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

2010/2011 full business year

EGIS Pharmaceuticals Public Limited Company

Non-audited, consolidated, IFRS

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

Change! The classification of financial instruments has been modified on the balance sheet

(This reporting has already been applied in the annual report)

New denominationContents

Stand-alone Consolidated

Other non-current financial assets

InvestmentsAvailable-for-sale financial assets

Loans given Loans given

Other current financial assets

Held-to-maturity investments Held-to-maturity investments

Held-for-trading investments Held-for-trading investments

Derivative transactions Derivative transactions

Other non-current financial liabilities

n/a Loans and borrowings

Other current financial liabilities

n/aShort term part of long term loans

n/a Bank loans and overdrafts

Derivative transactions Derivative transactions

5 5

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 million2010/2011

12M

2009/2010

12M

Local business tax 1,625 1,646

2010/2011 business year4th quarter

EGIS Pharmaceuticals Public Limited Company

Non-audited, consolidated, IFRS

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 33,073 32,426 647 2%

Gross profit 17,452 18,073 -621 -3%

% 52.8% 55.7% -2.9%p

Operating profit 2,019 4,590 -2 571 -56%

% 6.1% 14.2% -8,1%p

Pre-tax profit 2,719 3,296 -577 -18%

% 8.2% 10.2% -1.9%p

8

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

274266

275

275

268

6,56,53

6,77

6,616,5

160

180

200

220

240

260

280

300

320

07/08

Q1

07/08

Q2

07/08

Q3

07/08

Q4

08/09

Q1

08/09

Q2

08/09

Q3

08/09

Q4

09/10

Q1

09/10

Q2

09/10

Q3

09/10

Q4

10/11

Q1

10/11

Q2

10/11

Q3

10/11

Q4

EU

RH

UF

5,0

5,5

6,0

6,5

7,0

7,5

8,0

8,5

9,0

9,5

10,0

RU

BH

UF

EUR avg EUR close RUB avg RUB close

9

Increasing sales in all regions

2010/2011

Q4

2009/2010

Q4

Change

%

Hungary HUFm 8,604 8,410 2%

Russia + other CIS EURm 38.7 36.6 6%

Central and Eastern Europe EURm 35.0 34.7 1%

RoW pharma EURm 4.9 4.7 5%

API, others EURm 10.5 7.9 33%

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 market 569.6 589.7 3% 0%

EGIS turnover 30.2 31.7 5% 0%

EGIS market share 5.3% 5.4%

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, 2007 9% 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, 2008 1% April-June, 2011 0.3%July 1, 20080.3% July 1, 2011 1.5%October 1, 2008 0.1%

July 1, 20090.6%April 1, 2009 0.1%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

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

7% turnover rise in Russia, 3% aggregate growth in other CIS markets

EUR thousand2010/2011

Q4

2009/2010

Q4

Change

%

Russia 27,134 25,336 7%

Ukraine 5,490 3,569 54%

Kazakhstan 1,813 2,437 -26%

Belarus 1,403 2,152 -35%

Other CIS 2,865 3,114 -8%

Russia and other CIS total 38,705 36,607 6%

15

1% sales increase alltogether in Central and Eastern Europe


Q4

2009/2010

Q4

Change

%

Poland 17,097 16,317 5%

Czech Republic 5,003 4,491 11%

Slovakia 4,021 3,797 6%

Romania 4,456 4,743 -6%

Other CEE 4,436 5,394 -18%

CEE total 35,013 34,742 1%

16

Pharma export to other countries increased 5%


Q4

2009/2010

Q4

Change

%

Pharma export to other markets 4,925 4,708 5%

EGIS finished drugs 4,273 4,708 -9%

Co-operation 652 0

17

Export of active pharmaceutical ingredients extended 33% due to supplies to Servier


Q4

2009/2010

Q4

Change

%

API and others export 10,480 7,873 33%

of which Servier 6,599 4,327 52%

other partners of EGIS 3,881 3,546 9%

18

Cost of sales increased due to evolution of exchange rates, structure of sales and

settlements of year-end accounts


Q4

2009/2010

Q4

Change

%

Net sales 33,073 32,426 2%

Cost of sales 15,621 14,353 9%

Cost of sales ratio 47.2% 44.3% 2.9%p

19

General costs increased 6%(of which the impact of provisions: 3%p)


Q4

2009/2010

Q4

Change

%

Sales & Marketing 8,017 7,636 5%

R&D 3,034 2,948 3%

Administrative (normal) 2,709 2,727 -1%

Provisions and other items of value correction

449 39

General costs total 14,209 13,350 6%

20

The balance of other revenues and expenditure detoriated by HUF1,091 mn because of

pharmaceutical extra taxes


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 taxes Reclassified to profit taxes

Balance of other items 278 -34 312

21

Financial profit and share of results of associated companies HUF 700mn, determined by foreign exchange rate effects and results of assoc.co’s


Q4

2009/2010

Q4

Change

HUFm

Net interest income 469 328 141

Forex impact 1,753 -1,907 3,660

Realised -56 426 -482

Non-realised 1,809 -2,333 4,142

Hedge positions 13 832 -819

Other items and results of assoc.co’s -1,535 -547 -988

Profit from fin. & assoc.co 700 -1,294 1,994

2010/2011 fiscal year12 months

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 128,939 118,915 10,024 8% 8%

Gross profit 72,106 66,709 5,397 8% 8%

% 55.9% 56.1% -0.2%p

Operating profit 16,302 17,158 -856 -5% 6%

% 12.6% 14.4% -1.8%p

Pre-tax profit 15,676 19,401 -3,725 -19% -11%

% 12.2% 16.3% -4.1%p


24

Growing sales in all regions

2010/2011

12M

2009/2010

12M

Change

%

Hungary HUFm 34,871 32,687 7%

Russia + other CIS EURm 150.9 138.3 9%

Central and Eastern Europe EURm 134.2 130.0 3%

RoW pharma EURm 19.6 17.3 13%

API, others EURm 40.8 28.3 45%

25

12 % sales growth in Russia, 2% growth in other CIS markets alltogether


12M

2009/2010

12M

Change

%

Russia 110,244 98,378 12%

Ukraine 15,582 14,498 7%

Kazakhstan 8,021 7,637 5%

Belarus 6,207 6,618 -6%

Other CIS 10,839 11,123 -3%

Russia and other CIS total 150,893 138,254 9%

26

Sales in Central and Eastern Europe alltogether increased 3%


12M

2009/2010

12M

Change

%

Poland 65,518 63,969 2%

Czech Republic 18,405 16,462 12%

Slovakia 15,131 15,237 -1%

Romania 16,804 15,448 9%

Other CEE 18,340 18,904 -3%

CEE total 134,198 130,020 3%

27

Pharma export to other countries increased 13%


12M

2009/2010

12M

Change

%

Pharma export to other markets 19,560 17,265 13%

EGIS finished drugs 16,953 16,870 0%

Co-operation 2,607 395

28

Export of active pharmaceutical ingredients increased 45% due to duplex supplies to Servier


12M

2009/2010

12M

Change

%

API and others export 40,841 28,263 45%

to Servier 28,502 14,223 100%

to other partners of EGIS 12,339 14,040 -12%

29

The cost of sales improved 20 BPS y/y


12M

2009/2010

12M

Change

%

Net sales 128,939 118,915 8%

Cost of sales 56,833 52,206 9%

Cost of sales ratio 44.1% 43.9% 0.2%p

30

General costs increased 6% (sales growth was 8%)


12M

2009/2010

12M

Change

%

Sales & Marketing 29,686 28,143 5%

R&D 11,614 10,860 7%

Administrative (normal) 10,307 9,824 5%

Provisions and other items of value correction

518 202

General costs total 52,125 49,029 6%

31

The balance of other revenues and expenditure changed HUF3.2 bn adversely because of

increase in pharmaceutical extra taxes


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 taxes Reclassified to profit taxes

Balance of other items 545 162 383

32

Fin. profit and share of results of associated companies was minus HUF 0.6 bn


12M

2009/2010

12M

Change

HUFm

Net interest income 1,463 1,429 34

Forex impact 7 1,117 -1,110

Realised -565 1,786 -2,351

Non-realised 572 -669 1,241

Hedge contracts 215 -251 466

Other items -2,311 -52 -2,259

Profit from fin, & assoc.co -626 2,243 -2,869

33

RUBHUF hedge contracts (FRA)effective up to April 2012

November 2, 2011 RUBm Forward

November 210 6.78

December 210 6.84

January 210 6.87

February 180 6.90

March 150 6.93

April 90 6.96

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 128,939 118,915 10,024 8% 8%

Gross profit 72,106 66,709 5,397 8% 8%

% 55.9% 56.1% -0.2%p

Operating profit 16,302 17,158 -856 -5% 6%

% 12.6% 14.4% -1.8%

Pre-tax profit 15,676 19,401 -3,725 -19% -11%

% 12.2% 16.3% -4.1%p


35

Slight change in the headcount of the Group

peopleSept 30

2011

Sept 30

2010

EGIS Hungary 2,625 2,597

Repr. offices abroad 813 758

Subsidiaries abroad 437 431

Medimpex companies 40 38

Total headcount 3,915 3,824

36

Capital expenditures throughout the year increased 6% y/y


12M

2009/2010

12M

Change

HUFm

Property, plant and equipment 13,978 13,320 658

Intangible assets 1,388 1,188 200

Total capex 15,366 14,508 858

37

Guidance on the whole realised

Market CurrencyGuidance

in August12M fact

Hungary HUF +5% +7%

CIS EUR +12% +9%

of which: Russia EUR +12-14% +12%

CEE EUR +4% +3%

Row pharma EUR +10% +13%

API EUR +40% +45%

∑ Sales HUF +7-9% +8%

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

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