euro euro euro euro euro year currency currency thousand euro Subsidiaries (> 50% of the share capital held by the Company) Laboratoires BOIRON Srl (Italia) 1000 Euro 2,500 18, , ,547 3,568 - BOIRON Inc. Consolidé hold 100% de BOIRON Borneman Inc USD 3,588 5, ,452 3, ,473-5,143 BOIRON Sociedad Iberica de Homeopatia (Spanish) 1000 Euro 1,099 13, ,295 2,295-1, ,285 2,202 2,000 BOIRON Canada Inc (Canada) 1000 CAD 2,395 4, ,614 1, , BOIRON GmbH (Germany) 1000 Euro UNDA S.A. (Belgium) 1000 Euro 2,850 4, ,627 4,627 6, , BOIRON Caraïbes SARL (France - Martinique) 1000 Euro 1,660 1, ,898 1,898-1, , ,486 C.D.F.H. SARL (France) 1000 Euro BOIRON CZ S.r.o (Czech) 1000 CZK 3,600 14, ,951 2,658 - BOIRON SK S.r.o (Slovak) 1000 Euro , BOIRON SP z.o.o (Poland) 1000 PLN 10,099 8, ,624 2,624-1, ,407-3, BOIRON RO Srl (Romania) 1000 RON 80 1, , BOIRON TN SARL (Tunisia) 1000 TND , BOIRON MA SARL (Morocco) 1000 MAD 800 1, BOIRON Hungaria Kft (Hungaria) 1000 HUF 49, , ,342 42,233 - BOIRON BG E.O.O.D(Bulgaria) 1000 BGN , BOIRON O.O.O (Russia) 1000 RUB 127, , ,521 3, ,825, ,037 - BOIRON Medicamentos Homeopaticos Ltda (Brazil) 1000 BRL 16,812-15, , ,181-7,767 - BOIRON Belgium S.A.R.L.(Belgium) 1000 Euro 3, ,650 3, BOIRON Océan Indien S.A.R.L. (France-La Réunion) 1000 Euro , Laboratoires DOLISOS Italie Srl (Italia) 1000 Euro 1, ,214 1,036-1, ,599 Company in liquidation BOIRON S.A. /A.G./S.p.A.(Swiss) 1000 CHF 1,900-1, , , Les EDITIONS SIMILIA S.A.(France) 1000 Euro DOLISOS B.V. (Netherlands) 1000 Euro No activity BOIRON sociedade Unipessoal Lda. ( Portugal) 1000 Euro , BOIRON RUS O.O.O. (Russie) 1000 RUB No activity No activity No activity

40 40 Financial report Board of Director s Report Executive and corporate officers OFFICES Surname, first name, OFFICE Thierry Boiron (1) Director, Chairman of the Board of Directors Age: 51 Christian BOIRON (1) Director, General Manager Age: 64 Philippe GOURET (1) Deputy General Manager Age: 56 Valérie POINSOT (1) Deputy General Manager Age: 43 Philippe MONTANT (1) Deputy General Manager Age: 49 Jacky ABECASSIS (1) Director Age: 70 Michel BOUISSOU (1) Director Age: 70 Michèle BOIRON (1) Director Age: 67 Jean-Pierre BOYER (1) Director Age: 66 Bruno GRANGE (1) Director Age: 59 Christine BOYER-BOIRON (1) Director Age: 68 François MARCHAL (1) Director Age: 67 SOCIETE PIERRE FABRE SA (2) Director Permanent representative: Eric DUCOURNAU (1) Age: 44 Stéphanie CHESNOT (1) Director Age: 40 (1) French nationality (2) French company Appointed first in BM 09/18/1996 BM 05/19/2011 ESM 12/12/1973 BM 05/19/2011 BM 12/15/2010 (Effective at 01/01/2011) BM 05/19/2011 (Effective at 07/01/2011) BM 05/19/2011 (Effective at 07/01/2011) OSM 05/06/ /14/2009 BM 09/18/1996 OSM 05/18/2000 ESM 05/23/2002 OSM 05/22/2003 ESM 06/30/2005 ESM 06/30/2005 BM 03/10/2010 End of current term of office OSM 2014 BM 2014 OSM 2013 Indefinite period Indefinite period Indefinite period Indefinite period OSM 2014 OSM 2013 OSM 2014 OSM 2012 OSM 2014 OSM 2012 OSM 2014 OSM 2014 OSM 2012 Main position held in the Company Chairman of the Board of Directors General Manager Head pharmacist Director of production and distribution Director of Development and research Director of Administration and Finance None None None None Financial controller (employee) None None None None Main position held in the Company None None None None None None None None None None Investment fund manager Consulting in management and administration Other offices and positions held in other companies OBSERVATIONS Director and Chairman of Editions Similia, and Boiron SA/AG/SpA (SWITZERLAND). Director and Deputy Chairman of BOIRON USA Inc., BOIRON Inc., Permanent representative of BOIRON on the Board of Boiron Sociedad Iberica de Homeopatia, Unda, Director of Sodeva, of Boiron Canada Inc. Brother of Michèle and Christian Boiron Director and Managing Director of Laboratoires BOIRON Srl, Director and Chairman of the Board of Sodeva Director and Chairman of the Board of Boiron USA Inc, Boiron Inc, Director of Boiron Sociedad Iberica de Homeopatia, of Unda, Director of University Claude Bernard Lyon 1, Director of Faculty of Medecine LYON SUD-Charles MERIEUX Brother of Michèle and Thierry Boiron Director of Boiron USA Inc, Boiron Inc, General Manager of Editions Similia Manager of Boiron GmbH Director of Laboratoires BOIRON Srl, Director of Laboratoires Boiron Srl. Chairman of the Audit Committee of BOIRON, Member of Boiron s Compensation Committee. Chairman and CEO of CITA S.A. Director of Sodeva. And Boiron SA/AG/SpA (SWITZERLAND). Sister of Christian and Thierry Boiron Member of the Audit Committee of BOIRON, Director of SHB. Husband of Christine Boyer-Boiron, Director Chairman of the Supervisory Board of FCPE BOIRON Member of Boiron s Compensation Committee. Director of Société Henri Boiron (SHB). Cousin of Christian, Thierry and Michèle Boiron Director of Europlasma. Director of Saem Intermediasud. Manager of Tarn Medias, Cenraurea, Seponeria Delta. Chairman of Pierre Fabre Finance International, Calendula, Karité, Melilot, Soja, Pierre Fabre International. Director of Sodeva. Member of the Audit Committee of BOIRON, Daughter of Christian Boiron, Chairman Niece of Michèle and Thierry Boiron, Directors Offices (excluding subsidiaries) held by directors over the past five years that are no longer held: (1) Jacky Abécassis: Deputy Chairman of the Association Française pour la Recherche en Homéopathie (AFRH) (2) Michel Bouissou: - Chairman of the Supervisory Board of EUROMEZZANINE CONSEIL - CEO of NATEXIS INVESTISSEMENT - Member of the Supervisory Board of NAXICAP (3) François Marchal: - Director of DIDOT BOTTIN - Director of COFIP - Director of MEMRY CORP (USA) - Director of AVAL FUND MANAGEMENT GUERNESEY (4) Eric Ducournau: - Manager of ALPHABETA - Director of: - Darrow SA (Brazil) - Laboratorios Farmaceuticos Pierre Fabre Medicamentos do Brasil S.A. (5) Jean-Pierre BOYER: Manager of SARL GREVIN (in liquidation) (6) Stephanie CHESNOT: Co-manager of SARL JAG SBC CONCEPT FORME (in liquidation)