UCB — Management Reports 2015

Mar 27, 2015

REPORT OF THE BOARD OF DIRECTORS

TO THE GENERAL SHAREHOLDERS MEETING OF 30 APRIL 2015

Dear Madam, Dear Sir,

In accordance with the legal requirements and those laid down in UCB SA/NV's Articles of Association, we are pleased to present you our report on the activities of our Company during the previous financial year and submit to you, for your approval, the annual accounts of UCB SA/NV for the financial year ended 31 December 2014.

UCB SA/NV is the parent company of the UCB Group and serves as a holding company, managing the activities of the UCB Group and its subsidiaries worldwide.

Please refer to the UCB Group 2014 Annual Report for an overview of the activities and results of UCB SA/NV and the UCB Group.

Major events during the financial year 2014 $1.$

$1.1.$ Convertible Bonds UCB SA/NV - Capital increase of UCB SA/NV

UCB SA/NV issued 10,000 senior unsecured 4.5 % bonds due in 2015 for an aggregate principal amount of € 500 million, placed with institutional investors following an accelerated book-building procedure on 30 September 2009 (hereafter the "Convertible" Bond(s)"). An Extraordinary General Meeting decided on 6 November 2009 to attach a conversion right to the Convertible Bonds.

Each Convertible Bond had a denomination of $\epsilon$ 50,000 and could be converted as from 2 December 2009 until 15 October 2015 for a conversion price of €38.746 per UCB share.

UCB SA/NV has exercised its option to redeem all outstanding Convertible Bonds on 12 March 2014 (see the press releases of 16 and 21 January 2014).

As an alternative to the redemption of the Convertible Bonds, each bondholder had the right to exercise its conversion rights, following which UCB SA/NV could, in its own discretion, decide to transfer existing UCB shares and/or issue new UCB shares.

Pursuant to the notices received by UCB SA/NV up to 5 March 2014 (i.e. the latest day on which bondholders could exercise their conversion right), a number of bondholders

exercised their conversion rights with respect to an aggregate number of 9,985 Convertible Bonds, resulting in:

• a) two capital increases for an aggregate amount of €33,235,518 in capital and € 396,012,275 in issuance premium, and the resulting issuance of an aggregate number of 11,078,506 new UCB shares:
• a capital increase of 27 February 2014 (see the press release of i. 27 February 2014) following the conversion of 3,963 Convertible Bonds, and the resulting issuance of 5,114,057 new UCB shares; and
• a capital increase of 13 March 2014 (see the press release of ii. 19 March 2014) following the conversion of 4,622 Convertible Bonds, and the resulting issuance of 5,964,449 new UCB shares;
• b) the delivery of 1,806,638 existing UCB shares to UCB SA/NV's wholly owned subsidiary UCB Lux S.A. following the conversion of 1,400 Convertible Bonds which were held by this subsidiary.

The remaining 15 Convertible Bonds, with an aggregate nominal value of $\epsilon$ 750,000, were not converted but redeemed on 12 March 2014 at par together with interest accrued to that date.

As per 19 March 2014, UCB SA/NV no longer had any Convertible Bonds outstanding.

The Bonds have also consequently been withdrawn from the listing on the Euro MTF market of the Luxembourg Stock Exchange.

$1.2.$ Non-recurring result linked to redemption of convertible bonds

Under the conversion of the Convertible Bond, UCB Lux S.A. has received existing 1,806,638 UCB shares. The difference between the conversion price of the Convertible Bonds ( $\epsilon$ 38.746) and the original acquisition price of the respective existing UCB shares has resulted in a total gain for UCB SA/NV of $€ 11,873,482.66$ .

UCB Lux S.A. has repurchased 1,806,638 options on UCB shares that it had sold to UCB SA/NV (for $€$ 19,385,225.74) earlier against the payment of a premium of € 20.2682 per option, i.e. a total amount of $\epsilon$ 36,617,300.31, leading to a gain for UCB SA/NV of € 17,232,074.57.

$1.3.$ Contribution in kind of UCB Inc. preferred shares to UCB Finance N.V.

In June 2014, UCB SA/NV acquired UCB Inc. preferred shares from Celltech Group Ltd. and UCB Lux S.A. for a total amount of € 29,997,633.64, which it contributed to UCB Finance N.V. by a contribution in kind.

As a result of this transaction, the shareholding of UCB SA/NV in UCB Finance N.V. per 31 December 2014 amounts to € 1,431,897,111.

$1.4.$ Redemption of unexchanged 2009 bonds

In October 2009, UCB SA/NV completed a public offering of $\epsilon$ 750 million fixed rate bonds, carrying a coupon and an effective interest rate of 5.75 % per annum, and aimed at retail investors.

In September 2013, UCB SA/NV launched an unconditional public exchange offer for a maximum of $\epsilon$ 250 million of these bonds. The bondholders had the opportunity to exchange their existing bonds against newly issued bonds maturing October 2023 in an exchange ratio of 1 to 1. These new bonds carry a coupon of 5.125 % per annum while their effective interest rate is 5.398 % per annum.

At the end of the exchange period, 175,717 existing bonds were tendered in the exchange offer, representing a nominal amount of $\epsilon$ 176 million. 175,717 new bonds were issued in October 2013 and have been listed on Euronext Brussels. UCB SA/NV cancelled the existing bonds that were exchanged in the exchange offer. The remaining outstanding 574,283 existing bonds matured and have been redeemed in November 2014, representing a nominal amount of € 575 million.

$1.5.$ Capital increases of subsidiaries

In 2014, UCB SA/NV participated in a capital increase of:

• UCB Farma Brasil Ltda for an amount of €7.3 million (UCB Farma Brasil Ltda used the cash to finance its Brazilian subsidiary Meizler UCB Biopharma S.A.);
• UCB Pharmaceuticals (Taiwan) Ltd. for an amount of TWD 17,550,000 $(E 428, 149.03)$ ;
• UCB Trading (SG) Pte. Ltd. for an amount of SGD 244,001 ( $\epsilon$ 141,338.08); and
• UCB Trading (Malaysia) Sdn. Bhd. for an amount of MYR 400,000 ( $\epsilon$ 87,854.16).
• $1.6.$ Share swap transaction

In 2014, UCB SA/NV sold 1.45 million UCB shares to a bank counterparty for an amount of €89.6 million. In combination with this spot transaction, UCB SA/NV repurchased 1.45 million UCB shares from the same counterparty for settlement on 27 April 2015 (subject to the exercise by UCB SA/NV of its early termination right in accordance with and pursuant to the underlying bilateral documentation), together a share swap transaction.

Later in 2014, UCB SA/NV early terminated the share swap with respect to 85,000 UCB shares for an amount of $\epsilon$ 5.2 million and a second one with respect to 225,000 UCB shares for an amount of € 13.9 million.

At 31 December 2014, the share swap represents a position of $\epsilon$ 70.4 million as a short term financial liability.

The sales of the UCB shares are not recorded in the balance sheet; the cash received from the bank counterparty is recognized to be a short-term financial liability.

$1.7.$ Transactions in own shares

On 31 December 2014, UCB SA/NV held a total of 5,539,270 UCB securities representing, if exercised, 2.85 % of the total number of UCB shares.

That holding of UCB securities consists of 239,270 shares, 3,721,040 assimilated financial instruments (outstanding options), 438,960 assimilated financial instruments (options exercised but not yet settled) and 1,140,000 assimilated financial instruments (other).

The 239,270 UCB shares represent 0.12 % of the capital and a par value of $\epsilon$ 717,810. The amount reported in the balance sheet under the section "own shares" represents € 13,888,163.95.

New loan from European Investment Bank (EIB) amounting \$ 100 million 1.8.

UCB NV/SA entered into a contract for $\overline{a}$ \$100 million financing from 20 November 2014 to 22 November 2021 under the new InnovFin 'EU Finance for Innovators' program set up jointly by the European Commission and the EIB Group.

$1.9.$ Investment of \$20 million by UCB SA/NV in Dermira Inc.

Under the partnership with Dermira Inc., UCB SA/NV purchased 1,841,235 Dermira Inc. shares in 2014, representing a value of \$20 million.

$1.10.$ Impairment testing - Long term assets Biotie

On 31 December 2014, the equity investment in Biotie remained on the balance sheet as a financial asset and amounted to $\epsilon$ 8.0 million as a result of the accumulated fair value adjustments (based on share price evolution). Considering the regular decrease in the share price of Biotie, the Board of Directors has decided to record an impairment of € 11.6 million in 2014.

Transfer of SOP and SAW/PSP from UCB SA/NV to UCB Fipar SA $1.11.$

As per August 2014, UCB Fipar SA has assumed the obligations of UCB SA/NV under certain stock option plans and share award programs. UCB Fipar SA has received a compensation of € 13 million for assuming these plans and programs.

$1.12.$ Risk of impairment on the shares held by UCB SA/ NV - Impairment test on the participations

On 31 December 2014, an impairment testing has been performed on the shareholdings of UCB SA/NV, we can conclude that there is no risk and that there is no additional impairment to be considered.

$1.13.$ Creation of an subsidiary in Thailand

2014, UCB SA/NV In created subsidiary, new a UCB Trading (Thailand) Ltd., in which it participated in the capital for an amount of THB 100,000,000 (€ 2,471,747.92).

1.14. Change in accounting policies

None

$1.15.$ Internal controls in place regarding the establishment of the annual accounts

The Audit Committee, on behalf of the Board of Directors, assesses the adequacy and effectiveness of the internal control system in detecting fraud, irregularities or infringement of laws, rules and regulations or material control failures on a regular basis. This is reflected in the establishment of the annual accounts for the financial year ended 31 December 2014.

$2.$ Major events after the balance sheet date

$2.1.$ Bearer securities automatically and by force of law converted into dematerialized shares on 1 January 2014

On 1 January 2014, the UCB bearer shares were by force of law automatically converted into dematerialized shares.

As of 1 January 2015, UCB SA/NV will organize the sale of all unclaimed bearer shares on Euronext Brussels in accordance with the Act of 14 December 2005. UCB SA/NV will deposit the net proceeds of the sale with the Belgian Deposit and Consignments Fund ("Caisse des dépôts et consignations" / "Deposito- en Consignatiekas"). After 31 December 2015, the rightful owners of the underlying bearer shares will have the right to claim the payment of the corresponding net proceeds from the Belgian Deposit and Consignment Fund subject to evidence of their valid title to the shares.

As per 15 February 2015, there are 88,368 unclaimed bearer shares, representing a total value of € 5,584,857.60 (valued at the closing share price on Euronext Brussels on 31 December 2014).

UCB SA/NV must report the unclaimed bearer shares in the Annex to this Annual Report as rights and commitments not included in the balance sheet (C5.13).

Conflicts of interest met during the financial year 3.

There were no transactions or contractual relationships in 2014 between UCB SA/NV, including its affiliates, and a member of the Board of Directors, giving rise to conflicts of interest, except as reported in Section 1.9 (Application of article 523 of the Belgian Companies Code) of the Corporate Governance Statement included in the UCB Group 2014 Annual Report.

Concerning the long term incentive, please see Section 1.4 (Remuneration report) of the Corporate Governance Statement included in the UCB Group 2014 Annual Report.

Balance Sheet of UCB SA/NV at 31 December 2014 $4.$

On the balance sheet of UCB SA/NV at 31 December 2014, the total assets and liabilities amount to $\epsilon$ 9,132,629,917, as compared to $\epsilon$ 9,581,462,704 at 31 December 2013.

5. Results of UCB SA/NV and allocation thereof

The operations of UCB SA/NV generated in 2014 a net profit of $\epsilon$ 101,512,110 after tax compared to € 193,384,804 in 2013¹.

After taking into account the profits carried forward of $\epsilon$ 123,084,230, $\epsilon$ 224,596,339 is available for distribution. The Board of Directors proposes the following allocation:

• 1. distribution to the shareholders of a gross dividend of $\epsilon$ 1.06 per share;
• 1. transfer to the legal reserves of an amount of $\epsilon$ 3,323,552;
• 1. carry forward the balance.

We thus propose to pay, against delivery of coupon no 18, a gross dividend of $\epsilon$ 1.06 per share (giving right to a dividend net of Belgian 25 % withholding tax of $\epsilon$ 0.795)². The aggregate amount to be distributed to the shareholders may fluctuate depending on the number of UCB shares held by UCB SA/NV (own shares) on the dividend approval date, as the UCB shares held by UCB SA/NV (own shares) are not entitled to a dividend. Per 5 January 2015, 193,827,428 UCB shares are entitled to a dividend, representing a total distribution of € 205 million. The Board of Directors will communicate at the general meeting the total number of UCB shares entitled to the 2014 dividend and will submit the aggregate amount to be distributed to the shareholders for approval. The annual accounts of 2014 will be adapted accordingly.

Coupon no 18 will be payable as from 6 May 2015 at KBC Bank NV/SA, Havenlaan 12 Avenue du Port, 1080 Brussels (Belgium).

In accordance with the law, we request you to grant discharge to the Directors and the Statutory Auditor for the performance of their duties during the financial year ended 31 December 2014.

The profit in 2013 included non-recurring profits of $\epsilon$ 172,231,465 with respect to the liquidation of UCB SA/NV's Luxembourg subsidiary Société Financière UCB S.A.

^<sup>2 Other taxes and rates may apply depending on the situation of the individual shareholder.

Financial instruments, risks of credit, risks of liquidity and risk of treasury 6.

Please refer to the UCB Group 2014 Annual Report, Financial Report, Notes to the Consolidated Financial Statements, Point 4 "Financial Risks Management".

$7.$ Activities in the area of research and development

The activities of UCB SA/NV are holding activities.

Branches of UCB SA/NV 8.

UCB SA/NV has no branches.

9. Corporate Governance Statement

The Corporate Governance Statement (including the Remuneration Report) is included in the UCB Group 2014 Annual Report.

Brussels, 26 February 2015,

Jean-Christophe Tellier Chief Executive Officer and Director

Chairman of the Board

Annex: UCB Group 2014 Annual Report