Proposed Acquisition of Ecuphar NV and Placing

RNS Number : 9589I

Animalcare Group PLC

23 June 2017

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

For immediate release

23 June 2017

Animalcare Group plc

("Animalcare", the "Company" or, together with its Subsidiaries, the "Group")

Proposed acquisition of Ecuphar NV

Approval of waiver of obligations under Rule 9 of the Takeover Code

Proposed primary placing of approximately 8.6 million New Placing Shares

Proposed secondary placing of up to approximately 0.8 million Sale Shares

Admission of the Enlarged Issued Share Capital to trading on AIM

and

Notice of General Meeting

Animalcare Group plc (AIM: ANCR), a leading supplier of generic veterinary medicines and identification products and services to the companion animal veterinary markets, announces that it has today entered into a conditional share purchase agreement to acquire the entire issued share capital of Ecuphar NV ("Ecuphar", together with Animalcare, the "Enlarged Group"), a European animal health company focused on the development and sale of veterinary pharmaceutical products that provide significant benefits to animal health in the companion animal, equine and production animal markets (the "Acquisition").

The consideration for the Acquisition is structured on a consolidated Animalcare/Ecuphar Enlarged Issued Share Capital ratio of 37:63 (after taking into account dilution from certain Animalcare incentive arrangements), and will be satisfied through the issue of Consideration Shares and cash to the Ecuphar vendors. The cash component of the consideration will be satisfied in part through a placing of approximately 8.6 million New Placing Shares (representing approximately 40.4 per cent. of the Existing Issued Share Capital) to raise gross proceeds of not less than £30.0 million, with the balance (of £4.0 million) to be funded by existing cash held by the Group. The number of Consideration Shares to be issued to the vendors of Ecuphar, will be determined following completion of the Placing (and by reference to the exact number of New Placing Shares issued in the Placing).

The Acquisition constitutes a reverse takeover for the purposes of Rule 14 of the AIM Rules for Companies and, as such, is conditional, inter alia, upon Shareholder approval.

In addition, certain directors and employees of the Company intend to participate in the Placing in order to sell up to approximately 0.8 million Existing Ordinary Shares (in aggregate), and a proposed director of the Company, Edwin Torr, a former executive director of Dechra Pharmaceuticals PLC, intends to participate in the Placing by purchasing approximately 85,000 Placing Shares.

Highlights

Transformational Acquisition

· Proposed acquisition of the entire issued share capital of Ecuphar, a European animal health company focused on the development and sale of veterinary pharmaceutical products that provide significant benefits to animal health in the companion animal, equine and production animal markets.

· The consideration for the Acquisition is structured on a consolidated Animalcare/Ecuphar Enlarged Issued Share Capital ratio of 37:63 (after taking into account dilution from certain Animalcare incentive arrangements), and will be satisfied through the issue of Consideration Shares and cash to the Ecuphar vendors.

· Ecuphar is led by founder and Chief Executive Officer, Chris Cardon, supported by a strong and highly experienced management team.

· The Existing Directors believe that Animalcare and Ecuphar are highly complementary businesses, in particular with regard to their geographic markets, product portfolios and new product development pipelines, and the Existing Directors therefore expect the Acquisition to provide enhanced scale and capabilities. As such, the Existing Directors consider the Acquisition to provide an opportunity to create a specialist pan-European animal health company that gives the Enlarged Group leadership in its chosen niches that are supported by attractive and complementary market drivers.

· The Enlarged Group would comprise direct sales organisations in seven countries (currently one for Animalcare); export to approximately 50 markets (currently 12, with agreements signed for a further 14, for Animalcare) and have approximately 98 sales representatives (currently 22 for Animalcare) and 28 agents (currently none for Animalcare).

· For the year ended 31 December 2016, Ecuphar recorded revenue of £68.4 million and Underlying EBITDA of £8.9 million. Ecuphar has existing credit facilities with KBC Bank NV, BNP Paribas Fortis NV, Belfius Bank NV and ING België NV. These facilities will continue to be available to Ecuphar after Completion.

· The Acquisition complements, broadens and diversifies Animalcare's existing portfolio of licenced veterinary pharmaceutical products, in particular, generic medicines for the treatment of companion animals. The Enlarged Group will own 50 licenced drugs, eight vaccines and over 100 care and nutraceutical products (currently 21 licenced drugs for Animalcare).

· The Acquisition materially enhances Animalcare's portfolio of intellectual property and trademarks, which will help to protect the Enlarged Group's overall market position. The Enlarged Group will have three unique veterinary products (other than one competing ethamsylate product in France and currently none for Animalcare); ten patents (currently none for Animalcare) and approximately 300 trademarks (currently 42 for Animalcare).

· The Existing Directors believe that the Enlarged Group will represent a growing, highly cash generative dividend paying company with a solid pipeline of new products.

· The Existing Directors believe that, taking into account the business and prospects of the Enlarged Group, the Acquisition will be enhancing to the Board's expectations of underlying earnings for the Existing Group in the first full financial year of ownership.

· With effect from Admission, Chris Cardon (proposed Chief Executive Officer), Walter Beyers (proposed Chief Financial Officer), Jan Boone (proposed Non-executive Chairman), Edwin Torr (proposed senior independent Non-executive Director) and Marc Coucke (proposed Non-executive Director) will be appointed as Directors of the Company. Iain Menneer will remain as a Director following Admission with his role within the Group changing to Chief Operating Officer. James Lambert will step down as Chairman of the Company but will remain on the Board as a Non-executive Director. Nick Downshire will remain on the Board as a Non-executive Director. Chris Brewster will resign as a Director but will remain a critical and committed member of the senior management team of the Enlarged Group as Country Manager of the Enlarged Group's UK business. Raymond Harding will resign as a Director.

· The Acquisition constitutes a reverse takeover for the purposes of Rule 14 of the AIM Rules for Companies and, as such, is conditional, inter alia, upon Shareholder approval, which will be sought at a general meeting of the Company to be held at 10.00 a.m. on 12 July 2017 at the offices of Squire Patton Boggs (UK) LLP at 7 Devonshire Square, London, EC2M 4YH.

· In accordance with Rule 14 of the AIM Rules for Companies, trading in the Existing Ordinary Shares will be suspended from 7.30 a.m. today, 23 June 2017, pending publication of the Admission Document. The Admission Document, which will include a circular and a notice convening the General Meeting, is expected to be published as soon as possible after the Bookbuild (see details below), at which point it is expected that the suspension of trading in the Existing Ordinary Shares will cease the following business day. A copy of the Admission Document will be available on the Company's website at www.animalcaregroup.co.uk upon publication. The Company will provide a further update in due course.

The Placing and the Bookbuild

· The Company is proposing to raise gross proceeds of not less than £30.0 million by the issue of approximately 8.6 million New Placing Shares, which represents approximately 40.4 per cent. of the Existing Issued Share Capital.

· The net proceeds of the Placing receivable by the Company will be applied in full to paying a substantial proportion of the cash component of the Acquisition consideration.

· In addition, the Selling Shareholders intend to sell up to approximately 0.8 million Sale Shares in the Placing. In the case of each of the Selling Shareholders except Lord Nick Downshire, the Sale Shares which may be sold in the Placing will be obtained from the exercise of certain existing Options or the exchange of shares in Animalcare Limited by the relevant individuals. These Option Shares are expected to represent 6.5 per cent. of the Existing Issued Share Capital

· Edwin Torr, a proposed Director and former executive of Dechra, is intending to purchase approximately 85,000 Placing Shares in the Placing to show his support for the Acquisition and the Enlarged Group.

· The Placing will be conducted through an accelerated bookbuilding process (the "Bookbuild"), which will be launched immediately following this Announcement, in accordance with the terms and conditions set out in Appendix III to this Announcement. The Placing Shares are not being made available to the public. It is envisaged that the Bookbuild will be closed no later than 4.30 p.m. today, 23 June 2017. Details of the number of New Placing Shares, the number of Sale Shares, the price per share of the Placing Shares (the "Placing Price") and the gross proceeds of the Placing will be announced as soon as practicable after the closing of the Bookbuild. The Placing will not be underwritten.

· The Existing Directors believe that the increase in liquidity and free float of the Ordinary Shares of the Enlarged Group following the Placing will be beneficial to the Enlarged Group and to Shareholders as a whole.

· The Acquisition and Placing are conditional, inter alia, upon the Share Purchase Agreement not having been terminated and having become unconditional, the Placing and Admission Agreement having become unconditional and not having been terminated, the Company raising gross proceeds of not less than £30.0 million pursuant to the Placing of New Placing Shares and upon approval of Resolutions 1-6 by Shareholders at the General Meeting. In total, the Company has received letters of intent and irrevocable undertakings to vote in favour of the Resolutions (other than the Whitewash Resolution) in respect of beneficial holdings totalling 4,231,653 Ordinary Shares, representing, in aggregate, approximately 19.9 per cent. of the Existing Issued Share Capital.

· Application will be made for the Enlarged Issued Share Capital, including the Existing Issued Share Capital, the New Placing Shares, the Consideration Shares and the Option Shares, to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Enlarged Issued Share Capital will commence at 8.00 a.m. on 13 July 2017, and that the Acquisition will complete at the same time. The ISIN number of the Ordinary Shares is, and from Admission will continue to be, GB0032350695, and the TIDM will remain as ANCR.

· Rothschild is acting as Financial Adviser to the Company, Panmure Gordon is acting as Nominated Adviser, Lead Bookrunner and Broker to the Company in connection with the Placing and Admission, and Degroof Petercam is acting as Joint Bookrunner to the Company in connection with the Placing of the New Placing Shares.

Rule 9 Waiver

· Ecuphar is majority owned by Ecuphar Invest NV, an entity controlled by Chris Cardon, and Alychlo NV, the investment vehicle of Marc Coucke, a highly successful entrepreneur and investor having founded Omega Pharma. These entities hold, in aggregate, 96.4% of the shares in Ecuphar.

· The Panel has confirmed that it considers Ecuphar Invest NV, Alychlo NV and Jaak Cardon (the son of Chris Cardon and a minority shareholder in Ecuphar) to be acting in concert for the purposes of the Takeover Code (together, the "Concert Party").

· Following completion of the Acquisition, this Concert Party (by virtue of the Consideration Shares to be issued to Ecuphar Invest NV, Alychlo NV and Jaak Cardon pursuant to the Acquisition) is expected to control approximately 46.3 per cent. of the voting rights of the Enlarged Group.

· The Panel has agreed to grant a waiver of Rule 9 of the Takeover Code (which would otherwise require the Concert Party to make a general offer to acquire the balance of Ordinary Shares in issue immediately following the Acquisition), subject to the Whitewash Resolution being passed by the Independent Shareholders, being the Shareholders other than the Selling Shareholders and any person acting in concert with them who holds Ordinary Shares, (on a poll) at the General Meeting.

· In total, the Company has received letters of intent and irrevocable undertakings to vote in favour of the Whitewash Resolution, on which only the Independent Shareholders are entitled to vote, in respect of beneficial holdings totalling 2,739,075 Ordinary Shares, representing, in aggregate, approximately 13.9 per cent. of the Existing Issued Share Capital entitled to vote on that Resolution.

· Further details of the Waiver Resolution are set out below and in the Admission Document to be made available shortly after the conclusion of the Bookbuild.

Commenting on the Acquisition and the Placing, Iain Menneer, Chief Executive Officer of Animalcare said: "We are very pleased to present to shareholders this highly complementary acquisition which will provide enhanced scale and capabilities for the Group and create a pan-European animal health platform from which to accelerate growth. The acquisition will be truly transformational: it will expand our direct sales operation to cover seven countries and our international reach into 50 export markets, as well as greatly increasing the depth and diversity of our licensed veterinary medicines product range. As an enlarged Group we expect to deliver a growing, highly cash generative, dividend paying company with a solid pipeline of new products and multiple cross-selling opportunities."

This summary should be read in conjunction with the full text of this Announcement. Further details of the Acquisition and Placing are set out in Appendix I to this announcement. You should read and understand the information provided in the "Important Notices" section of this Announcement. Unless otherwise defined, defined terms have the same meanings as those given in Appendix IV to this Announcement.

The Market Abuse Regulation ("MAR") became effective from 3 July 2016. Market Soundings, as defined in MAR, were taken in respect of the proposed Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a Market Sounding are no longer in possession of inside information relating to the Company and its securities.

Enquiries:

Animalcare Group plc
Iain Menneer, Chief Executive Officer	Tel: 01904 487 687
Chris Brewster, Chief Financial Officer

Panmure Gordon (UK) Ltd (Nominated Adviser, Lead Bookrunner and Broker)	Tel: 020 7886 2500
Corporate Finance
Freddy Crossley / Peter Steel / Duncan Monteith
Corporate Broking
James Stearns

Rothschild (Financial Adviser)	Tel: 0113 200 1900
Stephen Griffiths
Tim Day

Bank Degroof Petercam NV (Joint Bookrunner)	Tel: +32 2229 6659
Sales
Gert Potvlieghe

Walbrook PR Ltd	Tel: 020 7933 8780 or animalcare@walbrookpr.com
Paul McManus	Mob: 07980 541 893
Lianne Cawthorne	Mob: 07584 391 303

About Animalcare

Animalcare is a leading veterinary sales and marketing company based in York with 67 employees including a sales team of 22 selling to veterinary practices around the United Kingdom.

Animalcare has developed a range of generic veterinary medicines and animal identification products primarily to companion animal veterinary markets.

Animalcare operates in three product areas:

· Licensed Veterinary Medicines

· Animal Welfare Products

· Companion Animal Identification

For more information see: www.animalcaregroup.co.uk

IMPORTANT NOTICES

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This announcement does not constitute, or form part of, a prospectus relating to the Company, nor does it constitute or contain any invitation or offer to any person, or any public offer, to subscribe for, purchase or otherwise acquire any shares in the Company or advise persons to do so in any jurisdiction.

The content of this announcement has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA"). This announcement has been issued by and is the sole responsibility of the Company. The information in this announcement is subject to change.

This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold, directly or indirectly, in or into the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan, the Republic of South Africa or any jurisdiction where to do so might constitute a violation of local securities laws or regulations (a "Prohibited Jurisdiction"). This announcement and the information contained herein are not for release, publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

This announcement is directed only at persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investments and: (i) if in a member state of the European Economic Area, are qualified investors within the meaning of article 2(1)(e) of the Prospectus Directive ("Qualified Investors"); and (ii) if in the United Kingdom, fall within: (a) article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); (b) article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Order; or (c) if in Belgium, qualified investors within the meaning of article 10 of the act of 16 June 2006 on public offerings; and/or (d) any other person to whom it may lawfully be communicated without any obligation to issue a prospectus approved by competent regulators (all such persons together being referred to as "Relevant Persons"). The minimum consideration to be provided by a Placee for their Placing Participation pursuant to the Placing is EUR100,000. This announcement must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

Panmure Gordon (UK) Limited ("Panmure Gordon") is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Panmure Gordon is acting as nominated adviser, Lead Bookrunner and Broker exclusively for the Company and no one else in connection with the contents of this announcement and will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the contents of this announcement nor will it be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Panmure Gordon by FSMA or the regulatory regime established thereunder, Panmure Gordon accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company or any other person, in connection with the Company and the contents of this announcement, whether as to the past or the future. Panmure Gordon accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of the contents of this announcement or any such statement.

Degroof Petercam is acting as Joint Bookrunner exclusively for the Company in the framework of the Placing of the New Placing Shares and no one else in connection with the contents of this announcement and will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the contents of this announcement nor will it be responsible to anyone other than the Company. Degroof Petercam accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company or any other person, in connection with the Company and the contents of this announcement, whether as to the past or the future. Degroof Petercam accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of the contents of this announcement or any such statement.

The Joint Bookrunners are acting only for the Company in connection with the matters described in this announcement and are not acting for or advising any other person, or treating any other person as their client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of the Joint Bookrunners or advice to any other person in relation to the matters contained herein. Such persons should seek their own independent legal, investment and tax advice as they see fit.

In connection with the Placing, the Joint Bookrunners and any of their respective affiliates, acting as investors for their own accounts, may subscribe for or purchase ordinary shares in the Company ("Ordinary Shares") and, in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Ordinary Shares and other securities of the Company or related investments in connection with the Placing or otherwise. Accordingly, references to the Ordinary Shares being offered, subscribed, acquired, placed or otherwise dealt in should be read as including any offer to, or subscription, acquisition, placing or dealing by a Joint Bookrunner and any of its respective affiliates acting as investors for their own accounts. In addition, a Joint Bookrunner or its respective affiliates may enter into financing arrangements and swaps in connection with which it or its affiliates may from time to time acquire, hold or dispose of Ordinary Shares. The Joint Bookrunners have no intention to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

N M Rothschild & Sons Limited ("Rothschild"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting for Animalcare Group plc and no one else in relation to the Acquisition and Placing and will not be responsible to anyone other than Animalcare Group plc for providing the protections afforded to clients of Rothschild nor for providing advice in relation to the Acquisition, Placing and the contents of this announcement. The information provided in this announcement is entirely based on information provided by Animalcare Group plc and has not been independently verified by Rothschild. Accordingly, Rothschild does not accept any responsibility or liability whatsoever, and makes no representations or warranty, express or implied, for the contents of this announcement. Rothschild disclaims, to the fullest extent permitted by law all and any responsibility and liability howsoever arising which it might otherwise have in respect of this announcement

FORWARD-LOOKING STATEMENTS

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's business strategy, plans and objectives of management for future operations, or any statements proceeded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. No undue reliance should be placed upon forward-looking statements. These forward looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by applicable law or the AIM Rules for Companies.

APPENDIX I - FURTHER DETAILS OF THE ACQUISITION AND PLACING

Proposed acquisition of Ecuphar NV

Approval of waiver of obligations under Rule 9 of the Takeover Code

Proposed primary placing of approximately 8.6 million New Placing Shares

Proposed secondary placing of up to approximately 0.8 million Sale Shares

Admission of the Enlarged Issued Share Capital to trading on AIM

and

Notice of General Meeting

1. Introduction

Animalcare announces that it has entered into the conditional Share Purchase Agreement to acquire the entire issued share capital of Ecuphar from the Vendors. Ecuphar is a European animal health company focused on the development and sale of veterinary pharmaceutical products that provide significant benefits to animal health in the companion animal, equine and production animal markets. Ecuphar is led by founder and Chief Executive Officer, Chris Cardon, together with a strong and highly experienced management team. The Existing Directors believe that Animalcare and Ecuphar are highly complementary businesses, in particular with regard to their geographic markets, product portfolios and new product development pipelines and the Existing Directors therefore expect the Acquisition to provide enhanced scale and capabilities. On completion of the Acquisition, the senior management teams of Animalcare and Ecuphar will be integrated to continue to operate the Enlarged Group, with Chris Cardon assuming the role of Chief Executive Officer and Iain Menneer, current Chief Executive Officer of Animalcare, becoming the Chief Operating Officer. For further details on the Ecuphar Group, see paragraph 3 of Appendix I in this Announcement.

The consideration for the Acquisition is structured on a consolidated Animalcare/Ecuphar Enlarged Issued Share Capital ratio of 37:63 (after taking into account dilution from certain Animalcare incentive arrangements), and will be satisfied through the issue of Consideration Shares and cash to the Vendors. The cash component of the consideration will be satisfied in part through a placing of approximately 8.6 million New Placing Shares (representing approximately 40.4 per cent. of the Existing Issued Share Capital) to raise gross proceeds of not less than £30.0 million, with the balance (of £4.0 million) to be funded by existing cash held by the Group. The number of Consideration Shares to be issued to the vendors of Ecuphar will be determined following completion of the Placing (and by reference to the exact number of New Placing Shares issued in the Placing). In addition, certain directors and employees of the Company intend to participate in the Placing in order to sell up to approximately 0.8 million Existing Ordinary Shares (in aggregate), and a proposed director of the Company, Edwin Torr, a former executive of Dechra Pharmaceuticals PLC, intends to participate in the Placing by purchasing approximately 85,000 Placing Shares.

The Existing Directors believe that the increase in liquidity and free float of the Ordinary Shares of the Enlarged Group following the Placing will be beneficial to the Enlarged Group and to Shareholders as a whole.

For further details on the terms of the Acquisition and the Placing, see paragraphs 7 and 8 of Appendix I respectively in this Announcement.

As further detailed in paragraph 9 of Appendix I in this Announcement, the Panel has confirmed that it considers Ecuphar Invest NV, Alychlo NV and Jaak Cardon (the son of Chris Cardon and a minority shareholder in Ecuphar) to be acting in concert for the purposes of the Takeover Code. Following completion of the Acquisition, this Concert Party (by virtue of the Consideration Shares to be issued to Ecuphar Invest NV, Alychlo NV and Jaak Cardon pursuant to the Acquisition) is expected to control approximately 46.3 per cent. of the voting rights of the Company. The Panel has agreed to grant a waiver of Rule 9 of the Takeover Code (which would otherwise require the Concert Party to make a general offer to acquire the balance of Ordinary Shares in issue immediately following the Acquisition), subject to the Whitewash Resolution being passed by the Independent Shareholders (on a poll) at the General Meeting. Your attention is drawn to paragraph 9 of Appendix I in this Announcement, which contains further details on the Rule 9 Waiver.

The Acquisition constitutes a reverse takeover under the AIM Rules for Companies, requiring the approval of a majority of all of the Shareholders who vote. It is also conditional upon, inter alia, the passing of other resolutions relating to the issue of new Ordinary Shares in connection with the Acquisition and the Placing. These approvals will be sought at the General Meeting to be held at Squire Patton Boggs (UK) LLP at 7 Devonshire Square, London EC2M 4YH at 10.00 a.m. on 12 July 2017, notice of which will be set out in the Admission Document. Voting on all of the Resolutions will be by way of a poll.

The Company has received letters of intent and irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting in respect of, in the case of all Resolutions other than the Whitewash Resolution, 4,231,653 Existing Ordinary Shares, representing, in aggregate, approximately 19.9 per cent. of the Existing Issued Share Capital and, in respect of the Whitewash Resolution, on which only the Independent Shareholders are entitled to vote, 2,739,075 Existing Ordinary Shares, representing, in aggregate, approximately 13.9 per cent. of the Existing Issued Share Capital entitled to vote on that Resolution.

2. Background to and reasons for the Acquisition

The Existing Directors believe that Animalcare and Ecuphar are highly complementary businesses in particular across products, product development and geographies. As such, the Existing Directors consider the Acquisition to provide an opportunity to create a specialist pan-European animal health company that gives the Enlarged Group leadership in its chosen niches that are supported by attractive and complementary market drivers. The Existing Directors believe that the Enlarged Group will represent a fast growing, highly cash generative and dividend paying company with a solid pipeline of new products.

The Existing Directors believe that there is a strong strategic rationale for the Acquisition for the following reasons.

Position of critical scale within the European animal health market

The Acquisition materially strengthens the position of Animalcare and Ecuphar in the supply and distribution of companion and food producing animal health products in Europe. This market is large and growing (estimated size of US $8 billion with 5 per cent. historic CAGR). The Directors believe the Enlarged Group's focus on niche, highly specialist therapeutic areas together with its increased scale makes it well positioned to capitalise on the underlying growth in the wider animal health market.

Creation of a pan-European platform

The Acquisition creates a pan-European animal health platform, which significantly enhances Animalcare's geographic footprint and sales, marketing and distribution network. Specifically, the Enlarged Group would comprise direct sales organisations in seven countries (currently one for Animalcare); export to approximately 50 markets (currently 12, with agreements signed for a further 14, for Animalcare) and have approximately 98 sales representatives (currently 22 for Animalcare) and 28 agents (currently none for Animalcare). Ecuphar's extensive European presence and established distribution network provides direct access to new markets for Animalcare and its products, and the combination provides the Enlarged Group with a scale platform from which to target new, significant commercial opportunities and attract new distribution partners.

Broader, more diversified product portfolio

The Acquisition complements, broadens and diversifies Animalcare's existing portfolio of licenced veterinary pharmaceutical products, in particular generic medicines for the treatment of companion animals. In addition, the Acquisition enlarges Animalcare's addressable market, both by diversifying Animalcare's areas of therapeutic focus within companion animals and adding new product capabilities in food producing animal segments. Specifically, the Enlarged Group will own 50 licenced drugs, eight vaccines and over 100 care and nutraceutical products (currently 21 licenced drugs for Animalcare). This will enable the Enlarged Group to offer its customers a broader range of products and services.

Enhanced intellectual property portfolio and new product development pipeline

The Acquisition materially enhances Animalcare's portfolio of intellectual property and trademarks, which will help to protect the Enlarged Group's overall market position. The Enlarged Group will have three unique veterinary products (other than one competing ethamsylate product in France and currently none for Animalcare); ten patents (currently none for Animalcare) and approximately 300 trademarks (currently 42 for Animalcare).

Together, the Enlarged Group will have a broader and more diversified new product development pipeline, supported by the greater cash generation of the Enlarged Group. The Existing Directors believe that this enhances the likelihood of successful new product launches and, given the increased scale and network of the Enlarged Group, also increases the potential revenue generation per product once launched versus a launch by Animalcare or Ecuphar on a standalone basis. Specifically, Animalcare currently has 18 projects in its pipeline and Ecuphar has 11 new product development projects in its pipeline. The combined research and development knowledge and expertise of the Enlarged Group may also lead to and accelerate additional product development opportunities.

The combined new product development pipeline of the Enlarged Group is as follows:

http://www.rns-pdf.londonstockexchange.com/rns/9589I_-2017-6-23.pdf

Highly experienced management team

The Existing Directors believe the experienced and capable management structure at Animalcare will be significantly enhanced by the high quality leadership of Ecuphar's management team. The Enlarged Group's management team will be led by Ecuphar current Chief Executive Officer Chris Cardon, who will join as Chief Executive Officer of the Enlarged Group. Animalcare's current Chief Executive Officer, Iain Menneer, will assume the role of Chief Operating Officer of the Enlarged Group. The Existing Directors and Proposed Directors believe that the Enlarged Group will have a strong management team and organisation, which is positioned to deliver shareholder value.

The Enlarged Group's Management team will also have significant M&A experience. The Directors believe that this will support an effective integration process and provide the Enlarged Group with the experience and capabilities to play a shareholder value-creating role in any industry consolidation, within what is considered by the Existing Directors to be a fragmented market.

Material opportunities for synergy creation

The Existing Directors believe the Acquisition will create significant synergy opportunities from which to drive shareholder value, including from:

• cross-selling the Enlarged Group's broader range of products and services to Animalcare's and Ecuphar's existing customers;

• bringing in-house the respective third party distribution of products from Animalcare to customers in Europe and from Ecuphar to customers in the UK;

• gaining significant operating efficiencies by leveraging the Enlarged Group's substantial supply chain, distribution, sales and marketing network;

• optimisation of the Enlarged Group's research and development function; and

• the enhanced brand and market position of the Enlarged Group, which is likely to generate more customer interest.

3. Information on Ecuphar

Introduction

Ecuphar is a European animal health company focused on the development and sale of veterinary pharmaceutical products that provide significant benefits to animal health in the companion animal, equine and production animal markets. Ecuphar is headquartered in Belgium and is also directly present in the Netherlands, Germany, Spain, Italy and Portugal through its own sales, marketing and distribution organisations. In addition, Ecuphar supplies its veterinary products to partners in 37 countries and operates a wholesale business, Medini, which is focused on the sale of veterinary pharmaceuticals, supplies and instruments in the Belgian market.

Since its foundation, Ecuphar has developed a strong track record of high growth and cash generation. For the year ended 31 December 2016, Ecuphar generated revenue of £68.36 million and Underlying EBITDA of £8.91 million (year ended 31 December 2015: £47.10 million and £4.82 million respectively). This growth is attributable to a combination of strong organic growth driven by the launch of new products and distributions, and the full-year impact of the 2015 acquisition of the animal health business of Laboratorios del Dr. Esteve, S.A. and other entities of the same group, an international pharmaceutical and chemical group, and the resulting expansion into the Spanish, Italian and Portuguese animal health markets.

Ecuphar has continuously invested in the future of the business and has a robust new product development pipeline focused on developing innovative licenced veterinary drugs and extending the lifecycle of existing products. In 2016, Ecuphar spent £2.8 million on new product development projects. Ecuphar's product development pipeline is currently composed of eleven new product development projects in various stages of development, which are expected to be launched and commercialised over the coming years.

In addition to growing its business through developing and launching new products, Ecuphar has over the past 15 years completed more than 15 asset and company acquisitions to strengthen its product portfolio and enter new geographical markets. Acquisitions are a key focus of Ecuphar's strategy and Ecuphar strongly believes that acquiring complementary veterinary businesses and products can lead to important commercial synergies, including through the cross-selling of Ecuphar's products through the acquiree's sales channels and vice versa.

Ecuphar is led by founder and Chief Executive Officer, Chris Cardon, together with a strong and highly experienced management team, which includes Chief Financial Officer Walter Beyers, Chief Strategy Officer, Jeroen Bastijns and Chief Commercial Officer and General Manager South Europe, Emilio Gil Ventura.

Background and history

Founded in 2001 in Bruges, Belgium, as Chris Cardon NV and renamed Cardon Pharmaceuticals in 2002 and subsequently Ecuphar in 2006, Ecuphar has grown through a successful focus on product portfolio development. Starting with the development and sale of OTC veterinary products such as Orozyme, for the dental health of companion animals, Ecuphar now has a portfolio of over 300 products covering pharmaceuticals, vaccines, and care and nutraceutical products which are successfully marketed to the European and wider international market, as well as over 250 registered trademarks, 10 patents and three veterinary products considered by Ecuphar to be unique (with the exception of one competing ethamsylate product in France). This has been achieved through in-house product development, acquired products, licensed products (through strategic alliances such as those with Bayer Animal Health and Elanco) and distribution partnerships (such as those with Orion Pharmaceuticals and Eco Animal Health).

The chart below shows the revenue evolution of Ecuphar (in £ million, at a constant exchange rate) since its foundation and highlights certain of the key developments in its corporate history.

http://www.rns-pdf.londonstockexchange.com/rns/9589I_1-2017-6-23.pdf

Ecuphar has successfully grown its platform during this time via acquisitions to develop a direct commercial presence in six European countries. Initially, a series of acquisitions between 2005 and 2008 was primarily aimed at expanding its position in the Belgian veterinary market and establishing a foothold in the Netherlands. Acquisitions during this period include among others:

2005 Clinagel Vet: the first veterinary pharmaceutical (Belgian anti-bacterial eye gel for companion animals) acquired.

Vetred: a Netherlands based specialist distributor of veterinary orthopaedic implants.

2006 Ecuphar: a Belgium based animal health company with pharmaceutical products for both companion and production animals. This acquisition led to a change of name from Cardon Pharmaceuticals to Ecuphar.

Medini: a Belgium based veterinary wholesaler and distributor.

Instrulife: a Belgium based specialist in veterinary instruments.

2008 Ace Veterinary Products: a Netherlands based specialist in pharmaceuticals for companion animals and horses.

Equipharma: a Belgium based specialist in equine nutraceuticals.

Ornis: a France based specialist in pigeon pharmaceuticals.

During 2009 and 2011, Ecuphar expanded further abroad with the acquisitions of Nutri-Science in Ireland and the Riemser Animal Health business in Germany:

2009 Nutri-Science: Ireland based manufacturer of a broad range of feed supplements for horses and companion animals. This business was sold to Swedencare in 2016 in order to allow Ecuphar to focus more closely on its core veterinary pharmaceuticals business.

2011 Riemser Animal Health: Germany based animal health portfolio. The acquisition enabled Ecuphar to enter the vaccines market and gain direct access to the German veterinary market.

In 2015, Ecuphar made its largest acquisition to date by acquiring the veterinary business of the Spanish pharmaceutical company, Esteve:

2015 Esteve Veterinaria: this acquisition provided Ecuphar with an important footprint in the Spanish, Italian and Portuguese veterinary markets as well as a number of new products in complementary therapeutic areas such as Danilon (equine anti-inflammatory) and Dinalgen (equine, bovine and swine anti-inflammatory).

The current group structure of the Ecuphar Group is as follows:

http://www.rns-pdf.londonstockexchange.com/rns/9589I_2-2017-6-23.pdf

Product overview

For management purposes, Ecuphar is organised into two segments: Pharmaceuticals and Wholesale. The Pharmaceuticals segment is active in the development and sale of Ecuphar's veterinary pharmaceutical products that provide significant benefits to animal health directly or via wholesalers to end customers (i.e. veterinary practices), whereas the Wholesale segment focuses on the purchase and re-sale of veterinary pharmaceuticals, supplies and instruments to Belgian veterinary practices.

In the year to 31 December 2016, the Pharmaceuticals segment contributed approximately 69 per cent. of Ecuphar's revenue, and as much as 95 per cent. of Underlying EBITDA and is therefore considered the key focus area for Ecuphar's management.

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In the Pharmaceuticals segment, Ecuphar's products fall into three main categories: companion animals (being those that are kept primarily for an individual's company, protection or entertainment), equine (being horses) and production animals (being those that are raised in an agricultural setting to produce commodities such as food, fibre and labour). Within these categories, Ecuphar supplies a broad portfolio of over 300 veterinary products, of which own products include 29 licensed drugs, eight vaccines and over 100 care and nutraceutical products.

Ecuphar's Pharmaceuticals segment product portfolio can be summarised as follows:

Product range

Growth drivers

Companion animal products

• Veterinary pharmaceuticals, food supplements and care products

• Specific focus on odontology, dermatology, incontinence, behaviour and anaesthesia

• Also range of otology, surgery, joint support and anti-parasitic products

• Increasing number of pets due to changes in lifestyle and pets being considered as family members

• Higher life expectancy of pets due to innovation and increased consumption of veterinary care

• Increasing disposable income potentially making owners more willing to spend money on their pets

Production animal products

• Broad range of injectables, oral powders, premixes and intra-mammary tubes

• Also range of feed supplements and dietary complementary feed to support metabolic functions of livestock

• Increasing global population and increasing disposable income leading to increasing demand for protein

• Increasing industrialisation of meat and milk production to ensure growing demand is met

• Food safety concerns encouraging more prevention of disease

Equine products

• Range of veterinary pharmaceuticals, horse supplements and specific care products

• Specific focus on anti inflammatories

• Equine customers demand increasingly specialised services

• Professionalism and globalisation increase the demand for medical care for horses

• Increasing disposable income makes owners more willing to spend money on their horses

Ecuphar's Pharmaceuticals segment revenue in 2016 can be broken down as follows:

http://www.rns-pdf.londonstockexchange.com/rns/9589I_4-2017-6-23.pdf

Ecuphar has retained a core focus on licensed pharmaceutical products, and a key area of strategic focus has been the diversification of Ecuphar's product portfolio into different therapeutic areas. This strategy has been successfully executed by the management team, and Ecuphar now supplies products into odontology, dermatology, surgery, anaesthesia and otology areas, among others. Ecuphar's management have also focused on expanding the therapeutic indications for its existing product portfolio to expand the respective product's lifecycle.

Details of Ecuphar's Pharmaceutical segment's top ten products for the year ended 31 December 2016, which in aggregate accounted for approximately £20.3 million of revenue in that period, are set out below.

Product	Market	Indication	Type
Aivlosin	Production animals	Antibiotic	Distribution
Conofite	Companion animals	Otology	Licence
Danilon	Equine	Anti-inflammatory	Own
Dinalgen	Production animals	Anti-inflammatory	Own
Dokamox	Production animals	Antibiotic	Licence
Flubenol	Production & comp. animals	Antiparasitic	Licence
IsoFlo	Companion animals	Anaesthesia	Distribution
Leisguard	Companion animals	Antiparasitic	Own
Orozyme	Companion animals	Odontology	Own
Seponver	Production animals	Antiparasitic	Licence

Ecuphar's own products

Ecuphar's own products represented approximately 33 per cent. of Ecuphar's Pharmaceuticals segment revenue for the year ended 31 December 2016. Product sales can be split between the following categories: pharmaceuticals and biocides representing 78 per cent., nutraceuticals representing 12 per cent., vaccines representing 8 per cent. and other representing 2 per cent. Ecuphar has three veterinary products which it believes are unique (other than one competing ethamsylate product in France):

• Danilon (suxibuzone): equine anti-inflammatory;

• Hemo-141 (ethamsylate): haemostatic for production animals; and

• E-6087: anti-inflammatory for companion animals (currently under development).

In-licensed and distributed products

Products sold via longstanding licenses with strategic partners represented approximately 24 per cent. of Ecuphar's Pharmaceuticals segment revenue for the year ended 31 December 2016, and third-party products sold via distribution agreements with partners represented approximately 44 per cent. of Ecuphar's Pharmaceuticals segment revenue for the year ended 31 December 2016.

Business model

Ecuphar's business model is complementary to that of the Company and the respective businesses are significantly aligned in the way that products are sourced and delivered to veterinary customers and in manufacturing being completely outsourced. Ecuphar relies on a mix of proprietary products, strategic alliances and distribution partnerships to grow and diversify its product portfolio. The process of developing products and acquiring licences is largely driven by the first-hand feedback from Ecuphar's local marketing and sales teams who are in frequent contact with veterinary practices and wholesalers and are therefore able to offer the right portfolio of products to meet customers' needs and provide a fully integrated solution. The two key focus areas for Ecuphar are product development and sales and marketing.

Ecuphar's business model can be summarised as follows:

http://www.rns-pdf.londonstockexchange.com/rns/9589I_5-2017-6-23.pdf

Products are sourced through in-house development, as well as through product acquisitions, strategic alliances and distribution partnerships. These are marketed by local sales teams in the six countries where Ecuphar has its own presence and through distributors in other markets. Vet practices are the end customers and targeted by the sales teams, although they are usually invoiced and physically supplied through wholesalers.

Product development

Product development at Ecuphar focuses on both life cycle extension and novel products. Life cycle extension entails the broadening of existing drug licences into other therapeutic areas, other target species and other application forms (tablet, liquid, injection). This helps to reduce the risk of outfall during the development trajectory. Each project is evaluated against stringent technical and commercial criteria before determining its suitability to become a full development project. All product development occurs in close cooperation with Ecuphar's in-house pharmaceutical and regulatory affairs teams which together comprise a total of 18 people focused on life-cycle extension of existing products and on novel products. As all manufacturing of Ecuphar's products is outsourced, contract manufacturers with whom Ecuphar has developed close working relationships are also involved early in the product development process.

Examples of innovations which are currently under development include improved galenic formulations, improved administration devices, improved gastric tolerance and improved palatability, as well as new indications or new species for existing molecules. The product development pipeline of Ecuphar is currently composed of eleven projects in various stages of development which are expected to be launched and commercialised over the coming years, and can be summarised as follows.

http://www.rns-pdf.londonstockexchange.com/rns/9589I_6-2017-6-23.pdf

* CAP: companion animal products; FAP: farm (production) animal products; EQ: equine products

Strategic alliances and distribution partnerships

Ecuphar's product portfolio is enhanced by its longstanding strategic alliances with global animal health leaders such as Bayer and Elanco. These alliances provide Ecuphar with long-term licences for the distribution of veterinary pharmaceutical products which both diversifies the scope of therapeutic areas targeted by Ecuphar and enables a broader integrated solution to be provided to its customers. In addition, Ecuphar's product portfolio is further enhanced through distribution partnerships with several leading animal health companies, such as Orion Pharmaceuticals and Eco Animal Health.

Local sales and marketing presence and distributors

Ecuphar has direct sales, marketing and distribution operations in Belgium, the Netherlands, Germany, Spain, Italy, and Portugal and supplies products in 37 countries through distribution agreements with local partners. Often the same partners that provide Ecuphar with long-term licenses or distribution agreements for the sale of third-party veterinary pharmaceutical products (see "Strategic alliances and distribution partnerships" above) function as distributor for Ecuphar's products abroad, further strengthening these relationships.

At the end of 2016, Ecuphar's workforce counted 201 employees (including consultants), of which 76 were sales representatives and an additional 28 were sales agents, as follows:

	Employees	Sales reps
Benelux	33	7
Germany	34	13
Spain	73	37
Portugal	11	7
Italy	11	7 (+ 28 agents)
Wholesale segment	39	5
Total	201	76 (+ 28 agents)

Ecuphar's commercial workforce is composed of a team of ambitious and result-oriented employees with an in-depth knowledge of their respective regional markets and strong local relationships with customers.

Wholesale

In addition to its Pharmaceuticals segment, Ecuphar has a Wholesale segment, which focuses on the purchase and re-sale of veterinary pharmaceuticals, supplies and instruments to Belgian veterinary practices. This business is relatively stable at both revenue and gross margin, and generates a gross margin lower than that of the Pharmaceuticals segment due to the nature of the wholesale business model.

Market, customers and competitive environment

Market

The European animal health market in which Ecuphar operates is a highly regulated and specialist market with significant intellectual and financial barriers to entry. Animal health in Europe is a large and growing market, underpinned by robust macroeconomic drivers and underlying trends. In the companion animal and equine market segments, these include population growth, and increasing wealth and urbanisation. Population growth and rising life expectancy are driving an increase in the demand for companion animals as pets. In addition, the increase in wealth has led to an increased focus on the welfare of animals and therefore an increased propensity for pet and horse owners to buy animal health products. Pets are increasingly seen as a "family member" which also leads to higher spending on animal health products.

The food producing animal market demonstrates similarly solid fundamental drivers and themes, with population growth and increasing wealth driving increases in the levels of protein consumption.

Ecuphar's management team believes that the business is well positioned to capitalise on the underlying growth in the animal health market.

Customers

The largest group of Ecuphar's customers are veterinary practices, which, depending on local market rules and customs are supplied either directly by Ecuphar or through wholesalers and/or distributors. The commercial efforts of Ecuphar are largely directed at veterinary practices as they create the underlying demand for its products. Customer concentration for Ecuphar is limited with its top ten customers in 2016 together representing less than 20 per cent. of revenue. Ecuphar's top ten customers are, with the exception of one distributor, all wholesalers who are not the actual end-customer, so in effect customer concentration can be considered lower still.

Geographically, Ecuphar's customers are spread broadly and total revenue in 2016 can be broken down as follows:

http://www.rns-pdf.londonstockexchange.com/rns/9589I_7-2017-6-23.pdf

Competitive environment

Similar to Animalcare, in all countries where Ecuphar operates, the market is dominated by large multinationals that have consolidated over the past years, such as Zoetis/Abbott, Elanco/Novartis, Boehringer/Merial and MSD/Intervet.

Ecuphar is differentiating itself from such players by focusing on certain niche markets, such as for instance odontology, dermatology, surgery/anaesthesia and otology. In such niche markets, Ecuphar often markets its products under umbrella brands, such as Orozyme, Dermazyme, Quirofarm and Otofarm. Ecuphar further tries to differentiate itself through its efforts to create customer loyalty. This is achieved through, among other things, value added services such as online advisory, maintenance of equipment, sector meetings and training seminars; as well as through stable local sales teams with many sales representatives having been with Ecuphar for many years, creating a close personal link between the customer and Ecuphar. As a result, Ecuphar can often focus more on attracting business through the relationship and the solution than through price.

In the markets where it operates, Ecuphar is also well positioned to become a distributor of choice for licensors that are looking for a professional local sales and marketing company. Because of its entrepreneurial culture and long-lasting local presence, Ecuphar is often preferred by licensors over larger players that often only want to focus on their own product portfolio and who may be slower in making decisions and preparing new product launches because of administrative procedures and complicated international structures.

The competitive market is also considered by Ecuphar to be fragmented, and the Ecuphar management team have a proven track record of growth through acquisitions to help the Enlarged Group take advantage of the right opportunities.

Ecuphar's financial record

Since its foundation, Ecuphar has developed a strong track record of high growth and cash generation. The table below provides a summary of the financial results of Ecuphar for each of the three financial years ended 31 December 2014, 2015 and 2016 and has been extracted from the historical financial information contained below in this Announcement. This summary financial information should be read in conjunction with the full text of this Announcement. Investors should not rely solely on the summarised financial information.

£ million	12 months to 31 December
	2014	2015	2016
Revenue	34.5	47.1	68.4
% change		37%	45%

Gross Margin	10.6	16.5	28.3
% of revenue	31%	35%	41%

Underlying EBITDA	4.2	4.8	8.9
% of revenue	12%	10%	13%

EBITDA	3.9	3.4	10.7
% of revenue	11%	7%	16%

Underlying Net Earnings	1.5	1.3	4.0

Between 2014 and 2016, Ecuphar's revenue nearly doubled to £68.4 million due to the 2015 acquisition of Esteve's animal health business and the resulting expansion into the Spanish, Italian and Portuguese animal health markets, in combination with organic growth driven by the launch of new products and distributions, as well as existing products. Over the same period, gross margin increased from 30.8 per cent. to 41.4 per cent. of revenue as the relative contribution of Ecuphar's higher margin Pharmaceuticals segment became more important in the overall revenue mix, while growth in the lower margin Wholesale segment was less pronounced. Underlying EBITDA margin increased from 12.2 per cent. of revenue in 2014 to 13.0 per cent. in 2016, following a decline to 10.2 per cent. in 2015 due to the temporary impact of the integration of the acquired Esteve animal health business.

Underlying EBITDA has been adjusted for non-recurring items which amounted to £1.8 million in 2016. This is comprised of the gain on the sale of Nutri-Science (£2.4 million) and £0.6 million non-recurring costs, largely related to the integration of the Esteve acquisition (£0.4 million). In 2015, non-recurring items largely related to the Esteve acquisition comprising transaction costs (£0.4 million) and a PPA adjustment on acquired stock (£0.4 million). Non-recurring items in 2014 largely comprised non-recurring market research and M&A costs (£0.3 million).

Ecuphar has high cash generating capabilities as a result of its business model which focuses on product development and sales and marketing, while manufacturing is outsourced. Therefore, capital expenditure is largely limited to new product development investments and cash conversion is high.

Recent trends, current trading and outlook

Trading since 31 December 2016 has been broadly in line with management expectations. Ecuphar has, over this period continued to invest in systems and people to further strengthen the organisation of the company. Recent hires in 2017 include a new country manager in Italy and a new group IT manager.

Ecuphar is continuing to invest in its new product development and since 31 December 2016, has closed a number of agreements related to manufacturing, clinical trials and regulatory consulting for products under development. Ecuphar management expects Ecuphar's next new product launch to occur during the fourth quarter of 2017 or the first quarter of 2018. In Belgium, Ecuphar lost the distribution rights for a number of companion animal products from Sogeval (which together represented less than £1 million of revenue in 2016) effective 1 January 2017, following its acquisition by Ceva (in December 2013). A number of new distribution agreements are, however, being discussed with partner companies to further complement Ecuphar's product offering in the future.

In February 2017, Ecuphar acquired from Elanco the rights to market a veterinary product in Germany, Ripercol Drench, a roundworm remedy for production animals. This product acquisition will complement Ecuphar's product portfolio for cattle, however, it is not expected to have a material impact on Ecuphar's financial performance.

In the second half of 2017, Ecuphar is expecting to start distributing its own Orozyme range of companion animal products in Spain and Portugal, which have until then been distributed by local distributors in those countries.

4. Strategy of the Enlarged Group

Following Completion, it is intended that the Enlarged Group will continue to grow both organically and through selective acquisitions to accelerate its overarching strategy of becoming a leader in the European animal health market.

The Enlarged Group's core areas of strategic focus will be on:

• initiating cross selling opportunities of both Animalcare's and Ecuphar's products across existing customers and distribution channels;

• implementing an effective business integration, including by combining product development activities, providing the technology and systems to drive product quality improvement programmes and by optimising the Enlarged Group's supply chain;

• developing the Enlarged Group's wider network of partnerships and strategic alliances in order to increase its exposure, as licensor and licensee, to global animal health leaders;

• leveraging its platform by identifying selective value-accretive acquisitions that can broaden the pan-European sales, marketing and distribution platform of the Enlarged Group;

• diversifying the Enlarged Group's portfolio of products into additional therapeutic areas within the companion animal, as well as production animal and equine, markets; and

• continuing the shift towards broadening the Enlarged Group's pipeline innovations to include novel therapies.

The Existing Directors and Proposed Directors believe that the key components required to ensure that the Enlarged Group continues to deliver this long-term growth strategy are to:

• continue to attract and retain the highest calibre people to drive forward its development;

• maintain leadership capability in research and development; and

• invest in high quality infrastructure in strategic locations.

5. Board of Directors and Proposed Directors

The Board of Animalcare is currently comprised of James Lambert as Non-executive Chairman, Iain Menneer as Chief Executive Officer, Chris Brewster as Chief Financial Officer, Lord Nick Downshire as Non-executive Director and Raymond Harding as Non-executive Director.

The following changes, each of which will take effect from Admission, will be made to the Board in connection with the Acquisition:

• Chris Cardon, (proposed Chief Executive Officer), Walter Beyers (proposed Chief Financial Officer), Jan Boone (proposed Non-executive Chairman), Edwin Torr (proposed senior independent Non-executive Director) and Marc Coucke (proposed Non-executive Director) will be appointed as Directors;

• Iain Menneer will remain a Director following Admission and his role within the Group will change to Chief Operating Officer;

• James Lambert will step down as Chairman of the Company but will remain on the Board as a Non-executive Director;

• Chris Brewster will resign as a Director but will remain a critical and committed member of the senior management team of the Enlarged Group as Country Manager of the Enlarged Group's UK business; and

• Raymond Harding will resign as a Director.

The biographical details of the Directors upon Admission are set out below:

Chris Cardon (aged 49) - Proposed Chief Executive Officer

Chris founded Ecuphar as Chris Cardon NV in 2001 to capitalise on opportunities identified in the animal health industry. The company began with the development of a number of original and high-quality OTC products for companion animal markets. Chris graduated as a pharmacist from the University of Ghent in 1993 after which he took over his family's pharmacy business. In 1995, he completed an MBA at the Vlerick Leuven-Gent Management School and then in 2006 received the prestigious award "Export Lion of Flanders 2005" in the Young Exporters category.

Chris has a strong entrepreneurial background in human OTC product development. In 1996, Chris established Mooss Pharma, a company which developed human OTC products that were exclusively distributed by pharmacists. Mooss Pharma developed into a key player in the Belgian market, and in 2001 the OTC assets of Mooss Pharma were acquired by Omega Pharma.

Walter Beyers (aged 57) - Proposed Chief Financial Officer

Walter is the current Chief Financial Officer of Ecuphar. He has a master's degree in Economics from the University of Antwerp and obtained an MBA from the University of Leuven (KUL) in Belgium.

Walter has significant experience in senior financial management positions in publicly listed and privately owned companies.

Walter started his career with the American multinational Cargill and subsequently joined his family's business in logistics until he sold that business. He then became finance director of Akeda, a Belgian family office and in 1998 he joined Euronext-listed company USG People, for which he worked for eight years, before working for listed companies Autogrill and Ecodis, then returning to USG People in 2009 for a further five years as VP Finance, being responsible for ten countries in Europe.

Before joining Ecuphar in April 2016, he was CFO Europe for the US based FCMG manufacturer Ecover-Method.

Iain Menneer (aged 47) - Proposed Chief Operating Officer

Iain is the current Chief Executive Officer of the Company. He has a degree and PhD in Chemistry, both from Newcastle University.

Following roles in the brewery industry in product development and technical research, Iain joined the Group in 2003, working in sales, marketing and business development roles, including an instrumental role in the new product development pipeline.

Iain was promoted to the Board as Director of Marketing in July 2011. Iain was appointed Managing Director of Animalcare Limited in March 2012 and subsequently Chief Executive Officer of the Company in January 2013, since when he has led the transformation of the business infrastructure, including the focus on new product development. Following Admission, Iain will fulfil the role of Chief Operating Officer in the Enlarged Group.

Jan Boone (aged 45) - Proposed Chairman

Jan is the Chief Executive Officer of Lotus Bakeries, which is listed on Euronext Brussels. He started at Lotus Bakeries as managing director in 2005 and was named chief executive officer in 2011.

Between 2000 and 2005, Jan served as Head of Corporate Controlling and Member of the Executive Committee of Omega Pharma. He started his career in the audit department at PricewaterhouseCoopers and holds a Master's degree in Applied Economics (KU Leuven) and a Master's degree in Audit (UMH).

In addition to his role at Lotus Bakeries, Jan serves as non-executive director of Club Brugge.

Edwin Torr (aged 57) - Proposed Senior Independent Non-Executive Director

Edwin Torr has significant experience of international veterinary and animal health markets, gained over a period of more than 20 years, during which time he has worked for ICI, Pitman Moore, Alfa Laval Agri and Dechra Pharmaceuticals. He was part of the management buyout team that set up Dechra Veterinary Products in 1997, and was an executive director on the board of the Dechra entity that was listed on the London Stock Exchange from 2000 until 2013. During this time, he was responsible for business development, managed the European business unit and was instrumental in setting up the USA business. Since 2014, Edwin has independently advised various companies on sales and marketing structures, M&A opportunities, 'in' and 'out' licensing of products and investment opportunities within the veterinary and animal health market sector.

James Lambert (aged 58) - Proposed Non-Executive Director

James was appointed Chairman of the Company in 2008 when the Company was acquired by Ritchey plc for whom he had been the chairman since 2005 and a non-executive director since 2003. James was previously co-founder and Chief Executive Officer of R&R Ice Cream where under James' leadership, R&R Ice Cream made a series of acquisitions to become the largest ice cream manufacturer by volume in the UK. James is now chairman of Burton's Biscuits, a company he helped Ontario Teachers' Pension Plan acquire in 2013. He was also awarded the EY UK Entrepreneur of the Year award in 2014.

Marc Coucke (aged 52) - Proposed Non-Executive Director

Marc founded Omega Pharma in 1987 and developed the company into a leading pan-European OTC health and personal care business. Marc has served as both chairman and chief executive officer of Omega Pharma. Following the sale thereof in 2015 to Perrigo Company plc for €3.6 billion, Marc invests via his private investment firm Alychlo NV in several listed and non-listed companies.

Marc currently serves as chairman of Mithra Pharmaceuticals (EBR: MITRA) and as non-executive director of Fagron (EBR: FAGR), in addition to a number of private companies.

Marc graduated as a pharmacist from the University of Ghent after which he completed an MBA at the Vlerick Leuven-Gent Management School. He was also awarded, as Chief Executive Officer of Omega Pharma, the EY Flemish Entrepreneur of the Year award in 2002.

Lord Nick Downshire (aged 58) - Proposed Non-Executive Director

Nick joined the Board of the Company when it was acquired by Ritchey plc for whom he had acted as a director since 1998. Nick is a qualified chartered accountant who has worked in corporate finance and venture capital. He has held and still holds non-executive directorships in a diverse range of businesses in the insurance, agricultural, hospitality, education and technology sectors. Nick runs an estate in Yorkshire with a range of activities including quarrying, renewables, forestry and a hotel as well as agriculture and real estate. He is also Chairman of the Agriculture and Land Use Committee for the Country Landowners & Business Association and also sits on their national policy committee, as well as acting as a trustee for a number of charitable and land related trusts.

6. Financial effects of the Acquisition

Animalcare is financing the Acquisition through a combination of the Consideration Shares, the proceeds of the Placing and through existing cash on Animalcare's balance sheet.

The Existing Directors believe that, taking into account the business and prospects of the Enlarged Group, the Acquisition will be enhancing to the Board's expectations of underlying earnings for the Existing Group in the first full financial year of ownership.

For the year ended 31 December 2016, Ecuphar recorded revenue of £68.4 million and Underlying EBITDA of £8.9 million. The table below shows an unaudited pro forma aggregated income statement for the Enlarged Group for the year ended 31 December 2016:

in £'000	Animalcare	Ecuphar	Total
Revenue	15,556	68,361	83,917
Gross profit	8,722	28,275	36,997
Operating costs	(5,181)	(22,236)	(27,417)
Operating profit	3,541	6,039	9,580
Depreciation, amortisation & impairment	402	4,690	5,092
Non recurring items	-	(1,814)	(1,814)
Underlying EBITDA	3,943	8,915	12,858
Financial expenses	36	(988)	(952)
Financial income	-	97	97
Exceptional costs	(172)	-	(172)
Profit before tax	3,405	5,148	8,553
Taxation	(466)	(1,632)	(2,098)
Net (loss) profit	2,939	3,516	6,455
Underlying net earnings	3,139	3,964	7,103

Notes:

The Existing Group's results have been presented on a pro forma basis for 12 months period to 31 December 2016, comprising the audited six month period to 30 June 2016 from the audited 12 month accounts to 30 June 2016, plus the unaudited interim accounts to 31 December 2016.

The Ecuphar Group's results have been extracted from the audited 12 months accounts to 31 December 2016.

Underlying EBITDA is summarised in paragraph 3 of this Announcement.

Ecuphar has existing credit facilities with KBC Bank NV, BNP Paribas Fortis NV, Belfius Bank NV and ING België NV, details of which are set out in paragraph 15 of Appendix I and in the notes to the historical financial information contained in Appendix II in this Announcement. These facilities will continue to be available to Ecuphar after Completion. The Existing Group does not have any debt facilities.

7. Details of the Acquisition

Animalcare has entered into the Share Purchase Agreement, pursuant to which it has conditionally agreed to acquire the entire issued share capital of Ecuphar from the Vendors in consideration for the issue of Consideration Shares and cash to the Vendors. The cash component of the consideration will be satisfied in part through a placing of approximately 8.6 million New Placing Shares (representing approximately 40.4 per cent. of the Existing Issued Share Capital) to raise gross proceeds of not less than £30.0 million, with the balance (of £4.0 million) to be funded by existing cash held by the Group. The number of Consideration Shares to be issued to the vendors of Ecuphar, will be determined following completion of the Placing (and by reference to the exact number of New Placing Shares issued in the Placing).

Under the Share Purchase Agreement, completion of the Acquisition is conditional on, among other things, the passing of Resolutions 1 to 6 at the General Meeting, Admission and the Placing and Admission Agreement having become unconditional. The Share Purchase Agreement contains customary warranties by the Vendors to Animalcare, and vice versa, subject to limitations on liability including a cap on liability. Under the Share Purchase Agreement, Ecuphar Invest NV and Alychlo NV, being the majority Vendors, have agreed to give covenants restricting them from competing with the Enlarged Group for a period of 24 months following Completion.

It is also proposed that Ecuphar Invest NV and Alychlo NV will enter into a relationship agreement with the Company and Panmure Gordon with effect from Admission.

Following completion of the Acquisition, it is intended that Ecuphar will acquire Animalcare Limited in an intragroup transaction, with Animalcare Limited thereby becoming a subsidiary of Ecuphar. The funding for this will be provided from Ecuphar's existing debt facilities, details of which are set out in paragraph 15 of Appendix I in this Announcement.

8. Details of the Placing

The Bookbuild will be launched immediately following this Announcement and will be conducted in accordance with the terms and conditions set out in Appendix III to this Announcement. The timing of the closing of the book, pricing and allocation is at the absolute discretion of the Company and Panmure Gordon. The exact number of Placing Shares will be determined by the Company and Panmure Gordon at the close of the Bookbuild. Details of the number of New Placing Shares, Sale Shares and the Placing Price will be announced as soon as practicable after the closing of the Bookbuild process.

The net proceeds of the Placing receivable by the Company will be applied in full to paying a substantial proportion of the cash component of the Acquisition consideration.

In addition, the Selling Shareholders (who comprise the Participating Directors and certain employees of the Company) also intend to sell up to approximately 0.8 million Sale Shares in the Placing. In the case of each of the Selling Shareholders except Lord Nick Downshire, the Sale Shares which are intended to be sold in the Placing will be obtained from the exercise of certain existing Options or the exchange of shares in Animalcare Limited by the relevant individuals.

Edwin Torr, a Proposed Director, is also showing his support for the Acquisition and the Enlarged Group by intending to purchase 85,000 Placing Shares in the Placing. The extent of the participation by the Selling Shareholders and Edwin Torr will be announced following completion of the Bookbuild.

The New Placing Shares will be issued credited as fully paid and will, on issue, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid on the Enlarged Issued Share Capital.

On 23 June 2017, the Company, the Majority Vendors, the Existing Directors, the Proposed Directors, Panmure Gordon and Degroof Petercam entered into the Placing and Admission Agreement, pursuant to which, among other things, the Joint Bookrunners have each agreed to use its reasonable endeavours to place approximately 8.6 million New Placing Shares on behalf of the Company. In addition, the Company, the Selling Shareholders and Panmure Gordon are intending to enter into the Selling Shareholders' Agreement, pursuant to which Panmure Gordon agreed to use its reasonable endeavours to place up to approximately 0.8 million Sale Shares on behalf of the Selling Shareholders.

The Placing is conditional on, among other things:

• the Placing and Admission Agreement having become unconditional and not having been terminated in accordance with its terms;

· the Share Purchase Agreement not having been terminated or amended, and having become unconditional in all respects (other than the conditions relating to Admission and the Placing and Admission Agreement); and

• Admission occurring by no later than 13 July 2017 (or such later date as the Company and the Joint Bookrunners agree, not being later than 25 July 2017).

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirety and to be making such offer on the terms and subject to the conditions in it, and to be providing the representations, warranties, acknowledgements and undertakings contained in Appendix III to this Announcement.

Pursuant to the Placing and Admission Agreement, each of the Majority Vendors and the Participating Directors will also undertake to the Company and Panmure Gordon:

· not, without the prior written consent of each of the Company and Panmure Gordon, to dispose of any of the Ordinary Shares held by them or their respective associates at Admission for a period of 12 months following Admission; and

· for a further period of 12 months following the end of such lock-in period, to be subject to customary orderly market restrictions.

9. The Takeover Code and Rule 9 Waiver

Application of the Takeover Code

The Company is subject to the Takeover Code. Brief details of the Panel, the Takeover Code and the protections they afford are described below.

The Takeover Code is issued and administered by the Panel. The Takeover Code applies to all takeover and merger transactions, however effected, where the offeree company is, inter alia, a listed public company resident in the United Kingdom. The Company is a listed public company resident in the United Kingdom and its shareholders are therefore entitled to the protections afforded by the Takeover Code.

Under Rule 9 of the Takeover Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares (as defined in the Takeover Code) which (taken together with shares already held by him and any interest in shares held or acquired by persons acting in concert with him) carry 30 per cent. or more of the voting rights of such a company, that person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

Rule 9 of the Takeover Code also provides that, among other things, where any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of the voting rights of such a company, and such person, or any person acting in concert with him, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he is interested, then such person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company.

An offer under Rule 9 of the Takeover Code must be in cash (or with a cash alternative) and at not less than the highest price paid within the preceding 12 months for any shares in the company by the person required to make the offer or any person acting in concert with him.

Rule 9 of the Takeover Code further provides, among other things, that where any person who, together with persons acting in concert with him holds over 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares. However, individual members of a concert party will not be able to increase their percentage interest in shares through or between a Rule 9 threshold without Panel consent.

For the purposes of the Takeover Code, persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), cooperate to obtain or consolidate control of a company. Paragraph (9) of the definition of 'acting in concert' also deems any shareholders in a private company who sell their shares in that company in consideration for the issue of new shares in a company to which the Takeover Code applies to be acting in concert for the purposes of the Takeover Code unless the contrary is established.

Rule 9 Waiver

The Panel has confirmed that it considers Ecuphar Invest NV, Alychlo NV and Jaak Cardon (the son of Chris Cardon and a minority shareholder in Ecuphar) to be acting in concert for the purposes of the Takeover Code. The Panel has also confirmed that it does not consider the other Vendors (the current minority shareholders in Ecuphar) to be acting in concert with the Concert Party.

None of the members of the Concert Party hold Existing Ordinary Shares as at the date of this Announcement. On completion of the Acquisition, the Concert Party are expected to hold (by virtue of the Consideration Shares to be issued to Ecuphar Invest NV, Alychlo NV and Jaak Cardon pursuant to the Acquisition) approximately 46.3 per cent. of the voting rights of the Company.

Following Completion, it is expected that Chris Cardon, who is presumed under the Takeover Code to be acting in concert with members of the Concert Party, will participate in the New LTIP which may result in him acquiring Ordinary Shares in the Company. The maximum aggregate number of Ordinary Shares that Chris Cardon would be entitled to receive pursuant to any awards made to him under the New LTIP will be equal to 0.5 per cent. of the Enlarged Issued Share Capital (the "New LTIP Awards").

On the basis that Chris Cardon is granted and exercises the maximum aggregate number of New LTIP Awards, and assuming no other changes in the Concert Party's or Chris Cardon's holding of Ordinary Shares or in the Company's issued share capital, the maximum controlling interest of the Concert Party and Chris Cardon (being a person presumed to be acting in concert with members of the Concert Party) in the period following Completion is expected to be approximately 46.8 per cent. of the voting rights of the Company.

As a consequence of the Acquisition, without a waiver of the obligation under Rule 9 of the Takeover Code, the Concert Party would be required to make a general offer for the balance of Ordinary Shares in issue immediately following the Acquisition. In addition, any future exercise by Chris Cardon of any New LTIP Awards could potentially trigger an obligation under Rule 9 of the Takeover Code, given that he is a person presumed to be acting in concert with members of the Concert Party, depending on the Concert Party's holding of Ordinary Shares at that time. The Panel has been consulted and has agreed, subject to the Whitewash Resolution being passed by the Independent Shareholders (on a poll) at the General Meeting, to waive the obligation that would otherwise arise under Rule 9 of the Takeover Code as a result of the issue of Consideration Shares to the Concert Party pursuant to the Acquisition or the exercise by Chris Cardon of any New LTIP Awards. The Whitewash Resolution will be passed if approved by a simple majority of votes cast by Independent Shareholders on a poll.

Shareholders should be aware that if the Resolutions are passed, the Concert Party will not be restricted from making an offer for the Company. Ecuphar Invest NV and Alychlo NV have confirmed that the Concert Party has no intention of making an offer for the Company.

Following completion of the Acquisition, unless the Concert Party holds more than 50 per cent. of voting rights in the Company (as to which, see the paragraph below), Rule 9 of the Takeover Code will continue to apply to the Concert Party, requiring a general offer to be made to all Shareholders if any member of the Concert Party or persons acting in concert with them acquires any Ordinary Shares in addition to those which are the subject of the Whitewash Resolution, unless a further waiver is obtained. Shareholders should note that the waiver of Rule 9 of the Takeover Code which the Panel has agreed to give (conditional on the Whitewash Resolution being passed by the Shareholders) is only in respect of the acquisition of Consideration Shares by the Concert Party as a result of the Acquisition and the exercise by Chris Cardon of any New LTIP Awards and not in respect of any other future acquisition of Ordinary Shares by any member of the Concert Party or persons acting in concert with them.

Shareholders should note that, if the Ordinary Shares issued to members of the Concert Party and persons acting in concert with them within the scope of the Whitewash Resolution are such that the Concert Party together with such persons controls more than 50 per cent. of voting rights in the Company following completion of the Acquisition, for so long as the Concert Party together with such persons collectively controls more than 50 per cent. of voting rights in the Company, Rule 9 of the Takeover Code will not apply in respect of future acquisitions of interests in Ordinary Shares by the Concert Party. As a result, the Concert Party could acquire further interests in Ordinary Shares without being required to make a general offer to all Shareholders pursuant to Rule 9 of the Takeover Code. Individual members of the Concert Party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without the Panel's consent.

Rothschild has provided independent advice to the Independent Directors in respect of the Acquisition and the Rule 9 Waiver.

10. Change of Accounting Reference Date

In connection with the Acquisition, it has been resolved to change the accounting reference date of the Company to 31 December, conditional on Admission. As such, the first full reporting period of the Enlarged Group will be for the 12 month period ending 31 December 2018.

11. Dividend Policy

The Existing Directors and Proposed Directors intend to continue the Company's current dividend policy which they believe maintains an appropriate balance between investment for future growth and dividend flow to deliver overall value for Shareholders.

The Company issued the following final and interim dividends in 2016, 2015 and 2014:

Year ended	Ordinary final dividend	Ordinary interim dividend	Total dividend paid
30 June 2016	£904,000 (4.3 pence per share)	£379,000 (1.8 pence per share)	£1,283,000
30 June 2015	£839,000 (4.0 pence per share)	£378,000 (1.8 pence per share)	£1,217,000
30 June 2014	£788,000 (3.8 pence per share)	£315,000 (1.5 pence per share)	£1,103,000

The Company will change its financial year end to 31 December with effect from Admission. As a result, the first dividend expected to be paid will be an interim dividend in respect of the six months to 30 June 2017 which the Existing Directors and Proposed Directors anticipate will be paid in November 2017. The final dividend in respect of the financial year ending 31 December 2017 is currently anticipated to be paid in May or June 2018 following the announcement of the Enlarged Group's preliminary results during March 2018.

From 2018 onwards, the Company's interim and final dividend payments are expected to be split approximately 30 per cent. to 70 per cent. respectively, in line with historical payment ratios.

12. Working Capital

In the opinion of the Existing Directors and the Proposed Directors, having made due and careful enquiry, the working capital available to the Enlarged Group will be sufficient for its present requirements, that is, for at least 12 months from Admission.

13. Share Incentive Schemes

The Group currently has in place three share incentive schemes: the Executive Share Option Scheme, the Existing LTIP and the Savings Related Share Option Scheme. On 22 June 2017, the Board also adopted the New LTIP. The New LTIP is conditional on, and will take effect from, Admission. The Directors do not intend to issue any new Options under the Existing LTIP or the Executive Share Option Scheme after Admission.

In connection with the Acquisition, certain of the holders of Options that have vested and are exercisable under the Executive Share Option Scheme intend to execute a form of election pursuant to which certain of their Options, of approximately 1.4 million Ordinary Shares, will be exercised, conditional on completion of the Acquisition and the Placing. Certain of these Option Shares to be issued on exercise of these Options are intended to be sold in the Placing.

The Options not exercised by the Selling Shareholders, as well as the unvested remainder of the Options under the Executive Share Option Scheme and all existing Options under the Savings Related Share Option Scheme will continue in force and effect on their existing terms until they become exercisable.

The Company intends to offer the two holders of awards under the Existing LTIP, Iain Menneer and Chris Brewster, the right to exchange their shares in Animalcare Limited for Ordinary Shares before completion of the Acquisition, and each intend to take up that right. As a consequence, approximately 0.9 million new Ordinary Shares are expected to be issued to Iain Menneer and Chris Brewster under the Existing LTIP prior to Admission, and a proportion of such new Ordinary Shares are intended to be sold as part of the Placing. In accordance with the Existing LTIP, the number of new Ordinary Shares to be issued pursuant to the exercise of these rights was determined using the lower of the closing middle market price for an Ordinary Share on 22 June 2017, being the dealing day before the date the offer to exchange was made and the average of the closing middle market prices for an Ordinary Share over the dealing days in the thirty day period before that date.

14. Admission, Settlement and Dealings

Application will be made to the London Stock Exchange for the Enlarged Issued Share Capital to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Enlarged Issued Share Capital will commence on 13 July 2017.

CREST is a computerised paperless share transfer and settlement system which allows shares and other securities to be held in electronic rather than paper form and transferred otherwise than by written instrument. The Articles permit the Ordinary Shares to be issued and transferred in uncertified form in accordance with the CREST Regulations. The Ordinary Shares are currently enabled for settlement through CREST. Accordingly settlement or transactions in the Ordinary Shares following Admission may take place within CREST if relevant Shareholders so wish. CREST is a voluntary system and Shareholders who wish to hold their shares in certified form will be able to do so.

The ISIN number of the Ordinary Shares is, and from Admission will continue to be, GB0032350695. The TIDM is, and from Admission will continue to be, ANCR.

15. Material Contracts

Banking facility agreements

Ecuphar has entered into the following bilateral credit facilities with KBC Bank NV, BNP Paribas Fortis NV, Belfius Bank NV and ING België NV (together, the "Banks"): (i) a €10 million bullet term facility dated 31 August 2016 to finance permitted acquisitions of which €10 million was available as at 31 December 2016 (the "Term Loan A"), (ii) a €4.08 million quarterly amortising term facility dated 31 August 2016 to refinance existing financial indebtedness of which €3.725 million was outstanding on 31 December 2016 (the "Term Loan B"), and (iii) a €41.5 million revolving credit facility dated 31 August 2016 to refinance a bridge loan which was used to finance the LDE APA and other existing financial indebtedness and for general corporate purposes and permitted acquisitions of which €25.2 million was drawn as at 31 December 2016 and €16.3 million is available (the "RCF") (together, the "Facilities"). The Facilities mature in March 2022 and carry a floating interest rate calculated as EURIBOR plus a margin of 1.75% for the Term Loan A, 1.50% for the Term Loan B, and 1.50% for the RCF.

Ecuphar has granted the following security interests to the Banks on a pari passu basis to secure the Facilities: (i) a business pledge and a business pledge mandate covering substantially all the business assets of Ecuphar, (ii) a pledge on all the shares Ecuphar holds in Medini NV and Orthopaedics.be NV, (iii) a pledge on receivables relating to the LDE APA, and (iv) a pledge on all intellectual property rights owned by Ecuphar.

In terms of financial covenants, the Facilities provide for: (i) a minimum adjusted solvency ratio measured as consolidated adjusted equity to consolidated adjusted total assets, (ii) a maximum leverage ratio measured as consolidated net debt to consolidated EBITDA, and (iii) a minimum interest coverage ratio measured as consolidated EBITDA to consolidated interest expenses.

The Facilities are subject to general terms and conditions which contain customary covenants (e.g. a negative pledge and restrictions on additional financial indebtedness, acquisitions and disposals), information undertakings, representations and events of default.

If a change of control over Ecuphar takes place, the Banks may require a cancellation and repayment of the Facilities prior to their maturity date. Each of the Banks has provided a written waiver and consent letter whereby they have consented to the Acquisition and the change of control resulting from the Acquisition. The Banks have also confirmed that Ecuphar can draw down under the Facilities in order to fund part of the consideration payable in respect of the proposed acquisition of Animalcare Limited following Completion, subject to the satisfaction of certain condition precedents. The Bank may require security to be granted over the shares or assets of Animalcare Limited as one such condition.

16. Significant Change

There has been no significant change in the financial or trading position of the Existing Group since 31 December 2016, the date to which the last interim financial information of the Existing Group was prepared.

Net debt of the Ecuphar Group at 31 May 2017 (being the latest practicable date prior to publication of this Announcement) was £28.8 million compared with net debt of £23.8 million at 31 December 2016, being the date to which the consolidated financial information for the Ecuphar Group set out in Appendix II of this Announcement. Management attributes this increase principally to movements in working capital, with the Ecuphar Group carrying higher levels of inventory and trade accounts receivable and a lower level of trade payables. Except as set out in this paragraph, there has been no significant change in the financial or trading position of the Ecuphar Group since 31 December 2016, the date to which the consolidated historical financial information for the Ecuphar Group set out in Appendix II of this Announcement.

17. General Meeting

The full terms of the Resolutions are set out in the notice convening the General Meeting, to be included in the Admission Document to be published shortly after the conclusion of the Bookbuild, and are summarised below:

• Resolution 1 is an ordinary resolution to approve the Acquisition for the purposes of the AIM Rules for Companies.

• Resolution 2 is the Whitewash Resolution described above in paragraph 9 of Appendix I in this Announcement. It is an ordinary resolution. This Resolution requires approval by the Independent Shareholders at the General Meeting.

• Resolution 3 is an ordinary resolution to authorise the Existing Directors under section 551 of the Companies Act to allot equity securities for the purpose of issuing the Consideration Shares and the New Placing Shares. This authority is in addition to the existing authorities granted to the Existing Directors at the previous annual general meeting of the Company.

• Resolution 4 is a special resolution to approve the disapplication of statutory pre-emption provisions to allow for the allotment of the New Placing Shares on a non pre-emptive basis.

• Resolutions 5 and 6 are special resolutions to remove existing, and now redundant, limitations on the authorised capital of the Company set out in the Company's memorandum and articles of association. These are required because the issue of the Consideration Shares and the New Placing Shares would otherwise result in the Company's share capital exceeding the limits set out in the memorandum and articles of association. Resolutions 5 and 6 are not conditional on any of the other Resolutions being passed.

• Resolution 7 is a special resolution to remove existing limitations on the composition of the Company's board and restrictions on non-UK resident directors and shareholders set out in the Company's articles of association, and to conform the provision of the articles of association relating to the timing of the annual general meeting with the position under the Companies Act.

All of Resolutions 1 to 6 need to be passed at the General Meeting in order for the Acquisition to be implemented and if any one of those Resolutions is not passed, the Acquisition will not go ahead. Voting on all Resolutions at the General Meeting will be by way of a poll.

16. Irrevocable undertakings

James Lambert, being the only Independent Director who holds Existing Ordinary Shares, has given an irrevocable undertaking to the Company to vote in favour of the Resolutions (and to procure that such action is taken by the relevant registered holders) in respect of his beneficial holdings totalling 1,313,691 Existing Ordinary Shares, representing approximately 6.19 per cent. of the Existing Issued Share Capital.

In addition, the Company has received letters of intent and irrevocable undertakings from certain other Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting in respect of a total of 1,425,384 Existing Ordinary Shares representing, in aggregate, approximately 6.7 per cent. of the Existing Issued Share Capital.

Iain Menneer, Chris Brewster and Nick Downshire (along with the other Selling Shareholders) are considered not to be independent in respect of the Rule 9 Waiver by virtue of their participation in the Placing, and will therefore not vote in respect of the Whitewash Resolution. Iain Menneer, Chris Brewster and Nick Downshire have given irrevocable undertakings to the Company to vote in favour of the Resolutions other than the Whitewash Resolution (and to procure that such action is taken by the relevant registered holders) in respect of their beneficial holdings totalling 1,492,578 Existing Ordinary Shares, representing, in aggregate, approximately 7.0 per cent. of the Existing Issued Share Capital.

In total, therefore, the Company has received letters of intent and irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting in respect of, in the case of all Resolutions other than the Whitewash Resolution, 4,231,653 Existing Ordinary Shares, representing, in aggregate, approximately 19.9 per cent. of the Existing Issued Share Capital and, in respect of the Whitewash Resolution, 2,739,075 Existing Ordinary Shares, representing, in aggregate, approximately 13.9 per cent. of the Existing Issued Share Capital entitled to vote on that Resolution.

17. Recommendation

The Existing Directors consider the Acquisition to be in the best interests of the Company and the Shareholders as a whole. Accordingly, the Existing Directors recommend that Shareholders vote in favour of the Resolutions (such recommendation being given, in the case of the Whitewash Resolution, as provided below).

Iain Menneer, Chris Brewster and Nick Downshire are considered not to be independent in respect of the Rule 9 Waiver by virtue of their participation in the Placing, and will not therefore vote in respect of the Whitewash Resolution. Iain Menneer, Chris Brewster and Nick Downshire do not therefore feel it appropriate to make any recommendation to Independent Shareholders in respect of the Whitewash Resolution.

The Independent Directors, having been so advised by Rothschild, consider that the Rule 9 Waiver is fair and reasonable and in the best interests of the Company and the Independent Shareholders as a whole. In providing advice to the Independent Directors, Rothschild has taken into account the Independent Directors' commercial assessments. Accordingly the Independent Directors recommend that the Shareholders vote in favour of the Whitewash Resolution.

APPENDIX II - HISTOICAL FINANCIAL INFORMATION ON ECUPHAR

Consolidated income statements

in £'000	Notes	For the year ended 31 December
in £'000	Notes	2016	2015	2014
Revenue	20.1	68,361	47,097	34,478
Cost of sales	20.2	(40,086)	(30,566)	(23,842)
Gross profit		28,275	16,531	10,636
Research and development expenses	20.3	(1,776)	(1,064)	(284)
Selling and marketing expenses	20.4	(9,740)	(6,682)	(3,390)
General and administrative expenses	20.5	(12,607)	(8,738)	(5,081)
Net other operating income/(expenses)	20.6	1,887	(345)	(277)
Operating (loss) profit		6,039	(298)	1,604
Financial expenses	20.9	(988)	(668)	(341)
Financial income	20.10	97	74	46
Profit (Loss) before taxes		5,148	(892)	1,309
Current income taxes	20.11	(1,305)	(537)	(466)
Deferred taxes	20.11	(327)	735	53
Net (loss) profit		3,516	(694)	896
Net (loss) profit attributable to:
The owners of the parent	21	3,515	(694)	896
Non-controlling interest		−	−	1
Earnings per share attributable to ordinary owners of the parent
Basic		0.25	(0.06)	0.08
Diluted		0.25	(0.06)	0.08

The accompanying notes form an integral part of these consolidated special purpose financial statements.

Consolidated statements of comprehensive income

in £'000	Notes	For the year ended 31 December
in £'000	Notes	2016	2015	2014
Net (loss) profit for the year		3,515	(694)	896
Other comprehensive income (loss)
Financial instruments at fair value
through OCI*		(5)	−	−
Cumulative translation differences*		2,515	(153)	(354)
Other comprehensive income (loss), net of taxes		2,510	(153)	(354)
Total comprehensive (loss) income for the year, net of taxes		6,025	(847)	542
Total comprehensive (loss) income attributable to:
The owners of the parent		6,025	(847)	541
Non-controlling interest		−	−	1

* May be reclassified subsequently to profit & loss

The accompanying notes form an integral part of these consolidated special purpose financial statements.

Consolidated statements of financial position

in £'000 Assets Non-current assets		For the year ended 31 December			1 January
	Notes	2016	2015	2014	2014

Goodwill	5	9,959	8,974	2,083	2,229
Intangible assets	6	21,246	19,415	7,279	7,425
Property, plant & equipment	7	719	662	386	330
Deferred tax assets	20.11	1,269	1,240	956	969
Other financial assets		69	68	52	96
Other non-current assets		1	1	−	−
Total non-current assets		33,263	30,360	10,756	11,049
Current assets
Inventories	9	13,254	13,024	6,383	6,937
Trade receivables	10	10,781	9,801	3,889	3,699
Available-for-sale financial assets	18	423	1	1	−
Other current assets		1,191	1,330	300	346
Cash and cash equivalents	11	951	749	966	1,154
Total current assets		26,600	24,905	11,539	12,136
Total assets		59,863	55,265	22,295	23,185
Equity and liabilities
Equity
Share capital	12	7,256	7,256	5,148	5,148
Share premium	12	8,821	8,821	−	−
Treasury shares		−	(646)	(646)	−
Retained earnings	12	1,258	(142)	660	496
Other reserves		2,518	8	161	515
Equity attributable to the owners of the parent		19,853	15,297	5,323	6,159
Non-controlling interest	12	2	2	2	1
Total equity		19,855	15,299	5,325	6,160
Non-current liabilities
Borrowings	14	24,102	2,019	3,837	4,020
Deferred tax liabilities	20.11	224	44	1	2
Derivative financial liability			−	30	41
Provisions	15	216	25	8	−
Total non-current liabilities		24,542	2,088	3,876	4,063
Current liabilities
Borrowings	14	631	26,609	6,908	7,464
Trade payables		10,012	8,406	3,512	3,433
Tax payables		1,774	973	388	299
Derivative financial liability		−	16	−	−
Accrued charges & deferred income	16	812	286	129	228
Other current liabilities	17	2,237	1,588	2,157	1,538
Total current liabilities		15,466	37,878	13,094	12,962
Total equity and liabilities		59,863	55,265	22,295	23,185

The accompanying notes form an integral part of these consolidated special purpose financial statements.

Consolidated statements of changes in equity

Attributable to the owners of the parents

		Share	Share	Treasury	Retained	Other		Non‑ controlling	Total
in £'000	Notes	capital	premium	shares	earnings	reserves	Total	interest	equity
		--------	--------	--------	--------	-------- --------		--------	--------
At 1 January 2016		7,256	8,821	(646)	(142)	8	15,297	2	15,299
		--------	--------	--------	--------	-------- --------		--------	--------
Net profit (loss)		−	−	−	3,515	−	3,515	−	3,515
Other comprehensive income (loss)		−	−	−	−	2,510	2,510	−	2,510
		--------	--------	--------	--------	-------- --------		--------	--------
Total comprehensive income (loss)		−	−	−	3,515	2,510	6,025	−	6,025
		--------	--------	--------	--------	-------- --------		--------	--------
External dividend		−	−	−	(1,469)	−	(1,469)	−	(1,469)
Redemption treasury shares		−	−	646	(646)	−	−	−	−
		--------	--------	--------	--------	-------- --------		--------	--------
At 31 December 2016		7,256	8,821	−	1,258	2,518	19,853	2	19,855
			Attributable to the owners of the parents
								Non‑
		Share	Share	Treasury	Retained	Other		Non‑
		Share	Share	Treasury	Retained	Other		controlling	Total
in £'000	Notes	capital	premium	shares	earnings	reserves	Total	interest	equity
		--------	--------	--------	--------	-------- --------		--------	--------
At 1 January 2015		5,148	−	(646)	660	161	5,323	2	5,325
		--------	--------	--------	--------	-------- --------		--------	--------
Net profit (loss)		−	−	−	(694)	−	(694)	−	(694)
Other comprehensive income (loss)		−	−	−	−	(153)	(153)	−	(153)
		--------	--------	--------	--------	-------- --------		--------	--------
Total comprehensive income (loss)		−	−	−	(694)	(153)	(847)	−	(847)
		--------	--------	--------	--------	-------- --------		--------	--------
External dividend	12	−	−	−	(108)	−	(108)	−	(108)
Capital increase in cash	12	2,108	8,821	−	−	−	10,929	−	10,929
		--------	--------	--------	--------	-------- --------		--------	--------
At 31 December 2015		7,256	8,821	(646)	(142)	8	15,297	2	15,299
			Attributable to the owners of the parents
								Non‑
		Share	Share	Treasury	Retained	Other		Non‑
		Share	Share	Treasury	Retained	Other		controlling	Total
in £'000	Notes	capital	premium	shares	earnings	reserves	Total	interest	equity
		--------	--------	--------	--------	-------- --------		--------	--------
At 1 January 2014		5,148	−	−	496	515	6,159	1	6,160
		--------	--------	--------	--------	-------- --------		--------	--------
Net profit (loss)		−	−	−	896	−	896	1	897
Other comprehensive income (loss)		−	−	−	−	(354)	(354)	−	(354)
		--------	--------	--------	--------	-------- --------		--------	--------
Total comprehensive income (loss)		−	−	−	896	(354)	542	1	543
		--------	--------	--------	--------	-------- --------		--------	--------
Dividend payment	13	−	−	−	(732)	−	(732)	−	(732)
Other movement	12	−	−	(646)	−	−	(646)	−	(646)
		--------	--------	--------	--------	-------- --------		--------	--------
At 31 December 2014		5,148	−	(646)	660 -------- -------- -------- -------- -------- -------- -------- --------	161	5,323	2	5,325

The accompanying notes form an integral part of these consolidated special purpose financial statements.

Consolidated cash flow statements

in £'000 Operating activities	Notes	For the year ended 31 December
		2016	2015	2014

Net (loss) profit for the period		3,516	(694)	896
Non-cash and operational adjustments
Depreciation of property, plant & equipment	7	326	156	154
Amortization of intangible assets	6	3,982	2,957	2,193
Loss (gain) on disposal of property, plant & equipment		(1)	(7)	(4)
Movement in provisions		180	17	8
Movement allowance for bad debt and inventories		355	457	42
Financial income	20.10	(97)	(74)	(46)
Financial expense	20.9	988	668	341
Impact of foreign currencies		1,787	(136)	(334)
Gain from sale of subsidiaries	4	(2,432)	−	−
Deferred tax expense (income)	20.11	327	(735)	(53)
Income taxes	20.11	1,305	537	465
Other		31	100	31
Working capital adjustment
Increase in trade receivables and other receivables		(1,447)	(6,706)	(156)
Decrease (increase) in inventories		(890)	(2,152)	512
Increase in trade payables and other payables		2,530	4,644	(1,323)
Income tax paid		(1,172)	(350)	(396)
Net cash flow from operating activities		9,288	(1,318)	2,330

The accompanying notes form an integral part of these consolidated special purpose financial statements.

in £'000			For the year ended 31 December
		Notes	2016		2015		2014

Investing activities
Purchase of property, plant & equipment		7	(463)		(458)		(290)
Purchase of intangible assets		6	(1,185)		(781)		(587)
Proceeds from the sale of property, plant & equipment (net)			74		29		57
Acquisition of subsidiaries		4	−		(26,125)		−
Proceeds from sale of subsidiary		4	3,211		−		−
Purchase available for sale financial investments			(409)		−		−
Net cash flow used in investing activities			1,228		(27,335)		(820)
Financing activities
Proceeds from loans & borrowings and convertible debt			15,852		21,091		3,265
Repayment of loans & borrowings			(23,925)		(2,817)		(3,245)
Proceeds from capital increase			−		10,924		−
	Purchase treasury shares			−		−		(646)
Dividends paid			(1,469)		(108)		(732)
Interest paid			(663)		(498)		(289)
Other financial income (expense)			(241)		(104)		(12)
Net cash flow from financing activities			(10,446)		28,488		(1,659)
	Net increase of cash & cash equivalents			70		(165)		(149)
Cash & cash equivalents at beginning of period		11	749		966		1,154
Exchange rate differences on cash & cash equivalents			132		(52)		(39)
Cash & cash equivalents at end of period		11	951		749		966

The accompanying notes form an integral part of these consolidated special purpose financial statements.

Notes to the consolidated special purpose financial statements

1 Corporate information

Ecuphar NV is a limited liability company with its registered office at Legeweg 157, bus I, 8020 Oostkamp, Belgium. The consolidated special purpose financial statements comprise Ecuphar NV (the "Parent Company" or "Parent") and its subsidiaries (collectively, the "Ecuphar Group"). See Note 26 for a list of subsidiaries of the Parent Company.

The Ecuphar Group is a leading provider of animal health products. Through the development of a veterinary pharmaceutical portfolio it aims to increase market penetration in existing markets, expand into new export markets and enter into new strategic partnerships and alliances. The Ecuphar Group sells its products in Europe, Americas and Asia.

2 Basis of preparation

The consolidated special purpose financial statements of the Ecuphar Group for the 3 years ended 31 December 2016 were prepared for the purposes of the proposed acquisition of Ecuphar NV by Animalcare Group plc (the "Company") and the Company's proposed readmission to AIM. These consolidated special purpose financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies, and in accordance the International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU-IFRS"). The Ecuphar Group has applied IFRS 1, First-Time adoption of International Financial Reporting Standards ("IFRS 1") in its adoption of IFRS. The Transition Date ("Transition Date") for the Ecuphar Group was 1 January 2014 which is the opening balance sheet date for fiscal year 2014. The Ecuphar Group has applied IFRS standards effective for the period ended 31 December 2016 to all years presented in these consolidated special purpose financial statements, as if these standards had always been in effect (subject to the mandatory and optional IFRS 1 exemptions discussed in Note 27).

These consolidated special purpose financial statements have been prepared on a historical cost basis, except for the assets and liabilities that have been acquired as part of a business combination which have been initially recognized at fair value and certain financial instruments which are measured at fair value.

The consolidated special purpose financial statements are presented in thousands of pound sterling (K£ or thousands of £) and all "currency" values are rounded to the nearest thousand (£000), except when otherwise indicated.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Ecuphar Group management to exercise judgment in applying the Ecuphar Group's accounting policies. The areas where significant judgment and estimates have been made in preparing the financial statements and their effect are disclosed in Note 3.

3 Summary of significant accounting policies

Basis for consolidation

The consolidated special purpose financial statements comprise the financial statements of the Ecuphar Group and its subsidiaries.

Entities are fully consolidated from the date of acquisition, which is the date when the Ecuphar Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the entities are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealized gains and losses resulting from intra-group transactions and dividends are fully eliminated.

The Ecuphar Group attributes profit or loss and each component of other comprehensive income to the owners of the parent company and to the non-controlling interest based on present ownership interests, even if this results in the non-controlling interest having a negative balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Ecuphar Group loses control over the subsidiary, it will derecognize the assets (including goodwill) and liabilities of the subsidiary, any non-controlling interest and the other components of equity related to the subsidiary. Any surplus or deficit arising from the loss of control is recognized in profit or loss. If the Ecuphar Group retains an interest in the previous subsidiary, then such interest is measured at fair value at the date the control is lost.

The proportion allocated to the parent and non-controlling interests in preparing the consolidated special purpose financial statements is determined based solely on present ownership interests.

The following changes to the consolidation scope occurred during the reported periods:

· Acquisition of the assets related to the Animal Health Business of Esteve SA, a Spanish pharmaceutical company, effective on 30 April 2015 (see Note 4). As part of this acquisition, the following entities has entered to the consolidation scope: Ecuphar Veterinaria, Ecuphar Italia, Belphar and Euracon GmbH;

· Disposal of Nutriscience Ltd., the subsidiary of the Ecuphar Group located in the Republic of Ireland, effective on 31 October 2016 (see Note 4).

Non-controlling interests

The Ecuphar Group has the choice, on a transaction by transaction basis, to initially recognize any non-controlling interest in the acquiree which is a present ownership interest and entitles its holders to a proportionate share of the entity's net assets in the event of liquidation at either acquisition date fair value or, at the present ownership instruments' proportionate share in the recognized amounts of the acquiree's identifiable net assets. Other components of non-controlling interest such as outstanding share options are generally measured at fair value. The Ecuphar Group has not elected to take the option to use fair value in acquisitions completed to date and currently only has minor non-controlling interest resulting from business combinations.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive committee. Operating segments are aggregated when they have similar economic characteristics which is the case when there is similarity in terms of (a) the nature of the products and services, (b) the nature of the production processes, (c) the type or class of customer for their products and services, (d) the methods used to distribute their products or provide their services, and (e) if applicable, the nature of the regulatory environment. The Ecuphar Group has two operating segments, Pharmaceutical and Wholesale.

Foreign currency translation

Functional and presentation currency

The Ecuphar Group's consolidated special purpose financial statements are presented in Pound Sterling (GBP) which is different that the functional currency of the parent company and subsidiaries. The presentation currency is different as it is the Ecuphar Group intention to be publicly quoted in the United Kingdom.

For each entity, the Ecuphar Group determines the functional currency, and items included in the financial statements of each entity are measured using the functional currency. The functional currency of all entities of the Ecuphar Group is Euro.

The statement of financial position is translated into GBP at the closing rate on the reporting date and their income statement is translated at the average exchange rate at year-end. Differences resulting from the translation of the financial statements of the parent and the subsidiaries are recognized in other comprehensive income as "cumulative translation differences".

Foreign currency transactions

Transactions denominated in foreign currencies are translated into Euro at the exchange rate at the end of the previous month-end. Monetary items in the statement of financial position are translated at the closing rate at each reporting date and the relevant translation adjustments are recognized in financial or operating result depending on its nature.

Business combinations

Business combinations are accounted for using the acquisition method at the acquisition date, which is the date at which the Ecuphar Group obtains control over the entity.

The cost of an acquisition is measured as the amount of the consideration transferred to the seller, measured at the acquisition date fair value, and the amount of any non-controlling interest in the acquiree.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Ecuphar Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets.

The Ecuphar Group measures goodwill initially at cost at the acquisition date, being:

· the fair value of the consideration transferred to the seller, plus

· the amount of any non-controlling interest in the acquiree, plus

· if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree re-measured at the acquisition date, less

· the fair value of the net identifiable assets acquired and assumed liabilities

Goodwill is recognized as an intangible asset with any impairment in carrying value being charged to the consolidated income statement. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated income statement on acquisition date.

Acquisition costs incurred are expensed and included in general and administrative expenses. Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes borrowing costs directly attributable to construction projects if the asset necessarily takes a substantial period of time to get ready for its intended use, it is probable that they will result in future economic benefits to the group and the cost can be measured reliably. When significant parts of property, plant and equipment are required to be replaced at intervals, the Ecuphar Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the income statement as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

•	Equipment	5 years
•	Office furniture & office equipment	3-5 years or lease term if shorter
•	Leased equipment	4-5 years
•	Leasehold improvements	5 years or lease term if shorter

Land is not depreciated.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Ecuphar Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset or the lease term.

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate.

Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

Finance leases which transfer to the Ecuphar Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the fair value of the leased item or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

Finance charges are recognized as financial expenses in the consolidated income statement.

Where substantially all of the risks and rewards incidental to ownership are not transferred to the Ecuphar Group (an "operating lease"), the total rentals payable under the lease are charged to the consolidated income statement on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognized as a reduction of the rental expense over the lease term on a straight-line basis.

Intangible assets

Intangible assets comprise the acquired product portfolios, in-process research and development, licensing and distribution rights and customer acquired in connection with business combinations, product portfolios & product development costs and capitalized software.

The useful life of the intangible assets is as follows:

•	Capitalized software:	5 years;
•	Patents, distribution rights and licenses:	7-12 years;
•	Product portfolios & product development:	10 years;
•	In Process Research and Development	10 years;
•	Goodwill	Not amortized

Intangible assets acquired separately

Intangible assets with finite useful lives which are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Intangible assets with finite lives are amortized over their useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. The amortization expense on intangible assets with finite lives is recognized in the consolidated income statement based on its function which may be "cost of sales", "sales & marketing expenses", "research & development expenses" and "general and administrative expenses".

Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Goodwill

Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments.

Internally generated intangible assets - research and development expenditures

Research and development includes the costs incurred by activities related to the development of software solutions (new products, updates and enhancements), guides and other products. Expenditures in research and development activities are recognized as an expense in the period in which they are incurred.

Development activities involve the application of research findings or other knowledge to a plan or a design of new or substantially improved (software) products before the start of the commercial use.

Internal development expenditures on an individual project are recognized as an intangible asset when the Ecuphar Group can demonstrate:

· the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;

· its intention to complete and its ability to use or sell the asset;

· how the asset will generate future economic benefits;

· the availability of resources to complete the asset;

· the ability to measure reliably the expenditure during development.

Internal development expenditures not satisfying the above criteria and expenditures on the research phase are recognized in the consolidated income statement as incurred.

Subsequent to initial recognition internally generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets which are acquired separately.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition intangible assets acquired in a business combination are measured at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets which are acquired separately.

Impairment of non-financial assets

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be

recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ("CGUs"). Goodwill is allocated on initial recognition to each of the Ecuphar Group's CGUs that are expected to benefit from the synergies of the combination giving rise to the goodwill.

The Ecuphar Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Ecuphar Group's CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to future cash flows projected after the fifth year.

Impairment charges are included in profit or loss, except, where applicable, to the extent they reverse gains previously recognized in other comprehensive income. An impairment loss recognized for goodwill is not reversed.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Inventories

Inventories are valued at the lower of cost and net realizable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

· Raw materials: purchase cost on a first in, first out basis;

· Goods purchased for resale: purchase cost on a first in, first out basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Financial assets

Financial assets include loans, deposits, receivables measured at amortized cost and available for sale financial investments measured at fair value.

Financial assets measured at amortized cost

The Ecuphar Group has loans and receivables that are measured at amortized cost.

The Ecuphar Group's loans and receivables comprise trade and other receivables, other financial assets and cash and cash equivalents in the consolidated statement of financial position.

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and - for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position.

Financial assets that are classified as loans and receivables are initially measured at fair value plus transaction costs and subsequently at amortized cost using the effective interest rate method (EIR). Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included under financial income in the consolidated income statement. The losses arising from impairment are

recognized in the consolidated income statement under other operating expenses or financial expenses.

Available-for-sale financial assets measured at fair value

Available-for-sale financial assets relate to investments that are not initially acquired in view of a short term sale (shares and securities) and that are nor fully consolidated nor equity consolidated. Assets in this category are measured at fair value with the resulting gains and losses being directly recognized in other comprehensive income (equity).

Assets in this category are measured at cost when there is no price input available in an active market and the fair value cannot be measured reliable by applying alternative valuation methods.

Impairment of financial assets

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

In case of available-for-sale financial assets, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred) or its current fair value, in case of available-for-sale financial assets. The present value of the estimated future cash flows is discounted at the financial asset's original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of loss is recognized in the income statement. In the event of an impairment loss for available-for-sale financial assets, the accumulated impairment loss is removed from other comprehensive income and recognized in the consolidated statement of profit or loss.

Impairment losses on available-for-sale financial assets are not reversed. Financial liabilities

The Ecuphar Group has financial liabilities measured at amortized cost which include loans and borrowings, trade payables and other payables and financial liabilities resulting from an interest rate swap (classified as held for trading).

Financial liabilities at amortized cost

Those financial liabilities are recognized initially at fair value plus directly attributable transaction costs and are measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Derivative financial liabilities

The Ecuphar Group uses derivative financial instruments to hedge the exposure to changes in interest rates, however the use of derivatives is limited and does not represent significant amounts. Derivative financial instruments are initially measured at fair value. After initial recognition the financial instruments are measured at fair value on the balance sheet date.

Such hedging transactions do not qualify for hedge accounting criteria, although they offer economic hedging according to the Ecuphar Group's risk policy. Changes in the fair value of such instruments are recognized directly in the consolidated statement of profit or loss.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

Share capital

Financial instruments issued by the Ecuphar Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Ecuphar Group's ordinary shares are classified as equity instruments.

Dividends

Dividends paid are recognized within the statement of changes in equity only when an obligation to pay the dividends arises prior to the year end.

Provisions

Provisions are recognized when the Ecuphar Group has 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.

Employee benefits

Short-term employee benefits

The Ecuphar Group has short-term employee benefits which are recognized when the service is performed as a liability and expense. The short-term employee benefit is the undiscounted amount expected to be paid.

Management incentive plans

The Ecuphar Group has implemented an incentive plan for some of its employees. The liability recognized is the undiscounted amount expected to be paid.

Post-employment benefits

The Ecuphar Group has a defined contribution obligation where the Ecuphar Group pays contributions based on salaries to an insurance company, in accordance with the laws and agreements in each country.

The Belgian defined contribution pension plans are by law subject to minimum guaranteed rates of return, currently 3.25% on employer contributions and 3.75% on employee contributions. These rate have been modified by the law of 18 December 2015 and effective for contribution paid as from 2016 to a new variable minimum return based on the Belgian government bonds, with a minimum of 1.75% and a maximum of 3.75%.

These plans quality as a defined benefit plan as from 1 January 2016 considering the modified law. Previously, the Ecuphar Group has adopted a retrospective approach whereby the net liability recognized in the statement of financial position is based on the sum of the positive differences,

determined by individual plan participant, between the minimum guaranteed reserves and the benefits accrued at the closing date based on the actual rates of return.

The impact of the defined contribution plans accounted for as a defined benefit plan is not material.

Contributions are recognized as expenses for the period in which employees perform the corresponding services. Outstanding payments at the end of the period are shown as other current liabilities.

Revenue recognition Sales of goods

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes.

Revenue from the sale of goods is recognized when all the following 5 conditions are met:

· The Ecuphar Group transfers to the buyer the significant risks and rewards of ownership of the goods;

· The Ecuphar Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

· The Ecuphar Group can measure reliably the amount of revenue;

· It is probable that the economic benefits associated with the transaction flow to the Ecuphar Group; and

· The Ecuphar Group can measure reliably the costs incurred or to be incurred in respect of the transaction.

Trade goods include goods produced for the purpose of sale and goods purchased for resale.

The Ecuphar Group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Sales of services

When the outcome of a transaction involving the rendering of services is estimated reliably, revenue associated with the transaction is recognized when the services are rendered. The outcome of a transaction is estimated reliably when all the following four conditions are satisfied:

· The amount of revenue is measured reliably;

· It is probable that the economic benefits associated with the transaction will flow to the Ecuphar Group;

· The stage of completion of the transaction at the balance sheet date can be measured reliably; and

· The costs incurred for the transaction and the costs to complete the transaction are measured reliably.

In general, these services are invoiced as they are performed and the amounts directly recognized in the income statement and do not require the measurement of the stage of completion.

Up-front income received in relation to long-term service contracts is deferred and subsequently recognized over the life of the relevant contracts.

Interest income

For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate, which is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included under financial income in the income statement.

Financing costs

Financing costs relate to interests and other costs incurred by the Ecuphar Group related to the borrowing of funds. Such costs mostly relate to interest charges on short- and long-term borrowings as well as the amortization of additional costs incurred on the issuance of the related debt. Financing costs are recognized in profit and loss of the period or capitalized in case they are related to a qualifying asset.

Other financial income and expenses

Other financial income and expenses include mainly foreign currency gains or losses on financial transactions and bank related expenses.

Taxes

Current income tax

Income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items that are recognized directly in equity is recognized in equity and not in the income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is calculated using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Ecuphar Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

· Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

· Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

· Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

Events after balance sheet date

Events after the balance sheet date which provide additional information about the parent company's position as at the balance sheet date (adjusting events) are reflected in the financial statements. Events after the balance sheet date which are not adjusting events are disclosed in the notes if material.

New and revised standards not yet adopted

The standards and interpretations that are issued, but not yet effective, up to the closing date of the Ecuphar Group's financial statements are disclosed below.

IFRS 9 Financial Instruments and subsequent amendments

On 24 July 2014 the IASB published the complete version of IFRS 9, Financial instruments, which replaces most of the guidance in IAS 39. This includes amended guidance for the classification and measurement of financial assets by introducing a fair value through other comprehensive income category for certain debt instruments. It also contains a new impairment model which will result in earlier recognition of losses. No changes were introduced for the classification and measurement of financial liabilities, except for the recognition of changes in own credit risk in other comprehensive income for liabilities designated at fair value through profit or loss. IFRS 9 also includes a new hedging guidance. It will be effective for annual periods beginning on or after 1 January 2018. The Ecuphar Group has yet to undertake a detailed assessment but no significant impact is expected.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 specifies how and when a company will recognize revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard provides a single, principles based five step model to be applied to all contracts with customers as follows:

· Identify the contract(s) with a customer;

· Identify the performance obligations in the contract;

· Determine the transaction price;

· Allocate the transaction price to the performance obligations in the contract; and

· Recognize revenue when (or as) the entity satisfies a performance obligation.

IFRS 15 was issued in May 2014 and replaces IAS 11-Construction Contracts, IAS 18-Revenue, IFRIC 13-Customer Loyalty Programmes, IFRIC 15-Agreements for the Construction of Real Estate, IFRIC 18-Transfers of Assets from Customers and SIC 31-Revenue-Barter Transactions involving Advertising Services. The Standard will be effective for annual periods beginning on or after 1 January 2018. The Ecuphar Group will make more detailed assessments of the impact over the next months and expect to complete the assessment in the third quarter of 2017.

IFRS 16 Leases

On 13 January 2016, the IASB issued IFRS 16, Leases, which provides lease accounting guidance. Under the new guidance, lessees will be required to present right-of-use assets and lease liabilities on the statement of financial position. At the lease commencement date, a lessee is required to recognize a lease liability, which is the lessee's discounted obligation to make lease payments arising from a lease, as well as a right of use asset, representing the lessee's right to use, or control the use of, a specified asset for the lease term. IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019, subject to endorsement by the European Union. Earlier application is permitted for entities that apply IFRS 15, Revenue from Contracts with Customers, at or before the initial application of IFRS 16.

As at the reporting date, the Ecuphar Group has non-cancellable operating lease commitments of £2,759k, see Note 22. However, the Ecuphar Group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Ecuphar Group's profit and classification of cash flows.

The other standards, interpretations and amendments issued by the IASB (all of them still subject to endorsement by the European Union), but not yet effective are not expected to have a material impact on the Ecuphar Group's future consolidated financial statements and those applicable for the Ecuphar Group are listed below:

· Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealized Losses (issued on 19 January 2016) and effective for annual periods on 1 January 2017, subject to endorsement by the European Union;

· Amendments to IAS 7: Disclosure Initiative (issued on 29 January 2016) and effective for annual periods on 1 January 2017;

· Clarifications to IFRS 15 Revenue from Contracts with Customers (issued on 12 April 2016) and effective for annual periods on 1 January 2018;

· Annual Improvements to IFRS Standards 2014-2016 Cycle (issued on 8 December 2016) and effective for annual periods on 1 January 2018;

Significant accounting judgments, estimates and assumptions

The preparation of the Ecuphar Group's consolidated special purpose financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities for future periods.

On an ongoing basis, the Ecuphar Group evaluates its estimates, assumptions and judgments, including those related to revenue recognition, development expenses, income taxes, impairment of goodwill, intangible assets and property, plant & equipment and business combinations.

The Ecuphar Group based its assumptions and estimates on parameters available when the consolidated special purpose financial statements were prepared. Existing circumstances and

assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Ecuphar Group. Such changes are reflected in the assumptions when they occur.

Internally-developed intangible assets

Under IAS 38, internally generated intangible assets from the development phase are recognized if certain conditions are met. These conditions include the technical feasibility, intention to complete, the ability to use or sell the asset under development, and the demonstration of how the asset will generate probable future economic benefits. The cost of a recognized internally generated intangible asset comprises all directly attributable cost necessary to make the asset capable of being used as intended by management. In contrast, all expenditures arising from the research phase are expensed as incurred.

Determining whether internally generated intangible assets from development are to be recognized as intangible assets requires significant judgment, particularly in determining whether the activities are considered research activities or development activities, whether the product enhancement is substantial, whether the completion of the asset is technical feasible considering a company-specific approach, the probability of future economic benefits from the sale or use.

Management has determined that the conditions for recognizing internally generated intangible assets from product development activities are not met until shortly before the developed products are available for sale. This assessment is monitored by the Ecuphar Group on a regular basis.

Income taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

As at 31 December 2016, the Ecuphar Group had £255k (2015: £58k; 2014: £142k) of tax losses carry forward and other tax credits such as investment tax credits and notional interest deduction. These losses relate to the subsidiaries that have a history of losses, do not expire and may not be used to offset taxable income elsewhere in the Ecuphar Group.

The Ecuphar Group may also be required to evaluate some uncertainty surrounding potential liability in relation to uncertain tax positions. Uncertain tax positions (whether assets or liabilities) are recognized using a 'probable' threshold in accordance with IAS 12, and they are reflected at the amount expected to be recovered from, or paid to, the taxation authorities. It may also include interpretations of complex tax laws as well as transfer pricing considerations which could be disputed by tax authorities. Assessing uncertain tax positions requires significant judgement from Management.

Impairment of goodwill

The Ecuphar Group has goodwill for a total amount of £9,959k (2015: £8,974k; 2014: £2,083k) which has been subject to an impairment test. The goodwill is tested for impairment based on a discounted cash flow model with cash flows for the next five years derived from the budget and a residual value considering a perpetual growth rate. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs are disclosed and further explained in Note 5.

No impairment charges have been recorded during the reported periods.

Business combinations

The Ecuphar Group determines and allocates the purchase price of an acquired business to the assets acquired and liabilities assumed as of the business combination date. The purchase price allocation process requires the Ecuphar Group to use significant estimates and assumptions, including:

· estimated fair value of the acquired intangible assets; and

· estimated fair value of property, plant and equipment.

While the Ecuphar Group is using its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the date of acquisition, our estimates and assumptions are inherently uncertain and subject to refinement. Examples of critical estimates in valuing certain of the intangible assets the Ecuphar Group has acquired or may acquire in the future include but are not limited to:

· future expected cash flows from customer contracts and relationships, software license sales and maintenance agreements;

· the fair value of the plant and equipment;

· the fair value of the deferred revenue;

· discount rates; and

· the determination of useful lives and amortization period of acquired intangible assets.

4 Business Combinations and disposals of subsidiaries

Business combinations

The Ecuphar Group did not complete any business combinations during the year ended 31 December 2016.

Esteve

On 30 April 2015, the Ecuphar Group acquired the assets related to the Animal Health business of Esteve SA, a Spanish pharmaceutical company, through an asset purchase agreement. The consideration paid in cash for those assets amounted to £26,125k (€36,000k). This acquisition related in substance to an integrated set of activities as defined by IFRS 3 Business Combinations. As a result a purchase price allocation was performed at the date of acquisition. The fair values of the related assets at acquisition date are described below.

in £'000 Assets	Carrying value at acquisition date	Fair value adjustments	Fair value acquisition at date
in £'000 Assets
Intangible assets	−	14,582	14,582
Other non-current assets	−	124	124
Inventory	4,523	423	4,946
Trade receivables	−	−	−
Other current assets	−	−	−
Cash	−	−	−
	4,523	15,129	19,652
Liabilities
Financial debts	−	−	−
Deferred tax liabilities	−	(443)	(443)
Trade payables	−	−	−
Other liabilities	−	−	−
	−	(443)	(443)
Total identified assets and liabilities	4,523	14,686	19,209
Goodwill			6,916
Acquisition price	−	−	26,125

The purchase price allocation resulted in a residual goodwill balance recognized of £6,916k. The impact on the cash flow position of the Ecuphar Group resulting from this business combination is as follows:

Cash flow from business combination

Consideration paid in cash	26,125
Total cash flow	26,125

The asset purchase agreement did not include any contingent consideration payable in addition to the purchase price.

The goodwill is mainly attributable to Esteve's significant commercial leverages opportunities, the value of the trained and knowledge workforce and the significant operational and commercial synergies realized.

The acquisition has contributed since the date of acquisition until 31 December 2015 a total revenue of £16,005k and a net loss of £(605)k. The Ecuphar Group does not have the information to disclose the impact on the revenue and the net profit as if the acquisition has been completed on 1 January 2015.

Disposals of subsidiaries Nutriscience

On 31 October 2016, the Ecuphar Group entered into a share purchase agreement with Swedencare AB regarding the sale of one of its subsidiaries, Nutriscience Ltd. The consideration received by the Ecuphar Group amounts to £3,507k and this resulted in a gain of £2,432k. The effect of this transaction on the financial position and cash flows of the Ecuphar Group is as follows:

Nutriscience

in £'000 Assets		Carrying value at selling date

Goodwill		419
Property, plant and equipment		53
	Inventories		407
	Trade receivables		419
Other receivables		37
Cash and cash equivalents		296
		1,631
Liabilities
Financial debts		−
Trade payables		(315)
Other payables		(241)
		(556)
Total assets and liabilities		1,075
	Gain on sale Nutriscience		2,432
	Selling price received in cash		3,507
Cash flow from sale
Cash & cash equivalents transferred		(296)
Selling price		3,507
Total cash flow		3,211

This disposal did not meet the IFRS 5 criteria as component of a group, as separate major line of business nor as geographical areas of operations. Therefore discontinued operations and asset held for sale disclosures are not required.

5 Goodwill

The goodwill has been allocated to the cash generating units ("CGU") as follows:

For the year ended 31 December

in £'000	2016	2015	2014
CGU: Pharmaceuticals	9,425	8,513	1,593
CGU: Wholesale	534	461	490
Total	9,959	8,974	2,083

The changes in the carrying value of the goodwill can be presented as follows for the years 2016, 2015 and 2014:

in £'000	Gross	Impairment	Total
At 1 January 2014	2,229	−	2,229
Additions	−	−	−
Currency translation	(145)	−	(145)
At 31 December 2014	2,083	−	2,083
Additions/(disposals)	6,917	−	6,917
Currency translation	(25)	−	(25)
At 31 December 2015	8,974	−	8,974
Additions/(disposals)	(419)	−	(419)
Currency translation	1,403	−	1,403
At 31 December 2016	9,958	−	9,958

In addition to currency translation effects the goodwill balance increased as a result of the Esteve business combination in 2015 with £6,917k and decreased as a result of the disposal of Nutriscience Ltd in 2016 with £(419)k (see Note 4).

As of 31 December 2016 goodwill allocated to the Pharmaceuticals CGU includes goodwill recognized as a result of past business combinations of Esteve, Equipharma NV, Ecuphar BV and Cardon Chemicals NV. As of 31 December 2016 goodwill allocated to the Wholesale CGU includes goodwill recognized as a result of the past business combinations of Medini NV and Orthopaedics NV.

The Ecuphar Group has performed an impairment test based on a discounted cash flow model including cash flows derived from the three year budget plan and residual value as of the fourth year.

Both the Pharmaceuticals and Wholesale CGU are included in their respective reportable segment Pharmaceuticals and Wholesale.

CGU Pharmaceuticals

The recoverable amount of this cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by management covering a 5-year period. The cash flows beyond that five-year period have been extrapolated using a steady 2% per annum growth rate. The main assumptions used for the goodwill impairment testing include a pre-tax discount rate based on a weighted average cost of capital ("WACC") of 10.56%. Other assumptions include the year-on-year growth rate of the revenue, gross margin and the operating costs which has been determined by management based on past experience. It was concluded that the recoverable amount of £61,892k is approximately £43,804k higher than the carrying value of the cash generating unit. If the year-on-year growth rate of the revenue, gross margin and the operating costs would be zero, the headroom would decrease by approximately £16,784k. If the discount rate would increase by 1%, the headroom would decrease by

approximately £8,349k. In both sensitivity analyses, the net recoverable amount is significantly higher than the carrying value of the cash generating units.

CGU Wholesale

The recoverable amount of this cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by management covering a 5-year period. The cash flows beyond that five-year period have been extrapolated using a steady 2% per annum growth rate. The main assumptions used for the goodwill impairment testing include a pre-tax discount rate (based on WACC) of 10.56%. Other assumptions include the year-on-year growth rate of the revenue, gross margin and the operating costs which has been determined by management based on past experience. It was concluded that the recoverable amount of £5,895k is approximately £4,127k higher than the carrying value of the cash generating unit. If the year-on-year growth rate of the revenue, gross margin and the operating costs would be zero, the headroom would decrease by approximately £1,345k. If the discount rate would increase by 1%, the headroom would decrease by approximately £628k. In both sensitivity analyses, the net recoverable amount is higher than the carrying value of the cash generating units.

6 Intangible assets

The changes in the carrying value of the intangible assets can be presented as follows for the years 2016, 2015 and 2014:

in £'000 Acquisition value	In Process R&D	Patents, distribution rights & licenses	Product portfolios & product development costs	Capitalized software	Total
in £'000 Acquisition value
At 1 January 2014	−	1,580	10,325	−	11,905
Additions	(11)	1,999	543	−	2,531
Change due to business combinations	−	−	−	−	−
Disposals	−	(1,211)	−	−	(1,211)
Exchange differences	−	(127)	(690)	−	(817)
Other	11	−	−	−	11
At 31 December 2014	− -------	2,241 -------	10,178 -------	− -------	12,419 -------
Additions	−	34	747	−	781
Change due to business combinations	2,417	8,798	3,367	−	14,582
Disposals		−	(15)	−	(15)
Currency translation	34	(8)	(542)	−	(516)
Other	−	−	−	−	−
At 31 December 2015	2,451 -------	11,065 -------	13,735 -------	− -------	27,251 -------
Additions	−	1,735	1,036	−	2,771
Change due to business combinations	−	−	−	−	−
Disposals	−	(2,090)	−	−	(2,090)
Currency translation	388	1,736	2,219	8	4,351
Transfers	−	−	−	179	179
Other	−	(9)	(34)	−	(43)
At 31 December 2016	2,839	12,437	16,956	187	32,419

------- ------- ------- ------- -------

	In Process R&D	Patents, distribution rights & licenses	Product portfolios & product development costs	Capitalized software	Total
Amortization At 1 January 2014	−	(156)	(4,323)	−	(4,479)

Additions	2	(1,238)	(956)	−	(2,192)
Disposals	−	1,211	−	−	1,211
Change due to business combinations	−	−	−	−	−
Impairments	−	−	−	−	−
Currency translation	−	11	311	−	322
Other	(2)	−	−	−	(2)
At 31 December 2014	−	(172)	(4,968)	−	(5,140)
Additions	(159)	(1,635)	(1,163)	−	(2,957)
Disposals	−	−	−	−	−
Change due to business combinations	−	−	−	−	−
Impairments	−	−	−	−	−
Currency translation	(2)	(13)	276	−	261
Other	1	−	(1)	−	−
At 31 December 2015	(160) -------	(1,820) -------	(5,856) -------	− -------	(7,836) -------
Additions	(268)	(2,256)	(1,457)	−	(3,981)
Disposals	−	2,016	7	−	2,023
Change due to business combinations	−	−	−	−	−
Currency translation	(39)	(299)	(991)	(2)	(1,331)
Transfers	−	−	(1)	(55)	(56)
Other	−	8	−	−	8
At 31 December 2016	(467)	(2,351)	(8,298)	(57)	(11,116)
Net carrying value
At 31 December 2016	2,372	10,086	8,658	130	21,246
At 31 December 2015	2,291	9,245	7,879	−	19,415
At 31 December 2014	−	2,069	5,210	−	7,279

In Process Research & Development relates to acquired development projects as part of the Esteve business combination in 2015.

Patents, distribution rights & licenses include amounts paid for exclusive distribution rights as well as distribution rights acquired as part of the Esteve business combination in 2015.

Product portfolios & product development costs relate to amounts paid for acquired brands as well as external and internal product development costs capitalized on the development projects in the pipeline for which the capitalization criteria are met.

At 31 December 2016, the remaining amortization period for the in process R&D intangibles amounts to 8.3 years.

The total amortization charge for 2016 is £3,981k (2015: £2,957k; 2014: £2,192k) which is included in lines cost of sales, research and development expenses, sales and marketing expenses and general and administrative expenses of the consolidated income statement.

7 Property, plant & equipment

The changes in the carrying value of the property, plant and equipment can be presented as follows for the years 2016, 2015 and 2014:

in £'000 Acquisition value At 1 January 2014 Additions Change due to business combinations		Equipment		Office furniture and equipment		Finance leases		Leasehold improvements		Total
		366		953		−		377		1,696
		63 −		175 −		− −		52 −		290 −
Disposals		(40)		(146)		−		(92)		(278)
	Transfers		−		−		−		−		−
	Currency Translation		(25)		(63)		−		(23)		(111)
Other		−		−		−
At 31 December 2014		364		919		−		314		1,597
Additions		84		250		51		73		458
Change due to business combinations		−		−		−		−		−
Disposals		−		(103)		−		−		(103)
Transfers		−		−		−		−		−
Currency Translation		(20)		(52)		1		(17)		(88)
Other		−		−		−		−		−
At 31 December 2015		428 -------		1,014 -------		52 -------		370 -------		1,864 -------
Additions		25		391		−		47		463
Change due to business combinations		(196)		(59)		−		(¹⁶⁴)		(⁴¹⁹)
	Disposals		−		(23)		−		−		(23)
Transfers		−		(174)		−		−		(174)
Currency Translation		60		166		8		53		287
Other		−		−		−		−		−
At 31 December 2016		317		1,315		60 ------- ------- ------- ------- -------		306		1,998

in £'000 Depreciation	Equipment	Office furniture and equipment	Finance leases	Leasehold improvements	Total
in £'000 Depreciation
At 1 January 2014	(323)	(710)	−	(334)	(1,367)
Depreciation charge for the year	(20)	(108)	−	(26)	(154)
Disposals	37	98	−	90	225
Transfers	−	−	−	−	−
Change due to business combinations	−	−	−	−	−
Currency Translation	20	47	−	20	87
Other	−	(2)	−	−	(2)
At 31 December 2014	(286) -------	(675) -------	− -------	(250) ------- -------	(1,211)
Depreciation charge for the year	(32)	(95)	(10)	(21)	(158)
Disposals	−	96	−	−	96
Transfers	−	−	−	−	−
Change due to business combinations	−	−	−	−	−
Currency Translation	15	40	−	14	69
Other	−	2	−	−	2
At 31 December 2015	(303) -------	(632) -------	(10) -------	(257) ------- -------	(1,202)
Depreciation charge for the year	(37)	(234)	(11)	(44)	(326)
Disposals	−	17	−	−	17
Transfers	−	52	−	−	52
Change due to business combinations	149	57	−	160	366
Currency translation	(43)	(105)	(2)	(36)	(186)
At 31 December 2016	(234)	(845)	(23)	(177)	(1,279)
Net book value At 31 December 2016	83	470	37	129	719
At 31 December 2015	125	382	42	113	662
At 31 December 2014	78	244	−	64	386
At 1 January 2014	43	243	−	43	329
The investments in property, plant & equipment in 2016 amounted to £463k (2015: £458k;					2014:

£290k) and mainly related to the acquisitions of IT and office equipment. The additions of 2015 and 2014 essentially related to acquisitions of office furniture and vehicles.

The Ecuphar Group realized a net result on disposals of property, plant and equipment of £0k in 2016 (2015: gain of £7k; 2014: loss of £1k).

No impairment of property, plant and equipment was recorded. Finance leases

The carrying value assets held under finance leases at 31 December 2016 was £37k (2015: £42k; 2014: £0k). Finance leases mainly relate to leased trucks.

Borrowing costs

No borrowing costs were capitalized during any of the years ended 31 December 2016, 2015 and 2014.

9 Inventories

Inventories include the following:

in £'000	For the year ended 31 December			1 January
in £'000	2016	2015	2014	2014
Raw materials	966	768	844	876
Goods purchased for resale	12,288	12,256	5,539	6,060
Total inventories (at cost or net realizable value)	13,254	13,024	6,383	6,936

The amount of inventory recognized as an expense during 2016 amounts to £38,918k (2015: £29,561k; 2014: £23,331k). Inventory write downs during 2016 amounted to £523k (2015: £621k; 2014: £167k).

10 Trade receivables

The trade receivables include the following:

For the year ended 31 December 1 January

in £'000	2016	2015	2014	2014
Trade receivables	10,905	9,825	3,914	3,726
Allowance on trade receivables	(123)	(23)	(25)	(27)
Total	10,781	9,801	3,889	3,699

Trade receivables are non-interest bearing and are generally on payment terms of 30 to 90 days.

As at 31 December 2016, trade receivables of an initial value of £123k (2015: £23k; 2014: £25k) were impaired and fully provided for. The table below shows the changes in the allowance of receivables.

in £'000

At 1 January 2014	(27)
Exchange difference	2
At 31 December 2014	(25)
Reversal impairment	1
Exchange difference	2
Other movement	(1)
At 31 December 2015	(23)
Additional impairments	(102)
Change in consolidation scope	9
Exchange difference	(8)
Other movement	1
At 31 December 2016	(123)

11 Cash and cash equivalents and held to maturity investments Cash and cash equivalents include the following:

For the year ended 31 December 1 January

in £'000	2016	2015	2014	2014
Cash at bank	945	746	958	1,114
Cash equivalents	6	3	8	39
Total	951	749	966	1,153

There were no restrictions on cash during 2016, 2015 or 2014.

12 Equity Share capital

The share capital of the parent company Ecuphar NV consists of 14,174,000 ordinary nominative shares at 31 December 2016 (2015: 14,174,000; 2014: 11,614,000) with no nominal but par value of 0.51 in 2016 (2015: 0.51; 2014: 0.44) for a total amount £7,255k at 31 December 2016

(2015: £7,255k; 2014: £5,148k). in £'000, except share data	Total number of shares	Total share‑ holders' capital	Total share‑ premium
Outstanding at 1 January 2014	11,614,000	5,148	−
Capital increase in cash	−	−	−
Other	−	−	−
Outstanding on 31 December 2014	11,614,000	5,148	−
Capital increase in cash	2,560,000	2,107	8,821
Other
Outstanding on 31 December 2015	14,174,000	7,255	8,821
Capital increase in cash	−	−	−
Other	−	−	−
Outstanding on 31 December 2016	14,174,000	7,255	8,821
Par Value 2016		0.5119
Par Value 2015		0.5119
Par Value 2014		0.4433

During 2015 two capital increases occurred through subscriptions in cash, the first on 15 July 2015 representing 2,500,000 shares for a total consideration £2,068k and the second on 26 October 2015 representing 60,000 shares for a total consideration of £39k. Ordinary shares are not divided into categories.

Share premium

In Belgium, the portion of the capital increase in excess of par value is typically allocated to share premium.

The carrying value of the share premium is £8,821k at 31 December 2016 (2015: £8,821k; 2014: £0k). The change in 2015 of £8,821k is the result of the capital increases explained in the paragraph above.

Other reserves

The nature and purpose of the reserves is as follows:

For the year ended 31 December 1 January

in £'000	2016	2015	2014	2014
Legal reserve	515	515	515	515
Other comprehensive income	2,003	(507)	(354)	−
Other reserves	2,518	8	161	515

The legal reserve is increased by reserving 5% of the yearly Belgian statutory profit until the legal reserve reaches at least 10% of the shareholders' capital. The legal reserve cannot be distributed to the shareholders.

Dividends

The Ecuphar Group paid dividends to its ordinary shareholders during 2016 for an amount of £1,469k (2015: £108k; 2014: £0k).

Non-controlling interest

The non-controlling interest is £2k at 31 December 2016 (2015: £2k; 2014: £2k). This non-controlling interest represents 0.2% of the share capital of Medini NV and 0.02% of Orthopaedics.be NV which are held by third parties.

14 Borrowings

The loans and borrowings include the following:

in £'000 (except if mentioned otherwise)	Interest rate	Maturity	For the year ended 31 December			1 January
in £'000 (except if mentioned otherwise)	Interest rate	Maturity	2016	2015	2014	2014
Investment loan €1,500,000	Euribor
	+1.25%	Aug18	−	421	615	837
Investment loan €750,000	2.52%	Dec16	−	184	391	627
Investment loan €1,500,000	3.97%	Jun18	−	394	586	806
Investment loan €750,000	2.60%	Jan18	−	318	481	−
Investment loan €250,000	2.11%	Dec17	−	94	148	209
Investment loan €2,489,820	3.75%	March16	−	87	371	700
Investment loan €800,800	1.50%	Feb18	−	331	509	−
Investment loan €1,500,000	3.75%	Jul18	−	434	628	851
Investment loan €1,500,000	1.50%	Feb18	−	621	953	−
Investment loan €1,500,000	4.03%	Jun18	−	407	600	821
Investment loan €750,000	2.36%	Dec17	−	276	440	627
Other loans	1.44%		75	250	312	25
Revolving credit facilities	Euribor
	+1.50%	March 22	21,482	−	−	−
Roll over investment facility	Euribor
	+1.50%	March 22	3,176	−	−	−
Straight loans	Euribor
	+2%		−	24,811	4,711	5,981
Other loans			−	−	−	−
			------	------	------	------
Total loans and borrowings			24,733	28,628	10,745	11,484
of which non-current			24,102	2,019	3,837	4,020
current			631	26,609	6,908	7,464

Revolving credit facilities and roll over investment facilities

Mid 2016, the Ecuphar Group refinanced all its outstanding investment loans with different banks. Financing arrangements have been entered into with four Belgian banks. These financing arrangements have been split equally amongst these four banks. The new agreements consist of:

· € 41.5m Revolving credit facilities

· € 10m available acquisition financing

· € 4.08m investment loans

The loans have a variable, EURIBOR based interest rate, increased with a margin of 1.5%. The revolving credit facilities and the acquisition financing have a bullet maturity on March 2022. The investment loans are repaid in 23 monthly instalments.

15 Provisions

Provisions consist of the following:

For the year ended 31 December 1 January

in £'000	2016	2015	2014	2014
Provisions for redundancy	20	−	−	−
Provisions for risks and charges	196	25	8	−
Total	216	25	8	−

Provisions for risks and charges amount to £196k at 31 December 2016 (2015: £25k; 2014: £8k) and relate to various obligations which are not individually significant.

The assessment of the accounting treatment of the Belgian employee benefit contribution plans with a minimal guaranteed return was based on actuarial calculations which resulted in an immaterial impact as only a limited number of individuals can benefit from the plan and given the limited fixed amount which is being covered per covered individual. No provision has been recognized as of 31 December 2016, 2015 and 2014. As a result no further disclosures have been provided.

16 Deferred income and accrued charges

Deferred income and accrued charges consists of the following:

For the year ended 31 December

in £'000	2016	2015	2014
Accrued charges	806	194	129
Deferred income	6	93	−
Other	−	(1)	−
Total	812	286	129

Accrued charges mainly relate to accrued management bonuses in Ecuphar NV for £350k and several accrued charges in Ecuphar Veterinaria for an amount of £318k.

17 Other current liabilities

Other current liabilities include the following:

in £'000	For the year ended 31 December			1 January
in £'000	2016	2015	2014	2014
Payroll-related liabilities	572	683	253	281
Other	−	−	1	−
Other current liabilities	1,665	905	1,903	1,257
Total	2,237	1,588	2,157	1,538

Other current liabilities mainly relate to an outstanding payable at year-end for expected contractual pay-outs under a license agreement, amounting to £1,655k at 31 December 2016 (2015: £892k; 2014: £1,896k; 1 January 2014: £1,255k).

18 Fair value

Financial assets

The carrying value and fair value of the financial assets for 31 December 2016, 2015 and 2014 can be presented as follows:

		Carrying value				Fair value
in £'000	2016 ---------	2015 ---------	2014 ---------	1 Jan 2014	2016 ---------	2015 ---------	2014 ---------	1 Jan 2014
in £'000	2016 ---------	2015 ---------	2014 ---------		2016 ---------	2015 ---------	2014 ---------
Financial assets measured at fair value
Assets available for sale at
FV through OCI	423	1	1	−	423	1	1	−
Loans and receivables measured at amortized cost
Trade and other receivables (current)	11,737	11,032	4,166	4,001	11,737	11,032	4,166	4,001
Other financial assets (non-current)	69	68	52	96	69	68	52	96
Other current assets	1,191	1,330	300	346	1,191	1,330	300	346
Cash & cash equivalents	951	749	966	1,154	951	749	966	1,154
	--------	--------	--------	-------- --------		--------	--------	--------
Total loans and other receivables	13,948	13,179	5,484	5,597 -------- -------- -------- -------- -------- -------- -------- --------	13,948	13,179	5,484	5,597

The fair value of the financial assets has been determined on the basis of the following methods and assumptions:

· The carrying value of the cash and cash equivalents and the current receivables approximate their fair value due to their short term character;

· The fair value of the financial assets at fair value through other comprehensive income is derived from market observable data, namely stock and foreign exchange market data (level 1 inputs). The Ecuphar Group has no financial instruments carried at fair value in the statement of financial position on 31 December 2016 except for an investment in a company through publicly listed shares. The fair value of this investment is determined based on level 1 inputs.

· Trade and other receivables are being evaluated on the basis of their credit risk and interest rate. Their fair value is not different from their carrying value on 31 December 2016, 2015 and 2014.

Financial liabilities:

The carrying value and fair value of the financial liabilities for 31 December 2016, 2015 and 2014 can be presented as follows:

in £'000		Carrying value
in £'000	2016	2015	2014		1 Jan 2014
Financial liabilities measured at amortized cost
Borrowings	24,733	28,629	10,745		11,484
Trade payables	10,012	8,406	3,512		3,433
Other liabilities	4,822	2,848	2,674		2,065
Total financial liabilities measured at amortized cost	39,567	39,883	16,931		16,982
Financial liabilities measured at fair value
Derivative financial instruments at
FV through PL	−	16	30		41
Total financial liabilities measured at fair value	−	16	30		41
Total non-current	24,102	2,035	3,867		4,061
Total current	15,465	37,848	13,064		12,921
in £'000		Fair value
in £'000	2016	2015		2014	1 Jan 2014
Financial liabilities measured at amortized cost
Borrowings	24,733	28,629		10,745	11,484
Trade payables	10,012	8,406		3,512	3,433
Other liabilities	4,822	2,848		2,674	2,065
Total financial liabilities measured at amortized cost	39,567	39,883		16,931	16,982
Financial liabilities measured at fair value
Derivative financial instruments at
FV through PL	−	16		30	41
Total financial liabilities measured at fair value	−	16		30	41
Total non-current	24,102	2,035		3,867	4,061
Total current	15,465	37,848		13,064	12,921

The fair value of the financial liabilities has been determined on the basis of the following methods and assumptions:

· The carrying value of trade payables and other liabilities approximates their fair value due to the short term character of these instruments;

· Loans and borrowings are evaluated based on their interest rates and maturity date. Most interest bearing debts have floating interest rates and their fair value approximates to their amortized cost value.

Fair value hierarchy

The Ecuphar Group has no financial instruments carried at fair value in the statement of financial position on 31 December 2016 except for an investment in a company through publicly listed shares. The fair value of this investment is a level 1 fair value.

19 Segment information

For management purposes, the Ecuphar Group is organized into two segments: the Pharmaceuticals and the Wholesale segment.

The Pharmaceutical segment is active in the development and marketing of innovative pharmaceutical products that provide significant benefits to animal health.

The Wholesale segment focusses on the sale of veterinary pharmaceuticals, supplies and instruments in the Belgian market.

The measurement principles used by the Ecuphar Group in preparing this segment reporting are also the basis for segment performance assessment. The Chief Executive Officer of the Ecuphar Group acts as the chief operating decision maker. As a performance indicator, the chief operating decision maker controls the performance by the Ecuphar Group's revenue, gross margin, REBITDA and EBITDA. EBITDA is defined by the Ecuphar Group as net profit plus finance expenses, less financial income, plus income taxes and deferred taxes, plus depreciation, amortization and impairment. REBITDA equals EBITDA plus non-recurring expenses, less non-recurring income.

The following table summarizes the segment reporting for each of the reportable periods ended 31 December. As management's controlling instrument is mainly revenue-based, the reporting information does not include assets and liabilities by segment and is as such not available per segment.

in £'000 For the year ended 31 December 2016		Ecuphar Pharma		Wholesales		Total segments		Adjustments & eliminations		Consolidated

Revenues		48,355		21,831		70,186		(1,825)		68,361
	Gross Margin		26,007		2,272		28,279		(4)	28,275
Gross Margin %		54%		10%		40%				41%
Segment REBITDA		8,420		485		8,905		8		8,913
Segment REBITDA %		17%		2%		13%				13%
Segment EBITDA		10,235		484		10,719		8		10,727
Segment EBITDA %		21%		2%		15%				16%
For the year ended 31 December
	2015
Revenues		30,542		17,987		48,529		(1,432)		47,097
Gross Margin		14,628		1,906		16,534		(3)		16,531
Gross Margin %		48%		11%		34%				35%
Segment REBITDA		4,501		318		4,819		3		4,822
Segment REBITDA %		15%		2%		10%				10%
Segment EBITDA		3,125		319		3,444		3		3,447
Segment EBITDA %		10%		2%		7%				7%
For the year ended 31 December
2014
Revenues		15,708		20,393		36,101		(1,623)		34,478
Gross Margin		8,445		2,193		10,638		(2)		10,636
Gross Margin %		54%		11%		29%				31%
Segment REBITDA		3,844		379		4,223		(2)		4,221
Segment REBITDA %		24%		2%		12%				12%
Segment EBITDA		3,546		379		3,925		(2)		3,923
Segment EBITDA %		23%		2%		11%				11%

The segment EBITDA is reconciled with the consolidated net profit (loss) of the year as follows:

in £'000	For the year ended 31 December
in £'000	2016	2015	2014
Segment EBITDA	10,727	3,447	3,923
Depreciation, amortization and impairment	(4,690)	(3,745)	(2,319)
Operating (loss) profit	6,037	(298)	1,604
Financial expenses	(988)	(668)	(341)
Financial income	97	74	46
Income taxes	(1,305)	(537)	(466)
Deferred taxes	(327)	735	53
Net (loss) profit	3,515	(694)	896

Non-current assets excluding deferred tax assets and financial instruments located in Belgium, Spain and other geographies are as follows:

	For the year ended 31 December			1 January
	2016	2015	2014	2014
Belgium	21,378	19,435	8,035	8,014
Spain	2,229	1,827	−	−
Portugal	3,913	3,371	−	−
Other	4,474	4,486	1,765	2,067
Non-current assets excluding deferred tax assets and financial instruments	31,994	29,119	9,800	10,081

Entity-wide disclosures

We refer to the Note 20.1 for the revenue by geographical area, based on location of the customer. The total revenue realized in the country of domicile (Belgium) amounts to £27,797k in 2016 (2015: £23,213k; 2014: £26,399k).

20 Income and expenses 20.1 Revenue Revenue by geographical area is presented in £'000		as follows: For the year ended 31 December
		2016		2015		2014
Europe		67,842		46,546		33,977
Belgium		27,797		23,213		26,399
	The Netherlands		1,434		1,277		1,308
United Kingdom		2,516		1,906		969
Germany		6,714		3,840		3,358
Spain		18,695		10,215		197
	Italy		3,559		1,930		111
	Portugal		4,044		2,262		96
	European Union - other		3,083		1,903		1,539
Asia		309		284		308
Middle East Africa		5		21		157
Other		205		246		36
Total		68,361		47,097		34,478

The Ecuphar Group has no customers with individual sales larger than 10% of the total revenue.

The revenue by category is presented as follows: in £'000	For the year ended 31 December
The revenue by category is presented as follows: in £'000	2016	2015	2014
Product sales	67,656	46,081	33,928
Services sales	705	296	550
Total	68,361	47,097	34,478

The revenue by product category is presented as follows: in £'000		For the year ended 31 December
		2016		2015		2014
Companion animals		30,799		20,092		14,027
Production animals		22,668		15,353		8,796
	Horses		5,567		3,522		2,166
	Other		9,327		8,130		9,489
Total		68,361		47,097		34,478

Other product sales represent sales of wholesale products unrelated to companion animals, production animals or horses as well as sales of equipment.

20.2 Cost of sales

Cost of sales includes the following expenses: in £'000		For the year ended 31 December
		2016		2015		2014
Purchase of goods and services		38,917		29,561		23,331
Inventory & other write-downs		682		669		228
	Payroll expenses		242		198		141
	Other expenses		245		138		143
Total		40,086		30,566		23,842

20.3 Research and development expenses

Research and development expenses include the following expenses: in £'000		For the year ended 31 December
		2016	2015		2014
Amortization and depreciation		269	159		(73)
Payroll expenses		1,507	905		35
	Other	−		−		−
Total		1,776	1,064		284

20.4 Selling and marketing expenses

Selling and marketing expenses include the following expenses:

in £'000	For the year ended 31 December
in £'000	2016	2015	2014
Transport costs sold goods	907	416	473
Promotion costs	2,002	1,095	312
Payroll expenses	6,081	4,913	2,368
Amortization and depreciation	23	20	9
Other	727	238	228
Total	9,740	6,682	3,390

20.5	General and administrative expenses General and administrative expenses include the following expenses: For the year ended 31 December
	in £'000	2016	2015	2014
	Amortization and depreciation	3,962	2,917	2,280
	Payroll expenses	3,448	1,286	739
	Other	5,197	4,535	2,062
	Total	12,607	8,738	5,081
20.6	Net other operating income (expense)
	The net other operating income (expense) can be detailed as follows:

in £'000	For the year ended 31 December
in £'000	2016	2015	2014
Re-invoicing costs	11	639	20
Gains/losses on disposals of fixed assets	−	7	4
Other operating income	2,453	245	18
Impairments	(29)	(145)	−
Other operating expenses	(548)	(1,091)	(319)
Total	1,887	(345)	(277)

Other operating income for 2016 mainly relates to a gain of £2,432k on the sale of Nutriscience Ltd on 31 October 2016. Impairments were recorded in 2016 and 2015 on certain intangible assets for £29k and £145k respectively.

Other operating expenses incurred during 2016 mostly relate to the loss on disposal of intangibles related to Nutriscience Ltd and Sogeval.

20.7 Expenses by nature

Expenses by nature for the period 31 December 2016

in £'000				For the year ended 31 December 2016
		Research and development expenses		Sales and marketing expenses		General & administrative expenses		Other operating (income)/ expense, net		Total
Rentals		−		295		1,070		−		1,365
Maintenance and repair		−		58		275		−		333
Personnel expenses		1,507		6,081		3,448		−		11,036
Utilities		−		−		58		−		58
Travel and representation		−		−		973		−		973
Transport costs goods sold		−		1,046		−		−		1,046
Car expenses		−		−		162		−		162
Promotion costs		−		2,207		−		−		2,207
Office expenses		−		−		292		−		292
Fees		−		−		1,909		−		1,909
Insurance		−		26		140		−		166
Depreciation & amortization		269		23		3,962		−		4,254
Fixed assets retirements		−		−		−		−		−
	Re-invoicing costs		−		−		−		(11)	(11)
Extraordinary depreciation and amortization		−		−		−		29		29
Gain on sale Nutriscience		−		−		−		(2,676)		(2,676)
Other				4		318		771		1,093
------- Expenses by nature for the period 31 December 2015 Total expenses		1,776		9,740		12,607		(1,887)		22,236
------- in £'000				For the year ended 31 December 2015
		Research and development expenses		Sales and marketing expenses		General & administrative expenses		Other operating (income)/ expense, net		Total
Rentals		−		2		604		−		606
Maintenance and repair		−		34		91		−		125
Personnel expenses		905		4,913		1,286		−		7,104
Utilities		−		−		35		−		35
	Travel and representation		−		−		350		−	350
Transport costs goods sold		−		468		−		−		468
Car expenses		−		−		110		−		110
Promotion costs		−		1,182		−		−		1,182
Office expenses		−		−		139		−		139
Fees		−		−		3,097		−		3,097
Insurance		−		15		89		−		104
Depreciation & amortization		159		20		2,917		−		3,096
Fixed assets retirements		−		−		−		(7)		(7)
Re-invoicing costs		−		−		−		(684)		(684)
Extraordinary depreciation and amortization		−		−		−		145		145
Other		−		48		20		891		959
Total expenses		1,064		6,682		8,738		345		16,829

Expenses by nature for the period 31 December 2014

------- in £'000		For the year ended 31 December 2014
------- in £'000	Research and development expenses	Sales and marketing expenses	General & administrative expenses	Other operating (income)/ expense, net	Total
Rentals	−	(1)	469	−	468
Maintenance and repair	−	45	78	−	123
Personnel expenses	357	2,368	739	−	3,464
Utilities	−	−	48	−	48
Travel and representation	−	−	132	−	132
Transport costs goods sold	−	535	−	−	535
Car expenses	−	−	89	−	89
Promotion costs	−	363	−	−	363
Office expenses	−	−	127	−	127
Fees	−	−	1,003	−	1,003
Insurance	−	18	79	−	97
Depreciation & amortization	(73)	9	2,280	−	2,216
Fixed assets retirements	−	−	−	(4)	(4)
Re-invoicing costs	−	−	−	(20)	(20)
Extraordinary depreciation and amortization	−	−	−	−	−
Other	−	53	37	301	391
Total expenses	284	3,390	5,081	277	9,032

20.8 Payroll expenses The following table shows the breakdown of payroll expenses for 2016, 2015 and 2014: For the year ended 31 December
in £'000		2016	2015	2014
Gross employee benefits		8,421	5,521	2,582
Social security expenses		1,875	1,221	680
Other employee expenses		982	560	343
Total		11,278	7,302	3,605
Average registered employees during the period		179	155	83
20.9 Financial expenses
Financial expenses includes the following elements:
in £'000	For the year ended 31 December
in £'000	2016		2015	2014
Interest expense	663		498	287
Foreign currency losses	81		81	28
Change in fair value - losses on financial instruments	−		−	−
Other financial expenses	244		89	26
Total	988		668	341

20.10 Financial income

Financial income includes the following elements:

in £'000	For the year ended 31 December
in £'000	2016	2015	2014
Foreign currency exchange gains	28	49	32
Change in fair value - gains on financial instruments	18	12	9
Other financial income	51	13	5
Total	97	74	46

20.11 Income taxes

Current income tax

The following table shows the breakdown of the tax expense for 2016, 2015 and 2014:

in £'000	For the year ended 31 December
in £'000	2016	2015	2014
Current tax expense for the period	(1,384)	(533)	(488)
Tax adjustments to the previous period	30	−	−
Other	49	(4)	22
Total tax income (loss) for the period	(1,305)	(537)	(466)

The current tax expense is equal to the amount of income tax owed to the tax authorities for the year, under the applicable tax laws and rates in effect in the various countries.

Deferred tax

Deferred tax is presented in the statement of financial position under non-current assets and non-current liabilities, as applicable. The following table shows the breakdown of the deferred tax assets, deferred tax liability and the deferred tax expense for 2016, 2015, and 2014:

	Statement of financial position							Statement of comprehensive income
in £'000		At 31 December		At 1 January				For the year ended 31 December
	2016	2015		2014			2014	2016		2015	2014
Goodwill	44	91		(13)			−	59		23	13
Intangible assets	175	194		149			372	44		(495)	192
Property, plant & equipment	13	2		−			−	(11)		(1)	−
Financial fixed assets	1	1		1			−	−		−	−
Inventory	43	26		(4)			1	(18)		(141)	6
Trade an other payables	565	759		645			426	302		(151)	(253)
Accruals & deferred income	173	103		26			4	(51)		(78)	(23)
Derivatives	−	6		10			14	6		4	3
Tax losses carry forward	255	58		142			152	(182)		19	12
Total deferred tax assets	1,269	1,240		956			969	149		(820)	(50)
in £'000	At 31 December					At 1 January		For the year ended 31 December
	2016		2015		2014	2014		2016	2015			2014
Goodwill	(264)		(98)		−	−		145	90			−
Intangible assets	−		−		−	(15)		−	−			(3)
Financial fixed assets	−		−		−	1		−	−			−
Inventory	3		−		(1)	(1)		3	(7)			−
Borrowings	−		23		−	−		26	(23)			−
Tax losses carry forward	37		31		−	13		4	25			−
Total deferred tax liabilities	(224)		(44)		(1)	(2)		178	85			(3)
Total deferred tax expense (income)								327	(735)			(53)

The Ecuphar Group has unused tax losses, tax credits and notional interest deduction available in an amount of £1,045k for 2016 (2015: £291k; 2014: £461k).

Deferred tax assets have been recognized on all available tax loss carry forwards, resulting in amounts recognized of £292k (2015: £89k; 2014: £142k). This was based on management's estimate that sufficient positive taxable basis will be generated in the near future for the related legal entities with fiscal losses.

The Ecuphar Group has unrecognized temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not been recognized in an amount of £5,155k (2015: £4,822k; 2014: £3,847k). The corresponding deferred tax liability would be minor because of the dividend received deduction regime applicable in Belgium.

Relationship between Tax Expense and Accounting Profit

	For the year ended 31 December
in £'000	2016	2015	2014
Profit (loss) before tax	5,147	(893)	1,309
Income tax at weighted average tax rate	(1,310)	339	(376)
Non-deductible expenses	(90)	(49)	(19)
Other tax credits and tax deductions	62	18	32
Other permanent tax differences	(73)	(69)	(78)
Other	(29)	(41)	28
Changes in statutory enacted tax rate	(68)	−	−
Withholding taxes on acquisition treasury shares	(154)	−	−
Prior year tax adjustments	30	−	−
Income tax expense as reported in the consolidated income statement	(1,632)	198	(413)

21 Earnings per share

Basic earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary equity holders of the parent company by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holder of the parent company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all warrants.

The net profit for the year used for the basic and diluted earnings per share are reconciled as follows:

in £'000 Net profit attributable to ordinary equity holders	For the year ended 31 December
	2016	2015	2014

of the parent for basic earnings	3,515	(694)	896
Dilutive effects	−	−	−
Net profit attributable to ordinary equity holders of the parent adjusted for the effect of dilution	3,515	(694)	896

The following reflects the share data used in the basic and diluted earnings per share computations:

	For the year ended 31 December
	2016	2015	2014
Weighted average number of ordinary shares for basic earnings per share	13,957,720	12,566,103	11,471,249
Effect of dilution:
	−	−	−
	−	−	−
Weighted average number of ordinary shares adjusted for effect of dilution	13,957,720	12,566,103	11,471,249
The earnings per share are as follows:
	For the year ended 31 December
	2016	2015	2014
Earnings per share attributable to ordinary owners of the parent
Basic	0.25	(0.06)	0.08
Diluted	0.25	(0.06)	0.08

22 Commitments and contingent liabilities

Operating lease commitments

The Ecuphar Group has operating lease commitments mainly related to buildings as follows:

in £'000	For the year ended 31 December
in £'000	2016	2015	2014
Within one year	510	352	226
Between two and three years	884	339	30
Between four and five years	678	325	−
More than 5 years	687	26	−
Total	2,759	1,042	256

The total operating lease payments recognized in the consolidated income statement are £1,365k in 2016 (2015: £606k; 2014: £468k).

Finance lease commitments

The Ecuphar Group has finance leases for the building and various other items of plant and equipment. Future minimum lease payments under finance lease with the present value of the net minimum lease payments are, as follows:

	31 December 2016		31 December 2015		31 December 2014
in £'000	Minimum lease payments	Present value of payments	Minimum lease payments	Present value of payments	Minimum lease payments	Present value of payments
Within one year	25	26	21	22	−	−
Between two and three years	40	41	44	45	−	−
Between four and five years	8	8	19	20	−	−
More than five years	−	−	−	−	−	−
Total	73	75	84	87	−	−
Less finance charges	2	−	3	−	−	−
Present value of minimum lease payments	75	75	87	87	−	−
23 Risks

In the exercise of its business activity the Ecuphar Group is exposed to credit, liquidity and market risks.

Credit risk

As at 31 December 2016 the Ecuphar Group's maximum exposure to credit risk is £10,781k, which is the amount of the trade receivables in the consolidated accounts (2015: £9,801k; 2014: £3,889k).

To control this risk, the Ecuphar Group has set up a strict credit collection process. Historically, no major bad debts have been recorded. The Ecuphar Group has no individual customers who represent a significant part of the consolidated turnover, nor of the trade receivables at year-end.

The following is an ageing schedule of trade receivables:

in £'000	Total	Non-due	< 30 days	31-60 days	61-90 days	91-180 days	> 181 days
31 December 2016	10,781	9,966	710	25	44	10	26
31 December 2015	9,801	9,260	474	46	9	−	12
31 December 2014	3,889	3,221	237	169	29	212	21
1 January 2014	3,699	2,698	785	101	(2)	(2)	119

Liquidity risk

Liquidity risk is the risk that the company may not be able to meet its financial obligations as they fall due. The Ecuphar Group expects to meet its obligations related to the financing agreements through operating cash flows. Additionally, the Ecuphar Group ensures there is sufficient headroom on the existing credit lines to have an additional working capital buffer. At 31 December 2016 the Ecuphar Group had the following sources of liquidity available:

Cash and cash equivalents: £423k

Undrawn credit facilities with a several banks: £13,895k

Undrawn acquisition financing: £8,525k

The table below provides an analysis of the maturity dates of the financial liabilities:

in £'000 At 31 December 2016	< 1 year	1 to 3 years	4-5 years	> 5 years	Total
in £'000 At 31 December 2016
Borrowings	631	1,259	1,210	21,633	24,733
Trade payables	10,012	−	−	−	10,012
Other current liabilities	2,237	−	−	−	2,237
Total	12,880	1,259	1,210	21,633	36,982

in £'000 At 31 December 2015	< 1 year	1 to 3 years	4-5 years	> 5 years	Total
in £'000 At 31 December 2015
Borrowings	26,609	2,019	−	−	28,628
Trade payables	8,406	−	−	−	8,406
Other current liabilities	1,588	−	−	−	1,588
Total	36,603	2,019	−	−	38,622

in £'000 At 31 December 2014	< 1 year	1 to 3 years	4-5 years	> 5 years	Total
in £'000 At 31 December 2014
Borrowings	6,908	3,258	579	−	10,745
Trade payables	3,512	−	−	−	3,512
Other current liabilities	2,157	−	−	−	2,157
Total	12,577	3,258	579	−	16,414

in £'000 At 1 January 2014	< 1 year	1 to 3 years	4-5 years	> 5 years	Total
in £'000 At 1 January 2014
Borrowings	7,464	2,643	1,377	−	11,484
Trade payables	3,433	−	−	−	3,433
Other current liabilities	1,538	−	−	−	1,538
Total	12,435	2,643	1,377	−	16,455

The Parent Company has an international cash pool with different banks to limit excess cash. The Parent Company closely monitors cash balances within the group and uses short term withdrawals on the credit lines to minimize the cash balances.

Foreign exchange risk

Given the fact that the Ecuphar Group operates in the Eurozone the functional currency is determined to be the Euro. Given its Euro functional currency and the fact that most transactions occur in that currency, foreign currency transactional risks are deemed to be limited.

Transactional exposures are mainly related to the USD. During 2016, 2015 and 2014, the fluctuations in the USD did not have a significant impact on the operating profit of the Ecuphar Group. In view of the limited exposure, no foreign currency hedging has been entered into. If the USD had increased (decreased) by 10% during 2016, the 2016 operating profit for that year would have been £163k lower (higher).

The cumulative effect of the foreign currency translation effects is reported under other comprehensive income in the statement of financial position and amounts to £2,003k (2015: £(507)k; 2014: £(354)k).

Interest rate risk

The maturity dates and interest rates of the financial debts and liabilities are detailed in Note 14. The exposure to interest rate risks is mainly related to existing borrowing facilities. The current loans of credit institutions have variable interest rates. There are no significant differences between the nominal interest rates as listed in Notes 14 and the effective interest rates of the loans.

If the interest rates had been 100 basis points higher (lower), the financial result would have been £287k lower (higher) in 2016, £205k lower (higher) in 2015 and £50k lower (higher) in 2014.

Capital management

The primary objective of the Ecuphar Group's shareholders' capital management strategy is to ensure it maintains healthy capital ratios to support its business and maximize shareholder value. Additionally, minimum solvency ratios are agreed upon in the financing agreements. Capital is defined as the Ecuphar Group shareholders' equity which amounts to £19,853k at 31 December 2016 (2015: £15,297k; 2014: £5,323k).

The Ecuphar Group consistently reviews its capital structure and makes adjustments in light of changing economic conditions and performances of the Ecuphar Group. The Ecuphar Group made no changes to its capital management objectives, policies or processes during the years ended 31 December 2016, 2015 and 2014.

24 Related party transactions

This disclosure provides an overview of all transactions with related parties.

Transactions between the Parent Company and its subsidiaries, which are related parties, are eliminated in the consolidated account and no information is provided hereon in this section.

Ecuphar NV is controlled by MC³ Health NV, which currently holds approximately 96% of the Ecuphar shares. The two shareholders of MC³ Health NV are Ecuphar Invest NV (with ultimate controlling party Chris Cardon) and Alychlo NV (with ultimate controlling party Marc Coucke). Both Ecuphar Invest NV and Alychlo NV hold 50% of the MC³ Health NV shares.

The compensation of key management personnel of the Ecuphar Group is as follows:

in £'000	For the year ended 31 December
in £'000	2016	2015	2014
Short-term employee benefits	1,513	825	603
Post-employment benefits	−	−	−
Termination benefits	−	−	−
Total	1,513	825	603

The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related to key management personnel.

Directors of the Parent Company are:

Bellevue NV (being a company controlled by Chris Cardon)

Business Contact International BVBA Alychlo NV

Mylecke Management, Art & Invest NV

The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:

in £'000				Fees paid to		Liabilities
Non-executive directors of the Ecuphar Group
2016 2015 2014 Shareholders of the Group 2016 2015 2014 26 Overview of consolidated entities					38 − − 60 − − Equity interest %		− − − − − −
			2016		2015		2014
Name	Country of incorporation
Ecuphar NV	Belgium		100%		100%		100%
Medini NV	Belgium		99.8%		99.8%		99.8%
Orthopaedics.be NV	Belgium		99.98%		99.98%		99.98%
Ecuphar BV	The Netherlands		100%		100%		100%
Ecuphar Veterinary Products BV	The Netherlands		100%		100%		100%
Ornis SA	France		100%		100%		100%
Nutriscience Ltd	Ireland		0%		100%		100%
Ecuphar GmbH		Germany	100%		100%		100%
Euracon Pharma Consulting und Trading GmbH	Germany		100%		100%		100%
Ecuphar Veterinaria SA	Spain		100%		100%		0%
Ecuphar Italia		Italy	100%		100%		0%
Belphar	Portugal		100%		100%		0%
27 First time adoption

The accounting policies set out in Note 3 have been applied in preparing the Ecuphar Group's consolidated special purpose financial statements for the year ended 31 December 2016, the comparative information presented in these financial statements for the year ended 31 December 2015 and 31 December 2014 and in the preparation of an opening IFRS balance sheet at 1 January 2014 (the Parent Company's date of transition), as required by IFRS 1.

The Ecuphar Group previously prepared consolidated financial statements in accordance with Belgian GAAP.

Set out below are the applicable mandatory exceptions and exemption elections in IFRS 1 applied in preparing the Parent Company's first financial statements under IFRS:

IFRS mandatory exceptions

The applicable mandatory exceptions in IFRS 1 applied in preparing the Parent Company's first financial statements under IFRS are as follows:

Estimates

An entity's estimates in accordance with IFRS at the date of transition shall be consistent with estimates made for the same date in accordance with its previous assertions made for its internal financial information purposes, unless there is objective evidence that those estimates were in error.

The Parent Company has considered such information about historic estimates and has treated the receipt of any such information in the same way as non-adjusting events after the reporting period in accordance with IAS 10 "Events after the Reporting Period", thus ensuring IFRS estimates as at 1 January 2012 are consistent with the estimates as at the same date made previously.

The other compulsory exceptions to IFRS 1 have not been applied as these are not relevant to the Parent Company or have not been early adopted:

Hedge accounting;

De-recognition of financial assets and financial liabilities;

Non-controlling interests;

Embedded derivatives;

Classification and measurement of financial assets; and

Government grants.

As the Parent Company has not early adopted IFRS 9: Financial Instruments, it has not considered the application of the compulsory exception for classification and measurement of financial assets.

IFRS exemption elections

The Ecuphar Group has applied the following optional exemptions when preparing the IFRS consolidated financial statements for the first time:

The Ecuphar Group has applied the exemption as provided in IFRS 1 First-time Adoption of International Financial Reporting Standards on non-application of IFRS 3, Business Combinations to business combinations consummated prior to 1 January 2014 (date of transition).

The Ecuphar Group has applied the transitional provisions in IFRIC 4 "Determining whether an Arrangement contains a Lease" and determined whether an arrangement existing at the date of transition to IFRSs contains a lease on the basis of facts and circumstances existing at that date.

Reclassifications

Several reclassifications between Belgian GAAP and IFRS have been made in order to reconcile the presentation format for Belgian GAAP purposes to IFRS. The expenses in the consolidated statement of profit & loss under Belgian GAAP is presented by nature while under IFRS by function. In addition, exceptional income and costs are presented separately under Belgian GAAP while this is not allowed under IFRS. The column "reclasses" in the following tables include all such reclassifications.

Reconciliation of statement of financial position from Belgian GAAP to IFRS Consolidated statement of financial position as at 1 January 2014

							Adjustments BE		Effect of transition to IFRS
									Effect of transition		GBP
in £'000, except if otherwise mentioned		Comment note -------	BE GAAP euros		Reclasses euros		GAAP euros		to IFRS euros		presentation currency		IFRS

Assets
Non-current assets
Goodwill		{a}, {b}	3,642		(978)		−		−		(435)		2 229
Intangible assets		{a}, {c}	11,255		978		−		(3,355)		(1,453)		7,425
Property, plant & equipment			395		−		−		−		(65)		330
Investments in joint ventures			−		−		−		−		−		−
Deferred tax assets		{d}	−		−		−		1,158		(189)		969
Other financial assets			115		−		−		−		(19)		96
Other non-current assets			−		−		−		−		−		−
Derivative financial assets			−		−		−		−		−		−
			-------		-------		-------		-------		-------		-------
Total non-current assets			15,407		−		−		(2,197)		(2,161)		11,049
			-------		-------		-------		-------		-------		-------
Current assets
Inventories		{e}	8,289		−		−		4		(1,356)		6,937
Trade receivables			4,422		−		−		−		(723)		3,699
Held to maturity investments		{f}	36		(36)		−		−		−		−
Derivative financial assets			−		−		−		−		−		−
Other current assets			414		−		−		−		(68)		346
Cash and cash equivalents			1,379		−		−		−		(225)		1,154
			-------		-------		-------		-------		-------		-------
Total current assets			14,540		(36)		−		4		(2,372)		12,136
			-------		-------		-------		-------		-------		-------
Total assets			29,947 -------		(36) -------		− -------		(2,193) -------		(4,533) -------		23,185 -------
Equity and liabilities
Equity
Equity attributable to the owners of the parent			10,146		964		−		(3,744)		(1,207)		6,159
Non-controlling interest			1		−		−		−		−		1
			-------		-------		-------		-------		-------		-------
Total equity			10,147		964		−		(3,744)		(1,207)		6,160
			-------		-------		-------		-------		-------		-------
Non-current liabilities
Loans & borrowings			4,806		−		−		−		(786)		4,020
Deferred tax liabilities		{d}	−		−		−		2		−		2
Derivative financial liability		{g}	−		−		−		49		(8)		41
Other non-current liabilities			−		−		−		−		−		−
			-------		-------		-------		-------		-------		-------
Total non-current liabilities			4,806		−		−		51		(794)		4,063
			-------		-------		-------		-------		-------		-------
Current liabilities
Loans & borrowings			8,922		−		−		−		(1,458)		7,464
Trade payables			4,103		−		−		−		(670)		3,433
	Tax payables			358		−		−		−		(59)		299
Derivative financial liability			−		−		−		−		−		−
Deferred income			272		−		−		−		(44)		228
Other current liabilities		{h}, {i}	1,339		(1,000)		−		1,500		(301)		1,538
			-------		-------		-------		-------		-------		-------
Total current liabilities			14,994		(1,000)		−		1,500		(2,532)		12,962
			-------		-------		-------		-------		-------		-------
Total equity and liabilities			29,947		(36)		−		(2,193)		(4,533)		23,185

Consolidated statement of financial position as at 31 December 2014

							Adjustments BE		Effect of transition to IFRS
									IFRS		GBP
in £'000,		Comment	BE GAAP		Reclasses		GAAP		adjustments presentation
except if mentioned otherwise		note -------	euros		euros		euros		euros			currency			IFRS

Assets
Non-current assets
Goodwill		{a}, {b}	2,916		(838)		−		585			(580)			2,083
Intangible assets		{a}, {c}	11,214		838		−		(2,743)			(2,030)			7,279
Property, plant & equipment			493		−		−		−			(107)			386
Investments in joint ventures			−		−		−		−			−			−
Deferred tax assets		{d}	−		−		−		1,223			(267)			956
Other financial assets			67		−		−		−			(15)			52
Other non-current assets			−		−		−		−			−			−
Derivative financial assets			−		−		−		−			−			−
			-------		-------		-------		-------			-------			-------
Total non-current assets			14,690		−		−		(935)			(2,999)			10,756
			-------		-------		-------		-------			-------			-------
Current assets
Inventories		{e}	8,150		−		−		13			(1,780)			6,383
Trade receivables			4,973		−		−		−			(1,084)			3,889
Held to maturity investments		{f}	837		(837)		−		−			−			−
Financial investments			1		−		−		−			−			1
Other current assets			384		−		−		−			(84)			300
Cash and cash equivalents			1,235		−		−		−			(269)			966
			-------		-------		-------		-------			-------			-------
Total current assets			15,580		(837)		−		13			(3,217)			11,539
			-------		-------		-------		-------			-------			-------
Total assets			30,270		(837)		−		(922)			(6,216)			22,295
			-------		-------		-------		-------			-------			-------
Equity and liabilities
Equity
Equity attributable to the owners of the parent			10,897		(704)		−		(3,386)			(1,484)			5,323
Non-controlling interest			2		−		−		−			−			2
			-------		-------		-------		-------			-------			-------
Total equity			10,899		(704)		−		(3,386)			(1,484)			5,325
			-------		-------		-------		-------			-------			-------
Non-current liabilities
Loans & borrowings			4,907		−		−		−			(1,070)			3,837
Deferred tax liabilities		{d}	−		−		−		1			−			1
Derivative financial liability		{g}	−		−		−		38			(8)			30
Other non-current liabilities			10		−		−		−			(2)			8
Total non-current liabilities			4,917		−		−		39			(1,080)			3,876
			-------		-------		-------		-------			-------			-------
Current liabilities
Loans & borrowings			8,834		−		−		−			(1,926)			6,908
Trade payables			4,492		−		−		−			(980)			3,512
Tax payables			496		−		−		−			(108)			388
Derivative financial liability			−		−		−		−			−			−
	Deferred income			165		−		−		−				(36)		129
Other current liabilities		{h}, {i}	467		(133)		−		2,425				(602)		2,157
			-------		-------		-------		-------				-------		-------
Total current liabilities			14,454		(133)		−		2,425				(3,652)		13,094
			-------		-------		-------		-------				-------		-------
Total equity and liabilities			30,270		(837)		−		(922)				(6,216)		22,295

Consolidated statement of financial position as at 31 December 2015

				Effect of transition to IFRS
				Adjustments
				BE	IFRS		GBP
in £'000, except otherwise mentioned	Comment note -------	BE GAAP euros	Reclasses euros	GAAP euros	adjustments euros		presentation currency	IFRS
in £'000, except otherwise mentioned	Comment note -------
Assets
Non-current assets
Goodwill	{a}, {b}, {k}	12,621	(650)	−	223	(3,220)		8,974
Intangible assets	{a}, {c}, {k}	28,513	650	−	(2,780)	(6,968)		19,415
Property, plant & equipment		899	−	−	−	(237)		662
Investments in joint ventures		−	−	−	−	−		−
Deferred tax assets	{d}, {k}	−	−	−	1,685	(445)		1,240
Other financial assets		92	−	−	−	(24)		68
Other non-current assets		1	−	−	−	−		1
Derivative financial assets		−	−	−	−	−		−
		-------	-------	-------	-------	-------		-------
Total non-current assets		42,126	−	−	(872)	(10,894)		30,360
		-------	-------	-------	-------	-------		-------
Current assets
Inventories	{e}	17,800	−	−	(102)	(4,674)		13,024
Trade receivables		13,319	−	−	−	(3 518)		9 801
Held to maturity investments	{f}	837	(837)	−	−	−		−
Financial investments		1	−	−	−	−		1
Other current assets		1,842	−	−	(35)	(477)		1,330
Cash and cash equivalents		1,018	−	−	−	(269)		749
		-------	-------	-------	-------	-------		-------
Total current assets		34,817	(837)	−	(137)	(8,938)		24,905
		-------	-------	-------	-------	-------		-------
Total assets		76,943	(837)	−	(1,009)	(19,832)		55,265
		-------	-------	-------	-------	-------		-------
Equity and liabilities
Equity
Equity attributable to the owners of the parent		26,383	(837)	(2,283)	(2,478)	(5,488)		15,297
Non-controlling interest		2	−	−	−	−		2
		-------	-------	-------	-------	-------		-------
Total equity		26,385	(837)	(2,283)	(2,478)	(5,488)		15,299
		-------	-------	-------	-------	-------		-------
Non-current liabilities
Loans & borrowings		2,744	−	−	−	(725)		2,019
Deferred tax liabilities	{d}	−	−	−	60	(16)		44
Derivative financial liability		−	−	−	−	−		−
Other non-current liabilities		34	−	−	−	(9)		25
Total non-current liabilities		2,778	−	−	60	(750)		2,088
		-------	-------	-------	-------	-------		-------
Current liabilities
Loans & borrowings		36,158	−	−	−	(9,549)		26,609
Trade payables	{j}	9,139	−	2,283	−	(3,016)		8,406
Tax payables		1,148	−	−	174	(349)		973
Derivative financial liability	{g}	−	−	−	22	(6)		16
Deferred income		389	−	−	−	(103)		286
Other current liabilities	{h}, {i}	946	−	−	1,213	(571)		1,588
		-------	-------	-------	-------	-------		-------
Total current liabilities		47,780	−	2,283	1,409	(13,594)		37,878
		-------	-------	-------	-------	-------		-------
Total equity and liabilities		76,943	(837)	−	(1,009)	(19,832)		55,265

Reconciliation of total comprehensive income between Belgian GAAP and IFRS:

Belgian GAAP has not defined the term "comprehensive income (loss)" and as such the reconciliation below starts with the profit for the year under Belgian GAAP.

Statement of comprehensive income for the year ended 31 December 2014

					Effect of transition to IFRS
				Adjustments
				Adjustments	IFRS		GBP
				BE	IFRS		GBP
in £'000,	Comment	BE GAAP	Reclasses	GAAP	adjustments presentation
except otherwise mentioned	note -------	euros	euros	euros	euros		currency	IFRS
except otherwise mentioned	note -------	42,889	(119)	−	−	(8 292)		34 478
Revenue		42,889	(119)	−	−	(8 292)		34 478
Cost of sales		(29,410) -------	(175) -------	− -------	9 -------	5,734 -------		(23,842) -------
Gross profit		13,479	(294)	−	9	(2,558)		10,636
		-------	-------	-------	-------	-------		-------
Research and development expenses	{m}, {n}	(793)	(235)	−	676	68		(284)
Selling and marketing expenses	{m}	(1,267)	(2,938)	−	−	815		(3,390)
General and administrative expenses	{m}, {o}	(9,349)	3,348	−	(302)	1,222		(5,081)
Net other operating income/ (expenses)		(243)	−	−	(100)	66		(277)
		-------	-------	-------	-------	-------		-------
Operating (loss) profit		1,827	(119)	−	283	(387)		1,604
		-------	-------	-------	-------	-------		-------
Financial expenses	{l}	(543)	119	−	−	83		(341)
Financial income	{g}	46	−	−	11	(11)		46
		-------	-------	-------	-------	-------		-------
(Loss) profit before taxes		1,330	−	−	294	(315)		1,309
		-------	-------	-------	-------	-------		-------
Income taxes		(577)	−	−	−	111		(466)
Deferred taxes	{d}	− -------	− -------	− -------	66 -------	(13) -------		53 -------
Net (loss) profit		753	−	−	360	(217)		896
		-------	-------	-------	-------	-------		-------
Other comprehensive income (loss)
Exchange differences on translation of foreign operations		− -------	− -------	− -------	− -------	(354) -------		(354) -------
Total other comprehensive income (loss)		−	−	−	−	(354)		(354)
		-------	-------	-------	-------	-------		-------
Total comprehensive income (loss)		753	−	−	360	(571)		542

------- ------- ------- ------- ------- -------

Statement of comprehensive income for the year ended 31 December 2015

				Effect of transition to IFRS

				Adjustments
				BE	IFRS		GBP
in £'000, except otherwise mentioned	Comment note -------	BE GAAP euros	Reclasses euros	GAAP euros	adjustments euros		presentation currency	IFRS
in £'000, except otherwise mentioned	Comment note -------	65,288	(140)	(250)		−	(17,801)	47,097
Revenue	{j}	65,288	(140)	(250)		−	(17,801)	47,097
Cost of sales	{j}	(40,086)	(272)	(1,064)		(697)	11,553	(30,566)
		-------	-------	------- ---			-------	-------
Gross profit		25,202	(412)	(1,314)		(697)	(6,248)	16,531
		-------	-------	------- --			-------	-------
Research and development expenses	{m}, {n}	(1,030)	(1,092)	−		656	402	(1,064)
Selling and marketing expenses	{m}	(2,438)	(6,771)	−		−	2,527	(6,682)
General and administrative expenses	{m}, {o}	(20,094)	8,135	−		(82)	3,303	(8,738)
Net other operating income/ (expenses)	{j}	358	−	(969)		135	131	(345)
		-------	-------	------- ---			-------	-------
Operating (loss) profit		1,998	(140)	(2,283)		12	115	(298)
		-------	-------	--- -------			-------	-------
Financial expenses	{l}	(1,060)	140	−		−	252	(668)
Financial income	{g}	86	−	−		16	(28)	74
		-------	-------	------------			-------	-------
(Loss) profit before taxes		1,024	−	(2,283)		28	339	(892)
		-------	-------	-------------			-------	-------
Income taxes		(530)	−	−		(210)	203	(537)
Deferred taxes	{d}	− -------	− -------	− -------------		1,014	(279) -------	735 -------
Net (loss) profit		494	−	(2,283)		832	263	(694)
		-------	-------	-------------			-------	-------
Other comprehensive income (loss)
Exchange differences on translation of foreign operations	{q}	− -------	− -------	− ------------		−	(153) -------	(153) -------
Total other comprehensive income (loss)		−	−	−		−	(153)	(153)
		-------	-------	-------------			-------	-------
Total comprehensive income (loss)		494	−	(2,283)		832	110	(847)

Other information on the reconciliation from Belgian GAAP to IFRS

The consolidated financial statements as prepared under Belgian GAAP did not include cash flow statements and as such no reconciliation is provided in relation to the cash flows.

The first-time adoption of IFRS had the following effects on the financial statements and equity of the Ecuphar Group at the respective reporting periods:

Goodwill was decreased with the amount of identifiable intangible assets which were recognized as a result of acquisitions meeting the criteria on asset deals under IFRS 3. Such intangibles were reclassified to the line intangible assets and amortized over their remaining estimated useful lives. Such reclasses amounted to €650k at 31 January 2015 (2014: €838k; 1 January 2014: €978k).

Goodwill was increased in the periods beyond the date of transition for amortizations which were recorded under Belgian GAAP. Such goodwill amortization are not allowed under IFRS. Amortizations reversed amounted to €223k at 31 December 2015 (2014: €585k).

Intangible assets were decreased for assets recognized under BE GAAP which do not meet the recognition criteria under IAS 38. Amortization on those intangible assets was reversed in the years beyond the date of transition. The cumulative effect of these adjustments amounted to €(2,780)k at 31 December 2015 (2014: €(2,743)k; 1 January 2014: €(3,355)k).

Deferred income taxes as defined under IAS 12 are not recognized under Belgian GAAP. As a result adjustments were recognized on deferred tax assets for €1,685k at 31 December 2015 (2014: €1,223k; 1 January 2014: €1,158k) and on deferred tax liabilities for €60k at 31 December 2015 (2014: €1k; 1 January 2014: €0k). Deferred income tax (expense) and income was recognized for €1,014k at 31 December 2015 (2014: €66k).

Inventory was adjusted to bring the carrying amounts to cost as defined under IAS 2 and to move from a weighted average costing formula to the First in - First out costing method. The cumulative effect of these adjustments amount to €(102)k at 31 December 2015 (2014: €13k; 1 January 2014: €4k).

Treasury shares classified as asset under Belgian GAAP were reclassified and recognized
as a deduction of equity under IFRS. The amount of treasury shares reclassified amounted to €837k at 31 December 2015 (2014: €837k; 1 January 2014: €36k).

Derivative financial instruments were not recognized under Belgian GAAP. They were recognized under IFRS based on the requirements of IAS 39. No hedge accounting as defined under IAS 39 has been applied. The effect of the recognition of derivative financial instruments on the statement of financial position amounted to €22k at 31 December 2015 (2014: €38k; 1 January 2014: €49k). The effect of the relating fair value adjustments in the income statement amounted to an income of €16k at 31 December 2015 (2014: €11k).

Dividends payable recorded as a liability under Belgian GAAP at the year-end prior to the shareholder's approval were reclassified to retained earnings as such dividends only give rise to a liability under IFRS at the moment of shareholder's approval. Dividends reclassified amounted to €0k at 31 December 2015 (2014: €133k; 1 January 2014: €1,000k).

A financial liability was recognized under IFRS for the estimated pay-outs under a license
agreement for which obligated payments were due by the Ecuphar Group at year-end. Under Belgian GAAP such pay-outs were recognized as intangible assets upon payment and amortized in subsequent periods. The amount of the financial liability recognized amounts to €1,213k at 31 December 2015 (2014: €2,425k; 1 January 2014: €1,500k).

Additional accruals were made in the 31 December 2015 IFRS statement of financial
position and income statement relating to costs that met the recognition criteria of a liability under IFRS at that date. Such costs were recorded in the Belgian GAAP financial statements in 2016. The amount of such accruals recognized in the statement of financial position at 31 December 2015 amounts to €2,283k. The negative impact on the income statement of 2015 amounts to €(250)k on revenues, €(1,064)k on cost of sales and €(969)k on other operating expenses.

The application of IFRS 3 Business combinations on the acquisition of the Esteve business (see Note 4) resulted in a purchase price allocation being performed. This allocation resulted in different values being recognized under IFRS then the ones formerly recognized under Belgian GAAP. An overview of the impact of this business combination on the statement of financial position can be found under Note 4.

Cash discounts were recognized as a financial expense under Belgian GAAP while they are
deducted from revenues under IFRS. Such discounts amounted to €140k at 31 December 2015 (2014: €119k).

Payroll costs have been allocated to the several functions in the functional income statement. This resulted in increasing cost of sales of €272k in 2015 (2014: €175k), increasing research and development expenses of €1,092k in 2015 (2014: €235k), decreasing general and administrative expenses of €8,135k in 2015 (2014: €3,348k) and increasing selling and marketing expenses of €6,771k in 2015 (2014: €2,938k).

The positive IFRS restatement effect on research and development expenses mostly relates lower amortization charges given the fact that less R&D related intangibles were recognized under IFRS.

The negative IFRS restatement effect on general and administrative expenses mostly relates to higher amortization charges given the fact that more License-related intangibles were recognized under IFRS.

The negative restatement of effect of €(100)k recorded in IFRS during 2014 relates to additional acquisition costs for which the IFRS 1 exemption on goodwill was applied. Such subsequent expenditures do not meet the recognition criteria under IFRS and were expensed as incurred.

Given that the reporting currency is determined to be GBP all functional currency Euro balances, income and expenses were translated into GBP. This resulted in foreign currency translation effects which cumulate within other comprehensive income.

28 Events subsequent to 31 December 2016

Subsequent to 31 December 2016, the Ecuphar Group lost one of its distribution contracts as a result of a takeover. This has an estimated negative impact on yearly sales of about £0.8m as from 2017.

APPENDIX III - TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING.

THIS ANNOUNCEMENT, INCLUDING THE APPENDICES AND THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND JAPAN, NEW ZEALAND OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. PERSONS INTO WHOSE POSSESSION THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) COMES ARE REQUIRED BY THE COMPANY AND THE JOINT BOOKRUNNERS TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THIS APPENDICES ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE ("QUALIFIED INVESTORS"); AND (B) IF IN THE UNITED KINGDOM, PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); OR (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (C) IF IN BELGIUM, QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 10 OF THE ACT OF 16 JUNE 2006 ON PUBLIC OFFERINGS; AND/OR (D) ARE PERSONS WHO ARE OTHERWISE LAWFULLY PERMITTED TO RECEIVE IT WITHOUT REQUIRING THE COMPANY TO ISSUE A PROSPECTUS APPROVED BY COMPETENT REGULATORS (ALL SUCH PERSONS REFERRED TO IN (A), (B), (C) AND (D) TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THE MINIMUM CONSIDERATION TO BE PROVIDED BY A PLACEE FOR THEIR PLACING PARTICIPATION PURSUANT TO THE PLACING IS EUR100,000. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

THE CONTENT OF THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY AN AUTHORISED PERSON WITHIN THE MEANING OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (AS AMENDED). RELIANCE ON THIS ANNOUNCEMENT FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE AN INDIVIDUAL TO A SIGNIFICANT RISK OF LOSING ALL OF THE PROPERTY OR OTHER ASSETS INVESTED.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR OR PURCHASE OF THE PLACING SHARES.

THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE PLACING SHARES ARE BEING OFFERED AND SOLD ONLY OUTSIDE THE UNITED STATES IN "OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE SECURITIES ACT AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN THE UNITED STATES OR ELSEWHERE.

This Announcement or any part of it does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares is being made in any such jurisdiction.

The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States. The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they be, registered under or offering in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan or the Republic of South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction outside the United Kingdom.

Persons (including, without limitation, nominees and trustees) who have a contractual right or other legal obligations to forward a copy of this Announcement should seek appropriate advice before taking any action.

By participating in the Bookbuild and the Placing, each Placee will be deemed to have read and understood this Announcement in its entirety to be participating, making an offer and acquiring Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained in this Announcement.

Details of the Placing

The Joint Bookrunners have each today entered into the Placing and Admission Agreement pursuant to which, subject to the conditions set out in such agreement, they have each agreed to use their respective reasonable endeavours to procure subscribers for the New Placing Shares at the Placing Price with certain institutional and other investors.

Panmure Gordon will also today enter into the Selling Shareholders' Agreement pursuant to which, subject to the conditions set out in such agreement, it has agreed to use its reasonable endeavours to procure purchasers for the Sale Shares which are intended to be sold by certain Selling Shareholders at the Placing Price with certain institutional and other investors.

No element of the Placing is underwritten.

The Placing of the New Placing Shares is conditional upon the Placing and Admission Agreement becoming unconditional in all respects. The Placing of the Sale Shares is conditional upon the Selling Shareholders' Agreement becoming unconditional in all respects.

The New Placing Shares will, when issued, be subject to the articles of association of the Company, be credited as fully paid and rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared or made following Admission.

Application for Admission

Application will be made to the London Stock Exchange for admission of the Placing Shares and the Enlarged Issued Share Capital to trading on AIM. Admission is conditional upon, amongst other things, the conditions in the Placing and Admission Agreement being satisfied and the Placing and Admission Agreement not having been terminated in accordance with its terms. It is expected that Admission will become effective at 8.00 a.m. on 13 July 2017 and that dealings in the Placing Shares will commence at that time.

Bookbuild

The Joint Bookrunners will today commence the Bookbuild to determine demand for participation in the Placing by Placees. This Announcement gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

The Joint Bookrunners shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their sole discretion, determine.

A Relevant Person who wishes to participate in the Bookbuild should communicate its bid by telephone to its usual sales contact at either of the Joint Bookrunners. If successful, an allocation will be confirmed orally following the close of the Bookbuild, and a conditional contract note will be dispatched as soon as possible thereafter.

A Placee's acceptance of their Placing Participation shall be irrevocable and its obligations in respect thereof shall not be capable of rescission or termination by it in any circumstance except fraud. All such obligations are entered into by a Placee with the Joint Bookrunners in their capacity as agent for the Company in respect of the New Placing Shares and with Panmure Gordon as agent of the Selling Shareholders in respect of the Sale Shares and are therefore directly enforceable by the Company and the Selling Shareholders.

Participation in, and principal terms of, the Placing

1. The Joint Bookrunners are acting as agents of the Company in respect of the New Placing Shares. Panmure Gordon will be acting as agent of certain Selling Shareholders in respect of the Sale Shares.

2. Participation in the Placing will only be available to Relevant Persons and others who may lawfully be, and are, invited to participate by the Joint Bookrunners. The Joint Bookrunners and their affiliates are each entitled to participate in the Placing as principal.

3. The minimum consideration to be provided by a Placee for their Placing Participation pursuant to the Placing is EUR100,000.

4. The Placing Price and the number of Placing Shares will be agreed between the Company and Panmure Gordon following completion of the Bookbuild exercise by the Joint Bookrunners. The Placing Price and number of Placing Shares will be announced on a Regulatory Information Service following completion of the Bookbuild.

5. Each Placee's allocation will be confirmed to Placees orally by the relevant Joint Bookrunner, and a trade confirmation or contract note will be dispatched as soon as possible thereafter. The oral confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of the Joint Bookrunners and the Company, under which it agrees to subscribe for or acquire the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Announcement and in accordance with the Company's articles of association.

6. The Bookbuild is expected to close no later than 4.30 p.m. (London time) on 23 July 2017 but may be closed earlier or later at the discretion of the Joint Bookrunners. The Joint Bookrunners reserve the right to scale back the number of Placing Shares to be subscribed for or acquired by any Placee in the event of an oversubscription under the Placing. The Joint Bookrunners also reserve the right not to accept offers for Placing Shares or to accept such offers in part rather than in whole.

7. Each Placee also has an immediate, separate, irrevocable and binding obligation, owed to the Joint Bookrunners as agents of the Company (in the case of both Joint Bookrunners) and as agent of the Selling Shareholders (in the case of Panmure Gordon), to pay in cleared funds immediately on the settlement date in accordance with the registration and settlement requirements set out below, an amount equal to the product of the Placing Price and the number of Placing Shares that such Placee has agreed to subscribe for or acquire in connection with the Placing, conditional upon Admission becoming effective.

8. Irrespective of the time at which a Placee's Placing Participation is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".

9. Each Placee will be deemed to have read and understood this Announcement in its entirety, to be participating in the Placing upon the terms and conditions contained in this Announcement, and to be providing the representations, warranties, agreements, acknowledgements and undertakings, in each case as contained in this Announcement.

10. Completion of the Placing will be subject to the fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing". In the event that the Placing and Admission Agreement does not become unconditional in all respects or is terminated, the Placing will not proceed and all funds delivered by you to us in respect of your Placing Participation will be returned to you at your risk without interest. The Placing of the Sale Shares will be conditional upon the Selling Shareholders' Agreement becoming unconditional in all respects.

11. By participating in the Placing, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

12. To the fullest extent permissible by law, neither (i) the Joint Bookrunners, nor (ii) any of their respective directors, officers, employees or consultants, nor (iii) to the extent not contained in (i) or (ii), any person connected with the Joint Bookrunners as defined in the FCA Rules ((i), (ii) and (iii) being together "affiliates" and individually an "affiliate"), shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither of the Joint Bookrunners nor any of their affiliates shall have any liability (including to the extent permissible by law, any fiduciary duties) in respect of the Joint Bookrunners' conduct of the Bookbuild or of such alternative method of effecting the Placing as the Joint Bookrunners and the Company may agree.

Conditions of the Placing

The obligations of the Joint Bookrunners under the Placing and Admission Agreement are conditional on, amongst other things:

the Placing and Admission Agreement having become unconditional in all respects and not having been terminated in accordance with its terms prior to Admission;

the Share Purchase Agreement (i) not having been terminated or varied or amended and (ii) having become unconditional in all respects, save for any condition relating to the Placing and Admission Agreement becoming unconditional in accordance with its terms (including, for the avoidance of doubt, Admission);

the Admission Document having been posted to shareholders together with the Notice of Meeting;

the Resolutions having been duly passed without amendment by the required majority at the General Meeting;

the representations and warranties contained in the Placing and Admission Agreement being true, accurate and not misleading in any material respect as at the date of the Placing and Admission Agreement and at all times up to and including Admission;

the Company having complied with all of its obligations under the Placing and Admission Agreement (to the extent such obligations fall to be performed prior to Admission); and

Admission taking place by 8.00 a.m. on 13 July 2017 (or such other later date as may be agreed between the parties).

If any of the conditions contained in the Placing and Admission Agreement are not fulfilled (or waived) by the respective time or date where specified or the Placing and Admission Agreement is terminated, the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.

The Placing of the Sale Shares by Panmure Gordon pursuant to the Selling Shareholders' Agreement is conditional upon the Selling Shareholders' Agreement having become unconditional in all respects and not having been terminated in accordance with its terms prior to Admission. The Selling Shareholders' Agreement is conditional upon the Placing and Admission Agreement becoming unconditional in accordance with its terms (other than in respect of any condition in relation to the Selling Shareholders' Agreement becoming unconditional).

The Joint Bookrunners and the Company may agree in writing to extend the time and/or date by which any of the conditions contained in the Placing and Admission Agreement are required to be fulfilled to no later than 4.30 p.m. on the Long Stop Date.

The Joint Bookrunners may, at their discretion and upon such terms as they think fit, waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing and Admission Agreement, to the extent permitted by law or regulations. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.

None of the Joint Bookrunners, the Company or any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Joint Bookrunners.

Termination of the Placing

The Joint Bookrunners (having first consulted with each other) are entitled, at any time before Admission, to terminate the Placing and Admission Agreement by giving notice to the Company at any time prior to Admission if, amongst other things:

a party (other than a Joint Bookrunner) fails, in any material respect, to comply with any of its obligations under the Placing and Admission Agreement; or

it comes to the notice of a Joint Bookrunner that any statement contained in any of the Admission Document, investor presentation or this Announcement was untrue, incorrect or misleading at the date of such document in any respect which the Joint Bookrunners (acting reasonably) consider to be material in the context of the Placing, Acquisition and/or Admission; or

it comes to the notice of a Joint Bookrunner that any statement contained in any of the Admission Document, investor presentation or this Announcement has become untrue, incorrect or misleading in any respect which the Joint Bookrunners (acting reasonably) consider to be material or that any matter which the Joint Bookrunners (acting reasonably) consider to be material has arisen which would, if the Placing were made at that time, constitute a material omission therefrom; or

it comes to the notice of a Joint Bookrunner that any of the warranties was not at the date of the agreement true and accurate in any respect which the Joint Bookrunners (acting reasonably) consider to be material by reference to the facts subsisting at the time when the notice referred to below is given; or

it comes to the notice of a Joint Bookrunner that there has been, or will be, a breach or potential breach of the Share Purchase Agreement including any of the warranties thereunder which is material or such Share Purchase Agreement is otherwise terminated, rescinded or frustrated; or

in the opinion of a Joint Bookrunner (acting reasonably) there shall have occurred any Material Adverse Change whether or not foreseeable as at the date of the agreement; or

the application by the Company for Admission is refused or rejected by the London Stock Exchange.

Upon such termination, the parties to the Placing and Admission Agreement shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing and Admission Agreement subject to certain exceptions.

Panmure Gordon will be entitled, at any time before Admission, to terminate the Selling Shareholders' Agreement by giving notice to the Selling Shareholders at any time prior to Admission if:

a Selling Shareholder fails, in any material respect, to comply with any of its obligations under the agreement; or

it comes to the notice of Panmure Gordon that any of the warranties was not at the date of the agreement true and accurate in any respect which Panmure Gordon (acting reasonably) considers to be material in the context of the Placing by reference to the facts subsisting at the time when the notice referred to below is given; or

it comes to the notice of Panmure Gordon that there has been, or will be, a breach or potential breach of the Share Purchase Agreement and/or Placing and Admission Agreement including any of the warranties thereunder which is material or such Share Purchase Agreement and/or Placing and Admission Agreement is otherwise terminated, rescinded or frustrated.

By participating in the Placing, Placees agree that the exercise by the Joint Bookrunners of any right of termination or other discretion under the Placing and Admission Agreement and/or Selling Shareholders' Agreement (as the case may be) shall be within the absolute discretion of the Joint Bookrunners and that they need not make any reference to Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.

No prospectus

No offering document, prospectus or admission document has been or will be submitted to be approved by the FCA in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in this Announcement released by the Company today.

Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Company or the Joint Bookrunners or any other person (including but not limited to the investor presentation given by the Company in connection with its recent roadshow) and none of Panmure Gordon, Degroof Petercam or the Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing.

Registration and Settlement

The General Meeting, at which the Resolutions to grant the Directors authority to allot new Ordinary Shares on a non-pre-emptive basis will be proposed, is scheduled for 10.00 a.m. on 12 July 2017.

Admission is expected to become effective at 8.00 a.m. on 13 July 2017.

Settlement of transactions in the Placing Shares following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions. The Company reserves the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if, in the Joint Bookrunners' opinion, delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a contract note (if affirmation is not sent electronically) stating the number of Placing Shares to be allocated to it at the Placing Price and settlement instructions.

Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with the Joint Bookrunners. Settlement should be:

· through Degroof Petercam against: CREST ID: BH01, Account No.: 768125, BIC Code MIDLGB22

· through Panmure Gordon against: CREST ID: 83801.

For the avoidance of doubt, Placing allocations will be booked with a trade date of 23 June 2017 and settlement date of 13 July 2017, the date of Admission.

The Company will deliver the New Placing Shares to the CREST accounts operated by Degroof Petercam and Panmure Gordon as agents for the Company and Degroof Petercam and Panmure Gordon will each enter its delivery (DEL) instruction into the CREST system. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

The Selling Shareholders will deliver the Sale Shares to the CREST account operated by Panmure Gordon.

It is expected that settlement will take place on 13 July 2017, on a delivery versus payment basis.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Joint Bookrunners.

Neither of the Joint Bookrunners nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from the transfer of shares to a Placee or its agent(s).

Each Placee is deemed to agree that, if it does not comply with these obligations, the Company may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for the Company's account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

Representations and Warranties

If any prospective Placee is not able to give the confirmations, representations, indemnities, warranties, undertakings and acknowledgements contained in this Announcement then it should not act on the information contained herein. This Announcement has not been nor is being issued by the Joint Bookrunners in their capacity as an authorised person nor has it been approved by an authorised person and it may not therefore be subject to the controls which would apply if it were made or approved as a financial promotion by an authorised person.

Placees are reminded that they are agreeing to accept their Placing Participation solely on the basis of information contained in this Announcement and other publicly available information.

By participating in the Placing each Placee (and any person acting on such Placee's behalf):

1 represents and warrants that it has read this Announcement in its entirety;

2 confirms that the exercise by either of the Joint Bookrunners of any right of termination or any right of waiver contained in the Placing and Admission Agreement and/or Selling Shareholders' Agreement, including without limitation the right to terminate the Placing and Admission Agreement and/or Selling Shareholders' Agreement, is within the absolute discretion of the relevant Joint Bookrunner and neither will have any liability to any Placee whatsoever in connection with any decision to exercise or not to exercise any such rights;

3 in respect of the New Placing Shares, acknowledges that if (i) any of the conditions in the Placing and Admission Agreement are not satisfied (or, where relevant, waived), or (ii) the Placing and Admission Agreement is terminated or (iii) the Placing and Admission Agreement does not otherwise become unconditional in all respects, the Placing will lapse and its rights and obligations hereunder shall cease and determine at such time and no claim shall be made by any Placee in respect thereof;

4 in respect of the Sale Shares, acknowledges that if (i) any of the conditions in the Selling Shareholders' Agreement are not satisfied (or, where relevant, waived), or (ii) the Selling Shareholders' Agreement is terminated or (iii) the Selling Shareholders' Agreement does not otherwise become unconditional in all respects, the Placing of the Sale Shares will lapse and its rights and obligations hereunder shall cease and determine at such time and no claim shall be made by any Placee in respect thereof;

5 acknowledges that no prospectus has been or will be prepared in connection with the Placing and represents and warrants that it has not received a prospectus in connection with the Placing or the Placing Shares;

6 acknowledges that the Ordinary Shares are admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM (collectively, the "Exchange Information"), which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account and that it is able to obtain or access such Exchange Information without undue difficulty and is able to obtain access to such information or comparable information concerning any other publicly traded company without undue difficulty;

7 acknowledges that (i) it is not and, if different, the beneficial owner of the Placing Shares is not and at the time the Placing Shares are acquired will not be a resident of the United States, Australia, Canada, the Republic of South Africa, the Republic of Ireland, Japan or New Zealand, and (ii) that the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada, the Republic of South Africa, the Republic of Ireland, Japan or New Zealand and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, in or into those jurisdictions;

8 acknowledges that the content of this Announcement is exclusively the responsibility of the Company and that none of Degroof Petercam, Panmure Gordon nor any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously published by or on behalf of the Company and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to subscribe for or purchase the Placing Shares is contained in this Announcement and any information previously published by the Company by notification to a Regulatory Information Service, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of the Joint Bookrunners or the Company and none of Degroof Petercam, Panmure Gordon nor the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing;

9 represents and warrants that neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services);

10 represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under applicable legislation, including if in the United Kingdom or otherwise applicable, the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 (the "Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations. If within a reasonable time after a request for verification of identity the Joint Bookrunners have not received such satisfactory evidence, the Joint Bookrunners may, in their absolute discretion, terminate your Placing Participation in which event all funds delivered by you to the Joint Bookrunners pursuant to this letter (if any) will be returned without interest to the account of the drawee bank or CREST account from which they were originally debited;

11 if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive (including any relevant implementing measure in any member state), represents and warrants that the Placing Shares subscribed for or purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the European Economic Area which has implemented the Prospectus Directive other than to qualified investors, or in circumstances in which the prior consent of the Joint Bookrunners has been given to the proposed offer or resale;

12 represents and warrants that it has not offered or sold and, prior to the expiry of a period of six months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of FSMA;

13 represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (Directive 2003/71/EC) (including any relevant implementing measure in any member state);

14 represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA (if applicable) does not require approval of the communication by an authorised person;

15 represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;

16 represents and warrants that it is a person (i) if in the United Kingdom, falling within Article 19(5) and/or Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or (ii) if in Belgium, is a qualified investor within the meaning of article 10 of the act of 16 June 2006 on public offerings; or (iii) is a person to whom this Announcement may otherwise be lawfully communicated and that any offer of Placing Shares may only be directed at persons to the extent in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive and represents and warrants that it is such a qualified investor or is otherwise permitted to receive it;

17 represents and warrants that it and any person acting on its behalf is entitled to subscribe for and purchase the Placing Shares under the laws of all relevant jurisdictions which would apply to it, and that its, and any person acting on its behalf's, subscription and/or purchase of the Placing Shares will be in compliance with applicable laws and regulations in the jurisdiction of its residence, the residence of the Company, or otherwise;

18 represents and warrants, without prejudice to the generality of paragraph 17 above, either that it is outside of the United States, it is not a "U.S. person" and is subscribing for or purchasing the Placing Shares in an "offshore transaction" (within the meaning of Regulation S under the Securities Act);

19 undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or purchasers or sold as the Joint Bookrunners may in their discretion determine and without liability to such Placee;

20 acknowledges that its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares which it will be entitled, and required, to acquire in connection with the Placing, and that the Company or the Joint Bookrunners may call upon it to acquire a lower number of Placing Shares (if any), but in no event in aggregate more than the aforementioned maximum without the Placee's prior agreement;

21 acknowledges that (i) neither of the Joint Bookrunners, nor any of their respective affiliates, nor any person acting on behalf of either of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of Degroof Petercam or Panmure Gordon for the purposes of the Placing and that the Joint Bookrunners have no duties or responsibilities to it for providing the protections afforded to their clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing and Admission Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right and (ii) that neither it nor, as the case may be, its clients expect the Joint Bookrunners to have any duties or responsibilities to it similar or comparable to the duties of "best execution" and "suitability" imposed by the Conduct of Business Sourcebook contained in the FCA's Handbook of Rules and Guidance, and that the Joint Bookrunners are not acting for it or its clients, and that the Joint Bookrunners will not be responsible to any person other than the Company for providing protections afforded to their clients;

22 represents and warrants that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither of the Joint Bookrunners nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify the Company and the Joint Bookrunners in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock accounts of Degroof Petercam and Panmure Gordon who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;

23 acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company, Degroof Petercam or Panmure Gordon in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

24 acknowledges that Degroof Petercam and Panmure Gordon and their respective affiliates will rely upon the truth and accuracy of the representations, warranties and acknowledgements set forth herein and which are irrevocable;

25 agrees to indemnify and hold the Company, the Joint Bookrunners and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Announcement and further agrees that the provisions of this Announcement shall survive after completion of the Placing;

26 acknowledges that its commitment to acquire Placing Shares on the terms set out herein will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the Placing. The foregoing representations, warranties and confirmations are given for the benefit of the Company and the Joint Bookrunners;

27 acknowledges that the agreement to settle a Placee's acquisition (and/or the acquisition by a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to the acquisition by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes, and is based on a warranty from each Placee, that neither it, nor the person specified by it, for registration as holder of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be acquired by, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services). If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, additional stamp duty or stamp duty reserve tax may be payable. In that event the Placee agrees that it shall be responsible for such additional stamp duty or stamp duty reserve tax, and neither the Company nor the Joint Bookrunners shall be responsible for such additional stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify the Joint Bookrunners accordingly;

28 understands that no action has been or will be taken by any of the Company, the Joint Bookrunners or any person acting on behalf of the Company or the Joint Bookrunners that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;

29 confirms that it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for or purchasing the Placing Shares. It further confirms that it is experienced in investing in securities of this nature in this sector, is familiar with the market in which the Company operates and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with the Placing. It further confirms that it relied on its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved;

30 represents and warrants that it has (a) made its own assessment and satisfied itself concerning legal, regulatory, tax, business and financial considerations in connection herewith to the extent it deems necessary; (b) had access to review publicly available information concerning the Enlarged Group that it considers necessary or appropriate and sufficient in making an investment decision; (c) reviewed such information as it believes is necessary or appropriate in connection with its subscription or purchase of the Placing Shares; and (d) made its investment decision based upon its own judgement, due diligence and analysis and not upon any view expressed or information provided by or on behalf of Degroof Petercam and Panmure Gordon or any of their Affiliates;

31 understands that it may not rely on any investigation that Degroof Petercam and Panmure Gordon or any person acting on their behalf may or may not have conducted with respect to the Company, its group, or the Placing and Degroof Petercam and Panmure Gordon have not made any representation to it, express or implied, with respect to the merits of the Placing, the subscription for or purchase of the Placing Shares, or as to the condition, financial or otherwise, of the Company, its Group, or as to any other matter relating thereto, and nothing herein shall be construed as a recommendation to it to subscribe for or purchase the Placing Shares. It acknowledges and agrees that no information has been prepared by Degroof Petercam, Panmure Gordon or the Company for the purposes of this Placing;

32 acknowledges that all representations, warranties, acknowledgements, undertakings and agreements which have been made in this Announcement shall survive the transaction and the delivery of the Placing Shares; and

33 represents, warrants and agrees that it will not hold Degroof Petercam, Panmure Gordon or any of their respective affiliates or any person acting on their behalf responsible or liable for any misstatements in or omission from any publicly available information relating to the Group or information made available (whether in written or oral form) in presentations or as part of roadshow discussions with investors relating to the Enlarged Group (the "Information") and that none of Degroof Petercam, Panmure Gordon or any person acting on behalf of Degroof Petercam or Panmure Gordon, makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such Information or accepts any responsibility for any of such Information.

In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the subscription or purchase by them of any Placing Shares or the agreement by them to subscribe for or purchase any Placing Shares.

Each Placee and any person acting on behalf of each Placee acknowledges and agrees that Degroof Petercam, Panmure Gordon or any of their affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

Money laundering

It is also a term of these terms and conditions that, to ensure compliance with the FCA Rules, the Proceeds of Crime Act 2002 and the Regulations (as applicable) the Joint Bookrunners may, in their absolute discretion, require verification of a Placee's identity to the extent that it has not already provided the same. Pending the provision to the Joint Bookrunners of evidence of identity, definitive certificates in respect of the Placing Shares or the crediting of the relevant CREST accounts may be retained or delayed at the Joint Bookrunners' absolute discretion.

If within a reasonable time after a request for verification of identity, the relevant Joint Bookrunner has not received evidence satisfactory to it, a Joint Bookrunner may, in its absolute discretion, terminate a Placee's Placing Participation (but without prejudice to the Joint Bookrunners' rights or the Company's rights to take proceedings to recover any loss suffered by either or both of them as a result of a failure to provide satisfactory evidence), in which event the monies payable on acceptance of the relevant Placing Shares will, if paid, be returned without interest to the account of the bank from which they were originally debited. No Placing Shares will be placed with a Placee if before Admission its acceptance of any Placing Shares is rejected pursuant to the Regulations. The Joint Bookrunners will not be liable to a Placee or any other person for any loss suffered or incurred as a result of the exercise of such discretion or as a result of any sale of shares comprised in a Placee's Placing Participation.

Law and jurisdiction

These terms and conditions and any non-contractual obligations connected with them are governed by English law.

All disputes arising under or in connection with these terms and conditions, or in connection with the negotiation, existence, legal validity, enforceability or termination of these terms and conditions, regardless of whether the same shall be regarded as contractual claims or not, shall be exclusively governed by and determined only in accordance with English law.

Placees irrevocably agree that the English courts are to have exclusive jurisdiction, and that no other court is to have jurisdiction to:

· determine any claim, dispute or difference arising under or in connection with these terms and conditions or in connection with the negotiation, existence, legal validity, enforceability or termination of these terms and conditions, whether the alleged liability shall arise under English law or under the law of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts ("Proceedings"); or

· grant interim remedies, or other provisional or protective relief.

Placees submit to the exclusive jurisdiction of such courts and accordingly any Proceedings may be brought against the Placees or any of them or any of their respective assets in such courts.

In considering this investment Placees should note that the Placing Shares are, or will be, traded on AIM, a market designed primarily for emerging or smaller companies to which a higher investment risk than that associated with larger or more established companies tends to be attached. The rules of AIM are less demanding than those applicable to companies listed on the Official List of the UK Listing Authority.

The Company and the Joint Bookrunners draw Placees' attention expressly to the fact that the value of shares can fluctuate in value in money terms, and accordingly that a Placee may not realise, on disposal by it of Placing Shares which it acquires or subscribes for, the full amount of its investment.

All times and dates in this Announcement may be subject to amendment. The Joint Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any changes.

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

APPENDIX IV - ADDITIONAL DEFINITIONS

The following definitions apply throughout this Announcement unless the context otherwise requires:

"Acquisition"	the proposed acquisition by the Company of the entire issued share capital of Ecuphar pursuant to the Share Purchase Agreement
"Admission"	admission of the Enlarged Issued Share Capital to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules
"Admission Document"	means the admission document containing information relating to the Enlarged Group, the Acquisition and details of the Placing
"Affiliates"	any person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified
"AIM"	the market of that name operated by the London Stock Exchange
"AIM Rules"	the AIM Rules for Companies as published by the London Stock Exchange from time to time
"Alychlo NV"	Alychlo NV, a company registered in Belgium with registered number 0895.140.645 and whose registered office is at Lembergsesteenweg 19, 9820 Merelbeke, Belgium
"Announcement"	means this announcement (including the Appendices to this announcement)
"Articles"	the articles of association of the Company
"Bookbuild"	the accelerated bookbuilding process launched immediately following this Announcement to conduct the Placing
"CAGR"	compound annual growth rate
"Companies Act"	the Companies Act 2006 (as amended)
"Company" or "Animalcare"	Animalcare Group plc
"Completion"	completion of the proposed acquisition of the entire issued share capital of Ecuphar, pursuant to the Share Purchase Agreement
"Concert Party"	Ecuphar Invest NV, Alychlo NV and Jaak Cardon (as further detailed in paragraph 9 of Appendix I in this Announcement) who are deemed to be acting in concert for the purposes of the Takeover Code
"Consideration"	new Ordinary Shares to be allotted and issued by the Company, credited as fully paid, under the Share Purchase Agreement to the Vendors in consideration for the Acquisition
"CREST"	the relevant system (as defined in the Uncertificated Securities Regulations 2001) for the paperless settlement of trades and the holding of uncertificated securities operated by Euroclear UK & Ireland Limited
"CREST Regulations"	the Uncertificated Securities Regulations 2001, including (i) any enactment or subordinate legislation which amends or supersedes those regulations; and (ii) any applicable rules made under those regulations
"Degroof Petercam"	Bank Degroof Petercam NV, the Company's Joint Bookrunner for the purposes of the Placing of the New Placing Shares
"Directors" or "Board"	the directors of the Company, or any duly authorised committee thereof
"EBITDA"	net profit plus finance expenses, less financial income, plus income taxes and deferred taxes, plus depreciation, amortisation and impairment
"Ecuphar"	Ecuphar NV, a company registered in Belgium with registered number 0476.255.350 and whose registered office is at Legeweg 157 box I, 8020 Oostkamp, Belgium
"Ecuphar Group"	Ecuphar and its subsidiaries at the date of this Announcement
"Ecuphar Invest NV"	Ecuphar Invest NV, a company registered in Belgium with registered number 0476.250.994 and whose registered office is at Rijselstraat 29, 8200 Brugge, Belgium
"Enlarged Group"	means the Group on Admission and as enlarged by the Acquisition
"Enlarged Issued Share Capital"	the issued ordinary share capital of the Company immediately following Admission (including the Existing Ordinary Shares, the Option Shares, the Consideration Shares and the New Placing Shares)
"Esteve"	Laboratorios del Dr. Esteve, S.A.
"Euroclear UK & Ireland"	Euroclear UK & Ireland Limited
"Executive Share Option Scheme"	the Animalcare Group plc Executive Share Option Scheme 2008 adopted by the Company on 30 May 2008
"Existing Directors"	the directors of the Company as at the date of this Announcement, being James Lambert, Iain Menneer, Chris Brewster, Lord Nick Downshire and Raymond Harding
"Existing Group"	the Company and Animalcare Limited
"Existing Issued Share Capital"	the 21,222,110 Ordinary Shares in issue as at the date of this Announcement
"Existing LTIP"	the Animalcare Limited Long Term Incentive Plan adopted on 20 June 2014
"Existing Ordinary Shares"	the Ordinary Shares in issue at the date of this Announcement
"FCA"	the Financial Conduct Authority in its capacity as the competent authority for the purposes of Part VI of FSMA
"Force Majeure"	means any unforeseen circumstance not within the reasonable control of the affected party including, without limitation, any strike, civil commotion, act of terrorism, riot, war, threat of war, political upheaval and any fire, explosion, storm, flood, earthquake or other natural physical disaster
"FSMA"	the Financial Services and Markets Act of 2000 (as amended).
"General Meeting"	the general meeting of the Company to be held at the offices of Squire Patton Boggs (UK) LLP at 7 Devonshire Square, London EC2M 4YH at 10.00 a.m. on 12 July 2017, or any adjournment thereof, notice of which will be set out in the Notice of Meeting
"Group"	the Company, its subsidiaries and its subsidiary undertakings
"Independent Directors"	James Lambert and Raymond Harding
"Independent Shareholders"	the Shareholders, other than the Selling Shareholders and any person acting in concert with them (including any members of their immediate families, related trusts or connected persons) who holds Ordinary Shares
"ISIN"	international security identification number
"Joint Bookrunners"	together, Panmure Gordon and Degroof Petercam
"London Stock Exchange"	London Stock Exchange plc
"Long Stop Date"	25 July 2017
"Majority Vendors"	Ecuphar Invest NV and Alychlo NV
"Material Adverse Change"	means any adverse change, or any development reasonably likely to involve an adverse change, in the condition (financial, operational, legal or otherwise), earnings, business, management, property, assets, rights, results, operations or prospects of the Company or the Enlarged Group which, taken as a whole, is material in the context of the Placing, Acquisition and Admission;
"New LTIP"	the Animalcare Group plc Long Term Incentive Plan 2017 adopted by the Board on 22 June 2017
"New Placing Shares"	the new Ordinary Shares to be subscribed for by Placees pursuant to the Placing
"Notice of Meeting"	the notice convening the General Meeting set out in the Admission Document
"Official List"	the Official List of the UK Listing Authority
"Options"	rights to acquire (whether by subscription or market purchase) Ordinary Shares
"Option Shares"	new Ordinary Shares which are intended to be issued by the Company to certain persons who intend to exercise certain of their Options or the exchange of shares in Animalcare Limited
"Ordinary Shares"	ordinary shares of 20 pence each in the capital of the Company
"OTC"	over the counter
"Panel"	the UK Panel on Takeovers and Mergers
"Panmure Gordon"	Panmure Gordon (UK) Limited, the Company's nominated adviser and Joint Bookrunner
"Participating Directors"	Iain Menneer, Chris Brewster and Lord Nick Downshire
"Placees"	subscribers or purchasers of the Placing Shares pursuant to the Placing
"Placing"	the conditional placing of (i) the New Placing Shares at the Placing Price by the Joint Bookrunners as agents for and on behalf of the Company pursuant to the terms of the Placing and Admission Agreement; and (ii) the Sale Shares at the Placing Price by Panmure Gordon as agent for and on behalf of the Selling Shareholders pursuant to the terms of the Selling Shareholders' Agreement
"Placing and Admission Agreement"	the conditional agreement dated 23 June 2017 between (i) the Company; (ii) each of the Joint Bookrunners; (iii) the Directors; (iv) the Proposed Directors; and (v) the Majority Vendors relating to the Placing, further details of which are set out in this Announcement
"Placing Participation"	a Placee's allocation of Placing Shares in the Bookbuild
"Placing Price"	the price per Placing Share, as will be agreed between the Company and the Joint Bookrunners at the close of the Bookbuild
"Placing Shares"	the New Placing Shares and the Sale Shares
"Proposed Directors"	Jan Boone, Chris Cardon, Walter Beyers, Marc Coucke and Edwin Torr
"Prospectus Directive"	EU Directive 2003/71/EC
"Proxy Form"	the form of proxy enclosed with the Admission Document for use by Shareholders in connection with the General Meeting
"Regulatory Information Service"	any of the services set out on the list maintained by the London Stock Exchange as set out in the AIM Rules
"Resolutions"	the resolutions to be proposed at the General Meeting as set out in the Notice of Meeting
"Rothschild"	N M Rothschild & Sons Limited
"Rule 9 Waiver"	the conditional waiver by the Panel of the obligation that would otherwise arise on the Concert Party to make a general offer to all Shareholders pursuant to Rule 9 of the Takeover Code as a result of the allotment and issue of the Consideration Shares or which may arise on the Concert Party
"Sale Shares"	the Ordinary Shares (including certain of the Option Shares) intended to be sold by the Selling Shareholders pursuant to the Placing
"Savings Related Share Option Scheme"	the Animalcare Group plc Savings Related Share Option Scheme adopted by the Company on 12 September 2006
"Selling Shareholders"	certain Shareholders who intend to sell Sale Shares under the Placing
"Selling Shareholders' Agreement"	the conditional agreement to be dated today's date between the Company, the Selling Shareholders and Panmure Gordon relating to the sale of the Sale Shares by Panmure Gordon on behalf of the Selling Shareholders
"Shareholders"	holders of Ordinary Shares
"Share Purchase Agreement"	the share purchase agreement dated 23 June 2017 and entered into between, among others, (1) the Vendors and (2) the Company, in respect of the Acquisition
"subsidiary"	has the meaning given to it in section 1159 of the Companies Act
"Takeover Code"	the City Code on Takeovers and Mergers published by the Panel
"TIDM"	tradable investment display mnemonic
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority"	the FCA acting in its capacity as the competent authority for the purposes of Part VI of the FSMA
"uncertificated" or "in uncertificated form"	recorded on a register of securities maintained by Euroclear in accordance with the CREST Regulations as being in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST
"Underlying EBITDA"	EBITDA adjusted for non-recurring items
"United States" or "USA"	United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction
"Vendors"	Alychlo NV, Ecuphar Invest NV and the minority shareholders of Ecuphar, as set out in the Share Purchase Agreement
"Whitewash Resolution"	the resolution proposed to be passed at the General Meeting, which relates to the Rule 9 Waiver

APPENDIX V - EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Publication of Admission Document	On or around 23 June 2017
Latest time and date for lodging CREST voting instructions	10.00 am on 10 July 2017
Latest time and date for lodging forms of proxy for the Animalcare General Meeting	10.00 am on 10 July 2017
Animalcare General Meeting	10.00 am on 12 July 2017
Expected time and date of cancellation of trading on AIM of the Existing Ordinary Shares	7.00 am on 13 July 2017
Expected time and date of completion of the Acquisition	8.00 am on 13 July 2017
Expected time and date of Admission and commencement of dealings in the Enlarged Issued Share Capital on AIM	8.00 am on 13 July 2017
Expected date for CREST accounts to be credited (where applicable)	13 July 2017
Expected despatch of definitive share certificates (where applicable)	27 July 2017