28 Jul y 2010

Domi ni c Val der

+ 44 ( 0) 20 7071 4705
dominic. valder@evosecurit ies. com

Ni gel Bi r k s

+ 44 ( 0) 20 7071 4707
nigel. birks@evosecurit ies.com

Chr i s Donnel l an

+ 44 ( 0) 20 7071 4706
chris. donnellan@evosecurit ies. com



The company has reviewed a draft of t his
research not e and fact ual changes have been
made
Pr i ce/ Tar get : €45. 2/ € 50.0
Mk t Cap: €59bn
Net Cash/ ( Debt ) ( FY1) - €862m


Dec 2009A 2010E 2011E
PBT 11, 725 11, 923 11, 718
EPS ( €) 6. 6 6. 6 6. 4
DPS ( €) 2. 5 2. 5 2. 6
P/ E ( x) 6. 8x 6. 9x 7. 0x



35
40
45
50
55
60
65
70
75
80
Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10
Price Price Relative to FTSE All Share
Source: FactSet Estimates



EVO Securit ies makes market s in Sanofi Avent is
This publicat ion was produced by Evolut ion Securit ies Limit ed ( ESL) . This publicat ion is disseminat ed in t he EEA
by ESL. This publicat ion is disseminat ed in t he US by Evolut ion Securit ies US ( ESUS) ; it has not been alt er ed in
any way by ESUS prior t o dist ribut ion. ESUS is a wholly owned subsidiar y of ESL. Under t he Market s in Financial
I nst rument s Direct ive and t he Financial Services Aut horit y’s Conduct of Business Rules, t his document is a
market ing communicat ion and has not been pr epared in accordance wit h legal requir ement s designed t o promot e
t he independence of invest ment research. Alt hough it is not subj ect t o any legal requirement prohibit ing dealing
ahead of t he disseminat ion of invest ment resear ch, Evolut ion Securit ies Lt d upholds t his st andard t hrough it s
int ernal syst ems and cont rols.
Sanof i Avent i s ( SAN. PA)
Sel l
Acqui si t i on of Genzy me – mer ger anal y si s
I n t hi s not e w e pr esent our M&A anal y si s t o w or k out how much Sanof i -
Avent i s coul d af f or d t o pay f or Genzy me. I n concl usi on, w e t hi nk pay i ng
bel ow $70 per shar e coul d be seen as a “ r easonabl e” deal f or Sanof i
shar ehol der s and a deal above $80 per shar e w oul d be seen as
ov er pay i ng. We hav e al so cal cul at ed EPS accr et i on f or ot her EU l ar gecap
phar ma compani es, w i t h t he obser v at i on t hat cur r ent l ow debt f undi ng
cost s mak es t he deal accr et i ve t o al l member s of our Lar ge Cap cover age
uni ver se. I n concl usi on, w i t h a deal t hat i s accr et i ve t o a number of
par t i es, “ w i nni ng” t he Genzy me asset “ coul d” be a py r r hi c vi ct or y and w e
pl ace a not e of caut i on over al l possi bl e bi dder s. Sel l r at i ng r ei t er at ed.
Given t he weight of speculat ion surrounding Genzyme and t he r ecent hist ory Carl
I cahn has had wit h t he Company, we t hink it is reasonable t o assume t he
Company is in play. Our merger analysis implies t hat t he most likely area of
common ground bet ween a buyer and a seller is in t he range of $70 t o $ 80 per
share for Genzyme.
I n t he current low int erest rat e environment , Sanofi could pay upt o $96 per share
before t he deal was dilut ive, on an 2011E EPS basis ( assumpt ions included wit hin
t he report ) . HOWEVER, we also not e t hat our DCF valuat ion for Genzyme
including synergies implies a fair value of no more t han about $75 per share.
Using assumpt ions det ailed wit hin, we calculat e a t ransact ion at $75 per share,
could be accr et ive t o Sanofi- Avent is’ business net income, by 1. 7% in 2011, 6. 2%
in 2012 and 12. 7% in 2013.
Using a similar logic, we have also performed an accret ion / dilut ion analysis for
ot her Companies in our European Universe, which provides t he conclusion t hat
t he deal would be accret ive t o t he rest of our large cap universe. Given t hat
Genzyme is in an area, which is at t ract ive t o a number of Companies t his implies
t hat t here could be considerable compet it ive t ension in t he process. We not e t hat
GSK and JNJ ( not in our universe) have already been linked t o Genzyme and we
could imagine t hat AZN could be int erest ed in t he opport unit y, given t heir pat ent
cliff.
I n conclusion, t he event s of Friday ( US approval of Lovenox generics, followed by
M&A rumours linking SAN wit h Genzyme) highlight t he difficult y in migrat ing a
Company from being dependent upon one set of businesses t o anot her. We
reit erat e our SELL rat ing.


July 10



2
Genzy me – Val uat i on Anal y si s
Genzyme was founded t o focus on finding t reat ment s for rare diseases. This is an
area of int erest t o ot her companies for t he following reasons:
1. I t s product s current ly have lower levels of compet it ion,
2. I t s product s are mainly biologics ( implying a t ougher pat hway for generics) and
3. They are highly profit able.
Genzyme generat ed sales of $4. 5bn in 2009 and t he largest 3 product s are: 1)
Cerezyme ( Gaucher’s Disease, 2009 sales= $793m) ; 2) Sevelamer ( renal disease
2009 sales= $707m) and 3) Fabrazyme ( Fabry’s Disease 2009 sales= $431m) .
Genzyme has experienced manufact uring problems at t wo of it s manufact uring
facilit ies over t he past year ( Allst on and Haverhill) , which has significant ly impact ed
t he st ock price, rendering t he company suscept ible t o M&A approaches. Vet eran
act ivist invest or Carl I cahn is also involved in t he sit uat ion, owning a 4% st ake in
t he Company.
Our DCF of Genzyme generat es a fair value of $55 t o $65 per share, excluding
synergies and $65 - $75 per shar e including synergies. I t is int erest ing t o not e t hat
Genzyme’s all t ime high st ock price was $84 per share in August 2008 and t hat t he
valuat ion has been impaired following t he manufact uring problems t hey had wit h
Cerezyme and Fabryzme at t he Allst on and Haverhill manufact uring plant s. I t is
int erest ing t o not e t hat assuming a 5% cost of debt , t he t r ansact ion would be
accret ive, on a business net income basis ( ie excluding rest ruct uring expenses and
amort isat ion) at up t o $96 per share.
We not e act ivist shareholder, Carl I cahn, has t aken a st ake in t he Company ( 4%,
according t o Bloomberg on 31
st
March 2011) and has recent ly forced t he addit ion of
t wo addit ional direct ors ont o Genzyme’s board. This implies t o us t hat t he Company
is focussed on maximising shareholder value in t he short t erm. Selling shareholders
would aim t o use t he following reasons t o support t heir valuat ion:
► The phase 3 t rials t hat are running for Campat h in Mult iple Sclerosis. First phase
3 dat a is due in mid 2011 and we have not assumed success in t his t rial in our
DCF.
► Management has fixed t he worst of t he manufact uring issues at t he Allst on and
Haverhill plant and hopes t o be able t o fully supply t he market wit h Cerezyme by
t he end of 2010 and Fabrazyme at some point in 2011.
Thi s i mpl i es di sci pl i ne i s r equi r ed by an acqui r or NOT t o ov er pay. This is
because debt funding cost s are so low, relat ive t o acquisit ion mult iples, t hat
accret ion / dilut ion analysis j ust ifies a far higher acquisit ion price t han DCF models.
We t hink $70 t o $80 per share could be a range t hat selling shareholders and an
acquirer could set t le on. The selling shareholders could argue t hat t hey obt ained a
full price, based on a DCF, and t he acquiring Company could argue t he t ransact ion is
accret ive. Our summary valuat ion chart is included below:
We t hink a deal could be
consummat ed at $70 t o $80 per
share
July 10



3

Genzy me – Summar y Val uat i on Char t

50
55
60
65
70
75
80
85
90
95
DCF Stand alone DCF I nc syner gies Genzyme High 1st Yr post -deal EPS
Neut ral
( $)
50
55
60
65
70
75
80
85
90
95
DCF Stand alone DCF I nc syner gies Genzyme High 1st Yr post -deal EPS
Neut ral
( $)


Source: EVO Securit ies

July 10



4
Sanof i - Avent i s / Genzy me mer ger anal y si s
Former Genzyme businesses would generat e 12% of pro- forma 2011E Sales and 7%
of pro- forma 2011E EBI T, EXCLUDI NG any synergies. I NCLUDI NG peak synergies,
calculat ed at 10% of t ar get operat ing expenses, former Genzyme business would
generat e 14% of pro- forma 2013E sales and 16% of 2013E EBI T, as shown in t he
following t able:

Genzy me Sal es as a % of pr o- f or ma gr oup Sal es

Genzy me EBI T as a % of pr o- f or ma gr oup EBI T
0%
5%
10%
15%
20%
25%
30%
2011 2012 2013 2014
Genzyme Sanof i

0%
5%
10%
15%
20%
25%
30%
2011 2012 2013 2014
Genzyme Sanofi
Source: EVO Securit ies

Source: EVO Securit ies. Not e: I ncludes synergies of 2% Genzyme cost s in
2011, 5% in 2012 and 10% in 2013.

We have put t oget her a merger model for Sanofi- Avent is and Genzyme, using t he
following assumpt ions:
► An acquisit ion price of $75 per share, which approximat es t o a 40% premium t o
22
nd
July closing share price.
► The deal closes at YE 2010.
► The deal is 100% financed by debt at a 5% cost of debt .
► Combined t ax rat e equivalent t o Sanofi’s forecast of 28%.
► Cost synergies at 2% of Genzyme’ cost s in 2011, 5% in 2012 and 10% from
2013.
► We assume 100% of Genzyme’s free cash flow is used t o pay down t he debt .
On t his basis t he deal would be 2% accret ive t o 2011E EPS, 6% accr et ive t o 2012E
EPS and 13% accret ive t o 2013E EPS, on a pre- except ional and pre- amort isat ion
basis. We would view an acquisit ion at a premium t o t his price as being bad for
shareholders, as it would imply t hat capit al discipline had broken downin Sanofi
( unless, of course, t he management could j ust ify a higher synergy level) . The
analysis is shown in t he following t able:
Assuming synergies of 10% of
t he t arget ’s cost s, Genzyme
could generat e 16% of t he pr o-
forma group’s EBI T in 2013
We t hink t he deal works for
Sanofi up t o t he low $70s and
beyond t hat it would imply a
breakdown in capit al discipline
July 10



5
Acqui si t i on anal y si s – cr edi t st at i st i cs
We have calculat ed various debt mult iples t o see if Sanofi could afford t he
acquisit ion. We have used Net Debt / EBI TDA and int erest cover, using EBI T /
int erest cover at a variet y of different share prices. The analysis implies t hat Sanofi
has t he flexibilit y t o fund t he acquisit ion ent irely from debt . Addit ionally, it implies
t hat raising funds will not be a significant barrier t o consummat ing t he t ransact ion.
Our analysis is included in t he following t able:
Sanof i Avent i s – Genzyme mer ger model , assumi ng $75 t ak eout pr i ce
2011E 2012E 2013E 2014E 2015E
SANOFI AVENTI S
Sal es 30, 013 28, 917 28, 701 29, 889 30, 872
growt h % - 2.7% - 3.6% - 0.8% 4.1% 3.3%
Op cost s ( 18,119) ( 18,477) ( 18,855) ( 19,769) ( 20,410)
EBI T ( busi ness) 11, 894 10, 441 9, 846 10, 120 10, 461
Margin % 39.6% 36.1% 34.3% 33.9% 33.9%
GENZYME
Sal es 4, 075 4, 375 4, 745 5, 001 5, 251
growt h % 14.7% 7.4% 8.5% 5.4% 5.0%
Op cost s ( 3,203) ( 3,215) ( 3,208) ( 3,351) ( 3,519)
EBI T 871 1, 160 1, 537 1, 649 1, 732
% margin 21.4% 26.5% 32.4% 33.0% 33.0%

MERGED
Sal es 34, 087 33, 292 33, 446 34, 890 36, 123
growt h % - 0.9% - 2.3% 0.5% 4.3% 3.5%
Op cost s ( 21,322) ( 21,691) ( 22,063) ( 23,120) ( 23,929)
Cost synergies 64 161 321 335 352
EBI T 12, 829 11, 761 11, 703 12, 105 12, 545
% margin 37.6% 35.3% 35.0% 34.7% 34.7%

Sanofi Net financials ( 176) ( 93) ( 17) 46 91
Genzyme Cash I nt 14 71 134 201 272
Merger debt ( 746) ( 746) ( 746) ( 746) ( 746)
Tot al net Fx ( 908) ( 768) ( 629) ( 500) ( 383)

Post merger pre- t ax 11,922 10,993 11,074 11,605 12,162
Tax ( 3,338) ( 3,078) ( 3,101) ( 3,249) ( 3,405)
Tax rat e 28.0% 28.0% 28.0% 28.0% 28.0%
Net i ncome ( adj ) 8, 584 7, 915 7, 973 8, 356 8, 756

Tot al shares 1,311 1,311 1,311 1,311 1,311

EPS ( Bus) , i ncl udi ng GENZ 6. 55 6.04 6. 08 6. 38 6. 68
EPS Acc ( Dil) 1.7% 6.2% 12.7% 14.2% 15.3%
Source: EVO Securit ies
July 10



6
Price ( €) 42.0 46.2 50.4

54.6

58.8 63.0 67.1 71.3
I mpact of acqui r i ng Genzy me on ot her Eur opean
Lar geCap st ock s:
Following t he repor t s linking GSK t o Genzyme we have performed an accret ion /
dilut ion analysis on all t he European LargeCap st ocks t o Genzyme. I n conclusion, at
$75 per shar e, t he acquisit ion would be accr et ive for all European large cap st ocks,
on a pre- except ional basis. Furt her, from a st rat egic perspect ive, we would
underst and if Ast raZeneca, GlaxoSmit hKline and Sanofi- Avent is had int erest in t he
Company. We not e, t here are also newspaper art icles linking Johnson and Johnson
( out side our coverage universe) t o t he Genzyme.
I n t his analysis, we use similar assumpt ions t o t hose list ed above, including a t ake
out price of $75 for Genzyme. As shown, t he acquisit ion would be posit ive for all five
of t he European companies.


Debt r at i os v er sus Genzy me pr i ce pr emi um
Pr emi um t o 22 Jul 0% 10% 20% 30% 40% 50% 60% 70%
Price ( $) 54.2 59.6 65.0

70.4

75.8 81.3 86.7 92.1

Equit y value ( €m) 11,200 12,320 13,440

14,560

15,680 16,800 17,920 19,040
Ent erprise Value ( €m) 10,441 11,561 12,681

13,801

14,921 16,041 17,161 18,281

2011 Net Debt / EBI TDA 0.44x 0.52x 0.60x

0.67x

0.75x 0.83x 0.91x 0.99x
2011 EBI T / int erest 18.6x 17.2x 16.0x

15.0x

14.0x 13.2x 12.5x 11.9x
Source: EVO Securit ies
Accr et i on / Di l ut i on anal y si s f or ot her EU l ar ge caps acqui r i ng Genzy me
2011E 2012E 2013E Comment s
Ast raZeneca ( $) EPS pre- syner gies 5.98 5.78 6.17 Could be int er est ed. Needs t o
EPS post - syner gies 6.11 6.19 6.97 address pat ent cliff
Accret ion 2.1% 7.1% 13.0%
GlaxoSmit hKline ( GBp) EPS pre- syner gies 1.30 1.38 1.48 Linked t o deal in newspaper
EPS post - syner gies 1.33 1.47 1.64 art icle. Request ed t o be kept
Accret ion 2.9% 6.5% 10.9% up t o dat e wit h process”
Novart is ( $) EPS pre- syner gies 4.81 4.99 4.90 Likely no int erest . Digest ing
EPS post - syner gies 4.92 5.28 5.44 Alcon acquisit ion
Accret ion 2.2% 5.8% 11.0%
Roche ( CHF) EPS pre- syner gies 14.80 16.18 17.52 Likely no int erest . Digest ing
EPS post - syner gies 14.91 16.85 18.96 Genent ech minorit ies purchase
Accret ion 0.8% 4.1% 8.2%
Sanofi Avent is ( €) EPS pre- syner gies 6.44 5.68 5.40 Linked t o Genzyme in various
EPS post - syner gies 6.55 6.04 6.09 art icles over last mont h
Accret ion 1.7% 6.3% 12.7%
Based on acquisit ion price of $75 per Genzyme share
Source: EVO Securit ies
July 10



7

Sanof i Avent i s ( SAN.PA)
Rat i ng Pr i ce Tar get Pr i ce Mar k et cap Net Cash EV
Sell €50.0 €45.2 €59bn - €862m €60bn

Segment al Anal y si s
Year End Dec - €m 2008A 2009A 2010E 2011E 2012E 2013E 2014E
Lovenox 2, 738 3, 043 2, 891 2, 350 2, 177 2, 043 2,005
Plavix 2, 616 2, 623 2, 236 2, 082 2, 099 2, 102 2,058
Delix / Trit ace 513 429 395 355 320 288 259
Avapro / Aprovel 1, 202 1, 236 1, 288 1, 302 974 753 671
Mult aq 0 25 148 387 679 868 1,169
Car di ov ascul ar / Thr ombosi s t ot a 7,069 7, 356 6, 958 6, 477 6, 248 6, 054 6, 162
Taxot ere 2, 033 2, 177 2, 116 1, 441 1, 295 1, 227 1,192
Eloxat in 1, 348 957 382 939 678 290 250
Copaxone 622 467 463 460 46 0 0
Oncol ogy / I mmunol ogy t ot al 4,003 3, 601 2, 961 2, 840 2, 019 1, 516 1, 442
Ambien / St ilnox 370 376 415 448 477 511 540
Ambien CR 459 498 484 97 92 87 83
Depakine 323 329 329 313 297 282 268
CNS t ot al 1,152 1, 202 1, 228 857 866 880 891
Lant us 2, 450 3, 080 3, 482 3, 796 4, 046 4, 297 4,551
Amar yl 387 416 441 451 462 474 489
Di abet es t ot al 2,837 3, 496 3, 923 4, 246 4, 508 4, 772 5, 040
Allegra 688 745 492 522 539 549 560
Xyzal 93 115 138 152 156 159 163
Act onel 330 264 224 180 144 115 57
Xat ral 331 296 296 133 60 54 49
Nasacor t 241 220 198 188 179 170 161
Ket ek 20 21 21 21 21 21 21
Apidr a 171 137 166 191 214 235 254
Sculpt r a 82 90 97 107 117 129 129
Acomplia 72 0 0 0 0 0 0
I nt er nal Medi ci ne t ot al 2,028 1, 888 1, 632 1, 493 1, 429 1, 432 1, 394
Polio / Whopping cough/ Hib Vaccin 768 968 968 1, 113 1, 225 1, 335 1,442
I nfluenza Vaccines 736 1, 062 1, 075 700 735 772 810
Tr avel Vaccines 309 313 351 379 398 417 438
Meningit is 68 80 88 94 99 104 109
Adult Boost er s 399 406 426 439 452 466 480
Menact ra 404 445 467 491 554 621 683
Ot her Vaccines 174 179 346 381 411 320 339
Acambis ( ACAM2000- Smallpox) 3 30 32 33 35 36 38
Pipeline Vaccines 0 0 0 0 0 0 50
Tot al Vacci nes 2,861 3, 483 3, 753 3, 630 3, 909 4, 071 4, 390
Ot her Pr escr i pt i on Phar ma 7,577 5, 867 5, 545 5, 212 5, 004 4, 803 4, 611
Gener i cs: 0 1, 010 1, 357 1, 480 1, 607 1, 745 1, 897
OTC 41 1, 401 1, 902 2, 079 2, 183 2, 292 2, 407
Teriflunamide 0 0 0 0 0 25 75
Afibercept 0 0 0 0 40 100 200
AVE0010 ( GLP- 1) 0 0 0 20 50 100 150
AVE 5026 0 0 0 0 5 25 100
ot her pipeline 0 0 0 0 45 175 375
Jevt ana 0 0 0 50 150 240 340
Pi pel i ne t ot al 0 0 0 70 290 665 1, 240
Sales 27, 568 29, 304 29, 258 28, 384 28, 062 28, 231 29,473
% Gr owt h - 2% + 6% 0% - 3% - 1% + 1% + 4%

July 10



8

I ncome St at ement
Year End Dec - €m 2008A 2009A 2010E 2011E 2012E 2013E 2014E
Sales 27, 568 29, 304 29, 258 28, 384 28, 062 28, 231 29,473
Ot her Revenue 1, 249 1, 443 1, 595 1, 629 855 469 416
Cost of sales ( 7, 335) ( 7, 853) ( 8, 631) ( 8, 657) ( 8, 559) ( 8, 611) ( 8,989)
Gross profit 21, 482 22, 894 22, 222 21, 356 20, 358 20, 090 20,900
Gross profit margin 77. 9% 78. 1% 76. 0% 75.2% 72.5% 71.2% 70.9%
SG&A ( 7, 168) ( 7, 325) ( 6, 964) ( 6, 812) ( 6, 735) ( 6, 776) ( 7,044)
R&D ( 4, 575) ( 4, 583) ( 4, 272) ( 3, 974) ( 3, 929) ( 3, 952) ( 4,126)
Tot al operat ing cost s ( 11, 720) ( 11, 743) ( 11, 297) ( 10, 943) ( 10, 843) ( 10,928) ( 11,481)
Pr e- ex cept i onal oper at i ng i ncom 9,942 12,025 12, 231 11, 894 10, 441 9, 846 10, 120
Pre- except ional margin 36. 1% 41. 0% 41. 8% 41.9% 37.2% 34.9% 34.3%
Operat ing except ionals ( 578) ( 1, 100) 0 0 0 0 0
Profit / loss JVs/ Associat es
Repor t ed EBI T 9,364 10,925 12, 231 11, 894 10, 441 9, 846 10, 120
EBI T mar gin 34.0% 37.3% 41.8% 41.9% 37.2% 34.9% 34.3%
Net financials ( 232) ( 300) ( 307) ( 176) ( 93) ( 17) 46
Pr e- t ax profit 9,132 11,252 11, 923 11, 718 10, 347 9, 828 10, 166
Tax ( 2, 333) ( 2, 626) ( 3, 339) ( 3, 281) ( 2, 897) ( 2, 752) ( 2,846)
Tax Rat e 25. 5% 23. 3% 28. 0% 28.0% 28.0% 28.0% 28.0%
Share of profit / loss associat es 890 1, 082 1, 436 1, 594 1, 007 743 748
Minor it ies ( 441) ( 427) ( 350) ( 332) ( 301) ( 279) ( 267)
Net i ncome 7,248 8, 626 8, 585 8, 437 7, 450 7, 076 7, 319
EBI TDA 10, 784 13, 376 13, 251 13, 002 11, 636 11, 128 11,495
EBI TDA margin
Per shar e dat a
Fully dilut ed Shares ( m) 1, 309. 3 1, 305. 9 1, 310. 5 1, 310. 5 1, 310. 5 1,310. 5 1,310. 5
Headline EPS - fully dilut ed 3.08 4.51 5.11 4.98 4.21 5.06 5.25
Adj ust ed EPS - f ul l y di l ut ed 5.63 6.61 6.55 6. 44 5. 68 5. 40 5. 59
DPS 2. 2 2. 5 2. 5 2. 6 2. 6 2. 5 2. 6

Cash f l ow st at ement
Year End Dec - €m 2008A 2009A 2010E 2011E 2012E 2013E 2014E
Net income 7, 248 8, 626 8, 585 8, 437 7, 450 7, 076 7,319
Depreciat ion & amort isat ion 5, 985 5, 011 4, 598 4, 686 4, 773 1, 583 1,675
Change in wor king cap ( 421) ( 1, 254) 214 433 ( 104) ( 242) ( 210)
Ot her 854 ( 208) 264 61 727 ( 753) ( 1,039)
Cashf l ow f r om oper at i ons 8,523 8, 515 10, 083 10, 040 9, 268 7, 365 7, 445
Capex ( 1, 606) ( 1, 785) ( 2, 351) ( 2, 310) ( 2, 296) ( 2, 303) ( 2,361)
Acquisit ions ( 661) ( 5, 563) ( 1, 488) 0 0 0 0
Disposals 123 85 0 0 0 0 0
Ot her ( 10) ( 24) 0 0 0 0 0
Cashf l ow f r om i nv est ment s ( 2,154) ( 7,287) ( 3, 839) ( 2, 310) ( 2, 296) ( 2, 303) ( 2, 361)
Dividends paid ( 2, 702) ( 2, 872) ( 3, 239) ( 3, 262) ( 3, 375) ( 3, 353) ( 3,255)
Share issues/ ( buybacks) ( 1, 221) 26 0 0 0 0 0
Ot her 114 2, 059 ( 509) ( 9) ( 9) ( 9) ( 9)
Cashf l ow f r om f i nanci ng ( 3,809) ( 787) ( 3, 748) ( 3, 271) ( 3, 384) ( 3, 362) ( 3, 264)
Net increase in cash 2, 560 441 2, 496 4, 458 3, 589 1, 700 1,820
Opening cash 1, 666 4, 251 4, 692 7, 188 11, 646 15, 235 16,935
Cl osi ng cash 4,226 4, 692 7, 188 11, 646 15, 235 16, 935 18, 755
Free cash flow 6, 917 6, 730 7, 732 7, 729 6, 973 5, 061 5,084

July 10



9

Bal ance sheet
Year End Dec - €m 2008A 2009A 2010E 2011E 2012E 2013E 2014E
Fixed asset s 6, 961 7, 830 8, 161 8, 363 8, 463 8, 484 8,470
Goodwill 28, 163 29, 733 29, 733 29, 733 29, 733 29, 733 29,733
I nt angible Asset s 15, 260 13, 747 11, 169 8, 591 6, 013 6, 713 7,413
Long- t er m asset s 56,584 56,175 56, 851 56, 069 54, 598 56, 062 57, 496
I nvent ories 3, 590 4, 444 4, 381 4, 069 4, 111 4, 217 4,407
Account s receivable 5, 303 6, 015 5, 685 5, 420 5, 557 5, 852 5,896
Cash 4, 226 4, 692 7, 188 11, 646 15, 235 16, 935 18,755
Cur r ent Asset s 15,403 17,532 19, 632 23, 450 27, 195 29, 308 31, 451
Tot al asset s 71,987 73,707 76, 483 79, 519 81, 793 85, 370 88, 947
Long- t erm debt 4, 173 5, 961 5, 461 5, 461 5, 461 5, 461 5,461
Pension liabilit ies 4, 068 4, 342 4, 342 4, 342 4, 342 4, 342 4,342
Long- t er m l i abi l i t i es 17,571 19,205 18, 705 18, 705 18, 705 18, 705 18, 705
Short - t erm debt 1, 833 2, 866 2, 866 2, 866 2, 866 2, 866 2,866
Account s payable 2, 791 2, 654 2, 475 2, 332 2, 406 2, 566 2,590
Cur r ent l i abi l i t i es 9,345 10,965 10, 786 10, 643 10, 717 10, 877 10, 901
Tot al l i abi l i t i es 26,916 30,170 29, 491 29, 348 29, 422 29, 582 29, 606
Shareholder funds 44, 866 48, 188 51, 619 54, 771 56, 940 60, 322 63,836
Minor it ies 205 258 282 309 340 375 414
Tot al equi t y and l i abi l i t i es 71,987 78,616 81, 392 84, 428 86, 702 90, 279 93, 856

Gear i ng
Year End Dec 2008A 2009A 2010E 2011E 2012E 2013E 2014E
Net Debt / EBI TDA 0.1x 0. 3x 0. 1x 0. 0 0. 0 0. 0 0. 0
I nt erest cover 42.9x 40. 1x 39. 8x 67. 6x 111. 9x 573. 7x 0. 0
Net cash/ ( Net debt ) ( 1, 377) ( 3, 858) ( 862) 3, 596 7, 185 8, 885 10,705
Dividend cover 2.6x 2. 7x 2. 6x 2. 5x 2. 2x 2. 2x 2. 2x



July 10



10

Di scl osur es
Anal y st det ai l s
Domi ni c Val der - Resear ch Anal y st
AstraZeneca® Novartis® Roche®
GlaxoSmithKline® Shire® Sanofi Aventis®
Ni gel Bi r k s - Resear ch Anal y st
Ni gel Bi r k s - Resear ch Anal y st Ni gel Bi r k s - Resear ch Anal y st Ni gel Bi r k s - Resear ch Anal y st Ni gel Bi r k s - Resear ch Anal y st
Chr i s Donnel l an - Resear ch Anal y st
Smith & Nephew® Straumann® Sonova®
Synthes® William Demant® Fresenius Medical Care®
Nobel Biocare® Qiagen® Fresenius SE®


Key: D Analyst has financial int erest , E Analyst has mat erial int erest , # Analyst is a direct or, ² Analyst has a business int erest , + EVO Securit ies is broker and/ or advisor and has in
t he last t welve mont hs act ed as broker and/ or advisor or provided invest ment banking services, for which it has received compensat ion wit hin t he next t hree mont hs, · EVO
Securit ies is no longer broker and/ or advisor, but has in t he last t welve mont hs act ed as broker and/ or advisor or provided invest ment banking services, for which t hey have
received compensat ion or are expect ing compensat ion wit hin t he next t hree mont hs, ® EVO Securit ies makes market s in t he company, + EVO Securit ies has shareholdings in t he
Company in excess of 5%, × The Company has shareholdings in Evolut ion Group plc in excess of 5%


Recommendat i on hi st or y char t ( for t he last 12 mont hs t o previous days close)
Sanof i Av ent i s - Rat i ngs Pl ot t er as at 28/ 07/ 2010
44
46
48
50
52
54
56
58
Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10
Sour ce: Fact Set / Evolut ion Secur it ies r at ings
16/09/09
Buy
25/01/10
Add
05/05/10
Sell


% of recommendat ions
( all st ocks)
% of recommendat ions
( corporat e st ocks)
% of recommendat ions
( non- corporat e st ocks)

Buy
52%
Not Rated
1%
Neutral
18%
Sell
10%
Add
15%
Reduce
4%

Buy
85%
Not Rated
6%
Neutral
2%
Sell
0%
Add
7%
Reduce
0%


Buy
44%
Not Rated
1%
Neutral
22%
Sell
12%
Add
16%
Reduce
5%

July 10



11


Equi t y r esear ch r ecommendat i on gui de
Absolut e basis, expect ed performance over t he next 12 mont h period.
Buy: 10% or great er increase in share price Sell: 10% or more decrease in share price
Add: 5- 10% increase in share price Reduce: 5- 10% decrease in share price
Neut ral: + 5% / - 5% variat ion in share price
The following Evolut ion research t eams adopt a sect or relat ive approach t o recommendat ions: Banks, Propert y, Gold
Sect or* relat ive basis, expect ed performance over next 12 mont hs
Buy: St ock expect ed t o out perform t he sect or and be among most at t ract ive in sect or
Neut ral: St ock expect ed t o perform in- line wit h t he sect or and may increase / decrease in value but remain less at t ract ive t han Buy- rat ed st ocks / more
at t ract ive t han Sell- rat ed st ocks
Sell: St ock expect ed t o underperform t he sect or and may increase / decrease in value but be among t he least at t ract ive in t he sect or

( * A sect or comprises st ocks covered by one or more analyst s which share a common indust ry and which t oget her const it ut e t hose analyst s’ coverage
universe)

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Genzyme generated sales of $4. which has significantly impacted the company susceptible to M&A approaches. has taken a stake in the Company (4%. based on a DCF. excluding synergies and $65 .5bn in 2009 and the largest 3 products are: 1) Cerezyme (Gaucher’s Disease. This implies to us that the Company is focussed on maximising shareholder value in the short term. owning a 4% stake in Our DCF of Genzyme generates a fair value of $55 to $65 per share. Carl Icahn. the transaction would be accretive.July 10 Genzyme – Valuation Analysis We think a deal could be consummated at $70 to $80 per share Genzyme was founded to focus on finding treatments for rare diseases. Selling shareholders would aim to use the following reasons to support their valuation: ► The phase 3 trials that are running for Campath in Multiple Sclerosis. It is interesting to note that assuming a 5% cost of debt. 2) Sevelamer (renal disease 2009 sales=$707m) and 3) Fabrazyme (Fabry’s Disease 2009 sales=$431m). on a business net income basis (ie excluding restructuring expenses and amortisation) at up to $96 per share. Our summary valuation chart is included below: 2 . and the acquiring Company could argue the transaction is accretive. Its products are mainly biologics (implying a tougher pathway for generics) and They are highly profitable. This is an area of interest to other companies for the following reasons: 1. 2009 sales=$793m). Management has fixed the worst of the manufacturing issues at the Allston and Haverhill plant and hopes to be able to fully supply the market with Cerezyme by the end of 2010 and Fabrazyme at some point in 2011. according to Bloomberg on 31st March 2011) and has recently forced the addition of two additional directors onto Genzyme’s board.$75 per share including synergies. Its products currently have lower levels of competition. First phase 3 data is due in mid 2011 and we have not assumed success in this trial in our DCF. This is because debt funding costs are so low. manufacturing problems at two of its manufacturing (Allston and Haverhill). We think $70 to $80 per share could be a range that selling shareholders and an acquirer could settle on. that accretion / dilution analysis justifies a far higher acquisition price than DCF models. 3. Genzyme has experienced facilities over the past year the stock price. Veteran is also involved in the situation. relative to acquisition multiples. It is interesting to note that Genzyme’s all time high stock price was $84 per share in August 2008 and that the valuation has been impaired following the manufacturing problems they had with Cerezyme and Fabryzme at the Allston and Haverhill manufacturing plants. rendering activist investor Carl Icahn the Company. 2. ► This implies discipline is required by an acquiror NOT to overpay. We note activist shareholder. The selling shareholders could argue that they obtained a full price.

July 10 Genzyme – Summary Valuation Chart ($) 95 90 85 80 75 70 65 60 55 50 DCF Stand alone DCF Inc synergies Genzyme High 1st Yr post-deal EPS Neutral Source: EVO Securities 3 .

calculated at 10% of target operating expenses. We have put together a merger model for Sanofi-Aventis and Genzyme. on a pre-exceptional and pre-amortisation basis. 6% accretive to 2012E EPS and 13% accretive to 2013E EPS. using the following assumptions: ► An acquisition price of $75 per share. the management could justify a higher synergy level). as shown in the following table: Genzyme Sales as a % of pro-forma group Sales 30% 25% 20% 15% 10% 5% 0% 2011 2012 Genzyme 2013 Sanofi 2014 Genzyme EBIT as a % of pro-forma group EBIT 30% 25% 20% 15% 10% 5% 0% 2011 2012 Genzyme 2013 Sanofi 2014 Source: EVO Securities Source: EVO Securities. 5% in 2012 and 10% in 2013. ► ► ► ► ► We think the deal works for Sanofi up to the low $70s and beyond that it would imply a breakdown in capital discipline On this basis the deal would be 2% accretive to 2011E EPS. former Genzyme business would generate 14% of pro-forma 2013E sales and 16% of 2013E EBIT. INCLUDING peak synergies. EXCLUDING any synergies. The deal is 100% financed by debt at a 5% cost of debt.July 10 Sanofi-Aventis / Genzyme merger analysis Assuming synergies of 10% of the target’s costs. Cost synergies at 2% of Genzyme’ costs in 2011. 5% in 2012 and 10% from 2013. We would view an acquisition at a premium to this price as being bad for shareholders. Combined tax rate equivalent to Sanofi’s forecast of 28%. We assume 100% of Genzyme’s free cash flow is used to pay down the debt. as it would imply that capital discipline had broken downin Sanofi (unless. The analysis is shown in the following table: 4 . of course. Genzyme could generate 16% of the proforma group’s EBIT in 2013 Former Genzyme businesses would generate 12% of pro-forma 2011E Sales and 7% of pro-forma 2011E EBIT. Note: Includes synergies of 2% Genzyme costs in 2011. The deal closes at YE 2010. which approximates to a 40% premium to 22nd July closing share price.

0% 8.7% 91 272 (746) (383) 12.0% 30.119) 11.5% (3.208) 1. using EBIT / interest cover at a variety of different share prices.732 33.3% (93) 71 (746) (768) 10.917 -3.215) 1.55 1. We have used Net Debt / EBITDA and interest cover.405) 28.7% 46 201 (746) (500) 11.04 6.889 4.087 -0.351) 1.3% 29. Additionally.1% 28.0% 8.249) 28.356 1.311 6.311 6.7% 33.8% (18.2% 36.0% 7.7% (3.9% 2012E 2013E 2014E 2015E Source: EVO Securities Acquisition analysis – credit statistics We have calculated various debt multiples to see if Sanofi could afford the acquisition.4% 5.756 1.0% 7.July 10 Sanofi Aventis – Genzyme merger model.9% 30.0% (17) 134 (746) (629) 11.5% 4.922 (3.537 32.120) 335 12.9% (21.3% (23.446 0.074 (3.584 1.075 14.38 14.251 5.001 5.703 35.6% (18.545 34.311 6.123 3.105 34.973 1.311 6.894 39.120 33. including GENZ EPS Acc (Dil) 34.203) 871 21.013 -2.6% 28.311 6.68 15.6% (176) 14 (746) (908) 11. The analysis implies that Sanofi has the flexibility to fund the acquisition entirely from debt.605 (3.3% (20.08 12.0% (3.160 26.5% (23.078) 28.461 33.745 8.477) 10.993 (3.322) 64 12.101) 28.519) 1.0% 8.890 4.846 34.701 -0.063) 321 11.761 35.162 (3.691) 161 11.3% (21.7% (18.441 36.338) 28.410) 10.292 -2.3% 4.2% 33. Our analysis is included in the following table: 5 .375 7.7% 34.4% (3.4% 4.649 33.929) 352 12.4% (3.1% (19.5% (22.872 3.829 37. it implies that raising funds will not be a significant barrier to consummating the transaction.769) 10.855) 9.0% 5. assuming $75 takeout price 2011E SANOFI AVENTIS Sales growth % Op costs EBIT (business) Margin % GENZYME Sales growth % Op costs EBIT % margin MERGED Sales growth % Op costs Cost synergies EBIT % margin Sanofi Net financials Genzyme Cash Int Merger debt Total net Fx Post merger pre-tax Tax Tax rate Net income (adj) Total shares EPS (Bus).915 1.

7% 2012E 5.8% 6. the acquisition would be accretive for all European large cap stocks.5x 0.91 0.0x 0.99 5.281 0.64 article.17 Could be interested.0 10% 59.8 58.90 Likely no interest.921 16.96 Genentech minorities purchase 8. In conclusion.801 14.98 6.52x 17.47 6. the acquisition would be positive for all five of the European companies. we use similar assumptions to those listed above.75x 14.52 Likely no interest.440 14.1% 1.9x Source: EVO Securities Impact of acquiring Genzyme on other European LargeCap stocks: Following the reports linking GSK to Genzyme we have performed an accretion / dilution analysis on all the European LargeCap stocks to Genzyme.0 50.2% 5.80 14.8 50% 81. We note.44 6. As shown.1% 1.60x 16.1% 5.6 40% 75.040 10.161 18. there are also newspaper articles linking Johnson and Johnson (outside our coverage universe) to the Genzyme.2x 0.2 20% 65.18 16.681 13.561 12.81 4.800 17.55 1.6 46.09 articles over last month 12. Accretion / Dilution analysis for other EU large caps acquiring Genzyme 2011E AstraZeneca ($) EPS pre-synergies EPS post-synergies Accretion GlaxoSmithKline (GBp) EPS pre-synergies EPS post-synergies Accretion Novartis ($) EPS pre-synergies EPS post-synergies Accretion Roche (CHF) EPS pre-synergies EPS post-synergies Accretion Sanofi Aventis (€) EPS pre-synergies EPS post-synergies Accretion 5. In this analysis.91x 12. on a pre-exceptional basis.38 1.44 Alcon acquisition 11.560 15. from a strategic perspective.48 Linked to deal in newspaper 1.19 7. Requested to be kept 10.68 6. we would understand if AstraZeneca.11 2. Needs to 6.3 63.40 Linked to Genzyme in various 6. including a take out price of $75 for Genzyme.0x 0.3 11.33 2.78 6.680 16.0% 1.99x 11.0% 17.97 address patent cliff 13.200 12.4 54.30 1.2% 14. Digesting 5.67x 15.920 19.5% 4.92 2.7 67.441 11.1 70% 92. Digesting 18.7% Based on acquisition price of $75 per Genzyme share Source: EVO Securities 6 .8% 16.041 17. at $75 per share.6x 0.85 4.28 5. GlaxoSmithKline and Sanofi-Aventis had interest in the Company.4 30% 70.44x 18.04 6.0 60% 86.83x 13.3% 2013E Comments 6. Further.2x 0.1 71.0x 0.July 10 Debt ratios versus Genzyme price premium Premium to 22 Jul Price ($) Price (€) Equity value (€m) Enterprise Value (€m) 2011 Net Debt / EBITDA 2011 EBIT / interest 0% 54.9% 4.9% up to date with process” 4.320 13.2 42.

248 1.796 451 4.803 1.348 622 4.837 688 93 330 331 241 20 171 82 72 2.113 700 379 94 439 491 381 33 0 3.033 1.407 75 200 150 100 375 340 1.July 10 Sanofi Aventis (SAN.772 549 159 115 54 170 21 235 129 0 1.753 5.350 2.295 678 46 2.551 489 5.225 735 398 99 452 554 411 35 0 3.043 2.401 0 0 0 0 0 0 0 29.099 320 974 679 6.482 441 3.071 4.442 540 83 268 891 4.335 772 417 104 466 621 320 36 0 4.616 513 1.162 1.004 1.183 0 40 50 5 45 150 290 28.2 Market cap €59bn Net Cash -€862m EV €60bn 7 .442 810 438 109 480 683 339 38 50 4.236 25 7.058 259 671 1.630 5.177 2.019 477 92 297 866 4.516 511 87 282 880 4.867 1.169 6.212 1.545 1.005 2.062 313 80 406 445 179 30 0 3.909 5.493 1.240 29.861 7.227 290 0 1.228 3.231 +1% 2014E 2.043 2.432 1.496 745 115 264 296 220 21 137 90 0 1.483 5.258 0% 2011E 2.632 968 1.069 2.390 4.302 387 6.357 1.246 522 152 180 133 188 21 191 107 0 1.923 492 138 224 296 198 21 166 97 0 1.288 148 6.046 462 4.441 939 460 2.738 2.897 2.568 -2% 2009A 3.054 1.079 0 0 20 0 0 50 70 28.902 0 0 0 0 0 0 0 29.€m Lovenox Plavix Delix / Tritace Avapro / Aprovel Multaq Cardiovascular/Thrombosis tota Taxotere Eloxatin Copaxone Oncology / Immunology total Ambien / Stilnox Ambien CR Depakine CNS total Lantus Amaryl Diabetes total Allegra Xyzal Actonel Xatral Nasacort Ketek Apidra Sculptra Acomplia Internal Medicine total Polio / Whopping cough/ Hib Vaccin Influenza Vaccines Travel Vaccines Meningitis Adult Boosters Menactra Other Vaccines Acambis (ACAM2000-Smallpox) Pipeline Vaccines Total Vaccines Other Prescription Pharma Generics: OTC Teriflunamide Afibercept AVE0010 (GLP-1) AVE 5026 other pipeline Jevtana Pipeline total Sales % Growth 2008A 2.508 539 156 144 60 179 21 214 117 0 1.961 415 484 329 1.040 560 163 57 49 161 21 254 129 0 1.477 1.116 382 463 2.062 -1% 2013E 2.0 Price €45.480 2.384 -3% 2012E 2.891 2.429 1.202 3.888 968 1.PA) Rating Sell Segmental Analysis Year End Dec .623 429 1.473 +4% Price Target €50.297 474 4.003 370 459 323 1.745 2.080 416 3.236 395 1.075 351 88 426 467 346 32 0 3.356 2.102 288 753 868 6.611 1.607 2.202 0 7.082 355 1.028 768 736 309 68 399 404 174 3 0 2.292 25 100 100 25 175 240 665 28.177 957 467 3.010 1.601 376 498 329 1.958 2.152 2.192 250 0 1.394 1.304 +6% 2010E 2.840 448 97 313 857 3.577 0 41 0 0 0 0 0 0 0 27.450 387 2.

755 5.809) 2.309.839) (3.943) 11.0% 1.296) (3.692 7.686 433 61 10.08 5.310.820 16.353) 0 (9) (3.3% (300) 11.3% 1.773 (104) 727 9.929) (10.5% (6.646 7.853) 22.443 (7.251 11.303) (3.335) 21.720) 9.384 1.935 5.40 2.928) 9.268 (2.626 5.310.5 4.120 34.166 (2.6 9.082 (427) 8.925 37.310.11 6.575) (11.040 (2.0% (232) 9.8% 0 2011E 28.002 10.437 13.059 (787) 441 4.973 2013E 7.356 75.154) (2.5 4.258 1.062 855 (8.061 2014E 7.272) (11.985 (421) 854 8.735) (3.8% (307) 11.631) 22.626) 23.333) 25.917 2009A 8.254) (208) 8.974) (10.846 34.700 15.872) 26 2.319 1.743) 12.666 4.310.€m Sales Other Revenue Cost of sales Gross profit Gross profit margin SG&A R&D Total operating costs Pre-exceptional operating incom Pre-exceptional margin Operating exceptionals Profit/loss JVs/Associates Reported EBIT EBIT margin Net financials Pre-tax profit Tax Tax Rate Share of profit/loss associates Minorities Net income EBITDA EBITDA margin Per share data Fully diluted Shares (m) Headline EPS .585 13.923 (3.083 (2.0% 1.304 1.126) (11.9 4.846) 28.450 4.598 214 264 10.846 34.6 1.675 (210) (1.6 1.120 34.249 (7.0% 1.692 6.325) (4.376 12.231 469 (8.231 41.894 41.0% (1.2% (6.011 (1.515 (1.0% 743 (279) 7.248 5.264) 1.281) 28.9% (176) 11.384) 3.496 4.952) (10.646 15.523 (1.989) 20.935 18.235 6.495 2008A 27.188 11.100) 2010E 29.339) 28.560 1.784 10.458 7.July 10 Income Statement Year End Dec .729 2012E 7.583 (242) (753) 7.296) 0 0 0 (2.fully diluted DPS Cash flow statement Year End Dec .563) 85 (24) (7.252 (2.595 (8.5 1.812) (3.68 2.255) 0 (9) (3.5 1.358 72.347 (2.98 6.375) 0 (9) (3.364 34.0% 748 (267) 7.589 11.5 5.657) 21.303) 0 0 0 (2.482 77.2% 0 2013E 28.436 (350) 8.231 41.0% (6.168) (4.310.21 5.25 5.61 2.319 11.9% (7.362) 1.732 2011E 8.9% 0 2014E 29.239) 0 (509) (3.828 (2.5% 890 (441) 7.5 5.361) 0 0 0 (2.025 41.226 6.€m Net income Depreciation & amortisation Change in working cap Other Cashflow from operations Capex Acquisitions Disposals Other Cashflow from investments Dividends paid Share issues/(buybacks) Other Cashflow from financing Net increase in cash Opening cash Closing cash Free cash flow 2008A 7.365 (2.310) (3.305.271) 4.568 1.251 4.fully diluted Adjusted EPS .59 2.718 (3.445 (2.785) (5.942 36.51 6.3% 46 10.06 5.044) (4.900 70.1% (7.748) 2.626 13.752) 28.9% (7.1% (578) 2009A 29.5 1.2% (6.2% (93) 10.894 78.55 2.702) (1.63 2.3% 0 8 .3 3.007 (301) 7.076 11.5 5.843) 10.262) 0 (9) (3.090 71.730 2010E 8.287) (2.039) 7.964) (4.44 2.450 11.084 1.481) 10.585 4.351) (1.235 16.221) 114 (3.9% (17) 9.297) 12.437 4.473 416 (8.361) (3.441 37.897) 28.611) 20.132 (2.636 9.559) 20.076 1.310) 0 0 0 (2.222 76.248 10.894 41.9% 0 2012E 28.606) (661) 123 (10) (2.594 (332) 8.583) (11.441 37.188 7.629 (8.776) (3.488) 0 0 (3.2 1.128 10.

733 6.170 48.175 4.195 81.830 29.606 63.935 29.068 17.322 375 90.692 17.0 111.2x 2013E 0.1x 39.422 56.705 2.717 29.654 10.856 9 .0 67.062 4.2x 2008A 6.226 15.463 29.413 57.069 4.705 2.0 10.188 19.705 2.1x 42.€m Fixed assets Goodwill Intangible Assets Long-term assets Inventories Accounts receivable Cash Current Assets Total assets Long-term debt Pension liabilities Long-term liabilities Short-term debt Accounts payable Current liabilities Total liabilities Shareholder funds Minorities Total equity and liabilities Gearing Year End Dec Net Debt/EBITDA Interest cover Net cash/(Net debt) Dividend cover 2008A 0.173 4.342 19.260 56.185 2.866 2.9x (1.557 15.342 18.332 10.771 309 84.363 29.733 13.407 5.646 23.7x 2010E 0.428 2012E 8.858) 2.866 2.475 10.483 5.836 414 93.733 6.0 0.5x 2012E 0.013 54.444 6.342 18.496 4.705 2.3x 40.747 56.342 18.163 15.381 5.584 3.420 11.877 29.713 56.461 4.069 5.755 31.205 2.616 2010E 8.685 7.235 27.345 26.451 88.015 4.705 2.632 76.532 73.961 4.6x 2009A 0.866 2.596 2.6x 3.591 56.590 5.461 4.111 5.308 85.705 2.793 5.566 10.169 56.851 4.470 29.7x 8.965 30.598 4.461 4.348 54.1x (3.161 29.885 2.961 28.733 7.279 2014E 8.450 79.8x (862) 2.896 18.484 29.916 44.6x 2011E 0.791 9.733 11.852 16.940 340 86.987 2009A 7.461 4.733 8.582 60.370 5.188 258 78.2x 2014E 0.303 4.491 51.707 5.571 1.9x 7.392 2011E 8.377) 2.702 2013E 8.July 10 Balance sheet Year End Dec .901 29.0 573.619 282 81.866 2.590 10.866 205 71.947 5.342 18.217 5.866 2.786 29.461 4.342 18.643 29.403 71.833 2.519 5.866 2.987 4.406 10.

Analyst is a director. for which it has received compensation within the next three months. but has in the last twelve months acted as broker and/or advisor or provided investment banking services. Analyst has material interest.Ratings Plotter as at 28/07/2010 16/09/09 Buy 58 56 54 52 50 48 46 44 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 25/01/10 Add 05/05/10 Sell Source: FactSet / Evolution Securities ratings % of recommendations (all stocks) Neutral 18% % of recommendations (corporate stocks) Neutral Not Rated Sell Reduce 2% 6% 0% Add 0% 7% % of recommendations (non-corporate stocks) Neutral 22% Not Rated 1% Not Rated 1% Sell 10% Buy 52% Buy 44% Sell 12% Reduce 4% Add 15% Reduce 5% Buy 85% Add 16% 10 .Research Analyst Nigel Birks .July 10 Disclosures Analyst details Dominic Valder .Research Analyst AstraZeneca GlaxoSmithKline Novartis Shire Roche Sanofi Aventis Nigel Birks .Research Analyst Nigel Birks . EVO Securities is no longer broker and/or advisor.Research Analyst Chris Donnellan .Research Analyst Smith & Nephew Synthes Nobel Biocare Straumann William Demant Qiagen Sonova Fresenius Medical Care Fresenius SE Key: Analyst has financial interest. The Company has shareholdings in Evolution Group plc in excess of 5% Recommendation history chart (for the last 12 months to previous days close) Sanofi Aventis . EVO Securities has shareholdings in the Company in excess of 5%.Research Analyst Nigel Birks .Research Analyst Nigel Birks . EVO Securities makes markets in the company. EVO Securities is broker and/or advisor and has in the last twelve months acted as broker and/or advisor or provided investment banking services. Analyst has a business interest. for which they have received compensation or are expecting compensation within the next three months.

Gold Sector* relative basis. ESL has a policy in relation to the management of the firms conflicts of interest. This material is for the use of intended recipients only and only for distribution to professional and institutional investors. re-distributed or passed to any other person or published in whole or in part for any purpose. expected performance over next 12 months Buy: Stock expected to outperform the sector and be among most attractive in sector Neutral: Stock expected to perform in-line with the sector and may increase / decrease in value but remain less attractive than Buy-rated stocks / more attractive than Sell-rated stocks Sell: Stock expected to underperform the sector and may increase / decrease in value but be among the least attractive in the sector (*A sector comprises stocks covered by one or more analysts which share a common industry and which together constitute those analysts’ coverage universe) Evolution Securities Ltd Disclaimer This document is issued by Evolution Securities Ltd (ESL) (Incorporated in England No. expected performance over the next 12 month period. Unless otherwise stated. either expressed or implied. this is available at: https://research. Accordingly. which is a recipient of this publication. the source for all forecasts included in this document is Evolution Securities and the source for historic results data is the company being reported on.evosecurities.pdf The stated price of any securities mentioned herein is as at the end of the business day immediately prior to the publication date unless otherwise stated and is not a representation that any transaction can be effected at this price. ESUS and/or its affiliates. The material in this document is not intended for distribution or use outside the European Economic Area. including lost profits arising in any way from the information contained in this material. persons who are authorised persons or exempted persons within the meaning of the Financial Services and Markets Act 2000 of the United Kingdom.com/conflicts. There is no regular update series for research recommendations issued by ESL. the securities referred to may not be suitable for you and should not be relied upon in substitution for the exercise of independent judgement. or persons who have been categorised by ESL as professional clients under the rules of the FSA. Disclosures in relation to ESUS and/or any affiliate’s role in managing or co-managing a public offering of securities for the issuer.pdf This publication has been produced by Evolution Securities Limited (ESL). Any US institution. Evolution Securities US Disclaimer ESUS accepts responsibility for the content of the publication. Buy: 10% or greater increase in share price Add: 5-10% increase in share price Neutral: +5% / -5% variation in share price The following Evolution research teams adopt a sector relative approach to recommendations: Banks. For Evolution Securities Limited Disclosures and Disclaimers please go to: https://research. No personal recommendation is being made to you. This document is for information purposes only and should not be regarded as an offer or solicitation to buy the securities or other instruments mentioned in it. 2316630). receiving compensation for investment banking services from the issuer in the past 12 months and/or expecting or intending to receive compensation for investment banking services from the issuer in the next three months and/or making a market in the issuer’s securities is set out in the main disclosure section of this publication Sell: 10% or more decrease in share price Reduce: 5-10% decrease in share price 11 . and may sell them or buy them from customers on a principal basis and may also perform underwriting services for or relating to those companies. No representation or warranty. Expressions of opinions are those of the research department of ESL only and are subject to change without notice. It is being distributed in the US by Evolution Securities US (ESUS) and it has not been altered in any way by ESUS prior to distribution. is made nor responsibility of any kind is accepted by any Evolution Group company. ESL or persons connected with it may provide or may have provided corporate services to the issuers of securities mentioned in this material and recipients of this document should not therefore rely on this report as being an impartial document.com/pdfs/disclosure. wishing to effect transactions in any security discussed in this publication. Property. its directors or employees either as to the accuracy or completeness of any information stated in this document. 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