UCB — Annual Report 2010

Mar 2, 2011

Aspiring to be the patient-centric biopharma leader at the heart Financial calendar 2011

Patients at the heart Financial calendar 2011

Severe diseases have a signi cant impact on the lives of both the patient and at least ve other people within the patient's family members, friends and co-workers, according to estimates. To understand the full impact of a severe disease on people's lives, we connect to patients in everything we do. Here are the values that drive us:

Innovation

Our patients rely on us to develop new medicines that will have a major positive impact on the quality of their lives. Innovative science is the foundation of everything we do.

Passion for performance

Our patients deserve our best. We are passionate about what we do and strive for continuous improvement in our performance.

Entrepreneurship

As entrepreneurs, we constantly strive to innovate our products, improve services to our patients, and create sustainable value for our investors.

Integrity

We act with integrity and ensure awless quality in all we do.

Care

We care about patients, customers and people.

Accountability

We delegate appropriately and expect our people to make sound and timely decisions, report back to team members and be accountable.

Embracing difference

We recognise diversity is the cornerstone of our success. We encourage and respect differences as it strengthens our organisation. UCB would like to thank the people living with severe diseases featured in this report for sharing the experience of their disease and for the time they devoted to writing their testimonials which are included in this report and to the sessions with the photographer…

Vision	1
Letter to the shareholders	2
2010 milestones	6
Pipeline	8
Strategy	10
Partnerships	12
Delivering for patients today	14
Rheumatoid arthritis	16
Crohn's disease	18
Epilepsy	20
Parkinson's disease	22
Restless legs syndrome	24
Delivering for patients tomorrow	26
Lupus	28
Osteoporosis	30
R&D Immunology	32
R&D CNS	34
Corporate social responsibility (CSR)	36
People	38
Patients	42
Ethics	44
Planet	46
Corporate governance statement	48
Financial report	70
Operating and nancial review	71
Consolidated nancial statements	80
Report of the statutory auditor	138
Abbreviated statutory nancial statements of UCB S.A.	139
CSR performance report	142

KEY FIGURES

15 000

■ 2009 ■ 2010

(headcount, year-end)

(headcount, year-end 2010)

€ million	2007	2008	2009	2010
Revenue	3 626	3 601	3 116	3 218
Net sales	3 188	3 027	2 683	2 786
Research and development expenses	-788	-767	-674	705
R&D as a % of revenue	21.7%	21.3%	21.6%	21.9%
Recurring EBIT (REBIT)	480	531	453	467
Recurring EBITDA (REBITDA)	741	733	698	731
Net income (after minority interests)	160	42	513	103
Core EPS (€ per non-diluted share)	-	1.86	1.74	1.99
Net debt	1 915	2 443	1 752	1 525
Equity ratio	44%	42%	48%	51%
Net debt/REBITDA ratio	2.6	3.3	2.5	2.1
Cash ow from operating activities	490	366	295	506
Capital expenditures (including intangible assets)	251	179	87	78

VISION

Raffaele and Jérôme, living with epilepsy

UCB aspires to be the patient-centric global biopharmaceutical leader, transforming the lives of people living with severe diseases

Letter to the shareholders

Aspiring to be the patient-centric biopharma leader

Roch Doliveux Chief Executive Officer

Karel Boone Chairman

We put patients at the heart of our work

Everything we do starts with a simple question: "How will this make a difference to the lives of people with severe diseases?"

Dear shareholders and friends of UCB,

In 2010, UCB progressed on its transformation into a patient-centric global biopharmaceutical leader. Our new products are enjoying intensive growth. In 2010, Cimzia®, Vimpat® and Neupro® combined sales exceeded € 400 million in the first full year of sales in the U.S. and Europe and over 203 000 patients have been exposed to the benefits of these new medicines, which are now available in over 20 countries with more launches planned for 2011.

All new products in clinical development reached their clinical milestone on time. UCB reported positive Phase 2b in systemic lupus erythematosus (SLE) for epratuzumab, a new molecule for the treatment of SLE, and started its Phase 3 programme at the end of 2010. Brivaracetam started its last Phase 3 study for the treatment of epilepsy and the Phase 2b programme with the sclerostin antibody (CDP7851) for post-menopausal osteoporosis enrolled faster than anticipated. We advanced all projects in our late-stage pipeline, with the notable exception of Neupro® in the U.S. which, subject to FDA approval, we hope to make available to U.S. Parkinson's disease and restless legs syndrome patients in 2012. In addition, we expanded our early-clinical pipeline thanks to the accelerating performance of UCB's NewMedicine organisation put in place in mid-2008.

And overall, we exceeded our financial guidance in 2010. Revenue reached € 3.2 billion (+3%) thanks to the growth of our new core products, Cimzia®, Vimpat® and Neupro® as well as solid performance from our established product portfolio, led by Keppra®. While Keppra® lost European

market exclusivity on 29 September 2010, it was launched in co-promotion with Otsuka in Japan under the name E-Keppra® the very same month.

Keeping ahead of industry developments

UCB's transformation and 2010 achievements should be viewed in the context of the rapid changes in our industry. The biopharmaceutical industry seems to be reaching an inflection point. On the one hand, there is tremendous pressure due to massive patent expiries resulting in generic competition and an all-time low R&D productivity, combined with rising regulatory demands and R&D costs. In addition, the economic crisis and rising public deficits, push governments to tighten public spending on pharmaceuticals.

On the other hand, never before has our industry faced so many opportunities. New science, such as genomics and bio-informatics, offer many new opportunities to discover breakthrough medicine. Demand is rapidly rising in an aging population, especially for new treatments in diseases of the brain, the immune system, the metabolic system, as well as for cancer. People living with these diseases are more connected, informed and actively engaged in the decisionmaking process.

Every inflection point creates new business models and new opportunities. UCB has responded by transforming itself over the past six years, creating a patient-centric biopharmaceutical leader. Since we started transforming

Letter to the shareholders

our company in 2004, we are focusing UCB's business model on what is best for patients, innovation that targets unmet needs in severe diseases, and on patient-centricity, i.e. putting the patient at the centre of all we do.

To make this model a reality, we acquired and integrated Celltech (2004) and Schwarz Pharma (2006), focused and streamlined our organisation through the SHAPE programme (2008), absorbed generic competition as a result of patent expiries of our two leading products in the U.S.: Zyrtec® (2008) and Keppra® (2009). We set the industry standard for the number of new product approvals in the U.S. in 2008, and subsequently launched Cimzia®, Vimpat® and Neupro® in over 20 countries to date. We also further optimised our financing and capital structure after the successful restructuring of our debt in 2009. Our new structure better matches future expected cash-flows.

UCB is actively moving forward a true transformation in all areas of the company from discovery research to development, commercial as well as manufacturing. Our colleagues at UCB have done an extraordinary job at leading and adapting through change and we would like to express our gratitude. Just over two years ago, UCB had 12 500 employees while we are now just over 8 000 colleagues after the implementation of SHAPE and the latest divestment of our three manufacturing sites in Europe to Aesica announced last December, and expected to transfer in March 2011. Within this time period, 2 000 new colleagues joined us to bring the complimentary skills and experience we need to become a global biopharmaceutical leader in the treatment of neurology and immunology disorders.

Successfully managing patent expiries

UCB has now entered the last part of its transformation. The last wave of major patent expiries is expected in 2011 with its effects expected to be compensated to a large extent – but not entirely – by the growth of Cimzia®, Vimpat® and Neupro®.

After 2011, Cimzia®, Vimpat® and Neupro® will drive UCB's growth with no major patent expiries expected for more than a decade for UCB. Additional growth is expected to come from those products in our pipeline that will have successfully completed their clinical development and regulatory processes.

With UCB's foundation and focus well-established, our success is in our hands and will in significant part be determined by our focus on execution, our commitment to open innovation, our agility and our ability to adapt and to drive relentlessly on efficiencies and continuous improvement – always keeping the patient at the centre of everything we do.

Delivering our 2010 objectives

UCB achieved its objectives in 2010: revenue reached € 3.2 billion (+3%), underlying profitability (recurring EBITDA) reached € 731 million (+5%) and core earnings per share (EPS) were € 1.99.

In-line with our dividend policy, which considers the longterm potential of UCB, the Board has proposed a gross dividend of € 0.98 per share (+2%).

In addition to progress in our late-stage pipeline, which is stronger in 2010 than a year before, and in addition to the performance of UCB NewMedicines which has started successfully to fill the early-stage pipeline, we progressed in our open innovation with dozens of new partnerships. One of them was the agreement we entered in 2010 with Synosia giving UCB access to new drug candidates for the potential treatment of Parkinson's disease and other movement disorders.

We also increased our efficiency by simplifying our manufacturing network through the sale of three manufacturing sites to our partner Aesica as we prepare to build and staff two significant biotech production sites in Braine l'Alleud (Belgium) and Bulle (Switzerland), pilot scale and commercial scale respectively. These new plants are expected to secure the future demand for new biological products developed by UCB as well as the projected market demand for Cimzia®.

As for our colleagues at UCB, we all progressed in becoming a leaner organisation where people can express their talents. And of course our colleagues continued to grow a deeper understanding of our customer's needs: the people who live with the severe diseases that we target, as well as their physicians, nurses, carers and payers.

2011 priorities

UCB's key priorities for 2011 are to grow Cimzia®, Vimpat® and Neupro®, to advance our late-stage pipeline and fill our early-stage pipeline, to ensure compliance in everything we do to protect our patients and UCB's reputation, to continuously look for efficiencies by evaluating all our activities and resources, to foster the personal and professional development of each UCB colleague within a stimulating environment.

In the meantime, we thank our colleagues for their consistent ability to deliver, their hard work, their drive to go that extra mile and for truly making UCB a patient-centric biopharmaceutical leader. We also thank people living with severe diseases, their physicians and payers for their candid feedback, knowledge, inspiration and energy.

Finally, we thank our partners, building on each other's strengths, the UCB Board for the unique blend of experience, challenge and support and our shareholders for their trust and confidence as we continue to build UCB with patients at the heart of everything we do.

Roch Doliveux Chief Executive Officer

Karel Boone Chairman

CNS

Vimpat®	epilepsy monotherapy (EU) – start of Phase 3 (Dec. 2010)
Brivaracetam	epilepsy adjunctive therapy – start of third Phase 3 trial (Dec. 2010)
Vimpat®	epilepsy PGTCS – start of Phase 2 (May 2010)
UCB2892	cognitive disorders – start of Phase 1 (Mar. 2010) - project discontinued (Jan. 2011)
UCB0942	drug refractory epilepsy – start of Phase 1 (Dec. 2010)

Immunology

Cimzia®	psoriatic arthritis – start of Phase 3 (Mar. 2010)
Cimzia®	ankylosing spondylitis – start of Phase 3 (Mar. 2010)
Epratuzumab	systemic lupus erythematosus – start of Phase 3 (Dec. 2010)
Olokizumab	rheumatoid arthritis – start of Phase 2b (Dec. 2010)
CDP7567	systemic lupus erythematosus – start of Phase 1 (Apr. 2010)

Milestones 2010

2010 was marked by several important milestones. Each one played a major role in our quest to become the patient-centric biopharma leader, helping us deliver our commitments to people living with severe diseases and to our shareholders.

4 patients recruited 000 more than

10 patients involved 000 more than

Xyrem®	fibromyalgia – EU filing (H1 2010)
Keppra®	epilepsy adjunctive therapy – approval in Japan under brand name E Keppra® (July 2010)
Xyzal®	allergy – approval in Japan (Oct. 2010)

Financial performance as expected

€ 731 million of recurring EBITDA

€ 1.99 core earnings per share

• • Reaching more than 22000 patients
• • Available in 20 countries
• • 16 national launches
• • 2 indications: rheumatoid arthritis Crohn's disease
• • 4 additional development projects: ankylosing spondylitis juvenile rheumatoid arthritis psoriatic arthritis rheumatoid arthritis (Japan)

Neupro Cimzia® Vimpat® ®

• • Reaching more than 108000 patients
• • Available in 22 countries
• • 7 national launches
• • 1 indication: epilepsy adjunctive therapy

• • 4 additional development projects: adjunctive therapy PGTCS monotherapy (Europe and U.S.) paediatric adjunctive therapy

• • Reaching more than 73000 patients

• • Available in 20 countries
• • 4 national launches
• • 2 indications: Parkinson's disease restless legs syndrome

203000 patients using

new UCB products

22000 patients treated with Cimzia®

108000 patients treated with Vimpat®

73000 patients treated with Neupro®

advancing the pipeline

R&D is the lifeblood of UCB's future. Our pipeline includes seven new projects (drug candidates) and 11 lifecycle management projects - the drug is already approved for a specific indication but is being investigated for additional indications. While UCB NewMedicines is responsible for drug discovery to clinical proof of concept, UCB Global Projects & Development follows up, develops and delivers innovative medicines. All projects reached their clinical milestone on time in 2010.

To create the next generation of breakthrough therapies and ensure UCB's future, we invest heavily in R&D: in 2010, R&D accounted for € 705 million or 22% of revenue.

2 therapeutic areas

Central Nervous System

Small-molecule drug (chemical production)

Immunology

Antibody-based, large-molecule drug (biotechnology production)

our strategy

Christer and Katarina, his daughter, living with Parkinson's disease

UCB has a clear long-term strategy to become the patient-centric global biopharma leader. To achieve this goal, we have been steadily transforming our company since 2004. Patient-focus, agility, adaptation and efficency roundedup by partners are our success factors.

Continuing to make progress

In 2004, UCB was a diversified pharmaceuticals, chemicals and films conglomerate. The transformation of UCB into a biopharmaceutical company, with a development portfolio of small- and large-molecule drugs, began in 2004 with the acquisition of Celltech, the leading British biotech company, and the divestment of noncore businesses in 2005. The acquisition of Schwarz Pharma in 2006 enriched the company's late-stage pipeline, enhancing the company's short- to mid-term commercial potential.

Since then, we have evolved into a leaner and more focused organisation with leading research and development capabilities focused on severe diseases in immunology and central nervous system. In 2008, for example, we accelerated our transformation with our SHAPE programme, which has successfully reallocated resources internally and externally, and focused our efforts and investments on our core business areas. The following year, 2009, we launched three new core products - Cimzia®, Vimpat® and Neupro® - in key markets, and continued to sharpen our focus in 2010 by exiting the primary care market in the U.S., Japan and Belgium in order to concentrate entirely on specialists treating severe diseases.

We have also managed patent expiries. In 2008 and 2009, UCB absorbed the first wave of generic erosion to its two leading brands, the anti-allergic drug Zyrtec® in 2008 and the epilepsy drug Keppra®, both in the U.S.. Although the effects of patent expiries continued in 2010, the second and last wave is expected in 2011. After 2011 UCB is not expected to face major patent expirations within the next decade. In 2010 and 2011, the new core products Cimzia®,

From left to right and top to bottom:

Robert Trainor, Executive Vice President & General Counsel Michele Antonelli, Executive Vice President Technical Operations, QA & HSE Detlef Thielgen,

Executive Vice President & Chief Financial Officer Fabrice Enderlin, Executive Vice President Corporate Human Resources and Communication

Iris Löw-Friedrich, Executive Vice President Global Projects & Development, Chief Medical Officer Ismaïl Kola, Executive Vice President & President UCB NewMedicines™ Roch Doliveux, Chief Executive Officer & Chairman of the Executive Committee Mark McDade, Executive Vice President Global Operations

Vimpat® and Neupro® of UCB are compensating to some extend the effects of generic erosion. From 2012 onwards the core products are expected to drive the company growth. Cimzia®, Vimpat® and Neupro® shall improve the lives of hundreds of thousands of patients around the world who suffer from disorders like rheumatoid arthritis, Crohn's disease, epilepsy, Parkinson's disease or restless legs syndrome. In the second half of this decade, Cimzia® is expected to generate annual peak sales of at least € 1.5 billion, Vimpat® of at least € 1.2 billion and Neupro® of at least € 400 million.

This growth will enable continued research and development investments. Currently, UCB has 10 molecules in its development pipeline across 15 indications, all of them being developed for the treatment of severe diseases of the central nervous system (CNS) and immunology. During the next decade we expect new treatment opportunities currently in clinical development to be available to patients suffering from epilepsy, the chronic autoimmune disease systemic lupus erythematosus or bone loss disorders such as post-menopausal osteoporosis. New development candidates for CNS and immunology will mature and enter our clinical development pipeline.

Using our expertise in biology and chemistry, UCB NewMedicines is working on long-term research projects that could transform the way severe diseases are treated. These initiatives include pre-clinical projects that are using our proprietary A2Hit™ technology to combine the convenience of small orally available molecules with the efficacy and precision-targeting of large molecules.

Our pipeline is further enriched by external partnerships in CNS development and oncology development, providing us with attractive additional options. At certain stages we can opt in and add mature development projects to our pipeline.

Our strategic objectives now include:

• Meeting unmet patient needs in CNS and immunology by: - creating and acquiring innovative new medicines
• delivering solutions beyond novel medicines
• Maximising Cimzia®, Vimpat® and Neupro®
• Par tnering to optimize value and efficiency
• Improving continuously our profitability and financial structure
• Fostering a "one UCB" workplace where people can express their talent and performance
• Optimising core processes towards lean biopharma networked organisation
• Ensuring compliance in everything we do to protect our patients and our reputation

Partnerships

UCB is working with an "open innovation" business model, recognising that optimising our chances of success requires making the best use of both internal and external resources.

We recognise that we cannot always bring innovative therapies to patients on our own. That is why we have teamed up with companies across the pharmaceutical industry, from drug discovery through to marketing.

UCB has several hundred collaborative alliances, ranging from partnerships with European and U.S. academic groups to multiple manufacturing partnerships, as well as memberships of major government-led consortia. Here are a few examples:

Research & Development

In January 2010, UCB and PatientsLikeMe®, the leading online community for people with life-changing conditions, opened the doors to a free online community for people living with epilepsy in the U.S. Focused on learning from patients' real-world experiences, the online community allows members to create profiles that record and share their treatments, symptoms, as well as seizure type, frequency and severity.

In October 2010, Synosia (now Biotie, after its acquisition of Synosia in February 2011) granted UCB exclusive worldwide rights to an adenosine A2a antagonist (SYN-115) and rights to a second compound (nitisinone, also known as SYN-118), both for patients living with movement disorders such as Parkinson's disease. UCB will take on late-stage development and commercialisation following completion of Phase 2 studies by Biotie.

In July 2010, Keppra® was approved in Japan as adjunctive therapy for partial onset seizures in adults with epilepsy. It is marketed under the brand name, E Keppra®. UCB Japan, together with its co-promotion partner, Otsuka Pharmaceutical, launched E Keppra® in September 2010.

In December 2010, Aesica announced the acquisition of UCB's manufacturing businesses in Germany and Italy. This new partnership is part of UCB's strategy to optimise its manufacturing network while securing the long-term supply our products and a long-term future for the sites' employees. This acquisition was completed in March 2011.

Delivering SOLUTIONS for patients today

Many illnesses are still incurable, but there are treatments for controlling their symptoms. UCB is committed to broadening the range of new treatment options for patients and healthcare professionals, as well as offering innovations"beyond the medicine".

Immunology | 16

Central Nervous System | 20

Alison, living with rheumatoid arthritis

Rheumatoid arthritis

Immunology

DeOnna, living with rheumatoid arthritis

I do not think I could imagine a life without intense pain, redundant doctor visits, sleepless nights yet sleepy days. I mention this with obvious sarcasm but it is in combination with valid sincerity. I mean sure the ability to wear four inch stiletto heels would be ideal but my reality is surrounded by the fact that my unique life is full of restrictions. I constantly have to remind myself that being restricted doesn't necessarily entail that my goals are impossible it just means that I have to contemplate alternative routes to reach my

Rheumatoid arthritis (RA) is a progressive autoimmune disease that causes chronic inflammation of the joints. With an estimated prevalence of 5.1 million in the seven major markets, women are three times more likely to be affected than men. Although RA can affect people of all ages, the onset of the disease usually occurs between the ages of 35 and 55.

Even the simplest, everyday tasks can be difficult

Rheumatoid arthritis (RA) generally affects the smaller joints in the body such as fingers, thumbs, wrists, feet and ankles. However, the systemic nature of the condition means that it can also affect the body as a whole, including internal organs and the vascular system. RA is one of a group of conditions classified as autoimmune diseases, in which the body mistakenly attacks its own immune system.

Symptoms may come and go and vary in severity from patient to patient. The main symptoms are joint stiffness and pain, swelling, reduction in mobility, appearance of nodules or lumps under the skin. These symptoms often lead to permanent damage of joints and bones. As this damage occurs, patients may find their movement becomes more restricted, which can lead to difficulty in undertaking even the simplest everyday tasks. In more severe cases, RA can eventually lead to disability.

Although significant progress has been made researching the disease in recent years, doctors are still unable to pinpoint the exact cause of RA. It is thought that genetic, environmental and hormonal factors all play a role. Many scientists believe that environmental factors such as bacteria and viruses can trigger the development of RA in susceptible individuals. As there is currently no cure for RA, treatment focuses on disease management.

Cimzia®: reaching more than 12000 RA patients

Approved in the U.S. (May 2009) and in Europe (October 2009), Cimzia® (certolizumab pegol) is now available in 20 countries, including the U.S. and EU5. Available data suggest a clinical response can be achieved in the majority of patients within the first 12 weeks. A rapid response to Cimzia® may provide patients with an initial indication that their new therapy is working, providing them with the opportunity to make an informed treatment decision together with their physicians.

Annual world arthritis day: 12 October

Underlining our commitment to patients, UCB offers Cimzia® in an exclusively designed pre-filled syringe and easy-to-open packaging, thanks to our partnership with OXO®, the maker of the Good Grips® brand of household tools. Various aspects of the syringe and packaging were designed in close collaboration with patients in order to ensure the challenges associated with self-injection were alleviated.

Crohn's disease

Immunology

Brett, living with Crohn's disease

When I was 13, I began having symptoms such as diarrhea, nausea, fatigue, abdominal pain and migraines. I thought the symptoms were too embarrassing to discuss with the pain and hide the symptoms and my frequent trips to the bathroom. For many years, I tried to self manage my unpredictable condition not knowing how I would fare from everything I ate and learned how to cook, so that food agreed with my body.

Crohn's disease (CD) is a chronic disorder that causes inflammation of the gastrointestinal tract. The estimated prevalence is 900 000 persons affected in the seven major markets. The disease usually starts between the ages of 15 and 35, a time when individuals make decisions that will affect the rest of their lives.

Debilitating symptoms are often accompanied by depression

With Crohn's disease (CD), the body produces too much of a protein called tumour necrosis factor (TNF), triggering the inflammation of the digestive tract and causing the disease's painful symptoms. Because it is caused by the immune system, CD is tought to be an autoimmune disorder. This means that the body is producing antibodies against itself.

The lives of people with CD are frequently disrupted by flare-ups of the condition, which can lead to diarrhoea, fever, nausea, abdominal pain and severe weight loss. For some people, living with CD means spending a lot of time at home, partly because their homes have a convenient bathroom, and stocks of appropriate foods: it is very important that people who have CD follow a nutritious diet and avoid any foods that seem to worsen symptoms.

Coupled with the fact that the condition is often diagnosed in young adults, a time in life when one is typically faced with major life-decisions such as college, new jobs and relationships, CD limits a sufferer's ability to lead a normal life. The burden of CD is further complicated by high rates of surgical intervention which can be as high as 75% for moderate to severe CD.

There is still uncertainty about how CD is caused. A number of genetic and environmental factors are associated with it but their role is not clear. Many scientists now believe that the interaction of an outside agent, a bacterium or virus, with the immune system may trigger an attack on the lining of the intestines, causing chronic inflammation and ultimately ulcerations and bowel injury. Genetics also appear to play a role: in 20-25% of cases the disease runs in the family. As there is currently no cure for CD, treatment focuses on disease management.

Annual world Crohn's day: 23 May

Cimzia®: reaching more than 10000 CD patients

Cimzia® (certolizumab pegol) is another option to treat CD, helping to bring back a degree of freedom to Crohn's patients. The product has been marketed in the U.S. and Switzerland since 2008. In Europe, UCB does not intend to pursue further development of Cimzia® in CD.

Keeping track of how you feel day-to-day is an essential part of any treatment. That is why UCB developed the Wellness Widget™, an interactive desktop and mobile phone application that enables the patient to record their daily symptoms and any other important information. Patients can report the data to their doctors and use the widget to remind themselves of doctor visits, prescription refills or medication doses.

Epilepsy

Central Nervous System

Atsumi, living with epilepsy

I wanted to attend nursing college, but people around me advised not to because of my epilepsy. I graduated from university with a degree in international relations and afterward I went to nursing college because I would not surrender my hope to become a nurse. I had a seizure when I drove to the hospital for nursing practice. It was my first seizure in over ten years. The frequency of my seizures had increased. I have been forced to resign my job in hospital again and again because I have epilepsy. I do not want to give up this job since I understand the minds of people with serious diseases.

Epilepsy is the most common neurological disorder that disturbs the normal activity of the brain cells. With an estimated prevalence of 5.3 million in the seven major markets, the disease typically starts in childhood and old age.

Discrimination and social stigma still surround epilepsy

With epilepsy, abnormal electrical activity in the nerve cells of the brain can lead to seizures, ranging from strange sensations, emotions and behaviours to convulsions, muscle spasms and loss of consciousness. Partial seizures are confined to one part of the brain, while generalised seizures result from simultaneous disturbances in the whole of the brain.

In many cases epilepsy is not well understood. Even today people with epilepsy are sometimes socially ostracised and it can be difficult for them to make friends, get a job or find a place to live. The unpredictability of the seizures, their physical effects and the heavy social stigma attached to the disease, affect every part of a person's life, including their education, employment and independence. Many people with epilepsy are depressed, have poor self-esteem and live in fear of the next seizure.

The causes of the disease, which is diagnosed by its symptoms and recordings of electrical activity in the brain, are not fully known. Although seizures can be triggered by head injuries, strokes, brain damage at birth and brain tumours, the vast majority of cases have no apparent cause.

Epilepsy itself can cause brain damage and can even be fatal. That is why it is so important to get effective treatment for the disease. While some patients' seizures can be controlled with a single antiepileptic drug (AED), 30-40% of people may need two or more drugs, known as 'combination therapy'. The ultimate goal of epilepsy treatment is to enable patients to be free of seizures. Unfortunately, up to 30% of people do not respond to currently available treatments and still have uncontrolled seizures, highlighting the need for new, more effective AEDs.

Vimpat®: reaching more than 108000 epilepsy patients

Approved in Europe (September 2008) and in the U.S. (October 2008) as adjunctive therapy for partial onset

Annual European epilepsy day: 14 February

seizures in patients with epilepsy aged 16 years and older (EU) or 17 years and older (U.S.), Vimpat® is now available in 22 countries (including U.S. and EU5). To broaden patient access, UCB is conducting additional trials with Vimpat® as monotherapy, as paediatric adjunctive therapy and as adjunctive therapy in PGTCS. For additional details on these trials, refer to page 34.

In January 2010, UCB and PatientsLikeMe®, the leading online community for people with life-changing conditions, created a free online community for people living with epilepsy in the U.S. Focused on learning from patients' real-life experiences, the online community allows members to create profiles so that they can record and share their knowledge of their treatments and symptoms, as well as the type, frequency and severity of their seizures.

Parkinson's disease

Central Nervous System

Christer, living with Parkinson's

Allow me to take you back to my first meeting with Mr. Parkinson. The date was 13 November 1987, the time was 8:37 AM, and the location was a New York hotel room. You may be asking yourself, how can I possibly remember this down to the minute? This was because I was literally removing my wristwatch to shower when my new life began. It all began when I started fumbling with the soap in my left hand.

After a physical examination, the diagnosis was obvious: I had Parkinson's disease. Oddly enough, I was relieved by this news because I knew that Mr. Parkinson and I could be friends.

Parkinson's disease (PD) is a chronic, degenerative neurological disease and progressive movement disorder. Its prevalence is approximately 3.1 million people in the seven major markets. Most people diagnosed with PD are over 50 years old.

PD affects your ability to move, speak and swallow

Parkinson's disease (PD) is caused by a gradual loss of nerve cells in the brain that produce a chemical called dopamine, which is important for transmitting signals across our brains so we can perform smooth, coordinated movements. Symptoms usually start when 80% of these cells are lost, can include tremors and slowness of movement, and develop, gradually, often in two stages. In the early stages of the disease, symptoms start to affect the sufferers' everyday activities, such as washing, getting dressed, walking, speaking and writing, so treatment is needed to try to restore dopamine levels. In the later stage, people develop movement problems, including abnormal involuntary movements, 'wearing off' of symptom control, and unpredictable switching between periods of normal and reduced mobility, so-called 'on-off' effects.

People with PD may also experience other problems, including tiredness, sleep problems, depression, and

Annual world Parkinson's day: 11 April

difficulties with balance and handwriting. They can find their speech and facial expressions change. Some people also have difficulties eating and swallowing. Like many severe diseases, there is no cure for PD but existing treatments focus on relieving the key symptoms.

Neupro®: reaching more than 65000 PD patients

Since the European authorities lifted the supply restrictions (June 2009), Neupro® (rotigotine), the first and only transdermal patch for every stage of idiopathic PD, is now available in 20 countries, including Germany, Italy, Spain and the U.K. UCB is committed to bringing Neupro® to patients in the U.S., subject to FDA approval, in 2012. Please refer to page 35 for additional details on this matter.

A transdermal delivery system has many benefits compared to other formulations. Firstly, it is non-invasive, and secondly it provides the benefit of continuous drug delivery over a 24-hour delivery period. In addition, absorption via the skin circumvents the effects of

gastrointestinal activity on absorption. A patch can also be used for patients who suffer from clouding of consciousness (absence) within the course of the disease, or in cases of poor compliance. It is also well-suited to treating patients with swallowing problems, which is a frequently occurring secondary symptom.

Restless legs syndrome

Central Nervous System

Esperanza, living with restless legs

My journey with RLS started with my first pregnancy at the age of 20. Whilst eating with friends I suddenly had this urge to shake my legs. I had to get up from the table several times and go outside for a walk. The discomfort in my legs grew stronger at night and stayed with me throughout my pregnancy. By the time I was 35 it had become nearly impossible for me to concentrate on work and I became very short-tempered with my family. I couldn't sit still. When I went to bed at night the real torture began and the desire to move my legs became so frequent I could not stand it any longer and would get up and do other things like wash the floor, iron or read while pacing in fact any activity – except sleeping.

Restless legs syndrome (RLS) is

a chronic, progressive neurological disorder that causes uncomfortable or odd sensations in the legs, leading to an irresistible urge to move about. Its prevalence is estimated to 52.3 million people in the seven major markets, with women more affected than men.

Watching TV can trigger RLS symptoms and the urge to move

Restless legs syndrome (RLS) usually occurs deep within the lower part of the legs, but it can also affect feet and thighs, as well as, more rarely, arms and hands. Moving the affected body part provides temporary relief.

Symptoms typically appear during periods of rest and inactivity and are often most pronounced in the evening and at night. However, patients also experience symptoms during the day, underlining the point that RLS is a 24-hour disease. Many people with RLS describe how they have waited months or years to get a diagnosis and even longer to find a treatment that relieves their symptoms. More significantly, they also report that the disease severely affects their ability to take part in many everyday activities, such as travelling long distances by plane or car, sitting in meetings at work, or going to concerts, the theatre or the cinema.

Affecting 5-10% of the total population, RLS affects both men and women of any age, although its prevalence is twice as high among women and increases with the age.

The exact cause of RLS is unknown; its complex mechanism has yet to be fully elucidated but there seems to be a connection with level of dopamine. The condition may be more common during pregnancy and in people with low iron levels or advanced kidney disease. There also appears to be a genetic link: a family history is observed in 50% of patients. However the genes involved have not yet been identified.

Neupro®: reaching more than 8000 RLS patients

Since June 2009, Neupro® (rotigotine) is available in Austria, Germany, Ireland, Switzerland and U.K. UCB is committed to bringing Neupro® to patients in the U.S., subject to FDA approval, in 2012. Please refer to page 35 for additional details on this matter.

Annual world sleep day: 18 March

A transdermal delivery system has many benefits compared to other formulations. Firstly, it is non-invasive, and secondly it provides the benefit of continuous drug delivery over a 24-hour delivery period. In addition, absorption via the skin circumvents effects of gastrointestinal activity on absorption. A patch can also be used for patients who suffer from clouding of consciousness (absence) within the course of the disease, or in cases of poor compliance.

Delivering SOLUTIONS for patients tomorrow

R&D is the lifeblood of UCB's future. Our mission is to develop breakthrough therapies that will either provide a cure or be more effective in controlling symptoms. To ensure our innovations lead to meaningful improvements, we are committed to listening to patients, their families and carers.

Immunology | 28

Central Nervous System | 34

Wolfgang, living with Parkinson's disease

Lupus

Epratuzumab

Clinical Phase 3

Bernadette, living with lupus

My lupus appeared one night in November: I woke up literally 'nailed to my bed' with fever. After a few hours I was doing fine. I thought it was the flu, winter fatigue, some kind of allergy… Maybe depression? I spent the next days with one thing in mind - going to bed. My joints started to swell; I could not grab a can without fear of dropping it. Symptoms would come and go, there was no logic to it. When vision troubles appeared, it was obvious it was more than a winter depression. Kidney life got punctuated by useless visits to the doctor, rest and discouragement. I had the feeling my life was over and I had no future...

Systemic lupus erythematosus

(SLE) is a chronic autoimmune disease in which cells attack healthy organs. With a prevalence estimated to 500000 persons in the seven major markets, SLE is approximately seven times more common in women than men, particularly women of childbearing age (15-40 years).

Strong autoimmune reactions can lead to miscarriages

Systemic lupus erythematosus (SLE), also commonly called lupus, can affect almost any part of the body, especially the joints, skin, kidneys and the membranes around the lungs or heart. SLE patients produce excessive amounts of antibodies directed against their own cells, resulting in inflammation and tissue damage.

The first symptoms of SLE can be vague, including feeling very tired and unwell, or experiencing severe aches and pains, making it is easy to confuse the disease with other illnesses. Most patients must live with debilitating pain and profound fatigue which greatly affects their quality of life. Many people with SLE are also unable to maintain employment or attend school because of extended lupusrelated absences and hospitalisations. Two-thirds of people with SLE have increased sensitivity to ultraviolet rays, either from sunlight or from artificial light.

The course of SLE is highly variable and characterised by periods of flares, interspersed with periods of improvement or remission. Some patients experience a relatively benign disease with little medical intervention, while others can have a serious and aggressive progression that can lead to significant and potentially life-threatening damage to organs. Associated risks include inflammation of the kidneys or of the nervous system, increased blood pressure in the lungs, and hardening of the arteries.

No cure for SLE yet exists. In fact, there has not been a new treatment approved for lupus for more than 50 years. Mirroring our commitment to find a cure for lupus, UCB is very proud to be a corporate partner in the Lupus Foundation of America's research project (www.lupus.org).

Epratuzumab started Phase 3

Epratuzumab, developed by UCB and licensed from Immunomedics, is a humanised monoclonal antibody targeting the receptor CD22 leading to the modulation of B cell activity. B cells contribute to SLE by producing

Annual world lupus day: 10 May

antibodies against the body's own tissues, resulting in inflammation and tissue damage. In December 2010, UCB started Phase 3 clinical trials with headline results expected in the in first half of 2014.

CDP7657 is a humanised anti-CD40L antibody fragment that prevents the interaction between CD40L on an activated T cell and its ligand on B-cell using a new class of CD40L antagonist. The drug candidate is targeted at patients with SLE and currently in Phase 1. It is run in collaboration with Biogen Idec.

Osteoporosis

CDP7851

Clinical Phase 3

Paulette, living with osteoporosis

Filing Approval Market

In 2005, my back, neck and arms hurt diagnosed with osteoporosis. I was in the early stages of the disease and therefore The pain is sometimes so strong that I feel killers on a daily basis. The pain wakes me up several times during the night. When I wake up in the morning I am often more tired than before I went to sleep. I have always been prevent me from doing things such as taking care of my grandchildren, meeting my friends, gardening and swimming ... but only two lengths!

Osteoporosis, or porous bone, is a chronic, progressive and systemic disease characterised by low bone mass and deterioration of bone tissue, leading to bone fragility and a consequent increased risk of fractures. The prevalence is estimated to 64.6 million people in the seven major markets; women are four times more likely than men to develop osteoporosis.

A painfully high and costly incidence of bone fractures

Due to its important prevalence, osteoporosis is considered as a serious public health concern. Approximately 30% of all post-menopausal women have osteoporosis in the U.S. and in Europe. At least 40% of these women and 15-30% of men will sustain one or more fragility fractures in their remaining lifetime. In the EU and the U.S. alone more than US\$ 77 billion are spent annually treating fractures resulting from osteoporosis.

Because bone loss is gradual and painless, osteoporosis has no specific symptoms. Its main consequence is the increased risk of bone fractures. Any bone can be affected but fractures of the hip and spine are of special concern because they are associated with substantial disability pain and reduced quality of life. A hip fracture almost always requires hospitalisation and major surgery. It can impair a person's ability to walk unassisted and may cause prolonged or permanent disability or even death. Spinal or vertebral

Annual world osteoporosis day: 20 October

fractures also have serious consequences, including loss of height, severe back pain and deformity.

Osteoporosis can have many causes, but in all cases they result in bone resorption exceeding bone formation. This makes the bones thinner, more porous and, consequently, more fragile. Although there are effective therapies for reducing bone loss, the potential to stimulate the formation of new, high-quality bone in patients with low bone mineral density represents a novel approach to bone loss disorders.

CDP7851, Phase 2 ongoing

CDP7851 (sclerostin antibody) is a humanised monoclonal antibody that neutralises sclerostin and acts as a bone anabolic agent by stimulating bone formation without increasing bone resorption. UCB, in collaboration with

Amgen, is currently investigating CDP7851 (also known as AMG785) in a Phase 2 clinical trial that is studying the safety and efficacy of CDP7851 in the treatment of postmenopausal women with lowbone mineral density. The first results from this study are expected by the end of second quarter 2011.

CDP7851 is also in two Phase 2 studies for fracture healing; first results of these studies are expected in 2012.

R&D Immunology: broadening patient access

Neil, Biologics Process Development

Cimzia® (certolizumab pegol) is approved in the treatment of Crohn's disease and rheumatoid arthritis (RA) reaching more than 22 000 patients in 2010. UCB is currently investigating its potential in additional indications such as ankylosing spondylitis, psoriatic arthritis and juvenile rheumatoid arthritis.

Cimzia® works by blocking the action of tumor necrosis factor (TNF)-alpha. TNF-alpha is a protein produced by cells of the immune system – the body's defense system. TNF-alpha plays a role in the immune system response that causes inflammation in rheumatoid arthritis. Inflammation, in turn, causes joint pain, stiffness, and swelling. When inflammation is severe or long-lasting, joint damage might occur.

Cimzia® is the first and only PEGylated option for treating moderate to severe RA. PEGylation helps provide a protective barrier around part of the medicine, so it stays in the body longer, allowing the medicine to be dosed every two or four weeks.

Cimzia® in ankylosing spondylitis

UCB is running a clinical trial programme for certolizumab pegol in the treatment of ankylosing spondylitis (AS).

AS is a chronic inflammatory disease that affects parts of the spine including the bones, muscles and ligaments. It causes swelling between the vertebrae, which are the disks that make up the spine, and in the joints between the spine and pelvis. The symptoms can vary but most people experience back pain, stiffness and, in some cases, disability.

AS can develop at any time but usually begins from the teenage years or early adulthood onwards, a critical period in terms of education and work. Over time, ankylosing spondylitis can fuse vertebrae together, limiting movement. The disease is more common and more severe in men. It also often runs in families. The disease has no cure

but medicines can relieve the pain, swelling and other symptoms.

The study is a Phase 3, multicentre, randomised, doubleblind, placebo-controlled study to evaluate the efficacy and safety of two dose regimens of certolizumab pegol. Approximately 320 patients are taking part in this clinical trial. First results are expected during the fourth quarter of 2011.

Cimzia® in psoriatic arthritis

UCB is running a clinical trial programme for certolizumab pegol in the treatment of psoriatic arthritis (PsA).

PsA is an inflammatory joint disease in which a person has both psoriasis and arthritis. Psoriasis is a lifelong, socially disabling skin disease caused by skin cells rising too rapidly to the surface.

Symptoms of PsA range from mild to severe and can wax and wane in a similar way to skin psoriasis, but like all arthritis, psoriatic arthritis can cause stiffness, pain and lack of movement in affected areas. PsA can affect any joint within the body, either a single joint or the same joint on both sides of the body, for example one or both knees. It most commonly affects the joints of the hand and foot but can also cause inflammation, swelling and pain in larger joints, including knees, elbows, hips and the spine.

The impact of PsA depends on symptom severity and the joints involved. Fatigue and anemia are common, with some patients also experiencing mood changes. Treating the arthritis and reducing the levels of inflammation often helps with these problems.

The study is a Phase 3, multicentre, randomised, doubleblind, parallel-group, placebo-controlled study to evaluate the efficacy and safety of certolizumab pegol with adult-onset active and progressive PsA. Approximately 400 patients are taking part in this clinical trial. First results are expected during the fourth quarter of 2011.

Cimzia® in rheumatoid arthritis (Japan)

Two clinical studies on Cimzia® (certolizumab pegol) for the treatment of rheumatoid arthritis (RA) in Japan completed positively ahead of plan, both trials met their primary endpoints. Submission of an application for regulatory approval to the Japanese authorities is under preparation in collaboration with Otsuka Pharmaceutical.

Cimzia® in juvenile rheumatoid arthritis

UCB is running a clinical trial programme for certolizumab pegol in the treatment of juvenile rheumatoid arthritis (JRA).

JRA is the most common form of arthritis in children – juvenile, in this context, refers to an onset before the age of 16. JRA makes joints stiff and painful. Unlike adults with RA, many children with the disease grow out of it after they get treatment. Others will need ongoing treatment as adults.

There are three types of JRA, all producing chronic joint inflammation, but each type of the disease has very different symptoms, treatments, and outcomes. Pauciarticular is the most common and mildest type. A child with this type of JRA can have pain in one to four joints, such as the knees, ankles, fingers, toes, wrists, elbows, and hips. Polyarticular is more severe. It affects more joints and tends to get worse over time. Systemic is the least common type, but it can be the most serious. It causes pain in many joints and can also spread to organs.

Our Phase 3 programme is under discussion with U.S. and EU regulators in order to finalise the study design.

Immunology pipeline

Further UCB development projects in the field of immunology include:

• epratuzumab for systemic lupus erythematosus (SLE): refer to page 28 for additional information;
• the sclerostin antibody, CDP7851, in bone loss disorders: refer to page 30 for additional information;
• olokizumab (anti-IL6), an antibody in Phase 2 development, which offers opportunities for a broad range of immunological indications including RA;
• CDP7657 (anti-CD40L), an antibody in Phase 1 development with potential in SLE. Refer to page 28 for additional information.

R&D CNS: INCREASING PATIENT ACCESS

Séverine, Analytical Development Chemicals There is still a high unmet medical need in CNS: up to 30% of people with epilepsy, for example, do not respond to currently available treatments and still have uncontrolled seizures, highlighting the need for new, more effective anti-epileptic drugs (AEDs). UCB is conducting additional trials to broaden the range of treatments and help epilepsy patients who are still uncontrolled to enjoy a normal life.

Vimpat® in epilepsy

Vimpat® (lacosamide) is currently approved in the treatment of epilepsy as adjunctive therapy in the U.S. (October 2008) and in Europe (September 2008), available in 22 countries and reaching more than 108000 epilepsy patients.

UCB is further investigating lacosamide with two Phase 3 programmes in epilepsy as monotherapy, one in the U.S. and the other in Europe. In the U.S., the Phase 3 monotherapy development programme in partial-onset seizures is ongoing as planned. The objective of this study is to evaluate the efficacy and safety of lacosamide as conversion to monotherapy in adult epilepsy patients with partial onset seizures. First results from this programme are expected in 2013. A Phase 3 clinical trial programme with the monotherapy indication in Europe has started as planned by the end of 2010. In Europe, UCB is conducting a Phase 3 non-inferiority monotherapy study to compare the efficacy and safety of lacosamide to carbamazepine controlled-release as monotherapy in newly or recently newly diagnosed patients with a primary efficacy endpoint of six-month seizure freedom. First results of this programme are expected in 2014.

UCB is also conducting trials in children with epilepsy to gain paediatric indication for children from 2-17 years. The paediatric (Phase 2) development programme evaluating the safety and pharmacokinetics of lacosamide as adjunctive therapy in the treatment of partial onset seizures in children aged 2-17 years is ongoing as planned. First results are indicating that the profile for lacosamide in children aged

5-11 years is similar to that observed in healthy adults. Data from this study were used to determine the dose range for the subsequent paediatric studies being performed.

UCB is also evaluating lacosamide for primary generalised tonic clonic seizures (PGTCS). The Phase 2 clinical trial programme for epilepsy as adjunctive therapy in PGTCS started as planned in the second quarter of 2010 with first results expected in the second half of 2011.

Brivaracetam in epilepsy

In addition, our pipeline includes brivaracetam in Phase 3, a new-generation antiepileptic drug. Based on further analysis and following discussions with the European and U.S. health authorities, the design and doses of the additional Phase 3 study with brivaracetam in epilepsy have been finalised and agreed with both parties. UCB has initiated this clinical trial as planned in the second half of 2010. This new study is being conducted to provide additional data to the two completed fixed-dose Phase 3 trials with first results expected in the first half of 2013.

Xyrem® in fibromyalgia

In 2010, UCB filed a supplementary marketing authorisation application for Xyrem® (sodium oxybate) in fibromyalgia with the European Medicines Agency (EMA). There are no prescription medicines approved yet for fibromyalgia in Europe. UCB expects feedback from the European authorities during the first half of 2011.

Fibromyalgia is an idiopathic, chronic, pain syndrome defined by widespread musculoskeletal pain and generalised tender points. Other common symptoms include sleep disturbances, fatigue, headache, morning stiffness and anxiety. Women are disproportionately affected by a ratio of 9:1, according to the American College of Rheumatology. Typically, the disease starts between the ages of 20 and 50.

In the U.S., Xyrem® is marketed by Jazz Pharmaceuticals for the treatment of excessive daytime sleepiness and cataplexy (the sudden loss of muscle tone) in adults with narcolepsy. In the EU, Xyrem® is marketed by UCB for the treatment of narcolepsy with cataplexy in adult patients.

Neupro® in the U.S.

Neupro® (rotigotine) is currently approved in the treatment of Parkinson's disease (PD) and restless legs syndrome (RLS) and available in 20 countries, except the U.S., reaching more than 73 000 patients.

In the U.S., Neupro® was launched for the treatment of the signs and symptoms of early stage idiopathic PD in 2007. The company recalled Neupro® from the U.S. market in March 2008 after ongoing monitoring revealed a deviation from the approved product specification and crystal formation in some batches. In December 2008, UCB received a Complete Response Letter from the U.S. regulatory authority, the FDA, which concluded that there was substantial evidence of effectiveness of Neupro® in patients with advanced PD and RLS. UCB needed to first resolve the issue of crystal formation in the patches before the drug could be approved in these indications in the U.S.

In April 2010, UCB received a Complete Response Letter from the FDA recommending the reformulation of Neupro® before making it available to U.S. patients. Significant progress has been made in the development of a room-temperature-stable patch formulation. UCB is committed to bringing Neupro® back to patients in the U.S. Subject to regulatory approval, UCB aims to make the patch available to U.S. patients during 2012.

Early projects in CNS

The Phase 1 programme for UCB2892, an H3 antagonist with potential for cognitive disorders, has been terminated by UCB as tests showed an unfavourable risk-benefit profile of this drug candidate.

A new pre-and post-synaptic inhibitor drug candidate, UCB0942, with an innovative mechanism of action has been designed for the treatment of drug refractory epilepsy. Phase 1 studies started in December 2010.

CORPORATE SOCIAL responsibility

Our passion to make a genuine difference to the lives of patients and their families is matched by our determination to operate in a caring and socially responsible manner.

For the second year, we report our Corporate Social Responsibility (CSR) performance at a Global reporting initiative (GRI) application level of C+, checked and reviewed by PwC.

Tom, living with Crohn's disease

People

Asad, Medical Affairs

As part of our 'patients at the heart of everything we do' philosophy, our teams constantly gather patient perspectives. These unique insights shape our research and development projects, steer design processes for drug delivery systems and fuel UCB-developed patient support and

empowerment programmes.

Sarah, Jimmy, Laetitia, Nadine, Gaëtan and Mareike, Biologics Process Development

Talented people make the difference

Our ability to make a significant difference to the lives of people with severe diseases depends on the talent and commitment of our people. To ensure we maintain and sharpen this competitive edge, our goal is to attract and retain talented individuals who share our commitment to putting patients at the heart of our business. More specifically, we strive to provide a fertile environment that fosters growth and development and creates positive energy. Everybody is encouraged to have an impact, to express their talents and to deliver a high level of performance.

To support our teams and strengthen our biopharma capabilities, UCB focused on recruiting specialists during 2010. New recruits included physicians, biotech engineers, scientists, and professionals from many of the pharmaceutical industry's best-known institutions and companies. When asked what attracted them to UCB,

they said they were drawn to our company by the knowledge that they could leave their individual mark on an exciting, transformational company that is big enough to make a difference but small enough to remain human.

High-performing teams

Thanks to our teams' proactive and agile approach to executing our plans, 2010 will be remembered as a year of a strong, collective performance. This achievement was underpinned by robust 'management by objective' processes, including UCB's vision, strategies, roadmap and individual objectives. After a period of intense reorganisation, UCB is now firmly on the path of becoming a much leaner biopharma, with new skills, knowledge and competencies.

A year of human development

We invest in all our colleague's growth so that everyone can develop and express their individual talents. During 2010, we were proud to have invested more than 4% of

People

Chemelle, Marketing

Age distribution

our total salary billing on training and developing our UCB colleagues. Overall, more than 5000 training plans were completed, enabling us to strengthen compliance across key areas of our business. The focus for each employee during the year was their Personal Development Plan. These individual plans allow employees to define their personal career objectives and how they can be achieved through training, mentoring or internal mobility.

In addition, 2010 saw the creation of a new training governance model. A group of qualified, internally elected 'deans' are now mandating, offering and coordinating the functional and technical trainings for our entire workforce. We have also designed high-quality, in-house leadership development programmes so that we can nurture authentic, self-aware, strong and balanced leaders. These programmes are currently being revisited to support the new employee demographics and talent dynamics established over the last years of transformation.

Rewarding talent

Talent needs recognition. It can be management recognition or some form of reward. In addition to being eligible for adhoc awards for outstanding achievements, UCB employees follow an annual performance management cycle. Through systematic feedback on measurable annual objectives, we track, reward and recognise each individual's contribution to the company. At the end of 2010, 77% of UCB staff has received formal regular performance and career development reviews., both tracked in a global IT system.

Communication - building alignment, pride and trust

UCB maintains timely, clear and transparent communication with all its employees in order to ensure alignment, consolidate trust, and build pride, In 2010, for example, we

started and ended the year with a 'High-Impact Conference' for upper management, followed by wide-reaching interactive town hall meetings that broadly communicated 2011 objectives with employees across the company. These face-to-face events allow a broad audience to review our achievements, set objectives and priorities for the future, and provide management with an opportunity to discuss issues with members of our Executive Committee in an informal and open setting.

Along with the management's daily commitment to open dialogue among and between teams, each of our sites holds regular town hall meetings and informal networking events where colleagues can share progress and have an open exchange across teams and seniority levels. Employees' questions to the Executive Committee are openly answered and broadcast via video on the intranet.

In 2010, UCB also started using collaborative Web 2.0 tools that is leading to the introduction of an employee centric collaborative 'Web 2.0' intranet in 2011 for increased transparency of communications across UCB.

Occupational health and safety

UCB is committed to protecting the health and safety of its staff at work with one goal: no accidents. In 2010, the level of"presenteeism" at UCB exceeded 97.5%

Continuing to reduce the number and severity of accidents

UCB's global Lost Time Incident Rate (LTIR) for 2010 was 2.33 resulting in 2.33 accidents with more than one day of absence per one million of hours worked. Our global Lost Time Severity Rate (LTSR) was 0.05, implying 0.05 days were lost per 1000 hours worked. There were no fatal injuries.

Overall, UCB safety performance continues to consistently improve in 2010, relative to last two years (2009: LTIR= 3.34 and LTSR= 0.08 & 2008: LTIR= 4.21 and LTSR= 0.11).

Greater attention to and more focused resources on safety

In 2010, the Annual Global Health & Safety Meeting followed by quarterly conference calls allowed us to intensify the sharing of best practices. Accident awareness was substantially enhanced by implementing a global Health & Safety dashboard, including timely accident investigation reporting and corrective action plans, and by sharing good practices. Another trigger to prioritising safety at work was the link of site safety indicators to the management performance system.

Care for the community

UCB and its employees support programmes that enable patients and their families to improve their lives. In 2010, UCB spent € 2 million on community sponsorships and charitable donations worldwide, excluding product donations and patient-assistance programmes.

The UCB employee-community has raised funds for charity through different local initiatives. For example, hundreds of UCB employees from the U.S. and Belgium took part in sponsored runs in support of people living with Crohn's disease, epilepsy and rheumatoid arthritis. Victims of natural disasters in Haiti, Pakistan and China also benefited from UCB-organised fund-raising events, including calls for personal donations.

Some of our employees also volunteered for humanitarian projects in developing countries. For instance, one colleague taught and supported children in a Sri-Lankan orphanage and hospital, while another colleague was part of the emergency relief team in Haiti, together with his rescue dog.

PATIENTS

Judith and Alexander, living with epilepsy

One of UCB's top priorities is to produce safe, highefficacy therapies. Understanding how diseases such as epilepsy and rheumatoid arthritis affect people both physically and socially is key to developing transformational, personalised therapies. To gain these insights, UCB is creating a patient-centric culture that involves working closely with patients, as well as their families, carers and physicians.

Access to healthcare

History has shown that medicines can have an extraordinary social and economic impact. But they can only have a positive effect if healthcare providers offer patients access to therapies that make a difference. Through partnerships, UCB's medicines and educational efforts reach patients in more than 50 emerging markets, beyond our core markets.

The pressures on public and private finances can sometimes limit or delay patients' ability to benefit from our therapies. UCB will continue to look into ways to help these patients through co-payment assistance programmes and namedpatient-access programmes, where local regulations allow.

We also believe that access to information and health literacy is a prerequisite for accessing the most appropriate healthcare.

To create the next generation of breakthrough therapies, we invest heavily in research and development, supported by a solid pipeline of large and small molecules. We focus on two main therapeutic areas: central nervous system and immunology. In 2010, we invested € 705 million in R&D, equivalent to 22% of our revenue during that year.

Quality

We implement standards for quality and continuous improvement at each phase of a product's life cycle, as well as related services. This commitment appears in the UCB Global Quality Policy, which is distributed to all employees in all countries and upheld by senior management.

Over the years, UCB has adopted an approach that ensures that the company is optimally prepared, at all times, for regulatory inspections across geographies and disciplines. In 2010, a total of 50 inspections (2009: 33) were conducted by health authorities worldwide. UCB received no 'critical findings' (e.g. FDA Warning Letters) following these inspections. In addition, the inspections did not disrupt our supply chain.

Our formal quality risk management approach facilitates better decision-making and increases the authorities' confidence in UCB's ability to deal with potential issues.

Drug safety

Despite in-depth pre-clinical tests and clinical trials, and despite respecting strict regulatory manufacturing standards, side-effects can occur with medicines because patients can react differently to the disease and its treatment. We have well-established systems to closely monitor these adverse events and react rapidly to them.

Like other biopharmaceutical companies, UCB receives thousands of adverse-event reports every year concerning our drug products, which are reviewed internally and provided to the governing regulatory authorities. Our safety teams use various tools to identify potential safety issues that could be related to adverse events, which may or may not be associated with our medicines.

Together with other departments, our safety teams draw up patient-risk management plans. These plans describe potential safety issues and the necessary actions and timelines required to reduce potential risks to patients throughout the entire lifecycle of each medicine. UCB provides these plans to health authorities as part of its submission for approval to market new medicines. These plans, which are also applied to first-in-man studies, are regularly reviewed and updated with new safety data as scientific and medical knowledge of the medicine's safety profile progresses.

Alongside other biopharmaceutical companies, we are investing in new techniques that will help improve patient safety and detection of possible side effects at an early stage. For example, we are developing technologies like

safety biomarkers, imaging techniques, and computer modelling and simulation linking large sets of preclinical and clinical data. Much of this work is carried out through partnerships such as the European's Innovative Medicines Initiative (IMI).

Connecting with patients

At UCB, we strive to understand the full impact of the disease on patients' lives, physically and socially, including their individual reactions to the condition. This approach enables us to identify the most appropriate clinical profile of candidate molecules, strengthening the relevance of the drugs in our pipeline and allowing us to develop equally appropriate clinical plans and clinical trial protocols. By taking into account patients' individual characteristics and lifestyles, such as their age, diet, family history and genetic profile, we are moving closer to providing personalised therapies – true patient solutions.

Interacting appropriately with patient organisations

UCB collaborates with a number of patient organisations, either by providing support, advice or working together on joint initiatives. We have established procedures to ensure our relationships with these organisations are carried out in a fair and transparent manner in accordance with UCB Compliance Guidelines, company procedures, applicable industry codes and legal requirements.

Encouraging a more informed, open dialogue

Severe diseases are often socially stigmatised, deterring patients from sharing their experiences with each other and their carers – an information bottleneck that can hinder the development of appropriate therapies. To overcome this problem, UCB runs an advocate programme: people living with a chronic condition volunteer to be advocates for their disease and share their experiences with others. For epilepsy, we currently have 24 advocates in Europe, 60 in the U.S., and 11 in China. For Parkinson's disease, there are 7 advocates in Europe, while for restless legs syndrome we have 3 in Europe. In the U.S. 10 advocates volunteered for Crohn's disease.

ethics

Christian and Rodrigo, Analytical Development Chemicals

Doing business in a compliant and ethical manner is one of the cornerstones of UCB's commitment to patient centricity.

Code of Conduct

UCB has developed and implemented a Code of Conduct and Global Business Practices Policy in line with the recommendations of industry associations such as EFPIA. The scope of the UCB Code of Conduct covers 30 principles from equal treatment, marketing ethics, intellectual property, trading on inside information to political activity and lobbying as well as bribery and corruption.

All UCB employees have to complete the Code of Conduct training to ensure they comply with the Code during their daily tasks and responsibilities. In 2010, 42% of UCB staff had successfully completed such training (entailing approximately 2 800 hours) leading to a total Code compliance level of 92% of UCB staff (2009: 80%).

Bio-ethics

The use of human tissue, blood samples, and related materials in drug discovery plays a valuable role in helping scientists predict a potential drug's efficacy and safety as well as its possible side effects and interactions with other drugs.

UCB employees can volunteer to give blood for research purposes coordinated by the occupational health advisor.

A bio-ethics committee will be installed on the Brainel'Alleud research site (Belgium) in 2011, following the example of our Slough site (U.K.) since 2009. Such a committee requires accreditations by competent national authorities. The aim of a bio-ethics committee is to develop and implement policies, consent forms, standard operating procedures for importing and exporting human tissues, storage, tracking and disposal of human tissues.

Animal welfare in biopharmaceutical research

UCB is committed to researching and developing medicines that improve the lives of patients with severe diseases. Before any new medicine can be administered to a patient, sufficient evidence for the potential benefit and impact on patient safety must be provided. By law, some of these tests must be carried out in animals and new medicines will only be given to humans once these tests have been successfully completed. Animals are only used in our drug development programmes when absolutely necessary to generate key data and where no suitable alternatives exist. Of the animals that UCB researchers and contractors use in experiments, over 99% are rodents.

At UCB, the ethical committees ensure promotion of care and welfare in all our animals, the training of qualified personnel and application of the 3R rule (Replacement, Reduction and Refinement) when approving experimental protocols. In this context, UCB is actively involved in an EFPIA working group on animal welfare and research aiming to develop comprehensive 3R-metrics.

A new European directive on the protection of laboratory animals was published in 2010 to be implemented in 2013. The directive will ensure common working practices across the EU for the care and the welfare of experimental animals. UCB is already compliant with the newly proposed legislation and will monitor development of the directive throughout its consultancy period.

Clinical trials for safe and effective drugs

UCB is committed to transparency relating to the existence and results of sponsored clinical studies. In this respect, we are also committed to disclosing balanced and accurate information regarding our hypothesis-testing clinical studies, regardless of outcome, to ensure that physicians and patients have access to relevant information from clinical studies.

UCB complies with the www.clinicaltrials.gov requirements and provides regularly updated information about publicly and privately supported clinical research in human volunteers.

Furthermore, the clinical trial results can be consulted on the website of www.clinicalstudyresults.org. This database serves the valuable function of making clinical trial results for many marketed pharmaceuticals more transparent.

Respecting good clinical practices

All UCB-sponsored trials must be performed in line with Good Clinical Practice (GCP) or they will be rejected by the regulators. GCP is the standard for the design, conduct, performance, monitoring, auditing, recording, analyses, and reporting of clinical trials that provides assurance that the data and reported results are credible and accurate, and that the rights, integrity, and confidentiality of trial subjects are protected. No UCB-sponsored trial activity will start before approval is obtained from external local ethics committees and health authorities. We always ensure that investigators involved in UCB clinical trials are skilled in the therapeutic area and trained in GCP.

Products used in UCB-sponsored clinical trials are manufactured and controlled according to international and local regulations and laws.

Responsible sales and marketing

The promotion and sale of pharmaceutical products is highly regulated. UCB has a strong commitment to comply with all applicable laws, regulations and industry codes. It fully respects the position of trust of healthcare professionals, which have to select the best treatment option for their patients. UCB always promotes its products based on the approved labeling.

UCB's interactions with healthcare professionals focus on providing and exchanging scientific information with the ultimate objective of enabling healthcare professionals to select the most appropriate treatment for their patients. These interactions are based on standards of ethics, integrity and fair market value.

All promotional, press and scientific communication relating to our compounds and products are submitted to our global and local promotional scientific review committees.

planet

Raffaele, living with epilepsy UCB continuously seeks ways to limit the environmental impact of its day-to-day business activities, not only on its premises but also in its activities with partners. We are committed to finding innovative ways to protect the planet and to limit our impact in terms of natural resource usage, air quality, and waste generation.

Reducing carbon footprint

Energy optimisation is on the priority list of UCB's site managers worldwide, supported by company-wide energy awareness campaigns. In addition to reducing energy consumption, we are exploring and moving towards renewable energy alternatives.

Optimising energy consumption

At our manufacturing sites in Bulle (Switzerland) and Shannon (Ireland), major efforts have been made to reduce energy consumption. Thanks to improvements in the heating and steam equipment, together with a switch from oil to natural gas, our Bulle site reduced its energy consumption by 30% in 2010, equivalent to an annual reduction of 1700 tonnes of CO2 . In Ireland, our manufacturing site cut its energy consumption by optimising steam production and streamlining waste-water treatment processes.

Greener information technology

Our global information and technology (IT) team is introducing a Green IT strategy, focusing primarily on energy consumption reduction, floor-space optimization, and energy-efficient IT technologies. Initiatives such as

streamlining the IT infrastructure, enhancing IT equipment and using low-temperature external air to chill the water of the Heating, Ventilation and Air Conditioning (HVAC) systems have improved Power Usage Effectiveness (PUE) by 20% at UCB's Global Data Center in Belgium (2008: PUE = 2.5 and 2010: PUE = 2.0). In addition, we regularly run internal awareness campaigns to encourage more responsible use of our servers' memory capacity.

Reducing travel

UCB has established a strict travel policy, underpinned by a 'think twice before travelling' philosophy. To support this new approach, alternative meeting options are being offered, including high-tech videoconferencing rooms using tele-presence, on-line collaboration sites and integrated office communicator tools such as webcams. More generally, our goal is to transform frequent travellers into environment-conscious travellers.

Responsible purchasing

In 2010, additional contractual clauses have been introduced into new sourcing agreements with packaging providers and toll manufacturers related to respecting human rights and fair labour conditions, together with health and safety conditions at work. In 2011, we aim to extend these new clauses to all collaborations with third parties.

In a continuous quest to reduce packaging and ease the handling of our products by patients, we developed a new design for the packaging of a Cimzia® device. Plastic components have been eliminated and the use of carton has been reduced by 20%. These access to drug is easier and patients have a clear view on the contents.

Responsible supply chain

As a company that aspires to be the patient-centric global biopharmaceutical leader, we are committed to supplying patients with our medicines in a timely, efficient and responsible manner, while respecting the highest quality standards.

Transport of medicines has an inevitable impact on the environment. In order to decrease its CO2 footprint and enhance flexibility of our services towards patients, UCB will partner with a pharmaceutical player to implement collaborative transport routes in the Eastern Europe market. Such streamlined transportation approach should reduce fuel consumption, saving approximately up to 30% of CO2 per year in 2011. We envisage extending such collaborative approach to other partners and to other regions.

Waste management

Our manufacturing sites generate most of our waste. Compared to 2009, we reduced our waste by16% in 2010.

In 2010, 86% of the waste was recovered through energy recovery, re-utilisation or recycling.

In 2011, we will further enhance the tracking and reporting methods for waste-water discharge and air pollutants, notably volatile organic compounds (VOC).

Soil and groundwater protection

There was no major soil or groundwater contamination or pollution within UCB's current, global network of industrial sites. Historical pollution on former UCB sites cannot be excluded and has been appropriately provisioned for.

Corporate Governance Statement

1.	Capital and shares	50
2.	Shareholders and shareholders structure	51
3.	Board of Directors and Board committees	53
4. R	emuneration report	56
5.	Main features of the Company's internal control and risk management systems	61
6. P	rivate investment transactions and trading in Company shares	62
7.	External audit	62
8.	Information requested under Article 34 of the Royal Decree of 14 November 2007	63
9.	Application of Article 523 of the Company Code	67
	10. Application of Article 96 § 2 al. 2 of the Belgian Company Code (deviations from the Belgian Code on Corporate Governance)	69

Directors and Auditors

Board of Directors

• Karel Boone, Chairman
• Evelyn du Monceau, Vice Chair
• Roch Doliveux, Executive Director
• Prince Lorenz of Belgium, Director until 29 April 2010
• Armand De Decker, Director
• Bert De Graeve, Director as from 29 April 2010
• Arnoud de Pret, Director
• Peter Fellner, Director
• Jean-Pierre Kinet, Director
• Thomas Leysen, Director
• Gerhard Mayr, Director
• Tom McKillop, Director
• Norman J. Ornstein, Director
• Alexandre Van Damme, Director as from 29 April 2010
• Bridget van Rijckevorsel, Director
• Gaëtan van de Werve, Director

Michèle de Cannart, Secretary of the Board

Statutory Auditors

• PricewaterhouseCoopers represented by Bernard Gabriëls

Honorary Directors

• André Jaumotte, Honorary Chairman
• Willy De Clercq, Honorary Chairman
• Mark Eyskens, Honorary Chairman
• Georges Jacobs, Honorary Chairman
• Daniel Janssen, Honorary Deputy Chairman
• Prince Lorenz of Belgium, Director as from 29 April 2010
• Alan Blinken
• Michel Didisheim
• Eric Janssen
• Guy Keutgen
• Paul Etienne Maes
• Jean-Louis Vanherweghem

Honorary Chairmen of the Executive Committee

• Georges Jacobs
• Daniel Janssen
• Paul Etienne Maes

As a Belgian-headquartered company with a commitment to the highest standards of corporate governance, UCB's Board of Directors adopted the Charter of Corporate Governance in October 2005, as required by the Belgian Code of Corporate Governance (first edition). UCB has adopted the Belgian Code of Corporate Governance (second edition) published on March 2009 available on www.corporategovernancecommittee.be/en/2009_code/latest_ edition/default.aspx

as its reference Code, taking into account the specific international aspects of the Company. On December 2009 the Board has revised the Charter of Corporate Governance to adapt it to the requirements of the Code of Corporate Governance. This Charter, which is available on UCB's website (www.ucb.com), describes the main aspects of UCB corporate governance, including its governance structure and

the terms of reference of the Board of Directors, as well as those of its committees and the Executive Committee. It is regularly updated. In accordance with the Belgian Company Code amended by the law of 6 April 2010 and with the Belgian Code of Corporate Governance, the following pages provide factual information about UCB corporate governance. This includes changes to UCB corporate governance, together with relevant events that took place during the year 2010, such as changes in UCB capital or shareholder structure, the modifications in UCB governance and in the Board of Directors' and committees' composition, the main features of UCB's internal control and risk management systems, and the remuneration report. It also includes explanations, where applicable, of any deviations from the Code of Corporate Governance.

1. Capital and shares

1.1. Capital

The capital of UCB has not been modified in 2010. On 31 December 2010 it amounts to € 550 095 156, represented by 183 365 052 shares.

1.2. Shares

Since 29 February 2008, the share capital of UCB is represented by 183 365 052 shares. Shares may be registered or dematerialised shares, at the request of the shareholder, or shares may be bearer shares in accordance with the law. Since 1 January 2008 shareholders can no longer request to have their shares converted into bearer shares. According to the Belgian law of 14 December 2005, all bearer shares of UCB, registered on a custody account or an investment account have been automatically converted into dematerialised shares since 1 January 2008.

As from 1 January 2008, all bearer shares deposited for registration on such custody or investment account are automatically converted into dematerialised shares. Until they are fully paid up, shares are registered and may only be transferred after prior agreement by the Board of Directors. Registered shares are recorded in a special register.

All UCB shares are admitted for listing and trading on Euronext Brussels.

1.3. Warrants

In 1999 and 2000 respectively, UCB issued 145 200 and 236 700 subscription rights (warrants):

• The 145 200 warrants issued in 1999 each confer the right to subscribe for one ordinary share: following the annulment, expiration and exercise of part of these warrants, 54 700 warrants may be exercised up to 31 May 2012.
• The 236 700 warrants issued in 2000 each confer the right to subscribe for one ordinary share: following the annulment, expiration and exercise of part of these warrants, 67 700 warrants may be exercised up to 28 February 2013.

It follows from the above that, if all the rights attached to these warrants were exercised, UCB capital would be € 550 462 356 and the number of shares issued by UCB would be 183 487 452.

Defensive warrants were also issued following a decision by the General Meeting of Shareholders in 2008, excluding preferential rights. The loan of € 600 000 represented by 30 000 loan stock units with a nominal value of € 20, each having 1 000 warrants attached, confers the right to the joint subscription of 30 000 000 ordinary shares. It was subscribed by Financière de Tubize S.A., UCB reference shareholder on 24 April 2008.

An ad-hoc committee was created at the same General Meeting of Shareholders, and the meeting also appointed the members of this committee. This committee concerns itself with deciding, in pre-defined circumstances, on the implementation of this defensive measure, and with approving all transfers of such warrants. The holders of warrants enter into an agreement with UCB ensuring compliance with the conditions of issue and exercise of the warrants.

The warrants may only be exercised if the ad-hoc committee decides that one of the pre-defined circumstances, associated with hostile takeover bids has been met:

• The launch of a takeover bid by a third party judged to be hostile by the UCB Board of Directors;
• The modification of UCB control due to transactions relating to UCB stock by one or more third parties, carried out either on or off the stock market, in isolation or in a concerted fashion;
• The threat of a takeover bid or, an operation involving modification of UCB control.

The defensive warrants and the agreement between the holders of the defensive warrants and UCB SA expire on 23 April 2013. UCB shares arising from the exercise of these warrants will be issued with reference to the market price over a period prior to issue.

1.4. Convertible bonds

UCB issued senior unsecured 4.5% bonds due 2015 for an aggregate principal amount of € 500 million, placed with institutional investors following an accelerated book-building procedure on 30 September 2009 (the "Bonds"). The Extraordinary General Meeting of Shareholders decided on 6 November 2009 to attach a conversion right to these Bonds.

Each Bond has a denomination of € 50 000 and may be converted as from 2 December 2009 until 15 October 2015 for a conversion price of € 38.746 per share. Upon receipt of a conversion request from a bondholder, the UCB Board has the option, in its sole discretion but in the best interest of the Company, (i) to issue new shares, (ii) to deliver existing shares or (iii) to make a combination of these two options.

If all of the Bonds were to be converted into new shares at the current conversion price, UCB would issue 12 904 558 new shares. The conversion price may have to be revised in accordance with antidilution provisions of the terms and conditions of the Bonds or in case of change of control.

The Bonds are listed on the EURO MTF market of the Luxembourg stock exchange.

1.5. Treasury shares

On 31 December 2010, UCB S.A. did not hold any UCB shares.

UCB Fipar S.A., an affiliate indirectly controlled by UCB S.A., acquired 746 800 UCB shares in 2002, 372 904 UCB shares in 2003, 1 064 200 UCB shares in 2004, 370 000 UCB shares in 2005 and 950 000 UCB shares in 2006.

As of 31 December 2010, UCB Fipar S.A. held a total of 3 165 550 UCB shares representing 1.73% of the total number of issued UCB shares. UCB S.C.A., an affiliate indirectly controlled by UCB S.A., acquired 61 200 UCB shares in 2007, 50 384 shares in 2008, 128 116 shares in 2009 and 239 639 shares in 2010. As of 31 December 2010, UCB S.C.A. held one UCB share.

The UCB shares were acquired by UCB Fipar S.A. and UCB S.C.A. in order to cover part of the obligations resulting from the employees' stock option plans, stock award plans and performance share plans. For more information on UCB S.A. stock option plans (see Note 27).

According to a decision of the General Meeting of Shareholders held on 6 November 2009 the Board of Directors is authorised, for an unlimited duration in time, in accordance with Article 622, § 2, section 2, 1°, of the Belgian Company Code, to dispose of the company's own shares on or outside the stock exchange, by way of sale, exchange, contribution or any other kind of disposal. This authorisation is applicable for the disposal of the company's shares held by a direct subsidiary of the company within the meaning of Article 627 of the Company Code.

According to a decision of the same General Meeting of Shareholders, the Board of Directors of the Company and the Boards of its direct subsidiaries are authorised, for a period of five years starting 7 November 2009, to acquire shares of UCB, up to maximum 20% of the issued shares, for exchange values equivalent to the closing price of the UCB share on Euronext Brussels on the day immediately preceding the acquisition, plus a maximum of 15% or minus a maximum of 15%, taking also into account any applicable legal requirement.

2. Shareholders and shareholders structure

UCB main shareholder (reference shareholder) is Financière de Tubize S.A., a company listed on Euronext Brussels.

Financière de Tubize S.A. has made a transparency notification of its holding in UCB on 1st September 2008 and in subsequent notifications, in compliance with the Law of 2 May 2007 relating to the publication of significant shareholdings in listed companies. According to Article 3, §1, 13° of the Law of 2 May 2007, Financière de Tubize S.A. acts in concert with Schwarz Vermögensverwaltung GmbH, KBC Bank N.V., Degroof Corporate Finance S.A. and Imofig S.A., Levimmo S.A., Compar Finance S.A., Pharmahold S.A. and Cosylva S.A., with which Financière de Tubize S.A. has signed separate shareholders agreements.

Their holdings are listed under N° 4 to 10 in the table hereafter. The shares that are covered by these agreements, including the shares held by Financière de Tubize S.A. represent 48.28% of the share capital of the company.

52.74% of Financière de Tubize S.A. is held by the Janssen family.

In accordance with the latest subsequent notifications made in compliance with the Law of 2 May 2007, the present UCB major shareholdings are:

2.1. UCB controlling and major shareholdings on 8 February 2011

		Current		Date (according to the notification in compliance with the
		Shareholding	Voting rights	law of 2 May 2007)
	Capital €	550095156
	Shares	183365052
1	Financière de Tubize S.A. (Tubize)	66370000	36.20%	15 December 2010
2	UCB Fipar S.A.	3165550	1.73%	15 December 2010
3	UCB SCA	1	0.00%	15 December 2010
4	Schwarz Vermögensverwaltung GmbH	9102658	4.96%	15 December 2010
5	KBC Bank NV	2289318	1.25%	1 September 2008
6	Banque Degroof S.A.	669230	0.36%	1 September 2008
	Through Degroof Corporate Finance S.A.	450000		1 September 2008
	Through Imofig S.A.	219 230		1 September 2008
7	Levimmo S.A.	1230770	0.67%	1 September 2008
8	Compar Finance S.A.	1900000	1.04%	1 September 2008
	Compar Finance S.A. additionally holds 165 830 UCB shares outside the concert
9	Pharmahold S.A.	1900000	1.04%	1 September 2008
	Pharmahold S.A. additionally holds 1 100 000 UCB shares outside the concert
10	Cosylva S.A.	1900000	1.04%	1 September 2008
	Cosylva S.A. additionally holds 1 100 000 UCB shares outside the concert
	Tubize + linked companies + concert 4, 5, 6, 7, 8, 9 et 10	88527527	48.28%
11	Capital Research and Management Company (voting interests) including the UCB shares held by Euro Pacific Growth Fund which exceed 3% of UCB share capital	21717895	11.84%	30 October 2008
12	Wellington Management Cy LLP	5550950	3.00%	8 February 2011

Tubize has declared acting in concert separately with each of the shareholders 4, 5, 6, 7, 8, 9 and 10 for the number of shares as indicated

2.2. Additional UCB shares held by persons acting in concert with Tubize, but who are not included in the concert agreements with Tubize

	Current Shareholding	Voting rights	Date (according to the notification in compliance with the law of 2 May 2007)
KBC Groep (through affiliates other than KBC Bank)	325640	0.18%	1 September 2008
Compar Finance S.A.	165830	0.09%	1 September 2008
Pharmahold S.A.	1100000	0.60%	1 September 2008
Cosylva S.A.	1100000	0.60%	1 September 2008
Total voting rights held by persons acting in concert with Tubize, including Tubize		49.75%

The remainder of UCB shares are held by the public.

Communication by virtue of Article 74, §7 of the Law of 1 April 2007 relating to public takeover bids, made jointly by stable shareholders of UCB S.A.

UCB S.A. has received the communications made respectively on 22 November 2007, 17 December 2007 and 28 December 2007, by the following shareholders of UCB S.A., acting in concert, by virtue of Article 74, § 7 of the Law of 1 April 2007. In summary, on 15 December 2010 the voting rights of these shareholders of UCB S.A. were allocated as follows:

		On 1 September 2007		On 15 December 2010
Financière de Tubize S.A.	66370000	36.20%		Unchanged
Schwarz Vermögensverwaltung GmbH & Co KG	9885618	5.39%	9102658	4.96%
UCB Fipar S.A.	3176578	1.73%	3 165 550	1.73%
Total voting rights	79432196	43.32%	78638208	42.90%

3. Board of Directors and Board committees

3.1. Board of Directors

Composition of the Board of Directors and independent directors

From 1 January until 29 April 2010, the composition of the Board of Directors was as follows:

• Karel Boone, Chairman
• Evelyn du Monceau, Vice Chair
• Roch Doliveux, Executive Director
• Prince Lorenz of Belgium
• Armand De Decker
• Arnoud de Pret
• Peter Fellner
• Jean-Pierre Kinet
• Gerhard Mayr
• Tom McKillop
• Thomas Leysen
• Norman J. Ornstein
• Bridget van Rijckevorsel
• Gaëtan van de Werve

At the General Meeting of Shareholders held on 29 April 2010, Prince Lorenz of Belgium retired as a Director and two new directors were appointed: Bert De Graeve and Alexandre Van Damme.

Bert De Graeve (1955) is CEO of the Bekaert Group since May 2006. From 2002 until May 2006 he was CFO and company secretary of the Group. He started his career in 1980 with Arthur Andersen & Co and joined Alcatel Bell in 1982. In 1991 he became General Manager Shanghai Bell Telephone Equipment Mfg. Cy in Shanghai. In 1994 he was appointed Vice President, Director Operations, Alcatel Trade International and later Director International Affairs, Alcatel Alsthom in Paris. In 1996 he became Managing Director of the Flemish Public Radio & TV Broadcaster (VRT). Bert De Graeve holds a master in Law from the University of Gent (1980) and studied Financial Management at IPO (Antwerp). He became Master in Tax Management at VLEKHO (Brussels). Bert De Graeve is Member of the International Business Leaders' Advisory Council for the Mayor of Shanghai (IBLAC), President of the Flanders-China Chamber of Commerce and Member of the Advisory Board of the Conference

Board China Center for Economics and Business in Beijing, Member of the Board of the Concours Reine Elisabeth and Senior Member of the Conference Board New York.

Alexandre Van Damme holds a degree in business economics and graduated in 1985 from the Solvay Business School (Brussels). He joined the beer industry early and held various functions within Belgium-based Interbrew until 1991. He joined the Board of Directors of Anheuser-Busch InBev (previously Interbrew and Inbev) in 1992 and is a Board member of InBev-Baillet Latour (non profit organisation) and various private family-owned companies. He is also a member of the Insead International Council and the Solvay Business School Consultative Counsel.

Since 24 April 2008 Karel Boone is Chairman of the Board of Directors. Karel Boone serves his fourth three-year term as a director since his last reelection on 30 April 2009 and for this sole reason does not qualify as an independent director, although less than 12 years.

Roch Doliveux is the only executive director of the Board and does not qualify as an independent director.

Evelyn du Monceau, Arnoud de Pret, Bridget van Rijckevorsel and Gaëtan van de Werve are representatives of the main UCB shareholder and, as such, are not eligible to be independent directors.

Alexandre van Damme, does not qualify as an independent director because of his family indirect interests in Pharmahold SA, a shareholder who acts in concert, according to the law of 2 May 2007 on the disclosure of large shareholdings, with UCB reference shareholder: Financière de Tubize S.A.

Prince Lorenz of Belgium, Armand De Decker, Gerhard Mayr, Jean-Pierre Kinet, Norman J. Ornstein, Thomas Leysen, Tom McKillop and Bert de Graeve meet all the independence criteria stipulated by the Belgian Company Code, the Board of Directors and the Belgian Code on Corporate Governance.

Peter Fellner has been CEO of Celltech Group until April 2003 and for this reason did not qualify to be an independent director for a period of five years. The General Meeting of Shareholders held on 29 April 2010, recognised that Peter Fellner qualified as independent Director, meeting all the independence criteria stipulated by law, the Board of Directors and the Belgian Code on Corporate Governance.

The present composition of the Board of Directors is as follows:

	First appointed as Director	End of term of office	Independent Director
Karel Boone, Chairman	2000	2012
Evelyn du Monceau, Vice Chair	1984	2011
Roch Doliveux, Executive Director	2004	2013
Armand De Decker	2008	2011	x
Bert De Graeve	2010	2013	x
Arnoud de Pret	2005	2011
Peter Fellner	2005	2013	x
Jean-Pierre Kinet	2008	2011	x
Thomas Leysen	2009	2011	x
Gerhard Mayr	2005	2011	x
Tom McKillop	2009	2012	x
Norman J. Ornstein	2008	2011	x
Bridget van Rijckevorsel	1992	2011
Alexandre Van Damme	2010	2013
Gaëtan van de Werve	2006	2012

The mandates of Evelyn du Monceau, Arnoud de Pret, Bridget van Rijckevorsel, Gerhard Mayr, Norman J. Ornstein, Jean-Pierre Kinet, Armand De Decker and Thomas Leysen will expire at the General Meeting of Shareholders of 28 April 2011. The mandates of these directors will be submitted for renewal at this next General Meeting of Shareholders. Armand De Decker has requested that his mandate not be renewed in view of his increasing professional activites and Thomas Leysen has asked for his mandates to be prolonged for one year only, in view of the new commitments he has taken on.

The Board of Directors' secretary is Michèle de Cannart, General Secretary.

Functioning of the Board of Directors

In 2010, the Board of Directors met seven times. The attendance rate of the members was the following:

Karel Boone, Chairman	100%
Evelyn du Monceau, Vice Chair	100%
Roch Doliveux, Executive Director	100%
Prince Lorenz of Belgium - until 29 April 2010	100%
Armand De Decker	57%
Bert De Graeve - as from 29 April 2010	83%
Arnoud de Pret	86%
Peter Fellner	100%
Jean-Pierre Kinet	100%
Thomas Leysen	100%
Gerhard Mayr	100%
Tom McKillop	86%
Norman J. Ornstein	100%
Bridget van Rijckevorsel	100%
Alexandre Van Damme - as from 29 April 2010	86%
Gaëtan van de Werve	100%

During 2010, the Board of Directors' main areas of discussion, review and decision were: UCB strategy, the reports of the Audit Committee and of the Remuneration and Nomination Committee, UCB corporate governance and organisation, the appointments reserved for the Board, the remuneration policies, the management and financial reporting, R&D, the debt refinancing and funding diversification, investment programs and business development proposals, financial and commercial partnerships, license agreements, divestments of non core activities and assets, reports and resolution proposals to the shareholders as published in the invitations to the general meetings of shareholders in compliance with the Belgian Company Code.

There were no transactions or contractual relationships between UCB, including its related companies, and a member of the Board of Directors, that could create a conflict of interests not covered by the legal provisions on conflicts of interests.

During 2010, the Board of Directors pursued an induction programme started in 2009 for its new and existing directors to cover the various areas of expertise required in a biopharmaceutical company, notably: R&D, operational matters, quality, drug safety, management of intellectual property, business development, finance and audit, information processing, talent management, risk management, internal control and corporate governance.

Assessment of the Board of Directors

In 2008 and early 2009 the Board of Directors conducted – as in 2003 and 2006 – an assessment of its functioning as well as contribution to the success of the business. This sets out its strategic mission and aims to optimise the composition and operation of the Board of Directors and its committees, as well as its interaction with the CEO and the Executive Committee. It was conducted by the Chairman of the Board of Directors and the Chair of the Remuneration and Nomination Committee.

In 2010, the Remuneration and Nomination Committee assessed for each of the directors who are candidate for reelection at the next General Meeting of Shareholders on 28 April 2011, their commitment and effectiveness and made recommendations to the Board of Directors regarding their reelection. The assessment was conducted by the Chairman of the Board of Directors and the Chair of the Remuneration and Nomination Committee who have meetings with each of the Boardmembers in their capacity as a Board member and, as the case may be, as Chair or member of a Board Committee.

For the Chair of the Remuneration and Nomination Committee, the assessment was conducted by the Chairman of the Board and a senior independent Boardmember. The sessions are based on a questionnaire and cover the Directors' role in the governance of the company and effectiveness of the Board and, amongst others, how they evaluate their commitment, contribution and constructive involvement in the discussions and decision-making. Feedback of the sessions was given to the Remuneration and Nomination Committee who reported to the Board and made recommendations as to the re-election.

3.2. Board committees

Audit Committee

The Board of Directors has set up an Audit Committee which composition, functioning and terms of reference are in accordance with the Belgian Company Code as modified by the law of 17 December 2008.

Until the General Meeting of Shareholders of 29 April 2010 the composition of the Audit Committee was the following:

	End of term of office	Independent Director
Arnoud de Pret, Chairman	2011
Prince Lorenz of Belgium	2010	x
Karel Boone	2012

Prince Lorenz of Belgium fulfilled the independence criteria set by the Company Code. The three members of the Audit Committee have the competencies in accounting and audit matters as required by Article 526bis § 2 of same code. Karel Boone does not meet all the independence criteria set by the Company Code and by the Belgian Code on Corporate Governance 2009 because he had served three three-year terms of office as a Board member of UCB before his reelection in 2009. The Board nevertheless estimates that Karel Boone's 10 year experience as a Director of the Company does not affect his independence of judgment in all matters submitted to the Board and the Board committees.

Since 17 December 2010 the composition of the Audit Committee is the following:

	End of term of office	Independent Director
Arnoud de Pret, Chairman	2011
Karel Boone	2012
Bert De Graeve - as from 29 April 2010	2013	x
Gerhard Mayr - as from 17 December 2010	2011	x

Bert De Graeve and Gerhard Mayr fulfil the independence criteria set by Article 526ter of the Company Code and all members have the competencies in accounting and audit matters as required by Article 526bis § 2 of same Code. The Audit Committee's composition complies with the Belgian Company Code as modified by the law of 17 December 2008 requiring that one member be an independent Director. The Belgian Code of Corporate Governance recommends that a majority of the members of the Audit Committee be independent. In appointing the members of the Audit Committee, the Board has chosen the most competent to perform the Committee's tasks. The Board is further of the opinion that all members of the Audit Committee, being independent from management, of which two are also independent in the sense of the Company Code, insure the independence of judgment needed in the Committee's works.

The Audit Committee met four times in 2010 with an attendance rate of 100%. Three of the four meetings were held in the presence of the external auditor.

The Audit Committee meetings were attended by Detlef Thielgen, Executive Vice President & Chief Financial Officer; Doug Gingerella, Senior Vice President Global Internal Audit/M&A; Guy Van den Dorpe, Vice President Financial Control (once); Olaf Elbracht, Vice President Reporting & Consolidation and Michèle de Cannart, Vice President & General Secretary who acted as Secretary. Two of the meetings were partly attended by Bob Trainor, Executive Vice President & General Counsel and also Chairman of the Group's Risk Management Committee and one meeting by Jean-Marie Schollaert, Senior Director Group Risk Management. One meeting was partly attended by Philippe Waty, Vice President Corporate Compensation & Benefits, by André van der Toorn, Vice President Treasury & Risk Management, by Caroline Vancoillie, Director Reporting and Consolidation, and by Filip Vanbrabant, Director Internal Audit.

In 2010, and according to its terms of reference (see Charter of Corporate Governance), the Audit Committee monitored the financial reporting process, the company's internal control and risk management systems and their effectiveness, the internal audit and its effectiveness, the statutory audit of the annual and consolidated accounts and the independence of the external auditor in particular regarding the provision of additional services to the Company for which the Audit Committee reviewed and authorised the fees. In addition, the Audit Committee made several in depth reviews on accounting and reporting issues at the request of the Board,

Remuneration and Nomination Committee

The Board of Directors has set up a Remuneration and Nomniation Committee which composition until 17 December 2010 was the following:

	End of term of office	Independent Director
Evelyn du Monceau, Chair	2011
Karel Boone	2012
Thomas Leysen - as from 26 February 2010	2011	x
Gerhard Mayr	2011	x
Gaëtan van de Werve	2012

Gerhard Mayr and Thomas Leysen fulfil the independence criteria set by Article 526ter of the Company Code. Karel Boone does not meet all the independence criteria set by the Code, nor by the Belgian Code of Corporate Governance, for the sole reason that he had served three terms of office as a Board member of UCB before his reelection in 2009. All members of the Remuneration and Nomination Committee are independent from management.

Since 17 December 2010 the Remuneration and Nomination Committee has the following composition, which is compliant with the requirements of the Law of 23 April 2010, applicable as from 1 January 2011:

	End of term of office	Independent Director
Evelyn du Monceau, Chair	2011
Karel Boone	2012
Thomas Leysen	2011	x
Gerhard Mayr	2011	x
Tom McKillop	2012	x

A majority of the members of the current Remuneration and Nomination Committee meet the independence criteria set by Article 526ter of the Company Code and all members have the competencies and expertise required in matters of remuneration policies as required by Article 526quater § 2 of same Code.

The Remuneration and Nomination Committee met two times in 2010 with an attendance rate of 100%. The Committee was attended by Roch Doliveux, Chairman of the Executive Committee, except when discussing issues relating to him, and by Fabrice Enderlin, Executive Vice President Human Resources and Communciation, who acts as secretary, except when discussing issues relating to him.

In 2010, and according to its terms of reference (see Charter of Corporate Governance section 4.3.2 available on the UCB website), the Remuneration and Nomination Committee reviewed the appointment proposals to be submitted to Board approval, the performance of the Executive Committee members and their remuneration. It reviewed the succession planning of the CEO and of the other members of the Executive Committee. It reviewed and submitted to Board approval the remuneration policy and the longterm incentives to be granted to the company management and the performance criteria to which these grants were linked.

Scientific Committee

On 10 June 2010, the Board of Directors set up, from amongst its members, a Scientific Committee to assist the Board in its review of the quality of UCB R&D science and its competitive standing.

The Committee members who have outstanding scientific medical expertise are the following:

	End of term of office	Independent Director
Peter Fellner	2013	x
Jean-Pierre Kinet	2011	x

The members of the Scientific Committee meet regularly with the Executive Vice-President & President UCB NewMedicines. The members of the Scientific Committee are also closely involved in the activities of the UCB Scientific Advisory Board (SAB), composed of external leading scientific medical experts. The SAB was created in September 2005 by the Executive Committee to critically review the R&D activities of UCB, provide scientific appraisal and strategic input as to the best way for UCB to become a thriving biopharmaceutical leader and to advise the Executive Committee on the strategic choices related to early stage R&D. The Scientific Committee reports to the Board of Directors on the SAB's appraisal of UCB's research activities and strategic orientations.

3.3. Executive Committee

Composition of the Executive Committee

Since November 2009 the composition of the Executive Committee is the following:

• Roch Doliveux, Chief Executive Officer & Chairman of the Executive Committee

• Robert Trainor, Executive Vice President & General Counsel
• Detlef Thielgen, Executive Vice President & Chief Financial Officer
• Iris Löw-Friedrich, Executive Vice President Global Projects & Development, Chief Medical Officer
• Fabrice Enderlin, Executive Vice President Corporate Human Resources and Communication
• Mark McDade, Executive Vice President Global Operations
• Michele Antonelli, Executive Vice President Technical Operations, QA and HSE
• Ismaïl Kola, Executive Vice President & President UCB NewMedicines™

Functioning of the Executive Committee

There were no transactions or contractual relationships in 2010 between UCB, including its related companies, and a member of the Executive Committee, giving way to a conflict of interests other than the Company's investment in WILEX AG (see Note 22 of the financial report) a German listed company in which Iris Löw-Friedrich is member of the Supervisory Board. In compliance with the UCB internal rules on conflict of interest, Iris Löw-Friedrich did not participate in the discussions and deliberations when these investments were discussed and decided by the Executive Committee.

4. Remuneration report

The remuneration report describes UCB's executive remuneration policy and how executive compensation levels are set. The Remuneration and Nomination Committee oversees our executive compensation policies and plans. The Committee's roles and responsibilities are set forth in the charter adopted by our Board of Directors.

4.1. UCB's global reward principles

To accomplish our company goals within a highly competitive global business environment we need qualified and talented executives working in a high performance culture. To foster this type of culture with fully engaged employees, it is critical to have a competitive Global Rewards Programme. The objectives of the UCB Global Rewards Programme are:

• to be fair and equitable
• to recognise and reward high performance
• to link executive pay to both individual contribution and the overall success of UCB
• to provide a strong motivation for reinforcing our business strategy and the achievement of our corporate goals and
• to enable us to attract and retain the industry's best talent on a global scale.

The Global Rewards Programme supports this drive and vision.

For our most senior executives, variable pay makes up the most significant component of the total remuneration offering. Our

variable pay programmes are closely linked to short-term company performance as well as long-term sustainability and performance of the company.

4.2. Development of the UCB remuneration policy

The policy of remuneration for members of the Executive Committee is set by the Board of Directors on the basis of recommendations by the Remuneration and Nomination Committee. The Remuneration and Nomination Committee meets at least twice per year during which time it:

• considers the market factors affecting the company's current and future pay practices
• evaluates the effectiveness of our remuneration policies in terms of recognising performance and determines the appropriate evolution of the plans
• reviews the financial targets of the different performance-based compensation programmes
• determines the compensation levels of UCB's management team

The remuneration policy ensures that the compensation programmes of the members of the Executive Committee, including equity incentives, pension schemes and termination arrangements, are fair and appropriate to attract, retain and motivate the management team. They must also be reasonable in view of the company economics and the relevant practices of comparable global biopharmaceutical companies.

Remuneration for non-executive directors

The directors and Board Committee members are compensated for their services through a cash-based compensation programme. The level of pay has been set based on benchmarks which include the remuneration of Board members of comparable U.S. companies and European biopharmaceutical companies. No long-term equity incentives are granted. The level of pay was approved at the General Meeting of Shareholders of 24 April 2008 and since then, the remuneration of UCB directors as follows:

Annual fees

• Chairman of the Board of Directors- € 120 000
• Vice Chair € 90 000
• Directors € 60 000

Board of Directors attendance fees

• Chairman of the Board of Directors € 2 000 per meeting
• Vice Chair € 1 500 per meeting
• Directors € 1 000 per meeting

Audit Committee / Remuneration and Nomination Committee – annual compensation

• Chairman of the Board committees € 15 000
• Members of the Board committees € 7 500

Scientific Advisory Committee – annual compensation

• Members of the committee - € 7 500

In application of these rules, the total remuneration of directors and Board committee members for 2010 in UCB was as follows:

• Karel Boone, Chairman	€ 149 000
• Evelyn du Monceau, Vice Chair	€ 115 500
• Roch Doliveux, Executive Director	€ 67 000
• Prince Lorenz of Belgium - until 29 April 2010	€ 35 750
• Armand De Decker	€ 64 000
• Bert De Graeve - since 29 April 2010	€ 54 625
• Arnoud de Pret	€ 81 000
• Peter Fellner	€ 70 750
• Jean-Pierre Kinet	€ 70 750
• Thomas Leysen	€ 74 500
• Gerhard Mayr	€ 74 500
• Tom McKillop	€ 67 875
• Norman Ornstein	€ 67 000
• Bridget van Rijckevorsel	€ 67 000
• Gaëtan van de Werve	€ 74 500
• Alexandre Van Damme - since 29 April 2010	€ 50 000

4.3. Statement on the remuneration policy applied to the reported year: remuneration for executive directors

This section discusses the competitive positioning strategy that UCB adopts against the market in which it operates. It also provides an overview of our executive compensation structure, the purpose of the different elements of pay and the link between pay and performance.

Benchmark for our Total Reward Programme

As per our Global Reward Principles, our remuneration packages intend to be fair and appropriate to attract, retain and motivate management, and be reasonable in view of the company economics and the relevant practices of comparable global biopharmaceutical companies.

Each year the Remuneration and Nomination Committee considers the appropriate mix and level of cash and equity awards to offer based on recommendations from the Corporate Human Resources department. These recommendations are reviewed with our independent compensation consultant, Towers Watson, and also with Pay Governance LLP, to ensure the competitiveness of our total remuneration. A survey is conducted every other year to assess the competitiveness of all compensation components (base salary, bonus, long-term incentives). The data is aged in the years in which a survey is not conducted, based on global market movements within executive compensation. Our Executive Committee compensation packages are composed of two main elements:

• Base salary (a fixed element of pay)
• Variable pay (consisting of a cash bonus and long-term incentives)

UCB benchmarks its executive Total Reward Programme against a defined comparator group of international companies within the biopharmaceutical sector (companies with pharmaceutical or biotechnology activities). The actual compensation level for each individual is determined according to the benchmark and taking into account their performance and level of experience in relation to the benchmark.

Compensation elements and pay for performance

Our executive compensation programmes are based on a balance of individual and corporate performance and market competitiveness. For our senior executives, both short-term and long-term incentives take into account performance against financial targets which are set by the Board of Directors. In addition to the base salary and performance-related incentive pay, our executives are eligible for a range of benefits and perquisites which are in line with market compensation practices.

Below we describe how each element of pay is determined and how performance is embedded into the incentive-based elements of pay.

Base salary

The target base salary is determined based on the specific job dimensions and criteria and in relation to level of base pay that the market typically pays for such a role. Once the market level of base pay is defined, the specific compensation level of the individual depends on the extent to which the individual impacts the business and their level of skill and experience.

Variable pay

Bonus

The cash bonus is designed to compensate the performance of the company and of the individual over a time horizon of one year. For Executive Committee members, the corporate and individual objectives are set at the beginning of the year by the Remuneration and Nomination Committee, upon proposal of the Executive Committee and are approved by the Board of Directors.

For all Executive Committee members the corporate performance represents 75% of the target bonus and individual performance objectives, 25% of the target bonus.

The corporate objective is based on target versus actual adjusted net profits after tax. The Remuneration and Nomination Committee has discretionary power to amend the budgeted target in case of exceptional circumstances, such as a major re-organisation of the company assets, acquisitions and divestments.

The payout for the corporate component is defined by the percentage of actual adjusted net profits after tax versus the budget. The payout curve enables to link performance or non performance from zero to 200% against target.

In addition, for the individual portion of the bonus, the CEO assesses the performance of the other Executive Committee members and makes the recommendation for the bonus payout to the Remuneration and Nomination Committee. The Remuneration and Nomination Committee assesses the performance of the CEO and also approves the actual payout for each of the Executive Committee members.

In discussing performance, the Remuneration and Nomination Committee deliberates the achievement of the financial and quantitative objectives of each of the Executive Committee members and the non-financial aspects, including the extent to which the individuals have carried out their duties in line with the company values and expected leadership behaviours. Below are the criteria which are evaluated for each Executive Committee member:

• Specific business achievements
• Strategic input and vision
• Team leadership
• Executive Committee team membership
• Impact

Long-term incentives (LTI)

Our remuneration practice is to also link a significant portion of equity-based compensation to mid-term and long-term company financial and strategic goals. The long-term incentive programmes are benchmarked against European Biopharmaceutical company practices. The offering currently follows a fixed number of shares approach. It is a three-tiered incentive programme which includes a stock option plan, free share plan (stock award) and a performance share plan.

Stock option

Eligibility for participation in the Stock Option Plan is at the Board's and management's discretion and is based on satisfactory performance, with the ability to reward overachievements. The vesting period is typically three years from date of grant but can be longer based on local legislative requirements. In the U.S., Stock Appreciation Rights are granted instead of stock options. These follow the same vesting rules as the Stock Option plan and result in employees receiving a cash amount equal to the appreciation of UCB stock instead of actual shares.

Stock award

The Stock Award Plan provides conditional rights to UCB common stock fulfilled upon remaining in employment with UCB three years after the grant date. The vesting period is three years from date of grant. Our Executive Committee members are eligible for participation at the Board's discretion, based on satisfactory performance.

Performance Share Plan

This plan ensures a strong link between pay and performance by rewarding only the highest performers within the senior executive group. Performance shares are grants of UCB common stock, awarded to those Executive Committee members who have achieved the highest levels of performance ratings. In addition, certain conditions must be met at the time of vesting as defined by the Remuneration and Nomination Committee and the Board. For the 2010 grant the metrics are net sales growth, EBITDA and net debt reduction targets.

The vesting period is three years. The number of shares awarded is adjusted at the end of the vesting period based on the company's performance goals as determined by the Remuneration and Nominating Committee. If actual company performance is below 100% of the target or the beneficiary leaves prior to vesting, then typically no shares are awarded. The maximum award is capped at 150% of the individual target.

In some countries delivery of the award may also be made in 'phantom shares' (an award for which the value is based on the evolution of the share price but which is settled in cash on a pre-determined vesting date), depending on the local legislative environment.

Below you will find a summary of UCB's long-term incentive performance-weighted grant levels:

Long-term incentives
Stock option	Stock award	Performance share
Granted at target for performance rating "Fully Effective" Maximum ± 25% of target		Granted at target for performance rating "Exceeds Expectations" Maximum +25% of target

Pensions

As the Executive Committee is international in its nature, the members participate in the pension plans available in their country of contract. Each plan varies in line with the local competitive and legal environment.

All defined benefit plans at UCB are either frozen or closed to new entrants. Any new Executive Committee members would therefore automatically join either a defined contribution or cash balance plan.

Belgium

The Executive Committee members participate in a cash balance retirement benefit plan which is fully funded by UCB. The benefit at retirement age is the capitalisation, at a guaranteed rate of return, of the employer's annual contributions during affiliation to the Plan. UCB also provides an annual guaranteed return of 2.5% increased by the Belgian health index (to a minimum of 3.25%, as defined by the Belgian legislation and with a maximum of 6%).

The Executive Committee members also participate in the UCB Senior Executive supplementary defined contribution plan. Contributions to the plan are twofold:

• a company contribution based on the actual corporate results as defined by the Board and
• a company contribution equal to 10% of their annual basic salary

The Chief Executive Officer benefits from an individual pension promise (with lump sum at the age of 60). This pension promise has been established when Mr. Doliveux joined the organisation in 2003.

The benefit at retirement is based on the average annual basic salary of the last five years and would be actuarially reduced would the CEO leave before retirement.

U.S.

Members participate in the UCB Retirement Savings Plan. The plan is composed of a qualified and non-qualified component. UCB's total contribution under the plan ranges from 3.5%-9% of annual pay based on age. Contributions up to the IRS limits are made in the qualified part of the plan. Contributions above this IRS limit are made in the non-qualified component. Both pensionable compensation levels and contributions are limited.

The Executive Committee members also participate in a deferred compensation plan which is fully funded by the employees. Participants contribute on individual basis and can defer salary and/or bonus.

Germany

Both Executive Committee members are covered by a closed defined benefit pension plan. The plan promises pensions in case of retirement, disability and death. Benefits in case of retirement and disability amount to 50% of their last annual base salary before retirement or disability.

Other remuneration elements

Members of the Executive Committee are also typically entitled to participate in an international healthcare plan and executive life insurance as are available to other senior executives. Executive Committee members are also provided with certain executive perquisites such as a company car and other benefits in kind. All these elements are disclosed in the remuneration statement.

The remuneration policy for the members of the Executive Committee is extensively described in UCB Charter of Corporate Governance (under 5.4.) available on the UCB website.

Termination arrangements

Given the international character of our Executive Committee, as well as the dispersal of our various activities across different geographies, our members have employment agreements governed by different legal jurisdictions.

All our existing Executive Committee agreements have been signed before the entry into force of the Belgian corporate governance law of 6 April 2010 which limited the level of termination indemnities.

The service contract for Mr. Roch Doliveux provides that in case of termination, he will be eligible to a lump sum equal to 24 months of actual base compensation plus the actual average variable compensation relating to the three previous years. In case of termination due to a change of control, the lump sum will be equal to 36 months.

Mr. Ismail Kola also holds a Belgian employment contract and does have a termination clause which would entitle him to a severance payment of 18 months base salary and bonus in case the contract is terminated by the company. In case of a change of control of UCB, this payment would be equivalent to 24 months base salary and bonus.

Mrs. Iris Loew-Friedrich has a German employment agreement which provides a minimum of six months' notice and a termination indemnity equal to one year base salary and bonus. Overall this would represent an 18 months termination package.

For Mr. Robert Trainor and Mr. Mark McDade, who both hold U.S. employment agreements, a clause is included in their agreements specifying a termination payment of 18 months base salary and bonus should there be an involuntary termination of the agreement by the company in case of a change of control.

4.4. Compensation details of the Executive Committee

Chairman of the Executive Committee and Chief Executive Officer

The remuneration of the Chairman of the Executive Committee and CEO, Roch Doliveux, is composed of the above-mentioned elements being base salary, short-term incentive and long-term incentive, each carrying a similar weight in terms of target value.

In addition to his director's fees as a Board member of UCB S.A., the remuneration and other benefits granted directly or indirectly to the Chairman of the Executive Committee and CEO by UCB or any other of its affiliates in 2010 amount to:

• Base salary (perceived in 2010): € 1 269 261

• Short-term incentive (bonus): bonus to be paid in 2011 and relating to the financial year 2010: € 722 716

• Long-term incentive (number of UCB shares and options): see section below.

• Other components of the remuneration, such as the cost of pension, insurance coverage and monetary value of other fringe benefits: € 1 769 252. This amount includes the retirement benefit (based on service cost): € 1 292 501.

Based on the evolving skills and experience in the role, the Board has approved a salary increase of 1% in 2010 and the CEO's new annual base salary for 2011 will be € 1 288 207.

The CEO's total compensation (base salary + bonus + LTI) for 2010 amounts to € 3 318 766 (excluding pension contributions and other benefits), which represents a 14% increase compared to 2009 (in value), mainly due to a higher share price at the time of the 2010 longterm incentive grant and a higher number of stock options granted than in the previous year. However, total cash (base +bonus) has increased by less than 1%.

Caring Entrepreneurship Fund

Roch Doliveux has contributed a portion of his compensation to a fund which has been set up as part of the King Baudouin Foundation. The Caring Entrepreneurship Fund focuses on supporting entrepreneurship in the field of health and wellness.

Other members of the Executive Committee

The amount of compensation stated below, reflects the amount the Executive Committee members have earned in 2010 based on their effective period in service as Executive Committee members (see above section 'Composition of the Executive Committee').

The remuneration and other benefits granted directly or indirectly on a global basis to all the other members of the Executive Committee by the company or any other affiliate belonging to the Group in 2010 amount to:

• Base salaries: € 3 160 859
• Short-term incentive (bonus): bonuses (to be paid in 2011 and relating to financial year 2010): € 2 023 980
• Long-term incentive (number of UCB shares and options): see section below
• Other components of the remuneration, such as the cost of pension, insurance coverage, retention awards and monetary value of other fringe benefits: € 1 916 177

The aggregated Executive Committee compensation (base salary + bonus + LTI) for 2010 amounts to: € 7 930 361 (excluding pension contributions and other benefits).

Long-term incentives (LTI) granted in 2010

						Binomial value
	Stock	Binomial value		Binomial value	Performance	performance	Total binomial
	options1	stock option2	Stock awards3	stock awards4	shares5	shares6	value LTI7
Roch Doliveux	45000	€ 377550	24000	€ 585840	28 750	€ 363400	€ 1326790
Michele Antonelli	15000	€ 125 850	7200	€ 175752	8050	€ 101752	€ 403354
Fabrice Enderlin	15000	€ 125850	7 500	€ 183 075	8750	€ 110600	€ 419525
Ismail Kola	15000	€ 125850	6000	€ 146460	7000	€ 88480	€ 360790
Iris Löw-Friedrich	15000	€ 125 850	7200	€ 175752	8050	€ 101752	€ 403354
Mark McDade	12000	€ 100 680	6000	€ 146460	7000	€ 88 480	€ 335620
Detlef Thielgen	15000	€ 125850	7200	€ 175752	8050	€ 101752	€ 403354
Bob Trainor	15 000	€ 125 850	7500	€ 183075	8 750	€ 110600	€ 419525
Total	147000	€ 1233330	72600	€ 1772166	84400	€ 1 066 816	€ 4072312

1 Number of rights to acquire one UCB share at a price of € 31.62 between 1 April 2013 and 31 March 2020 (between 1 January 2014 and 31 March 2020 for Roch Doliveux, Fabrice Enderlin, Detlef Thielgen, Ismail Kola and Michele Antonelli).

2 The 2010 value of stock options has been calculated based on the binomial methodology at € 8.39 (as defined by Towers Watson).

3 Number of UCB shares to be delivered for free after a vesting period of three years if still employed by UCB.

4 The 2010 value of stock awards has been calculated based on the binomial methodology at € 24.41 per share award (as defined by Towers Watson).

5 Number of UCB shares to be delivered for free after a vesting period of three years if still employed by UCB and upon fulfillment of predefined performance conditions – including phantom performance shares.

6 The 2010 value of performance shares has been calculated based on the binomial methodology at € 12.64 per performance share (as defined by Towers Watson).

⁷ Binomial valuation: an objective technique for pricing long-term incentives and which determines a fair value of the stock price over the life of an option or a long-term incentive grant.

Stock option exercises and stock awards vested in 2010

	Stock options1	Stock awards		Performance shares
	Number vested	Number	Total value upon	Number	Total value upon
	(not exercised)2	vested	vesting3	vested	vesting3
Roch Doliveux	45000	15000	€ 480150	28860	€ 923809
Robert Trainor4	15000	5000	€ 160 050	18410	€ 589304
Iris Löw-Friedrich	8100	2700	€ 86 427	7215	€ 230952
Detlef Thielgen	15000	4000	€ 128 040	12025	€ 384920
Ismail Kola5		5000	€ 125200	-	-

1 Fabrice Enderlin, Michele Antonelli, Mark McDade and Ismail Kola joined UCB after the 2007 LTI grant.

2 The stock options granted to Iris Löw-Friedrich and Detlef Thielgen and the stock appreciation rights granted to Robert Trainor on 1 April 2007 vested on 1 April 2010 and have an exercise price of € 43.57. The stock options granted to Roch Doliveux on 1 April 2006 vested on 1 January 2010 and have an exercise price of € 40.14.

3 Upon vesting, the UCB share had a value of € 32.01 which represents the market value of the shares delivered on the vesting date, determined as the average of the high and the low price of UCB shares on that date.

4 Performance shares: of which 6 385 shares vested as a special recognition award.

5 On 1 December 2009 Ismail Kola was granted a sign-on Phantom Stock Award (no delivery of shares but payment of a cash amount on 1 December 2010). The UCB shares had a value of € 25.04 on 1 December 2010.

The General Meeting of Shareholders on 29 April 2010 approved the allocation of free shares under the Stock Award and Performance Share Plans.

5. Main features of the Company's internal control and risk management systems

5.1. Internal control

The Board of Directors is the Company's governing body, and one of its roles is to provide entrepreneurial leadership of the Company within a framework of prudent and effective controls that enables risks to be assessed and managed. Company management is responsible for establishing and maintaining adequate internal controls to provide reasonable assurance regarding the achievement of objectives of the reliable nature of financial information, compliance with relevant laws and regulations and performing internal control processes within the Company in the most efficient manner.

The Audit Committee assists the Board of Directors in its responsibility of monitoring the management of the Company and the Group as a whole, the effectiveness of the company's overall internal control processes, the financial overall reporting process and the Global Internal Audit function and its effectiveness.

The Global Internal Audit function provides independent, objective assurance activities designed to evaluate, add value and improve the Company's internal control and operations by bringing a systematic, disciplined approach to the evaluation of, and recommending enhancements to, the Company's governance, compliance, risk management and internal control processes. The Global Internal Audit Group undertakes an Audit Plan of financial, compliance and operational audits and reviews, as reviewed and approved by the Audit Committee and covering relevant company activities. The programme includes independent reviews of the systems of internal control and risk management. The findings and the status of corrective actions taken to address these are regularly reported in writing to the Executive Committee and the status of the completion of the Audit Plan as well as a summary of the findings and the status of corrective actions are reported in writing to the Audit committee four times per year.

The Company has adopted formal procedures focused on internal controls over financial reporting, referred to as the Transparency Directive Process. This process is intended to help minimise the risk of selective disclosure; to help ensure that all material information disclosures made by UCB to its investors, creditors and regulators are accurate, complete, timely and fairly present the company's condition; and to help ensure adequate disclosure of material financial and nonfinancial information and significant events, transactions and risks.

The process consists of a number of activities. Identified key contributors in the internal control process, which includes all Executive Committee members, are required to certify in writing that they understand and have complied with the company's requirements related to the financial reporting process, including providing reasonable assurance of effective and efficient operations, reliable financial information and compliance with laws and regulations. To promote their understanding of the broad range of potential issues, a detailed checklist is provided to them to complete, to assist in their certification. In addition, a detailed worldwide review of sales, credits, accounts receivables, inventories and trade inventories is performed, and the finance director of all individual business units are required to acknowledge in writing that their financial reporting in these areas is based on reliable data and that their results are properly stated in accordance with requirements.

These procedures are coordinated by the Global Internal Audit function in advance of the issuance of the half-year and annual accounts. The results of the procedures are reviewed by the Reporting and Consolidation Team, as well as Finance, Legal Department and External Auditor. Appropriate follow-up of any potential issues identified is performed and consideration of adjustments to reported financial information or disclosures is evaluated.

The results of these procedures are reviewed with the CEO and the CFO, and subsequently with the Audit Committee, prior to the issuance of the accounts.

The company updates its business plan on an annual basis and prepares a detailed annual budget for each financial year that is considered and approved by the Board. A management reporting system is in place, providing management with financial and operational performance measurement indicators. Management accounts are prepared monthly to cover each major area of the business. Variances from plan and previous forecast are analysed, explained and acted on in a timely manner. In addition to regular Board discussions, meetings are held at least monthly by the Executive Committee to discuss performance with specific projects being discussed as and when required. Information systems are developed to support the Company's long term objectives and are managed by a professionally staffed Information Management team.

5.2. Risk management

A global Risk Management policy, applicable for the whole UCB Group and its affiliates worldwide, describes UCB's commitment to provide an effective risk management system across the company in order to minimise its exposure to risks that could threaten UCB's corporate objectives.

The Board of Directors is responsible for approving the UCB Group strategy, goals and objectives and overseeing the establishment, implementation and review of the Group's risk management system. The Board of Directors is assisted by the Audit Committee in its responsibility for the appreciation of risk and risk management. The Audit Committee examines on a regular basis the areas where risk could significantly affect the Group's financial situation and reputation and monitors the overall risk management process of the Company.

The Corporate Risk Management Committee, consisting of Executive Committee members and senior management representatives of all business functions, and reporting to the Executive Committee, provides strategic leadership that endorses the corporate risk assessment and prioritisation process that drives the establishment of risk mitigation plans within all business functions and operations, supported by a global risks management system to effectively and efficiently assess report, mitigate and manage actual or potential risk or exposures. The Chairman of the Corporate Risk Management Committee provides periodic status updates directly to the Executive Committee and, on an annual basis, to the Audit Committee as well as the Board of Directors.

The Executive Committee is responsible for implementing the risk management strategy and objectives, and the Global Internal Audit function is responsible for independently and regularly reviewing as well as validating the risk management process in the Company and jointly agreeing with the Business Functions on actions to mitigate and control assessed risks.

6. Private investment transactions and trading in Company shares

In compliance with Directive 2003/6/EC on insider dealing and market manipulation, the Board of Directors has approved a Code on Private Investment Transactions to prevent insider trading offences and market abuse, particularly during the periods preceding the publication of results or information which is liable to considerably influence UCB share price or the share price of the company targeted by a planned operation.

The Code on Private Investment Transactions establishes rules for all employees (directors, executive management and other employees) which prohibit the dealing in the company shares or other financial instruments of the company for a designated period preceding the announcement of its financial results (closed periods). It also establishes rules to set limitations in transactions by certain employees (key employees). It further prohibits trading in UCB shares during 'special closed periods' for employees and directors who are, or will soon be, in possession of insider information.

The Board has designated Michèle de Cannart, Vice President & General Secretary, as Compliance Officer whose duties and responsibilities are defined in the Code.

The Code establishes the list of key employees and directors, who have to inform the Compliance Officer of the transactions on UCB shares they intend to make for their own account. The Code is fully in compliance with Directive 2003/6/EC on insider dealing and market manipulation and the Belgian Royal Decree of 24 August 2005 in the same field. The Code is posted on UCB website: www.ucb.com

7. External audit

The General Meeting of Shareholders held on 30 April 2009 appointed PricewaterhouseCoopers (PwC) as external auditors for the Company for the legal term of three years. The legal

representative designated by PwC for UCB in Belgium is Bernard Gabriëls. The firm PwC has been appointed as external auditors in the affiliates of the UCB Group worldwide.

The 2010 fees paid by UCB to its auditors amounted to:

€	Audit	Audit related	NON -Audit related	Total
PricewaterhouseCoopers (in Belgium)	438500	171 240	0-	609740
PricewaterhouseCoopers (outside Belgium)	1708270	151119	146 835	2006223
Total	2146770	322359	146835	2615963

8. Information requested under Article 34 of the Royal Decree of 14 November 2007

The following elements may have an impact in the event of a takeover bid (see section 1.3):

8.1. Company's capital structure, with an indication of the different classes of shares and, for each class of shares, the rights and obligations attached to it and the percentage of total share capital that it represents

As from 29 February 2008, the capital of the company amounted to € 550 095 156 represented by 183 365 052 shares of no par value, fully paid in.

All shares are entitled to the same rights. There are no different classes of shares (see section 1).

8.2. Restrictions, either legal or prescribed by the Articles of Association, on the transfer of securities

Restrictions on the transfer of securities only apply to not fully paid up shares according to Article 11 of the company's Articles of Association as follows:

"…

Until they are fully paid up, shares are registered and may only be transferred after prior agreement by the Board of Directors.

b) Any shareholder holding shares not fully paid who wishes to transfer all or part of his shareholding, should notify his intention by registered letter to the Board of Directors, indicating the name of the candidate to be approved, the number of shares offered for sale, the price and the proposed terms of sale.

The Board of Directors may, by registered letter, oppose this sale within a month of such notification, by presenting another candidate as purchaser to the selling shareholder. The candidate proposed by the Board will have a right of pre-emption on the shares offered for sale, unless the proposed seller withdraws from the sale within 15 days.

The right of pre-emption will be exercisable at a unit price corresponding to the lower of the two following amounts:

• • The average closing price of a UCB ordinary share on the '"continuous trading market" of Euronext Brussels in the 30 stock exchange working days preceding the notification under the preceding paragraph, reduced by the amount still to be paid up;
• • The unit price offered by the third party proposed for approval.

The above-mentioned notification by the Board of Directors shall be taken as notification of the exercise of the right of pre-emption in the name and

for the account of the purchasing candidate presented by the Board. The price will be payable within the month of this notification without prejudice to any more favourable conditions offered by the third party presented for approval.

c) If the Board does not reply within the period of a month from notification set out in the first paragraph of subsection b) above, the sale may take place on conditions no less favourable than those set out in the above-mentioned notification for the benefit of the candidate presented for approval."

To date, the capital of the company is fully paid up.

8.3. Holders of any securities with special control rights and a description of those rights

There are no such securities. For more details, see section 1.3.

8.4. System of control of any employee share scheme where the control rights are not exercised directly by the employees

There is no such system.

8.5. Restrictions, either legal or prescribed by the Articles of Association, on voting rights

The existing UCB shares entitle holders thereof to vote at the General Meeting of Shareholders.

Under Article 38 of the Articles of Association of the Company:

"Each share gives the right to one vote.

Any person or entity who acquires or subscribes to beneficial ownership in shares, whether registered or not, in the capital of the company, conferring a right to vote, will be obliged to declare within the period required by law, the number of shares purchased or subscribed for, together with the total number of shares held, when such number in total exceeds a proportion of 3% of the total voting rights exercisable, before any possible reduction, at a General Meeting of Shareholders. The same procedure will have to be followed each time that the person obliged to make the initial declaration mentioned above increases his voting strength up to 5%, 7.5%, 10% and subsequently for each additional 5% of the total voting rights acquired as defined above or when following the sale of shares, his voting rights fall below one of the limits specified above. These notifications will occur according to the modalities described in the legislation applicable to the disclosure of large shareholdings in issuers whose securities are admitted to trading on a regulated market. Any failure to respect this statutory requirement can be penalised in the manner laid down by Article 516 of the Company Code.

No-one may at a General Meeting of Shareholders cast a greater number of votes than those relating to such shares as he has, in accordance with the above paragraph, declared himself to be holding, at least twenty days before the date of the Meeting."

Treasury shares (UCB shares held by UCB S.A. or by direct or indirect affiliates) have, by law, no voting rights.

8.6. Agreements between shareholders which are known to the company and may result in restrictions on the transfer of securities and/or the exercise of voting rights

A shareholders' agreement between Financière de Tubize S.A. and the Schwarz Family Holding was signed on 24 September 2006.

Under this Shareholders' agreement, the Schwarz Family Holding agreed not to transfer (as defined in the Shareholders Agreement) at least 41.58% of the new UCB shares it will receive if the Schwarz Family Holding accepts the exchange offer as follows: 20.79% of the UCB shares received by the Schwarz Family Holding under the offer remained under lock-up until 1 June 2010, an additional 20.79% of the UCB shares received by the Schwarz Family Holding under the offer will remain under lock-up until 1 June 2011.

As to the UCB shares that are subject to lock-up, Financière de Tubize S.A. shall have a right of first offer at the higher of (a) the volume weighted average of the UCB share price of the 20 Euronext Brussels trading days ending on the day prior to the notification by the Schwarz Family Holding of its intention to transfer shares or (b) any price offered under a public takeover bid for the UCB shares. Subject to certain conditions and limitations, Financière de Tubize S.A. shall not transfer any UCB shares which it acquired pursuant to its right of first offer for up to four months following such transfer.

Subject to certain conditions and limitations, the Schwarz Family Holding is entitled, however, to transfer the UCB shares in its possession at any time if (i) the shareholding of Financière de Tubize S.A. in UCB S.A. falls below 33%; (ii) the shareholding of the Janssen Family in Financière de Tubize S.A. falls bellow 50% or (iii) if Financière de Tubize S.A. or the Janssen Family decides to tender any of their shares in UCB S.A. or Financière de Tubize S.A., respectively, in a public takeover bid for UCB S.A. or Financière de Tubize S.A.

Under the same shareholders' agreement, the Schwarz Family Holding and Financière de Tubize S.A. have agreed – subject to certain conditions and limitations – that prior to each General Meeting of Shareholders they shall meet and consult with each other during a pre-meeting with respect to the agenda of the General Meeting of Shareholders and the proposed decisions. The Schwarz Family Holding and Financière de Tubize S.A. will try to reach a consensus with regard to each item of the agenda on how to exercise their voting rights at the respective General Meeting of Shareholders. In case such consensus cannot be reached, Financière de Tubize S.A. shall have a casting vote.

At the relevant General Meeting of Shareholders, the Schwarz Family Holding and Financière de Tubize S.A. shall cast their votes in accordance with the decisions taken at the pre-meeting. These voting arrangements do not apply to certain specific decisions. The company has no knowledge of the content of other agreements which might result in restrictions on the transfer of its securities and/or the exercise of voting rights.

8.7.a) Rules governing the appointment and replacement of Board members

Under the Articles of Association of the company

" The company shall be managed by a Board of Directors having at least three members, whether shareholders or not, appointed for three years by the General Meeting of Shareholders and at all times subject to dismissal by the General Meeting of Shareholders.

Retiring directors are eligible for re-election. The period of office of retiring directors, who are not re-appointed, ceases immediately on the closing of the ordinary General Meeting of Shareholders.

The General Meeting of Shareholders shall determine the fixed or variable remuneration of the directors and the value of their attendance vouchers, to be charged to operating expenses."

The General Meeting of Shareholders decides by a simple majority of votes on these matters. The candidates are proposed by the Board after a selection process ruled by the company's Charter of Corporate Governance as follows:

"…

Composition of the Board of Directors

Composition

The Board is of the opinion that a number between 10 and 15 members is appropriate for efficient decision-making on the one hand, and contribution of experience and knowledge from different fields on the other hand. Such a number also allows for changes to the Board's composition to be managed without undue disruption. This is way within the provisions of the Law and the Articles of Association of the Company according to which the Board of Directors shall be composed of at least three members. The General Meeting of Shareholders decides of the number of Directors upon proposal of the Board of Directors.

A large majority of the Board members are non-executive Directors.

The curricula vitae of the Directors and directorship candidates are available for consultation on the UCB website (www.ucb.com) which also mentions the directorships in other companies taken by each member of the Board.

Designation of directors

The Directors are appointed by the General Meeting of Shareholders following a proposal by the Board of Directors on recommendation of the Remuneration and Nomination Committee.

In proposing candidates at the General Meeting of Shareholders, the Board of Directors takes particular account of the following criteria:

• • It ensures that a large majority of the Directors are non-executive Board Members.
• • It ensures that at least five non-executive Directors are independent in accordance with the legal criteria, and also the criteria adopted by the Board of Directors;
• • It ensures that no single Director or group of Directors may dominate decision-making.
• • It also ensures that the composition of the Board of Directors guarantees diversity and contribution of experience, knowledge and ability required for UCB's succes as a global biopharmaceutical company.
• • It ensures that candidates are fully available to carry out their functions and that they do not take more than five directorships in listed companies.

The Remuneration and Nomination Committee gathers information, enabling the Board of Directors to ensure that the criteria set out above have been met at the time of the appointments and renewals, and during the term of office.

For each new directorship appointment, the Remuneration and Nomination Committee performs an assessment of existing and required abilities, knowledge and experience on the Board of Directors. The profile of the ideal candidate is drawn up on the basis of this assessment and proposed to the Board for discussion and definition.

Duration of mandates and age limit

Directors are appointed by the General Meeting of Shareholders for a three-year term, and their terms may be renewed. Please note that it will be proposed to an extraordinary General Meeting of Shareholders to be held on 28 April 2011 to extend the term to four years and to modify the Articles of Association of the Company accordingly).

Moreover, an age limit of 70 has been stipulated; this takes effect on the day of the General Meeting of Shareholders following the 70th birthday of a member who, if need be, gives up his current term.

Procedure for appointment, renewal of terms

The process of appointment and re-election of Directors is run by the Board of Directors, which strives to maintain an optimum level of abilities and experience within UCB and its Board of Directors.

Further to the process outlined above under "Designation of Directors ", the proposals for appointment, re-election, renewal, resignation or possible retirement of a Director are examined by the Board of Directors, based on a recommendation from the Remuneration and Nominations Committee.

The Remuneration and Nomination Committee gathers information, allowing the Board of Directors to ensure that the criteria set out above have been met at the time of the appointments and renewals and during the term of office.

For each new directorship appointment, the Remuneration and Nomination Committee performs an assessment of existing and required abilities, knowledge and experience on the Board of Directors. The profile of the ideal candidate is drawn up on the basis of this assessment and proposed to the Board for discussion and definition.

When the profile is established, the Remuneration and Nomination Committee selects candidates who fit the profile, in consultation with the Board members (including the Chairman of the Executive Committee), and possibly using a recruitment firm. Recommendation of the final candidate is made by the Remuneration and Nomination Committee to the Board. The Board decides on the proposals to be submitted to Shareholders' approval.

For appointment of a reference shareholder's representative to the Board, the Vice-Chair will present the candidate chosen by the reference shareholder to the Board, after consultation with the Remuneration and Nomination Committee and dialogue with the Board members.

For each of the directors who are candidate for re-election at the next General Meeting of Shareholders, the Remuneration and Nomination Committee assesses their commitment and effectiveness and makes recommendations to the Board of Directors regarding their re-election. Special attention is given to the evaluation of the Chairman of the Board and the Chairs of the Board committees. The assessment is conducted by the Chairman of the Board of Directors and the Chair of the Remuneration and Nomination Committee who have meetings with each of the directors in their capacity as a director and, as the case may be, as Chair or member of a Board Committee. For the Chairman of the Board the assessment is conducted by the Chair of the Remuneration and Nomination Committee and a senior independent Board member; for the Chair of the Remuneration and Nomination Committee the assessment

is conducted by the Chairman of the Board and a senior independent Board member. The sessions are based on a questionnaire and cover the director's role in the governance of the company and effectiveness of the Board and amongst others how they evaluate their commitment, contribution and constructive involvement in the discussions and decisionmaking. Feedback is given to the Remuneration and Nomination Committee who then reports to the Board and makes recommendations as to the proposed re-election.

The Board of Directors submits to the General Meeting of Shareholders its proposals concerning the appointments, renewals, resignations or possible retirement of Directors. These proposals are communicated to the General Meeting of Shareholders as part of the agenda of the relevant shareholders meeting.

The General Meeting of Shareholders rules on the proposals of the Board of Directors in this area by a majority of the votes.

In the event of a vacancy during a term, the Board of Directors is empowered to fill the post and to allow its decision to be ratified at the next General Meeting of Shareholders.

Proposals for appointment state whether or not the candidate is proposed as an executive Director, define the term proposed for the mandate - currently three years in accordance with the Articles of Association - and indicate the place where all useful information in relation to the professional qualifications of the candidate, in addition to the main functions and directorships of the candidate, may be obtained or consulted. These are available on the UCB website (www.ucb.com).

The Board of Directors likewise indicates whether or not the candidate meets the independence criteria, in particular those stipulated by law in Article 526ter of the Company Code; in the latter case, a proposal will be submitted to the General Meeting of Shareholders to acknowledge such independent character."

8.7.b) Rules governing the amendment of the Company's Articles of Association

The rules governing the amendment of the Articles of Association are set by the Belgian Law. The decision to amend the Articles of Association has to be made by a General Meeting of Shareholders with a majority of 75% of the votes cast, provided that a least 50% of the share capital of UCB S.A. is present or represented at the meeting.

If the attendance quorum is not met at the first extraordinary General Meeting of Shareholders, a second General Meeting of Shareholders can be convened and will decide without any attendance quorum.

8.8. Powers of Board members, in particular the power to issue or buy back shares

Powers of the Board members are those defined by Belgian law and by the Articles of Association.

The Terms of Reference of the Board and the responsibilities that the Board has reserved to itself are further described in the Charter of Corporate Governance of the company as follows:

"The Board of Directors is the Company's governing body. It has the power to make decisions on all matters which the law does not expressly attribute to the General Meeting of Shareholders. The Board acts collegially.

The roles and responsibilities, and the functioning of the Board of Directors, are determined by the Company's Articles of Association and by the terms of reference of the Board of Directors and its Committees described in this Charter.

Among the matters over which it may, by law, make decisions, the Board of Directors has reserved key areas for itself, and has delegated wide powers of administration to an Executive Committee (see point 5).

It did not opt to create a Management Committee in the sense of the Belgian Company Code, since it preferred not to permanently delegate the powers granted to it by the law and the general representation of the Company.

The Board's role is to provide leadership of the Company within a framework of prudent and effective controls that enables risks to be assessed and managed. The Board sets the Company's strategy, ensures that the necessary financial measn and systems, as well as human resources are in place for the Company to meet its objectives and reviews management performance. The Board sets the Company's values and standards and ensures that its obligations to its shareholders and others are understood and met. It takes collegiate responsibility for sound exercise of its authority and powers.

The powers the Board has reserved for itself mainly concern the following - and to this end it also receives all the information required in relation to each of them:

• 1. Definition of the Company's mission, values and strategy, risk tolerance and key policies. Monitoring of:
• a. Management performance and implementation of the company strategy
• b. Effectiveness of the Board committees
• c. Performance of the external auditor
• 2. Appointment or removal:
• a. From among its members, of the Chairman of the Board, after a consultation of all Board members conducted by the Chair of the Remuneration and Nomination Committee
• b. From among its members, of the Chairmen and members of the Audit Committee and of the Remuneration and Nomination Committee
• c. Of the Chairman of the Executive Committee following a proposal by the Remuneration and Nomination Committee
• d. Of members of the Executive Committee following a proposal by the Remuneration and Nomination Committee and recommendation by the Chairman of the Executive Committee
• e. Of senior executives on the recommendation of the Chairman of the Executive Committee
• f. Of persons in major external bodies or of persons outside UCB requested to represent UCB at certain subsidiaries, on the recommendation of the Chairman of the Executive Committee
• g. Reviews the succession planning for the Company's Chairman of the Executive Committee and the other Executive Committee members proposed by the Remuneration and Nomination Committee
• 3. Ensure the integrity and timely disclosure of the financial statements of the UCB Group and UCB S.A. and of material financial and nonfinancial information to shareholders and financial markets
• 4. Approve the framework of internal control and risk management set up by the executive management and controlled by the internal audit with direct access to the Audit Committee
• 5. Preparation of the General Meeting of Shareholders and of the decisions proposed to be considered at the meeting
• 6. Executive management structure and general organisation of UCB (and of the Group)
• 7. Approval of the annual budget (including the R&D programme and

the capital plan) and any increase in the overall annual budget (including the R&D and the capital plan)

• 8. The long-term or major finance operations
• 9. Creating, establishing, closing, settling or transferring subsidiaries, branches, production locations or major divisions exceeding a value of € 50 million
• 10. Allotment, merger, division, purchase, sale or pledging of instruments and shares to a value exceeding € 20 million and involving third parties
• 11. Purchase, sale or pledging of property assets to a value exceeding € 50 million and leases over a period exceeding nine years for an aggregate amount of expenditures exceeding € 20 million
• 12. The terms and conditions of plans for the grant of stock and stock options to employees
• 13. To be informed, at the end of every semester, of the charitable donations in excess of € 10 000 YTD to each single beneficiary
• 14. At the request of the Chairman of the Executive Committee, the Board may also be asked to pronounce in the event of diverging opinions among a majority of the members of the Executive Committee and its Chairman.

No authorisation of the shareholders exists at this date allowing the Board or Board members to issue new Company Shares.

According to a decision of the General Meeting of Shareholders held on 6 November 2009, the Board of Directors of the Company and the Boards of its direct subsidiaries are authorised, in the framework of the authorised capital (Article 603 of the Belgian Company Code), for a period of five years starting 7 November 2009, to acquire shares of UCB, up to maximum 20% of the issued shares, for exchange values equivalent to the closing price of the UCB share on Euronext Brussels on the day immediately preceding the acquisition, plus or minus a maximum of 15%, taking also into account any applicable legal requirement.

Further, there are the warrants (see section 1.3) which under predefined conditions in the evnt of an hostile takeover can be exercised if the above mentioned ad-hoc committee so decides.

• 8.9. Significant agreements to which the company is a party and which take effect, alter or terminate upon a change of control of the issuer following a takeover bid, and the effects thereof, except where their nature is such that their disclosure would be seriously prejudicial to the issuer; this exception shall not apply where the issuer is specifically obliged to disclose such information on the basis of other legal requirements
• Subscription agreement between UCB S.A., Barclays Bank PLC, BNP Paribas, KBC Financial Products UK Limited, ABN AMRO Bank N.V. (London Branch), Calyon, and Commerzbank AG, dated 30 September 2009, which Change of Control clause was approved by the General Meeting of Shareholders held on 6 November 2009
• Subscription agreement between UCB S.A., Fortis Bank S.A, ING Belgium S.A. and KBC S.A., dated 23 October 2009, which Change of Control clause was approved by the General Meeting of Shareholders held on 6 November 2009
• Subscription agreement between UCB S.A, Calyon, Commerzbank AG, ING Belgium S.A., Merrill Lynch International, The Royal Bank

of Scotland, Mizuho International, Fortis Bank S.A., and Banco Santander S.A., dated 10 December 2009, which Change of Control clause was approved by the General Meeting of Shareholders held on 29 April 2010

• Facilities agreement between UCB S.A, Commerzbank Aktiengesellschaft, FORTIS BANK S.A./NV, and Mizuho Corporate Bank Nederland N.V. as co-ordinators, mandated lead arrangers and bookrunners, ABN AMRO Bank NV, Belgian branch, Banco Santander, S.A. London Branch, Bank of America Securities limited, Calyon, ING Belgium S.A./NV, KBC Bank NV, and The Bank of Tokyo-Mitsubishi UFJ, Ltd. as mandated lead arrangers and Bookrunners and Banque LBLux S.A., Barclays Capital, Bayerische Landesbank, Intesa Sanpaolo S.p.A., Sumitomo Mitsui Banking Corporation and WestLB AG as mandated lead arrangers, dated 14 December 2009, which Change of Control clause was approved by the General Meeting of Shareholders held on 29 April 2010
• The UCB stock awards and performance share plans by which UCB shares are granted annually by the company to certain employees according to grade and performance criteria, vest according to the rules of both plans after three years, upon condition that its beneficiary remains in continuous employment with the Group.

They also vest upon change of control or merger.

On 31 December 2010, the following number of stock awards and performance shares are outstanding:

• 396 510 stock awards, of which 106 690 will vest in 2011
• 360 250 performance shares, of which 95 000 will vest in 2011.

8.10. Agreements between the issuer and its Board members or employees providing for compensation if the Board members resign or are made redundant without valid reason or if the employment of the employees ceases because of a takeover bid

• For more details, see section 4.2 on the main contractual terms on hiring and termination arrangements for the Chief Executive Officer and members of the Executive Committee. No other agreements provide for a specific compensation of Board members in case of termination because of a takeover bid.
• In additon to the Executive Committee members identified in section 4.2, six employees in the U.S. benefit from a change of control clause that guarantees their termination compensation if the employment of the employee ceases because of a takeover bid. In Europe one employee benefits from such a clause.

9. Application of Article 523 of the Company Code

Excerpt from the minutes of the meeting of the Board of Directors held on 26 February 2010

Present:

Baron K. Boone, Chairman Countess Evelyn du Monceau, Vice-Chair Dr. R. Doliveux, Director H.R.H. Prince Lorenz, Director Dr. P. Fellner, Director Prof. J.P. Kinet, Director Mr. Th. Leysen, Director Mr. G. Mayr, Director Mr. N. J. Ornstein, Director (by phone) Count de Pret, Director Mrs. J. van Rijckevorsel, Director Mr. G. van de Werve, Director

Excused:

Mr. A. De Decker, Director Sir Tom McKillop, Director

In attendance:

Mrs. M. de Cannart, General Secretary

(…)

Prior to any discussion or decision by the Board of Directors concerning the following items on the agenda:

• Approval of the stock option plan 2010
• Approval of the stock award plan 2010
• Approval of the performance share plan 2010

Roch Doliveux, Director, stated that he had a direct financial interest in the implementation of the said decisions. In accordance with Article 523 of the Company Code, this director withdrew from the meeting in order not to attend the discussion by the Board of Directors concerning these issues, nor to participate in the vote.

The Board of Directors established that Article 523 of the Company Code was applicable to these operations.

Therefore, in accordance with the provisions of this article, and in view of the publication in the management report as stipulated in Article 96, section 7 of the Company Code, the Board stated the following:

9.1. Approval of the UCB Stock Option Plan 2010

• The present operation is designed, as in the past, to promote shareholding by some 1 036 employees level MM1 and above of the UCB Group within their company – including the Executive Director who is a member of the Executive Committee – and to financially encourage them by continuing to further involve them in the success of the company and to make them aware of the value of UCB shares on the markets, whilst adhering to the rules governing insider information.
• The financial consequences of the operation for the company, which basically consist in the difference which might exist between the purchase price of own shares by the company and the price of resale of these same shares to the concerned beneficiary when exercising the options in accordance with the conditions stipulated in the plan rules.

Distribution

The Board of Directors approved the recommendations of the Remuneration and Nomination Committee concerning the rules of the stock option allocation on the basis of job category and level of responsibility. Thus a number of 3 300 000 (± 25%) options shall be allocated to some 1 036 employees level MM1 and above of the UCB Group.

Stock Appreciation Rights (SAR) in the U.S. and Phantom Shares in China

UCB will again grant SARs rather than Stock Options in the U.S. The SAR Plan follows the rules of the UCB Stock Option Plan. The only difference is that instead of granting real shares to the participants, it provides them with the ability to benefit from the appreciation in value of UCB stock. This appreciation is paid in cash at the moment of exercise.

In China, UCB will grant Phantom Stock Options rather than Stock Options. The Phantom Stock Option Plan follows the rules of the UCB Stock Option Plan. Any appreciation is paid in cash at the moment of exercise, as is the case for SARs.

Setting the exercise price

The exercise price of these options will be the lower of the two following amounts:

• The average of the closing price over the 30 calendar days preceding the offer (from 2-31 March 2010)
• The closing price of the day preceding the offer (31 March 2010).

UCB will determine a different exercise price for those eligible employees subject to legislation which requires a different exercise price in order to benefit from a reduced taxation.

Vesting

Stock options will have a vesting period of three years as of the date of grant except for countries where this is not allowed or less favorable. As a consequence, for the beneficiaries residing in Belgium, the vesting will occur on the 1st of January of the fourth calendar year following the year of the grant and for the beneficiaries residing in France, the vesting will occur on the day following the fourth anniversary of the grant.

Documentation

The Board subsequently decided on, and approved, the documentation to be issued to the beneficiaries of the offer, specifically the reasons and the terms of the offer as well as the information regarding the number and the nature of the securities offered to them.

Conditions

The Board approved the conditions of the offer of the UCB Stock Option Plan 2010.

9.2. Approval of the UCB Stock Award Plan 2010

The present operation, reserved to the Senior Executives – including the Executive Director who is a member of the Executive Committee – and proposed by the Remuneration and Nomination Committee, is designed to promote shareholding among this category of personnel of the UCB group within the company and to financially encourage them by continuing to further involve them in the success of the company and to make them aware of the value of UCB shares on the

markets, whilst adhering to the rules governing insider information. As this is in line with the remuneration policy for these beneficiaries and is intended to provide a long term incentive, this free share grant is linked to the condition that the beneficiary remains employed within the Group until the end of the vesting period (i.e. normally three years after grant date).

The financial consequences of the operation for the company basically consist in the value of the UCB shares at time of vesting.

Distribution

The Board of Directors approved the recommendations of the Remuneration and Nomination Committee concerning the rules of the free share grant on the basis of job category and level of responsibility. Thus a number of 150 000 shares shall be allocated to 38 Senior Executives within the Group.

Conditions

The Board approved the conditions of the offer of the UCB Stock Award Plan 2010.

Documentation

The Board subsequently decided on, and approved, the documentation to be issued to the beneficiaries of the offer, specifically the reasons and the terms of the offer, as well as the information regarding the number and the nature of the securities offered to them and the conditions of the offer.

9.3. Approval of the UCB Performance Share Plan 2010

The present operation, reserved for Senior Executives who have 'Exceeded Expectations' or who are considered 'Top Performers' including the Executive Director who is a member of the Executive Committee - and proposed by the Remuneration and Nomination Committee, is designed to promote shareholding among this category of personnel of the UCB group within their company, and to financially encourage them by continuing to further involve them in the success of the company and to make them aware of the value of UCB shares on the markets, whilst adhering to the rules governing insider information. This grant is in line with the remuneration policy for these beneficiaries and is intended to provide a long term incentive.

The vesting of this performance share award is linked to the condition that the beneficiary remains employed within the Group for at least three years after grant date and that pre-defined targets are achieved by the UCB Group. The payout will vary from 0% to 150% of the granted amount, depending on the level of achievement of the performance conditions.

The financial consequences of the operation for the company basically consist in the value of the UCB shares at time of vesting.

Distribution

The Board of Directors approved the recommendations of the Remuneration and Nomination Committee concerning the grant of performance shares on the basis of job category, level of responsibility and performance of the beneficiary. Thus a number of 150 000 shares shall be allocated to 28 Senior Executives within the Group (with payout ranging from 0 to 150% depending on meeting the performance conditions set by the Board of Directors).

Conditions

The Board approved the conditions of the offer of the UCB Performance Share Plan 2010.

Documentation

The Board subsequently decided on, and approved, the documentation to be issued to the beneficiaries of the offer, specifically the reasons and the terms of the offer, as well as the information regarding the number and the nature of the securities offered to them and the conditions of the offer.

9.4. Allocation of Stock Awards and Performance Shares in exceptional circumstances

In accordance with the measures concurrent to the creation of an "incentive stock" pool, the Board approved to allocate 50 000 shares for allocation of stocks in exceptional circumstances.

The beneficiaries will be identified by the Executive Committee and the Senior Executives, and the grant will be approved by the Executive Committee. The Remuneration Committee will be informed at year-end.

9.5. Delegating powers

The Board decided to delegate all powers to the Chairman of the Executive Committee of the company, currently Roch Doliveux, and to the General Secretary of the company, currently Michèle de Cannart, acting individually with the right to delegate, in order to ensure the execution of the decisions taken and specifically to finalise the rules and regulations of the issues, the documentation for the beneficiaries and the exercise procedure.

10. Application of Article 96 § 2 al. 2 of the Belgian Company Code

• (Deviations from the Belgian Code on Corporate Governance) According to the Law, the Board or the Statutory Auditor(s) must call an extraordinary general meeting upon the written request of shareholders representing jointly 20% of the share capital of the Company. The Board of Directors has not adopted as a rule that shareholders representing a lower percentage of the capital may add proposals of resolutions to the shareholders meeting (principle 8.8. of the Belgian Code on Corporate Governance). The Board will however carefully consider each request of a Shareholder to add an item on the agenda of a Shareholders meeting and decide on each

request in the best interest of the Company. The Board is indeed of the opinion that proposals which are not in the corporate interest, and those where a favorable majority vote of the shareholders meeting is not expected, should not unnecessarily extend the agenda and the duration of the shareholders meeting.

• The other deviation from the Belgian Code on Corporate Governance (principle 5.2./4) concerns the composition of the Audit Committee and is explained under section 3.2. of this Statement

Financial report

	Operating and financial review	71
1.	Business performance review	71
2. M	anagement report	73
	Consolidated financial statements	80
1. C	onsolidated income statement	80
2. C	onsolidated statement of comprehensive income	81
3. C	onsolidated statement of financial position	82
4. C	onsolidated statement of cash flows	83
5. C	onsolidated statement of changes in equity	84
6. N	otes to the consolidated financial statements	85
	Report of the statutory auditor	138
	Abbreviated statutory financial statements of UCB S.A.	139

Operating and Financial Review

1. Business performance review1

This Operating and Financial Review is based on the consolidated financial statements for the UCB Group of companies prepared in accordance with IFRS. The separate statutory financial statements of UCB S.A. prepared in accordance with Belgian Generally Accepted Accounting Principles, together with the report of the Board of Directors to the General Assembly of Shareholders, as well as the auditors' report will be filed at the National Bank of Belgium within the statutory periods, and be available on request or on our website.

1.1. Key highlights

• Revenue in 2010 increased by 3% to € 3 218 million. Net sales went up by 4% due to the solid performance of the three core products Cimzia®, Vimpat® and Neupro®, strong Keppra® sales in Europe as well as venlafaxine XR in North America, partially offset by the generic competition to the mature product portfolio. Royalty income and fees was down by 3% as a result of biotechnology

intellectual property expiry. Other revenue increased by 3% due to higher contract manufacturing sales.

• Recurring EBITDA reached € 731 million in 2010 compared to € 698 million in 2009, reflecting the revenue increase offset by launch expenses for Cimzia®, Vimpat®, Neupro® and start of new clinical development programmes.

• Net profit decreased from € 513 million in 2009 to € 103 million in 2010, reflecting a strong 2010 operational result, higher nonrecurring expenses mainly stemming from impairment charges linked to Toviaz® and one-time write-offs relating to the disposal of three manufacturing facilities to Aesica, partially offset by one-off income taxes. Net profit adjusted for non-recurring and one-off items reached € 239 million, which is 6% above the € 226 million of adjusted net profit for 2009.

• Core EPS increased from € 1.74 in 2009 to € 1.99 per share in 2010.

	Actual		Variance
€ million	2010	2009	Actual rates	Cst rates
Revenue	3218	3116	3%	0%
Net sales	2786	2683	4%	0%
Royalty income and fees	220	227	-3%	-7%
Other revenue	212	206	3%	0%
Gross profit	2165	2 091	4%	-1%
Marketing and selling expenses	-797	-781	2%	-3%
Research and Development expenses	-705	-674	5%	2%
General and administrative expenses	-194	-189	3%	1%
Other operating income/expenses (-)	-2	6	n.s.	n.s.
Recurring EBIT (REBIT)	467	453	3%	-7%
Non recurring income/expenses (-)	-263	384	n.s.	n.S.
EBIT (operating profit)	204	837	-76%	-80%
Net financial expenses	-185	-162	14%	13%
Income from associates	0	0	n.s.	n.s.
Profit before income taxes	19	675	-97%	-102%
Income tax expenses(-)/credit	86	-168	n.s.	n.s.
Profit from continuing operations	105	507	-79%	-85%
Profit/loss (-) from discontinuing operations	-1	7	n.s.	n.s.
Non-controlling interest	-1	-1
Net profit of the Group	103	513	-80%	-85%
Recurring EBITDA	731	698	5%	-3%
Adjusted net profit	239	226	6%	-8%
Capital expenditures (including intangible assets)	78	87	-10%	n.s.
Net financial debt	1525	1752	-13%	n.s.
Cash flow from operating activities	506	295	72%	n.s.
Number of shares - non-diluted	180	180
EPS (€ per non-diluted share)	0.57	2.85	n.s.	n.s.
Core EPS (€ per non-diluted share)	1.99	1.74	15%	4%

1.2. 2010 key events

There have been a number of key events that have affected or will affect UCB financially:

Important agreements / initiatives

• Expanding manufacturing capacity for Cimzia®: In December 2010, UCB has initiated a project to build in-house biotech microbial manufacturing capacity in Bulle, Switzerland to secure demand for its core product Cimzia® (certoluzimab pegol). The new manufacturing unit should be operational in 2015 and requires an investment of € 250 million in two steps.
• UCB optimises its manufacturing network: In December 2010, UCB agreed with Aesica, a leading pharmaceutical manufacturer, that Aesica acquires current UCB manufacturing facilities in Germany and Italy. The agreement is part of UCB's strategy to optimise its manufacturing network.
• Strategic alliance in neurology with Synosia: In October 2010, UCB and Synosia Therapeutics announced a new strategic partnership in neurology. Synosia has granted UCB a license for exclusive, worldwide rights to the development compound SYN-115 and rights to a second compound, SYN-118, for nonorphan indications. Both are in Phase 2 clinical development for the treatment of Parkinson's disease. Synosia is responsible for the development up to the end of Phase 2. UCB will be responsible for subsequent development and commercialisation. UCB also became a key shareholder of Synosia Therapeutics. In January 2011, Biotie Therapies acquired Synosia, thereby creating a leading central nervous system development company. UCB now holds 8.94% of the shares of Biotie Therapies.
• Strategic alliance with WILEX strengthened: In June 2010, UCB acquired an additional 6.65% of shares in WILEX, partner to develop UCB's oncology portfolio, thereby increasing UCB's total holding in WILEX to 18.05%.
• Agreement with Chiesi for Innovair® marketing in EU: In July 2010, UCB and Chiesi agreed, that the marketing of the asthma product Innovair® (beclomethasone/formoterol) in Europe will be taken over by Chiesi itself.
• Divestment of primary care mature products in Japan: In May 2010, UCB decided to exit the primary care market in Japan through a transfer of its primary care products to Taiho Pharmaceuticals, an affiliate of Otsuka Holdings.
• Decision to exit the primary care market in the U.S: Effective 1 March 2010, UCB exited the primary care market in the U.S. During July 2010, UCB also out-licensed the U.S. marketing rights for a bundle of six established products to Actient Pharmaceutical.

Regulatory update and pipeline progress

Central Nervous System (CNS)

• In September 2010, UCB Japan and Otsuka Pharmaceutical launched levetiracetam in Japan under the brand name E Keppra® following regulatory approval in adjunctive therapy for partial onset seizures in adults with epilepsy.
• A new Phase 3 study evaluating brivaracetam as adjunctive therapy in the treatment of partial onset seizures in adults with epilepsy has commenced in December 2010. The headline results are expected in the first half of 2013.
• For the epilepsy medicine Vimpat® (lacosamide), the U.S. monotherapy (Phase 3) development programme in partial-onset seizures is ongoing, with first results expected in the second quarter 2013. At the end of 2010, UCB started a Phase 3 clinical

study across Europe to evaluate the efficacy and safety of Vimpat® as monotherapy in adult patients. Headline results are expected at the end of 2014. First positive results were reported from the paediatric Phase 2 programme investigating Vimpat® as adjunctive therapy in children.

The Vimpat® (lacosamide) Phase 2 clinical trial programme for adjunctive therapy in primary generalised tonic-clonic seizures (PGTCS) started in the second quarter of 2010 with first headline results expected in the second half of 2011. Since the end of 2010, UCB holds worldwide development and marketing rights for Vimpat®: UCB acquired the rights for Japan.

• In April 2010, UCB received a Complete Response Letter from the U.S. regulatory authority, the FDA, recommending the reformulation of Neupro® (rotigotine) before making it available in the U.S. market for the treatment of Parkinson's disease (PD) and restless legs syndrome (RLS). UCB aims to make the patch available to U.S. patients during 2012, subject to regulatory approval.
• UCB has filed Xyrem® (sodium oxybate) in fibromyalgia with the European Medicines Agency (EMA). UCB expects feedback from the European authorities during the first half of 2011.
• The Phase 1 program, for UCB2892, a H3 antagonist with potential for cognitive disorders has been terminated by UCB as tests showed an unfavorable risk/benefit profile of this drug candidate.
• UCB0942, a new drug candidate with an innovative mechanism of action, "pre-and-post synaptic inhibitor" (PPSI), has been designed for the treatment of drug refractory epilepsy. Phase 1 studies started in December 2010.

Immunology

• Two clinical studies on Cimzia® (certolizumab pegol) for the treatment of rheumatoid arthritis (RA) in Japan completed positively ahead of plan, both trials met their primary endpoints. Submission of an application for regulatory approval to the Japanese authorities is under preparation in collaboration with Otsuka Pharmaceutical.
• In December 2010, enrolment started to the Phase 3 programme (EMBODY™ 1 and EMBODY™ 2) for epratuzumab in patients with moderate to severe systemic lupus erythematosus (SLE). Approximately 780 patients randomised in each study are to be recruited. First results are expected in the first half of 2014.
• CDP7851 ("sclerostin antibody" also known as AMG 785), a novel anabolic therapy for bone loss disorders, is currently ongoing with its Phase 2 development in post-menopausal osteoporosis and in fracture healing. These studies are expected to report headline results by the end of the second quarter 2011 and in 2012, respectively.
• A Phase 2b programme for olokizumab (anti-IL 6) being developed for the treatment of moderate to severe rheumatoid arthritis (RA) started ahead of plan at the end of 2010. Headline results are expected in the third quarter of 2012.
• In April 2010, a new molecule entered clinical Phase I: CDP7657, a humanised anti-CD40L antibody fragment, which has potential for systemic lupus erythematosus (SLE).

Other

• MEK inhibitor: UCB's partner, WILEX AG, Munich/Germany, announced in June 2010 the successful completion of a Phase 1 dose escalation study with the oncology MEK inhibitor WX‑554 demonstrating WX-554 activity in humans for the first time.

2. Management report1

Scope change: UCB pursued its transformation towards becoming a global biopharma leader by acquiring Schwarz Pharma in 2006. UCB has consolidated the balance sheet of the Schwarz Pharma Group since 31 December 2006. The results of the Schwarz Pharma group of companies have been consolidated as from 1 January 2007 onwards. UCB announced on 8 May 2009 that it intended to acquire the outstanding Schwarz Pharma shares held by the minority shareholders by way of a "squeeze-out" procedure. UCB owns 100% of the outstanding shares as of 8 July 2009.

As a result of the divestment of the remaining non-pharma activities (i.e. Surface Specialties) in February 2005, UCB reports the results from those activities as a part of profit from discontinued operations.

Recurring and non-recurring: Transactions and decisions of a onetime nature that affect UCB's results are shown separately ("nonrecurring" items). Besides EBIT (earnings before interest and taxes or operating profit), a line for "recurring EBIT" (REBIT or recurring operating profit), reflecting the ongoing profitability of the company's biopharmaceutical activities, is included. The recurring EBIT is equal

to the line "operating profit before impairment, restructuring and other income and expenses" reported in the consolidated financial statements.

Adjusted net profit: Transactions and decisions of a one-time nature that are impacting UCB's results for both periods under review are highlighted separately ("non-recurring items" and "one-off items"). For like-for-like comparison purposes, a line with "adjusted net profit", reflecting the ongoing after-tax profitability of the biopharmaceutical activities, is included. Adjusted net profit is equal to the line "profit" reported in the consolidated financial statements, adjusted for discontinued operations and the after-tax impact of non-recurring items and one-off items.

Core EPS: The adjusted net profit, as defined above, adding back the after tax amortisation of intangible assets linked to sales. per nondilluted share

Core products: The "core products" are UCB's newly launched products being Cimzia®, Vimpat® and Neupro®. UCB's priority is the continued launch and growth of those three products.

2.1. Net sales by product – total net sales amount to € 2786 million or 4% higher than the period before

Actual			Variance
€ million	2010	2009	Actual rates	Cst rates
Core products
Cimzia®	198	75	163%	151%
Vimpat®	133	46	190%	179%
Neupro®	82	61	34%	33%
Other products
Keppra® (includ. Keppra® XR)	942	913	3%	0%
Zyrtec® (includ. Zyrtec-D®/Cirrus®)	229	268	-15%	-22%
venlafaxine XR	162	109	49%	42%
Xyzal®	115	132	-13%	-16%
Tussionex™	80	147	-46%	-48%
Nootropil®	66	70	-5%	-9%
omeprazole	65	64	1%	-4%
Metadate™ CD	54	72	-26%	-30%
Other	660	727	-9%	-12%
Total net sales	2786	2683	4%	0%

Core products

Cimzia® (certolizumab pegol), available in the U.S. (since May 2009) and in Europe (October 2009) for patients suffering from moderately to severely active rheumatoid arthritis (RA) and available in the U.S. (April 2008) and Switzerland for Crohn's disease (CD) reached net sales of € 198 million, an increase of 163%.

Vimpat® (lacosamide), for epilepsy, available in Europe (since September 2008) and in the U.S. (June 2009) as add-on therapy for the treatment of partial-onset seizures reached net sales of € 133 million, a plus of 190%.

Neupro® (rotigotine), available to patients in Europe with Parkinson's disease and for restless legs syndrome (RLS) showed net sales increasing to € 82 million (+34%).

Other products

Keppra® (levetiracetam), for epilepsy, reported net sales of € 942 million (of which € 83 million for Keppra® XR in the U.S.) which is 3% higher than last year. Further post-patent expiry erosion in North America (-13%), market leadership in Europe (+11%) and in the Rest of World (+21%) are the factors of this performance.

Zyrtec® (cetirizine, including Zyrtec®-D/Cirrus®), for allergy, decreased net sales by 15% to € 229 million due to the divestment of nonstrategic small markets to GlaxoSmithKline (GSK) in the first quarter of 2009. European sales remained stable, whilst Japanese sales decreased by 12%.

Venlafaxine XR, to treat major depressive and social anxiety disorders, achieved 49% higher net sales of € 162 million in the U.S., despite generic competition since August 2010. UCB holds exclusive rights from Osmotica to market and sell venlafaxine hydrochloride XR in the U.S.

Xyzal® (levocetirizine), for allergy, reported net sales of € 115 million, going down by 13% following entry of generic competitors in Europe. Xyzal® U.S. sales are not consolidated. UCB's part of the profit-sharing agreement with sanofi-aventis in the U.S. is reported under the line "other revenue".

Tussionex™ (hydrocodone polistirex and chlorpheniramine polistirex), an anti-tussive in the U.S., was impacted by a weak cold and cough season, the market shift to codeine-based products and generic competition since October 2010. Net sales reached € 80 million (-46%), including net sales of the generic drug launched by UCB's generic arm in the U.S.

Nootropil® (piracetam), for cognitive disorders, reached net sales of € 66 million (-5%), with stable sales in Europe and a decrease in the Rest of World.

omeprazole, a generic product for hyperacidity disease, achieved net sales of € 65 million, 1% higher than last year.

Metadate™ CD (methylphenidate HCI), for attention deficit and hyperactivity disorder marketed in the U.S., reported net sales of € 54 million, a decrease of 26%. The product was also sold under the trademark Equasym® XL in Europe and "Rest of World" and was divested to Shire early 2009.

Other products: Net sales for other mature products went down by 9% to € 660 million, due to product divestments, generic competition and the maturity of the portfolio.

2.2. Net sales by geographical area

North America net sales in 2010 went up by 8% to € 1 024 million. Cimzia®, for patients suffering from Crohn's disease (CD) and rheumatoid arthritis (RA), increased net sales by 137% to € 166 million. The anti-epileptic drug Vimpat® reached net sales of € 96 million, plus 220%. The Keppra® franchise declined to € 278 million, down by 13% year-over-year. While Keppra® (off-patent since late 2008) faces further post-patent expiry erosion (-27%), Keppra® XR net sales were up by 50% to € 83 million. Tussionex™ net sales were impacted by a weak cold and cough season, the market shift to codeine-based products and generic competition since October 2010. Net sales reached € 80 million (-46%), including net sales of the generic drug launched by UCB's generic arm in the U.S. Venlafaxine XR reached net sales of € 162 million (+49%) despite generic competition since August 2010.

Europe net sales reached € 1 421 million in 2010, up by 4%. Cimzia® net sales increased from € 5 million in 2009 to € 31 million in 2010, driven by further national launches throughout Europe. The new antiepileptic drug Vimpat® more than doubled net sales to € 36 million. Neupro® for the treatment of Parkinson's disease and restless legs syndrome reached net sales of € 81 million, an increase of 34% year-over-year. Market leading Keppra® net sales increased by 11% to € 606 million. The decrease in the allergy drugs Xyzal® (€ 88 million; -22%) and Zyrtec® (€ 71 million; -4%) was due to generic competition in most European countries.

'Rest of World' net sales in 2010 amounted to € 348 million, a decrease of 7%. Excluding the markets divested to GSK in 2009, "Rest of World" net sales went up by 2%. All three new core products, Cimzia®, Vimpat® and Neupro®,are now available to patients in this region, with first launches in Australia, Hong Kong, Mexico and other markets. Each core product achieved net sales of € 1 million. Market leading Keppra® net sales went up by 21% and reached net sales of € 58 million.

Net sales in Japan went down by 8% to € 178 million, due to lower Zyrtec® net sales amounting to € 133 million (-12%). Net sales of the newly launched UCB products in Japan, E Keppra® and Xyzal®, achieved € 16 million.

Zyrtec® net sales in the other "Rest of World" countries also decreased.

		2010/2009 Variance
	Actual			at Actual rates		at constant rates
€ million	2010	2009	€ million	%	€ million	%
Net sales North America	1024	948	75	8%	25	3%
Core products
Cimzia®	166	70	96	137%	88	125%
Vimpat®	96	30	66	220%	61	205%
Other products
Keppra® (including Keppra® XR)	278	320	-43	-13%	-57	-18%
Tussionex™	80	147	-67	-46%	-71	-48%
venlafaxine XR	162	109	53	49%	46	42%
Other	243	273	-30	-11%	-42	-15%
Net sales Europe	1421	1370	51	4%	32	2%
Core products
Cimzia®	31	5	26	518%	26	509%
Vimpat®	36	16	20	129%	20	127%
Neupro®	81	60	20	34%	20	33%
Other products
Keppra®	606	545	61	11%	54	10%
Xyzal®	88	114	-26	-22%	-27	-24%
Zyrtec® (including Cirrus®)	71	73	-3	-4%	-6	-8%
Nootropil®	57	57	0	0%	-2	-3%
Other	451	500	-49	-10%	-53	-11%
Net sales Rest of World	348	375	-28	-7%	-64	-17%
Core products
Cimzia®	1	0	1	n.s.	0	n.s.
Vimpat®	1	0	1	n.s.	0	n.s.
Neupro®	1	0	1	n.s.	1	n.s.
Other products
Zyrtec® (including Cirrus®)	150	183	-33	-18%	-49	-27%
Keppra®	58	48	10	21%	3	6%
Xyzal®	25	17	8	48%	5	31%
Nootropil®	9	13	-3	-27%	-4	-35%
Other	103	114	-11	-10%	-18	-16%
Unallocated	-7	-11

Net sales – 2009

2.3. Royalty income and fees

	Actual		Variance
€ million	2010	2009	Actual rates	Cst rates
Biotechnology IP	98	116	-16%	-20%
Toviaz®	52	41	28%	28%
Zyrtec® U.S.	19	23	-18%	-22%
Other	51	48	8%	3%
Royalty income and fees	220	227	-3%	-7%

Royalty income and fees for 2010 amounted to € 220 million, down by € 7 million or 3% compared to the same period last year. Royalties for UCB's biotechnology intellectual property (IP) decreased with 16% due to expiration of the "Winter patents" mid 2010. Royalties for Toviaz® (fesoterodine) went up by 28% to € 52 million. Zyrtec® U.S.

royalty income received on the over-the-counter sales amounted to € 19 million in 2010 compared to € 23 million in the same period last year. Royalty expenses are reported as part of cost of sales.

2.4. Other revenue

	Actual Variance
€ million	2010	2009	Actual rates	Cst rates
Contract manufacturing sales	101	94	8%	5%
Provas™ and other profit sharing	33	25	29%	29%
Xyzal® U.S. milestones / profit sharing	28	47	-41%	-44%
Otsuka	20	26	-24%	-25%
Other	30	14	123%	127%
Other revenue	212	206	3%	0%

Other revenue for 2010 amounted to € 212 million, up by 3% or € 6 million.

The increase of contract manufacturing sales to € 101 million, 8% higher compared to the same period last year, was essentially the result of the agreements with GSK and Shire announced in 2009.

The profit sharing agreement with Novartis on the cardiovascular drug Provas™, Jalra® and Icandra® in Germany represents € 33 million, up by 29%. Profit sharing with sanofi-aventis on Xyzal® in the U.S.

generated € 28 million down by 41%. Since 1 March 2010, sanofiaventis U.S. assumes all of the commercialisation responsibility for Xyzal®. UCB continues to receive a percentage of Xyzal® profits, however at a lower rate than before and overall profits will be impacted by generic competition. The 2010 Otsuka-related other revenue pertains to the reimbursement of R&D expenses and milestones recognised as part of the agreements entered into by Otsuka and UCB in June 2008 for E Keppra® and Cimzia® in Japan.

2.5. Gross profit

	Actual		Variance
€ million	2010	2009	Actual rates	Cst rates
Revenue	3218	3116	3%	0%
Net sales	2786	2683	4%	0%
Royalty income and fees	220	227	-3%	-7%
Other revenue	212	206	3%	0%
Cost of sales	-1053	-1 025	3%	1%
Cost of sales products and services	-724	-769	-6%	-6%
Royalty expenses	-155	-128	22%	18%
Amortisation of intangible assets linked to sales	-173	-128	36%	33%
Gross profit	2165	2091	4%	-1%
of which
Products and services	2273	2119	7%	2%
Net royalty income	64	100	-35%	-38%
Amortisation of intangible assets linked to sales	-173	-128	36%	33%

Gross profit of € 2 165 million is 4% higher than 2009 following the increase of net sales and more than compensated for the increased royalty expenses for the newly launched products and amortisation of these products.

Cost of sales has three components, the cost of sales for products and services, royalty expenses and the amortisation of intangible assets linked to sales:

Cost of sales for products and services: The cost of sales for products and services decreased by € 45 million from € 769 million in 2009 to € 724 million in 2010. This reduction is the combined result of industrial efficiencies on yield and discards, consolidation of external partners and improvements in the biotech production.

Royalty expenses: Royalties increased from € 128 million in 2009 to € 155 million in 2010 as a result of royalties relating to the newly launched products (Cimzia®, Vimpat®) and venlafaxine XR.

	Actual		Variance
€ million	2010	2009	Actual rates	Cst rates
Biotechnology IP	-36	-33	10%	6%
Other	-119	-95	25%	37%
Royalty expenses	-155	-128	22%	18%

Amortisation of intangible assets linked to sales: Under IFRS 3 (Business Combinations), UCB has reflected on its balance sheet a significant amount of intangible assets relating to the Celltech and Schwarz Pharma acquisitions (in-process Research and Development, manufacturing know-how, royalty streams, trade names, etc.), which gave rise to amortisation expenses of € 173 million in 2010, compared to € 128 million in 2009, representing the amortisation of intangible assets for which products have already been launched.

2.6. Recurring EBIT and recurring EBITDA

	Actual		Variance
€ million	2010	2009	Actual rates	Cst rates
Revenue	3218	3116	3%	0%
Net sales	2786	2683	4%	0%
Royalty income and fees	220	227	-3%	-7%
Other revenue	212	206	3%	0%
Gross profit	2165	2 091	4%	-1%
Marketing and selling expenses	-797	-781	2%	-3%
Research and development expenses	-705	-674	5%	2%
General and administrative expenses	-194	-189	3%	1%
Other operating income/expenses (-)	-2	6	n.s.	n.s.
Total operating expenses	-1 698	-1 638	4%	0%
Recurring EBIT (REBIT)	467	453	3%	-7%
Add: Amortisation of intangible assets	190	142	33%	30%
Add: Depreciation charges	73	102	-28%	-31%
Recurring EBITDA (REBITDA )	731	698	5%	-3%

Operating expenses, encompassing marketing and selling expenses, research and development expenses, general and administrative expenses and other operating income/expenses, reached € 1 698 million in 2010, 4% higher than last year, reflecting:

• € 16 million higher marketing and selling expenses, or an increase of 2%, driven substantially by the increased launch expenses for Cimzia®, Vimpat® and Neupro®.
• € 31 million higher research and development expenses, or a 4% increase, reflecting the advanced late-stage pipeline and the start of clinical development programmes.
• € 5 million higher general and administrative expenses or an increase of 3%.

Recurring EBIT is up by 3% mainly due to the increase of net sales.

Recurring EBITDA is up by 5% to € 731 million compared to 2009, reflecting the increase in revenue and gross profit offset by launch expenses for the core products and the start of clinical development programmes.

2.7. Net profit and adjusted net profit

	Actual		Variance
€ million	2010	2009	Actual rates	Cst rates
Recurring EBIT	467	453	3%	-7%
Impairment charges	-223	-126	78%	73%
Restructuring expenses	-40	-73	-46%	-48%
Gain on disposals	49	594	n.s.	n.s.
Other non recurring income/expenses (-)	-49	-11	n.s.	n.s.
Total non recurring income/expenses (-)	-263	384	n.s.	n.s.
EBIT (operating profit)	204	837	-76%	-80%
Net financial expenses	-185	-162	14%	13%
Income from associates	0		n.s.	n.s.
Profit before income taxes	19	675	-97%	-102%
Income tax expenses (-)/credit	86	-168	n.s.	n.s.
Profit from continuing operations	105	507	-79%	-85%
Profit/loss (-) from discontinued operations	-1	7	n.s.	n.s.
Non-controlling interests	-1	-1	n.s.	n.s.
Net profit	103	513	-80%	-85%
After-tax non-recurring items and financial one-offs	216	-298	n.s.	n.s.
Profit/loss from discontinued operations	1	-7	n.s.	n.s.
Tax one-offs	-81	17	n.s.	n.s.
Adjusted net profit (after non-controlling interests)	239	226	6%	-8%

Total non-recurring income/expenses amounted to € 263 million pre-tax expense, compared to € 384 million pre-tax income in 2009. The 2009 non-recurring items included restructuring charges amounting up to € 73 million mainly for the organisational changes in Belgium and the U.K. and the exit of the primary care sector in the U.S. announced in January 2010. The impairment on intangible assets in 2009 reflected mainly the impairment on the development project CDP323 and reduction in value in use of other intangible and tangible assets for a total of € 126 million. The gain on disposal amounted in 2009 to € 594 million before tax or € 477 million net after tax gains mainly on the divestitures of commercial operations and product distribution rights for selected smaller markets to GSK, the divestiture of Equasym® to Shire, and the divestiture of Somatostatine-UCB™ to Eumedica.

The 2010 non-recurring items include € 223 million impairment charges mainly related to Toviaz®, Mylotarg® and the manufacturing facilities disposed to Aesica. The € 40 million restructuring expenses include the PCP business in Japan and Turkey, items related to the SHAPE programme and other severance costs. The divestment of small businesses gave rise to a gain on disposal of € 49 million, offset by other non-recurring expenses of € 49 million mainly related to write-offs of three manufacturing facilities disposed to Aesica of € 20 million and charges related to the U.S. Department of Justice. Since 2008, as previously reported, UCB has been cooperating with the United States Department of Justice in an investigation relating to the marketing of Keppra®. Recently, the Company reached an agreement in principle with the United States and participating states to settle this investigation. Under the agreement in principle, UCB Inc. will plead guilty to a misdemeanor violation and pay US\$ 8.6 million and enter into a civil settlement of US\$ 25.8million plus modest interest. UCB is continuing to work with the authorities to conclude this investigation. The issues that were the subject of this investigation occurred more than six years ago. Since then, UCB has established and continues to enhance its compliance program. UCB's compliance program reflects the Company's commitment to the highest standards of corporate conduct.

Net financial expenses increased from € 162 million in 2009 to € 185 million in 2010, or by € 23 million. Last year the financial expenses included the debt re-financing and certain expenses related to re-financing, amongst others an accelerated amortisation of arrangement fees and termination of hedge-accounting on existing interest rate hedges. The increased net financial expenses in 2010 are due to higher interest rates, fees, € 7 million one-off revocation of the cash-settlement option related to the convertible bond in February 2010 and termination of hedge-accounting on interest rate derivatives.

The average tax rate on recurring activities is 23% in 2010 compared to 29% in the same period of last year. The difference is mainly due to income reduction realized in high tax jurisdictions. The non-recurring items include € 81 million of one-off tax income that mainly arise from positive outcome of tax claims, the reversal of certain tax provisions as a result of the expiration of statute of limitations, provision adjustments and the recognition of previously unrecognized deferred tax assets.

Net profit after non-controlling interest for the year reached € 103 million, i.e. € 410 million below prior year, reflecting the higher non-recurring expenses and on-off tax income.

Adjusting for the after-tax impact of non-recurring items and financial one-offs and for the after-tax contribution from discontinued operations, adjusted net profit reached € 239 million, which is 6% above the € 226 million of adjusted net profit for 2009.

2.8. Capital expenditure

The tangible capital expenditure resulting from UCB biopharmaceutical activities amounted to € 54 million in 2010 compared to € 38 million in 2009.The 2010 capital expenditures related mainly to improvement and replacement, as well as investments supporting new product, a new biotech pilot plant in Braine-l'Alleud (Belgium) and delivery devices.

Acquisition of intangible assets reached € 24 million in 2010 (versus € 49 million in 2009) for the payment of license products, milestones and software.

In addition, as foreseen in the agreement between UCB and Lonza for the manufacturing by Lonza of PEGylated antibody fragment-based bulk actives, UCB has participated in the pre-financing of the related capital expenditure. Depreciation charges on this investment are recognised in the cost of goods sold and is added back for recurring EBITDA calculation purposes.

2.9. Balance sheet

Intangible assets: Further to the ongoing amortisation of the intangible assets related to the acquisition of Celltech and Schwarz Pharma (€ 173 million), the impairment (€193 million) mainly on the fesoterodine royalty stream and the impact of the increasing U.S. dollar and British pound, intangible assets decreased by € 312 million from € 1 953 million at 31 December 2009 to € 1 641 million at 31 December 2010.

Goodwill: Goodwill amounts € 4 718 million or a € 166 million increase between 31 December 2009 and 31 December 2010 reflecting the impact of the increasing U.S. dollar and British pound.

Other non-current assets: Other non-current assets increased by € 57 million, mainly driven by investments in WILEX AG and Synosia Therapeutics Holding AG, recognition of previously not recognised deferred tax assets, offset by further depreciation and impairment of tangible assets.

Current assets: The decrease from € 1 794 million as of 31 December 2009 to € 1 731 million as of 31 December 2010 mainly as a reduction of trade receivables due to credit collection in various markets and the execution of the refinancing.

Shareholders' equity: UCB's shareholders' equity, at € 4 592 million, increased by € 175 million between 31 December 2009 and 31 December 2010. Equity increased by the amount of net profit after non-controlling interest (€ 103 million), € 180 million cumulative translation adjustments due to the increasing U.S. dollar and British pound, the after tax derivative component linked to the convertible bond (€ 48 million) and the fair value adjustments related to the derivative financial instruments, the available for sale financial assets and the cash flow hedges (€ 14 million), offset by € 173 million as the result of dividends declared on the 2009 results.

Non-current liabilities: The decrease in non-current liabilities from € 2 641 million to € 2 524 million is mainly related to the deferred tax liabilities on the amortisation of the intangible assets, the recognition of the deferred tax liabilities on the revocation of the cash-settlement option related to the convertible bond in February 2010 and the decrease in the derivative financial instruments.

Current liabilities: The decrease in current liabilities from € 2 062 million to € 1 853 million results from a decrease in the provisions related to the SHAPE programme, repayment of the debt and an increase in trade and other liabilities.

Net debt: The net debt of € 1 525 million represents a reduction of € 227 million compared to € 1 752 million as of end December 2009.

2.10. Cash Flow Statement

The evolution of cash flow generated by biopharmaceuticals activities is affected by the following:

Cash flow from operating activities: The increase in cash flow from operating activities from € 295 million to € 506 million results from a solid operational performance, a major reduction in the trade receivables due to credit collection, higher trade payables offset by payments related to restructuring programmes.

Cash flow from investing activities: The cash flow from investing activities amounted to € 473 million inflow in 2009 and was mainly driven by the divestitures of commercial operations and product distribution rights for selected smaller markets to GSK, the divestiture of Equasym® to Shire, the divestiture of Somatostatine-UCB™ to Eumedica. The 2010 € 63 million outflow results from € 78 million spending in tangible and intangible assets, an increase of the shareholding in WILEX AG to 18.05% and the 19.06% investment in Synosia Therapeutics Holding AG, offset by the proceeds of the divestiture of small businesses.

Cash flow from financing activities has an outflow € 440 million due to the repayment of the short term portion of the Group borrowings and the dividend payment relating to the 2009 results.

2.11. Outlook 2011

UCB's results in 2011 are expected to be driven by the continued intense growth of Cimzia®, Vimpat® and Neupro® which should compensate to a large extent – but not entirely - the effects of the remaining major patent expiries. From 2012 onwards, more than a decade without major patent expiration combined with momentum of new products is expected to provide a solid basis for driving UCB's growth.

Total revenue is expected between € 3.0 to € 3.1 billion in 2011 due to generic competition to Keppra® in the EU and the full annualised generic competition to U.S. products as well as further erosion of mature products, partially offset by the performance of newly launched products.

In 2011, UCB's recurring EBITDA is expected to be in the range between € 650 and € 680 million.

Core EPS 2011 is expected to reach approximately € 1.60 and € 1.70 based on 180 million shares outstanding.

Consolidated Financial Statements

1. Consolidated income statement

For the year ended 31 December	Note	2010	2009
€ million
Continuing operations
Net sales	5	2786	2683
Royalties		220	227
Other revenue	8	212	206
Revenue		3218	3116
Cost of sales		-1 053	-1025
Gross profit		2165	2 091
Marketing and selling expenses		-797	-781
Research and development expenses		-705	-674
General and administrative expenses		-194	-189
Other operating income/expenses (-)	11	-2	6
Operating profit before impairment, restructuring and other income and expenses		467	453
Impairment of non-financial assets	12	-223	-126
Restructuring expenses	13	-40	-73
Other income and expenses	14	0	583
Operating profit		204	837
Financial income	15	9	59
Financing costs	15	-194	-221
Share of profit/loss (-) of associates	21	0	-
Profit/loss (-) before income taxes		19	675
Income tax expense (-)/ credit	16	86	-168
Profit/loss (-) from continuing operations		105	507
Discontinued operations
Profit/loss (-) from discontinued operations	7	-1	7
Profit		104	514
Attributable to:
Equity holders of UCB SA		103	513
Non-controlling interest		1	1
Basic earnings per share (€)
from continuing operations	37	0.58	2.81
from discontinued operations	37	-0.01	0.04
Total basic earnings per share		0.57	2.85
Diluted earnings per share (€)
from continuing operations	37	0.57	2.71
from discontinued operations	37	-0.01	0.04
Total diluted earnings per share		0.56	2.75

2. Consolidated statement of comprehensive income

For the year ended 31 December	Note	2010	2009
€ million
Profit for the period		104	514
Other comprehensive income
Net gain/loss(-) on available for sale financial assets	17	1	0
Income tax		0	0
		1	0
Exchange differences on translation of foreign operations		179	-54
Effective portion of gains/losses(-) on cash flow hedges	17	7	102
Income tax		0	-2
		7	100
Net gain/loss(-) on hedge of net investment in foreign operation	17	0	0
Income tax		0	0
		0	0
Share of other comprehensive income of associates	21	1	0
Income tax		0	0
		1	0
Other comprehensive income/loss (-) for the period, net of tax		188	46
Total comprehensive income for the period, net of tax		292	560
Attributable to:
Equity holders of UCB S.A.		293	560
Non-controlling interests		-1	0
Total comprehensive income for the period, net of tax		292	560

3. Consolidated statement of financial position

For the year ended 31 December	Note	2010	2009
€ million
ASSETS
Non-current assets
Intangible assets	18	1 641	1 953
Goodwill	19	4 718	4 552
Property, plant and equipment	20	505	534
Deferred income tax assets	31	217	158
Employee benefits	32	18	12
Investments in associates	21	16	-
Financial and other assets (including derivative financial instruments)	22	123	117
Total non-current assets		7238	7326
Current assets
Inventories	23	434	405
Trade and other receivables	24	705	819
Income tax receivables		9	14
Financial and other assets (including derivative financial instruments)	22	61	53
Cash and cash equivalents	25	494	486
		1703	1777
Assets of disposal group classified as held for sale	6	28	17
Total current assets		1731	1794
Total assets		8969	9120
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable to UCB shareholders	26	4 590	4 415
Non-controlling interests		2	2
Total equity		4 592	4 417
Non-current liabilities
Borrowings	28	32	23
Bonds	29	1 683	1 654
Other financial liabilities (including derivative financial instruments)	30	43	130
Deferred income tax liabilities	31	316	404
Employee benefits	32	105	104
Provisions	33	218	211
Trade and other liabilities	34	127	115
Total non-current liabilities		2 524	2 641
Current liabilities
Borrowings	28	308	566
Other financial liabilities (including derivative financial instruments)	30	79	63
Provisions	33	92	169
Trade and other liabilities	34	1172	1036
Income tax payables		198	228
		1849	2062
Liabilities of disposal group classified as held for sale	6	4	0
Total current liabilities		1853	2062
Total liabilities		4377	4703
Total equity and liabilities		8969	9120

4. Consolidated statement of cash flows

For the year ended 31 December	Note	2010	2009
€ million
Profit for the year attributable to equity holders of UC B SA		103	513
Non-controlling interests		1	1
Depreciation of property, plant and equipment	9, 20	65	78
Amortisation of intangible assets	9, 18	190	142
Impairment of non-financial assets	9, 12	223	126
Impairment of financial assets	15, 22	0	3
Loss/gain (-) on disposals of property, plant and equipment		0	0
Loss/gain (-) on disposals other than property, plant and equipment		-61	-102
Share-based payment expense	27	20	16
Profit from discontinued operations	7	1	-7
Profit from disposed operations, other than discontinued operations		-2	-501
Net interest income(-)/expense		168	131
Net non-cash financing costs		-51	-31
Financial derivatives – changes in fair value and cash flow hedges transferred to	15	9	80
equity
Dividend income	15	0	-1
Income tax expense/credit (-)	16	-86	168
Cash flow from operating activities before changes in working capital, provisions and		580	616
employee benefits
Decrease/increase (-) in inventories		-17	-5
Decrease/increase (-) in trade and other receivables and other assets		175	58
Increase/decrease (-) in trade and other payables		126	-21
Increase/decrease (-) in provisions and employee benefits		-91	-135
Net cash generated from operating activities		773	513
Interest received		53	64
Interest paid		-190	-194
Income taxes paid		-130	-88
CASH FLOW FROM OPERATING ACTIVITIES		506	295
Acquisition of intangible assets	18	-24	-49
Acquisition of property, plant and equipment	20	-54	-38
Acquisition of minority interests in Schwarz Pharma AG, net of cash acquired		0	-94
Acquisition of other investments		-21	-12
Proceeds from sale of intangible assets		26	111
Proceeds from sale of property, plant and equipment		2	23
Proceeds from sale of businesses, net of cash disposed		2	515
Proceeds from sale of other investments		6	16
Dividends received	15	0	1
CASH FLOW FROM INVESTING ACTIVITIES		-63	473
Proceeds from issuance of share capital		0	0
Proceeds from borrowings	28	3 336	528
Repayment of borrowings	28	-3 600	-2830
Proceeds from bonds issuance	29	0	1 735
Repayment of finance lease liabilities		-2	-2
Purchase(-)/re-issuance of treasury shares	26	0	0
Dividend paid to UCB shareholders net of dividend paid on treasury shares		-174	-167
CASH FLOW FROM FINANCING ACTIVITIES		-440	-736
CASH FLOWS FROM DISCONTINUED OPERATIONS
		0	0
NET INCREASE /DECREASE (-) IN CASH AND CASH EQUIVALENTS		3	32
Cash and cash equivalents less bank overdrafts at the beginning of the year	25	466	434
Effect of exchange rate fluctuations		8	0
CASH AND CASH EQUIVALENTS LESS BANK OVERDRAFTS AT THE END OF THE YEAR	25	477	466

5. Consolidated statement of changes in equity

2010 - € million						Attributed to equity holders of UCB S.A.
	Share capital and share premium	Treasury shares	Retained earnings	Other reserves	Cumulative translation adjustments	Available for sale financial assets	Cash flow hedges	Net investment hedge	Total	Non-controlling interests	Total stockholders' equity
Balance at 1 January 2010	2151	-125	2 630	232	-523	0	-5	55	4415	2	4 417
Profit for the period			103						103	1	104
Other comprehensive income/ loss (-)					180	1	7		188	-1	187
Share of other comprehensive income of associates					1				1		1
Total comprehensive income			103		181	1	7		292	0	292
Dividends			-173						-173		-173
Share-based payments			15						15		15
Transfer between reserves		7	-7						0		0
Treasury shares		-7							-7		-7
Equity component of				48					48		48
convertible bond Balance at 31 December 2010	2151	-125	2568	280	-342	1	2	55	4590	2	4592
2009 - € million						Attributed to equity holders of UCB S.A.
	Share capital and share premium	Treasury shares	Retained earnings	Other reserves	Cumulative translation adjustments	Available for sale financial assets	Cash flow hedges	Net investment hedge	Total	Non-controlling interests	Total stockholders' equity
Balance at 1 January 2009	2 151	-125	2276	232	-469	0	-105	55	4015	2	4017
Profit for the period Other comprehensive income/ loss (-)			513		-54	0	100		513 46	0	513 46
Total comprehensive income			513		-54	0	100		559	0	559
Dividends			-166						-166		-166
Share-based payments			10						10		10
Transfer between reserves		3	-3						0		0
Treasury shares		-3							-3		-3
Capital increase
Balance at 31 December 2009	2151	-125	2 630	232	-523	0	-5	55	4415	2	4 417

1. General information 86
2. Summary of significant accounting policies 86
3. Critical judgements and accounting estimates 95
4. Financial risk management 97
5. Segment reporting 102
6. Non-current assets held for sale 102
7. Discontinued operations 103
8. Other revenue 103
9. Operating expenses by nature . 104
10. Employee benefit expense 104
11. Other operating income/expenses 104
12. Impairment of non-financial assets 105
13. Restructuring expenses 105
14. Other income and expenses 105
15. Financial income and financing costs 106
16. Income tax expense (-) / credit 106
17. Components of other comprehensive income 107
18. Intangible assets 108
19. Goodwill 109
20. Property, plant and equipment 109
21. Investment in associates 110
22. Financial and other assets 111
23. Inventories 112
24. Trade and other receivables 112
25. Cash and cash equivalents 113
26. Capital and reserves 113
27. Share-based payments 114
28. Borrowings 118
29. Bonds 119
30. Other financial liabilities 120
31. Deferred tax assets and liabilities 120
32. Employee benefits 121
33. Provisions 123
34. Trade and other liabilities 124
35. Financial instruments by category 124
36. Derivative financial instruments 125
37. Earnings per share 127
38. Dividend per share 128
39. Commitments and contingencies 129
40. Related party transactions 130
41. Events after the balance sheet date 132
42. UCB companies 132
43. Responsibility statement 137

1. General information

UCB S.A. (UCB or the company) and its subsidiaries (together the Group) is a global biopharmaceutical company focused on severe diseases in two therapeutic areas namely Central Nervous System disorders and Immunology.

The consolidated financial statements of the company as at and for the year ended 31 December 2010 comprise the Company and its subsidiaries. Within the Group, only UCB Pharma S.A., a wholly owned subsidiary, has a branch in the U.K. that is integrated into its accounts.

UCB S.A., the parent company, is a limited liability company incorporated and domiciled in Belgium.

The registered office is at 60, Allée de la Recherche, B-1070 Brussels, Belgium. UCB S.A. is listed on the Euronext Brussels Stock Exchange.

The Board of Directors approved these consolidated financial statements and the statutory financial statements of UCB S.A. for issue on 1 March 2011. The shareholders will be requested to approve the statutory financial statements of UCB S.A. at their annual meeting on 28 April 2011.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1. Basis of preparation

The consolidated financial statements of the company have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use by the European Union. All IFRS's issued by the International Accounting Standards Board (IASB) and effective at the time of preparing these consolidated financial statements have been adopted for use in the European Union through the endorsement procedure established by the European Commission.

The consolidated financial statements have been prepared using the historical cost convention, except that certain items including available for sale financial assets, derivative financial instruments and liabilities for cash-settled share based payment arrangements are measured at fair value.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

Where necessary, the comparatives have been reclassified in order to enhance inter-period comparability of information presented in current and prior years.

2.2. Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year except as follows:

The group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 January 2010:

• IAS 27 (Revised), Consolidated and Separate Financial Statements. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the

entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. This change in accounting policy was applied prospectively although there has been no impact for the year ended 31 December 2010 since there have been no transactions whereby an interest in an entity is retained after the loss of control of that entity, and there have been no transactions with non controlling interests. (Refer to note 2.4. Consolidation (b) Transactions and non-controlling interests).

• IFRS 3 (Revised), Business Combinations. The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, the definition of a business has been broadened, which is likely to result in more acquisitions being treated as business combinations.
• All payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition-related costs should be expensed. The changes to IFRS 3 and IAS 27 above will affect future acquisitions or loss of control and transactions with non controlling interests. The revised standard was applied prospectively to all business combinations from 1 January 2010 and has had no impact on the financial position of the Group. (Refer to note 2.4. Consolidation (a) Subsidiaries)

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2010, but are not currently relevant for the Group:

• IAS 39 (Amendment), Financial Instruments: Recognition and Measurement – Eligible Hedged Items.
• 2009 Annual Improvements to IFRS's.
• IFRS 2 (Amendment), Share-based payment Group cash-settled share-based payments.
• IFRS 1 (Amendment), First time adoption of IFRS Additional exemptions for first time adopters
• IFRIC 17, Distribution of non-cash assets to owners

2.3. New standards and interpretations not yet adopted

The following standards, amendments to existing standards, and interpretations have been published and are mandatory for the Group accounting periods beginning on or after 1 January 2011 or later periods, but the Group has not early adopted them:

• IAS 32 (Amendment), Financial instruments; presentation Classification of rights issues (effective from 1 February 2010). The amendment provides relief to entities that issue rights in a currency other than their functional currency, from treating the rights as derivatives with fair value changes recorded in profit or loss. Such rights will now be classified as equity instruments when certain conditions are met. Application of the amendment is retrospective and will result in the reversal of profits or losses previously recognised. This amendment will be applied from 1 January 2011 but will have no impact on the Group because it has not carried out any rights issues.
• IAS 24 (Revised), Related party disclosures (effective from 1 January 2011). The revised Standard simplifies the disclosure requirements for entities that are controlled, jointly controlled or significantly influenced by a government (referred to as government-related entities) and clarifies the definition of a related party. The Group is still evaluating the impact of this amendment on the financial statements and will apply the revised standard from 1 January 2011.
• IFRS 9 Financial instruments (effective from 1 January 2013). IFRS 9 is part of wider project to replace IAS 39 Financial Instruments: Recognition and Measurement over the next year. The first phase of the IAS 39 replacement project deals with the classification and measurement of financial assets only. The standard simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortised cost and fair value. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of financial assets. The guidance in IAS 39 on impairment of financial assets, hedge accounting, financial liabilities and derecognition continues to apply. The aim is to replace IAS 39 in its entirety by the end of 2011. The Group will apply IFRS 9 retrospectively from 1 January 2013. The Group has yet to assess IFRS 9's full impact.
• IFRIC 14 (Amendment), Prepayments of a Minimum Funding Requirement (effective from 1 January 2011). The amendment applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset. The Group is still evaluating the impact of this amendment on the financial statements.
• IFRIC 19 Extinguishing Financial liabilities with Equity Instruments (effective from 1 July 2010) clarifies the requirements of IFRSs when an entity negotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity's shares or other equity instruments to settle the financial liability fully or partially. The Group will apply this interpretation from 1 January 2011. It is not expected to have any impact on the Group's financial statements.

• IFRS 1 (Amendment) First-time adoption of IFRS's Limited exemption from comparative IFRS 7 disclosures for first-time adopters (effective from 1 July 2010). This amendment provides the same relief to first-time adopters as was given to current users of IFRSs upon adoption of the amendments to IFRS 7. It also clarifies the transition provisions of the amendments to IFRS 7. This amendment will have no impact on the Group because it is not a first time adopter of IFRS.

• 2010 Annual Improvements to IFRS's (effective from 1 July 2010). The IASB issued In May 2010 improvements to IFRS's, an omnibus of amendments to its standards. The amendments have not been adopted as they become effective for annual periods on or after either 1 July 2010 or 1 January 2011. The Group is still evaluating the impact of those amendments on the financial statements.

• IFRS 1 (Amendment) First-time adoption of IFRSs (effective from 1 July 2011). The amendments result in the removal of fixed dates (for example 1 January 2004) and instead will make reference to the date of transition to IFRSs. These amendments will have no impact on the Group because it is not a first time adopter of IFRS.
• IAS 12 (Amendment) Income Taxes (effective from 1 January 2012). The amendments introduce a presumption that an investment property is recovered entirely through sale.This amendment will have no impact since the Group has no investment property.

2.4. Consolidation

Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.

Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Transactions and non controlling interests

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between 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.

When the group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are classified to profit or loss where appropriate.

Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% - 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

The Group share of its associates' post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Dilution gains and losses arising in investments in associates are recognised in the income statement.

2.5. Segment reporting

The Group's activities are in one segment, Biopharmaceuticals. There are no other significant classes of business, either singularly or in aggregate. The Chief Operating Decision Makers, that being the Executive Committee, review the operating results and operating plans, and make resource allocation decisions on a company-wide basis, therefore UCB operates as one segment.

2.6. Foreign currency translation

The following important exchange rates were used in preparing the consolidated financial statements:

	Closing rate		Average rate
	2010	2009	2010	2009
USD	1.337	1.433	1.324	1.391
JPY	108.460	133.5	115.875	130.0
GBP	0.857	0.888	0.857	0.891
CHF	1.248	1.483	1.377	1.510

The closing rates represent spot rates as at 31 December 2010 and 31 December 2009.

Functional and presentation currency

Items included in the individual financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated Financial statements are presented in euro (€), which is the functional currency of the company, and the presentation currency of the Group.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in the carrying amount are recognised in other comprehensive income.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss.

Translation differences on non-monetary financial assets such as equities classified as available for sale are included in the available for sale reserve in other comprehensive income..

Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
• Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

• All resulting exchange differences are recognised in other comprehensive income (referred to as 'cumulative translation adjustments').

On consolidation, exchange difference arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. When a foreign operation is partially or wholly disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.7. Revenue

Revenue is recognised when it is probable that future economic benefits associated with the transaction will flow to the entity and that these benefits can be measured reliably. The amount of revenue is not considered to be reliably measured until all contingencies relating to the sale have been resolved.

Revenue represents the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group activities. Revenue is shown net of value added tax, returns, rebates, trade discounts, and cash discounts related to Medicaid in the U.S. and similar programmes in other countries.

Sale of goods

Revenue from the sale of goods is recognised when:

• The significant risks and rewards of the ownership of goods are transferred to the buyer;
• The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
• The amount of revenue can be measured reliably;
• It is probable that the economic benefits associated with the transaction will flow to the entity; and
• The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Estimates of expected sales returns, charge-backs granted to government agencies, wholesalers, managed care and other customers are deducted from revenue at the time the related revenue is recorded or when the incentives are offered.

Such estimates are calculated on the basis of historical experience and the specific terms in the individual agreements.

Royalty income

Royalties are recognised on an accrual basis in accordance with the substance of the relevant agreement.

Interest income

Interest is recognised on a time proportion basis that takes into account the effective yield on the asset.

Dividend income

Dividends are recognised when the shareholder's right to receive the payment is established.

2.8. Cost of sales

Cost of sales includes primarily the direct production costs, related production overheads and the amortisation of the related intangible assets as well as services rendered. Start-up costs are expensed as incurred. Royalty expenses directly linked to goods sold are included in 'cost of goods sold'.

2.9. Other revenue

Other revenue comprises revenue generated through out-licensing and profit-sharing agreements as well as contract manufacturing agreements. Other revenue is recognised as it is earned or as the related service is performed.

The Group receives from third parties upfront, milestone and other similar payments related to the sale or out-licensing of products. Revenue associated with performance milestones is recognised based upon the achievement of the milestone event if the event is substantive, objectively determinable and represents an important point in the development life cycle of the pharmaceutical product. Upfront payments and license fees for which there are subsequent deliverables are initially reported as deferred income and are recognised as revenue when earned over the period of the development collaboration or the manufacturing obligation.

2.10. Research and development

Internally-generated intangible assets - research and development expenditure

All internal research and development costs are expensed as incurred. Due to long development periods and significant uncertainties related to the development of new products (such as the risks related to the outcome of clinical trials as well as the likelihood of regulatory approval), it has been concluded that the Group internal development costs in general do not qualify for capitalisation as intangible assets.

Acquired intangible assets

In-process research and development projects acquired either through in-licensing arrangements, business combinations or separate purchases are capitalised as intangible assets.

These intangible assets are amortised on a straight-line basis over their estimated useful life from the moment that they are available for use.

2.11. Impairment of non-financial assets, restructuring expenses, other income and expenses

Assets that have an indefinite useful life such as goodwill are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever 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 assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Impairment losses are presented in the income statement under the 'impairment of non-financial assets' caption.

The expenses made by the Group in order to be better positioned to face the economic environment in which it operates are presented in the income statement as 'restructuring expenses'.

The gains and losses arising upon the sale of intangible assets or property, plant and equipment as well as increases or reversals of provisions for litigations, other than tax litigations or litigations related to discontinued operations, are presented in the income statement as 'other income and expenses'.

2.12. Income taxes

The tax expense for the period comprises current and deferred income taxes. Tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company's subsidiaries operate and generate taxable income.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred income tax liabilities are generally recognised for all taxable temporary differences and deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. Deferred income tax is not accounted for if it arises from the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction (other than in a business combination) that at the time of the transaction affects neither accounting nor taxable profit.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred income tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised.

Deferred income tax assets and liabilities are not discounted.

2.13. Intangible assets

Patents, licenses, trademarks and other intangible assets

Patents, licenses, trademarks and other intangible assets (collectively referred to as 'intangible assets') are shown at historical cost. Intangible assets acquired in a business combination are recognised at fair value at the acquisition date.

Intangible assets (except for goodwill) are amortised over their useful lives on a straight-line basis as from the moment they are available for use (i.e. when regulatory approval has been obtained). Estimated useful life is based on the lower of the contract life or the economic useful life (between five to 20 years). Intangible assets (except for goodwill) are considered to have a finite economic useful life; therefore no intangible assets with an indefinite life have been identified.

Computer software

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives (three to five years) on a straight-line basis.

2.14. Goodwill

Goodwill arises when the cost of a business combination at the date of acquisition exceeds the fair value of the Group share of the net identifiable assets of the acquired subsidiary. Goodwill is initially recognised as an asset at cost and is subsequently carried at cost less accumulated impairment losses. Goodwill related to the acquisition of subsidiaries is presented separately on the face of the balance sheet, whereas goodwill arising upon acquisition of associated companies is included in the investment in associated companies.

UCB operates as one segment and accordingly has one cash generating unit for the purpose of impairment testing.

As goodwill is considered to have an indefinite life, it is tested for impairment annually, and whenever there is an indication that it may be impaired, by comparing its carrying amount with its recoverable amount. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses on goodwill are not reversed.

On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the entity.

In the event that the fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess remaining after reassessment is recognised directly in the statement of comprehensive income.

2.15. Property, plant and equipment

All property, plant and equipment are carried at cost less accumulated depreciation and impairment losses except for property, plant and equipment under construction, which is carried at cost less accumulated impairment losses.

Cost includes all directly attributable costs of bringing the asset to its working condition for its intended use.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed as they are incurred.

Land is not depreciated.

Depreciation is calculated using the straight-line method to allocate the cost of assets, other than land and properties under construction, to their residual values over their estimated useful lives. Depreciation commences when the asset is ready to be used.

The residual value and the useful life of an asset are reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change(s) is(are) accounted for as a change in an accounting estimate in accordance with IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors).

The following useful lives are applicable to the main property, plant and equipment categories:

• Buildings	20 – 33 years
• Machinery	7 – 15 years
• Laboratory equipment	7 years
• Prototype equipment	3 years
• Furniture and fixtures	7 years
• Vehicles	5 – 7 years
• Computer equipment	3 years

• Asset held under finance lease shorter of asset's useful life and leasing term

Gains and losses on disposals are determined by comparing the proceeds from disposal with the carrying amount and are recognised under 'other income and expenses' in the income statement.

Investment property is indicative of land and buildings held to earn rentals. Such assets are initially carried at cost and depreciated on a straight-line basis over their estimated useful lives. The underlying useful lives correspond to those of self-used tangible assets. Given the insignificant amount of investment property, it is not separately presented in the balance sheet.

2.16. Leases

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Finance leases

Assets held under finance leases are recognised as assets of the Group at the lower of their fair value and the present value of the minimum lease payments less cumulative depreciation and impairment losses. The corresponding liability to the lessor is included in the balance sheet as obligations under finance leases.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the income statement.

The depreciable amount of a leased asset is allocated to each accounting period during the period of expected use on a systematic basis consistent with the depreciation policy the Group adopts for depreciable assets that are owned.

If there is reasonable certainty that the Group will obtain ownership by the end of the lease term, the period of expected use is the useful life of the asset; otherwise the asset is depreciated over the shorter of the lease term and its useful life.

Operating leases

Lease payments under an operating lease are recognised in the income statement on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

2.17. Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its intangible assets, goodwill and property, plant and equipment to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.

Irrespective of whether there is an indication of impairment, an impairment assessment of the intangibles not yet available for use and goodwill is carried out annually. These assets are not amortised.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. To determine the value in use, the Group uses estimates of future cash flows generated by the asset or the CGU, using the same methods as those used in the initial measurement of the asset or the CGU on the basis of the medium-term plans of each business activity.

Estimated cash flows are discounted using an appropriate rate that reflects current market assessments of the time value of money and the risks specific to the asset or the CGU.

An impairment loss is recognised directly in the income statement. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. The reversal of the impairment is recognised in the income statement. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Impairment losses on goodwill are never reversed.

Intangible assets are assessed for impairment on a compound by coumpound basis.

2.18. Financial assets

Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired.

Management determines the classification of its financial assets at initial recognition.

Financial assets at fair value through profit or loss

An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group financial market risk management policy. Derivative financial instruments are also categorised as held for trading unless they are designated as hedges.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than

12 months after the balance sheet date. These are classified as noncurrent assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet.

Available for sale financial assets

Available for sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets at fair value through profit or loss are initially recognised at fair value and the transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method, less any impairment losses.

The fair value of listed investments is based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques.

Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are recognised in the income statement in the period in which they arise while gains or losses arising from changes in the fair value of available for sale financial assets are recognised directly in other comprehensive income. On disposal/impairment of availablefor-sale financial assets, any cumulative gains or losses that have been deferred in equity are recycled to the income statement.

2.19. Impairment of financial assets

Assets carried at amortised cost

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the group uses to determine that there is objective evidence of an impairment loss include:

• significant financial difficulty of the issuer or obligor;
• a breach of contract, such as default or delinquency in interest or principal payments;

• the group, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;

• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

• the disappearance of an active market for that financial asset because of financial difficulties; or
• observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:

(a) adverse changes in the payment status of borrowers in the portfolio; and

(b) national or local economic conditions that correlate with defaults on the assets in the portfolio.

The group first assesses whether objective evidence of impairment exists.

For loans and receivables category, the amount of loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument's fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

Assets classified as available for sale

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the group uses the criteria refer to (a) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the separate consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the separate consolidated income statement.

2.20. Derivative financial instruments and hedging activities

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. The Group does not engage in speculative transactions.

Derivative financial instruments are initially recorded at fair value and attributable transaction costs are recognised in the income statement when incurred. Derivative financial instruments are subsequently remeasured at their fair value.

The method of recognising the resulting gains or losses depends on whether the derivative financial instrument is designated as a hedging instrument and if so, the nature of the item being hedged. The Group designates derivative financial instruments as either cash flow hedges, fair value hedges or net investment hedges.

The Group documents at inception of the transaction the relationship between the hedging instrument and the hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, as to whether the derivative financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The full fair value of a hedging derivative financial instrument is classified as a non-current asset or liability when the remaining hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

Embedded derivative financial instruments are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative financial instrument are not closely related, a separate instrument with the same terms as the embedded derivative financial instrument would meet the definition of a derivative financial instrument, and the combined instrument is not measured at fair value through profit or loss.

Cash flow hedges

The effective portion of changes in the fair value of derivative financial instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within 'financial income'.

If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or a non-financial liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative financial instrument that had previously been recognised in equity are included in the initial measurement of the asset or liability.

If the cash flow hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains or losses that were recognised directly in equity are reclassified to the income statement in the same period or periods during which the asset acquired or liability assumed affects the income statement.

A cash flow hedge relationship is discontinued prospectively if the hedge fails the effectiveness test, the hedging instrument is sold, terminated or exercised, management revokes the designation or the forecasted transactions is no longer highly probable. Where a forecasted transaction is no longer highly probable but still expected to occur, hedging gains and losses previously deferred in equity remain in equity until the transaction affects profit or loss.

Once the forecasted transaction is no longer expected to occur, any gain or loss is released immediately to the income statement.

Fair value hedges

Changes in the fair value of derivative financial instruments that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Net investment hedges

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income; the gain or loss relating to the ineffective portion is recognised immediately in the income statement within 'financial income'. Gains and losses accumulated in equity are recycled to the income statement when the foreign operation is partially disposed of or sold.

Derivative financial instruments that do not qualify for hedge accounting

Certain derivative financial instruments do not qualify for hedge accounting. Changes in the fair value of any derivative financial instruments that do not qualify for hedge accounting are recognised immediately in the income statement within 'financial income'.

2.21. Inventories

Raw materials, consumables and goods purchased for resale are valued at the lower of cost and net realisable value.

Cost is determined using the weighted average cost method. The cost of work in progress and finished goods comprises all the costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The conversion costs include the cost of production and the related fixed and variable production overhead costs (including depreciation charges).

Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

2.22. Trade receivables

Trade receivables are recognised initially at fair value, and are subsequently measured at amortised cost using the effective interest rate method, less provision for impairment.

2.23. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

2.24. Non-current assets (or disposal groups) held for sale and discontinued operations

A discontinued operation is a component of the company that either has been disposed of, or that is classified as held for sale. It represents a major separate line of business or geographical area of operations and is part of a single coordinated plan to dispose of; or is a subsidiary acquired exclusively with a view to resale.

Non-current assets or a disposal group are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Non-current assets and disposal groups are measured at the lower of the carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Impairment losses upon initial classification as held for sale are recognised in the income statement. Non-current assets classified as held for sale are neither depreciated nor amortised.

2.25. Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. The company did not issue any preference or mandatory redeemable preference shares.

Treasury shares

When any group company purchases the company's equity share capital (treasury shares), the consideration paid, including attributable direct costs (net of income taxes) is deducted from the equity attributable to the company's equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company's equity holders.

2.26. Borrowings

Borrowings and overdrafts are initially measured at fair value, net of transaction costs incurred, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group accounting policy.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.27. Compound financial instruments

Compound financial instruments issued by the Group comprise convertible bonds that can be converted into ordinary shares at the option of the Issuer. The number of shares to be issued does not vary with changes in their fair value. In the past, due to the existence of the Option by the Issuer to redeem in cash, such convertible bonds were separated into a debt and a derivative component.

Upon initial recognition of the bond, the fair value of the debt component was determined based on the present value of the contractually determined stream of cash flows discounted at the rate of interest applied at that time by the market to instruments of comparable credit status and providing substantially the same cash flows, on the same terms, but without the conversion option. Subsequent to initial recognition, the Debt component is measured based on its amortised cost, using the effective interest method.

The remainder of the proceeds was allocated to the conversion option and recognised within 'Other derivatives'. Subsequent to initial recognition, the Derivative component was measured at fair value, with all gains and losses upon re-measurement being recognised in the Income Statement.

As a result of the Board's decision to revoke UCB's rights related to the cash settlement option, the derivative component was reclassified to equity based on its fair value at the date of revocation. The equity component is not re-measured subsequent to initial recognition except on conversion or expiry.

Transaction costs that are directly attributable to the bond offering and incremental, are included in the calculation of the amortised cost, using the effective interest method, and are amortised through the Income Statement over the life of the instrument.

2.28. Trade payables

Trade payables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest method.

2.29. Employee benefits

Pension obligations

The Group has both defined benefit and defined contribution retirement benefit plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligations to pay further contributions in the event that the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Obligations for contributions to defined contribution pension plans are recognised as en employee benefit expense in the income statement when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation less the fair value of plan assets which is then adjusted for unrecognised actuarial gains and losses and unrecognised past service costs. Any asset resulting from this calculation is limited to the total of any unrecognised actuarial losses and past service costs plus the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities.

The Group defined benefit obligation is calculated by independent actuaries using the 'projected unit credit method' with actuarial valuations being carried out regularly, at each balance sheet date for the main plans. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using yields on AA credit-rated bonds that have maturity dates approximating the terms of the Group obligations and that are denominated in the same currency in which the benefits are expected to be paid.

Actuarial gains and losses are amortised over the expected average remaining working lives of the employees participating in the plan, in accordance with 'the corridor approach'. Therefore, actuarial gains and losses are recognised as income or expenses when the cumulative unrecognised actuarial gains or losses at the end of the previous reporting period exceed 10% of the greater of the present value of the retirement benefit obligation and the fair value of the plan assets.

Other long-term employee benefits

Some Group companies provide post-retirement healthcare benefits to their retirees. The Group net obligation is the amount of future benefits that employees have earned in return for their service in the current and prior periods. The expected costs of these benefits are accrued over the period of employment using the same methodology used for defined benefit plans except that all actuarial gains and losses are recognised immediately and no 'corridor' is applied and all past service costs are recognised immediately.

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

Profit-sharing and bonus plans

The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the company's shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation and a reliable estimate of the obligation can be made.

Share-based payments

The Group operates several equity-settled and cash-settled sharebased compensation plans.

The fair value of the employee services received in exchange for the grant of stock options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the stock options granted, excluding the impact of any non-market service and performance vesting conditions (for example profitability, remaining an employee of the entity over a specified time period). Non-market vesting conditions are included in the assumptions about the number of options that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied.

The fair value of the stock option plan is measured at the grant date using the Black-Scholes valuation model which takes into account the expected life and cancellation rate of the options. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the

revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an expense, with a corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is re-measured at each balance sheet date and at settlement date.

Any changes in the fair value of the liability are recognised as personnel expenses in the income statement.

2.30. Provisions

Provisions are recognised in the balance sheet when:

• There is a present obligation (legal or constructive) as a result of a past event;
• It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
• A reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.

A restructuring provision is recognised when the Group has a detailed formal plan and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.

3. Critical judgements and accounting estimates

Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

3.1. Critical judgements in applying the Group accounting policies

Revenue recognition

The nature of the Group business is such that many sales transactions do not have a simple structure.

Sales agreements may consist of multiple arrangements occurring at the same or at different times. The Group is also party to out-licensing agreements, which can involve upfront and milestone payments that may occur over several years and involving certain future obligations. Revenue is only recognised when the significant risks and rewards

of ownership have been transferred and when the Group does not retain continuing managerial involvement or effective control over the goods sold or when the obligations are fulfilled. This might result in cash receipts being initially recognised as deferred income and then released to income in subsequent accounting periods based on the different conditions specified in the agreement.

3.2. Critical accounting estimates and assumptions

The preparation of the financial statements in conformity with IFRS as adopted for use by the European Union requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the

circumstances, the results of which form the basis for making the reported amounts of revenue and expenses that may not be readily apparent from other sources. Actual results will by definition not equal those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.

Sales allowances

The Group has accruals for expected sales returns, charge-backs and other rebates, including Medicaid in the U.S. and similar rebates in other countries. Such estimates are based on analyses of existing contractual obligations or legislation, historical trends and the Group experience. Management believes that the total accruals for these items are adequate, based upon currently available information. As these deductions are based on management estimates, the actual deductions might differ from these estimates. Such differences could impact the accruals recognised in the balance sheet in future periods and consequently the level of sales recognised in the income statement in future period. In general, the discounts, rebates and other deductions shown on the invoice are accounted for as an immediate deduction from gross sales in the income statement. The sales returns, charge-backs, rebates and discounts that are not mentioned on the invoice are estimated, deducted from sales and presented on the balance sheet in the appropriate accrual account and deducted from sales.

Intangible assets and goodwill

The Group has intangible assets with a carrying amount of € 1 641 million (Note 18) and goodwill with a carrying amount of € 4 718 million (Note 19). Intangible assets are amortised over their useful lives on a straight-line basis as from the moment they are available for use (i.e. when regulatory approval has been obtained).

Management estimates that the useful life for acquired in-progress R&D compounds equates to the period these compounds benefit from patent protection or data exclusivity. For the intangible assets acquired through a business combination and which comprises compounds that are marketed but for which no patent protection or data exclusivity exists, management estimates that the useful life equates to the period in which these compounds will realise substantially all the cash contributions.

These intangible assets and goodwill are regularly reviewed for impairment and whenever there is an indication that an impairment might exist. The intangible assets not yet available for use and goodwill are subject to at least annual impairment testing.

To assess if there is any impairment, estimates are made of the future cash flows expected to result from the use of these assets and their eventual disposal. These estimated cash flows are then adjusted to the present value using an appropriate discount rate that reflects the risks and uncertainties associated with the forecasted cash flows.

Actual outcomes could vary significantly from such estimates of discounted future cash flows. Factors such as the entrance or absence of competition, technical obsolescence or lower than expected rights could result in shortened useful lives and impairments.

The Group applied the following key assumptions for the 'value in use' calculations required for the impairment testing of intangible assets and goodwill at year-end:

• Growth rate: 3.0%
• Discount rate in respect of Goodwill and Intangibles related to existing products: 9.1%
• Discount rate in respect of Intangibles related to in-process R&D compounds: 12.2%

Since the cash flows also take into account tax expenses a post-tax discount rate is used in the impairment testing.

Management estimates that the use of the post-tax discount rate approximates the results of using a pre-tax rate applied to pre-tax cash flows.

Environmental provisions

The Group has provisions for environmental remediation costs, which are disclosed in Note 33. The most significant elements of the environmental provisions consist of costs to fully clean and refurbish contaminated sites and to treat contamination at certain other sites, mainly related to the discontinued chemical and films activities of the Group.

Future remediation expenses are affected by a number of uncertainties that include, amongst others, the detection of previously unknown contaminated sites, the method and extent of remediation, the percentage of waste attributable to the Group, and the financial capabilities of the other potentially responsible parties. Given the inherent difficulties in estimating the liabilities in this area, it cannot be guaranteed that additional costs will not be incurred beyond the amounts currently accrued. The effect of resolution of environmental matters on results of operations cannot be predicted due to uncertainty concerning both the amount and timing of future expenditures and the results of future operations. Such changes that arise could impact the provisions recognised in the balance sheet in the future.

Employee benefits

The Group currently has many defined benefit plans, which are disclosed in Note 33. The calculation of the assets or liabilities related to these plans is based upon statistical and actuarial assumptions. This is in particular the case for the present value of the defined benefit obligation which is impacted by assumptions on discount rates used to arrive at the present value of future pension liabilities, and assumptions on future increases in salaries and benefits.

Furthermore, the Group uses statistically-based assumptions covering areas such as future withdrawals of participants from the plans and estimates of life expectancy. The actuarial assumptions used might differ materially from actual results due to changes in market and economic conditions, higher or lower employee turnover, longer or shorter life spans of participants, and other changes in the factors being assessed. These differences could impact the assets or liabilities recognised in the balance sheet in future periods.

4. Financial risk management

The Group is exposed to various financial risks arising from its underlying operations and corporate finance activities.

These financial risks are market risk (including currency risk, interest risk and price risk), credit risk and liquidity risk.

This note presents information about the Group exposure to the above-mentioned risks, the Group policies and processes for managing these risks and Group management of capital. Risk management is carried out by the Group treasury department under policies approved by the Financial Risk Management Committee (FRMC).

The FRMC has been established and includes the Chief Financial Officer and the heads of the Accounting, Reporting & Consolidation department, Financial Control department, Internal Audit department, Tax department and Treasury & Risk department.

The FRMC is responsible for:

• Reviewing the results of UCB risk assessment;
• Approval of the recommended risk management strategies;
• Monitoring compliance with the financial market risk management policy;
• Approval of policy changes; and
• Reporting to the Audit Committee.

The Group financial risk management policies established by the FRMC need to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed by the FRMC on a semi-annual basis to reflect changes in market conditions and the Group activities.

4.1. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group income statement or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures. The Group enters into derivative financial instruments and also incurs financial liabilities in order to manage market risk. Where possible the Group seeks to apply hedge accounting in order to manage volatility in the income statement. It is the Group policy and practice not to enter into derivative transactions for speculative purposes.

Foreign exchange risk

The Group operates across the world and is exposed to movements in foreign currencies affecting its net income and financial position, as expressed in euro. The Group actively monitors its currency exposures, and when appropriate, enters into transactions with the aim of preserving the value of assets and anticipated transactions. The Group uses forward contracts, foreign exchange options and crosscurrency swaps to hedge certain committed and anticipated foreign exchange flows and financing transactions.

The instruments purchased to hedge transaction exposure are primarily denominated in U.S. dollar, GB pound, Japanese yen and Swiss franc, the currencies where the Group has its most important exposures. The Group Financial risk management policy is to hedge for a period of minimum six and maximum 26 months of anticipated cash flows derived from sales, royalties or out-licensing revenues provided that no natural hedges exist.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group foreign operations in the U.S. is managed through borrowings denominated in U.S. dollar. This provides an economic hedge. Currency exposure arising from the net assets of the Group foreign operations in Switzerland is managed through forward contracts.The Group investments in other subsidiaries are not hedged by means of borrowings or forward contracts as those currencies are not considered to be material or are long-term neutral.

The effect of translation exposure arising from the consolidation of the foreign currency denominated Financial statements of the Group foreign subsidiaries is shown as a cumulative translation adjustment in the Group consolidated statement of changes in equity.

Effect of currency fluctuations

At 31 December 2010, if the euro had strengthened or weakened by 10% against the following currencies with all other variables being held constant, the impact on equity and post-tax profit for the year would have been as follows:

€ million	Change in rate	Impact on Equity: loss(-)/gain	Impact on Income Statement: loss(-)/gain
At 31 December 2010
USD	+10%	-123	7
	-10%	147	-7
GBP	+10%	-7	-11
	-10%	9	13
CHF	+10%	-36	-2
	-10%	43	3
At 31 December 2009
USD	+10%	-120	5

	-10%	151	-7
GBP	+10%	-28	-1
	-10%	34	1
CHF	+10%	-34	11
	-10%	41	-13

Interest rate risk

Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. In addition, they can affect the market value of certain financial assets, liabilities and instruments as described in the following section on market risk of financial assets. The interest rates on the Group's major debt instruments are both fixed and floating, as described in Note 28. The Group uses interest rate derivatives to manage its interest rate risk, as described in Note 36.

The Group designates derivative financial instruments (interest rate swaps) as hedging instruments, under fair value hedges, to fixed rate financial assets and liabilities. Both the derivative financial instrument and the hedged item are accounted for at fair value through profit or loss.

The Group also designates derivative financial instruments (interest rate swaps) as hedging instruments, under cash flow hedges, to floating rate financial assets and liabilities. Changes in fair value of such derivative financial instruments are accounted for through equity or through profit or loss only in cases where hedge accounting would no longer be applicable.

In 2010, all changes in fair value resulting from interest rate derivatives designated to the foreign currency denominated floating rate liabilities of the Group are accounted for through profit or loss. This is a consequence of the underlying future cash flows having been assessed to result with high probability from derivative instruments, which do not qualify for accounting of changes in fair value through equity under IAS39.

Effect of interest rate fluctuations

A 100 basis points increase in interest rates at balance sheet date would have increased equity by € 0 million (2009: € 8 million); a 100 basis points decrease in interest rates would have decreased equity by € 0 million (2009: € 8 million). Contrary to 2009, at the balance sheet date there were no more interest rate derivatives outstanding through equity.

A 100 basis points increase in interest rates at balance sheet date would have increased profit and loss by € 8 million (2009: € 8 million); a 100 basis points decrease in interest rates would have decreased profit and loss by € 12 million (2009: € 9 million). These changes to the profit and loss would result from the change in fair value of the cash flow interest rate derivatives designated to the foreign currency denominated floating rate liabilities of the Group, which do not qualify for hedge accounting, as well as the inefficient portion of the fair value hedges designated to a portion of the fixed rate borrowings of the Group (retail bond and institutional eurobond).

Other market price risk

Changes in the market value of certain financial assets and derivative financial instruments can affect the income or the financial position of the Group. Financial long-term assets, if any, are held for contractual purposes and marketable securities are held for mainly regulatory purposes. The risk of loss in value is managed by reviews prior to investing and continuous monitoring of the performance of investments and changes in their risk profile.

Investments in equities, bonds, debentures and other fixed income instruments are entered into on the basis of guidelines with regard to liquidity and credit rating.

Following the issuance by the Group of a € 500 million convertible bond maturing in 2015 (conversion rate at € 38.746), the fair value of the derivative linked to the convertible bond was recorded as a derivative financial liability (refer to Note 36). On February 26, 2010 the Group exercised its right to revoke and cancel its right to make a cash alternative election on the exercise of conversion rights by bondholders. Changes in the fair value of the derivative, due to remeasurement until February 26, 2010, were recorded through profit and loss (2010: € -7 million, 2009: € 5 million – refer to Note 15). On February 26, 2010 the derivative financial liability of € 74 million before taxes has been reclassified into equity without further remeasurement.

Other amounts subject to market price risk are rather immaterial and therefore the impact on equity or the income statement of a reasonable change of this market price risk is assumed to be negligible.

4.2. Credit risk

Credit risk arises from the possibility that the counterparty to a transaction may be unable or unwilling to meet its obligations causing a financial loss to the Group. Trade receivables are subject to a policy of active risk management, which focuses on the assessment of country risk, credit availability, ongoing credit evaluation and account monitoring procedures. There are certain concentrations within trade receivables of counterparty credit risk, particularly in the U.S., due to the sales via wholesalers (Note 24). For some credit exposures in critical countries, the Group has obtained or is seeking to obtain credit insurance.

The exposure of other financial assets to credit risk is controlled by setting a policy for limiting credit exposure to highquality counterparties, regular reviews of credit ratings, and setting defined limits for each individual counterparty.

Where appropriate to reduce exposure, netting agreements under an ISDA (International Swaps and Derivatives Association) master agreement are signed with the respective counterparties. The maximum exposure to credit risk resulting from financial activities, without considering netting agreements, is equal to the carrying amount of Financial assets plus the positive fair value of derivative instruments.

4.3. Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal circumstances without incurring unacceptable losses or risking damage to the Group reputation.

The Group maintains sufficient reserves of cash and readily realisable marketable securities to meet its liquidity requirements at all times. In addition, the Group has certain unutilised revolving committed facilities at its disposal.

At the balance sheet date, the Group had the following sources of liquidity available:

• Cash and cash equivalents (Note 25) € 494 million (2009: € 486 million)
• Marketable non-equity securities (Note 22) € 2 million (2009: € 2 million)
• Unutilised committed facilities (Note 28) € 698 million (2009: € 1 056 million)

The existing committed revolving credit facility of the Group was successfully amended in December 2010 leading to a reduction to € 1 billion from € 1.5 billion and an extension of the maturity to 2015 from 2012.

The table below analyses the contractual maturities of the Group financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date, excluding the impact of netting. The amounts mentioned below with respect to the financial derivatives are indicative of the contractual undiscounted cash flows.

			Less than	Between	Between	Over
€ million	Note	Total	1 year	1 and 2 years	2 and 5 years	5 years
At 31 December 2010
Bank Borrowings	28	295	282	0	13	0
Debentures and other short term loans	28	7	7	0	0	0
Finance lease liabilities	28	21	2	4	12	3
Convertible Bond	29	432	0	0	432	0
Retail Bond	29	756	0	0	756	0
Institutional Eurobond	29	495	0	0	0	495
Trade and other liabilities	34	1299	1172	32	46	49
Bank overdrafts	28	17	17	0	0	0
Interest rate swaps			-13	-5	32	3
Forward exchange contracts used for hedging purposes
Outflow		685	581	104	0	0
Inflow		673	565	109	0	0
Forward exchange contracts and other derivative
financial instruments at fair value through profit or loss
Outflow		2964	2528	212	224	0
Inflow		2972	2557	212	203	0

			Less	Between	Between
€ million	Note	Total	than 1 year	1 and 2 years	2 and 5 years	Over 5 years
At 31 December 2009
Bank Borrowings	29	530	529	0	1	0
Debentures and other short term loans	29	15	14	1	0	0
Finance lease liabilities	29	24	2	4	14	4
Convertible Bond	30	421	0	0	0	421
Retail Bond	30	739	0	0	739	0
Institutional Eurobond	30	494	0	0	0	494
Trade and other liabilities	35	1151	1036	24	56	35
Bank overdrafts	29	20	20	0	0	0
Interest rate swaps			-22	-11	22	3
Forward exchange contracts used for hedging purposes
Outflow			906	188	0	0
Inflow			905	199	0	0
Forward exchange contracts and other derivative financial instruments at fair value through profit or loss
Outflow			2321	0	209	0
Inflow			2317	0	203	0

Net debt is explained in the Glossary enclosed at the end of the Annual Report.

4.4. Capital risk management

The Group policy with respect to managing capital is to safeguard the Group ability to continue as a going concern in order to provide returns to shareholders and benefits to patients and to reduce the Group external debt in order to obtain a capital structure that is consistent with others in the industry.

The Group is closely monitoring its net debt level and wants to obtain an optimal capital structure, similar to the one of a peer group, by lowering substantially its external financial debt by 2012.

€ million	2010	2008
Total borrowings (Note 28)	340	589
Bonds (Note 29)	1 683	1 654
Less: cash and cash equivalents (Note 25), available for sale debt securities (Note 22) and cash collateral related to the financial lease obligation	-498	-491
Net debt	1525	1752
Total equity	4592	4417
Total financial capital	6117	6169
Gearing ratio	25%	28%

4.5. Fair value estimation

The fair value of financial instruments traded in active markets (such as available for sale financial assets) is based on quoted market prices at the balance sheet date.

The fair value of financial instruments that are not traded in an active market is determined by using established valuation techniques such as option pricing models and estimated discounted values of cash flows. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date.

Quoted market prices are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of the interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the balance sheet date.

The carrying amount less impairment provision of trade receivables and trade payables is assumed to approximate their fair values. The

fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rates that is available to the Group for similar financial instruments.

Fair value hierarchy

Effective 1 January 2009, the Group adopted the Amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value. The Amendment requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

Financial Assets measured at fair value

€ million	Level 1	Level 2	Level 3	Total
31 December 2010
Financial assets
Available for sale assets
Quoted Equity securities	15	0	0	15
Quoted Debt securities (Note 22)	3	0	0	3
Derivative financial assets (Note 36)
Forward foreign exchange contracts – cash flow hedges	0	9	0	9
Forward exchange contracts – fair value through profit and loss	0	54	0	54
Interest rate derivatives – cash flow hedges	0	0	0	0
Interest rate derivatives – fair value through profit and loss	0	13	0	13

€ million	Level 1	Level 2	Level 3	Total
31 December 2009
Financial assets
Available for sale assets
Quoted Equity securities	7	0	0	7
Quoted Debt securities (Note 22)	5	0	0	5
Derivative financial assets (Note 36)
Forward foreign exchange contracts - cash flow hedges	0	22	0	22
Forward exchange contracts - fair value through profit and loss	0	32	0	32

Financial Liabilities measured at fair value

€ million	Level 1	Level 2	Level 3	Total
31 December 2010
Financial liabilities
Derivative financial liabilities (Note 36)
Forward foreign exchange contracts – cash flow hedges	0	9	0	9
Forward exchange contracts – fair value through profit and loss	0	60	0	60
Interest rate derivatives – cash flow hedges	0	0	0	0
Interest rate derivatives – fair value through profit and loss	0	44	0	44
Derivative linked to convertible bond	0	0	0	0

€ million	Level 1	Level 2	Level 3	Total
31 December 2009
Financial liabilities
Derivative financial liabilities (Note 36)
Forward foreign exchange contracts – cash flow hedges	0	10	0	10
Forward exchange contracts – fair value through profit and loss	0	43	0	43
Interest rate derivatives – cash flow hedges	0	12	0	12
Interest rate derivatives – fair value through profit and loss	0	51	0	51
Derivative linked to convertible bond	0	67	0	67

During the reporting period ending 31 December 2010, there were no transfers between level 1 and level 2 fair value measurements, and no transfers into and out of level 3 fair value measurements.

5. Segment reporting

The Group's activities are in one segment, Biopharmaceuticals. There are no other significant classes of business, either singularly or in aggregate. The Chief Operating Decision Makers, that being the Executive Committee, review the operating results and operating plans, and make resource allocation decisions on a company-wide basis, therefore UCB operates as one segment. Enterprise-wide disclosures about product sales, geographic areas and revenues from major customers are presented below:

5.1. Product sales information

Net sales consist of the following:

€ million	2010	2009
Cimzia®	198	75
Vimpat®	133	46
Neupro®	82	61
Keppra® (includ. Keppra® XR)	942	913
Zyrtec® (includ. Zyrtec-D®/	229	268
Cirrus®)
Tussionex™	80	147
Xyzal®	115	132
venlafaxine XR	162	109
Metadate™ CD	54	72
Nootropil®	66	70
omeprazole	65	64
Other products	660	726
Total net sales	2786	2683

5.2. Geographic information

The table below shows sales in each geographic market in which customers are located:

€ million	2010	2009
North America	1024	948
Germany	353	295
France	185	194
Italy	141	141
Spain	141	145
U.K. and Ireland	132	153
Belgium	42	44
Rest of the world	768	763
Total net sales	2786	2683

6. Non-current assets held for sale

6.1. Optimisation of manufacturing network

At 15 December 2010, UCB announced its decision to sell its manufacturing sites (plants) of Monheim and Zwickau (Germany) and Pianezza (Italy) to Aesica, a European leader in pharmaceutical manufacturing. This decision is part of UCB's strategy to optimise its manufacturing network in line with the evolution of its portfolio.

Over the years, UCB's product portfolio has been changing significantly, with the company increasingly focusing on severe diseases The table below illustrates the property, plant and equipment in each geographic market in which the assets are located:

Property, plant and equipment

€ million	2010	2009
North America	98	95
Germany	24	57
France	2	2
Italy	0	4
Spain	2	0
U.K. and Ireland	91	104
Belgium	198	189
Rest of the world	90	83
Total	505	534

5.3. Information about major customers

UCB has 1 customer which individually account for more than 10% of the total net sales at the end of 2010.

In the US, sales to 3 wholesalers accounted for approximately 82% of US sales (2009: 87%).

in the Central Nervous System and Immunology areas. This change in product mix has had an impact on production reducing the need for large manufacturing capacity.

As part of the deal, employees in the three affected plants will follow their activity and will be transferred to Aesica.

The deal is expected to close in the first Quarter of 2011.

The major classes of assets and liabilities of the disposal group classified as held for sale at year-end are as follows:

€ million	2010
Assets classified as held for sale
Property, plant and equipment	11
Inventories	17
Total assets	28
Liabilities classified as held for sale
Employee benefits	4
Total liabilities	4

6.2. Other non-current assets held for sale

Other non-current assets held for sale decreased to € 1 million (2009: € 17 million) and is mainly the result of the disposal of small businesses other than discontinued operations. The completion dates for the transactions outstanding at 31 December 2010 are expected during the course of 2011.

€ million	Note	2010	2009
Intangible assets	18	0	14
Property, plant and	20	1	3
equipment
Total		1	17

7. Discontinued operations

The loss from discontinued operations of € 1 million (2009: profit of € 7 million) arose from the partial reversal of provisions related to the legacy chemical activities, including terminations of environmental claims for sites for which UCB retained liability and which were settled in the past 12 months as well as the unwinding of the discount rate.

8. Other revenue

€ million	2010	2009
Revenue generated by means of profit-sharing agreements	61	74
Upfront payments, milestone payments and reimbursements	50	38
Contract manufacturing revenues	101	94
Total other revenue	212	206

The revenue generated through profit-sharing agreements relates primarily to the following items:

• Revenue from the co-promotion of Xyzal® in the U.S. with sanofiaventis, and
• Revenue from the co-promotion of Provas™, Jalra® and Icandra® in Germany with Novartis.

During 2010, UCB received milestone payments and reimbursements from different parties, mainly from:

• Keppra® and Cimzia® related milestones and reimbursements due to the agreement entered into between Otsuka and UCB to copromote E Keppra® for the adjunctive treatment of partial-onset seizures and Cimzia® in Japan,

• Equasym® sales milestones related to the Shire agreement (2009),
• Milestone payments due to the agreement with Actient Pharmaceuticals (announced earlier this year), and
• Other milestones recognised as part of a licensing deal on non-core mature gastro-intestinal products signed early in 2008.

The increase in revenue from contract manufacturing activities is mainly linked to the toll manufacturing agreements entered into with GSK and Shire as well as contract manufacturing revenue earned on products related to the Actient Pharmaceuticals agreement (announced earlier this year) and Delsym™.

9. Operating expenses by nature

The table below illustrates certain items of expense recognised in the income statement using a classification based on their nature within the Group:

Note	2010	2009
10	798	809
20	65	78
18	190	142
12	223	126
	1276	1155

10. Employee benefit expense

€ million	Note	2010	2009
Wages and salaries		562	569
Social security costs		88	98
Post-employment benefits – defined benefit plans	32	38	29
Post-employment benefits – defined contribution plans		17	18
Share-based payments to employees and directors	27	20	16
Insurance		45	37
Other employee benefits		28	42
Total employee benefit expense		798	809

The total employee benefit expense has been allocated along functional lines within the income statement, except in the case of discontinued operations where they have been included, if relevant, in the determination of the profit from discontinued operations. Other employee benefits consist mainly of termination benefits, severance payments, and other long-term/short-term disability benefits.

Headcount at 31 December	2010	2009
Hourly Paid	1 086	1 111
Monthly Paid	3 839	4 238
Management	3 973	3 975
Total	8 898	9 324

Further information regarding post-employment benefits and share-based payments can be found in Notes 27 and 32.

11. Other operating income/expenses (-)

Other operating income/expenses (-) amounted to € -2 million (2009: € 6 million) and consists mainly of the amortisation of non-production related intangible assets of € 5 million (2009: € 2 million); the reversal of provisions of € 5 million (2009: € 13 million); the impairment in

respect of trade receivables of € 7 million (2009: € 7 million) and the reimbursement by third parties for development expenses incurred by the Group of € 4 million.

12. Impairment of non-financial assets

A review of the recoverable amounts of the Group assets resulted in the recognition of impairment charges amounting to € 223 million (2009: € 126 million).

As a result of the yearly impairment testing of the trademarks, patents and licences, an impairment charge of € 190 million (2009: € 7 million) was recognised, mainly related to the write down of the fesoterodine franchise royalty stream (amount: € 176 million) that no longer reflects the latest market estimates (as announced in January 2011) and a write down of Mylotarg® (amount: € 5 million) after Pfizer voluntarily withdrew the product from the market at the request of the U.S. FDA in June 2010. The impairment charge with respect to the other intangible assets amounts to € 3 million (2009: € 103 million).

The 2009 other intangible assets impairment charge includes the development project CDP323 and the know-how pertaining to certain manufacturing processes.

The impairment charge related to the Group property, plant and equipment amounted to € 29 million (2009: € 16 million) of which € 22 million related to the disposal of three manufacturing facilities to Aesica.

No reasonably possible change in a key assumption on which management has based its determination of the assets recoverable amounts would cause the assets carrying amount to exceed its recoverable amount.

13. Restructuring expenses

The restructuring expenses as at 31 December 2010 amount to € 40 million (2009: € 73 million) and can be attributed to restructuring the PCP business in Japan and Turkey, items related to the SHAPE

programme and other severance costs. In 2009 the restructuring expenses included the organisational changes in Belgium and the UK, the exit from the primary care sector in the US and other severance costs.

14. Other income and expenses

Other income amounted to € 0 million (2009: € 583 million) and comprised of the following items:

• Other income from the divestment of small business for € 49 million in 2010 compared to € 572 million in 2009 for the divestiture of certain products and affiliates in selected emerging markets to GSK, the divestiture of the anti-haemorrhagic product Somatostatine-UCBTM to Eumedica and the divestiture of Equasym® to Shire;
• other expenses amounted to € 49 million in 2010 and mainly relate to:
• the write-off with respect to to three manufacturing facilities that will be disposed of to Aesica for € 20 million;
• charges related to the U.S. Department of Justice. Since 2008, UCB has been cooperating with the United States Department

of Justice in an investigation relating to the marketing of Keppra®. Recently, the Company reached an agreement in principle with the United States and participating States to settle this investigation. Under the agreement in principle, UCB Inc., will plead guilty to a misdemeanor violation, pay USD 8.6 million and enter into a civil settlement of USD 25.8 million plus modest interest. UCB is continuing to work with the authorities to conclude this investigation. The issues that were the subject of this investigation occurred more than six years ago. Since then, UCB has established and continues to enhance its compliance program.

• the 2009 other expenses amounted to € 11 million and were related to contract manufacturing capacity for biologicals.

15. Financial income and financing costs

The net financing costs for the year amounted to € 185 million (2009: € 162 million). The breakdown of the financing costs and financial income is as follows:

Financing costs

€ million	2010	2009
Interest expenses on:
Convertible Bond	-33	-6
Retail Bond	-43	-4
Institutional Eurobond	-29	-2
Other borrowings	-50	-93
Interest expenses related to interest rate derivatives	-15	-32
Loss on derivative component of convertible bond	-7	0
Impairment on equity securities	0	-3
Financial charges on finance leases	-1	-1
Net loss on interest rate derivatives	0	-40
Net foreign exchange losses	-	-
Fair value losses on foreign exchange derivatives	-5	-40
Net other financial income/expense(-)	-11	-4
Total financing costs	-194	-225

Financial income

€ million	2010	2009
Interest expenses on:
On bank deposits	3	5
Provisions: unwinding of discount	0	-
Dividend income	0	1
Gain on derivative component of convertible bond	0	5
Net gain/losses(-) on sale of equity financial derivatives	0	10
Net gain/losses(-) on sale of debt securities	0	0
Ineffective portion of cash flow hedges	0	-
Net gain on interest rate derivatives	3	0
Net foreign exchange gains	3	42
Fair value gain on foreign exchange derivatives	-	-
Total financial income	9	63

16. Income tax expense (-)/credit

€ million	2010	2009
Current income taxes	-88	-213
Deferred income taxes	174	45
Total income tax expense(-)/ credit	86	-168

The Group operates in various territories and is therefore subject to income taxes in many different tax jurisdictions.

The income tax expense on the Group profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated companies as follows:

€ million	2010	2009
Profit/loss(-) before tax	19	675
Income tax expense(-)/credit calculated at domestic tax rates applicable	-4	-182
in the respective countries
Tax effects of:
Expenses not deductible for tax purposes	-118	-123
Non-taxable income	127	236
Tax credits	76	30
Variation in tax rates	5	1
Other tax rate effects	13	41
Current tax adjustments related to prior years	12	-44
Deferred tax adjustments related to prior years	16	-17
Reversal of write-downs/write-downs(-) of previously recognised deferred tax assets	-38	-108
Withholding tax impact on inter-company dividends	-2	-1
Other taxes	-1	-1
Total income tax expense(-)/credit	86	-168
	2010	2009
Effective tax rate	-443%	24.9%

The change in the effective tax rate is mainly attributable to the following: the positive outcome of tax claims, the reversal of certain tax provisions as a result of the expiration of the applicable statute of limitations, provision adjustments and the recognition of previously unrecognised deferred tax assets.

The income tax charged/(credited) to equity during the year is as follows:

€ million	2010	2009
Current tax	0	0
Deferred tax:
Arising upon the adoption of IFRIC 14 – Onerous minimum	0	0
funding requirements
Deferred tax liability on equity component of convertible bond	-25	0
Effective portion of changes in fair value of cash flow hedges	0	-2
Income taxes recognised in equity	-25	-2

17. Components of other comprehensive income

€ million	2010	2009
Available for sale financial assets:
Gains/losses(-) arising during the year	1	0
Less: Reclassification adjustment for gains/losses(-) included in the income statement	0	0
	1	0
Cash flow hedges:
Gains/losses(-) arising during the year	-14	27
Less: Reclassification adjustment for gains/losses(-) included in the income statement	-21	-75
	7	102
Net investment hedge:
Gains/losses(-) arising during the year	0	0
Less: Reclassification adjustment for gains/losses(-) included in the income statement	0	0
	0	0

18. Intangible assets

		2010
€ million	Trademarks , patents and licences	Other	Total
Gross carrying amount at 1 January	1501	1031	2532
Additions	10	14	24
Disposals	-15	-4	-19
Transfer from one heading to another	903	-905	-2
Transfer to assets held for sale	0	0	0
Effect of movements in exchange rates	42	37	79
Gross carrying amount at 31 December	2441	173	2614
Accumulated amortisation and impairment losses at 1 January	-403	-176	-579
Amortisation charge for the year	-177	-13	-190
Disposals	15	3	18
Impairment losses recognised in the income statement	-192	-1	-193
Transfer from one heading to another	-145	147	2
Transfer to assets held for sale	0	0	0
Effect of movements in exchange rates	-15	-16	-31
Accumulated amortisation and impairment losses at 31 December	-917	-56	-973
Net carrying amount at 31 December	1 524	117	1641

		2009
	Trademarks , patents and
€ million	licences	Other	Total
Gross carrying amount at 1 January	1541	978	2519
Additions	16	33	49
Disposals	-28	-3	-31
Transfer from one heading to another	0	7	7
Transfer to assets held for sale	-17	0	-17
Effect of movements in exchange rates	-11	16	5
Gross carrying amount at 31 December	1501	1 031	2 532
Accumulated amortisation and impairment losses at 1 January	-276	-74	-350
Amortisation charge for the year	-132	-10	-142
Disposals	23	1	24
Impairment losses recognised in the income statement	-7	-103	-110
Transfer from one heading to another	-16	15	-1
Transfer to assets held for sale	3	0	3
Effect of movements in exchange rates	2	-5	-3
Accumulated amortisation and impairment losses at 31 December	-403	-176	-579
Net carrying amount at 31 December	1098	855	1 953

The Group amortises all intangible assets. The amortisation of intangible assets is allocated to cost of sales for all intangible assets that are related to compounds. The amortisation charges related to software are allocated to the functions that use this software.

The majority of the Group intangible assets arose from previous acquisitions. During 2010, the Group acquired intangible assets totalling € 24 million (2009: € 49 million). These additions related mainly to the acquisition of licensed products, and the payment of milestones with respect to certain in-licencing agreements. This includes milestone payments paid to Synosia (USD 5 million), a strategic partner who has granted UCB a license for exclusive, worldwide rights to the development compound SYN-115 and SYN-118 (as announced in October 2010). In addition to the above, the Group made additions to software and also capitalised eligible software development costs.

During the year, the Group recognised total impairment charges of € 193 million (2009: € 110 million) on its intangible assets, mainly related to Mylotarg®,€ 5 million, after Pfizer withdrew the product voluntarily from the market at the request of the U.S. FDA in June 2010 and € 176 million for the fesoterodine franchise royalty stream that no longer reflects the latest markt estimates (as announced in January 2011). The impairment charges are detailed in Note 13 and have been presented in the income statement under the caption 'impairment of non-financial assets'.

Other intangible assets includes software and in process development projects.

19. Goodwill

€ million	2010	2009
Cost at 1 January	4 552	4579
Adjustment related to Schwarz acquisition	0	-1
Effect of movements in exchange rates	166	-26
Net book value at 31 December	4 718	4 552

The Group tests goodwill for impairment at each reporting date or more frequently if there are indications that goodwill might be impaired. The 'recoverable amount' of a CGU is determined based on 'value in use' calculations.

These calculations are based on cash flow projections as derived from financial budgets approved by management which cover a period of 10 years. Given the nature of the industry, these long-term projections are used to fully model the appropriate product lifecycles based on the patent expiry and therapeutic area. Cash flows beyond the projected forecast period are extrapolated using estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the relevant territories in which the CGU operates. The discount rate (refer below) is derived from a capital

asset pricing model adjusted to reflect the specific risks relating to the assets, the company risk profile and the industry within which it operates. Since after-tax cash flows are incorporated into the calculation of the 'value in use' of the CGU's, a post-tax discount rate is used in order to remain consistent.

The use of the post-tax discount rate approximates the results of using a pre-tax rate applied to pre-tax cash flows.

Key assumptions used for the value in use calculations:

	2010
Discount rate	9.1%
Growth rate	3.0%

20. Property, plant and equipment

			2010
€ million	Land and buildings	Plant and machinery	Office, computer equipment, vehicles & other	Assets under construction	Total
Gross carrying amount at 1 January	536	526	152	25	1239
Additions	1	7	4	42	54
Disposals	0	-5	-14	-1	-20
Transfers from one heading to another	-13	-26	14	5	-20
Transfer to assets held for sale	-28	-61	-13	-1	-103
Effect of movements in exchange rates	21	19	7	1	48
Gross carrying amount at 31 December	517	460	150	71	1 198
Accumulated depreciation at 1 January	-204	-385	-108	-8	-705
Depreciation charge for the year	-20	-33	-12	0	-65
Impairment charge	-12	-9	-3	-5	-29
Disposals	-1	4	14	0	17
Transfers from one heading to another	14	11	4	-9	20
Transfer to assets held for sale	28	54	11	1	94
Effect of movements in exchange rates	-7	-12	-6	0	-25
Accumulated depreciation at 31 December	-202	-370	-100	-21	-693
Net carrying amount at 31 December	315	90	50	50	505

			2009
€ million	Land and buildings	Plant and machinery	Office, computer equipment, vehicles & other	Assets under construction	Total
Gross carrying amount at 1 January	515	509	144	60	1228
Additions	8	15	7	8	38
Disposals	-5	-6	-5	-2	-18
Transfers from one heading to another	18	7	6	-42	-11
Transfer to assets held for sale	0	0	0	0	0
Effect of movements in exchange rates	0	1	0	1	2
Gross carrying amount at 31 December	536	526	152	25	1239
Accumulated depreciation at 1 January	-165	-345	-87	-8	-605
Depreciation charge for the year	-23	-38	-17	0	-78
Impairment charge	0	-6	-10	0	-16
Disposals	-16	5	7	0	-4
Transfers from one heading to another	0	0	-1	0	-1
Transfer to assets held for sale	0	0	0	0	0
Effect of movements in exchange rates	0	-1	0	0	-1
Accumulated depreciation at 31 December	-204	-385	-108	-8	-705
Net carrying amount at 31 December	332	141	44	17	534

None of the Group property, plant and equipment is subject to restrictions on title. Nor has any property, plant and equipment been pledged as security for liabilities.

During 2010, the Group acquired property, plant and equipment totalling € 54 million (2009: € 38 million).

These additions related mainly to improvement and replacement capital expenditure as well as investments supporting new product and delivery devices.

During the year, the Group recognised total impairment charges of € 29 million (2009: € 16 million) on its property, plant and equipment. The impairment charges are detailed in Note 12 and have been presented in the income statement under the caption 'impairment of non-financial assets'.

Investment property is recorded at historical cost less accumulated depreciation. Since such investment property does not represent a substantial amount in relation to total property, plant and equipment, preparation of an external expert opinion on fair value was dispensed with. It is presumed that the fair value corresponds to the book value.

Capitalised borrowing costs

During the 12 months of 2010, the capitalised borrowing costs amounted to € 0 million (2009: € 0 million).

Leased assets

UCB leases buildings and office equipment under a number of finance lease agreements. The carrying value of the leased buildings is € 21 million (2009: € 24 million).

21. Investment in associates

On 12 October 2010, UCB acquired a 19.6% interest in Synosia Therapeutics Holding AG. Synosia is involved in the research and development of drugs for unmet needs in the fields of neurology and psychiatry.

€ million	2010	2009
At 1 January	0	-
Investment in associate	15	-
Share of profit/loss (-)	0	-
Exchange differences	1	-
Other equity movements	0	-
At 31 December	16	-

The result of the Group's associate and its gross assets (excluding goodwill) and liabilities are as follows:

CHF million	Country of incorporation	Assets	Liabilities	Revenue	Profit/Loss (-)	% on interest held
2010
Synosia Therapeutics Holding AG	Switzerland	34	14	2	-2	19.6%
Total		34	14	2	-2

22. Financial and other assets

22.1. Non-current financial and other assets

€ million	2010	2009
Available for sale financial assets (refer below)	16	11
Cash deposits	8	7
Derivative financial instruments (Note 36)	17	12
Loans granted to third parties	1	0
Reimbursement rights with respect to German Defined Benefit plans	24	23
Other financial assets	57	64
Total financial and other assets at year end	123	117

22.2. Current financial and other assets

€ million	2010	2009
Clinical trial material	0	9
Available for sale financial assets (refer below)	2	2
Derivative financial instruments (Note 36)	59	42
Total financial and other assets at year end	61	53

22.3. Available for sale financial assets

The current and non-current available for sale financial assets comprise the following:

€ million	2010	2009
Equity securities	15	8
Debt securities	3	5
Total available for sale financial assets at year end	18	13

The movement in the carrying values of the available for sale financial assets is as follows:

€ million	2010		2009
	Equity securities	Debt securities	Equity securities	debt securities
At 1 January	8	5	0	7
Additions *	6	0	11	1
Disposals	0	-2	0	-3
Revaluation through equity	1	0	0	0
Gain/loss(-) reclassified from equity to the income statement	0	0	0	0
Impairment charge (Note 16)	0	0	-3	0
At 31 December	15	3	8	5

The Group has investments in listed debt securities, mainly issued by European governments as well as by some financial institutions. These bonds have been classified as available for sale and are measured at fair value.

The fair value of the listed debt securities is determined by reference to published price quotations in an active market.

None of these financial assets is either past due or impaired at year end.

23. Inventories

€ million	2010	2009
Raw materials and consumables	114	152
Work in progress	230	143
Finished goods	82	88
Goods purchased for resale	8	22
Inventories	434	405

The cost of inventories recognised as an expense and included in 'cost of sales' amounted to € 613 million (2009: € 637 million). There are no inventories pledged for security, nor is there any inventory stated

at net realisable value. The write-down on inventories amounted to € 26 million in 2010 (2009: € 17 million) and has been included in cost of sales.

24. Trade and other receivables

€ million	2010	2009
Trade receivables	540	645
Less: provision for impairment	-13	-7
Trade receivables – net	527	638
VAT receivable	34	22
Interest receivables	10	9
Prepaid expenses	24	27
Accrued income	12	8
Other receivables	49	48
Royalty receivables	49	67
Trade and other receivables	705	819

The carrying amount of trade and other receivables approximates their fair values. With respect to trade receivables, the fair value is estimated to be the carrying amount less the provision for impairment and for all other receivables the carrying value approximates fair value given the short-term maturity of these amounts.

There is some concentration of credit risk with respect to trade receivables. The Group co-operates with dedicated wholesalers in certain countries. The largest outstanding trade receivable in 2010 from a single customer is 19% (2009: 23.0%) from McKesson Corp. U.S.

The aging analysis of the Group trade receivables at year-end is as follows:

€ million		2010		2009
	Gross carrying amounts	Impairment	Gross carrying amounts	Impairment
Not past due	478	0	409	0
Past due – less than one month	14	0	37	0
Past due more than one month and not more than three months	11	0	12	0
Past due more than three months and not more than six months	8	0	159	-1
Past due more than six months and not more than one year	10	-1	8	-3
Past due more than one year	19	-12	20	-3
Total	540	-13	645	-7

Based on historical default rates, the Group believes that no provision for impairment is necessary in respect of trade receivables not past

due or past due up to one month. This concerns more than 91% (2009: 69%) of the outstanding balance at the balance sheet date. The movement in the provision for impairment in respect of trade receivables is shown below:

€ million	2010	2009
Balance at 1 January	-7	-10
Impairment charge recognised in the income statement	-10	-7
Utilisation/reversal of provision for impairment	4	10
Effects of movements in exchange rates	0	0
Balance at 31 December	-13	-7

The other classes within trade and other receivables do not contain impaired assets.

The carrying amounts of the Group trade and other receivables are denominated in the following currencies:

€ million	2010	2009
EUR	242	248
USD	269	384
JPY	22	40
GBP	35	32
Other currencies	137	115
Trade and other receivables	705	819

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.

The Group does not hold any collateral as security.

25. Cash and cash equivalents

2010	2009
427	297
0	135
67	54
494	486
-17	-20
477	466

26. Capital and reserves

26.1. Share capital and share premium

The issued share capital of the company amounted to € 550 million (2009: € 550 million), and is represented by 183 365 052 shares (2009: 183 365 052 shares). The company's shares are without par value. At 31 December 2010, 72 414 773 shares were registered and 110 950 279 were bearer/dematerialised shares. The holders of UCB shares are entitled to receive dividends as declared and are also entitled to one vote per share at the Shareholders' meeting of the company. There is no authorised, unissued capital.

At 31 December 2010, the share premium reserves amounted to € 1 601 million (2009: € 1 601 million).

26.2. Treasury shares

The Group acquired 239 739 treasury shares for a total amount of € 7 million (2009: 128 116 shares for a total amount of € 3 million) and issued 243 239 treasury shares to UCB employees for a total amount of € 7 million (2009: 146 329 shares for a total amount of € 3 million).

The Group retained 3 165 551 (2009: 3 169 051) treasury shares at 31 December 2010. These treasury shares have been acquired in order to honour the exercise of share options and share awards granted to the Board of Directors and certain categories of employees. UCB Fipar or UCB SCA have the right to resell these shares at a later date.

26.3. Other reserves

Other reserves amounted to € 280 million (2009: € 232 million) and consists of the following items:

• the IFRS acquisition value surplus that arose during the Schwarz Pharma business combination for € 232 million (2009: € 232 million); and
• the equity component linked to the convertible bond for € 48 million net of taxes as a result of UCB's decision to revoke the cash settlement option linked to the convertible bond. (refer to note 2.27.).

27. Share-based payments

The Group operates several equity-based compensation plans, including a share option plan, a share appreciation rights plan, a share award plan and a performance share plan to compensate employees for services rendered.

The share option plan, the share award plan and the performance share plan are equity-settled, whereas the share appreciation rights plan is a cash-settled plan. Besides these plans, the Group also operates employee share purchase plans in the U.K. and the U.S.

27.1. Share option plan and share appreciation rights plan

The Remuneration Committee granted options on UCB S.A. shares to the Executive Committee members, the Senior Executives and the senior and middle management of the UCB Group. The exercise price of the granted options under these plans is equal to the lowest of the following two values:

• The average of the closing price of the UCB shares on Euronext Brussels, during the 30 days preceding the offer or
• The closing price of the UCB shares on Euronext Brussels the day before the grant.

A different exercise price is determined for those eligible employees subject to legislation which requires a different exercise price in order to benefit from reduced taxation. The options become exercisable after a vesting period of three years, except for those eligible employees subject to legislation which requires a longer vesting period in order to benefit from reduced taxation. If an employee leaves the Group, his/her options usually lapse upon expiry of a period of six months. Options do no lapse in case of death or retirement and in case of involuntary termination when taxes have been paid upon grant. The Group has no obligation to repurchase or settle the options in cash.

There are no reload features, and the options are not transferable (except in case of death).

The Share Appreciation Rights (SAR's) plan has similar characteristics to the share option plan, except that it is reserved for UCB employees in the U.S. This plan is cash-settled. All share options granted to U.S. option holders in 2005 and 2006 were transformed into SAR's, except for three employees. Since 2007 all eligible U.S. employees have been granted SAR's.

26.4. Cumulative translation adjustments

The cumulative translation adjustments reserve represents the cumulative currency translation differences relating to the consolidation of Group companies that use functional currencies other than the euro.

27.2. Share award plan

The Remuneration Committee granted free UCB S.A. shares to the Executive Committee members and Senior Executives. The free shares have service conditions attached to them whereby beneficiaries are required to remain in service for three years post grant date Share awards lapse upon leaving the Group, except upon leaving on retirement or death in which case they vest immediately. The beneficiary is not entitled to dividends during the vesting period.

27.3. Performance share plan

The Remuneration Committee granted performance shares to the Executive Committee members and Senior Executives who achieved an outstanding performance. The performance shares are conditional on the beneficiary completing three years of service (the vesting period) and are also subject to the fulfillment of certain company performance conditions.

Performance Shares lapse upon leaving the Group, except upon leaving on retirement or death in which case they vest immediately. The beneficiary is not entitled to dividends during the vesting period.

27.4. Phantom share option, share award and performance share plans

The Group also has phantom share option, phantom share award and performance phantom share plans (collectively referred to as 'phantom plans'). These phantom plans apply to certain employees who have an employment contract with certain affiliates of the Group and are governed under similar rules to the Group share option, share award and performance share plans except for their settlement.

27.5. Employee share purchase plans in the U.S.

The plan is intended to provide employees of UCB affiliates in the U.S. with an opportunity to purchase common shares of the Group. Shares are acquired at a discount of 15% which is funded by UCB. Employees save a defined percentage of their salary through payroll deduction and shares will be purchased with after-tax employee contributions. The shares are held by an independent third party banking institution in an account in the employee's name.

The limit placed on employees' participation in the plan is as follows:

• Between 1% and 10% of each participant's compensation;
• US\$ 25 000 per year per participant;

• Maximum of US\$ 5 million total ownership by U.S. employees in all forms of share plans over a rolling period of 12 months.

As of 31 December 2010, the plan had 731 participants (2009: 688). There are no specific vesting conditions and the share-based payment expense incurred for this plan is immaterial.

27.6. Share savings plan in the United Kingdom

The purpose of this plan is to encourage the holding of UCB shares by employees in the U.K. Participants save a certain portion of their salary through payroll deductions and UCB matches every 5 shares bought by each participant with 1 free share. Shares are held in an account in the employee's name by an independent company that acts as a trustee.

Employee contributions to the plan are limited to the lower of:

• 10% of each participant's compensation
• GBP 1 500 per year per participant.

As of 31 December 2010, the plan had 40 participants (2009: 52) and the share-based payment expense incurred for this plan is immaterial.

27.7. Share-based payment expense

The total share-based payment expense incurred for the Group equity-based compensation plans amounted to € 20 million (2009: € 16 million), and has been included in the relevant functional lines within the income statement as follows:

€ million	2010	2009
Cost of sales	2	2
Marketing and selling expenses	5	4
Research and development expenses	5	4
General and administrative expenses	8	6
Total operating expense	20	16
Of which, Equity-settled:
Share option plans	10	7
Share award plans	2	3
Share option plans	4	1
Performance share plan	0	0
Of which, Cash-settled:
Share appreciation rights plan	1	4
Phantom share option, share award and performance share plans	3	1

27.8. Share option plans

The movements in the number of share options outstanding and their related weighted average exercise prices as at 31 December are:

	2010			2009
	Weighted average fair value	Weighted average exercise price (€)	Number of share options	Weighted average fair value	Weighted average exercise price (€)	Number of share options
Outstanding at 1 January	6.30	30.24	6805705	6.61	33.31	5 597 630
+ New options granted	7.90	31.62	1613100	5.37	21.41	1914800
(-) Options forfeited	6.46	30.05	754700	5.75	28.38	700 511
(-) Options exercised	3.71	27.21	3600	4.40	26.46	6214
(-) Options expired	-	-	-	-	-	-
Outstanding at 31 December	6.62	30.55	7660505	6.30	30.24	6805705
Number of options fully vested:
At 1 January			1383005			618530
At 31 December			2259505			1383005

The share options outstanding as at 31 December 2010 with the following last exercise dates and exercise prices are:

Last exercise date	Range of exercise prices (€)	Number of share options
21 April 2013	19.94	1 967
31 May 2013	[26.58 – 27.94]	213 332
05 April 2014	31.28	3 106
31 August 2014	[40.10 – 40.20]	336 200
31 March 2015	[37.33 - 37.60]	412 700
31 March 2016	[40.14 - 40.57]	611 100
31 March 2017	[43.57 - 46.54]	1 245 500
31 March 2018	[22.01 – 25.73]	1 700 300
31 March 2019	[21.38 – 22.75]	1 609 600
31 March 2020	31.62	1 526 700
Total outstanding		7660505

The weighted average fair value of the share options granted during 2010 was € 7.90 (2009: € 5.37).

The fair value has been determined based on the Black-Scholes valuation model.

The volatility was determined primarily by reference to historically observed share prices of UCB over the last five years. The probability of early exercise is reflected in the expected life of the options. The expected forfeiture rate is based on actual turnover of employees for categories eligible for stock option compensation.

The significant assumptions used in the measurement of the fair value of the share options are:

		2010	2009
Share price at grant date	€	32.06	22.75
Weighted average exercise price	€	31.62	21.41
Expected volatility	%	32.92	31.73
Expected option life	Years	5	5
Expected dividend yield	%	2.99	4.04
Risk free interest rate	%	2.67	3.48
Expected annual forfeiture rate	%	7.00	7.00

27.9. Share appreciation rights (SAR's) plan

the SAR's at grant date is determined using the Black-Scholes model. The fair value of the liability is remeasured at each reporting date.

The movements of the SAR's and the model inputs as at

31 December 2010 can be found in the table below. The fair value of

		2010	2009
Outstanding rights as of 1 January		1516000	1 192 000
+ New rights granted		576100	565 000
(-) Rights forfeited		217400	241 000
(-) Rights exercised		0	0
Outstanding rights as of 31 December		1874700	1 516 000
The significant assumptions used in the measurement of the fair value of the share appreciation rights are:
Share price at year end	€	25.67	29.22
Exercise price	€	31.62	22.19
Expected volatility	%	33.35	32.82
Expected option life	Years	5	5
Expected dividend yield	%	3.82	3.15
Risk free interest rate	%	3.17	2.79
Expected annual forfeiture rate	%	7.00	7.00

27.10. Share award plans

The share-based payment expense related to these share awards is spread over the vesting period of three years.

The beneficiaries are not entitled to dividends during the vesting period. The movement in the number of share awards outstanding at 31 December is as follows:

	2010		2009
	Number of shares	Weighted average fair value (€)	Number of shares	Weighted average fair value (€)
Outstanding at 1 January	281 605	29.23	302205	36.27
+ New share awards granted	90 755	31.54	115655	23.16
(-) Awards forfeited	35 775	27.69	19480	33.93
(-) Awards vested and paid out	86 675	41.35	116775	40.65
Outstanding at 31 December	249 910	26.08	281605	29.23

27.11. Performance Share plans

The movement in the number of performance shares outstanding at 31 December is as follows:

	2010		2009
	Number of shares	Weighted average fair value (€)	Number of shares	Weighted average fair value (€)
Outstanding at 1 January	387 725	34.14	354675	38.00
+ New performance shares granted	54 525	32.08	98925	22.75
(-) Performance shares forfeited	88 640	38.15	45500	37.67
(-) Performance shares vested	146 785	43.52	20375	38.08
Outstanding at 31 December	206 825	25.23	387725	34.14

27.12. Options granted before 7 November 2002

According to the transitional provisions included in IFRS 2, the options granted before 7 November 2002 and not yet vested at 1 January 2005 are not amortised through the income statement.

In 1999 and 2000 respectively, UCB issued 145 200 and 236 700 subscription rights (warrants) to subscribe for one ordinary share. Out of these rights, 122 400 may still be exercised. These warrants expire progressively between 2010 and 2013.

The movement in the number of options and warrants not accounted for under IFRS 2 can be described as follows:

	2010		2009
	Number of shares	Weighted average fair value (€)	Number of shares	Weighted average fair value (€)
Outstanding at 1 January	620 165	40.00	715288	40.34
(-) Options forfeited	19 038	41.44	63623	42.23
(-) Options expired	50 600	39.19	31500	43.19
Outstanding at 31 December	550 527	40.03	620165	40.00

28. Borrowings

The carrying amounts and fair values of borrowings are as follows:

	Carrying amount		Fair value
€ million	2010	2009	2010	2009
Non-current
Bank borrowings	13	1	13	1
Finance leases	19	22	19	22
Total non-current borrowings	32	23	32	23
Current
Bank overdrafts	17	20	17	20
Current portion of bank borrowings	282	529	282	529
Debentures and other short-term loans	7	15	7	15
Finance leases	2	2	2	2
Total current borrowings	308	566	308	566
Total borrowings	340	589	340	589

28.1. Borrowings

On 1 December 2010, UCB announced the amendment of its credit facility which has resulted in the credit facility being reduced from € 1.5 billion to € 1 billion. The credit maturity has been extended to 2015 vs 2012.

The amended facility expires on 14 December 2015. At year-end, the total amount drawn down under the facility was € 299 million (2009: € 444 million). The Borrowings linked to the amended Facilities agreement bear interest using a Euribor or Libor floating interest rate plus a margin depending on the UCB leverage ratio within the covenants of the agreement.

On 31 December 2010, the Groups weighted average interest rate was 4.71% (2009: 4.69%) prior to hedging. The floating interest rate payments are subject to designated cash flow hedges and fixed interest rate payments are subject to designated fair value hedges, thereby fixing the weighted average interest rate for the Group at

4.29% (2009: 6.04%) post hedging. The fees paid for the arrangement of the bonds, in note 29, and the amended facilities agreement are amortized over the life of the instruments.

Where applicable under hedge accounting, the fair value of the noncurrent borrowings is determined based on the present value of the payments associated with the debt instruments, using the applicable yield curve and UCB credit spread for the various different currencies.

Since the bank borrowings are at a floating interest rate that is reset every six months, the carrying amount of the bank borrowings equates to its fair value. With respect to the current borrowings, the carrying amounts approximate their fair values as the effect of discounting is considered to be insignificant.

Please refer to Note 4.3 for the maturity analysis of the Group borrowings (excluding other financial liabilities).

The carrying amounts of the Group borrowings are denominated in the following currencies:

€ million	2010	2009
EUR1	-4	206
USD	299	324
Total interest bearing loans by currency	295	530
Bank overdrafts - EUR	17	20
Debentures other than short term loans - EUR	7	15
Finance lease liabilities - EUR	21	24
Total borrowings	340	589

28.2. Finance lease liabilities – Minimum lease payments

€ million	2010	2009
Amounts payable under finance leases:
1 year or less	2	2
1-2 years	4	4
2-5 years	12	14
More than 5 years	3	4
Present value of finance lease liabilities	21	24
Less: amount due for settlement within 12 months	2	2
Amount due for settlement after 12 months	19	22

Management considers that the carrying value of the Group finance lease liabilities approximate their fair value.

29. Bonds

The carrying amounts and fair values of bonds are as follows:

	Coupon	Maturity	Carrying amount		Fair value
€ million	rate	date	2010	2009	2010	2009
Non-current
Convertible Bond	4.50%	2015	432	421	496	490
Retail Bond	5.75%	2014	756	739	797	777
Institutional Eurobond	5.75%	2016	495	494	536	503
Total non-current bonds			1 683	1654	1829	1770

29.1. Convertible bond

During September 2009, UCB issued senior unsecured convertible bonds amounting to € 500 million. The closing date for the transaction was 22 October 2009 and the bonds will mature on 22 October 2015 (i.e. 6 year duration).

The convertible bonds were issued and will be redeemed at 100% of their principal amount and bear a coupon of 4.5%, payable semiannually in arrears. The conversion premium has been set at € 38.746. Bondholders have the right to convert the Bonds into new and/or existing (at the option of the Company) shares of the Company.

The fair value of the debt component is based on the present value of the contractually determined stream of cash flows discounted at the rate of interest applied at the time by the market to instruments of comparable credit status and providing substantially the same cash flows, on the same terms, but without the conversion option. The residual amount, being the difference between the total gross

proceeds on bond issuance and the fair value of the debt component, was attributed to the fair value of the Derivative component. As a result of the Boards decision to revoke UCBs rights related to the cash settlement option, the derivative component was reclassified to equity based on its fair value at the date of revocation. (refer to note 2.27.)

At 31 December 2010, the debt component is measured based on its amortised cost, using an effective interest rate of 7.670% per annum. In accordance with IAS39, the remaining transaction costs included in the calculation of the effective interest rate will be amortised over the expected life of the instrument (i.e. 6 years). The bonds have been listed on the Luxembourg Stock Exchange.

The fair value of the debt component of the convertible bond at 31 December 2010 amounted to € 496 million (2009: € 490 million). The fair value is determined by a third party financial institution.

The convertible bond recognised in the Statement of financial position is calculated as follows:

€ million	2010	2009
Balance at 1 January1	421	428
Effective interest expense (Note 15)	33	6
Nominal interest accrued for/not yet due	-4	-4
Nominal interest accrual of previous period, paid in current period	4	-
Interest paid	-23	-
Unamortised transaction costs upon initial recognition	0	-9
Amortisation charge for the period	1	-
Balance at 31 December	432	421

29.2. Retail bond

During October 2009, UCB completed a public offering of € 750 million fixed rate bonds, due in 2014 and aimed at retail investors. These retail bonds will be redeemed at 100% of their principal amount and carry a coupon of 5.75% per annum while their effective interest rate is 5.75% per annum. The bonds have been listed on the Luxembourg Stock Exchange.

The carrying amount of the retail bond at 31 December 2010 amounted to € 756 million (2009: € 739 million). The Group designates derivative financial instruments under fair value hedges to the Retail Bond. The increase in the carrying amount of the Retail Bond is fully attributable to the increase in the fair value of the hedged portion of the Retail Bond, and is almost fully offset by a change in fair value of the corresponding derivative financial instrument.

29.3. Institutional Eurobond

In December 2009, UCB completed an offering of € 500 million senior unsecured bonds, due in 2016 and aimed at institutional investors. The bonds were issued at 99.635% and will be redeemed at 100% of their principal amount. These bonds carry a coupon of 5.75% per annum while their effective interest rate is 5.8150% per annum. The bonds have been listed on the Luxembourg Stock Exchange.

The carrying amount of the institutional eurobond at 31 December 2010 amounted to € 495 million (2009: € 494 million). The Group designates derivative financial instruments under fair value hedges to the institutional eurobond. The increase in the carrying amount of the institutional eurobond is fully attributable to the increase in the fair value of the hedged portion of the institutional eurobond, and is almost fully offset by a change in fair value of the corresponding derivative financial instrument.

30. Other financial liabilities

		Carrying amount	Fair value
€ million	2010	2009	2010	2009
Non-current
Derivative financial instruments (Note 36)	43	130	43	130
Total non-current other financial liabilities	43	130	43	130
Current
Derivative financial instruments (Note 36)	70	53	70	53
Other financial liabilities	10	10	10	10
Total current other financial liabilities	80	63	80	63
Total other financial liabilities	123	193	123	193

31. Deferred tax assets and liabilities

31.1. Recognised deferred tax assets and liabilities

€ million	2010	2009
Intangible assets	-316	-391
Property, plant and equipment	-5	-9
Inventories	69	58
Trade and other receivables	65	54
Employee benefits	12	14
Provisions	19	22
Other short-term liabilities	-9	-27
Tax losses	283	210
Unused tax credits	76	42
Write-down of previously recognised deferred income tax assets	-293	-219
Total deferred tax liabilities (net)	-99	-246

31.2. Unutilised tax losses

The amount and expiry date of unutilised tax losses for which no deferred tax asset is recognised in the balance sheet is detailed below:

€ million	2010	2009
Expiry date:
1 year or less	0	0
1-2 years	10	0
2-3 years	1	9
3-4 years	0	1
More than 4 years	14	14
Without expiration	1 379	980
Unutilised tax losses	1 404	1 004

31.3. Temporary differences for which no deferred tax liability is recognised

No deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries.

The unrecognised deferred tax liabilities amount to approximately € 9 million (2009: € 9 million).

31.4. Temporary differences for which no deferred tax asset is recognised

Deferred tax assets are recognised on tax losses carried-forward that represent income likely to be realised in the foreseeable future. Deferred tax assets amounting to € 547 million (2009: € 593 million) have not been recognised in view of the uncertain character of the recovery.

32. Employee benefits

Most employees are covered by retirement benefit plans sponsored by Group companies. The nature of such plans varies according to legal regulations, fiscal requirements and economic conditions of the countries in which the employees are employed. The Group operates both defined contribution plans and defined benefit plans.

32.1. Defined contribution plans

Post-employment benefit plans are classified as 'defined contribution' plans if the Group pays fixed contributions into a separate fund or to a third party financial institution and has no further legal or constructive obligation to pay further contributions. Therefore no assets or liabilities are recognised in the Group balance sheet in respect of such plans, apart from regular prepayments and accruals of contributions.

32.2. Defined benefit plans

The Group operates several defined benefit plans. The benefits granted include mainly pension benefits, jubilee premiums and termination indemnities. The benefits are granted according to local market practice and regulations.

These plans are either unfunded or funded via outside pension funds or insurance companies. For (partially) funded plans, the assets of the plans are held separately in funds under the control of the trustees. Where a plan is unfunded, notably for the major defined benefit plans in Germany, a liability for the obligation is recorded in the Group balance sheet. For funded plans, the Group is liable for the deficits between the fair value of the plan assets and the present value of the benefit obligations. Accordingly, a liability (or an asset when the plan is over-funded) is recorded in the Group balance sheet. Independent actuaries assess all main plans annually.

Actuarial gains and losses are amortised over the expected average remaining working lives of the employees participating in the plan, in accordance with the 'corridor approach'. Therefore, actuarial gains and losses are recognised as income or expenses when the cumulative unrecognised actuarial gains or losses at the end of the previous reporting period exceed 10% of the greater of the present value of the retirement benefit obligation and the fair value of the plan assets.

The assets held in the funds do not contain any direct investment in UCB Group shares, nor any property occupied by, or other assets used by the Group, though this does not exclude UCB shares being included in mutual investment fund type investments.

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

€ million	2010	2009
Present value of funded obligations	592	484
Fair value of plan assets	-443	-404
Deficit /surplus(-) for funded plans	149	80
Present value of unfunded obligations	25	81
Unrecognised actuarial gains/losses(-)	-94	-78
Adjustment in respect of minimum funding requirements	-	-
Effect of the Asset ceiling limit under IAS19, paragraph 58(b)	0	2
Net liability in respect of defined benefit plans	80	85
Add: Liability with respect to cash settled share based payments (Note 27)	11	7
Total employee benefit liabilities	91	92
Of which:
Portion recognised in non-current liabilities	105	104
Portion recognised in non-current assets	-18	-12
Portion recognised in liabilities held for sale (note 6.1)	4	-

UCB total non-current employee benefit liabilities amount to

€ 105 million (2009: € 104 million) of which € 11 million (2009:

€ 7 million) is related to the Group liability for cash settled share-

based payments (Note 27).

The movement in defined benefit obligation over the year is as follows:

€ million	2010	2009
At 1 January	565	471
Current service cost	23	18
Interest cost	30	28
Contribution by plan participants	2	1
Amendments	-	-
Actuarial gains and losses	18	76
Exchange difference	18	14
Benefits paid	-31	-26
Premiums, taxes, expenses paid	-5	-3
Liabilities acquired in a business combination / divestitures / transfers	-	-
Curtailments and settlements	-4	-14
At 31 December	616	565

The movement in the fair value of plan assets of the year is as follows:

€ million	2010	2009
At 1 January	404	351
Expected return on plan assets	25	24
Actuarial gains/losses(-) on plan assets	-8	14
Exchange difference	15	14
Employer contribution	32	41
Employee contribution	2	1
Benefits paid	-22	-26
Premiums, taxes, expenses paid	-5	-3
Plan settlements	-4	-12
Assets acquired in a business combination / divestitures / transfers	4	-
At 31 December	443	404

The fair value of plan assets amounts to € 443 million (2009: € 404 million), representing 72% (2009: 71%) of the benefits accrued to members for both funded and unfunded plans. The total deficit

of € 173 million (2009: € 161 million) is expected to be eliminated over the estimated remaining average service period of the current membership.

The expenses recognised in the consolidated income statement are as follows:

€ million	2010	2009
Current service cost	23	18
Interest cost	30	28
Expected return on plan assets and reimbursement assets	-26	-25
Actuarial gain(-)/loss recognised	-	-1
Amortisation of past service cost1	-	-
Amortisation of net gain(-)/loss11	10	24
Adjustment in respect of minimum funding requirements	-	-
Effect of the asset ceiling limit under IAS19, paragraph 58(b)	0	-17
Curtailment gain(-)/loss recognised	0	-1
Settlement gain(-)/loss recognised	1	3
Total expense recognised in income statement	38	29

The split of the recognised expense by functional line is as follows:

€ million	2010	2009
Cost of sales	-8	-8
Marketing and selling	-4	-3
expenses
Research and development	-12	-10
expenses
General and administrative	-14	-8
expenses
Total	-38	-29

The actual return on plan assets is € 17 million (2009: € 38 million) and the actual return on reimbursement rights is € 1 million (2009: € 0 million).

The principal weighted average actuarial assumptions used were as follows:

	2010	2009
Discount rate	4.91%	5.26%
Expected rate of salary	3.97%	4.05%
increases
Inflation rate	2.75%	2.91%
Expected long-term rate of	5.87%	6.57%
return on plan assets
Assumed health-care trend
rate
- immediate trend rate	8.40%	8.60%
- ultimate trend rate	4.50%	4.50%
- year that the rate reaches ultimate trend rate	2028	2028

Plan assets comprise the following:

	2010		2009
	Percentage of plan assets	Expected return on plan assets	Percentage of plan assets	Expected return on plan assets
Equity securities	24.05%	7.35%	29.72%	7.73%
Debt securities	27.03%	4.91%	24.64%	5.24%
Real estate	0.75%	5.16%	0.72%	5.25%
Other	48.17%	4.96%	44.91%	5.04%

A one percentage point increase or decrease in the assumed health-care trend (i.e. medical inflation) rate would have the following effect:

€ million	1% Increase	1% DEcrease
Effect on the total service cost and interest cost	9	-8
Effect on the defined benefit obligation	19	-19

Amounts for the current and previous four periods (since transition to IFRS) are as follows:

€ million	2010	2009	2008	2007	2006
At 31 December
Present value of the defined benefit obligation	616	565	471	529	590
Fair value of plan assets	443	404	351	462	472
Surplus/Deficit(-) in the plan before adjustments	-173	-161	-120	-67	-118
Experience adjustments arising on plan liabilities	1	3	9	6	3
Experience adjustments arising on plan assets	8	-14	80	3	-9

The pension expense for 2011 toward defined benefit plans is expected to be € 32 million (2010: € 38 million).

33. Provisions

The movements in provisions have been disclosed below:

€ million	Environment	Restructuring	Other	Total
At 1 January 2010	57	121	202	380
Arising during the year	9	28	55	92
Unused amounts reversed	-1	-13	-40	-54
Unwinding of discount	3	0	0	3
Transfer from one heading to another	0	-1	4	3
Effect of movements in exchange rates	0	3	8	11
Utilised during the year	0	-91	-34	-125
At 31 December 2010	68	47	195	310
Non-current portion	60	21	137	218
Current portion	8	26	58	92
Total provisions	68	47	195	310

33.1. Environmental provisions

UCB has in the past retained certain environmental liabilities which were associated to the acquisition of Schwarz Pharma and the divestiture of Surface Specialties. The latter relates to the divested sites on which UCB has retained full responsibility in accordance with the contractual terms agreed upon with Cytec Industries Inc. In 2010 a part of the provisions related to the Surface Specialties business was reversed. The provisions have been discounted at a rate of 3.62% (2009: 3.78%).

33.2. Restructuring provisions

The main increase in the 2010 restructuring provision include the PCP business in Japan and Turkey , items related to the SHAPE programme and other severance costs. On the other hand the provision was utilised in view of the 2008 SHAPE programme (announced in August 2008).

33.3 Other provisions

Other provisions relate mainly to tax risks, product liability and litigations. Provisions for tax risks are recorded if UCB considers that the tax authorities might challenge a tax position taken by the Group or a subsidiary. Provisions for litigation comprise mainly provisions for litigations where UCB or a subsidiary is or might be a defendant against claims of previous employees. Product liability provisions relate to the risks related to the normal course of business and for which the Group might be liable by selling these kinds of drugs.

An assessment is performed with respect to the above-mentioned risks together with the Group legal advisers and experts in the different domains.

34. Trade and other liabilities

34.1. Non-current trade and other liabilities

€ million	2010	2009
GSK / Sumitomo (Japan)	14	14
GSK Japan (Switzerland)	19	14
Other payables	94	87
Total non-current trade and other liabilities	127	115

34.2. Current trade and other liabilities

€ million	2010	2009
Trade payables	354	287
Taxes payable, other than income tax	36	25
Payroll and social security liabilities	124	110
Other payables	71	75
Deferred income linked to Collaboration agreements	56	42
Other Deferred income	22	59
Royalties payable	43	45
Rebates/discount payable	271	234
Accrued interest	35	37
Other accrued expenses	160	122
Total current trade and other liabilities	1 172	1036

The vast majority of the trade and other liabilities are classified as current and consequently the carrying amounts of the total trade and other liabilities is assumed to be a reasonable approximation of fair value.

35. Financial instruments by category

€ million 31 December 2010 Assets as per balance sheet	Note	Loans and receivables	Assets at fair value through the profit and loss	Derivatives used for hedging	Available for sale	Total
Available for sale financial assets	22	0	0	0	18	18
Derivative financial assets	36	0	67	9	0	76
Trade and other receivables – including prepaid expenses	24	705	0	0	0	705
Cash and cash equivalents	25	494	0	0	0	494
Total		1199	67	9	18	1293

€ million 31 December 2010 Liabilities as per balance sheet	Note	Liabilities at fair value through the profit and loss	Derivatives used for hedging	Other financial liabilities at amortised cost	Total
Borrowings	28	0	0	340	340
Bonds	29	0	0	1683	1 683
Derivative financial liabilities	36	104	9	0	113
Trade and other liabilities	34	0	0	1 172	1 172
Other financial liabilities	30	0	0	10	10
Total		104	9	3205	3318

€ million 31 December 2009 Assets as per balance sheet	Note	Loans and receivables	Assets at fair value through the profit and loss	Derivatives used for hedging	Available for sale	Total
Available for sale financial assets	22	0	0	0	13	13
Derivative financial assets	36	0	32	22	0	54
Trade and other receivables – including prepaid expenses	24	819	0	0	0	819
Cash and cash equivalents	25	486	0	0	0	486
Total		1305	32	22	13	1372

€ million 31 December 2009 Liabilities as per balance sheet	Note	Liabilities at fair value through the profit and loss	Derivatives used for hedging	Other financial liabilities at amortised cost	Total
Borrowings	28	0	0	589	589
Bonds	29	0	0	1654	1 654
Derivative financial liabilities	36	161	22	0	183
Trade and other liabilities	34	0	0	1 151	1 151
Other financial liabilities	30	0	0	10	10
Total		161	22	3404	3587

36. Derivative financial instruments

€ million	Assets		Liabilities
	2010	2009	2010	2009
Forward foreign exchange contracts – cash flow hedges	9	22	9	10
Forward foreign exchange contracts – fair value through profit and loss	54	32	60	43
Interest rate derivatives – cash flow hedges	0	0	0	12
Interest rate derivatives – fair value through profit and loss	13	0	44	51
Derivative linked to convertible bond (Note 29)	0	0	0	67
Total	76	54	113	183
Of which:
Non-current - (Notes 22 & 30)	17	12	43	130
Current - (Notes 22 & 30)	59	42	70	53

The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months, and as a current liability, if the maturity of the hedged item is less than 12 months.

The cash flow hedges entered into by the Group were assessed to be highly effective and as at 31 December 2010, a net unrealised gain/ loss of € 7 million (2009: net unrealised gain of € 100 million) after

deferred taxes was included in equity in respect of these contracts. These gains/losses will be recycled to the profit or loss in the period during which the hedged forecast transactions affect the profit or loss.

The ineffective portion recognised in the profit or loss that arises from cash flow hedges amounts to € 0 million (2009: € 0 million).

36.1. Foreign currency derivatives

The Group policy with respect to the use of financial derivative contracts is described in Note 4 'financial risk management'.

The fair values of the foreign currency derivative contracts are as follows:

€ million	Assets		Liabilities
	2010	2009	2010	2009
USD	11	31	39	32
GBP	7	5	2	3
EUR	44	17	1	9
PLN	0	0	1	1
MXN	0	0	0	0
JPY	0	1	2	1
CHF	1	0	22	4
Other currencies	0	0	2	3
Total foreign currency derivatives	63	54	69	53

The foreign currency derivatives maturity analysis is noted below:

€ million	2010	2009
1 year or less	-10	-9
1-5 years	4	10
Beyond 5 years	0	0
Total foreign currency derivatives – net asset/(net liability)	6	1

The following table shows the split of foreign currency derivatives by currency of denomination (currencies sold view) as at 31 December 2010.

Notional amounts in € million	USD	GBP	EUR	JPY	CHF	Other currencies	Total
Forward contracts	399	26	642	28	288	69	1452
Currency swaps	882	465	508	18	65	65	2003
Option / collar	140	0	182	0	0	0	322
Total	1 421	491	1332	46	353	134	3777

The Group entered into several forward foreign exchange contracts in order to hedge a portion of highly probable future sales and royalty income, expected to occur in 2011.

36.2. Interest rate derivatives

The Group uses various interest rate derivative contracts to manage its exposure to interest rate movements on its variable rate borrowings. The re-pricing dates and amortisation characteristics are aligned with those of the floating rate syndicated loan recorded in Borrowings. The outstanding interest rate derivative contracts are as follows:

	Nominal values of contracts	Average rate (- is payer / +	Plus margin of points (- is payer / + is
Contract type	(million)	is receiver)	receiver)		For periods from/to	Floating Interest receipts
IRS	EUR 900	-3.22%		31/1/2005	31/1/2012	EURIBOR 6 months
CAP	EUR 50	-4.50%		15/2/2007	15/2/2012	EURIBOR 6 months
IRS	USD 300	-3.40%		22/1/2010	24/1/2011	USD LIBOR 6 Months
IRS	USD 400	-3.91%		25/8/2008	25/8/2012	USD LIBOR 6 Months
IRS	USD 150	-4.04%		22/1/2010	22/1/2012	USD LIBOR 6 Months
IRS	USD 150	-3.69%		22/1/2010	22/1/2013	USD LIBOR 3 Months
IRS	USD 100	-3.92%		24/1/2011	22/1/2013	USD LIBOR 3 Months
IRS	USD 50	-3.21%		23/1/2012	22/1/2014	USD LIBOR 3 Months
IRS	EUR 150	-3.59%		23/1/2012	22/1/2014	EURIBOR 6 Months
IRS	EUR 600	1.70%		29/1/2010	31/1/2012	-EURIBOR 6 Months
IRS	EUR 680	2.47%		27/11/2009	27/11/2014	-EURIBOR 3 Months
IRS	EUR 150	3.09%		23/1/2012	22/1/2014	-EURIBOR 6 Months
IRS	USD 150	-3.30%		22/1/2013	22/1/2014	USD LIBOR 3 Months
CCIRS	EUR 680	-USD LIBOR 3 Months	-0.23%	27/11/2009	27/11/2014	EURIBOR 3 Months
IRS	EUR 80	2.92%		10/12/2009	10/12/2016	-EURIBOR 3 Months
IRS	EUR 85	2.63%		10/12/2010	10/12/2016	-EURIBOR 3 Months
CCIRS	USD 250	+USD LIBOR 3 Months	0.32%	29/11/2010	27/11/2014	-EURIBOR 3 Months
Swaption	USD 400	0.93%		25/2/2011	25/8/2012	-USD LIBOR 6 Month

36.3. Hedge of net investment in a foreign entity

In 2006, the company entered into a loan agreement which was partly designated as a hedge of the net investment in the Group U.S. operations. Following an internal corporate restructuring, this net investment hedge relationship was terminated in December 2007.

The unrealised cumulative foreign exchange gain of € 55 million has been reported in a separate component of equity, under 'Net Investment Hedge' in 2007. This unrealised gain will remain in equity and will only be recycled to profit or loss when the Group no longer holds the underlying USD assets.

36.4. Derivative linked to convertible bond

As a result of the decision of UCB to revoke the cash settlement option linked to the convertible bond, the fair value of the derivative component linked to the convertible bond (2009: € 67 million) has been reclassified to equity (refer to note 2.27).

37. Earnings per share

37.1. Basic earnings per share

€	2010	2009
From continuing operations	0.58	2.81
From discontinued operations	-0.01	0.04
Basic earnings per share	0.57	2.85

Basic earnings per share is calculated by dividing the profit attributable to shareholders of the company by the weighted average number of

ordinary shares in issue during the year, excluding ordinary shares purchased by the company and held as treasury shares.

37.2. Diluted earnings per share

€	2010	2009
From continuing operations	0.57	2.71
From discontinued operations	-0.01	0.04
Diluted earning per share	0.56	2.75

Diluted earnings per share are calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

Potential dilutive effects arise from the convertible debt instruments and the employee stock option plans. If the outstanding instruments were to be converted than this would lead to a reduction in interest expense and the reversal of the mark to market adjustment of the

37.3. Earnings

Basic

related derivative financial liability.For the share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company's shares).

The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the following data:

€ million	2010	2009
Profit/(loss) from continuing operations attributable to shareholders of UCB SA	104	506
Profit/(loss) from discontinued operations	-1	7
Profit attributable to shareholders of UC B SA	103	513

Diluted

€ million	2010	2009
Profit/(loss) from continuing operations attributable to shareholders of UCB SA	104	506
Adjusted for:
- interest expense on convertible debt (net of tax)	0	3
- fair value gain (-)/loss on derivative linked to convertible bond (net of tax)	0	-3
Profit/(loss) from continuing operations used to determine diluted EPS	104	506
Profit from discontinued operations	-1	7
Adjusted profit attributable to shareholders of UC B SA	103	513

37.4. Number of shares

In thousands of shares	2010	2009
Weighted average number of ordinary shares for basic earnings per share	180 150	180 180
Adjusted for:
- share options	4 053	3 742
- assumed conversion of convertible debt	0	2 509
Weighted average number of ordinary shares for diluted earnings per share	184 203	186431

On 24 April 2008, the Group has issued a stock loan note represented by 30 000 loan stock units with a nominal value of € 20 each, each having 1 000 defensive warrants attached to it. Each defensive warrant confers the right to its holders to subscribe to one share newly issued by UCB S.A. (Note 40). The UCB shares that might result from the exercise of these warrants will be issued with reference to the market price over a period prior to the issue.

Therefore, those contingently issuable shares have no dilutive effect as at 31 December 2010 and 31 December 2009 and have not been taken into account in the calculation of diluted earnings per share.

The shares related to the convertible debt have no dilutive impact as at 31 December 2010.

38. Dividend per share

The gross dividends paid in 2010 and 2009 were € 176 million (€ 0.96 per share) and € 169 million (€ 0.92 per share) respectively.

A dividend in respect of the year ended 31 December 2010 of € 0.98 per share, amounting to a total dividend of € 180 million, is to be

proposed at the annual general meeting of the shareholders on 28 April 2011.

In accordance with IAS 10, Events after the reporting period, the proposed dividend has not been recognised as a liability at year-end.

39. Commitments and contingencies

39.1. Operating lease commitments

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

€ million	2010	2009
Less than one year	38	28
Between one and five	86	86
years
More than five years	42	34
Total	166	148

The Group has a number of non-cancellable operating leases primarily related to company cars and office spaces.

The leases cover an initial period of three to five years. Lease payments are increased annually to reflect market rentals. None of the leases include contingent rentals. In 2010, € 52 million (2009: € 54 million) was recognised as an expense in the income statement in respect of operating leases.

39.2. Capital commitments

At 31 December 2010, the Group has committed to spend € 107 million (2009: € 55 million) mainly with respect to capital expenditure on the construction of a biological pilot plant in Belgium and a biological plant in Bulle, Switzerland. Construction on the pilot plant in Belgium began in May 2009 and expected to be completed in mid-2013. This pilot plant is being financed partially by government assistance, as well as loans. In December 2010, UCB initiated a project to build an in-house biotech manufacturing capacity in Bulle, Switzerland in order to meet the rising future demand for Cimzia®. The new manufacturing plant should be operational in 2015 and requires an investment of € 250 million.

UCB has entered into long-term development agreements with various pharmaceutical and private equity companies which provide for potential milestone payments and other payments by UCB that may be capitalised. As of 31 December 2010, UCB's commitments to make payments under these agreements are as follows:

€ million	2010	2009
Less than one year	34	8
Between one and five	423	0
years
More than five years	624	0
Total	1081	8

The commitments for Cimzia®, Vimpat® and brivaracetam amount to € 538 million in total.

39.3. Guarantees

With respect to the syndicated loan facilities agreement, UCB and a certain number of its affiliates, have provided certain financial guarantees towards the consortium of banks. Furthermore, certain financial arrangements have been put in place with the Walloon Region amounting to € 41 million (2009: € 40 million).

Additionally, the company has provided guarantees to Zurich Insurance Company amounting to € 30 million (2009: € 30 million) in respect of reinsurance liabilities, guarantees to Fortis Lease amounting to € 7 million in respect of retail agreements and Sandoz GmbH for € 4 million (2009: € 8 million) in respect of manufacturing capacity arrangements. With respect to the former chemical activities of the Group, UCB has provided guarantees to the public waste agency of Flanders, OVAM, pertaining to environmental liabilities of € 13 million (2009: € 13 million). Other guarantees, for the Group, amount to a total of € 8 million.

39.4. Contingent liabilities

It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided for in Note 34 (2009: no material liabilities).

The Group continues to be actively involved in litigations, claims and investigations. The ongoing matters could result in liabilities, civil and criminal penalties, loss of product exclusivity and other costs, fines and expenses associated with findings adverse to UCB's interests.

39.5. Contingent assets

On 26 April 2005 UCB and Lonza AG entered into a strategic biomanufacturing alliance. UCB and Lonza signed a longterm supply agreement, whereby Lonza will manufacture PEGylated antibody fragment-based bulk actives for UCB.

Lonza has built a commercial scale biopharmaceutical manufacturing facility which is co-financed by UCB.

Based on the terms and conditions of the agreement related to the manufacturing facility, the agreement will be accounted for as an operating lease in the consolidated financial statements of UCB. Nevertheless, the agreement stipulates that 50% of the joint assets are owned by UCB, which means that:

• the facility excluding the land on which it is built;
• the technology used by Lonza;
• all the capital items acquired, created or developed by Lonza during the term of the agreement; and
• all other assets that are acquired, created or developed by or on behalf of Lonza and where it has been wholly or partially funded by UCB;

will belong to UCB at 50%, not taking into account any improvements made by Lonza.

40. Related party transactions

40.1. Intra-group sales and services

During the financial years ended 31 December 2010 and 2009, all intra-UCB Group transactions were carried out based on assessments of mutual economic benefit to the parties involved, and the applicable conditions were established in accordance with criteria of at arm's length negotiations and fair dealing, and with a view to creating value for the entire UCB Group. Conditions governing intra-UCB Group transactions were similar to conditions governing third-party transactions.

With regard to the sale of intermediary and finished products, these criteria were accompanied by the principle of increasing each party's respective production cost by an at arm's length profit margin. With regard to intra-UCB Group services rendered, these criteria are accompanied by the principle of charging fees sufficient to cover each party's respective incurred costs and an at arm's length markup. Intra-group transactions carried out within the UCB Group constitute standard transactions for a biopharmaceutical group. These transactions include the purchase and sale of intermediary and finished medical products, deposits and loans for UCB Group affiliates as well as centralised functions and activities carried out by the UCB Group in order to optimise operations through economies of scale and scope.

40.2. Financial transactions with related parties other than UCB S.A. affiliates

There are no financial transactions with other related parties other than affiliates of UCB S.A.

40.3. Defensive warrants

On 24 April 2008, the General Meeting of Shareholders resolved to issue a stock loan represented by 30 000 loan stock units with a nominal value of € 20 each, each having 1 000 defensive warrants attached to it (the 'defensive warrants').

Each defensive warrant confers the right to its holders to subscribe to one share newly issued by UCB S.A. The loan was subscribed for by Financière de Tubize. The holders of the defensive warrants have entered into an agreement with UCB S.A. to comply with the terms and conditions relating to the issue and exercise of the defensive warrants.

At the mentioned General Meeting of Shareholders it was also resolved to create an ad hoc committee to decide, in pre-defined circumstances, about the implementation of this defensive measure and the transfer of the défensive warrants. The defensive warrants may only be exercised in specific circumstances, the existence of which must be assessed by the ad-hoc committee:

• Launch of a takeover bid by a third party considered to be hostile by the Board of Directors;
• Modification of control over the UCB Group due to transactions relating to UCB Shares by one or more third parties, carried out either on or off the stock market, whether or not in a concerted fashion;
• The threat of a takeover bid or an operation involving modification of control over the UCB Group.

The defensive warrants and the agreement between the holders of the defensive warrants and UCB S.A. expire on 23 April 2013. UCB shares resulting from the exercise of these warrants will be issued with reference to the market price over a period prior to issuance.

40.4. Key management compensation

Key management compensation as disclosed below comprises compensation recognised in the income statement for members of the Board of Directors and the Executive Committee, for the portion of the year where they exercised their mandate.

€ million	2010	2009
Short-term employee	8	8
benefits
Termination benefits	0	2
Post-employment benefits	3	2
Share-based payments	4	4
Total key management	15	16
compensation

Short-term employee benefits include salaries (including social security contributions), bonuses earned during the year, car leasing and other allowances where applicable. Share-based compensation includes the amortisation over the vesting period of the fair value of equity instruments granted, and comprises share options, share awards and performance shares as further explained in Note 27. The termination benefits contain all compensated amounts, including benefits in kind and deferred compensation.

There have been no loans granted by the company or a subsidiary of the Group to any Director or Officer of the Group, nor any guarantees given with respect hereto.

40. 5. Shareholders and shareholders structure

UCB main shareholder (reference shareholder) is Financière de Tubize S.A., a company listed on Euronext Brussels.

Financière de Tubize S.A. has made a transparency notification of its holding in UCB on 1st September 2008 and in subsequent notifications, in compliance with the Law of 2 May 2007 relating to the publication of significant shareholdings in listed companies. According to Article 3, §1, 13° of the Law of 2 May 2007, Financière de Tubize S.A. acts in concert with Schwarz Vermögensverwaltung GmbH, KBC Bank N.V., Degroof Corporate Finance S.A. and Imofig S.A., Levimmo S.A., Compar Finance S.A., Pharmahold S.A. and Cosylva S.A., with which Financière de Tubize S.A. has signed separate shareholders agreements.

Their holdings are listed under n° 4 to 10 in the tables here below. The shares that are covered by these agreements, including the shares held by Financière de Tubize S.A. represent 48.28% of the share capital of the company.

52.74% of Financière de Tubize S.A. is held by the Janssen family.

In accordance with the latest subsequent notifications made in compliance with the Law of 2 May 2007, the present UCB major shareholdings are:

UCB controlling and major shareholdings on 8 February 2011

		Current Shareholding	Voting rights	Date (according to the notification in compliance with the law of 2 May 2007)
	Capital €	550095156
	Shares	183365052
1	Financière de Tubize S.A. (Tubize)	66370000	36.20%	15 December 2010
2	UCB Fipar S.A.	3165550	1.73%	15 December 2010
3	UCB SCA	1	0.00%	15 December 2010
4	Schwarz Vermögensverwaltung GmbH	9102658	4.96%	15 December 2010
5	KBC Bank NV	2289318	1.25%	1 September 2008
6	Banque Degroof S.A.	669230	0.36%	1 September 2008
	Through Degroof Corporate Finance S.A.	450000		1 September 2008
	Through Imofig S.A.	219 230		1 September 2008
7	Levimmo S.A.	1230770	0.67%	1 September 2008
8	Compar Finance S.A.	1900000	1.04%	1 September 2008
	Compar Finance S.A. additionally holds 165 830 UCB shares outside the concert
9	Pharmahold S.A.	1900000	1.04%	1 September 2008
	Pharmahold S.A. additionally holds 1 100 000 UCB shares outside the concert
10	Cosylva S.A.	1900000	1.04%	1 September 2008
	Cosylva S.A. additionally holds 1 100 000 UCB shares outside the concert
	Tubize + linked companies + concert 4, 5, 6, 7, 8, 9 and 10	88527527	48.28%
11	Capital Research and Management Company (voting interests) including the UCB shares held by Euro Pacific Growth Fund which exceed 3% of UCB share capital	21717895	11.84%	30 October 2008
12	Wellington Management Cy LLP	5550950	3.00%	8 February 2011
	Tubize has declared acting in concert separately with each of the shareholders 4, 5, 6, 7, 8, 9 and 10 for the number of shares as indicated

Additional UCB shares held by persons acting in concert with Tubize, but who are not included in the concert agreements with Tubize

	Current Shareholding	Voting rights	Date (according to the notification in compliance with the law of 2 May 2007)
KBC Groep (through affiliates other than KBC Bank)	325640	0.18%	1 September 2008
Compar Finance S.A.	165830	0.09%	1 September 2008
Pharmahold S.A.	1100000	0.60%	1 September 2008
Cosylva S.A.	1100000	0.60%	1 September 2008
Total voting rights held by persons acting in concert with Tubize, including Tubize		49.75%

The remainder of UCB shares are held by the public.

41. Events after the balance sheet date

Stronger partner for UCB: Synosia and biotech company Biotie to join forces

On 13 January 2011, Biotie Therapies, a Finnish public biotech company, announced its plan to acquire Synosia Therapeutics Inc., thereby creating a leading central nervous system development company. Once the transaction is completed, Synosia Therapeutics shareholders will own 50% of the combined entity. UCB will remain a key shareholder of the new combined organisation, with a shareholding of 9.8% in Biotie Therapies, compared to a previously held 20% held stake in Synosia Therapeutics. Holding AG.

U.S. shareholder, Wellington Management, increases its UCB shareholding to 3%

Wellington Management Company LPP, U.S., notified having bought on 7 February 2011 a number of UCB shares with voting rights, increasing their shareholding to make it cross the lowest statutory threshold of 3% for notification and is currently holding 5 505 950 shares representing 3.00% of UCB's share capital.

42. UCB companies

42.1. List of fully consolidated companies

Name and office	Holding	Parent
Australia
UCB Australia Pty Ltd. – Level 1, 1155 Malvern Road – 3144 Malvern, Victoria	100%	Viking Trading Co. Ltd
Austria
UCB Pharma GmbH – Geiselbergstrasse 17-19, 1110 Wien	100%	UCB Finance N.V.
Belgium
UCB Fipar S.A. – Allée de la Recherche 60 – 1070 Brussels (BE0403.198.811)	100%	UCB Belgium S.A.
Fin UCB S.A. – Allée de la Recherche 60 – 1070 Brussels (BE0426.831.078)	100%	UCB Pharma S.A.
UCB Belgium S.A. – Allée de la Recherche 60 – 1070 Brussels (BE0402.040.254)	100%	UCB Pharma S.A.
UCB Pharma S.A. – Allée de la Recherche 60 – 1070 Brussels (BE0403.096.168)	100%	UCB S.A.
Sifar S.A. – Allée de la Recherche 60 – 1070 Brussels (BE0453.612.580)	100%	UCB Finance N.V.
Immo UCB Braine S.A. – Allée de la Recherche 60 – 1070 Brussels (BE0820.150.341)	100%	UCB Pharma S.A.
Brazil
UCB Farma Brasil Ltda – Rue Sete de Setembro 67, Sala 301, 20050-005 Rio de Janerio	100%	UCB S.A.
Bulgaria
UCB Bulgaria EOOD – 15, Lyubata Str., Fl. 4 apt. 10-11, Lozenetz, Sofia 1407	100%	UCB S.A.

UCB establishes innovative collatobarion with Harvard University

UCB has concluded an innovative research collaboration agreement with Harvard University. UCB will bring its expertise on antibody generation and medicinal chemistry into the alliance and will provide up to USD 6 million over two years to fund specific innovative research projects led by Harvard scientists. The innovative collaboration focuses on CNS and immunology, two key research domains for UCB.

Name and office	Holding	Parent
Canada
UCB Pharma Canada Inc. – 2060 Winston Park Drive, Suite 401 – ON L6H5R7 Oakville	100%	UCB Holdings Inc.
China
UCB Trading (Shanghai) Co Ltd – Room 317, No. 439 Fu Te Xi Yi Road, Shanghai (Waigaoqiao Free Trade Zone)	100%	UCB S.A.
UCB Pharma (Hong Kong) Ltd – Unit 514, 5/F South Tower, World Finance Center The Gateway, Harbour City – Hong Kong	100%	UCB Pharma GmbH
Zhuhai Schwarz Pharma Company Ltd – Block A. Changsa Industrial zone. Qianshan District – 519070 Zhuhai Guangdong Province	75%	UCB Pharma GmbH
Czech Republic
UCB S.R.O. – Thámova 13 – 186 00 Praha	100%	UCB S.A.
Denmark
UCB Nordic AS – Arne Jacobsen Alle 15 – 2300 Copenhagen	100%	Celltech Pharma Europe Ltd
Finland
UCB Pharma Oy (Finland) – Itsehallintokuja 6 – 02600 Espoo	100%	UCB Finance N.V.
France
UCB France S.A. – 420 rue d'Etienne d'Orves – 92700 Colombes	100%	UCB S.A.
UCB Pharma S.A. – 420 rue d'Etienne d'Orves – 92700 Colombes	100%	UCB France S.A.
Germany
UCB Pharma GmbH – Alfred Nobel Strasse, 10 – 40789 Monheim am Rhein	100%	UCB GmbH
UCB GmbH – Alfred Nobel Strasse, 10 – 40789 Monheim am Rhein	100%	UCB Finance N.V.
Schwarz Biosciences GmbH – Alfred-Nobel-Strasse 10 – 40789 Monheim am Rhein	100%	UCB Pharma GmbH
Sanol GmbH – Alfred-Nobel-Strasse 10 – 40789 Monheim am Rhein	100%	UCB Pharma GmbH
Schwarz & Co Immobiliengesellschaft Zwickau – Galileistrasse 6 – 08056 Zwickau	100%	UCB Pharma GmbH
Schwarz & Co Industriegebäudegesellschaft Zwickau – Galileistrasse 6 – 08056 Zwickau	100%	UCB Pharma GmbH
Schwarz Pharma Produktions GmbH – Alfred-Nobel-Strasse 10 – 40789 Monheim am Rhein	100%	UCB Pharma GmbH
Greece
UCB A.E. – 580 Vouliagmenis Avenue – 16452 Argyroupolis – Athens	100%	UCB S.A.
Hungary
UCB Hungary Ltd – Obuda Gate Building Arpád Fejedelem ùtja 26-28, 1023 Budapest	100%	UCB S.A.
India
UCB India Private Ltd – 504 Peninsula Towers, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel – 400 013 Mumbai	100%	UCB S.A.
Uni-Mediflex Private Ltd – G-6 Venus Apartments RG Thandani Marg Worli – 400 018 Mumbai	100%	Vedim Ltd

134 UCB financial report 2010

Name and office	Holding	Parent
Ireland
UCB (Pharma) Ireland Ltd – United Drug House Magna Drive, Magna Business Park, City West Road – Dublin 24	100%	UCB S.A.
Celltech Pharma Ireland – United Drug House Magna Drive, Magna Business Park, City West Road – Dublin 24	100%	Celltech Group Ltd
Celltech Insurance (Ireland) Ltd (in liquidation) – 4th fl St. James House 25-28 Adelaide Road – Dublin 2	100%	Medeva Ltd
Schwarz Pharma Ltd – Shannon Industrial Estate – Shannon County Clare	100%	UCB Pharma GmbH
Kudco Ireland Ltd – Shannon Industrial Estate – Shannon County Clare	100%	Kremers Urban Development Company
Italy
UCB Pharma SpA – Via Gadames 57 – 20151 Milano	100%	Viking Trading Co. Ltd
Japan
UCB Japan Co Ltd – Ochanomizu Kyoun Bldg 2-2, Kanda-Surugadai – 101-0062 Chiyoda-Ku, Tokyo	100%	UCB S.A.
Luxembourg
Société Financière UCB S.A. – Rue Eugène Ruppert, 12 – 2453 Luxembourg	100%	UCB S.A.
UCB Lux S.A. – Rue Eugène Ruppert, 12 – 2453 Luxembourg	100%	UCB S.A.
UCB S.C.A – Rue Eugène Ruppert, 12 – 2453 Luxembourg	100%	UCB Lux S.A.
Mexico
UCB de Mexico S.A. de C.V. – Homero#440, 7fl Col. Chapultepec Morales – 11570 Mexico D.F.	100%	UCB S.A.
Vedim S.A. de C.V. – Homero#440, 7fl Col. Chapultepec Morales – 11570 Mexico D.F.	100%	Sifar S.A.
Netherlands
UCB Finance N.V. – Lage Mosten 33 – 4822 NK Breda	100%	UCB S.A.
UCB Pharma B.V. (Netherlands) – Lage Mosten 33 – 4822 NK Breda	100%	UCB Finance N.V.
Medeva Holdings B.V. – Lage Mosten 33 – 4822 NK Breda	100%	Celltech Pharma Europe Ltd
Medeva B.V. – Lage Mosten 33 – 4822 NK Breda	100%	Medeva Holdings B.V.
Norway
UCB Pharma A.S. – Grini Naeringspark 8b – 1361 Osteras, Baerum	100%	UCB Finance N.V.
Poland
Vedim Sp.z.o.o. – Ul. Kruczkowskiego, 8 – 00-380 Warszawa	100%	Sifar S.A.
UCB Pharma Sp.z.o.o. – Ul. Kruczkowskiego 8 – 00-380 Warszawa	100%	UCB S.A.
Portugal
UCB Pharma (Produtos Farmaceuticos) Lda – Ed. D. Amelia, piso 0 sala A2, Quinta da Fonte, 2770- 229 Paço de Arcos	100%	Vedim Pharma S.A.
Vedim Pharma (Prod. Quimicos e Farma) Lda – Ed. D. Amelia, piso 0 sala A2, Quinta da Fonte, 2770- 229 Paço de Arcos	100%	UCB Pharma (Produtos Farmaceuticos) Lda.

Name and office	Holding	Parent
Romania
UCB Pharma Romania S.R.L. – 37 Paris Street, Bucharest 011814	100%	UCB S.A.
Russia
UCB Pharma LLC – Shturvaluaya 5 bldg 1 – 125364 Moscow	100%	UCB S.A.
Schwarz Pharma ooo (in liquidation) – Kantemirovskaja 58 – 115477 Moscow	100%	UCB Pharma GmbH
UCB Pharma Logistics LLC– Perevedenovky pereulok 13 bldg 21 – 105082 Moscow	100%	UCB S.A.
South Korea
Korea UCB Co Ltd. – 1674-1, Seocho-dong, Seocho-gu, 137-881 Seoul	100%	UCB S.A.
Spain
Vedim Pharma SA – Paseo de la Castellana 141, Planta 15 – 28046 Madrid	100%	UCB S.A.
UCB Pharma S.A. – Paseo de la Castellana 141, Planta 15 – 28046 Madrid	100%	Vedim Pharma S.A.
Sweden
UCB Pharma AB (Sweden) – Stureplan 4C 4 van – 11435 Stockholm	100%	UCB Finance N.V.
Switzerland
UCB Farchim S.A.(A.G. – Ltd.) – ZI de Planchy, Chemin de Croix Blanche 10 – 1630 Bulle	100%	UCB Investissements S.A.
UCB Investissements S.A. – ZI de Planchy, Chemin de Croix Blanche 10 – 1630 Bulle	100%	UCB Finance N.V.
Doutors Réassurance S.A. – ZI de Planchy, Chemin de Croix Blanche 10 – 1630 Bulle	100%	UCB Investissements S.A.
UCB-Pharma AG – ZI de Planchy, Chemin de Croix Blanche 10 – 1630 Bulle	100%	UCB Investissements S.A.
Medeva Pharma Suisse S.A. – Chemin de Croix Blanche 10 – 1630 Bulle	100%	Medeva B.V.
Turkey
UCB Pharma A.S. – Rüzgarlibahçe, Cumhuriyet Caddesi Gerçekler Sitesi, B-Blok Kat:6, Kavacik, Beykoz – 34805 Istanbul	100%	UCB Lux S.A.
Melusin Ilac ve Maddeleri Pazarlama TLS – Rüzgarlibahçe, Cumhuriyet Caddesi Gerçekler Sitesi, B-Blok Kat:6, Kavacik, Beykoz – Istanbul	100%	UCB Pharma GmbH
U.K.
Fipar Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Medeva Ltd
UCB Fipar Ltd, subs. of UCB Inc. – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB Inc.
Fipar U.K. Ltd, subs of UCB Fipar Ltd. – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB Fipar Ltd
UCB (Investments) Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB S.A.
UCB T&R Graham Ltd – c/o Baker Thilly Breckenridge House 274 Sauchiehall Street – G2 3EH Glasgow	100%	UCB (Investments) Ltd
UCB Services Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB (Investments) Ltd
Viking Trading Co Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB (Investments) Ltd
Vedim Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB (Investments) Ltd
UCB Watford Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB (Investments) Ltd
Celltech Group Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB Lux S.A.
Celltech R&D Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Celltech Group Ltd

Name and office	Holding	Parent
UCB Ireland – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB Lux S.A.
Celltech Japan Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Celltech R&D Ltd
Celltech Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Medeva Ltd
Chiroscience Group Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Celltech Japan Ltd
Chiroscience R&D Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Celltech Group Ltd
Darwin Discovery Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Chiroscience Group Ltd
Medeva Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Celltech Group Ltd
UCB Pharma Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Evans Healthcare Ltd
Evans Healthcare Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Medeva Ltd
Medeva International Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Medeva Ltd
Celltech Pharma Europe Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Medeva Ltd
International Medication Systems (U.K.) Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	UCB Pharma GmbH
Oxford GlycoSciences – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Celltech Group Ltd
Oxford GlycoSciences (U.K.) Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Oxford GlycoSciences
Oxford GlycoTherapeutics Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Oxford GlycoSciences
Confirmant Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Oxford GlycoSciences (U.K.) Ltd
Schwarz Pharma Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Celltech Group Ltd
Schwarz Pharmaceuticals Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Schwarz Pharma Ltd
Medo Pharmaceuticals Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire	100%	Schwarz Pharma Ltd
U.S.
UCB Holdings Inc. – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington, Delaware	100%	UCB S.A.
Fipar U.S. Inc. – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington, Delaware	100%	Fipar UK Ltd
UCB Inc. – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington, Delaware	100%	UCB Holdings Inc.
UCB Biosciences Inc. – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington, Delaware	100%	UCB Inc
UCB Pharco Inc. – 300 Delaware Avenue – 19801 Wilmington Delaware	100%	UCB Inc.
Celltech U.S. LLC – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington Delaware	100%	Medeva Ltd
Celltech Manufacturing CA Inc. – C T Corporation System, 818 W. Seventh Street, Los Angeles California 90017	100%	UCB Inc.
UCB Manufacturing Inc. – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington, Delaware	100%	UCB Inc.
UCB Technologies Inc. – C T Corporation System, 111 Eight Avenue, NY, 10011 New York	100%	UCB Manufacturing Inc.
Upstate Pharma LLC – C T Corporation System, 111 Eight Avenue, NY, 10011 New York	100%	UCB Inc.
Cistron Biotechnology Inc. – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington, Delaware	100%	UCB Inc
Schwarz Biosciences Inc. – 1209 Orange Street – 19801 Wilmington Delaware	100%	UCB Inc.
Schwarz Pharma Inc – 2711 Centerville Road Suite 400 – 19808, Wilmington, Delaware	100%	UCB Inc.
Kremers Urban Pharmaceuticals Inc. – 251 E. Ohio Street Suite 1100 –46204 Indianapolis	100%	UCB Inc.
Kremers Urban Development Company – 2711 Centerville Road –– 19808 Wilmington Delaware	100%	Schwarz Pharma Inc.
SRZ Properties Inc. – 2711 Centerville Road Suite 400 –– 19808 Wilmington Delaware	100%	Schwarz Pharma Inc.
CPM Properties Inc. – Corporation Trust Center, 209 Orange Street – 19801 Wilmington Delaware	100%	Kremers Urban Pharmaceuticals Inc.
Kremers Urban LLC – 2711 Centerville Road Suite 400 – 19808 Wilmington Delaware	100%	Kremers Urban Pharmaceuticals Inc.
Schwarz Pharma LLC – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington Delaware	100%	Kremers Urban Pharmaceuticals Inc.

42.2. List of associated companies

Name and office Holding

Synosia Therapeutics Holding AG. – Aeschenvorstadt 36 – 4051 Basel, Switzerland 19.60%

43. Responsibility statement

We hereby confirm that, to the best of our knowledge, the consolidated financial statements as of 31 December 2010, prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, and with the legal requirements applicable in Belgium, give a true and fair view of the assets, liabilities, Financial position and profit or loss of the company and the undertakings included in the consolidation as a whole, and that the management report includes a fair review of the development and

performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Signed by Roch Doliveux (CEO) and Detlef Thielgen (CFO) on behalf of the Board of Directors.

Roch Doliveux Chief Executive Officer

Detlef Thielgen Chief Financial Officer

Report of the STATUTORY Auditors

Statutory Auditor's Report to the General Shareholders' meeting on the consolidated accounts of the company UCB S.A./N.V. as of and for the year ended 31 December 2010

As required by law and the company's articles of association, we report to you in the context of our appointment as the company's statutory auditor. This report includes our opinion on the consolidated accounts and the required additional disclosure.

Unqualified opinion on the consolidated accounts

We have audited the consolidated accounts of UCB S.A./N.V. and its subsidiaries (the "Group") as of and for the year ended 31 December 2010, prepared in accordance with International Financial Reporting Standards, as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. These consolidated accounts comprise the consolidated statement of financial position as of 31 December 2010 and the consolidated statement of income, changes in shareholders' equity, comprehensive income and cash flows for the year then ended, as well as the summary of significant accounting policies and other explanatory notes. The total of the consolidated statement of financial position amounts to EUR 8 969 million and the consolidated statement of income shows a profit for the year (group share) of EUR 103 million.

The company's board of directors is responsible for the preparation of the consolidated accounts. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated accounts that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Our responsibility is to express an opinion on these consolidated accounts based on our audit. We conducted our audit in accordance with the legal requirements applicable in Belgium and with Belgian auditing standards, as issued by the "Institut des Réviseurs d'Entreprises/Instituut der Bedrijfsrevisoren". Those auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated accounts are free of material misstatement.

In accordance with the auditing standards referred to above, we have carried out procedures to obtain audit evidence about the amounts and disclosures in the consolidated accounts. The selection of these procedures is a matter for our judgment, as is the assessment of the risk that the consolidated accounts contain material misstatements, whether due to fraud or error. In making those risk assessments, we have considered the Group's internal control relating to the preparation and fair presentation of the consolidated accounts, in order to design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. We have also evaluated the appropriateness of the accounting policies used and

the reasonableness of accounting estimates made by management, as well as the presentation of the consolidated accounts taken as a whole. Finally, we have obtained from the board of directors and Group officials the explanations and information necessary for our audit. We believe that the audit evidence we have obtained provides a reasonable basis for our opinion.

In our opinion, the consolidated accounts set forth on pages 80 to 137 give a true and fair view of the Group's net worth and financial position as of 31 December 2010 and of its results and 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.

Additional remark

The company's board of directors is responsible for the preparation and content of the management report on the consolidated accounts.

Our responsibility is to include in our report the following additional remark, which does not have any effect on our opinion on the consolidated accounts:

• The management report on the consolidated accounts set forth on pages 48 to 79 deals with the information required by the law and is consistent with the consolidated accounts. However, we are not in a position to express an opinion on the description of the principal risks and uncertainties facing the companies included in the consolidation, the state of their affairs, their forecast development or the significant influence of certain events on their future development. Nevertheless, we can confirm that the information provided is not in obvious contradiction with the information we have acquired in the context of our appointment.

Brussels, 1 March 2011

The statutory auditor

PricewaterhouseCoopers Reviseurs d'Entreprises / Bedrijfsrevisoren Represented by

Bernard Gabriëls

Bedrijfsrevisor

Abbreviated Statutory Financial Statements of UCB S.A.

1. Introduction

In accordance with the Belgian Company Code, it has been decided to present an abbreviated version of the statutory financial statements of UCB S.A.

The statutory financial statements of UCB S.A. are prepared in accordance with Belgian Generally Accepted Accounting Principles.

It should be noted that only the consolidated financial statements as presented above, present a true and fair view of the financial position and performance of the UCB Group.

The Board of Auditors have issued an unqualified audit opinion and certify that the non-consolidated Financial statements of UCB S.A. for the year ended 31 December 2010 give a true and fair view of the financial position and results of UCB S.A. in accordance with all legal and regulatory dispositions.

In accordance with the legislation, these separate financial statements, together with the management report of the Board of Directors to the general assembly of shareholders, as well as the auditors' report will be filed at the National Bank of Belgium within the statutory periods.

These documents are available on our website www.ucb.com or on simple request, addressed to:

UCB S.A. Corporate Communication Allée de la Recherche 60 B-1070 Brussels (Belgium)

2. Balance sheet

€ million	At 31 December 2010	At 31 December 2009
ASSETS
Formation expenses	30	42
Intangible assets	0	1
Tangible assets	7	6
Financial assets	6 001	5 170
Fixed assets	6 038	5219
Amounts receivable after more than one year	1819	1317
Amounts receivable within one year or less	93	1391
Short-term investments	0	0
Cash at bank and on hand	2	2
Deferred charges and accrued income	28	14
Current assets	1942	2724
Total assets	7 980	7943
LIABILITIES
Capital	550	550
Share premium	1 601	1 601
Reserves	2 054	2 017
Profit brought forward	149	146
Equity	4 354	4314
Provisions	2	2
Provisions and deferred taxes	2	2
Amounts payable after more than one year	2 830	1 819
Amounts payable within one year or less	769	1 778
Accrued charges and deferred income	25	30
Current liabilities	3 624	3627
Total liabilities	7 980	7943

3. Income statement

€ million	At 31 December 2010	At 31 December 2009
Operating income	47	47
Operating charges	-52	-55
Operating result	-5	-8
Financial income	450	253
Financial charges	-217	-101
Financial result	233	152
Operating result before income taxes	228	144
Exceptional income	2	49
Exceptional charges	-9	-7
Exceptional result	-7	42
Profit before income taxes	221	186
Income taxes	-2	0
Profit for the year available for appropriation	219	186

4. Appropriation account

€ million	At 31 December 2010	At 31 December 2009
Profit for the period available for appropriation	219	186
Profit brought forward from previous year	146	145
Profit to be appropriated	365	331
To legal reserve	0	0
To other reserves	-37	-9
Appropriation to capital and reserves	-37	-9
Profit to be carried forward	-148	-146
Result to be carried forward	-148	-146
Dividends	-180	-176
Profit to be distributed	-180	-176
If the proposed allocation of the profit is approved, the total gross dividend will be fixed at:	€ 0.98	€ 0.96
If the proposed allocation of profit is approved and taking into account the tax regulations, the total net dividend off withholding tax per share will be fixed at:	€ 0.735	€ 0.72

The activities of UCB S.A. generated in 2010 a net profit of € 219 220 326 after income taxes. After taking into account the profit brought forward of € 145 825 317, the amount available form distribution is € 365 045 643.

The Board of Directors proposes to pay a gross dividend of € 0.98 per share, or a total dividend distribution of € 179 697 751. If this dividend proposal is approved by the company's shareholders on their Meeting on 28 April 2011, the net dividend of € 0.735 per share will be payable as of 5 May 2011 against the delivery of coupon nr 13, attached to the company's bearer shares.

5. Summary of significant accounting principles

The Board of Directors made the following decisions in accordance with the Article 28 of the Royal Decree of 30 January 2001 on implementing the company code.

5.1. Intangible assets

Research and development costs have been capitalised as intangible assets at their purchase or at cost. These capitalised costs have been entirely depreciated in the year but the difference between the actual amount of depreciation taken in the year and the gross amount capitalised has been treated as a write-back of depreciation on the exceptional income.

A straight-line depreciation rate of 33 1/3% has been applied to these costs, based on a three-year life considering 'pro rata temporis'. The depreciation of the purchase price of patents, licenses and similar items is either in accordance with a prudent assessment of the economic life of such intangible assets or at a minimum rate equal to that of the assets required to handle the patent or process, or by a fixed period of the depreciation not lower than five years considering 'pro rata temporis'.

5.2. Tangible assets

Tangible assets purchased from third parties have been included in the balance sheet at purchase price; assets manufactured by the company itself have been valued at cost. The purchase price or cost is depreciated on a straight-line basis considering "pro rata temporis". The depreciation rates are as follows:

• Administrative buildings	3%
• Industrial buildings	5%
• Tools	15%
• Furniture and office machinery	15%
• Vehicles	20%
• Computer equipment & office machines	33.3%
• Prototype equipment	33.3%

5.3. Financial assets

Shareholdings have been valued in accordance with the proportion held in shareholders' funds of the company concerned. Shareholdings which are not included in the scope of the consolidation have been valued at cost. A specific write-down has been made whenever the valuation made each year shows a permanent loss in value.

Receivables and liabilities

They are shown at their book value. Receivables have been written down if their repayment, when due, is entirely or partly uncertain and doubtful.

5.4.Assets and commitments expressed in foreign currencies

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions.

Non-monetary assets and liabilities (intangible and tangible assets, shareholdings), denominated in foreign currencies, are translated at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at balance sheet date rate. Realised exchange differences on foreign currency transactions are recognised in the income statement, as are non-realised exchange losses, whilst non-realised exchange profits are included under accrued charges and deferred income in the balance sheet.

5.5. Provisions

All the risks born by the company have been the subject of provisions reviewed each year, in accordance with the rules of prudence, good faith and sincerity. Provisions are recorded at normal value.

Corporate Social Responsiblity Performance Report

Global Reporting Initiative disclosure Human resources & environmental data Scope and reporting principles Assurance report

CEO's overview

Operating in a caring and socially responsible manner, especially when it comes to improving the lives of people with severe diseases through innovative therapies and support programmes, has been one of the distinguishing characteristics of UCB over many years.

Our passion to make a genuine difference to lives of patients and their families is undoubtedly the biggest driver behind our success. We are patient-centric: we immerse ourselves in our patients' lives. We involve patients and their carers closely and personally in all facets of our business so that we can understand and develop therapies that take into account both their physiological and social needs.

Of course, we also adhere rigorously to the strict regulations that govern biopharmaceuticals, our relationships with patients and carers, and the operation of our business. In addition, we naturally and whole heartedly embrace many other aspects of CSR, reflected in our caring about UCB staff as well as in our community and green initiatives.

Reporting on CSR

So why do we report on CSR? Partly because we have a lot to be proud of and we want to publicly recognise and thank all our staff at UCB for their hard work. But we also know we can do better and want to improve so we can make an even bigger, positive difference to the lives of people with severe diseases, to the well-being of our colleagues, and the protection of the environment.

CSR reporting at UCB is part of that quest and leans on four pillars: patients (social), people (social), ethics (social and economic), and planet (environment).

To progress in its CSR ambitions, UCB is actively engaging its stakeholders: its employees, patients and their carers, business partners, the authorities and regulators as well as the community at large.

CSR Governance

A dedicated UCB team is setting annual CSR priorities presented and approved by UCB's Executive Committee.

This team focuses on managing and continuously enhancing the CSR reporting procedures and instruments, while leaning on the valuable input of a company-wide CSR network. The UCB 2010 CSR Report network was composed of more than 200 UCB colleagues worldwide (in 2009: 120 UCB staff). Furthermore, benchmarks are being set against which patients, their carers, shareholders and other stakeholders can measure our progress in the coming years and against which we can be held to account.

Accountability essential for both social and economic progress

To measure progress, key performance indicators are assessed according to the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, which provide an internationally accepted framework for CSR reporting. This approach is entirely voluntarily and adapted to UCB's own requirements. The 2010 UCB CSR uses the GRI guidelines at an application level of C+, checked and reviewed by PricewaterhouseCoopers, whereby 15 GRI indicators were validated (in 2009: 11 validated GRI indicators).

In November 2009, UCB's first CSR report received a special mention from the jury of the Best Belgian Sustainability Report 2009 for its clear and comprehensive vision based on concrete strategies.

We will continue reporting progress against relevant benchmarks in our next CSR reports.

In the meantime, we welcome any suggestions or comments you might have; please email us at csr@ucb.com.

Roch Doliveux Chief Executive Officer

Global Reporting Initiative Disclosure

The table summarises the performance indicators on the economic, environmental and social performance of UCB in 2010. The indicators are reported in line with the GRI Guidelines: 15 fully and 8 partially reported.

Legend: indicators fully reported and compliant with the GRI indicators definition

indicators partially reported and partially compliant with the GRI indicators definition

General 1. Strategy and analysis 2-5; 143 1.1 Statement of CEO 2. Organisational profile 6-35 2.1 - 2.2 Name, products / services 73-77; 102 2.3 - 2.7 Structure, geographical presence, markets served front and back covers 2.8 Scale 2-5; 48-69 2.9 Significant changes in size, structure or ownership 143 2.10 Awards received in 2010 3. Report parameters 143; back cover 3.1 - 3.4 Report profile, contacts points 149-151 3.5 - 3.13 Report scope and assurance 4. Governance, commitments, and engagement 48-69; 143 4.1 - 4.13 Structure and governance 143 4.14 - 4.17 Stakeholder engagement Economic Economic performance EC1 Economic value generated and distributed, including revenues, operating costs, front cover; 70-85 employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.(Core) EC3 Coverage of the organisation's defined benefit plan obligations. (Core) 94-96; 104; 121-123 Environmental Energy EN3 Direct energy consumption by primary energy source. (Core) 146-147 EN4 Indirect energy consumption by primary source. (Core) 146-147 EN5 Energy saved due to conservation and efficiency improvements. (Additional) 46-47; 146-147 EN7 Initiatives to reduce indirect energy consumption and reductions achieved 46-47 (Additional) Water EN8 Total water withdrawal by source. (Core) 146-147 Emissions, effluents, and waste EN16* Total direct and indirect greenhouse gas emissions by weight. (Core) 146-147 EN19 Emissions of ozone-depleting substances by weight. (Core) 146-147 EN20 Emissions of volatile organic compounds (chlorinated and non-chlorinated) by 146-147 weight. (Core)			Reported	Page
	EN22*	Total weight of waste by type and disposal method. (Core)		146-147
EN24 Weight of transported, imported, exported, or treated waste deemed hazardous 47; 146-147
under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally. (Additional)

Employment
LA1*	Total workforce by employment type, employment contract, and region. (Core)	front cover; 40-41
LA2*	Total number and rate of employee turnover by age group, gender, and region. (Core)	146
	Occupational health and safety
LA7	Rates of injury, occupational diseases, lost days, and absenteeism, and number of	41;146
	work-related fatalities by region. (Core)
Training and education
LA10	Average hours of training per year per employee by employee category. (Core)	39-40; www.ucb-annual report.com/en/2010/29/
		Talent-management
LA11	Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings. (Additional)	39-40
LA12	Percentage of employees receiving regular performance and career development reviews.	39-40; www.ucb-annual
	(Additional)	report.com/en/2010/29/
		Talent-management
	Diversity and equal opportunity
LA13*	Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity. (Core)	40-41; front cover
	Social Performance: Human Rights
	Investment and procurement practices
HR3*	Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained. (Additional)	44
Social Performance: Society
Corruption
SO3*	Percentage of employees trained in organization's anti-corruption policies and procedures. (Core)	44
Public policy
SO5*	Public policy positions and participation in public policy development and lobbying. (Core)	www.ucb-annual-report. com/en/2010/17/Partners
	Social Performance: Product Responsibility
Marketing communications
PR6*	Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship. (Core)	45

Social Performance: Labor Practices & Decent Work

* Indicators identified by an asterisk (*) have been reviewed for the year 2010 by the Statutory Auditors. Their assurance statement, detailing the work they have performed as well as their comments and conclusions, appears on pages 150-151 of this CSR report..

Human Resources and Environmental Data

	HUMAN RESOURCES DATA
GRI Indicator		Definition	Unit of measure	2009	2010
LA 1	Total workforce	Workforce as of December 31	Total number of employees	9324	8898
	Workforce by gender	Male and female Group employees	Number of women	4433	4167
				48%	48%
			Number of men	4891	4583
				52%	52%
	Workforce by area	Europe-5 / Belgium/ Other Europe / Asia-Pacific-Australia /North America / Rest of the world	Number of employees		see below
	Workforce by FTE and	Full Time Employees (FTE) and Part	Number of FTE	8787	8 352
	PTE	Time Employees (PTE) Group		94%	94%
			Number of PTE	537	546
				6%	6%
LA 2	Recruitment	Hired	Number of employees hired	1648	1 547
	Departure	Left	Number of employees who left the company	3616	1 973
LA 7	Absenteeism	Number of working days lost due to absenteeism of the main sites and excluding U.S. locations because the absenteeism is not monitored in U.S.	Days	Not reported	39924
	LTIR	Lost Time Incident Rate	Number of incidents resulting in lost time of one day or more within a 12-month period, per million hours worked	3.34	2.33
	LTSR	Lost Time Severity Rate	Number of lost days resulting from a lost time incident within a 12-month period, per thousand hours worked	0.08	0.05

(headcount, year-end 2009)

	ENVIRONMENTAL DATA
GRI		Definition	Unit of measure	2009	2010
Indicator
EN 3	Gas	Gas consumption	m³	19802198	24 076327
			MegaJoules	731752170	913 327467
	Fuel oil	Fuel oil consumption	liters	1965196	733463
			MegaJoules	223371916	84 221836
	Fuel for utilitary vehicle	Vehicle fuel consumption	liters	32553	12670
			MegaJoules	3700102	1 454866
EN 4	Electricity	Electricity consumption	KwH	159292945	154 489945
			MegaJoules	573454602	556 163802
EN 5	Energy Saved	Energy saved due to conservation and efficiency improvements	KwH		3 777000
EN 8	Water	Total water	m³	898120	1 015918
		Main water		642666	651573
		Ground and surface water		255454	364345
		Other		0	0
	COD	Chemical Oxygen Demand in effluents following internal treatment	Tons	146	108
	TSS	Discharge of residual Total Suspended Solids after internal treatment	Tons	40	42
EN 16	Direct & Indirect	Electricity	Tons CO²	54443	52 341
	CO² emissions -	Gas		35160	42 749
	Scope 1&2	Fuel		4962	1 849
EN 19	ODS	Emissions of Ozone Depleting Substances	CFC-11 equivalent tons	1.6	1.3
EN 20	Chlorinated VOC	Emissions of chlorinated volatile organic compounds	Tons	6	8
	Non-chlorinated VOC	Emissions of non-chlorinated volatile organic compounds	Tons	119	114
EN 22	Waste disposal	Incinerated	Tons	1 859	1256
		Re-used as liquid		3 926	2903
		Solvent recycled by 3rd party		2 145	2577
		Packaging recycled by 3rd party		1 806	1489
		Other		789	1639
EN 24	Hazardous waste	Hazardous waste products as defined by locally applicable regulations	Tons	10 415	8789
	Non-hazardous waste	Other solid waste (excluding emissions and effluents)	Tons	3 273	2666

UCB CSR performance report 2010

Scope and Reporting Principles

Scope

People data are consolidated for all UCB companies worldwide that are globally integrated into our financial consolidation, regardless of their activity (research or industrial sites, sales affiliates, headquarters). Health and Safety data (occupational accidents) addressed the same scope excluding affiliates with less than 10 employees.

Planet data are consolidated for all manufacturing sites, research sites, sales affiliates from India, U.S. and Italy and headquarters in Belgium. This scope covers 74% of UCB's workforce.

For each of these elements we state whether UCB's level of reporting covers the requirements fully or partially.

Reporting principles

In order to ensure the uniformity and reliability of indicators used for all entities, UCB Group implemented the Global Reporting Initiative's G3 Sustainability Reporting Guidelines covering social factors, safety and environmental impacts of a company's performance. We have self-assessed ourselves as a C+ reporter according to GRI-defined application levels.

These guidelines specify the methodologies to be used for indicator reporting for UCB: definitions, methodological principles, calculation formulas and emission factors.

Accuracy

The UCB Corporate Health, Safety & Environment (HSE) department is responsible for ensuring that all data are consolidated on the basis of information provided by the manufacturing and research sites and sales affiliates and administrative headquarters throughout the world.

HSE coordinators for each activity perform an initial validation of safety and environmental data prior to their consolidation. Corporate HSE also verifies data consistency during consolidation. These validations include data comparisons from previous years as well as careful analysis of any significant discrepancies.

Social data regarding the workforce are extracted from a global IT HR system used as management control database for UCB worldwide.

Reliability

In order to obtain an external review of our data's reliability and the thoroughness of our reporting procedures, we asked our Statutory Auditors to perform specific verification of certain social and HSE indicators appearing in tables on pages 144-147. Their assurance statement, describing the work they performed as well as their comments and conclusions, appears on pages 150-151.

In UCB, we will continue to enhance the reliability of data and further strenghten the reporting processes.

Assurance Report

information for shareholders

On 31 December 2010, UCB market capitalisation reached € 4.7 billion, representing 3.57% of the Bel20 index and 0.29% of the Euronext 100 index.

Key figures

	2007	2008	2009	2010
Gross dividend per share (€)	0.92	0.92	0.96	0.98
Net dividend per share (€)	0.69	0.69	0.72	0.735
Basic earnings per share (€)	0.89	0.24	2.85	0.57
Share price (year end - € per share)	31.02	23.3	29.22	25.67
High and low of the year (€)	54.10/ 30.30	25.90 /21.30	31.50 /19.17	33.60 /22.50
Market capitalisation (year end - € billion)	5.7	4.3	5.3	4.7
Entreprise value (year end - € billion)	7.6	6.7	7.1	6.2
Number of shares (weighted average number of
ordinary shares)	180173 920	180 166683	180180255	180149693
Number of shares (fully diluted)	183371 920	182 591255	186431127	184202735

Core EPS

2008	2009	2010
42	513	103
-339	-297	216
-55	-7	1
-56	17	-81
270	226	239
94	128	173
-29	-40	-53
335	314	359
180	180	180
1.86	1.74	1.99

¹ Adjusted for after-tax impact of one-time and non-recurring items

Debt maturity profile

• € 750 million 5.75% Belgian retail bonds due November 2014
• € 1 000 million Revolving credit facility due 2015
• € 500 million 4.50% Convertible bonds due October 2015 (notional amount)
• € 500 million 5.75% Institutional bonds due December 2016

For additional details on the bonds, refer to Note 29 of the financial report.

Source: Global shareholder intelligence report and UCB controlling and major shareholdings on December 2010.

GLOSSARY

Adjusted earnings per share (Adjusted EPS): It is the adjusted net pro t as de ned below divided by the weighted average total outstanding number of shares for the year.

Adjusted net profi t: Pro t for the year as reported in the consolidated nancial statements adjusted for the impact of one-off and non-recurring items, the contribution from discontinued operations and the inventory step-up corrected for income taxes.

Adverse event is any untoward medical occurrence in a patient or clinical-trial participant administered a medicinal product and which does not necessarily have to have a causal relationship with this treatment. An adverse event can therefore be any unfavourable and unintended sign (e.g. an abnormal laboratory nding), symptom, or disease temporally associated with the use of a medicinal product, whether or not considered related to a medicinal product. (source: Volume 9A of the Rules Governing Medicinal Products in the European Union, version September 2008).

AED: Antiepileptic drug.

Biomarker refers to a protein measured in blood whose concentration re ects the severity or presence of some disease state.

Complete Response Letter: The FDA sends applicants a CRL to indicate that the review cycle for an application is complete but that the application is not yet ready for approval.

Core EPS / Core earning per share: Adjusted net pro t, as de ned above, adding back the after tax amortisation of intangible assets linked to sales.

EBIT / Earnings Before Interest and Taxes: Operating pro t as mentioned in the consolidated nancial statements.

EFPIA: European Federation of Pharmaceutical Industries and Associations represents the pharmaceutical industry operating in Europe. www.efpia.org

EMA / European Medicines Agency: the agency responsible for the evaluation of medicinal products designed to protect and promote human and animal health. www.emea.europa.eu

Entreprise value is a measure of a company's value, often used as an alternative to straightforward market capitalisation. Enterprise value is calculated as market cap plus net debt.

Equity ratio: Shareholder's equity as a percentage of total assets.

EU5: France, Germany, Italy, Spain and U.K.

FDA / U.S. Food and Drug Administration: the agency within the U.S. Department of Health and Human Services is responsible for protecting and promoting the nation's health. www.fda.gov

Free cash fl ow: Cash ow from operating activities plus cash ow from investing activities of the continuing operations.

GRI / Global Reporting Initiative: Organisation which provides sustainability reporting guidelines, internationally accepted framework for CSR reporting

IMI: The Innovative Medicines Initiative: a public-private partnership designed by the European Commission and the EFPIA. The aim of IMI is to support the faster discovery and development of better medicines for patients and to enhance Europe's competitiveness by ensuring that its biopharmaceutical sector remains a dynamic high-technology sector. www.imi-europe.org

LTIR / Lost Time Incident Rate: Number of accidents with more than one day of absence per million of hours worked.

LTSR / Lost Time Severity rate: Number of lost days excluding the day of the accident per thousand of hours worked.

Net debt: Non-current and current borrowings and bank overdrafts less debt securities, restricted cash deposit with respect to nancial lease agreements, cash and cash equivalents.

Non-recurring items: Items of income or expense which do not occur regularly as part of the normal activities of the company.

PGTCS: Primary generalised tonic-clonic seizures.

Prevalence: The total number of cases of a disease in a given population at a speci c time. The prevalences mentioned in this report are based on the population of the seven countries (France, Germany, Italy, Japan, Spain, the U.K. and U.S.) which make up the majority of the global pharmaceutical market (sources: Decision Resources).

REBIT / Recurring EBIT: Operating pro t adjusted for impairment charges, restructuring expenses, and other exceptional income and expenses.

REBITDA / Recurring EBITDA / Recurring Earnings Before Interest, Taxes, Depreciation and Amortisation charges: operating pro t adjusted for amortisation, depreciation, impairment charges, restructuring expenses and other exceptional income and expenses.

Seven major markets: France, Germany, Italy, Japan, Spain, the U.K. and U.S.

Weighted average number of ordinary shares: The number of ordinary shares outstanding at the beginning of the period, adjusted by the number of shares bought back or issued during the period, multiplied by a time-weighting factor.

Working capital: Includes inventories, trade and other receivables and trade and other payables, both due within and after 12 months.

at the heart Financial calendar 2011

28 April Annual general meeting 28 April Interim report 29 July 2011 HY nancial results 27 October Interim report

Forward-looking statements

This Annual Report contains forward-looking statements, including, without limitation, statements containing the words 'believes', 'anticipates', 'expects', 'intends', 'plans', 'seeks', 'estimates', 'may', 'will', and 'continue' and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which might cause the actual results, nancial condition, performance or achievements of UCB, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, the public is cautioned not to place any undue reliance on such forward-looking statements. These forward-looking statements are made only as of the date of this Annual Report. UCB expressly disclaims any obligation to update any such forwardlooking statements in this Annual Report to re ect any change in its expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based, unless such statement is required pursuant to applicable laws and regulations.

Offi cial report language

Pursuant to Belgian law, UCB is required to prepare its Annual Report in French and Dutch. UCB has also made this report available in English. In the event of any differences in translations or interpretations, the French version shall prevail.

Availability of the Annual Report

The Annual Report is as such available on the website of UCB (www.ucb.com/investors/annual-reports/annual-report). Other information on the website of UCB or on any other website, does not form part of this Annual Report.

Contact

Investor Relations

Antje Witte, VP Investor Relations Tel: +32 2 559 9414 E-mail: antje.witte@ucb.com

External Communications

Nancy Nackaerts, Director Corporate External Communications Tel: +32 2 559 9264 E-mail: nancy.nackaerts@ucb.com

Corporate Social Responsibility

Isabelle de Cambry, Associate Director, Corporate HSE & CSR Tel: +32 2 386 3686 E-mail: csr@ucb.com

2010 UCB S.A. Allée de la Recherche, 60 1070 Brussels – Belgium RPM/RPR Brussels VAT BE 0403.053.608 www.ucb.com

at the heart Financial calendar 2011

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