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2010/2011 full business year EGIS Pharmaceuticals Public Limited Company Non-audited, consolidated, IFRS.

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Presentation on theme: "2010/2011 full business year EGIS Pharmaceuticals Public Limited Company Non-audited, consolidated, IFRS."— Presentation transcript:

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2 2010/2011 full business year EGIS Pharmaceuticals Public Limited Company Non-audited, consolidated, IFRS

3 3 Change! EGIS Group analyses export sales revenue in €, starting in 2010/2011 Regulation in Russia changed –Prices of EDL products* are fixed in RUB –EDL products make up as much as 70% of EGIS local turnover Distribution agreements modified to ruble invoicing, effective from January 1, 2011 Weight of USD in the export of EGIS Group reduced –No 1. selling currency earlier, slipped to third rank (HUF, EUR) * EDL: Essential Drug List

4 4 Change! The classification of financial instruments has been modified on the balance sheet (This reporting has already been applied in the annual report) New denomination Contents Stand-aloneConsolidated Other non-current financial assets Investments Available-for-sale financial assets Loans given Other current financial assets Held-to-maturity investments Held-for-trading investments Derivative transactions Other non-current financial liabilities n/aLoans and borrowings Other current financial liabilities n/a Short term part of long term loans n/aBank loans and overdrafts Derivative transactions

5 55 Change! The classification of local business tax (LBT) has been modified Earlier classification: other operating costs Part of operating profit New classification:profit taxes Part of profit after tax HUF million 2010/2011 12M 2009/2010 12M Local business tax1,6251,646

6 2010/2011 business year 4 th quarter EGIS Pharmaceuticals Public Limited Company Non-audited, consolidated, IFRS

7 7 2% uplift in sales, but because of numerous one-off effects 18% decrease in profit HUF million 2010/2011 Q4 2009/2010 Q4 Change HUF m Change % Sales 33,07332,4266472% Gross profit 17,45218,073-621-3% %52.8%55.7%-2.9%p Operating profit 2,0194,590-2 571-56% %6.1%14.2%-8,1%p Pre-tax profit 2,7193,296-577-18% %8.2%10.2%-1.9%p

8 8 Average exchange rates are down and closing rates are up in y/y comparison

9 9 Increasing sales in all regions 2010/2011 Q4 2009/2010 Q4 Change % HungaryHUFm8,6048,4102% Russia + other CISEURm38.736.66% Central and Eastern EuropeEURm35.034.71% RoW pharmaEURm4.94.94.74.75% API, othersEURm10.57.97.933%

10 10 The Hungarian pharma market and EGIS turnover remained stagnant Regulation continued to create tough business environment –Price reductions, payment obligations –Further negative legislative changes whose impact is to occur in post-quarter periods IMS data, HUF billion MAT Sep/2011 MAT Sep/2010 Change y/y Change q/q Pharma market569.6589.73%3% 0%0% EGIS turnover30.231.75%5% 0%0% EGIS market share5.3%5.4%

11 11 Price reduction is persistent Price cuts (calculated for the total EGIS portfolio in HU) July 1, 20063%January 1, 2010 0.5% April 1, 20079%April 1, 2010 0.2% July 1, 20071%July 1, 2010 0.6% October 1, 2007 1%October 1, 2010 0.2% January 1, 2008 1%January 1, 2011 0.1% April 1, 20081%April-June, 20110.3% July 1, 20080.3%July 1, 2011 1.5% October 1, 2008 0.1% July 1, 20090.6% April 1, 20090.1% July 1, 20091 % October 1, 2009 0.6%

12 12 Payment obligation to NHF* was HUF1,161mn in Q4, in addition HUF250mn provision was created Deduction (realised) Balance Payment obligation Deduction (reported) Reversal (reported) * NHF = National Health Fund

13 13 On July 1, 2011 rules of extra taxes were modified partially with retroactive effect Regulation effective from June 2009 (regarding deductions MedRep fee and 12% binding rebate) 100% of payment obligation emerging in 2010 to be recovered in 2011 –Condition: R&D spending not less than 20% of state subsidies allocated to products of the company –Limit: level of R&D expenditure –Change in December 2010: NHF discontinued to be the fund in settling supplier’s claims Financial settlement with EGIS (owing to the Company’s fiscal year offset) –Payments have been performed in due course of time –20% of 2009 payments are compensated in 2011 –2010 payment to be deducted in 2012 Changes taking effect on July 1, 2011 –Reclaim of payments January 1 – December 31, 2010 is subject to the ratio of reimbursement to R&D expenses Anticipated 50% for EGIS (to be realised in 2012) –No refunding possibility for payments beyond January 1, 2011 –From July 1, 2011 Annual medrep fee to increase to HUF10mn Reimbursement proportionate payment obligation to increase to 20%

14 14 7% turnover rise in Russia, 3% aggregate growth in other CIS markets EUR thousand 2010/2011 Q4 2009/2010 Q4 Change % Russia27,13425,3367% Ukraine5,4903,56954% Kazakhstan1,8132,437-26% Belarus1,4032,152-35% Other CIS2,8653,114-8% Russia and other CIS total38,70536,6076%

15 15 1% sales increase alltogether in Central and Eastern Europe EUR thousand 2010/2011 Q4 2009/2010 Q4 Change % Poland17,09716,3175% Czech Republic5,0034,49111% Slovakia4,0213,7976% Romania4,4564,743-6% Other CEE4,4365,394-18% CEE total35,01334,7421%

16 16 Pharma export to other countries increased 5% EUR thousand 2010/2011 Q4 2009/2010 Q4 Change % Pharma export to other markets4,9254,7085% EGIS finished drugs4,2734,708-9% Co-operation6520

17 17 Export of active pharmaceutical ingredients extended 33% due to supplies to Servier EUR thousand 2010/2011 Q4 2009/2010 Q4 Change % API and others export10,4807,87333% of which Servier6,5994,32752% other partners of EGIS3,8813,5469%

18 18 Cost of sales increased due to evolution of exchange rates, structure of sales and settlements of year-end accounts HUF million 2010/2011 Q4 2009/2010 Q4 Change % Net sales33,07332,4262% Cost of sales15,62114,3539% Cost of sales ratio47.2%44.3%2.9%p

19 19 General costs increased 6% (of which the impact of provisions: 3%p) HUF million 2010/2011 Q4 2009/2010 Q4 Change % Sales & Marketing8,0177,6365% R&D3,0342,9483% Administrative (normal)2,7092,727-1% Provisions and other items of value correction 44939 General costs total14,20913,3506%

20 20 The balance of other revenues and expenditure detoriated by HUF1,091 mn because of pharmaceutical extra taxes HUF million 2010/2011 Q4 2009/2010 Q4 Change HUFm Other revenues – other expenditure-1,224-133-1,091 Balance of industry payment obligations-1,503-100-1,403 Local taxesReclassified to profit taxes Balance of other items278-34312

21 21 Financial profit and share of results of associated companies HUF 700mn, determined by foreign exchange rate effects and results of assoc.co’s HUF million 2010/2011 Q4 2009/2010 Q4 Change HUFm Net interest income469328141 Forex impact1,753-1,9073,660 Realised-56426-482 Non-realised1,809-2,3334,142 Hedge positions13832-819 Other items and results of assoc.co’s-1,535-547-988 Profit from fin. & assoc.co700-1,2941,994

22 2010/2011 fiscal year 12 months

23 23 8% expanding sales, 6% increase in operating profit without the one-off NHF* related impact HUF million 2010/2011 12M 2009/2010 12M Change HUF m Change % w/o one-off impact Sales 128,939118,91510,0248% Gross profit 72,10666,7095,3978% %55.9%56.1%-0.2%p Operating profit 16,30217,158-856-5%6% %12.6%14.4%-1.8%p Pre-tax profit 15,67619,401-3,725-19%-11% %12.2%16.3%-4.1%p * NHF = National Health Fund

24 24 Growing sales in all regions 2010/2011 12M 2009/2010 12M Change % HungaryHUFm34,87132,6877% Russia + other CISEURm150.9138.39% Central and Eastern EuropeEURm134.2130.03% RoW pharmaEURm19.617.313% API, othersEURm40.828.345%

25 25 12 % sales growth in Russia, 2% growth in other CIS markets alltogether EUR thousand 2010/2011 12M 2009/2010 12M Change % Russia110,24498,37812% Ukraine15,58214,4987% Kazakhstan8,0217,6375% Belarus6,2076,618-6% Other CIS10,83911,123-3% Russia and other CIS total150,893138,2549%

26 26 Sales in Central and Eastern Europe alltogether increased 3% EUR thousand 2010/2011 12M 2009/2010 12M Change % Poland65,51863,9692% Czech Republic18,40516,46212% Slovakia15,13115,237-1% Romania16,80415,4489% Other CEE18,34018,904-3% CEE total134,198130,0203%

27 27 Pharma export to other countries increased 13% EUR thousand 2010/2011 12M 2009/2010 12M Change % Pharma export to other markets19,56017,26513% EGIS finished drugs16,95316,8700% Co-operation2,607395

28 28 Export of active pharmaceutical ingredients increased 45% due to duplex supplies to Servier EUR thousand 2010/2011 12M 2009/2010 12M Change % API and others export40,84128,26345% to Servier28,50214,223100% to other partners of EGIS12,33914,040-12%

29 29 The cost of sales improved 20 BPS y/y HUF million 2010/2011 12M 2009/2010 12M Change % Net sales128,939118,915 8% Cost of sales56,83352,206 9% Cost of sales ratio44.1%43.9%0.2%p

30 30 General costs increased 6% (sales growth was 8%) HUF million 2010/2011 12M 2009/2010 12M Change % Sales & Marketing29,68628,1435% R&D11,61410,8607% Administrative (normal)10,3079,8245% Provisions and other items of value correction 518202 General costs total52,12549,0296%

31 31 The balance of other revenues and expenditure changed HUF3.2 bn adversely because of increase in pharmaceutical extra taxes HUF million 2010/2011 12M 2009/2010 12M Change HUFm Other revenues – other expenditure-3,679-522 -3,157 Balance of industry payment obligations-4,224-684-3,540 Local taxesReclassified to profit taxes Balance of other items545162383

32 32 Fin. profit and share of results of associated companies was minus HUF 0.6 bn HUF million 2010/2011 12M 2009/2010 12M Change HUFm Net interest income1,4631,429 34 Forex impact71,117 -1,110 Realised-5651,786 -2,351 Non-realised572-669 1,241 Hedge contracts215-251 466 Other items-2,311-52 -2,259 Profit from fin, & assoc.co-6262,243-2,869

33 33 RUB  HUF hedge contracts (FRA) effective up to April 2012 November 2, 2011RUBmForward November2106.78 December2106.84 January2106.87 February1806.90 March1506.93 April906.96

34 34 8% expanding sales, 6% increase in operating profit without the one-off NHF* related impact HUF million 2010/2011 12M 2009/2010 12M Change HUF m Change % w/o one-off impact Sales 128,939118,91510,0248% Gross profit 72,10666,7095,3978% %55.9%56.1%-0.2%p Operating profit 16,30217,158-856-5%6% %12.6%14.4%-1.8% Pre-tax profit 15,67619,401-3,725-19%-11% %12.2%16.3%-4.1%p * NHF = National Health Fund

35 35 Slight change in the headcount of the Group people Sept 30 2011 Sept 30 2010 EGIS Hungary2,6252,597 Repr. offices abroad813758 Subsidiaries abroad437431 Medimpex companies4038 Total headcount3,9153,824

36 36 Capital expenditures throughout the year increased 6% y/y HUF million 2010/2011 12M 2009/2010 12M Change HUFm Property, plant and equipment13,97813,320 658 Intangible assets1,3881,188 200 Total capex15,36614,508858

37 37 Guidance on the whole realised MarketCurrency Guidance in August 12M fact HungaryHUF +5%+7% CISEUR +12%+9% of which: RussiaEUR +12-14%+12% CEEEUR +4%+3% Row pharmaEUR +10%+13% APIEUR +40%+45% ∑ SalesHUF+7-9%+8%


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