Fagron N.V. — Annual Report 2014

Jul 14, 2016

Publication

Fagron NV

Waregem

Konzernabschluss zum Geschäftsjahr vom 01.01.2014 bis zum 31.12.2014

Financial Annual Report 2014

Consolidated financial statements

	Statement
	Consolidated income statement
	Consolidated statement of comprehensive income
	Consolidated statement of financial position
	Consolidated statement of changes in equity
	Consolidated statement of cash flows

Notes to the consolidated financial statements

1	General information
2	Financial reporting principles
3	Risk management
4	Critical accounting estimates and judgments
5	Segment information
6	Turnover
7	Other operating income
8	Employee benefit expenses
9	Depreciation and amortisation
10	Other operating expenses
11	Financial result
12	Income tax expenses
13	Discontinued operations
14	Earnings per share
15	Intangible fixed assets
16	Property, plant and equipment
17	Financial assets
18	Taxes, remuneration and social security
19	Inventories
20	Trade receivables, other receivables, and cash and cash equivalents
21	Assets held for sale and related liabilities
22	Equity
23	Provisions
24	Pension obligations
25	Financial debts and financial instruments
26	Other current payables
27	Contingencies
28	Related parties
29	Business combinations
30	Discontinued operations
31	Information on the Statutory Auditor, his remuneration and related services
32	Significant events after the reporting period
33	Additional notes
34	List of the consolidated companies

Statutory Auditor's Report

Statutory financial statement

	Condensed stand-alone income statement Fagron NV
	Condensed stand-alone balance sheet Fagron NV
	Appropriation of profits Fagron NV

Alphabetical terminology list

Consolidated financial statements

The Report of the Board of Directors and Corporate Governance Statement, as reported before, are an integral part of the consolidated financial statements.

Statement

We declare that, to the best of our knowledge, the consolidated financial statement for the year ended 31 December 2014, prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, and the legal and regulatory requirements applicable in Belgium, reflect a true and fair view of the equity, the financial situation and the results of the Company and the companies that are included in the consolidation scope, and that the annual report provides a true and fair view of the development and the results of the Company and of the position of the Company and the companies included in the consolidation scope, and provides a description of the main risks and uncertainties they are faced with.

In the name and on behalf of the Board of Directors,

10 April 2015

Ger van Jeveren, CEO

Jan Peeters, CEO

Consolidated income statement

(x 1,000 euros)	Note	2014	2013 Restated1
Operating income		450,409	343,639
Turnover	6	447,056	342,711
Other operating income	7	3,353	928
Operating expenses		356,073	277,321
Trade goods		158,843	148,050
Services and other goods		76,067	49,157
Employee benefit expenses	8	101,642	71,166
Depreciation and amortisation	9	19,025	8,914
Other operating expenses	10	496	35
Operating profit		94,336	66,318
Financial income	11	731	1,039
Financial expenses	11	(25,215)	(18,536)
Profit before income tax		69,852	48,821
Taxes	12	26,663	6,997
Profit for the year from continuing operations		43,190	41,824
Profit (loss) for the year from discontinued operations
(attributable to equity owners of the company)	13	(27,033)	(73,854)
Profit (loss) for the year		16,156	(32,030)
Profit (loss) attributable to:
Equity holders of the company (net result)		16,226	(32,102)
Non-controlling interest		(70)	72
Earnings per share from continuing and discontinued operations: attributable to owners of the parent during Profit (loss) for the year per share (in euros)	14	0.53	(1.05)
From continuing operations	14	1.41	1.36
From discontinued operations	14	(0.88)	(2.41)
Diluted profit for the year per share (in euros)	14	0.52	(1.03)
From continuing operations	14	1.39	1.34
From discontinued operations	14	(0.87)	(2.37)

1 The income statement of 2013 is restated for the application of IFRS 5.

Consolidated statement of comprehensive income

	Note	2014	2013 Restated2
Profit for the year		16,156	(32,030)
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurements of post employment benefit obligations	24	(2,541)	137
Items that may be subsequently reclassified to profit or loss
Currency translation differences		5,973	(22,896)
Other comprehensive income from the year		3,432	(22,759)
Total comprehensive income for the year		19,588	(54,789)
Attributable to:
Equity holders of the company		19,686	(54,651)
Non-controlling interest		(98)	(138)
Total comprehensive income for the year		19,588	(54,789)
Total comprehensive income for the year attributable to equity holders of the company:
From continuing operations		46,719	19,203
From discontinued operations	13	(27,033)	(73,854)
		19,686	(54,651)

There are no deferred taxes on translation differences, the amount of deferred tax on post employment benefits equals 0.635 million euros.

2 The statement of comprehensive income of 2013 is restated for the application of IFRS 5.

Consolidated statement of financial position

(x 1,000 euros)	Note	31 December 2014	31 December 2013
Non-current assets		662,648	492,100
Intangible assets	15	575,252	400,587
Property, plant and equipment	16	59,969	47,454
Financial assets3	17	5,064	15,767
Deferred tax assets	18	22,363	28,292
Current assets		228,114	236,536
Inventories	19	65,181	58,917
Trade receivables	20	36,337	29,611
Other receivables	20	18,043	19,137
Cash and cash equivalents	20	108,552	128,871
Assets held for sale	21	82,989	76,057
Total assets		973,752	804,693
Equity	22	156,948	155,168
Shareholders equity (parent)		154,630	151,555
Non-controlling interest		2,317	3,613
Non-current liabilities		575,472	389,097
Provisions	23	8,891	9,197
Pension obligations	24	6,053	4,286
Deferred tax liabilities	18	6,162	4,451
Borrowings	25	551,504	368,698
Financial instruments	25	2,862	2,463
Current liabilities		220,938	230,364
Borrowings	25	5,710	55,004
Trade payables		57,440	55,551
Taxes, remuneration and social security	18	38,668	28,842
Other current payables	26	119,120	90,968
Liabilities directly associated with assets classified as held for sale	21	20,394	30,064
Total liabilities	21	816,804	649,525
Total equity and liabilities		973,752	804,693

3 The financial assets per 31 December 2013 consist of 0.867 million euros financial assets and 14.900 million euros other non-current assets.

Consolidated statement of changes in equity

(x 1,000 euros)	Note	Share capital & share premium	Other reserves	Treasury shares	Retained earnings	Total	Non-controlling interest	Total equity
Balance at 1 January 2013		318,134	(208,349)	(4,263)	135,910	241,432	3,753	245,186
Profit for the year					(32,102)	(32,102)	72	(32,030)
Other comprehensive income for the year			(22,550)			(22,550)	(209)	(22,759)
Total comprehensive income for the year			(22,550)		(32,102)	(54,652)	(137)	(54,789)
Capital increase		793				793		793
Purchase of treasury shares				(12,942)		(12,942)		(12,942)
Result on treasury shares				(4,637)		(4,637)		(4,637)
Dividends relating to 2012 result					(18,842)	(18,842)		(18,842)
Share-based payments			400			400		400
Balance at 31 December 2013		318,927	(230,499)	(21,842)	84,966	151,553	3,615	155,168
Profit for the year					16,226	16,226	(70)	16,156
Other comprehensive income for the year			3,460			3,460	(28)	3,432
Total comprehensive income for the year			3,460		16,226	19,686	(98)	19,588
Capital increase	22	733				733		733
Sale of treasury shares	22			5,350		5,350		5,350
Result on treasury shares	22			(3,743)		(3,743)		(3,743)
Dividends relating to 2013 result	22				(22,209)	(22,209)		(22,209)
Share-based payments	22		2,060			2,060		2,060
Change in non-controlling
interests	22		1,198			1,198	(1,198)
Balance at 31 December 2014		319,660	(223,781)	(20,235)	78,983	154,628	2,319	156,948

Consolidated statement of cash flows

(x 1,000 euros)	2014	2013
Operating activities
Profit before income tax	46,299	(21,618)
Paid taxes	(11,370)	(10,299)
Adjustments for financial items	26,730	25,018
Total adjustments for non-cash items	44,267	79,751
Total changes in working capital	(4,229)	(9,774)
Total cash flow from operating activities	101,696	63,078
Investment activities
Capital expenditure	(20,656)	(15,822)
Investments in existing shareholdings (subsequent payments)
and in new holdings	(196,171)	(101,317)
Proceeds from disposal of assets	23,042	53,606
Total cash flow from investing activities	(193,785)	(63,533)
Financing activities
Capital increase	733	794
Sale (purchase) of treasury shares	1,339	(18,252)
Dividends paid	(22,199)	(18,766)
New borrowings	355,488	129,161
Reimbursement of borrowings	(245,703)	(7,009)
Interest received (paid)	(24,668)	(19,403)
Total cash flow from financing activities	64,990	66,525
Total net cash flow for the period	(27,099)	66,069
Cash and cash equivalents - start of the period	135,412	72,352
Gains or losses on exchange on liquid assets	(238)	(3,009)
Cash and cash equivalents- end of the period	108,552	135,412
Change in cash and cash equivalents	(27,099)	66,069
Cash flows from discontinued operations 4
Cash flow from operating activities	11,172	7,945
Cash flow from investing activities	(13,322)	(21,346)
Cash flow from financing activities	3,660	11,477
Total net cash flow from discontinued operations	1,510	(1,925)

The opening balance sheet for cash and cash equivalents consists of cash from continued operations (128.871 million euros) and of cash of assets held for sale (6.541 million euros).

The profit before income tax of 46.299 million euros is made up by profit before income tax for continued operations 69.852 million euros, the loss before income tax of discontinued operations -23.553 million euros.

The item 'adjustments for financial items' relates to interest paid and received and to other financial expenses and income not being cash flows such as revaluation of the financial instruments.

The 'total adjustments for non-cash items' particularly relates to depreciation, amortisation and changes in provisions.

The item 'total changes in working capital' concerns changes in the inventories, trade debtors and creditors, other receivables and debts, and all other balance sheet elements that form part of the working capital. Aforementioned changes are adjusted as appropriate for non-cash flows as presented above and conversion differences and changes in the consolidation scope.

4 The cash flows from discontinued operations of 2013 are restated for the application of IFRS 5.

Notes to the consolidated financial statements

1 General information

Fagron NV (the 'Company') and its subsidiaries (together, the 'Group') constitute a multinational group of companies that is focused on optimising and innovating pharmaceutical compounding worldwide. Fagron offers its products to (compounding) pharmacies and hospital pharmacies.

Fagron NV is a company headquartered in Belgium with its registered office at Textielstraat 24,8790 Waregem. The company registration number is BE 0890 535 026. The operational activitie of the Fagron Group are driven by the Dutch company Fagron BV. The operational head office of Fagron BV is located in Rotterdam.

The shares of Fagron NV are listed on the regulated markets of Euronext Brussels and Euronext Amsterdam.

The Board of Directors approved the publication of this consolidated financial statement on 10 April 2015.

2 Financial reporting principles

The principal accounting policies applied in preparing these consolidated financial statements are detailed below. These policies have been consistently applied by all consolidated entities to all years presented, unless stated otherwise.

The consolidated financial statements of Fagron have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

The consolidated financial statements have been prepared on the basis of the historical cost convention, with the exception of some financial assets and liabilities (including derivative financial instruments) which are stated at fair value.

IFRS accounting standards

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2014 and have been mandatory and applied by the Group.

Mandatory and applied		Impact
Consolidation and Disclosures (IFRS 10 and IFRS 12)	The new standard IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements.	Fagron has assessed and applied the standards of consolidation and disclosures.
	IFRS 12 is a new standard on disclosure requirements for all forms of interests in other entities.
Amendments to IAS 36 - Impairments	Limitation of scope and introduction of additional disclosures about fair value measurements when there has been impairment or a reversai of impairment.	Fagron has assessed and applied the amendments to the standard of impairments.
Following new interpretation, new standards and amendments to standards have been issued, but are not mandatory for the first time for the financial year beginning 1 January 2014		Anticipated impact
IFRS 9 Financial Instruments	The standard addresses the classification, measurement and derecognition of financial assets and financial liabilities.	Fagron will review the effects of a comprehensive standard on financial instruments and consider adoption when appropriate.
(not endorsed by the EU)
Amendment to IFRS 9 'financial instruments' on general hedge accounting	The amendment incorporates the new general hedge accounting model which will allow reporters to reflect risk management activities in the financial statements more closely as it provides more opportunities to apply hedge accounting.	Fagron will review the effects of a comprehensive standard on financial instruments and consider adoption when appropriate.
(not endorsed by the EU) Annual report 2018
IFRIC 21 Levies	IFRIC 21 sets out the accounting for a liability to pay a levy if that liability is within the scope of IAS 37. It also addresses the accounting for a liability to pay a levy whose timing and amount is certain.	Fagron has assessed that the application of this standard will not have a material impact on the consolidated financial statements.
Annual report 2015
Annual improvements	Minor amendments to eight standards:	Fagron has assessed that the application of these minor amendments will not have a material impact on the consolidated financial statements.
(2010 - 2012 cycle)	· IFRS 2 Definition of vesting condition
Annual report 2016 (endorsed by the EU)	· IFRS 3 Accounting for contingent consideration in a business combination
	· IFRS 8 Aggregation of operating segments
	· IFRS 8 Reconciliation of the total of the reportable segments' assets to the entity's assets
	· IFRS 13 Short term receivables and payables
	· IAS 7 Interest paid that is capitalised
	· IAS 16/IAS 38 Revaluation period - proportionate restatement of accumulated depreciation
	· IAS 24 Key management personnel
Following new interpretation, new standards and amendments to standards have been issued, but are not mandatory for the first time for the financial year beginning 1 January 2014		Anticipated impact
Amendment to IAS 19	The amendment seeks clarification for the accounting of employee contributions set out in the formal terms of a defined benefit plan.	Fagron has assessed that the application of this amendment will not have a material impact on the consolidated financial statements.
'Defined benefit plans'
Annual report 2016
Annual improvements 2012-2014	The amendments include IFRS 5, 'Non-current assets held for sale and discontinued operations', IAS 19, 'Employee benefits', IFRS 7, 'Financial instruments: disclosures' and IAS 34, 'Interim financial reporting'.	Fagron will review the effects of these amendments and consider adoption when appropriate.
(not endorsed yet by the EU)
IFRS 15 Revenue from contracts with customers	The standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally.	Fagron has assessed that the application of this standard will not have a material impact on the consolidated financial statements.
Amendments to IAS 1 Presentation of financial statements	The amendments to IAS1 are part of the initiative of the IASB to improve presentation and disclosure in financial reports and are designed to further encourage companies to apply professional judgement in determining what information to disclose in their financial statements.	Fagron will review the effects of these amendments and consider adoption when appropriate.
Annual report 2016
(not endorsed by the EU)

The other new standards, amendments of standards and interpretations which were published but are not yet mandatory for this financial year starting 1 January 2014, are not applicable for Fagron.

Consolidation criteria

The consolidated financial statements include the accounts of Fagron and its subsidiaries. Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to Fagron. They are no longer consolidated from the date Fagron no longer has control.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

An acquisition is recognised using the purchase method. The cost price of an acquisition is defined as fair value of the assets given, shares issued and liabilities assumed on the date of the exchange. Identifiable assets acquired and liabilities and contingencies assumed in a business combination are initially set at their fair value on the acquisition date. For each business combination, the acquiring party values any minority interest in the party acquired at fair value or at the proportional share in the identifiable net assets of the party acquired. The acquiring costs incurred are recognised as expenses. The remainder of the total of the transferred fees and the amount recognised as any minority interest is taken from the net balance of the acquired identifiable assets, and the acquired liabilities form goodwill to be recognised as an asset.

Intercompany transactions, balances and unrealised gains on transactions between companies of the Group are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted in accordance with the accounting policies of the Group.

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Foreign currency translation

Items included in the financial statements of all entities of Fagron are measured using the currency of the primary economic environment in which the company operates ('the functional currency'). The consolidated financial statement is presented in Euros, the functional and presentation currency of Fagron. To consolidate Fagron and each of its subsidiaries, the respective financial statement is converted as follows:

•	Assets and liabilities at the year-end rate;
•	Income statements at the average rate for the year;
•	Components of the equity at historical exchange rate.

Exchange rate differences arising from the conversion of the net investment in foreign subsidiaries at year-end exchange rate are recognised as shareholders' equity elements under 'Cumulative conversion differences'.

Transactions in foreign currencies

Transactions in foreign currencies are translated to the functional currency using the exchange rates on the transaction date. Profits and losses from exchange rate differences resulting from settling these transactions and from the conversion of monetary assets and liabilities into foreign currencies at exchange rates valid at year-end are recognised in the income statement.

Property, plant and equipment (Note 16)

Tangible fixed assets are valued at the acquisition or production plus directly attributable costs if applicable. Depreciation pro rata calculated based on the useful life of the asset. The useful life of equipment and machinery is 2.5 to 5 years and for buildings range from 25 to 60 years.

In general all assets are depreciated on a straight-line, based on the estimated economic life. Any residual value taken into account when calculating the depreciations is reviewed annually. Assets acquired under finance leasing arrangements are depreciated over their economic life, which may exceed the lease term if it is reasonably certain that ownership will be obtained at the end of the lease term.

Exchange rates of key currencies

	Balance sheet		Income statement
	2014	2013	2014	2013
---	---	---	---	---
US dollar	1.214	1.379	1.328	1.328
Brazilian real	3.221	3.258	3.122	2.867

Intangible assets (Note 15)

Intangible assets are valued at cost accumulated amortisation and impairment charges. All intangible assets are tested for impairment whenever there is an indication that the intangible asset may be impaired.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the share of Fagron in the net identifiable assets of the acquired subsidiary on the acquisition date. Goodwill on acquisitions of subsidiaries is recognised under intangible assets. Goodwill is tested at least annually for impairment and consistently when a trigger event occurs. Goodwill is recognised at cost price less accumulated impairment losses. Impairment losses on goodwill are never reversed. Gains and losses on the disposal of an entity include the book value in goodwill relating to the entity sold.

Brands, licenses, patents and other

Intangible assets are capitalised at cost, provided this cost is not higher than the economic value and the cost price is not higher than the recoverable value. No intangible assets with an unlimited useful life were identified. The costs of brands with a definite useful life are capitalised and generally amortised on a straight-line basis over a period of 20 years.

Research & development

Research costs related to the prospect of gaining new scientific or technological knowledge and understanding are recognised as costs as at the moment they are incurred.

Development costs are defined as costs incurred for the design of new or substantially improved products and for the processes preceding commercial production or use. They are capitalised if, among other things, the following criteria are met:

•	Technical feasibility of the project;
•	Intention to complete and to use or sell the asset;
•	Ability to use or sell the asset;
•	Probability that the asset will generate future economic benefits;
•	Adequate resources to complete the asset;
•	Ability to measure the cost reliability.

Development costs are amortised using the straight-line method over the period of their expected benefit, currently not exceeding five years. Amortisation starts as of the moment that these assets are ready for use.

In-house development

Unique products developed in-house, including software controlled by Fagron, that are expected to generate future economic benefits are capitalised at the cost directly related to their production. The products are depreciated over their useful life, which is currently estimated at 2.5 to 7 years.

Software

Acquired software is capitalised at cost price and then valued at cost price less accumulated depreciations and exceptional losses of value. The software is depreciated over its useful life, which is currently estimated at 2.5 to 7 years.

Impairment of non financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and in-use value. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Borrowings (Note 25)

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised costs; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities, unless Fagron has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

Financial assets (Note 17)

Fagron classifies its non-derivative financial assets into the following categories: loans and receivables, and financial assets available for sale. Management determines its investment classifications at initial recognition, evaluating them at each reporting date. The Group does not have any financial assets in the category held until maturity or any financial assets designated at fair value for which any changes in value have to be included in the income statement.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Loans and receivables are included in current assets, except for those maturing more than twelve months after the balance sheet date.

Loans and receivables are measured at amortised cost.

Financial assets available for sale

Financial assets available for sale are non-derivative financial assets that are designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Financial assets available for sale are initially valued at fair value except where such fair value cannot be reliably determined, in which case they are valued at cost. Unrealised gains and losses arising from changes in the fair value are recognised in unrealised result in other comprehensive income. If the relevant assets are sold or impaired, the accrued fair value adjustments are recognised in the income statement. Any events or changes in circumstances indicating a decrease in the recoverable amount are monitored closely. Impairment losses are recognised in the income statement as and when required.

Lease contracts - Operating leases (Note 25)

Lease contracts in which a significant portion of the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments under operating leases are made on a straight-line basis over the life of the operating lease.

Lease contracts - Financial leases (Note 25)

Lease contracts regarding property, plant and equipment whereby Fagron retains virtually all risks and benefits of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease contract at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between liability and financing charges, so as to achieve a constant amount on the outstanding financing balance.

The corresponding rental obligations, net of financing charges, are recognised at non-current (payable after one year) and current (payable within the year) borrowings. The interest component of the financing charges is recognised in the income statement over the lease period, so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period.

The property, plant and equipment assets acquired under finance leases are depreciated over the useful life of the asset, which may exceed the lease term if it is reasonably certain that ownership will be obtained at the end of the lease term.

Inventories (Note 19)

Raw materials, auxiliary materials, and trade goods are valued at the acquisition value using the FIFO method or using the net realisable value (NRV) at the balance sheet date, whichever is lower. Work in progress and inventory finished products are valued at direct and indirect production costs. In addition to purchasing costs of raw materials and auxiliary materials, production costs include production costs and production overhead costs directly attributable to the individual product or the individual product group.

Trade receivables (Note 20)

Trade receivables are initially valued at fair value and are measured at amortised costs. A provision for impairment loss relating to trade receivables is created when there is objective evidence that Fagron will not be able to collect all amounts due. After that trade receivables are valued at cost price less impairments. Significant financial difficulties of the debtor, the probability of the debtor becoming insolvent or under going financial restructuring, and non or overdue payments are regarded as indicators for recognising an impairment loss for the trade receivable in question.

If trade receivables are transferred to a third party (through factoring), the trade receivables are taken off the balance sheet provided that (1) there is no longer a right to receive cash flows and (2) Fagron has substantially transferred all risks and rewards.

Cash and cash equivalents (Note 20)Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, and

are valued at acquisition at fair value and subsequently recognised at cost. Adjustments to the carrying amounts are made when at balance sheet date realisation value is lower than the book value.

Discontinued operations and non-current assets held for sale (Note 21)

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction than through continuing use.

Non-current assets and disposal groups only classify as held for sale when the following criteria of IFRS 5 are met:

―	Management is committed to a plan to sell;
―	The asset is available for immediate sale;
―	An active programme to locate a buyer is initiated;
―	The sale is highly probable, within 12 months of classification as held for sale (subject to limited exceptions);
―	The asset is being actively marketed for sale at a sales price reasonable in relation to its fair value;
―	Actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or withdrawn.

When Fagron is committed to a sale plan in involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether Fagron will retain a non-controlling interest in its former subsidiary after the sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

Equity (Note 22)

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognised in the equity as a deduction, net of taxes, from the proceeds.

If a company of Fagron purchases share capital of Fagron (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the shareholders of Fagron until the shares are cancelled, reissued or disposed of. If such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and related income tax effects, is included in equity attributable to the equity holders of Fagron.

Provisions (Note 23)

Fagron recognises provisions when a present legal or constructive obligation as a result of a past event exists, and it is probable that an outflow of economic benefits is required to settle the obligation. Different provisions exist for restructuring costs, legal claims, risk of losses or costs potentially arising from personal securities or collateral constituted as guarantees for creditors or commitments to third parties, from obligations to buy or sell non-current assets, from the fulfilment of completed or received orders, technical guarantees associated with turnover or services already completed by Fagron, unresolved disputes, fines and penalties related to taxes, or compensation for dismissal. Provisions for restructuring costs comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Fagron recognises a provision if:

1.	A present obligation (legal or constructive) has arisen as a result of a past event (the obligating event);
2.	Payment is probable ('more likely than not'); and
3.	The amount can be estimated reliably.

Provisions are recognised based on management's best estimate of the expenditure required to settle the present obligation at balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

Derivative financial instruments (Note 25)

Fagron utilises derivative financial instruments to limit risks relating to unfavourable fluctuations in interest rates. No derivatives are employed for trade purposes.

Derivative financial instruments are recognised at fair value on the balance sheet. Fair values are derived from market prices. As the derivatives contracts of Fagron do not fulfil the criteria set in IAS39 to be regarded as hedging instruments, changes in fair value of derivatives are recognised in the income statement.

Employee benefit expenses Pension obligations (Note 24)

The companies of Fagron operate various pension schemes. The pension schemes are funded through payments to insurance companies, determined by periodic actuarial calculations. Fagron has both defined benefit and defined contribution plans.

The liability recognised in the balance sheet in respect of defined benefit plans is the present value of the future defined benefit obligations less the fair value of plan assets. The defined benefit obligation is calculated periodically by independent actuaries using the projected-unit-credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. Actuarial gains and losses arising from empirical adjustments and changes in actuarial assumptions are recognised immediately through other comprehensive income.

For defined contribution plans, Fagron pays contributions to insurance companies. Once the contributions have been paid, Fagron ceases to have any liabilities. Contributions to defined contribution plans are recognised as costs in the income statement at the moment they are made.

Share-based payments (Note 22)

Fagron operates an equity-settled, warrant-based compensation plan. The total amount to be recognised as costs over the vesting period is determined by reference to the fair value of the warrants or options granted, excluding the impact of any non-market vesting conditions (for example, profitability and turnover growth targets). Non-market vesting conditions are included in the assumptions about the number of warrants or options expected to become exercisable. At each balance sheet date, Fagron revises its estimates of the number of warrants or options expected to become exercisable. Fagron recognises any impact of the revision of original estimates in the income statement, and a corresponding adjustment to equity over the remaining vesting period. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the warrants are exercised. The modalities of the existing plans were not changed this year.

Taxation (Note 18)

Income taxes as recognised in the income statement include current income tax and deferred taxes. Current income taxes include the expected tax liabilities on the taxable income of Fagron for the financial year, based on the applicable tax rates at balance sheet date, and any adjustments of previous years. The income tax consequences of dividends are recognised when a liability to pay the dividend is recognised.

Deferred taxes are recognised using the balance sheet liability method and are calculated on the basis of the temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amount used for taxation purposes. This method is applied to all temporary differences arising from investments in subsidiaries and associates, except for differences whereby the timing of reversing the temporary difference is controlled by Fagron and whereby the temporary difference is not likely to be reversed in the near future. The calculation is based on the tax rates as enacted or substantially enacted at balance sheet date and expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Under this calculation method, Fagron is also required to account for deferred taxes relating to any difference between the fair value of the net acquired assets and their fiscal book value resulting from any acquisitions. Deferred tax assets are recognised to the ratio as the tax losses carried forward are likely to be utilised in the foreseeable future. Deferred income tax receivables are fully written off when it ceases to be likely that the corresponding tax benefit will be realised.

Fagron will offset tax assets and tax liabilities if, and only if Fagron (a) has a legally enforceable right to off set the recognised amounts; and (b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Revenue recognition

Revenue of goods is recognised at the moment that delivery of the products has been made to the customer, the customer has accepted the products and the related receivables are likely to be collectable. Revenue of services is recognised in the accounting period in which the services have been provided. Revenue of software is recognised as revenue at the time of delivery. The revenues relating to software service contracts are recognised over the term of the contract.

Segment reporting

IFRS 8 defines an operating segment as:

•	a component of an entity that engages in business activities from which it may earn turnover and incur expenses;
•	in whose operating results are regularly reviewed by the entity's Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance and
•	for which discrete financial information is available.

Fagron determines and presents operating segments on the information that internally is provided to the Executive Committee, the body that was Chief Operating Decision (CODM) maker during 2014. An operating segment is a group of assets and activities engaged in providing products or services that are the basis of the internal reporting to Fagron's Executive Committee. As a result of the sale of the dental and medical division in 2014 and disposal of Corilus in 2015, Fagron changed its operating segments as of the first of January 2015.

The financial information of the current Fagron segments that is provided to the Executive Committee is split up in Fagron Compounding Services, Fagron Trademarks and Fagron Compounding Essentials. Therefore, as of 2015, the reportable segments will be Fagron Compounding Services, Fagron Trademarks and Fagron Compounding Essentials.

Earnings per Share (Note 14)

Fagron presents basic and diluted Earnings per Share (EPS) for common shares. Basic EPS is calculated by dividing the profit or loss attributable to holders of common shares by the weighted average number of common shares outstanding during the period. Dividend distribution to the shareholders of Fagron is recognised as a liability in the financial statement of Fagron in the period in which the dividends are approved by the shareholders of Fagron.

For the purpose of calculating diluted EPS, the profit or loss for the period attributable to ordinary equity holders adjusted for the effects of all dilutive potential ordinary shares should be divided by the sum of the weighted average number of ordinary shares used in the basic EPS calculation and the weighted average number of shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

3 Risk management

The Risk management is an important core responsibility of Fagron in order to secure the long-term business objectives and the value creation of the company. The policy of Fagron is to focus on identifying all major risks, on developing plans to prevent and manage these risks, and on putting in place measures to contain the consequences should such risks effectively occur. Still, Fagron cannot conclusively guarantee that said risks will not occur or that there will be no consequences when they occur.

Adequate and reliable financial reporting is essential for both the internal management reports and the external reporting. Group-wide reporting guidelines have been drawn up within Fagron to this end, based on IFRS and internal information needs.

All entities periodically prepare business plans, budgets and interim forecasts at predetermined moments. Discussions with the management of the entities take place periodically on the general course of affairs, including the realisation and feasibility of the forecasts issued and strategic decisions. With regard to fiscal regulation, Fagron makes use of the possibilities offered by the fiscal legislation and regulation without taking any unnecessary risks in doing so. Fagron has the support of external fiscal advisers in this regard.

In addition to strategic and operational risks, Fagron is also subject to various financial risks. Fagron has at its disposal ample credit facilities to sustain its day-to-day operations. The most important credit facility of 220 million euros has a term until 16 December 2019.

On 16 December 2014, Fagron NV amended and extended the credit facility with an original amount of 150 million euros and a maturity of July 2017. The amended credit facility was increased to 220 million euros and has a term of five years with two additional one year extension options. The main covenant of this credit facility is a net financial debt/recurring EBITDA ratio of a maximum of 3.25. At the end of 2014, the net financial debt/annualised recurring EBITDA ratio was 3.18 (2013: 2.61) and therefore below the condition of a debt ratio of maximum 3.25 as agreed in the credit agreement.

On 2 July 2012, Fagron NV issued 225 million euros in bonds consisting of 225,000 bonds with a nominal value of 1,000 euros per bond. The bonds were listed on Euronext Brussels under ISIN code BE0002180462 on 2 July 2012. The issue price of the bonds was 101.875%. The bonds have a maturity of five years and offer a fixed annual gross interest of 4.75%. The bonds are redeemable at 100% of the nominal value on 2 July 2017.

Fagron manages the cash and financing flows and the risks arising from these by means of a group-wide treasury policy. In order to optimise the financial position and keep the related interest charges to a minimum, the cash flows of the companies are centralised by means of domestic and cross border cash pooling as much as possible.

Credit risk

Credit risk involves the risk that a debtor or other counterparty is unable to satisfy its payment obligations to Fagron, resulting in a loss for Fagron. Operating an active credit policy, Fagron has in place strict procedures to manage and limit credit risks. No individual customers make up a substantial part of either turnover or outstanding receivables. Fagron has an active policy to reduce operational working capital; from this perspective the group aims to reduce the accounts receivable balance.

Interest risk

Fagron regularly assesses the maintained mix of financial debts with fixed and variable interest rates. At this time, financing is partly based on a multicurrency syndicated loan in euros and USD with a variable interest rate of one to six months. A higher Euribor rate by 10 base points would have adversely affected the variable interest charges by approximately 70 thousand euros after taxes (2013: 69 thousand euros). For 70 million euros of the syndicated loan, the interest rate risk is hedged with a financial derivative. This hedging was taken into account in calculating the impact of an increase in the Euribor rate by 10 base points.

Exchange rate risk

The exchange rate risk is the risk on results due to fluctuations in the exchange rates. Fagron reports its financial results in euros and is, because of the international distribution of its activities, subject to the potential impact of currencies on its profits. Exchange rate risk is the result on the one hand of several entities of Fagron operating in a functional currency other than euros and on the other hand of the circumstance that purchasing and retail prices of Fagron have foreign currencies as reference. The risk involved in entities of Fagron operating in a functional currency other than the euro concerns entities operating in US dollars, Brazilian reals, Czech crowns, Swiss francs, British pounds, Danish crowns, Polish zloty, Colombian pesos, Chinese yuan, South African rand, Australian dollars and Argentinian pesos. In 2014, these entities collectively represent just over 57.0% of the consolidated turnover and over 72.5% of the operating result of Fagron. Currency risk due to translation of assets and liabilities of foreign subsidiaries into euros is not hedged. Some of the Group's revenue is realised in currencies other than the euro, such as in Brazil, the United States and Poland. The hypothetical supplementary effect of the euro strengthening (weakening) by 10% against the Brazilian real would affect the profit before tax by 0.998 (1.220) million euros, whereas the impact on equity would amount to 10.359 million euros (12.611 million euros). In the event of the euro strengthening (weakening) by 10% against the US dollar, the impact on the profit before tax would amount to 3.609 million euros (4.410 million euros). The impact on equity would amount to 5.391 million euros (6.588 million euros). In the event of the euro strengthening (weakening) by 10% against the Polish zloty, the impact on the profit before tax would amount to 0.544 million euros (0.665 million euros). The impact on equity would amount to 3.596 million euros (4.395 million euros).

The company also incurs indirect currency risk as a large part of its purchases in Brazil are actually transactions in US dollars. This means that the Group's products will become relatively more expensive to the consumer in Brazil each time the US dollar rises against the Brazilian real. The risk is difficult to quantify, as such price increases are directly charged to the consumer in full or in part.

Fair value risk

Fagron utilises financial derivatives to hedge its interest risks. Fagron hedged the interest rate risk on 70 million euros loans with variable interest rate. In accordance with IFRS, all financial derivatives are recognised either as assets or as liabilities.

In accordance with IAS 39, financial derivatives are recognised at fair value. Changes in fair value are recognised by Fagron directly in the income statement because these are financial derivatives that do not qualify as cash flow hedging instrument. At the end of 2014, the cumulative revaluation of financial derivatives amounted to -2.862 million euros (2013: -2.463 million euros) whereby this is treated as a non-cash item.

4 Critical accounting estimates and judgments

Estimates and judgments are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are deemed reasonable given the circumstances.

Critical assessments and judgments

Fagron makes assessments and assumptions concerning the future. The resulting estimates will, by definition, rarely match the related actual results. Those estimates and assumptions that entail a significant risk of causing the need fora material adjustment of the carrying amounts of assets and liabilities within the next financial year are discussed below.

Estimated impairment loss of goodwill and intangible assets

Fagron performs annual goodwill impairment tests in accordance with the financial reporting principles specified in note 15. The recoverable amount of cash flow-generating units is determined on the basis of value-in-use calculations. These calculations require the application of estimates. The book value of goodwill as at 31 December 2014 was 522.069 million euros (2013: 371.630 million euros).

Estimated impairment loss on deferred taxes

Deferred tax assets are stated for tax losses that can be carried forward. The degree to which these deferred assets can be recuperated is assessed regularly. See note 18.

Pension obligations

The present value of the pension obligations is derived from a number of actuarially determined factors based on assumptions. The assumptions applied to determine net costs (income) for pensions include expected rates for salary increases, price inflation, pension increase and the discount rate.

Any changes in these assumptions will impact the book value of pension obligations. The gross defined benefit obligation is calculated periodically by independent actuaries. The book value of pension obligations as at 31 December 2014 was 6.053 million euros (2013:4.286 million euros).

Provisions for disputes

As stated, provisions are valued at present value of the best estimate by management of the expenditure required to settle the existing obligation at balance sheet date. Provisions for disputes require significant professional judgment in terms of the ultimate outcome of administrative law rulings or court judgments. Estimates are always based on all available information at the moment the financial statement is prepared. However, the need for significant adjustments cannot be absolutely precluded if ruling or judgment proves not as expected. Hypotheses and assessments are continuously evaluated on the basis of empirical facts and other factors including projected development of future events regarded as reasonable given the circumstances.

5 Segment information

Fagron's its divisional structure is tailored to the various activities of Fagron and also supports effective decision-making and individual responsibility. The two segments are Fagron and HL Technology. This is in accordance with IFRS 8, which states that the operational segments must be determined on the basis of the components that the Executive Committee applies to assess the performance of the operational activities and on which the decisions are based.

Fagron is organised into two main operational segments:

1.	1. Fagron is an innovative scientific pharmaceutical R&D company that is focused on optimising and innovating pharmaceutical compounding worldwide. Fagron offers Fagron Compounding Essentials, Fagron Trademarks and Fagron Compounding Services to pharmacies and hospital pharmacies in 32 countries. Pharmaceutical compounding is an essential part of pharmaceutical care that enables pharmacists to fulfil the worldwide growing need for tailor-made medication. Fagron's own R&D organisation consists of more than 300 pharmacists who are working continually on developing new formulations to treat an increasing number of patients with customised compounded medication;
2.	HL Technology develops and produces innovative precision components and orthopedic tools for dental and medical professionals.

Taken into account the planned change in reporting structure, as from 2015, Fagron will report in three segments. The reportable segments are determined by examing how the Executive Committee allocates her recources and reviews the performances of Fagron. Fagron's new unique business model consists of Fagron Compounding Services, Fagron Trademarks and Fagron Compounding Essentials:

1.	Fagron Compounding Services (FCS) refers to all medication that is compounded in the 19 sterile and non-sterile compounding facilities Fagron has in Europe, North America, South America (Colombia) and South Africa. FCS produces tailor-made medication to meet the specific needs of patients suffering from severe diseases;
2.	Fagron Trademarks (FTM) refers to all products, materials, concepts, know-how and combinations of these related to compounding developed by Fagron's own R&D team of 45 researchers and over 300 pharmacists located on three continents;
3.	Fagron Compounding Essentials (FCE) refers to all pharmaceutical raw materials, equipment and supplies a pharmacist needs to compound medication.

The segment results for continued operations for the reporting period ending 31 December 2014 are as follows:

2014

(x 1,000 euros)	Fagron	HL Technology	Unallocated	Total
Total turnover	438,479	8,577		447,056
Intersegment turnover
Turnover	438,479	8,577		447,056
Operating result per segment	107,683	(931)	(12,416)	94,336
Financial result				(24,484)
Profit before taxes				69,852
Income tax expenses				(26,663)
Profit for the period				43,190

The segment results for continued operations for the reporting period ending 31 December 20135 are as follows:

2013

(x 1,000 euros)	Fagron	HL Technology	Unallocated	Total
Total turnover	334,986	7,726		342,711
Intersegment turnover
Turnover	334,986	7,726		342,711
Operating result per segment	77,992	(1,303)	(10,371)	66,318
Financial result				(17,497)
Profit before taxes				48,821
Income tax expenses				(6,997)
Profit for the period				41,824

5 The segment results of 2013 are restated for the application of IFRS 5.

Other segmented items recognised in the income statement for continued operations are as follows:

2014

(x 1,000 euros)	Fagron	HL Technology	Unallocated	Total
Depreciation and amortisation	12,993	1,653	1,697	16,343
Write-down on inventories	1,246			1,246
Write-down on receivables	1,439		(3)	1,436

2013

(x 1,000 euros)	Fagron	HL Technology	Unallocated	Total
Depreciation and amortisation	4,331	1,380	3,276	8,987
Write-down on inventories	(375)			(375)
Write-down on receivables	350	(42)	(7)	301

The assets and liabilities, and the capital expenditure (investments) for continued operations, are as follows:

2014

(x 1,000 euros)	Fagron	HL Technology	Unallocated	Total
Assets	796,744	21,059	155,950	973,752
Liabilities	220,682	2,500	593,621	816,803
Capital expenditure	8,387	557	3,548	12,492

2013

(x 1,000 euros)	Fagron	HL Technology	Unallocated	Total
Assets	518,970	22,602	182,576	804,693
Liabilities	154,877	3,304	467,826	649,525
Capital expenditure	4,971	85	330	13,183

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and cash from operations.

Segment liabilities comprise operational liabilities but exclude such elements as corporate borrowings.

Turnover of Fagron for continued operations by geographical segments is as follows:

(x 1,000 euros)	2014	2013
United States	127,924	49,474
The Netherlands	114,813	96,277
Brazil	81,914	82,792
Belgium	26,341	34,742
Poland	16,201	13,078
Germany	15,475	16,150
France	14,272	3,071
Italy	10,851	12,296
Spain	9,733	9,241
Switzerland	8,577	7,726
Czech Republic	7,921	7,360
Denmark	7,046	6,949
United Kingdom	2,909	2,800
Colombia	975	745
Greece	858
South Africa	751
Australia	495
Argentina		12
Total	447,056	342,711

Fagron has a broad customer base in which no customer accounts for more than 10% of turnover.

Concerning the geographical segments, Fagron applies the following allocation for non-current assets excluding deferred tax assets, for continued operations:

(x 1,000 euros)	2014	2013
United States	299,028	113,404
The Netherlands	125,091	79,269
Brazil	93,583	90,176
Belgium	17,312	81,550
Other	105,272	99,409
Total	640,286	463,808

6 Turnover

(x 1,000 euros)	2014	2013
Sale of goods	447,056	342,711
Turnover	447,056	342,711

7 Other operating income

(x 1,000 euros)	2014	2013
Gain on disposal of fixed assets	476	548
Other operating income	2,877	379
Total other operating income	3,353	928

The change in the line 'Other operating income' mainly relates to a decrease of 1.575 million euros in contingent considerations.

8 Employee benefit expenses

(x 1,000 euros)	2014	2013
Wages and salaries	67,043	47,555
Social security costs	15,156	10,758
Pension costs - defined benefit plans	642	714
Pension costs - defined contribution plans	1,237	926
Other post-employment benefit contributions	257	2,886
Other employment costs	17,307	8,326
Total employee benefit expenses	101,642	71,166

Full-time equivalents continued operations

Full-time equivalents (rounded at one unit)	2014	2013
Brazil	534	528
The Netherlands	443	323
United States	384	145
France	142	22
Belgium	121	96
Poland	112	103
Czech Republic	100	98
Switzerland	67	82
Germany	54	68
Spain	42	41
Italy	36	37
Greece	32
Colombia	25	27
South Africa	17
United Kingdom	13	14
Denmark	10	15
China	7	2
Australia	4
Total	2,143	1,600

At 31 December 2014, Fagron's workforce (fully consolidated companies), for continued operations, comprised 2,277 (1,693) employees or 2,142.7 (in 2013 1,600.0) full-time equivalents. Of these full-time equivalents, 1,983.2 (in 2013 1,440.9) are attributable to Fagron, 66.8 (in 2013 82.1) to HL Technology and 92.7 (in 2013 77.0) to Fagron Corporate.

9 Depreciation and amortisation

(x 1,000 euros)	2014	2013
Depreciation and amortisation	16,343	8,987
Write-down on inventories	1,246	(375)
Write-down on receivables	1,436	302
Depreciation and amortisation	19,025	8,914

10 Other operating expenses

(x 1,000 euros)	2014	2013
Increase (decrease) in provisions for current liabilities	(700)	(74)
Increase (decrease) in provisions for pension liabilities	(630)	287
Taxes and levies (excluding income tax)	669	275
Other operating expenses	1,157	(454)
Total other operating expenses	496	35

11 Financial result

The financial results are presented on the face of the consolidated income statement as follows:

(x 1,000 euros)	2014	2013
Other financial income	731	1,039
Revaluation of financial derivatives		1,285
Total financial income	731	2,324
Other financial expenses	(3,305)	(2,763)
Interest expenses	(20,672)	(11,426)
Currency exchange differences	(839)	(5,631)
Revaluation of financial derivatives	(399)
Total financial expenses	(25,215)	(19,821)
Total financial result	(24,483)	(17,497)

The negative revaluation of financial derivatives of 0.399 million euros relates to the change in the market value of the interest rate hedges that are not a cash flow hedge and do not qualify for hedge accounting in accordance with IAS 39. The interest hedging instruments are valued on the basis of discounted cash flows. The parameters used for these models are those valid as at year-end.

This instrument hedges the interest rate risk on 70 million euros financing.

The financial result, excluding the revaluation of the financial derivatives, amounts to -24.1 million euros, an increase of 28.2% compared to 2013 (-18.8 million euros). This is due to an increase in the net financial debt.

12 Income tax expenses

Income tax expenses (income) from continuing operations:

(x 1,000 euros)	2014	2013
Current tax expenses	17,989	12,018
Deferred tax	8,673	(5,021)
Income tax expenses (income)	26,663	6,997
Effective tax rate	38.17%	14.33%
Profit before income tax from continuing operations	69,852	48,821
Tax calculated at weighted average statutory tax rate	23,056	15,357
Income not subject to taxes	(688)	(746)
Expenses not deductible for tax purposes	955	581
Tax on profit previous years	828	(505)
Other	2,511	(7,690)
Income tax expenses (income)	26,663	6,997

In 2014, the line 'Other' includes 1.4 million euros relating to dividends.

In 2013, the line 'Other' mainly includes 4.5 million euros relating to a one-off credit of a deferred tax asset on deductible tax losses in Poland and 3.3 million euros relating to a credit of a deferred tax asset on deductible merger goodwill in Brazil.

13 Discontinued operations

Fagron completed the divestment program of the Healthcare Specialties and Healthcare Solutions divisions in 2014.

Fagron successfully finalised the sale of Duo-Med, Owandy Radiology, Eurotec Germany, Eurotec France and Arseus Medical. Duo-Med was sold to ABN Amro Participaties, Owandy Radiology to Villa Sistemi Medicali based in Milan and Arseus Medical was acquired by entrepreneurs Cedric De Quinnemar and Jan Ponnet. A sum of 30.8 million euros was received in these transactions, excluding earn-outs and vendor loans. The earn-outs and vendor loans have no significant impact on the result.

Fagron has completed the divestment of its ICT division Corilus to AAC Capital fora total consideration of 77 million euros. The fair value less costs to sell the discontinued operations is higher than the carrying amount of the related assets and liabilities. Therefore management recognised no impairment loss when the assets and liabilities of the discontinued operations were reclassified as held for sale. Further details on the assets and liabilities reclassed as held for sale are explained in note 21 and 30.

Fagron sold most of the remaining dental and medical activities in 2014. The proceeds of sale were lower than the carrying amount of the related net assets, therefore management recognised an impairment of 18.2 million euros.

The combined results of the discontinued operations included in the profit for theyear and cash flows are set out below.

The comparative profit and cash flows from discontinued operations have been re-presented to include those operations classified as discontinued in 2014.

Result for the year from discontinued operations

(x 1,000 euros)	2014	2013
Operating income	90,217	237,892
Turnover	88,573	235,042
Other operating income	1,644	2,850
Expenses	86,303	240,295
Profit before tax	3,914	(2,403)
Attributable income tax expenses	(3,480)	(3,415)
Loss on remeasurement to fair value less costs to sell		(68,035)
Loss on sale dental and medical activities including costs to sell	(27,467)
Loss for the year from discontinued operations
(attributable to Equity holders of the company)	(27,033)	(73,854)

Cash flows from discontinued operations

(x 1,000 euros)	2014	2013
Cash flow from operating activities	11,172	7,945
Cash flow from investing activities	(13,322)	(21,346)
Cash flow from financing activities	3,660	11,477
Total net cash flow from discontinued operations	1,510	(1,925)

14 Earnings per share

(in euros)	2014	2013
Basic earnings (loss) per share	0.53	(1.05)
- from continued operations	1.41	1.36
- from discontinued operations	(0.88)	(2.41)
Diluted earnings (loss) per share	0.52	(1.03)
- from continued operations	1.39	1.34
- from discontinued operations	(0.87)	(2.37)

The earnings used in the calculations are as follows:

(x 1,000 euros)	2014	2013
Profit (loss) attributable to equity holders of the company	16,225	(32,102)
- from continued operations	43,259	41,752
- from discontinued operations	(27,033)	(73,854)

The diluted earnings are equal to the 'basic' earnings.

The weighted average number of ordinary shares used in the calculations are as follows:

(number of shares x 1,000)	2014	2013
Weighted average number of ordinary shares	30,759	30,647
Effect of warrants and stock options	359	486
Weighted average number of ordinary shares (diluted)	31,118	31,133

There are no ordinary share transactions after year-end that have an effect on earnings per share. The effect on the number of warrants and stock options that are anti dilutive for the period but could dilute basic earnings per share in the future is 932,500. These are warrants with an exercise price higher than the average stock price of Fagron in 2014.

15 Intangible assets

	Goodwill	Development	Concessions & patents	Brands	Software	Other	Total
Net book value as at 1 January 2013	382,481	25,135	2,074	3,695	4,481		417,866
Investments	29	9,752	41		2,045		11,866
Acquisitions	127,156			615	22		127,793
Disposals
Amortisation		(6,907)	(170)	(482)	(2,141)		(9,700)
Impairment	(58,908)						(58,908)
Discontinued operations	(29,324)	(2,471)	(411)	(2,486)	(668)		(35,361)
Classified as assets held for sale	(28,315)	(368)	(175)		(91)		(28,949)
Other movements	130	(2,013)	51	(6)	(498)		(2,335)
Exchange differences	(21,618)	(20)		(1)	(47)		(21,686)
Net book value as at 31 December 2013	371,630	23,108	1,411	1,335	3,103		400,587
Gross carrying amount 6	371,630	58,988	5,561	2,036	17,901	22	456,139
Accumulated amortisation 6		(35,880)	(4,150)	(702)	(14,798)	(22)	(55,552)
Net book value	371,630	23,108	1,411	1,335	3,103		400,587
Net book value as at 1 January 2014	371,630	23,108	1,411	1,335	3,103		400,587
Investments		8,818	80	12	1,592		10,502
Acquisitions	168,021		6	41,027	5,071	295	214,419
Disposals		(114)			100		(14)
Amortisation		(4,327)	(126)	(4,895)	(2,176)		(11,523)
Impairments
Discontinued operations
Classified as assets held for sale	(46,912)	(24,478)	(293)	(1,047)	(16)		(72,746)
Other movements	(113)	(45)	(5)	(30)	376		183
Exchange differences	29,441	34	1	4,160	208		33,844
Net book value as at 31 December 2014	522,069	2,996	1,073	40,560	8,259	295	575,252
Gross carrying amount 6	522,069	13,248	1,613	46,095	22,951	317	606,293
Accumulated amortisation 6		(10,252)	(540)	(5,535)	(14,692)	(22)	(31,040)
Net book value	522,069	2,996	1,073	40,560	8,259	295	575,252

The intangible assets have not been pledged as security for obligations.

The category `Development consists mainly of unique software developed in-house in full control of Fagron. Part of the development are expensed and not capitalized, in accordance with IAS38, these are mainly related to employee costs.

Goodwill

Goodwill is tested at least annually for impairment and consistently when a trigger event occurs. Goodwill is recognised at cost price less accumulated impairment losses.

6 Excluding gross carrying amounts discontinued operations and assets reclassified as held for sale.

Goodwill impairment tests continued operations

Goodwill is allocated to the cash flow-generating units of Fagron, i.e. the two segments of Fagron being Fagron and HL Technology.

The goodwill allocation per division is as follows:

(in millions of euros)	2014	2013
Fagron	513.7	316.5
HL Technology	8.3	8.2
Corilus		46.9
Total	522.1	371.6

The recoverable amount of a cash flow-generating unit is determined on the basis of value-in-use calculations. These calculations use cash flow projections with a five-year forecast horizon based on detailed financial budgets approved by management for the first year. The year-one budget figures are extrapolated for year's two to five, taking into account an internal growth rate and a budgeted gross margin. In addition to these rates, the model uses assumptions such as the rate of perpetual growth and a pre-tax discount rate. Below are specified the key assumptions for the value-in-use calculations. Management determined the gross margin and growth rates based on past performance and its market development expectations.

	Organic growth Five-year growth (%)		Perpetual growth (%)		Gross margin (%)		Discount rate (%)
	2014	2013	2014	2013	2014	2013	2014	2013
---	---	---	---	---	---	---	---	---
Fagron	5	5	2.5	2.5	64.2	56.3	6.4	8.4
HLTechnology	5	5	2.0	2.0	79.2	70.9	6.4	6.9

The above assumptions were subjected to a sensitivity analysis which confirmed that for 2014, as previous year, no impairment of goodwill was required.

For Fagron, a reasonable possible change in one of the parameters (estimates) used will not lead to a potential impairment.

For HL Technology, an increase in the discount rate by 0.95 percentage points, a decrease in the gross margin by 2.06 percentage points or a decrease in the perpetual growth to 0.92% would use up the remaining buffer.

The value per cash flow-generating unit as per aforementioned value-in-use calculations is compared with the net book values of the non-current assets of the relevant cash flow-generating unit. For all cash flow-generating units, value-in-use exceeds net book value.

Goodwill impairment tests discontinued operations

In 2014, operations were discontinued and reclassified as held for sale, see note 13.

Management expects the fair value less costs to sell is higher than the carrying amount of the assets and liabilities when reclassified as held for sale. Therefore management did not recognise an impairment loss when the assets and liabilities of the discontinued operations were reclassified as held for sale. The remaining goodwill classified as held for sale totalled 46,912 million euros. Further details on the assets and liabilities reclassed as held for sale are explained in note 21.

16 Property, plant and equipment

	Land and buildings	Plant machinery and equipment	Furniture and vehicles	Leasing and other similar rights	Other tangible assets	Assets under construction	Total
Net book value as at 1 January 2013	31,213	9,661	4,704	2,643	9,354	1,681	59,255
Investments	(588)	3,426	2,033	103	1,915	1,511	8,400
Acquisitions	1,662	321	690		(870)		1,803
Disposals	(187)	(5)	(41)		(640)		(874)
Depreciation	(1,122)	(2,859)	(1,719)	(689)	(1,643)		(8,032)
Discontinued operations	(307)	(549)	(406)		(1,910)		(3,171)
Classified as assets held for sale	(287)	(509)	(900)		(2,902)		(4,598)
Other movements	87	(1,387)	132		(1,241)	(938)	(3,347)
Exchange differences	(1,151)	(340)	(209)	(46)	15	(252)	(1,983)
Net book value as at 31 December 2013	29,321	7,758	4,285	2,011	2,077	2,002	47,454
Gross carrying amount	34,288	23,815	15,157	5,732	7,546	2,002	88,539
Accumulated amortisation	(4,967)	(16,057)	(10,872)	(3,720)	(5,469)		(41,085)
Net book value	29,321	7,758	4,285	2,011	2,077	2,002	47,454
Net book value as at 1 January 2014	29,321	7,758	4,285	2,011	2,077	2,002	47,454
Investments	1,905	1,844	2,013	63	705	2,755	9,285
Acquisitions	6,288	3,622	1,851		2,061		13,822
Disposals	(181)	(5)	(93)		(176)		(454)
Depreciation	(2,033)	(2,861)	(1,756)	(697)	(1,658)		(9,006)
Discontinued operations
Classified as assets held for sale	(101)	(137)	(420)	(80)	(94)		(831)
Other movements	2,089	(55)	130		727	(3,753)	(862)
Exchange differences	(20)	92	220	32	119	118	561
Net book value as at 31 December 2014	37,269	10,257	6,231	1,330	3,760	1,123	59,969
Gross carrying amount	45,707	29,317	16,734	5,797	9,267	1,123	107,945
Accumulated amortisation	(8,439)	(19,060)	(10,503)	(4,468)	(5,507)		(47,976)
Net book value	37,269	10,257	6,231	1,330	3,760	1,123	59,969

The Group's liability regarding financial leasing is guaranteed as the lessor holds the legal property title of the leased assets. The other tangible fixed assets have no restrictions on the property title. Nor have these assets been pledged as security for obligations.

17 Financial assets

(x 1,000 euros)	Financial assets available for sale	Loans and receivables	Total
Net book value as at 1 January 2013	843	1,027	1,870
Investments		14,707	14,707
Discontinued operations	(2)	(298)	(300)
Classified as assets held for sale		(508)	(508)
Reimbursements		(26)	(26)
Other movements	26		26
Net book value as at 31 December 2013	867	14,901	15,767
Net book value as at 1 January 2014	867	14,901	15,767
Investments	731	2,509	3,240
Transfers and disposals		(13,875)	(13,875)
Discontinued operations	(2)	12	10
Classified as assets held for sale		(29)	(29)
Reimbursements		(49)	(49)
Other movements
Net book value as at 31 December 2014	1,595	3,469	5,064

The assets available for sale mainly consist of a minority interest participation of 1.336 million euros. This asset is stated at cost due to not having any reliable information on its fair value.

An analysis of the assets above, showed that none of these assets needs to be impaired in 2014 and 2013.

Loans and receivables concern receivables with different due dates. The fair value approximates the book value.

18 Taxes, remuneration and social security

a) Taxes. remuneration and social security

(x 1,000 euros)	2014	2013
Current income tax liabilities	10,962	7,617
Other current tax and VAT payables	8,827	8,998
Remuneration and social security payables	18,879	12,227
Taxes, remuneration and social security	38,668	28,842

b) Deferred tax receivables

	Differences in depreciation rates	Employee benefits	Provisions	Tax losses	Other	Total
Balance at 1 January 2013	21,647	965	1,006	10,057	(1,379)	32,296
Result	(2,105)	113	396	3,974	49	2,427
Impairment				(541)		(541)
Discontinued operations				(5,891)		(5,891)
Balance at 31 December 2013	19,542	1,078	1,402	7,599	(1,330)	28,292
Balance at 1 January 2014	19,542	1,078	1,402	7,599	(1,330)	28,292
Result	(1,539)	(128)	30	(2,986)	(6,339)	(10,963)
Change in scope consolidation	5,228		292			5,520
Impairment				(486)		(486)
Balance at 31 December 2014	23,231	950	1,724	4,127	(7,670)	22,362

The category 'Other' mainly concerns netting with deferred tax liabilities.

In 2014, deferred tax assets are recognised of 5.2 million euros related to acquired goodwill in business combinations. A deferred tax asset is recognised because the carrying amount of the goodwill is less than the tax base. It is probable that there is taxable profit against which the deductible temporary difference can be used.

In 2013, a deferred tax asset of 4.5 million euros is recognised for a tax loss in Poland and 3.3 million euros is recognised for tax-deductible goodwill merger in Brazil.

An impairment test is performed on tax losses twice per year. If it becomes clear that the Company will not be able to use these losses within a reasonable time, these are derecognised. This calculation is based on result projections with a seven-year forecast horizon, based on detailed financial budgets approved by the management for the first year and an extrapolation of these figures for the second to seventh year.

At the end of 2014, deferred tax assets have been recognised for loss-making entities, but amounts are limited and it is probable that these tax assets will be realized through future taxable profits.

For Fagron Compounding Services NV a part of the losses (486 thousand euros) is reversed through the profit and loss because it is uncertain that these losses will be used within reasonable time.

The tax loss carry-forwards which will expire in 2018 are mainly related to deductible losses in Poland (2.572) million euros. These tax losses carry-forward are expected to be used within 3 years. The remaining amount of tax losses carry-forward have an unrestricted use period.

c) Deferred tax liabilities

(x 1,000 euros)	Differences in depreciation rates	Other	Total
Balance at 1 January 2013	3,439	(973)	2,466
Result	1,215	676	1,891
Discontinued operations		94	94
Balance at 31 December 2013	4,654	(203)	4,451
Balance at 1 January 2014	4,654	(203)	4,451
Result	4,211	(6,484)	(2,273)
Change in scope of consolidation	4,801		4,801
Discontinued operations		(817)	(817)
Balance at 31 December 2014	13,666	(7,504)	6,162

The category 'Other' mainly concerns netting with deferred tax assets.

In 2014, intangible assets were acquired during a business combination, this creates a temporary difference for which deferred tax liabilities were recognised (3.355 million euros). Also tangible assets were acquired during a business combination of which a deferred tax liability was set up due to differences in depreciation rates (1.446 million euros).

As there is no practical plan for up streaming dividends, no deferred tax liabilities are recognised in this respect. The amount of tax due if dividend would have been distributed, as defined in IAS 12.81, amounts to 3.2 million euros (2013: 0.9 million euros).

19 Inventories

(x 1,000 euros)	2014	2013
Raw materials	19,681	12,505
Work in progress	3,617	3,261
Finished goods	8,700	6,536
Trade goods	33,184	36,616
Inventories	65,181	58,917

The increase in inventories is mainly due to the acquired companies in the Netherlands and the United States, see note 29. The inventories are not encumbered with collateral.

20 Trade receivables, other receivables, and cash and cash equivalents

a) Trade receivables and other receivables

(x 1,000 euros)	2014	2013
Trade receivables	39,124	31,562
Provision for impairment of receivables	(2,787)	(1,951)
Total trade receivables	36,337	29,611
Other receivables	18,043	19,137

There is no concentration of credit risk with respect to trade receivables as the majority of Fagron's customers are internationally dispersed. There were no indications at the end of the reporting period that debtors of trade receivables not yet due would not fulfil their payment obligations. Provisions were made for known exposures. The item 'Other receivables' mainly concerns taxes to be refunded over the reporting period, value added tax and earnings to be received related to the sale of dental activities.

Fagron applies a strict credit policy towards its customers, ensuring that the Company controls and minimises credit risk. The Group has a stable customer base. The majority of its customers are not part of a listed company. No individual customers make up a substantial part of either turnover or outstanding receivables.

(x 1,000 euros)	Carrying amount	Of which not past due at year-end	Of which due at year-end
Less than 30 days	Between 31 and 90 days	Between 91 and 150 days	More than 150 days
---	---	---	---	---	---	---
Trade receivables at 31 December 2014	36,337	27,522	4,791	2,784	758	482
Trade receivables at 31 December 2013	29,611	20,347	5,253	2,504	686	821

(x 1,000 euros)	Provision for impairment of receivables
Balance at 1 January 2013	(3,502)
Additions
- Via business combinations	(19)
- Other	(3,407)
Amounts used	413
Sale of operations	788
Classified as held for sale	3,657
Other	119
Balance at 1 January 2014	(1,951)
Additions	-
- Via business combinations	(215)
- Other	(1,734)
Amounts used	897
Sale of operations	247
Classified as held for sale	(31)
Balance at 31 December 2014	(2,787)

b) Cash and cash equivalents

(x 1,000 euros)	2014	2013
Investments with a maturity of less than three months	9,359	2,472
Cash at bank and in hand	99,193	126,399
Cash and cash equivalents	108,552	128,871

The decrease in cash and cash equivalents is mainly due to subsequent payments related to acquisitions and investments. The increase of investments with a maturity of less than three months is due to investments of cash in Poland.

The majority of cash and cash equivalents consist of money in bank accounts and cash. The cash and cash equivalents are centralised as much as possible in a cash pool, deposited in accounts with banks that mostly have an A-rating. All new bank accounts we open are with banks awarded at least an A-rating.

Trade receivables and other receivables and cash and cash equivalents are generally within a close range of their maturities. Therefore, the carrying amount approximates their fair value.

21 Assets held for sale and related liabilities

(x 1,000 euros)	2014	2013
Assets held for sale	82,989	76,057
Liabilities directly associated with assets classified as held for sale	20,394	30,064

The 'Assets held for sale' as per 31 December 2014 relate to Corilus activities which Fagron sold in March 2015, see further note 13. An overview of the assets and liabilities of Corilus activities is viewed below:

(x 1,000 euros)	2014	20137
Goodwill	46,912	28,315
Other intangible assets	25,835	633
Property, plant and equipment	831	4,598
Deferred tax assets		2,358
Other non-current assets	59	508
Inventories	1,440	14,566
Trade receivables	4,783	16,721
Other receivables	3,129	3,993
Cash and cash equivalents		4,365
Assets held for sale	82,989	76,057
Provisions		666
Pension obligations	61	578
Deferred tax liabilities	957	(1,018)
Borrowings		891
Trade payables	7,027	18,075
Taxes, remuneration and social security	6,173	8,389
Other current payables	6,176	2,484
Liabilities directly associated with assets classified as held for sale	20,394	30,064

7 Figures 2013 are related to divisions Healthcare Specialties and Healthcare Solutions which were sold in 2014.

22 Equity

Authorised capital

By resolution adopted by the Extraordinary General Meeting of 7 September 2007, the Board of Directors was granted the power to increase the capital in one or more instalments by a maximum amount of 319,810,475 euros by means and on terms to be decided by the Board of Directors, such within a period of five years as of the publication date of said resolution in the Annexes of the Belgian Bulletin of Acts, Orders and Decrees.

The Extraordinary General Meeting decided on 14 May 2012 to renew the Board of Director's authorisation to increase the authorised share capital, such within the limits of the existing authorisation as set out in Article 5bis of the Articles of Association, in one or more rounds by a maximum amount of 320,023,050.35 euros, such within a period of five years from the date of announcing such a decision in the Annexes of the Belgian Bulletin of Acts, Orders and Decrees. This proxy to increase the capital may be exercised only subject to the approval of at least three fourths (3/4) of the directors present or lawfully represented.

As at 31 December 2014, the Board of Directors is still authorised to increase the capital by a maximum amount of 320,023,050.35 euros.

If the capital is increased within the limits of the authorised capital then the Board of Directors will be competent to request payment of a share premium. If the Board of Directors adopts this decision then this share premium will be deposited into a blocked account, the balance of which may only be reduced or transferred in whole on the basis of a resolution adopted by a General Meeting of Shareholders in accordance with the clauses governing an amendment of the Articles of Association.

This power of the Board of Directors will apply to capital increases that are subscribed to in cash or in kind, or that result from capitalisation of reserves with or without the issue of new Shares. The Board of Directors is permitted to issue convertible bonds or warrants within the limits of the authorised capital.

Statement of changes in the capital and in the number of shares

The movements in this balance sheet item are presented in the statement of changes in equity. During 2014,59,539 treasury shares were purchased (2013:1,468,522). The decrease of treasury shares with 303,899 is the result of the exercise of stock options (353,625), the acquisition of treasury shares (59,539) and the transfer of shares (9,813) relating to the variable remuneration of Fagron employees in 2014. As at 31 December 2014, Fagron NV owned a total of 577,479 treasury shares (2013: 881,378). In accordance with IFRS, these shares are deducted from equity and do not affect the income statement. In the context of Warrant Plan 1,73,002 new shares were issued during 2014 at an amount of 726,671 euros. In 2013, 79,844 new shares were issued at an amount of 783,081 euros. At 31 December 2014, the total number of shares issued are 31,431,360 (2013: 31,358,358). The total number of shares outstanding as at 31 December 2014 is 30,853,881 (2013: 30,476,980).

Number of ordinary shares	2014	2013
Issued shares at 1 January	31,358,358	31,278,514
Issue of shares under Warrant Plan	73,002	79,844
Issued shares at 31 December	31,431,360	31,358,358
Treasury shares as per 31 December	577,479	881,378
Shares outstanding as per 31 December	30,853,881	30,476,980

All ordinary shares are fully paid. The ordinary shares have no face value, the par value is 1/31,431,360th of capital as of 31 December 2014 (2013: 1/31,358,358th). Each ordinary share carries one vote and a right to dividends.

Share-based payments

On 6 September 2007, the Board of Directors approved two warrant plans for the benefit of the employees, directors and consultants of the Company and/or subsidiaries (Warrant Plan 1 and Warrant Plan 2).

The warrants granted under Warrant Plan 1 (for employees) have a lifetime of eight years as of the date on which they are granted.

For employees (Warrant Plan 1) the warrants are exercisable in annual instalments of 25%, in May of the fourth, fifth, sixth and seventh calendar year after the calendar year in which the Warrants are offered.

Pursuant to a decision taken by the Board of Directors dated 11 May 2009, held in the presence of the civil-law notary Mr Dirk van Haesebrouck, the period during which the warrants granted to beneficiaries prior to 31 August 2008 in the context of Warrant Plan 1 are exercisable was extended by five years to 17 December 2020, in accordance with the Amendment Act (Herstelwet). The warrants granted under Warrant Plan 2 (for directors and consultants) have a lifetime of five years as of the date on which they are granted.

For directors and consultants (Warrant Plan 2) the warrants are exercisable, pursuant to a decision of the relevant body, after granting of the warrants (i) in annual instalments of 50% in May of the third and fourth calendar year after the calendar year in which the warrants are offered, or (ii) in annual instalments of 25% in May of any calendar year after the calendar year in which the warrants are offered. These alternatives depend on the holder's contribution paid for the warrants. This is 7.5% for (i) or 15% for (ii).

Pursuant to a decision of the Board of Directors dated 13 July 2009 it was decided, subject to the resolutive condition of any decision to the contrary taken by the General Meeting, to extend the period for exercising the rights granted to beneficiaries prior to 31 August 2008 under Warrant Plan 2 by five years to 17 December 2017, on the understanding that beneficiaries exercising their rights following the expiry of the initial period (exercising of rights after 17 December 2012) will solely be entitled to acquire existing, instead of new, shares in the Company. This extension was presented by the Board of Directors at the annual meeting on 10 May 2010. The General Meeting ratified this proposal.

The condition for vesting warrants is for employees that still have an employment contract with the Company and for directors and consultants that their relationship with the Company has not been terminated.

The cost of the warrants and stock options is determined at the warrants' fair value on grant date and is spread over the vesting period of the warrants. The cost is recognised at the item 'Other employee costs' for the amount of 2.060 million euros for the financial year 2014,400 thousand euros for the financial year 2013. The warrants and stock options are equity settled share based payments transactions.

On 3 June 2014, the Company's Board of Directors approved the 2014 warrant plan for employees and consultants/management of Fagron NV and/or its subsidiaries, which was created by decision taken by the Board of Directors dated 2 September 2014 in presence of notary Luc De Ferm. In total 2,140,000 warrants were issued. In 2014 932,500 warrants were granted. The exercise price of these warrants is 39.37 euros.

On 16 June 2014,73,002 (13 June 2013: 79,844) new shares were issued as a result of exercising warrants under Warrant Plans 1 and 2. The number of Fagron shares with voting rights is 31,431,360 (2013: 31,358,358). The total number of voting rights (denominator) is 31,431,360 (2013: 31,358,358). The authorised capital amounts to 322,111,645.98 euros (2013: 321,384,975 euros).

The movements in the number of outstanding warrants under Warrant Plan 1 and their related weighted average exercise prices are as follows:

	Average exercise price in euros	Number of warrants
As at 1 January 2013	9.75	175,828
Exercised	10.25	(63,536)
Exercised	8.14	(13,625)
Exercised	7.77	(2,558)
Exercised	8.11	(125)
Forfeited	10.25	(1,164)
Forfeited	7.77	(756)
As at 31 December 2013	9.70	94,064
As at 1 January 2014	9.70	94,064
Exercised	10.25	(63,238)
Exercised	8.14	(6,888)
Exercised	7.77	(2,751)
Exercised	8.11	(125)
Forfeited	10.25	(2,759)
Forfeited	8.14	(1,000)
Forfeited	7.77	(375)
Granted	39.37	932,500
As at 31 December 2014	38.82	949,428

The related weighted average exercise price per share at year-end amounted to 38.82 euros in 2014 (2013: 9.70 euro)

As of 6 March 2015, the total number of warrants not yet exercised, which could prompt the issue of the same number of shares of the Company, amounted to 949,428. Their average exercise price amounts to 38.82 euros. Outstanding warrants at year-end have the following expiry dates and exercise prices:

Expiry date	Average exercise price in euros	Number of warrants
2015- May	10.25	4,900
2015- May	8.14	6,462
2015- May	7.77	2,753
2015- May	8.11	125
2016 - May	7.77	2,563
2016 - May	8.11	125
2018 - March	39.37	466,250
2019 - March	39.37	233,125
2020 - March	39.37	233,125
	38.82	949,428

Stock Option Plan

On 7 December 2009, the Board of Directors approved the Fagron NV Stock Option Plan (Stock Option Plan) for employees, directors, and consultants of the Company and/or subsidiaries, which approval was subsequently ratified by the Extraordinary General Meeting of 27 January 2010. The options granted under the Stock Option Plan were granted free of charge and, in line with the plan, have a term of six years from the date of offer. Options not exercised at the end of the six-year term, on 16 January 2016 therefore, are void by operation of law.

In accordance with the provisions of Section 43, paragraph 4,1° of the Act of 26 March 1999 concerning the Belgian Action Plan for Employment 1998 (Stock Options Act), the exercise price shall be determined on the basis of the share's average closing price during the thirty days preceding the date of the offer of the options, and was therefore calculated at 8.5214 euros per option. The options shall be exercisable during the third, fourth, fifth and sixth calendar year following the calendar year in which the options were offered, each time for 25%. The exercise of the options at the exercise price shall take place unconditionally and may only take place in the month of April of each calendar year and may take place for the first time in April 2012 in the proportions specified below:

Exercise maximum	Time
25% of the options granted	April 2012
50% of the options granted	April 2013
75% of the options granted	April 2014
100% of the options granted	April 2015

	Average exercise price in euros	Number of stock options
As at 1 January 2013	9.95	2,053,250
Exercised	10.25	(882,250)
Exercised	8.52	(328,250)
Forfeited	8.52	(2,000)
As at 31 December 2013	10.20	840,750
As at 1 January 2014	10.20	840,750
Exercised	10.25	(48,625)
Exercised	8.52	(282,500)
Exercised	13.73	(22,500)
Granted	32.82	4,650
As at 31 December 2014	11.21	491,775

Outstanding stock options at year-end have the following expiry dates and exercise prices:

Expiry date	Average exercise price in euros	Number of stock options
2015 - April	10.25	10,000
2015 - April	8.52	246,000
2015 - April	13.73	40,000
2015 - April	10.25	3,625
2016 - April	13.73	125,000
2017 - April	13.73	62,500
2018 - April	32.82	2,325
2019 - April	32.82	1,163
2020 - April	32.82	1,162
	11.21	491,775

On 27 October 2011, the Company's Board of Directors approved the 2011 Stock Option Plan for consultants and employees of Fagron NV and/or its subsidiaries, such under the suspensive condition of approval by the General Meeting.

The Stock Option Plan 2011 was approved by the Annual General Meeting of 14 May 2012. In 2012, the procedure of Article 523 of the Belgian Companies Code was applied.

In June 2012,250,000 stock options were granted at an exercise price of 13.73. The options are equity settled share-based payment transactions.

In 2013 no new stock options were granted. In 2014,4,650 stock options were granted.

Fair value

The fair value of the warrants and stock options was determined using the 'Black & Scholes' valuation model at grant date. The main data used in the model were the share price at grant date, the above-mentioned exercise price, the standard deviation of Fagron share price returns during option live and expected dividend, the option life specified above, and the annual risk-free interest rate.

In 2014 there were 932,500 new warrants and 4,650 stock options granted. The total expenses recognised for the warrant and stock option plans is 2.060 million euros (2013: 0.400 million euros). The fair value of the warrants is 6.895 euros. The fair value of the stock options is 4.146 euros. The main data used to determine the fair value of the granted stock options during 2014 were, the above-mentioned exercise price, the standard deviation of expected share price returns 25.6% with an expected share price return of 4.3%, the option life specified of 3.5 years, and the annual risk-free interest rate of 1.0%. The main data used for the 2014 warrants which were granted were the above mentioned exercise price, the standard deviation of expected share price returns 28.24% with an expected share price return of 1.73%, the warrant life specified of 3.8 years, and the annual risk-free interest rate of 0.47%.

Dividend

A dividend of 22.199 million euros was paid in 2014 (2013: 18.842 million euros). This equates to a gross dividend of 0.72 euros per share (2013: 0.60 euros per share).

At the Annual General Meeting of Shareholders of 11 May 2015, a gross dividend for 2014 will be proposed amounting to 1 euro per share, which equates to a total dividend of 31.431 million euros. This dividend due is not recognised in this financial statement.

A further explanation of the equity is included in the Corporate Governance Statement.

Other reserves

(x 1,000 euros)	Consolidated translation reserves	Foreign currency reserve	Transactions with non-controlling interests	Remeasurement post-employment benefits	Share based payments	Total
Balance at 1 January 2013	(195,967)	(11,236)	(1,575)	(198)	626	(208,349)
Other comprehensive income		(22,687)		137		(22,550)
Share based payments					400	400
Balance at 31 December 2013	(195,967)	(33,923)	(1,575)	(61)	1,026	(230,499)
Other comprehensive income		6,001		(2,541)		3,460
Share based payments					2,060	2,060
Change in non controlling interest			1,198			1,198
Balance at 31 December 2014	(195,967)	(27,922)	(377)	(2,602)	3,086	(223,781)

Change in non controlling interests is related to the purchase of 49% of the shares of Unit Dose Pack BV without paying any consideration.

23 Provisions

(x 1,000 euros)	axes	Disputes	Warranty obligations	Other	Total
Balance at 1 January 2013	48	196	660	2,615	3,519
Additions
- Through business combinations				71	71
- Other		408	(29)	20	400
Amounts used		(83)	(159)	(86)	(328)
Discontinued operations		(149)	(318)		(467)
Classified as assets held for sale		(461)	(154)	(51)	(666)
Unused housing				3,015	3,015
Related to disposed subsidiaries		1,000		2,213	3,213
Others		(285)		287	2
Transfers				438	438
Balance at 1 January 2014	48	628		8,522	9,197
Additions
- Through business combinations	2			50	52
- Other		15		43	58
Amounts used		(801)			(801)
Sale of operations		35		(51)	(16)
Classified as assets held for sale		582		51	633
Unused housing
Related to disposed subsidiaries		(467)			(467)
Others		46			46
Transfers	(3)	25		166	188
Balance at 31 December 2014	47	63		8,780	8,891

The provision 'Unused housing' relates to a provision taken for leases and furniture of the buildings which are no longer (fully) in use, due to the discontinuation of operations. These lease contracts have a duration until 2017. The provision is made only for the portion not in use.

The provision 'Related to discontinued subsidiaries' relates to settlements regarding deferred taxes, employee benefits and social charges due to the sale of a subsidiary. Expectations are, these settlements will take place between 2015 and 2017.

24 Pension obligations

Pension obligations and costs

The amounts recognised in the balance sheet are determined as follows:

(x 1,000 euros)	2014	2013
Defined benefit obligations	5,305	3,387
Other defined benefit obligations	748	899
Pension obligations	6,053	4,286

The category 'Defined benefit obligations' include Fagron's defined benefit plans held by Fagron Services BV and Spruyt hillen BV. The 'Other defined benefit obligations' include multiple insignificant defined benefit plans, which are not further disclosed.

Defined benefit obligations are estimated using the Projected Unit Credit method. Under this method each participant's benefits under the plan are attributed to years of service, taking into consideration future salary increases and the plan's benefit allocation formula. Thus, the estimated total pension to which each participant is expected to become entitled at retirement is broken down into units, each associated with a year of past or future credited services. If an employee's service in later years will lead to a materially higher level of benefit than in earlier years, these benefits are attributed on a straight-line basis.

All defined benefit plans are final salary pension plans paid on a monthly basis. The amounts pertaining to post-employment medical plans are included in the liability but are not significant. There are no informal constructive obligations.

The amounts recognised regarding the Dutch defined benefit plans held by Fagron Services BV and Spruyt hillen BV are determined as follows:

(x 1,000 euros)	2014	2013
Present value of defined benefit obligations	20,367	16,458
Fair value of plan assets	(15,062)	(13,071)
Funded status	5,305	3,387
Net liability arising from defined benefit obligations	5,305	3,387

Movements in the present value of the defined benefit obligations and the fair value of the plan assets were as follows:

(x 1,000 euros)	Present value defined benefit obligations	Fair value plan assets	Total
Balance at 1 January 2013 (restated)	15,577	(12,264)	3,313
Service costs	765		765
Interest expense (income)	618	(496)	122
Remeasurements:
- Return on plan assets (excluding interest income)		95	95
- (Gains)/losses arising from changes in demographic assumptions	(16)		(16)
- (Gains)/losses arising from changes in financial assumptions	(216)		(216)
- (Gains)/losses arising from experience adjustments
Employer contributions		(757)	(757)
Benefit payments from plan	(270)	270
Administrative expenses paid from plan assets		81	81
Balance at 31 December 2013	16,458	(13,071)	3,387
Balance at 1 January 2014	16,458	(13,071)	3,387
Past service costs	(1,329)		(1,329)
Interest expense (income)	586	(519)	67
Remeasurements:
- Return on plan assets (excluding interest income)		(2,215)	(2,215)
- (Gains)/losses arising from changes in demographic assumptions	110		110
- (Gains)/losses arising from changes in financial assumptions	5,989		5,989
- (Gains)/losses arising from experience adjustments	(1,261)		(1,261)
Employer contributions		557	557
Benefit payments from plan	(186)	186
Administrative expenses paid from plan assets
Balance at 31 December 2014	20,367	(15,062)	5,305

The principal actuarial assumptions used for the actuarial valuations are:

	December 31, 2014	December 31, 2013
Discount rate	2.20%	3.90%
Expected rate of salary increase	N/A	2.00%
Expected rate of price inflation	N/A	2.00%
Future rate of pension increases actives	2.00%	2.00%
Future rate of pension increases inactives	0.00%	0.00%

The assets comprise qualifying insurance policies and are not part of the in-house financial instruments of Fagron.

The pension insurer invested the assets fully in Aegon Strategic Allocation Fund 80/20. This fund has a market quotation.

The amounts recognised in comprehensive income in respect of these defined benefit plans are as follows:

(x 1,000 euros)	December 31, 2014	December 31, 2013
Past service costs	(1,329)
Current service cost		765
Net interest cost	67	122
Administrative expenses and taxes	82	81
Defined benefit costs recognised in profit or loss	(1,180)	968
Remeasurement on the net defined benefit liability:
- Return on plan assets (excluding interest income)	(2,297)	95
- (Gains)/losses arising from changes in demographic assumptions	110	(16)
- (Gains)/losses arising from changes in financial assumptions	5,989	(216)
- (Gains)/losses arising from experience adjustments	(1,261)
Defined benefit costs recognised in other comprehensive income	2,541	(137)
Total defined benefit costs	1,361	831

The 2015 expected defined benefit costs are 0.108 million euros.

c) Belgium pension plans

Fagron has in Belgium 32 pension plans in place which are legally structured as Defined Contributions plans. Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called 'Law Vandenbroucke'), all Belgian Defined Contribution plans have to be considered under IFRS as Defined Benefit plans. Law Vandenbroucke states that in the context of defined contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions. Because of this minimum guaranteed return for Defined Contributions plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as a Defined Benefit plans under IAS 19.

In the past the Company did not apply the Defined Benefit accounting for these plans because higher discount rates were applicable and the return on plan assets provided by insurance companies was sufficient to cover the minimum guaranteed return. As a result of continuous low interest rates offered by the European financial markets, the employers in Belgium effectively assumed a higher financial risk related to the pension plans with a minimum fixed guaranteed return than in the past, requiring them to measure the potential impact of Defined Benefit accounting for these plans.

Management made an estimate of the potential additional liabilities as at 31 December 2014 and these are assessed as not significant. The employer's contributions 2014, for these Belgium pension plans, amounts to 618 thousand euros (2013: 384 thousand euros). The employees' contributions 2014 is nihil (2013: 77 thousand euros), the employees' contributions have been stopped in 2014. The total amount of the plan assets at 31 December 2013 amounts to 3.2 million euros (2103: 2.8 million euros).

25 Financial debt and financial instruments

(x 1,000 euros)	2014	2013
Non-current
Financial lease liabilities	435	677
Bank borrowings	550,966	367,958
Other borrowings	103	63
	551,504	368,698
Current
Financial lease liabilities	361	349
Bank borrowings	5,318	54,652
Other borrowings	31	3
	5,710	55,004
Total	557,214	423,702

Non-current borrowings by term

(x 1,000 euros)	2014		2013
Financial leases	Bank borrowings	Financial leases	Bank borrowings
---	---	---	---	---
Non-current borrowings by term
More than 1 year but less than 5 years	435	550,620	677	366,570
More than 5 years		450		1,452
Total non-current borrowings	435	551,069	677	368,022

a. Bank borrowings and financial instruments

The book value of the bank borrowings is expressed in euros. The effective interest rate at balance sheet date on 31 December 2014 was 3.50% (2013: 3.00%).

On 2 July 2012 Fagron NV issued bonds for an amount of 225 million euros, the nominal value of the bonds is 1,000 euros. The bonds have a maturity of five years and offer a fixed annual gross interest of 4.75%. The bonds are redeemable at 100% of the nominal value on 2 July 2017. Main covenant of this bond is that the total EBITDA, calculated as result before interest, taxes, depreciation and amortisation, of the guarantors is at least 70 per cent of the consolidated Group EBITDA.

Fagron NV has also amended and extended the existing credit facility on 16 December 2014. This new multicurrency facility of 220 million euros, which will mature in December 2019 and includes two additional one year extension options, is arranged through a syndicate of existing and new international banks. The new syndicate consists of ING (Coordinator), BNP Paribas, HSBC, KBC Bank, Fifth Third Bank and Commerzbank. The main covenant of this credit facility is a net financial debt/recurring EBITDA ratio of a maximum of 3.25. As at the closing date of 2014, an amount of 178 million euros had been withdrawn (2013:191 million euros). The interest payable in respect of this credit agreement is a variable interest rate of one to six months.

The interest risk relating to 70 million euros of this loan has been hedged with financial derivatives.

The valuation of this instrument is in accordance with a Level 2 method. This implies that the valuation is based on inputs other than the listed prices in active markets such as included in Level 1. The fair values of all derivatives held for hedging purposes are based on valuation methods. These methods maximise the use of detectable market data where available and minimise the impact of the Company's estimates and projections. The interest hedging instruments are valued on the basis of discounted cash flows. The parameters used for these models are those applicable as at year-end and are therefore classified as Level 2. The valuation is calculated using the discounted cash flows of the nominal value and interest flows.

The fair value of these financial derivatives at year-end 2014 was -2.862 million euros (2013: -2.463 million euros). The full movement in fair value, 0.399 million euros loss, was charged to the result of 2014 (2013: 1.285 million euros gain). Fagron has no other financial derivatives.

All financial instruments except the financial derivatives and contingent considerations for acquisitions are valued at amortised cost, with the exception of the bond. The fair value of the bond is approximately 231.885 million euros. Contingent considerations are valued at fair value through P&L taken account for the valuation method level 3.

As do the borrowing companies, Fagron NV and Arseus Capital NV, the following companies serve as guarantors for the bank loan and bond loan concluded by Fagron:

Company name of guarantors

Fagron Nederland BV

SM Empreendimentos Farmaceuticos Ltda

Spruyt hillen BV

Pharma Cosmetic K.M. Adamowicz Sp. z.o.o.

ACA Pharma NV

Fagron GmbH & Co KG

Arseus België NV

Fagron België NV

Steunpunt Apotheek Mierlo-Hout BV

B&B Pharmaceuticals Inc.

Fagron Inc.

Freedom Pharmaceuticals Inc.

Pharmacy Services Inc.

b. Financial leases

Property, plant and equipment include the following amounts where Fagron is a lessee under a financial lease.

(x 1,000 euros)	2014	2013
Cost-capitalized financial leases	5,797	5,732
Accumulated depreciation	(4,468)	(3,720)
Net amount of assets in leasing	1,330	2,011

The Group's liability regarding financial leasing is guaranteed as the lessor holds the legal property title of the leased assets.

The net amount of the financial leases concerns the following investments:

(x 1,000 euros)	2014	2013
Machinery and installations	1,284	1,908
Furniture and vehicles	46	103
Net amount of assets in leasing	1,330	2,011

Financial lease liabilities - minimum lease payments:

(x 1,000 euros)	2014	2013
Within 1 year	377	368
More than 1 year but less than 5 years	483	776
Total	860	1,144
Future charges on financial leases	64	119
Present values of financial lease liabilities	796	1,026

c. Operating leases

Operating lease liabilities - minimum lease payments:

(x 1,000 euros)	2014	2013
Within 1 year	5,933	7,231
More than 1 year but less than 5 years	10,727	13,666
More than 5 years	4,906	4,604
Total	21,567	25,501

There are no leases that individually represent an important part of the total.

The fair values of the bank borrowings and financial leasing liabilities are calculated based on the present value of the future payments associated with the debt.

26 Other current payables

(x 1,000 euros)	2014	2013
Prepayments	101	8
Other payables	108,235	83,069
Accrued expenses	10,783	7,891
Other current payables	119,120	90,968

(x 1,000 euros)	Total	Due as per 2015	Due as per 2016	Due as per 2017	Due as per 2018
Prepayments	101	101
Other payables	108,236	57,353	39,340	4,464	7,079
Accrued expenses	10,783	10,783
Other current payables	119,120	68,237	39,340	4,464	7,079

The 'Other payables' includes an amount of 87.573 million euros (2013: 74.590 million euros) related to amounts to be paid to existing participations (subsequent payments). The ' Accrued expenses' includes an amount of 7.647 million euros (2013: 6.049 million euros) related to interest payments on the bond.

Trade payables and other liabilities generally have short times to maturity. The reported values approximate their fair values.

27 Contingencies

Fagron is involved in a number of claims, disputes and legal proceedings within the normal conduct of its business. Management believes that these claims, disputes and legal proceedings will not, on aggregate, have a materially adverse impact on Fagron's financial position. The term 'material' in this context is defined as a financial risk exceeding 0.750 million euros.

28 Related parties

The overall remuneration package for members of the Executive Committee and the CEO individually, as well as the non-executive directors, for the 2014 and 2013 financial years was as follows:

	Fixed remuneration Variable components	remuneration component	Other remuneration components 9
2013 financial year
Ger van Jeveren, CEO	500	600	32
Executive Committee, including the CEO	1,674	1,010	62
Non-executive members of the Board of Directors	230
2014 financial year
Ger van Jeveren, CEO	600	720	31
Executive Committee, including the CEO	1,609	1,150	31
Non-executive members of the Board of Directors	123

The variable remuneration component for the 2014 fiscal year is the bonus effectively paid out in 2015. The Remuneration Committee prepares proposals annually for the remuneration policy and/or other benefits for members of the Executive Committee and the CEO.

In 2014 no new stock options were granted.

In 2014 Mr Van Jeveren exercised 125,000 stock options, while the other members of the Executive Committee exercised 85,000 stock options. The members of the Executive Committee, in the composition in effect on 31 December 2014, together hold 318,000 stock options.

29 Business combinations

Fagron completed a number of acquisitions in the 2014 financial year. Full control was acquired of all group companies. As the acquired activities were immediately - in their entirety or to a significant degree - integrated in existing entities of Fagron, their respective contributions to the profit of Fagron have not been reported separately.

In April 2013, US company Freedom Pharmaceuticals Inc. was acquired. The acquisition of Freedom Pharmaceuticals strengthens Fagron's global market leadership, creates a presence throughout the United States and allows Fagron to immediately deliver extra value to its customers. Fagron is perfectly positioned to provide compounding pharmacies in the United States with innovative products and concepts, as well as value added services and training, through its offices. The acquisition involved a payment of approximately 77.656 million euros.

The final fair value of the assets and liabilities acquired was established, representing a decrease in goodwill of 7.7 million euros, mainly due to valuing and recognition other intangible assets such as customer bases. This goodwill was allocated to the operating segment Fagron. Expectation is that the goodwill will be fully tax deductible. The fair value of the acquired assets and liabilities was determined as detailed below.

8 Costs incurred by Fagron, i.e. the gross amount including any social security contributions.

9 Includes costs regarding pensions, insurances and the cash value of the other benefits in kind.

Fair value of the acquired assets and liabilities Freedom Pharmaceuticals Inc.

(x 1,000 euros)
Intangible assets	9,048
Property, plant and equipment	210
Deferred tax assets	2,588
Inventories	1,492
Trade receivables	1,556
Cash and cash equivalents	64
Total assets	14,957
Other non-current debts	3,965
Trade payables	754
Other current payables	316
Net acquired assets	9,922
Goodwill	67,735
Total acquisition amount	77,656

At the end of 2013, US company JCB Laboratories Inc. was acquired. The acquisition involved a payment of approximately 16.316 million euros, representing an increase in goodwill of 14.675 million euros. This goodwill was allocated to the operating company segment Fagron. Expectation is that the goodwill will be fully tax deductible. The fair value of the acquired assets and liabilities was determined as detailed below.

Fair value of the acquired assets and liabilities JCB Laboratories Inc.

(x 1,000 euros)
Intangible assets	783
Property, plant and equipment	718
Deferred tax assets	32
Inventories	320
Trade receivables	455
Cash and cash equivalents	(83)
Total assets	2,224
Financial debt	345
Trade payables	113
Other current payables	125
Net acquired assets	1,641
Goodwill	14,675
Total acquisition amount	16,316

In April 2014, US company Pharmacy Services Inc. was acquired. Fagron has further strengthened its worldwide market leadership with this acquisition of compounding facilities. Through this acquisition Fagron gained the number one market position compounding in the US.

The acquisition involved a payment of approximately 147.427 million euros, representing an increase in goodwill of 124.938 million euros. Expectation is that the goodwill will be fully tax deductible. The provisional fair value of the acquired assets and liabilities was determined as detailed below.

Fair value of the acquired assets and liabilities Pharmacy Services Inc.

(x 1,000 euros)
Intangible assets	31,861
Property, plant and equipment	2,853
Deferred tax assets	3,400
Inventories	1,341
Trade receivables	4,085
Other receivables	108
Cash and cash equivalents	6,290
Total assets	49,938
Trade payables	819
Other current payables	26,631
Net acquired assets	22,488
Goodwill	124,938
Total acquisition amount	147,427

In January 2014, Panoramix BV was acquired. The acquisition involved a payment of approximately 49.330 million euros, representing an increase in goodwill of 40.792 million euros. This goodwill was allocated to the operating company segment Fagron. The provisional fair value of the acquired assets and liabilities was determined as detailed below.

Fair value of the acquired assets and liabilities Panoramix BV

(x 1,000 euros)
Intangible assets	1,987
Property, plant and equipment	6,022
Other non current assets	3
Deferred tax assets	292
Inventories	1,853
Trade receivables	2,314
Other receivables	2,225
Cash and cash equivalents	(287)
Total assets	14,408
Financial debt	1,806
Trade payables	869
Other current payables	3,195
Net acquired assets	8,538
Goodwill	40,792
Total acquisition amount	49,330

Furthermore, some smaller companies and activities were acquired during 2014. The total net assets acquired, before allocation of the acquisition price, amounted to 3.814 million euros.

Fair value of the acquired assets and liabilities other acquisitions

(x 1,000 euros)
Intangible assets	6
Property, plant and equipment	3,017
Other non current assets	223
Inventories	674
Trade receivables	291
Other receivables	439
Cash and cash equivalents	776
Total assets	5,425
Financial debt	513
Trade payables	461
Other current payables	637
Net acquired assets	3,814
Goodwill	5,943
Total acquisition amount	9,757

To a large extent, the goodwill relates to future profit potential due to operational benefits to be gained, including synergy and scale benefits and efficiency improvements, as well as commercial benefits in the form of access to new markets and realising market leadership in both new and existing markets.

The fair value of a number of acquired assets and liabilities, acquired in 2014, was determined on a provisional basis. The fair value as stated is provisional because the integration process of the acquired entities and their activities is still ongoing. The provisional fair value of intangible assets, property, plant and equipment, deferred tax and working capital can change when the final fair value of the assets and liabilities acquired is established.

The final determination of the fair value of the assets and liabilities from previous minor acquisitions, acquired in 2013, resulted in an adjustment of 4.087 million euros (increase of goodwill). The changes are mainly the result of the recognition of intangible assets partly offset by the derecognition of inventories.

The total increase in goodwill by acquisitions amounts to 168.021 million euros, of which everything was allocated to the Fagron operating segment. To a large extent, the goodwill relates to future profit potential due to operational benefits to be gained, including synergy and scale benefits and efficiency improvements, as well as commercial benefits in the form of access to new markets and realising market leadership in both new and existing markets.

At year-end, the Group had an amount of approximately 72.439 million euros in contingencies. These fees payable to former shareholders were determined on the basis of business plans at the time of acquisition. In 2014, the actual payments are 1.575 million euros lower than the initial contingencies.

(x 1,000 euros)	Total	Due in 2015	Due in 2016	Due in 017	Due in 2018
Contingencies	72,439	25,213	36,380	10,846

The contigencies are related to Pharmacy Services Inc., JCB Laboratories Inc and Fagron Hellas A.B.E.E.

The contingency varies between 0 euros and a maximum of 79.852 million euros. The contingency is estimated at the moment of acquisition.

30 Discontinued operations

Consideration received

(x 1,000 euros)	2014	2013
Consideration received in cash and cash equivalents	30,831	54,000
Subsequent payments	2,251	(1,549)
Total consideration received	33,232	52.451

Fagron completed the divestment program of the Healthcare Specialties and Healthcare Solutions divisions in 2014.

Fagron successfully finalised the sale of Duo-Med, Owandy Radiology, Eurotec Germany, Eurotec France and Arseus Medical. Duo-Med was sold to ABN Amro Participaties, Owandy Radiology to Villa Sistemi Medicali based in Milan and Arseus Medical was acquired by entrepreneurs Cedric De Quinnemar and Jan Ponnet. A sum of 30.8 million euros was received in these transactions, excluding earn-outs and vendor loans. The earn-outs are valued at fair value. The fair value is estimated at 0 euros.

Analysis of assets and liabilities disposed of

	2014	201310
Current assets	44,805	27,818
Inventories	11,849	13,325
Trade receivables	18,112	11,478
Other receivables	7,054	839
Cash and cash equivalents	7,789	2,176
Non-current assets	22,789	43,245
Goodwill	16,104	29,324
Other intangible assets	472	6,037
Property, plant and equipment	3,960	3,171
Financial assets		2
Deferred tax assets	1,786	3,533
Other non-current assets	466	1,178
Current liabilities	26,771	18,773
Trade payables	15,359	13,613
Taxes, remuneration and social security	6,048	4,722
Other current payables	5,326	438
Non-current liabilities	7,779	1,900
Provisions	6,497	467
Pension obligations	726	509
Borrowings	557	924
Net assets disposed of	33,232	50,391

10 Figures 2013 and 2014 are related to Healthcare Specialties and Healthcare Solutions.

Gain (loss) on disposal

(x 1,000 euros)	2014	2013
Consideration received	33,232	52,451
Net assets disposed of	(33,232)	(50,391)
Gain (loss) on disposal	0	2,060

31 Information on the Statutory Auditor, his remuneration and related services

The Company's Statutory Auditor is PricewaterhouseCoopers Bedrijfsrevisoren BCVBA, represented by its permanent representative, Mr Peter Van den Eynde.

(x 1,000 euros)	2014	2013
Audit fee for the Group audit
Fagron Group	501	491
Audit fee for PricewaterhouseCoopers Bedrijfsrevisoren	188	235
Audit fee for parties related to PricewaterhouseCoopers Bedrijfsrevisoren	313	256
Additional services rendered by the Statutory Auditor to Fagron
Other engagements linked to the Statutory Auditor's mandate	162	5
Additional services rendered by parties related to the Statutory Auditor
Tax advisory services	165	212
Other services	572	9

The item 'Other services', i.e. services other than strictly financial auditing work, mainly relates to due diligence work. The Audit Committee of 4 August 2014 and 3 December 2014 approved an exception to the 1 to 1 rule in accordance with article 133 of the Belgian Companies Code.

32 Significant events after the reporting period

Fagron has completed the divestment of its ICT division Corilus to AAC Capital. The transaction was completed on 13 March 2015 for a total consideration of 77 million euros.

33 Additional notes

1. Off-balance sheet rights and liabilities - collateral:

HL Technology SA provided a mortgage registration in the amount of 0.832 million euros (1 million Swiss francs) related to its financing.

2. Fagron NV signed a liability statement on behalf of a number of Dutch subsidiaries, specifically:

Fagron Nederland BV

Arseus Dental BV

Arseus Medical BV

Corilus BV

Arseus CV

Arseus Beheer BV

Dutch BioFarmaceutics BV

Fagron Brazil Holding BV

Fagron BV

Fagron Group BV

Fagron Services BV

Panoramix BV

Pharmaline BV

Pharma Assist BV

Spruyt hillen BV

Steunpunt Apotheek Mierlo-Hout BV

Timm Health Care BV

Twipe BV

34 List of the consolidated companies

Name	Address	Ownership
ABC Dental & Pharmaceutical Consultancy NV	Textielstraat 24, 8790 Waregem (Belgium)	100.0%
ACA Pharma NV	Textielstraat 24, 8790 Waregem (Belgium)	100.0%
Alternate Sistemas E Informatica Ltda	Anchieta 285, Jundiai 13.201-804 (Brazil)	100.0%
ApodanNordic PharmaPackaging A/S	Kigkurren 8 M 2. Sal, 2300 Copenhagen (Denmark)	100.0%
APPEG SA	Rue de la Sambre 6, 6032 Charleroi (Belgium)	100.0%
Arseus Beheer BV	Lichtenauerlaan 182, 3062 ME Rotterdam (The Netherlands)	100.0%
Arseus Belgié NV	Textielstraat 24, 8790 Waregem (Belgium)	100.0%
Fagron BV	Lichtenauerlaan 182, 3062 ME Rotterdam (The Netherlands)	100.0%
Arseus Capital NV	Textielstraat 24, 8790 Waregem (Belgium)	100.0%
Arseus CV	Lichtenauerlaan 182, 3062 ME Rotterdam (The Netherlands)	100.0%
Arseus Dental BV	Lichtenauerlaan 182, 3062 ME Rotterdam (The Netherlands)	100.0%
Arseus Dental Solutions Est SARL	Boulevard Ornano ZacAxe Pleyel 30,93200 St-Denis (France)	100.0%
Arseus Dental Solutions SAS	Boulevard Ornano ZacAxe Pleyel 30,93200 St-Denis (France)	100.0%
Fagron België NV	Textielstraat 24, 8790 Waregem (Belgium)	100.0%
Arseus Medical BV	Gelderlandhaven 4, 3433 PG Nieuwegein (The Netherlands)	100.0%
Arseus Medical NV	Textielstraat 24, 8790 Waregem (Belgium)	100.0%
B&B Pharmaceuticals Inc.	17200 East Ohio Drive, 80017 Aurora Colorado (The United States)	100.0%
CMIS BVBA	Mastboomstraat 4, 2630 Aartselaar (Belgium)	100.0%
CMS France Sarl	Boulevard Malesherbes 19,75008 Paris (France)	100.0%
CMS NV	Mastboomstraat 4, 2630 Aartselaar (Belgium)	100.0%
Corilus BV	Randhoeve 221, 3995 GA Houten, (Netherlands)	100.0%
Corilus Info Santé SA	Rue Gabriel Peri 30, 92700 Colombes (France)	100.0%
Corilus SA	Rue Camille Hubert 23, 5032 Gembloux (Belgium)	100.0%
DPI Inc.	5967 S. Garnett Rd., 74146 Tulsa (United States)	100.0%
Dutch BioFarmaceutics BV	Steenovenweg 15, 5708 HN Helmond (The Netherlands)	100.0%
Dynaceuticals Ltd	Kudu Street 606, White Thorn Office Park, Unit 2, Johannesburg (South Africa)	100.0%
Eurotec Dental GmbH	Forumstraße 12, 41468 Neuss (Germany)	100.0%
Eurotec Dental SAS	Boulevard Ornano ZacAxe Pleyel 30, 93200 St-Denis (France)	100.0%
Fagron a.s.	Holicka 1098/31 M, 772 00 Olomouc (Czech Republic)	73.1%
Fagron Brazil Holding BV	Lichtenauerlaan 182, 3062 ME Rotterdam (The Netherlands)	100.0%
Fagron Nederland BV	Venkelbaan 101, 2908 KE Capelle aan den IJssel (The Netherlands)	100.0%
Fagron China Ltd	268 Xi Zang Middle Road, Shanghai, 200001 (China)	100.0%
Fagron Compounding Services NV	Woestijnstraat 53,2880 Bornem (Belgium)	100.0%
Fagron Compounding Services SAS	Boulevard Ornano ZacAxe Pleyel 30,3200 St-Denis (France)	100.0%
Fagron Compounding Supplies Australia Pty Ltd	Atkinson Road 2/16, Taren Point, Sidney (Australia)	100.0%
Fagron GmbH & Co KG	Von-Bronsart-Straße 12, 22885 Barsbüttel (Germany)	100.0%
Fagron Hellas A.B.E.E.	12 Th Klm Trikala Larisa N.R. (Greece)	100.0%
Fagron Group BV	Lichtenauerlaan 182, 3062 ME Rotterdam (The Netherlands)	100.0%
Fagron Holding USA LLC	Orange street 1209, New Castle County (The United States)	100.0%
Fagron Iberica SAU	Carrer de Josep Tapiolas 150, 08226 Terrassa (Spain)	100.0%
Fagron Inc.	2400 Pilot Knobroad, 55120 St. Paul (The United States)	100.0%
Fagron Italia SrL	Via Lazzari 4-6,40057 Quarto Inferiore (Italy)	100.0%
Fagron NordicA/S	Kigkurren 8 M 2. Sal, 2300 Copenhagen (Denmark)	100.0%
Fagron NV	Textielstraat 24,8 790 Waregem (Belgium)	100.0%
Fagron Poland Sp. z o.o	Albatrosôw 1, 30-176 Krakau (Poland)	100.0%
Fagron Sarl	Intendente Neyer 924, Beccar, Partido de San Isidro Provincia de Bs.As (Argentina)	100.0%
Fagron SAS	Rue Gabriel Peri 30, 92700 Colombes (France)	100.0%
Fagron Services BV	Molenwerf 13,1911 DB Uitgeest (The Netherlands)	100.0%
Fagron Services BVBA	Industrieweg 2, 2850 Boom (Belgium)	100.0%
Fagron UK Ltd	4 B Coquet Street, NE1 2 QB Newcastle upon Tyne (The United Kingdom)	100.0%
Flores e Ervas Comercio Farmaceutico Ltda	Estrada Vicente Bellini, No 17513.427-225 Piracicaba City (Brazil)	100.0%
Freedom Pharmaceuticals Inc.	801 W. New Orleans Street, 74011 Broken Arrow, Oklahoma (The United States)	100.0%
Healthconnect NV	Luchthavenlaan 25 B, 1800 Vilvoorde (Belgium)	100.0%
HL Technology SA	Rue Jardiniere 153, 2300 La Chaux-de-Fonds (Switzerland)	100.0%
JCB Laboratories LLC	3510 N. Ridge RD. STE.900, KS 67205 Whichita (The United States)	100.0%
Jupiter Health Holding LLC	Millwell Drive 212, Maryland Heights, Missouri 63017 (The United States)	100.0%
Mercury Innovations LLC	Millwell Drive 212, Maryland Heights, Missouri 63017 (The United States)	100.0%
Microgest Paramedical Software sprl	Rue du Beauregard 79, 7141 Morlanwelz/Carnières (Belgium)	100.0%
Midwest Rx LLC	Millwell Drive 212, Maryland Heights, Missouri 63017 (The United States)	100.0%
Multident GmbH	Pelikanplatz 25, 30177 Hannover (Germany)	100.0%
Northern Rx LLC	2012 E. Northwest Highway, Arlington Heights, Illinois, 60004 (United States)	100.0%
Orbus Pharma Ltda	Calle 9547 A-28 Bogota (Colombia)	100.0%
Owandy Radiology SAS	Le Coruscant 2, Rue des Vieilles Vignes, 77183 Croissy Beaubourg (France)	100.0%
Pharma Assist BV	Dieselstraat 3, 7903 AR Hoogeveen (The Netherlands)	100.0%
Pharma Cosmetic K.M. Adamowicz Sp. z.o.o.	UI. Pasternik 26, 31-354 Krakau (Poland)	100.0%
Pharmaflore SA	Rue Botrieux 7,7864 Lessines (Deux-Acren) (Belgium)	100.0%
Panoramix BV	Münsterstraat 4, 7575 ED Oldenzaal (Netherlands)	100.0%
Pharmacy Services Inc.	Millwell Drive 212, Maryland Heights, Missouri 63017 (The United States)	100.0%
Pharmaline BV	Münsterstraat 4, 7575 ED Oldenzaal (Netherlands)	100.0%
PPH Galfarm Sp. z.o.o.	Ul.Przemysfowa,12 30-701 Krakau (Poland)	100.0%
Rausa Kem Pharmacy Ltd	Clarendon Street 61, Parow Valley, 7500 Cape Town (South Africa)	100.0%
Reakiri Ltd	Erica Way 8, Somerset West Business Park, 7130 Cape Town (South Africa)	100.0%
Slovgal s.r.o	Stürova 19,058 01 Poprad (Slovakia)	100.0%
SM Empreendimentos Farmaceuticos Ltda	Rua Jurupari, 803-Jardim Oriental, 04348-070 Sao Paulo (Brazil)	100.0%
SOFT 33 Sprl	Rue du Travail 11, 1400 Nijvel (Belgium)	100.0%
Southern Rx LLC	10131 W. Commercial Blvd, Tamarac, Florida, 33351 (United States)	100.0%
Spruyt hillen BV	Tinbergenlaan 1, 3401 MT IJsselstein (The Netherlands)	100.0%
Steunpunt Apotheek Mierlo-Hout BV	Steenovenweg 15, 5708 HN Helmond (The Netherlands)	100.0%
Texas Southern Rx LLC	Millwell Drive 212, Maryland Heights, Missouri 63017 (The United States)	100.0%
Timm HealthCare BV	Lorentzlaan 4, 3401 MX IJsselstein (The Netherlands)	100.0%
Twipe BV	Lichtenauerlaan 182,3062 ME Rotterdam (The Netherlands)	100.0%
Unit Dose Pack BV	Eijkenakker 12, 5571 SL Bergeijk (The Netherlands)	100.0%
Zenith Pharmaceuticals Cyprus Ltd	Doma Building Arch Makarios III Avenue 227,3105 Limassol (Cyprus)	100.0%

Statutory Auditor's Report

Statutory auditor's report to the general shareholders' meeting on the consolidated accounts for the year ended 31 December 2014

In accordance with the legal requirements, we report to you on the performance of our mandate of statutory auditor. This report includes our opinion on the consolidated financial statements, as well as the required additional statement. The consolidated financial statements comprise the consolidated

income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity and consolidated statement of cash flows as at 31 December 2014 and the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Report on the consolidated financial statements - Unqualified opinion

We have audited the consolidated financial statements of Fagron NV ("the Company") and its subsidiaries (jointly "the group"), prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. The consolidated total assets amount to EUR'000 973.752 and the consolidated income statement shows a profit for the year 2014 attributable to the equity holders of EUR'000 16.226.

Board of directors' responsibility for the preparation of the consolidated financial statements

The board of directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines, is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Statutory auditor's responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the group's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the consolidated financial statements.

We have obtained from the board of directors and the company's officials the explanations and information necessary for performing our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Unqualified Opinion

In our opinion, the consolidated financial statements give a true and fair view of the group's net equity and consolidated financial position as at 31 December 2014 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium.

Report on other legal and regulatory requirements

The board of directors is responsible for the preparation and the content of the directors' report on the consolidated financial statements.

In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we provide the following additional statement which does not impact our opinion on the consolidated financial statements:

The directors' report on the consolidated financial statements includes the information required by law, is consistent with the consolidated financial statements and does not present any material inconsistencies with the information that we became aware of during the performance of our mandate.

Antwerp, 10 April 2015

**The Statutory Auditor

PwC Bedrijfsrevisoren bcvba

Represented by**

Peter Van den Eynde*

Bedrijfsrevisor/Réviseur d'Entreprises

* Peter Van den Eynde BVBA

Board Member, represented by its fixed representative, Peter Van den Eynde.