HALF-YEAR FINANCIAL REPORT AT JUNE 30, 2017

Transcription

1 HALF-YEAR FINANCIAL REPORT AT JUNE 30, 2017 CONTENTS Activity report p. 2 Key figures p. 3 Condensed half-year consolidated financial statements at June 30, 2017 _ p. 4 Statutory Auditors' report p. 19 Statement from the person responsible for the half-year financial report p. 20 1

2 Activity report Comments on activity in the first half of 2017 After a successful year in 2016, focused on turning around the declining ex-cmds business, Guerbet's revenue for the 1st half of 2017 grew by 8.1% at current exchange rates to million, and by 5.6% at constant exchange rates (CER) to million. This positive development has come despite: i. the first effects of the decrease of Dotarem price in Europe in the context of the arrival of a new generic product; ii. the gradual withdrawal of certain products, which is already under way, as part of the recently announced plan to streamline Guerbet's product range, such as Oxilan and Hexabrix in X-Ray imaging, and Optimark in MRI. With the exception of the IRT segment, which has experienced supply difficulties, the other Group segments are growing, including strong performances by Dotarem in the USA and China, by the ISS segment in all geographies and by Optiray especially in Asia and Latin America. With the efforts deployed to benefit from new synergies after the acquisition of CMDS, the Group has been able to increase its margins compared with Improved purchasing conditions, industrial streamlining measures, the optimization of the product portfolio and the distribution network, have resulted in a 14.9% EBITDA growth. EBITDA stands at 64.5 million, versus 56.1 million in the 1st half of It now represents 15.8% of revenue, compared with 14.9% at June 30, Operating income amounts to 40.7 million, versus 26.3 million in the 1st half of 2016, an increase of 56.4%. Net income increases by 90.4% to 23.1 million, versus 12.1 million for the same period last year. Shareholders' equity has increased by 11.0% to million, compared with million at June 30, The Group's available cash totals 55.8 million, with net debt of million. The net debt / EBITDA ratio has improved, at 2.41, in line with forecasts. Given the satisfactory performance in the 1st half of 2017, Guerbet's objective, at constant exchange rates, is to increase revenue by 3% to 4% with stronger growth in EBITDA than in revenue. Main risks and uncertainties for the six remaining of the year Readers can refer to the 2016 Registration Document deposited with the French Financial Markets Authority (AMF) on April 5, 2017, number D which can be downloaded from the AMF and Guerbet websites ( We also inform readers that no major uncertainties or risks have appeared since this date concerning the last six of the year. Main transactions between related parties recorded in the first of the year Readers can refer to note 24 and note 30 (describing the list of stakes held by the parent company) of the the consolidated financial statements and notes of the 2016 Registration Document deposited with the French Financial Markets Authority (AMF) on April 5, 2017, number D which can be downloaded from the AMF and Guerbet websites ( We also inform readers that no major transactions between related parties have occurred since this date regarding the first six of the year. 2

3 Key figures In thousands- IFRS June 30, 2017 June 30, 2016 (Restated) Revenue 407, ,739 EBITDA 1 64,509 56,144 Operating income 40,676 26,308 Net income 23,083 12,124 Net earnings per share Shareholders' equity 324, ,833 Net financial debt 310, ,555 Leverage Gearing Guerbet share Month Highest price in a Lowest price in a Number of Turnover trading session trading session shares traded (in euros) (in euros) (in millions of ) January , February , March , April , May , June , July , August , September , October , November , December , January , February , March , April , May , June , EBITDA refers tooperating income, with the allowance for amortization, depreciation, and provisions added back in. 2 This ratio corresponds to the covenant contractually agreed upon between Guerbet and its banks. It had to be less than 3.70 in

4 CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS AT JUNE 30, 2017 On September 26, 2017, the Board of Directors approved the publication of the condensed half-year consolidated financial statements for GUERBET for the period from January 1 to June 30, The condensed half-year consolidated financial statements at June 30, 2017 are to be read as a complement to the consolidated financial statements for the fiscal year ended December 31, 2016, as indicated in the Registration Document deposited with the French Financial Markets Authority (AMF) on April 5, 2017, number D

5 Consolidated balance sheet ASSETS (net) In thousands Notes June 30, 2017 June 30, 2016 Restated Dec 12, 2016 Intangible fixed assets 1 101, , ,069 Tangible fixed assets 1 263, , ,407 Non-current financial assets 6,247 2,920 4,739 Deferred taxes 2 24,239 43,997 26,425 Total non-current assets 395, , ,640 Inventories 3 279, , ,891 Trade receivables 152, , ,443 Assets held for sale Other current financial assets 77,800 74,573 94,632 Cash and cash equivalents 55,797 71,249 96,547 Total current assets 566, , ,513 TOTAL ASSETS 962, ,833 1,028,153 Share capital 4 12,530 12,438 12,501 Other reserves 311, , ,093 Consolidated income 23,083 12,124 28,930 Translation adjustment (22,869) (13,411) (3,724) Shareholders equity 324, , ,800 of which Group share 324, , ,800 Non-current financial debt 6 303, , ,419 Other non-current financial liabilities Deferred taxes 2 18,080 40,544 23,382 Provisions 5 35,641 31,224 33,194 Total non-current liabilities 357, , ,995 Trade payables 71,252 90, ,783 Current financial debt 6 63, ,759 66,971 Other financial liabilities 85,722 97,942 93,321 Current tax payable 54,956 45,614 34,429 Provisions 5 5,896 5,432 7,854 Total current liabilities 280, , ,358 TOTAL LIABILITIES 962, ,833 1,028,153 Restatements of the Consolidated balance sheet at June 30, 2016 As stated on page 87 of the Registration Document at December 31, 2016, the financial statements at June 30, 2016 were also restated in order to incorporate the effects of the valued asset valuations and reallocations and the related taxation following the acquisition of the CMDS group. Intangible fixed assets were decreased by 24.1 million. Tangible fixed assets were increased by 28.7 million. Deferred tax increased by 4.5 million on the asset side and 19.8 million on the liability side. The impact on Net Income at June 30, 2016 is a 5.2 million decrease. 5

6 Consolidated income statement In thousands June 30, 2017 (6 ) June 30, 2016 (6 ) Restated Dec 31, 2016 (12 ) Revenue 407, , ,773 Royalties Other operating income 1,803 3, Purchases consumed and change in inventories (96,552) (84,030) (184,576) Staff-related costs (114,443) (103,785) (204,464) External charges (122,536) (119,865) (251,461) Taxes and duties (10,515) (16,137) (27,281) Depreciation and amortization (20,806) (24,327) (49,213) Net allocations to provisions (3,027) (5,509) (2,469) Other operating income and expenses (330) (204) (2,546) Operating income 40,676 26,308 54,594 Income from cash and cash equivalents Gross finance costs (3,165) (2,955) (6,578) Net finance costs (3,130) (2,939) (6,548) Currency gains and losses (2,333) (2,903) (1,202) Other financial income and expenses (893) Income taxes (11,237) (8,407) (18,131) Consolidated net income 23,083 12,124 28,930 of which Group share 23,083 12,124 28,930 Net earnings per share with a face value of 1 (in ) Diluted net earnings per share with a face value of 1 (in ) Restatements of the Consolidated income statement at June 30, 2016 Since December 31, 2016, it was decided to reclassify the Research Tax Credit (C.I.R.) in operating income in accordance with the interpretation of IAS 20. The impact of this reclassification is therefore included in the financial statements at June 30, This is reflected in an increase in "Income taxes" of 2.0 million and an increase in "Other operating income and expenses" of 2.0 million. A reclassification of 23.4 million also increased "Staff-related costs" and decreased "Purchases consumed and change in inventories", in order to guarantee a better allocation of staff-related expenses. This reclassification was included in the financial statements published at December 31, 2016, however. As part of the reallocation and revaluation of the various fixed assets and liabilities relating to the acquisition of the CMDS group, presented at the bottom of the Consolidated balance sheet, allocations to depreciation and amortization increased by 5.8 million. Staff-related costs rose by 1 million due to the adjustment for the bonuses paid to former employees. The effect on the group's tax expenses is a 1.8 million decrease. The total impact is a 5.2 million decrease in the Net Income at June 30,

7 Restatements of the Consolidated income statement at June 30, 2017 In the first half of 2017, the appropriation of the entries relating to the reallocation and revaluation of assets and liabilities in connection with the acquisition of the CMDS group was carried out by Guerbet's various local finance teams (USA and Ireland). The direct result of this work is the refining of the depreciation/amortization to be applied to each of the assets revalued at the time of the acquisition. In accordance with IAS8, the Guerbet group opted for a forward-looking treatment of the impact of this new depreciation/amortization schedule estimate resulting from the experience gained from this additional work carried out in the first half of The impact at June 30, 2017 is a 0.7 million decrease in the depreciation/amortization charge, in accordance with the new depreciation/amortization schedule thus defined. Net income and gains and losses recognized directly in equity In thousands June 30, 2017 June 30, 2016 Restated Dec 31, 2016 Net income 23,083 12,124 28,930 Gains and losses recognized directly in equity Actuarial gains and losses relating to IAS 19 obligations 0 0 (1,445) Net investment hedge: conversion of borrowing into USD 6,420 0 (2,659) Change in translation adjustment (19,146) 2,321 12,008 Net income and gains and losses recognized directly in equity 10,357 14,445 36,834 7

8 Consolidated statement of cash flows In thousands June 30, 2017 (6 ) June 30, 2016 (6 ) Restated Dec 12, 2016 (12 ) Net income 23,083 12,124 28,930 Allowances for depreciation and amortization and provisions for fixed assets 22,678 24,198 49,213 Allowances and reversals of provisions for risks 652 (1,220) 2,929 Change in fair value of hedging instruments 934 (281) (1,520) Stock option costs 1,612 1, Income from sales of fixed assets and other adjustments 1,169 (42) 1,412 Cash flow after net finance costs and taxes 50,128 35,950 81,797 Net finance costs 3,878 2,939 6,548 Tax expenses (including deferred taxes) 11,237 6,415 18,131 Cash flow before net finance costs and taxes 65,243 45, ,476 Taxes paid (6,856) (11,150) (29,548) Change in working capital needs linked to activity (including debt linked to employee benefits) (44,127) (16,226) (38,242) (Increase) / decrease in inventory (28,395) (27,931) (44,979) (Increase) / decrease in trade receivables 20,579 (7,653) (13,436) Increase / (decrease) in trade payables (27,580) 2,321 14,346 (Increase) / decrease in other assets (3,324) 16,044 16,813 Increase / (decrease) in other liabilities (5,407) 993 (10,986) Net cash flows from operating activities 14,260 17,928 38,686 Investments (24,160) (21,300) (52,285) in intangible fixed assets (10,985) (9,305) (16,152) in tangible fixed assets (13,225) (11,738) (33,630) in financial fixed assets 50 (257) (2,503) Reimbursement received from Mallinckrodt 7,690 2,620 2,620 Sales of fixed assets 3, ,771 Increase / (decrease) in debt on fixed assets (3,096) (1,043) 5,124 Net cash flows from investing activities (16,091) (19,300) (42,770) Dividends paid (10,784) (8,010) (8,010) Increase in equity and other reserves* 443 1,463 2,447 New borrowing 31,956 40, ,083 Loan repayments (50,287) (9,365) (140,432) Net financing interest paid (including finance lease agreements) (4,463) (2,876) (6,863) Net cash flows from financing activities (33,135) 21,615 46,225 Effect of exchange rate fluctuations (2,753) 1,134 2,188 Net change in cash position (37,719) 21,377 44,329 Initial cash position 75,688 31,360 31,360 Closing cash position 37,969 52,737 75,688 *Corresponds to the IFRS2 treatment relating to stock options: increase in equity of 29,000 and an impact on reserves of 414,000 at June 30,

9 Statement of changes in Shareholders equity In thousands Share capital Consolidated reserves Result Change in translation adjustment position at December 31, , ,596 39,232 (15,732) 282,439 Incorporation of 2015 income 39,232 (39,232) 0 Stock options Dividend payments (8,010) (8,010) Consolidated 2016 income 28,930 28,930 Actuarial gains and losses (1,445) (1,445) Translation adjustment 12,008 12,008 Increase in equity 158 2,289 2,447 Other changes* (1,585) (1,585) position at December 31, , ,093 28,930 (3,724) 314,800 Incorporation of 2016 income 28,930 (28,930) 0 Stock options 0 Dividend payments (10,609) (10,609) Consolidated income for 1st half ,083 23,083 Actuarial gains and losses 0 Translation adjustment (19,146) (19,146) Increase in equity Other changes (of which hedge) 15,445 15,445 position at June 30, , ,273 23,083 (22,870) 324,016 *: of which hedge: 6,420,000 Total Existing net consolidated position at June 30, 2016 (IAS 34): In thousands Share capital Consolidated reserves Result Change in translation adjustment position at December 31, , ,596 39,232 (15,732) 282,439 Incorporation of 2015 income 39,232 (39,232) 0 Stock options 0 Dividend payments (8,010) (8,010) Consolidated 2016 income 12,124 12,124 Actuarial gains and losses 1,432 1,432 Translation adjustment 2,321 2,321 Increase in equity 95 1,368 1,463 Other changes (of which hedge) Restated position at June 30, , ,682 12,124 (13,411) 291,833 Total 9

10 NOTES TO THE CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS AT JUNE 30, 2017 In thousands of euros ( '000s) I) Accounting methods and rules The accounting principles applied in preparing the consolidated financial statements at June 30, 2017 are the same as those used in the consolidated financial statements prepared at December 31, 2016 (which can be seen on the Group website: The application of new standards and interpretations that became mandatory on January 1, 2017 did not have a significant effect on the financial statements at June 30, The new interpretations and standards that were optional before June 30, 2017 were not early adopted. The analysis of the effects relating to the first application in 2018 of IFRS 15 Revenue from contracts with customers and IFRS 9 Financial instruments continued in the first half of Although the analysis of the new information that may need to be provided in the appended notes because of the new standards is still in progress, the Group is not expecting any material impact at this stage. The condensed consolidated financial statements at June 30, 2017 were prepared in accordance with IAS 34 Interim financial reporting, which allows the presenting of a selection of notes in an appendix. The condensed consolidated financial statements should be read along with the consolidated annual financial statements for the fiscal year The Group's condensed consolidated financial statements are in thousands of euros, unless otherwise indicated. They were approved on September 26, 2017 by the Board of Directors. Readers should note that all of the Group s business is carried out in a single area of activity, namely research, development and the production and sale of contrast media for medical imaging. The Group does not, therefore, provide segment reporting as defined by IFRS 8. To ensure an in-depth reading of its activity, however, the Group presents it in detail by geographical region in section V of this document, entitled Additional information. This information corresponds to the internal reporting statements used by the Management to steer the Group. Additional information on revenue by product range (X-ray, MRI, IRT, MD and others) is provided. II) Seasonality There is no significant seasonal aspect to the activity. III) Dividend payment In the first half of 2017, a dividend of 0.85 per share was paid to shareholders. 10

11 IV) Management of financial risk In accordance with its risk management policy, Guerbet hedges the main accounting risks on the balance sheet and does not have any open market positions not tied to accounting risks. A) FOREIGN EXCHANGE RISK Guerbet centralizes its management of foreign exchange risk. a. Hedging portfolio At June 30, 2017, the exchange value, in euros, of the hedging portfolio, is million. b. Exposure to foreign exchange risk of the 10 representative currencies ( million) USD EUR* ZAR HKD JPY CAD BRL CLP GBP MXN Total position outside group (a) Total position within group (b) Total financial exposure (c) Total position before hedging (d=a+b+c) Total hedges outstanding (e) Net foreign exchange position (d+e) The accounting risk includes all the assets and liabilities in non-euro currencies. * It consists of the exposure of some of our subsidiaries (Hong Kong Brazil USA - Canada) to fluctuations in the euro. The group's financial exposure in USD of million includes million of loans taken out for the acquisition of CMDS, comprising the net investment hedge for the acquisition of companies whose operating currency is USD. c. Sensitivity of financial income to foreign exchange risk for the main currencies This calculation is based on the unhedged outstandings at June 30, The table below shows the absolute value of the impact on financial income of a 10% fluctuation in the main currencies against the euro: In thousands of June 30, 2017 June 30, 2016 USD 7,851 8,906 ZAR 1, HKD

12 B) INTEREST RATE RISK The debt is nearly exclusively variable rate. The debt breakdown between fixed and variable rates is determined, through the hedging policy, by the Group s Management, and periodically reviewed according to foreseeable changes in interest rates. a. Hedging portfolio The portfolio consists of 12 contracts covering outstandings with a euro exchange value of million, the details of which are listed in the table below: Bank Date implemented Maturity date Type of contract Guerbet's Position Indices Contract rate Currency Notional residual amount In foreign currency ('000s) Notional residual amount Exchange value in ('000s) BNP Paribas 03/27/ /27/2019 Swap Buy CMCIC 03/27/ /27/2019 Swap Buy HSBC 03/27/ /27/2019 Swap Buy Société Générale 03/27/ /27/2019 Swap Buy CA CIB 03/27/ /27/2019 Swap Buy CA IDF 03/27/ /27/2019 Swap Buy CA CIB 12/27/ /27/2020 HSBC 12/27/ /27/2020 BNP Paribas Société Générale 12/27/ /27/ /27/ /27/2020 CMCIC 12/27/ /27/2020 CMCIC 12/27/ /27/2020 Crosscurrency swap Crosscurrency swap Crosscurrency swap Crosscurrency swap Crosscurrency swap Crosscurrency swap Fixed-rate purchase Fixed-rate purchase Fixed-rate purchase Fixed-rate purchase Fixed-rate purchase Fixed-rate purchase 1.15% USD 44,034 38, % 0,979 27, % USD 26,094 22, % USD 20,597 18, % USD 15,894 13, % USD 15,085 13, % USD 17,400 16, % % USD 17,400 16,338 USD 17,400 16, % USD 17,400 16, % USD 12,615 11, % USD 13,500 12,676 12

13 b. Exposure to interest rate changes at June 30, 2017 In thousands Less than one year 1 More than one year Total Fixed-rate financial liabilities (282) (9,719) (10,001) Variable-rate financial liabilities (62,865) (293,603) (356,468) Fixed-rate financial assets Variable-rate financial assets 55,797-55,797 Net position before management 2 : - fixed rate (282) (9,719) (10,001) - variable rate (7,068) (293,603) (300,671) Net position after management: - fixed rate - variable rate (33,222) (200,478) (233,700) 25,872 (102,844) (76,972) c. Sensitivity of financial income to changes in interest rates Change in interest rates of 1% Change in financial income of 769,720 V) Additional information The geographical information is presented below, according to the risk and profitability analysis, in two subsets, corresponding to the Group s internal organization and Guerbet s different growth models in these markets: - The main European markets where the Guerbet Group has been able to build sustainable customer relationships, and has a strong position thanks to its own networks of pharmaceutical sales representatives, - The other markets. Europe consists of the European countries where the Group is present via its own networks of pharmaceutical sales representatives, namely: Germany, Austria, Belgium, Spain, France, the United Kingdom, the Netherlands, Italy, Portugal, Switzerland and Turkey. The non-allocated portion of operating income corresponds to head office administrative costs, research and development costs, and indirect industrial costs not attributable to products, being components that can only be allocated on an arbitrary basis to the various sectors. The Group's research and development costs and support functions are centralized in France. 1 All maturities of variable-rate financial assets and liabilities, and fixed-rate financial assets and liabilities with maturities of less than one year 2 Sum of the differences (assets - liabilities) at fixed rates and (assets - liabilities) at variable rates 13

14 ( m) June 30, 2017 European companies in their markets Others Total REVENUE European markets Other markets Total revenue Operating Income ( m) June 30, 2016 European companies in their markets Others Total REVENUE European markets Other markets Total revenue Operating Income 31.3 Breakdown of revenue by product range In thousands of June 30, 2017 June 30, 2016 X-ray 47.7% 52.2% MRI 33.8% 31.9% IRT 6.0% 6.7% MD 10.2% 8.8% Others 2.3% 0.4% Total 100.0% 100.0% VI) Descriptive notes (in thousands of euros) Note 1 - Tangible and intangible fixed assets In the first half of 2017, the Group invested: million in tangible fixed assets. These investments were made in IT and in arrangements relating to the change of ERP, and in increasing the capacities of the Lanester, Aulnay, Dublin and Raleigh plants, million in intangible fixed assets, primarily relating to the roll-out of the group ERP and its improvement. 14

15 Note 2 - Deferred tax assets and liabilities In thousands 12/31/2016 Changes in income Changes in shareholders' equity Translation and other adjustments 06/30/2017 Deferred tax assets 26,425 2,218 0 (4,404) 24,239 Deferred tax liabilities (23,382) 10,606 (3,369) (1,935) (18,080) Total 3,043 12,824 (3,369) (6,339) 6,159 Note 3 - Inventories In thousands 06/30/ /31/2016 Raw materials and spare parts 67,440 76,308 Intermediate and finished products, work in progress and goods 236, ,233 Gross value 303, ,541 Provisions (24,334) (23,650) Net value 279, ,891 Note 4 Shareholders' equity At December 31, 2016, the parent company's equity was made up of 12,501,148 shares with a face value of 1. The number of Guerbet shares changed over the period from 28,720 to 12,529,868 at the end of June The Group holds 20,428 treasury shares. Note 5 Provisions In thousands 12/31/2016 Provisions Reversals used Reversals not used Translation adjustments and reclassifications 06/30/2017 Long-term 33, (120) (89) 1,948 35,641 Deferred employee 1,947 35,641 33, (120) (89) benefits Short-term Tax disputes (90) 861 Commercial disputes (27) Various risks 6,649 2,313 (1,578) (1,787) (1,437) 4,159 Total current provisions 7,854 2,479 (1,578) (1,814) (1,044) 5,896 Total provisions 41,048 3,186 (1,698) (1,903) ,536 15

16 Note 6 Borrowing In thousands June 30, 2017 Dec 12, 2016 Long-term borrowing (non-current liabilities) of which: 302, ,419 Special profit-sharing reserve (blocked current accounts) 997 1,047 Finance leases 2,619 1,819 Other borrowing 298, ,533 Short-term borrowing (current liabilities) of which: 63,147 66,971 Finance leases 1,400 1,156 Other borrowing and current profit-sharing reserve 43,918 44,956 Bank facilities 17,829 20,859 Total financial debt 365, ,791 Note 7 Other potential assets and liabilities In December 2008, the request for aid for the French-German "Iseult" research project, filed with Oséo, was approved by the European Commission. The aid agreement provides for financing of half of the expenses incurred, including 39% in the form of repayable advances, and 61% in the form of a grant. An amendment signed with BPI France extends the duration of the project by 2 years and changes the terms of the financial return if a product resulting from the project is released for sale. No other significant potential assets or liabilities were identified. Note 8 Staff-related costs Main characteristics for valuing the share-based payment benefit: a) Characteristics of share-based payments for plans in effect at June 30, 2017 Grant date Number granted Share price on grant date Volatility Risk-free rate Exercise price Lock-up period October 17, , % 2.77% years November 23, , % 2.77% years February 20, , % 2.77% years b) Distribution of benefit by fiscal year for plans in effect Grant date March 26, October 17, February 20, November 23, Total Total 0 1, ,825 c) Impact on balance sheet The benefit above is recorded for each fiscal year in terms of the number of options yet to be exercised in exchange for shareholders' equity. 16

17 Note 9 Income tax Details of tax expenses In thousands of June 30, 2017 June 30, 2016 Restated June 30, 2016 Current taxes (21,819) (13,948) (11,954) Deferred taxes 10,582 5,540 3,715 Total (11,237) (8,407) (8,240) 9-2 Analysis of tax expenses Since December 31, 2016 it was decided to reclassify the Research Tax Credit (C.I.R.) in operating income in accordance with the interpretation of IAS 20. This reclassification is therefore reflected in the analysis of tax expenses at June 30, In thousands June 30, 2017 June 30, 2016 Restated June 30, 2016 Theoretical tax charge at the prevailing rate for the consolidating company (*) (11,817) (7,069) (8,793) Impact of differences in tax rates 3,186 (207) 577 Impact of expenses that are permanently non-deductible or non-taxable (1,104) (690) (690) Research tax credit reclassified in operating income (IAS 20) Impact of tax credits ,992 Impact of deferred taxes on various unrecognized losses (2,367) (1,127) (1,127) Total (11,237) (8,407) (8,240) Effective tax rate (%) 32.74% 37.16% 32.26% (*) Income tax rate 34.43% Note 10 Related-party disclosures 10-1 Relationships with non-consolidated companies All the significant Group subsidiaries are wholly-owned and fully consolidated. Transactions between these companies are eliminated. 17

18 10-2 Compensation and benefits granted by the Group to the main directors and members of the Board. The main directors form the Executive Committee. They received the following benefits and compensation in euros: Short-term benefits Total gross compensation 1,640 of which in-kind benefits 16 and variable portion 1 75 Post-employment benefits of which funded supplemental pension contributions 53 of which provisions for retirement benefits (on the balance sheet) 905 Payments in shares 2 0 During the 1st half-year, the members of the Board of Directors received 226,333 of attendance fees for the fiscal year Note 11 Events after closing N/A 1 For each person, the variable portion depends on the achieving of a number of individual objectives over the course of the previous year. It is adjusted according to the performance of the company or the Group, during that same year, and is calculated based on the person's salary in December This is the expense recorded for the first half of 2017 for the stock options granted to them (see note 8). 18

19 Statutory Auditors' report on the 2017 half-year financial statements From January 1 to June 30, 2017 Dear Shareholders, Under the terms of the assignment entrusted to us by your shareholders' meeting, and in application of article L III of the French Monetary and Financial Code, we have undertaken: - A limited review of Guerbet's condensed half-year consolidated financial statements, for the period running from January 1 to June 30, 2017, attached to this report; - The verification of the information given in the half-year activity report. These condensed half-year consolidated financial statements were prepared by your Board of Directors. It is our responsibility to express an opinion on these statements on the basis of our limited review. I Opinion on the statements We have conducted our limited review in accordance with the professional standards applicable in France. A limited review consists mainly of holding discussions with senior managers in charge of accounting and finance, and carrying out analysis work. Such a review is less comprehensive than the investigations required for a full audit under French industry standards. As such, the assurances obtained through a limited review that the financial statements as a whole are free from any material misstatements are moderate assurances, lesser than those obtained through a full audit. Based on our limited review, we have not identified any material misstatements likely to call into question the compliance of the condensed half-year consolidated financial statements with IAS 34, applicable under IFRS, as adopted within the European Union, relating to interim financial reporting. II Specific verifications We also verified the information provided in the half-year activity report commenting on the condensed halfyear consolidated financial statements that were the subject of our limited review. We do not have any observations to make regarding the sincerity of this information or its consistency with the condensed half-year consolidated financial statements. Paris and Neuilly-sur-Seine, September 26, 2017 The Statutory Auditors HAF Audit & Conseil Member of Crowe Horwath International Deloitte & Associés Marc de Prémare Frédéric Souliard 19

20 Statement from the person responsible for the half-year financial report I hereby certify that, to the best of my knowledge: - the condensed consolidated financial statements for the half-year elapsed have been prepared in accordance with the applicable accounting standards and provide a fair picture of the assets, liabilities, financial position and earnings of the company and all the companies included in the consolidation scope, - the half-year activity report provides a fair picture of the significant events that occurred during the first six of the year, their impact on the financial statements, and the main transactions between related parties, and a description of the main risks and uncertainties for the second half of the year. Villepinte, September 26, 2017 Yves L Epine Chief Executive Officer 20