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OMEGA PHARMA

A N N U A L R E P O R T

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The Banking and Finance Commission authorised Omega Pharma on 16 May 2002 to use this annual report as a reference document whenever it makes an offering of stock to the public pursuant to section II of Royal Decree no. 185 of 9 July 1935, via the procedure of provision of special information, until such time as it publishes its next annual report. In connection with this procedure, a transaction note must be appended to the annual report. The annual report and the transaction note together comprise a prospectus as defined in article 29 of Royal Decree no. 185 of 9 July 1935. This prospectus must be submitted for the approval of the Banking and Finance Commission in accordance with article 29ter, 1, paragraph 1 of Royal Decree no. 185 of 9 July 1935. The annual report is available on the Internet (www.omega-pharma.be) in Dutch, French and English, and copies of it may be obtained from the company's registered office. The Dutch version is the official version. The French and English versions are translations only, without legal status. Omega Pharma NV is responsible for the translations.

SUMMARY OF CONTENTS

Chairmans preface to the shareholders Key consolidated financial figures General information about Omega Pharma Identity and general information Objects of the company Company capital Omega Pharma shares Description of activities of Omega Pharma Historical background Group structure Description of products and activities Financial and accounting information Information about Omega Pharmas corporate governance Recent developments and prospects Financial calendar Financial information

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CHAIRMAN'S PREFACE TO THE SHAREHOLDERS


After different takeovers in 2000, the year 2001 was characterised by successful and future-oriented integrations for Omega Pharma. In the Netherlands, France, Germany, the United Kingdom and Spain, the group succeeded in setting up a basic organisation, prepared to implement Omega's extensive strategy in all countries. In the meantime, our organisation in Belgium - for the 14th consecutive year has proven that this strategy can indeed result in a long-term growth and an increased profitability. In the fragmented medical OTC/B2B market in Europe, Omega Pharma has all the assets to become a successful consolidator. It will enable us to be the best partner for our customers and to offer our talented employees development opportunities on a permanent basis. But most of all, we are convinced that this strategy could result in a maximum return for the confidence and trust shown by our shareholders. I would like to sincerely thank all our employees, customers, partners, and shareholders for their contributions to successful realisations in 2001. The decisive foundations have been laid for a magnificent future for Omega Pharma, and you may count on our total commitment to yield maximum shareholders' value.

Marc Coucke Managing Director Chairman of the Board of Directors

KEY CONSOLIDATED FINANCIAL FIGURES

In thousands of euros Turnover Operating profit/loss Financial result (1) Amortisation of consolidation differences Profit/loss from ordinary operations Extraordinary profit/loss (2) Profit/loss before tax Profit for the financial year Share in the result of the companies to which the equity method has been applied Consolidated net profit (3) Consolidated net ordinary profit (4) Number of shares (5) Result on ordinary activities after taxation Net ordinary profit/loss per share Gross dividend Net dividend Balance sheet total Capital and reserves Market capitalisation on 31 December Average traded volume per day (6) Highest value (in euros) Lowest value (in euros) Average value (in euros) Value on 31 December (in euros)

1999 42 242 5 654 ((2 379) 2 013 3 275 (75) 3 200 991 0 991 3 049

2000 177 976 22 888 (8 900) 7 867 13 988 (4 817) 9 171 3 100 (64) 3 036 13 857

2001 % change on 430 071 67 840 (30 252) 21 179 37 588 (5 395) 32 193 14 810 (319) 14 491 39 317 142 196 240 169 169 12 251 378 398 377 184 12 152 60 60

19 285 000 21 800 000 24 466 694 0,05 0,27 0,74 0,16 0,64 1,61 0,033 0,0500 0,08 0,025 0,0375 0,06 45 243 17 237 429 423 188 249 614 535 316 743

379 076 1 050 519 1 361 114 43 080 29 448 51 144 20,20 47,00 53,3 5,83 18,77 33,97 11,16 36,92 43,48 19,50 43,4 50,85

(1) Including amortisation of consolidation differences. (2) The exceptional charges in 2001 primarily relate to the capital increase which was finalised in December 2001. (3) There were no third-party interests. (4) The net ordinary profit/loss is defined as the net profit/loss adjusted for the extraordinary profit/loss (after adjustment for tax) and amortisation of goodwill. (5) The number of shares as at 1.2.2002 was 26,767,241. The average of 24,466,694 is determined by calculating the pro-rata contribution of the new shares in the consolidated result. (6) In number of shares.

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GENERAL INFORMATION ABOUT OMEGA PHARMA


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IDENTITY AND GENERAL INFORMATION


Name Omega Pharma NV Registered office Venecoweg 26 9810 Nazareth Trade register and VAT number Gent trade register no. 194 562. VAT no. BE 431 676 229. Incorporation, legal form, duration Omega Pharma was incorporated on 27 July 1987 as a cooperative society (CV) by a private deed, published in the Appendixes to the Belgisch Staatsblad of 25.08.1987 under number 870825-29. It was re-registered as a public limited company on 27 September 1993 by a deed executed in the presence of Mr. Dirk Van Haesebrouck, notary, in Kortrijk-Aalbeke, and published in the Appendixes to the Belgisch Staatsblad of 15.10.1993 under number 931015-294. The companys articles of association were last altered on 5 March 2002 by a deed executed in the presence of Mr. Dirk Van Haesebrouck, notary, in KortrijkAalbeke. The company is further defined as one that is offering or has offered stock to the public. It was re-registered as a public limited company under Belgian law of unlimited duration by a deed dated 27 September 1993.

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Financial year The companys financial year starts on 1 January and closes on 31 December of the same year. General meeting (articles 28 and 30 of the articles of association) The ordinary general meeting of shareholders, known as the AGM, is held every year on the first Monday of June at 14:00. If this day is a public holiday, the AGM is held at the same time on the next working day.

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Extraordinary general meetings may be called whenever the interests of the company require. They must be called whenever shareholders representing at least one fifth of the company capital so request. To be admitted to the general meeting, owners of registered shares must inform the Board of Directors of their intention to attend at least three days in advance. Owners of bearer shares must deposit their shares in the place stated in the notice of meeting by the same deadline. They will be admitted to the meeting upon production of a certificate proving that the shares have been deposited. Owners of dematerialised shares must deposit with the institutions indicated by the Board of Directors by the same deadline a certificate drawn up by the authorised account-holder or the liquidator, testifying to the unavailability of the shares for the purposes of the general meeting. Debenture holders and warrant holders may attend the general meeting provided that they comply with the admission conditions stipulated for the shareholders. Unless otherwise mentioned in the notice, general meetings are held at the companys registered office.
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Auditing of the annual accounts The companys simple and consolidated annual account is audited by PricewaterhouseCoopers Bedrijfsrevisoren B.C.V.B.A., represented by Mr. Lieven Adams. Consultation of company documents The simple and consolidated annual account, articles of association, annual reports and other information (as stipulated in the Royal Decree of 3 July 1996 on obligations with regard to occasional and periodical information) publicised for the benefit of the shareholders may be obtained free of charge at the registered offices of Omega Pharma. The simple and consolidated annual account and supplementary reports are deposited with the Nationale Bank van Belgi. The articles of association may be obtained from the clerks office at Gent Commercial Court.

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OBJECTS OF THE COMPANY (article 3 of the memorandum of association)


The companys objects are as follows: the trade in all its forms (wholesale and retail, purchase and sale, import and export, representation, brokerage, commission trade, etc.), production and distribution of parapharmaceutical and/or pharmaceutical products, pharmaceutical raw materials, plant extracts, bandages and dressings, orthopaedic articles, cosmetics, toiletry articles and items for the pharmacy and medical equipment, as well as all connected or related articles and products; the trade in all its forms of consumer articles, such as general foodstuffs, dietary aids, beverages, sweeteners, condiments, deep-freeze products, furniture, packaging materials and clothing; the manufacture, design, purchase and sale of machines for the food industry, cosmetic and pharmaceutical industries and furniture industry; the fitting out of pharmacies; the purchase, sale and establishment of real estate and brokerage in real estate; the purchase and sale, hiring to and from third parties and leasing of vehicles; the provision of services of an economic nature, both separately and in conjunction with third parties, including technical consultancy, assistance in the fields of management, engineering, consulting and franchising, technical, commercial and administrative management and advice, tax and accountancy advice and the hiring to and from third parties of personnel. It may perform all activities and legal transactions which are directly or indirectly connected with these objects. It may also hold interests in or participate in any other way in or collaborate with other companies or businesses which might contribute to or promote its own development. It may also fulfil functions in other companies, such as acting as a director or liquidator. The company may offer securities or collateral to companies or private individuals, in the broadest sense of these terms. The company may conduct all of the above business in Belgium or abroad, on its own behalf or on behalf of third parties, in the broadest sense of these terms.

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COMPANY CAPITAL
Issued capital (article 5 of the articles of association) Omega Pharmas capital was EUR 15,398,306.21 as at 5 March 2002, and is represented by 26,808,046 fully paid-up no-par shares with a fractional value of one part in twenty-six million, eight hundred and eight thousand and forty-six (1/26,808,046) of the companys capital. Acquisition of and right of disposal over own shares (article 12 and article 51 of the articles of association) The general meeting may resolve to buy back its own shares or dispose of them in accordance with article 620 and following of the Companies Law. The Board of Directors may dispose of shares that are listed on the first market of a stock exchange or the official listing of a stock exchange in a member state of the European Union without obtaining the prior consent of the general meeting. The general meeting of 12 July 2001, the decisions of which were announced in the annexes to the Belgisch Staatsblad on 2 August 2001 under number 20010802392, expressly authorised the Board of Directors, in accordance with the provisions of the Companies Law, to acquire or dispose of its own shares or profit-sharing certificates, if the acquisition or disposal thereof is necessary in order to prevent any imminent occurrence which would be to the serious disadvantage of the company. This authorisation applies for a period of three years from the publication of the above-mentioned resolution in the Appendix to the Belgisch Staatsblad and may be renewed in accordance with article 620 of the Companies Law. The general meeting of 12 July 2001, the decisions of which were announced in the annexes to the Belgisch Staatsblad on 2 August 2001 under number 20010802392, also authorised the Board of Directors to obtain by purchase or exchange the maximum authorised number of shares as per article 620 of the Companies Law at the price at which these shares are listed on a Belgian stock exchange at the moment of such purchase or exchange. This authorisation applies for a period of eighteen months from the publication of the resolution in the Appendix to the Belgisch Staatsblad and may be renewed in accordance with article 620 of the Companies Law.

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Authorised capital (article 5 bis of the articles of association) By resolution of the extraordinary general meeting of twelve July two thousand and one, the decisions of which were announced in the annexes to the Belgisch Staatsblad on 2 August 2001 under number 20010802-392, the Board of Directors is authorised, within a period of five years from the date of publication of the resolution in the Appendix to the Belgisch Staatsblad, to increase the capital by a maximum of thirteen million, nine hundred and forty thousand, four hundred and thirty-seven point six five (13,940,437.65) euro, on one or more occasions, and in the manner and under the conditions determined by the Board. As appears from the official report drawn up by Notary Dirk Vanhaesebrouck on seven September two thousand and one, the decisions of which were announced in the annexes to the Belgisch Staatsblad of 5 October 2001 under number 20011005-229, the Board of Directors decided to issue fifty-five thousand two hundred twenty-five (55,225) warrants, each of which provides the right to subscribe to one new share and therefore constitute a capital increase, subject to the suspensive condition to exercise these warrants, for a maximum amount of fifty-five thousand two hundred twenty-five (55,225) times the fractional value of the existing ordinary shares of the company at the time of issue (appropriation of authorised capital for an amount of 31,721.24 euro). As appears from the official report drawn up by Notary Dirk Vanhaesebrouck on 1 October 2001, the decisions of which were announced in the annexes to the Belgisch Staatsblad of 27 October 2001 under number 20011027-548, the Board of Directors decided to increase the authorised capital of the company with an amount of one hundred and two thousand, two hundred and fifty euro and nine eurocent (102,250.09 euro). As appears from the official report drawn up by Notary Dirk Vanhaesebrouck on 22 October 2001, the decisions of which were announced in the annexes to the Belgisch Staatsblad of 15 November 2001 under number 20011115-570 and 20011115-571, and of 17 November 2001 under number 20011117-1 and 20011117-2, the Board of Directors decided to increase the authorised capital of the company with an amount of sixty-eight thousand and eleven euro and eightyfour eurocent (68,011.84 euro). As appears from the official report drawn up by Notary Dirk Vanhaesebrouck on 12 December 2001, the decisions of which were announced in the annexes to the Belgisch Staatsblad of 11 January 2002 under number 20020111-1589, it was noted that the capital increase by the issue of a maximum of two million four hundred and ten thousand (2,410,000) new shares, which the Board of Directors decided to carry out on 4 December 2001, has been partly achieved, and that, as a result, the company's capital has been increased by the amount of one million, one hundred and seventy-six thousand, seven hundred and forty euro and fiftyfour eurocent (1,176,740.54 euro).

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As appears from the official report drawn up by Notary Dirk Vanhaesebrouck on twenty-seven December two thousand and one, the decisions of which were announced in the annexes to the Belgisch Staatsblad of 26 January 2002 under number 20020126-307, 20020126-483 and 20020126-484, the Board of Directors increased the authorised capital of the company with an amount of nineteen thousand seven hundred and ninety euro and ninety-five eurocent (19,790.95 euro). As appears from the official report drawn up by Notary Dirk Vanhaesebrouck on five March two thousand and two, the Board of Directors increased the authorised capital of the company with an amount of ten thousand eight hundred and fortyfour euro and sixty-seven eurocent (10,844.67 euro). As a result, the Board of Directors is still authorised to increase the capital by a maximum further amount of twelve million, five hundred and thirty-one thousand and seventy-eight point three two (12,531,078.32) euros. This authorisation applies to capital increases which must be subscribed to in cash, and for capital increases which are subscribed to by means of non-cash consideration. This authorisation of the Board of Directors also applies to capital increases through the conversion of the reserves or of share issue premiums. The aforementioned authorisation is renewable. The Board of Directors is also authorised, on the basis of a resolution passed in accordance with the provisions of article 560 of the Companies Law, within the limits of the law, to change the rights attached to the existing classes of shares or stock, whether or not they represent capital, in connection with the issue of stock up to the authorised capital level. Omega Pharma shall under no circumstances use this authorisation in such a manner that could result into an infringement of the rights connected with the existing shares and that could only decide to such issues as far as the law allows this. In addition to the issue of shares, convertible debentures and share options, the Board of Directors may also decide to carry out capital increases through the issue of nonvoting shares, preferential shares and convertible shares which may under specific conditions be converted into a smaller or larger number of ordinary shares (7).

(7) The purpose of this authorisation granted by the general meeting to the Board of Directors is to allow the Board, during capital increases within the limits of the authorised capital, to issue a new class of shares or securities that may, on the basis of its status, alter the rights attached to existing shares. This may occur in the form of an issue of convertible bonds, share options, preferential shares or convertible shares. Convertible shares mean shares which, within the limits of the law and in line with the conditions of the issue, are convertible into a larger or smaller number of ordinary shares, without an additional contribution resulting in respectively an increase or decrease of the fractional value of the other classes of existing shares. Such an authorisation may be required in the interests of the company, as it enables it, if necessary, to attract additional funding in a flexible and rapid manner from the international capital markets through the issue of special financial instruments. However, the company undertakes not to use this authorisation in any way that would have the purpose or side-effect of prejudicing the rights attached to existing shares.

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The Board of Directors is, within the limits of the authorised capital, authorised, in the interests of the company and subject to compliance with the conditions stipulated in article 598 of the Companies Law, to revoke or restrict the preferential rights assigned by law to the shareholders. The Board of Directors is authorised to restrict or revoke the preferential rights in favour of one or more particular persons, even if these are not members of the personnel of the company or its subsidiaries. During an increase in the issued capital which is effected within the limits of authorised capital, the Board of Directors is authorised to ask for a share premium. If the Board of Directors so decides, this share premium should be transferred to a non-distributable reserve account, the balance of which shall constitute a collateral for third parties, in the same degree as the company's authorised capital, and which, unless the Board of Directors decides to incorporate this account into the group's authorised capital, shall only be at the disposal of the general shareholders' meeting, in accordance with the provisions of the Companies Law, as required to modify the articles of association. In the absence of express authorisation from the general meeting to the Board of Directors, from the date of notification to the company by the Banking and Finance Commission (CBF) of a public takeover bid for the companys shares, the Board of Directorss authorisation to increase the issued capital by the issue of shares for cash consideration, with the revoking or restriction of the preferential rights of existing shareholders, or by the issue of shares for non-cash consideration, is withdrawn. This authorisation becomes applicable again immediately after the conclusion of such a takeover bid. However, the extraordinary general meeting of 12 July 2001 expressly granted the Board of Directors authorisation to increase the issued capital on one or more occasions, from the date of notification to the company by the Banking and Finance Commission of a public takeover bid for the companys shares, to increase the issued capital by the issue of shares for cash consideration, with the revoking or restriction of the preferential rights of existing shareholders, or by the issue of shares for non-cash consideration, in accordance with article 607 of the Companies Law. This authorisation is granted for a period of three years from the date of publication of the resolution in the Appendix to the Belgisch Staatsblad, and is renewable. The Board is likewise authorised, with a view to the proper coordination of the articles of association, to adjust the relevant article thereof whenever the authorised capital or a part thereof is converted into issued capital. If the authorised capital is not issued within the appointed term, the text of this article becomes null and void.

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Historical evolution of the capital

Deed 27.07.87 27.09.93 28.06.96

Transaction incorporation (as cooperative society) Re-registration as public limited co. Capital increase 1:200 split and introduction of classes of shares Capital increase as result of merger Capital increase via public share issue Capital increase via private share issue 1:3 split and abolition of share classes Capital increase via public share issue (IPO) Capital increase within authorised capital (8) Capital increase within authorised capital (9) Capital increase within authorised capital (10) Capital increase within authorised capital (11) 1:10 split of share

Capital Issuing premium (BEF) (BEF) 30 000 1 250 000 1 250 000

No. of shares 30 1 250 62 600 A 187 400 B 250 000 112 367 A 336 383 B 448 750 112 367 A 401 383 B 513 750 112 367 A 447 133 B 559 500 1 678 500 1 878 500

28.06.96

2 500 000

02.07.97

105 200 000

12.02.98

185 262 500

27.05.98 25.06.98 30.09.98 28.06.99 16.08.99 25.02.00 25.04.00

185 262 500 435 262 500 440 933 310 447 922 147 450 434 551 452 118 369 452 118 369 44 329 190 158 340 353 200 827 949 248 065 631 248 065 631

1 902 974 1 933 136 1 943 979 1 951 246 19 512 460

(8) Creation of 24,474 new shares upon takeover of Competel Pharma Systems NV and Competel Software Development NV. (9) Creation of 30,162 new shares upon acquisition of shareholding in Interphar NV (50.1%), takeover of ICS NV and transfer of Eurogenerics registrations. (10) Creation of 10,843 new shares upon takeover of Offilog SA (Farmix SA). (11) Creation of 7,267 new shares upon takeover of ACA Pharma BVBA, De Coninck BVBA and Erco 2000 BVBA

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Deed 25.04.00 08.05.00 11.05.00

Transaction Conversion into euros Capital increase within authorised capital (12) Capital increase within authorised capital (13) (public share issue) Capital increase within authorised capital (14) Capital increase within authorised capital (15) Capital increase within authorised capital (16) Capital increase within authorised capital (17) Capital increase within authorised capital (18) (private share issue) Capital increase within authorised capital (19) Capital increase (20)

Capital Issuing premium (EURO) (EURO) 11 207 721,61 6 149 386,36 11 226 498,75 12 375 298,75 6 527 238,86 75 678 438,86

No. of shares 19 512 460 19 545 150 21 545 150

16.05.00 13.06.00 03.07.00 19.09.00 30.10.00

12 617 658,21 12 789 978,21 12 962 652,61 12 973 042,36 13 547 442,36

90 203 804,40 100 576 484,40 110 203 968,90 110 872 856,99 151 898 456,99

21 967 085 22 267 085 22 567 702 22 585 790 23 585 790

30.10.00 13.12.00 13.12.00 15.01.01

13 852 825,57 13 903 401,92

171 242 812,99 171 381 334,71 171 417 785,84 174 107 578,45

24 117 446 24 205 496 24 205 496 24 269 974

Increase of the issuing premium due to the exercise of share options 13 903 401,92 Capital increase within authorised capital (21) 13 940 437,65

(12) Creation of 32,690 new shares upon takeover of Cogestic SA. (13) Creation of 2,000,000 new shares upon the public share issue decided upon by the Board of Directors on 25 April 2000. (14) Creation of 421,935 new shares upon takeover of Les laboratoires Pharmygine-Mdiple in France. (15) Creation of 300,000 new shares upon the public share issue (green shoe clause) decided upon by the Board of Directors on 25 April 2000. (16) Creation of 118,360 new shares upon takeover of ABC Dental NV, Euro Dental NV, New Dental Prospect NV and of 182,257 new shares on the occasion of the public offering on the remainder of the shares of Les Laboratoires Pharmygine-Mdiple. (17) Creation of 18,088 new shares upon takeover of Superware BVBA and Servidental SA. (18) Creation of 1,000,000 new shares upon the private share issue decided upon by the Board of Directors on 25 October 2000. (19) Creation of 531,656 new shares upon takeover of the remaining 49,99 % of Interphar NV, 100 % of the shares of Fagron BV, OHC BV, JJ Maes Sygma NV, Dental Group 2000 NV, ICP NV and Homeoropa BV. (20) Creation of 88,050 new shares upon the exercise of the first tranche of share options approved by the Board of Directors on 20 April 1998. (21) Creation of 64,478 new shares upon takeover of Lamoral group.

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Deed 02.10.01 22.10.01 22.10.01 22.10.01 22.10.01 12.12.01 12.12.01 12.12.01 27.12.01 27.12.01 27.12.01 04.02.02 04.02.02 05.03.02

Transaction Capital increase within authorised capital (22) Capital increase within authorised capital (23) Capital increase within authorised capital (24) Capital increase within authorised capital (25) Capital increase within authorised capital (26) Capital increase within authorised capital (27)

Capital Issuing premium (EURO) (EURO) 14 042 687,74 182 005 211,85 14 047 617,24 14 059 297,09 14 073 589,89 14 110 699,58 15 287 440,12 182 363 308,17 183 194 466,30 184 295 694,36 187 153 584,67 284 045 384,54 284 456 981,77 284 505 728,99 285 312 302,74 285 606 372,28 286 046 565,28 286 265 394,90 286 274 471,46 287 171 189,77

No. of shares 24 447 986 24 456 568 24 476 902 24 501 785 24 566 391 26 615 034 26 732 786 26 732 786 26 750 601 26 756 786 26 767 241 26 789 166 26 789 166 26 808 046

Capital increase within 15 355 076,86 (28) authorised capital Increase of the issuing premium 15 355 076,86 due to the exercise of share options Capital increase within authorised capital (29) Capital increase within authorised capital (30) Capital increase within authorised capital (31) 15 365 309,80 15 368 862,46 15 374 867,82

Capital increase within 15 387 461,54 (32) authorised capital Increase of the issuing premium 15 387 461,54 due to the exercise of share options Capital increase within authorised capital (33) 15 398 306,21

(22) Creation of 178,012 new shares upon takeover of the activities of Mooss Pharma group. (23) Creation of 8,582 new shares upon takeover of Prins BV. (24) Creation of 20,334 new shares upon takeover of F&E NV. (25) Creation of 24,883 new shares upon takeover of Pharmaflore NV. (26) Creation of 64,606 new shares upon takeover of Medeva NV. (27) Creation of 2,048,643 new shares following a private investment for an amount of 98.1 million EUR by international institutional investors. (28) Creation of 117,752 new shares upon the exercise of share options. (29) Creation of 17,815 new shares upon takeover of De Jong Dental BV. (30) Creation of 6,185 new shares upon takeover of Softomat NV. (31) Creation of 10,455 new shares upon takeover of Promedent SPRL. (32) Creation of 21,925 new shares upon the exercise of share options. (33) Creation of 18,880 new shares upon takeover of Tendem NV.

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Share option scheme On 20 April 1998 the Board of Directors of Omega Pharma approved a share option scheme for the benefit of physical persons or legal entities who are employees, advisors or significant third parties connected to the company or to an affiliated company. The most important features of this scheme are as follows: Number of share options: 900,000 (34), each authorising subscription to one new share. Share option exercise price: the unweighed arithmetic average of the closing price of Omega Pharma shares, as published in the Financieel Ekonomische Tijd, during the last 30 trading days prior to the assignment of the share options to the selected participant, if the Omega Pharma shares are traded on a Belgian stock exchange or other regulated market. Exercise period: the share options are exercisable for personnel members in instalments of one-fifth per year, on the second, third, fourth, fifth and sixth anniversaries of the share option agreement, and for non-personnel members in instalments of one quarter per year, on the second, third and fourth anniversaries of the share option agreement and at the end of a period of six months after the fourth anniversary of the share option agreement. Share options exercisable in this way may first be exercised in the next exercise period (i.e. in November). Period of validity: personnel members: exercisable during the period 2000 to 2008 non-personnel members: exercisable during the period 2000 to 2007

Application has been made for the listing on the First Market of the Brussels Stock Exchange of a maximum of 900,000 new Omega Pharma shares arising from the exercise of these share options. On 31 December 2001, 874,600 share options already were assigned (of which 461,100 to personnel members and 413,500 to non-personnel members, especially directors and self-employed members of the company or its subsidiaries) with maximum spread over the target group. The average exercise price amounts to EUR 5,3.
(34) This number already incorporates the 1:10 split of 25 April 2000.

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On 13 December 2000 the Board of Directors approved a second share option scheme for the benefit of physical persons or legal entities who are employees or advisors or significant third parties connected to the company or an affiliated company. The most important features of this scheme are as follows: Number of share options: 450,000, each authorising subscription to one new share. The scheme is a continuous one, in which the Board of Directors will draw up a special report at each assignment. Share option exercise price: the unweighed arithmetic average of the closing price of Omega Pharma shares, as published in the Financieel Ekonomische Tijd, during the last 30 market trading days prior to the offer of the share options to the selected participant, if the Omega Pharma shares are traded on a Belgian stock exchange or other regulated market. Exercise period: the share options are exercisable by personnel members employed in Belgium, in 20 % instalments every year in the fourth, fifth, sixth, seventh and eighth calendar years after the calendar year in which the share options were offered. The share options are exercisable by personnel members not employed in Belgium, and by significant third parties and advisors in 20 % instalments every year in the second, third, fourth, fifth and sixth calendar years after the calendar year in which the share options were offered. Within this period, the share options may be wholly or partially exercised by the optionholder during the month of January of each relevant year. Share option price: the share option price for the subscription rights associated with the share options for personnel members who are employed in Belgium is equivalent to 9 % of the arithmetic average of the closing price of Omega Pharma NV shares during the last 30 market trading days prior to the day of the offer. The share option price for the subscription rights associated with the share options for significant third parties and advisors is equivalent to 16 % of the arithmetic average of the closing price of Omega Pharma NV shares during the last 30 market trading days prior to the day of the offer. Personnel members who are not employed in Belgium do not pay a share option price. On 31 December 2001, a total of 377,225 share options were issued, in three tranches, 341,175 of which were issued to employees, and 36,050 share options for non-employees, more specifically the directors and independent contractors of the company or subsidiaries), with a maximum distribution amongst the members of the target group. The average exercise price amounts to 41.97 EUR.

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OMEGA PHARMA SHARES


Shareholding structure Based on an announcement received on 14 January 2002, Couckinvest NV, the holding company of Marc Coucke, holds 7,417,234 shares or 27.70 % of the shares, and is therefore Omega Pharma's most important reference shareholder. Based on an announcement received on 9 July 2001, Mr. Paul Duchne now holds less than 3 % of the shares in the company. The lockup shares are estimated at approximately 1.3 % of the company's shares. The remaining shares are held by the general public; of these, a significant proportion is held by Belgian and foreign institutional investors, and by a number of pharmacists, mostly from Belgium.

I .4.2

Announcements in the interests of transparency Article 11 of the articles of association states: in application of articles 1 to 4 of the Act of 2 March 1989 on the publication of significant shareholdings in listed companies, and for the purposes of regulation of public takeover bids, the applicable quotas are set at three percent, five percent, and ensuing multiples of five percent. Shareholder agreement There are no shareholder agreements. Changes in share value and trading volume The average share price during 2001 was EUR 43.48, the highest level being 53.30 on 4 September 2001 and the lowest level EUR 33.97 on 27 March 2001. Omega Pharma yielded a return of 17 % on Euronext Brussels. The average daily volume of trade during 2001 was 51,144 units, putting Omega Pharma in 12th place on Euronext Brussels 2001 in terms of traded volume (EUR 574 million).

I .4.3

I .4.4

(35)

in

Since 1 March 2002, the company's share has been listed on the BEL 20 stock index, with a coefficient of 1.2 %.

(35) Source: Euronext Brussels

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> general information

Omega Pharma is also listed on the MSCI World index, with a coefficient of 0.003 %. Omega Pharma also entered the VLAM 21 stock index on number 5, with a coefficient of 9.7 %, and the company's share was listed on the Next Prime Segment of Euronext.

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RATE OF OMEGA PHARMA BEL 20 AVERAGE MONTHLY VOLUME

100 000

120 000

110 000

90 000

60 000

80 000

40 000

20 000

30 000

50 000

70 000

10 000

0
30/04/02 30/03/02 28/02/02 31/01/02 31/12/01 30/11/01 31/10/01 29/09/01 31/08/01 31/07/01 30/06/01 31/05/01 30/04/01 31/03/01 28/02/01 31/01/01 31/12/00 30/11/00 31/10/00 30/09/00 31/08/00 31/07/00 30/06/00 31/05/00 30/04/00 31/03/00 28/02/00 31/01/00 31/12/99 30/11/99 31/10/99 30/09/99 31/08/99 31/07/99 30/06/99 31/05/99 30/04/99 31/03/99 28/02/99 31/01/99 31/12/98 30/11/98 31/10/98 30/09/98 31/08/98 31/07/98

Comparative graphics of the Omega Pharma share, volume and BEL 20 since 31.07.98

EURO 60

40

20

30

50

45

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25

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15

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DESCRIPTION OF ACTIVITIES OF OMEGA PHARMA


II .1

HISTORICAL BACKGROUND
Omega Pharma was incorporated as a cooperative society in 1987 by Marc Coucke and a fellow pharmacy student, with an issued capital of BEF 30,000 (EUR 750). The two partners each held 50 % of the shares. Shortly after the business had been set up, their first product was developed, a shampoo which was sold to pharmacies in five-litre bottles. The pharmacists then added in specific aromas, colouring or active ingredients and sold the product as their own house preparation. Sometime later, the two also developed Phytosedan, a natural sedative product. Omega Pharma only developed and sold the products, the production work being outsourced to third parties. In 1989, Omega Pharma launched the Uvesol product line. This range was originally specifically developed as a product offering protection against sunbed tanning. The turnover of Omega Pharma climbed from BEF 1 million ( 25,000 EUR) in 1988 to BEF 6 million (150,000 EUR) in 1989. In the same year, Alpha Pharma CV was established by the same partners, as an associate undertaking to Omega Pharma. The new entity supplied pharmacists with the basic raw chemical materials used for magisterial preparations. Alpha Pharma opted for an exclusive agreement with Bufa BV, one of the worlds biggest and most highly-reputed specialists in the packaging of pharmaceutical raw materials. In 1993, the two companies were re-registered as public limited companies, each with a capital of BEF 1,250,000 ( 31,000 EUR). The activities of Omega Pharma and Alpha Pharma were further expanded, and the business gradually acquired international prominence. In 1994, a Dutch wholesaler of pharmaceutical products put in a takeover bid for 100 % of the shares. Unlike his then partner, Marc Coucke was not willing to sell his stake. As the Dutch would-be purchaser was not interested in 50 % of the shares, and further collaboration between the two partners was therefore no longer possible, Marc Coucke decided to take over the totality of the shares from his partner via Couckinvest. This resulted in a brief respite for the expansion plans. In order to implement the growth plans at an accelerated pace, the search was launched for a financial partner. Paresa Invest, an international venture capital company of Dutch origin with an office in Antwerp, took a 25 % shareholding. In 1996, Omega Pharma and Alpha Pharma merged, and the official name of the company became Omega Pharma. This merger was carried out in order to simplify

> description of activities


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a number of administrative matters, promote the transparency of the group structure and make a subsequent structured offering of shares possible. In 1995, 3 % of the shares were sold to executive personnel in order to maximise their motivation to contribute to the companys future. In December 1996, 2 % of the shares were sold to a restricted number of pharmacists (customers of the company). The purpose of this transaction was to acquire experience of having pharmacists as shareholders. The conclusion of this experiment was positive on both sides: the pharmacists felt more involved in Omega Pharma and wanted more information about all the products, while Omega Pharma enjoyed the benefits of the resultant increase in turnover. In addition, the company was also able to acquire extra information and tips in this way, making it possible to optimise the quality of their services. In June 1997, a capital increase of 65,000 (36) shares was carried out via a public share issue. As a result of this public offering, which was massively oversubscribed, a large number of pharmacists (who were prioritised in the allocation) became shareholders. In September 1997, Lomed and Promedis were taken over, two companies from the Leuven area which supplied pharmacists with vitamins, food supplements and certain OTC (over-the-counter) medicines; they are also the distributors of a number of exclusive brands. The takeover was partly financed out of the companys own capital, partly by loan capital, and partly by a new capital increase, subscribed to by the former shareholders of Lomed and Promedis and Omega Pharmas management. In June 1998, the capital was increased by BEF 250 million via an IPO. The financial partner, Paresa Invest, sold its entire shareholding during this operation. After this operation, companies began to be taken over in Belgium and joint ventures entered into in rapid succession. Virtually all the takeovers were conducted via a share exchange, ensuring that the shareholders of the takeover companies retained a strong tie with Omega Pharma. Via the takeovers of Competel Pharma Systems, Competel Software Development, ICS, Farmix, Cogestic and A2I, Omega Pharma became the Belgian market leader in pharmacy IT; this division was further reinforced by joint ventures with IMS and Belgacom. Via the 30 % stake in Tectrade from Bruges, Omega Pharma gained access to the new Internet technologies, which are integrated in the existing software.
(36) Before 1:3 share split in May 1998 and 1:10 share split in April 2000.

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Via the takeover of Interphar, Erco 2000, ACA Pharma, Discap and De Coninck, Omega Pharma became the market leader in accessories and packaging materials. This side of the business was further reinforced by the joint venture with Gaasch Packaging. The strategic partnership with Conforma significantly strengthened Omega Pharmas position in the vegetable raw materials market. In June 1999, Omega Pharma became the biggest Belgian player in the generic medicines market in Belgium, via the long-term joint venture with Eurogenerics, a wholly-owned subsidiary of the German company Stada GmbH. As a result of the takeover of the ABC Dental group, New Dental Prospect, Servidental, OHC, JJ Maes Sygma, Dental Group 2000 and the Lamoral group, Omega Pharma created a new division for business-to-business activities with dentists. Thanks to these takeovers, the division immediately assumed the position of market leader in Belgium, in the markets for both consumption goods and capital goods.

> description of activities

On 25 February 2000, an announcement was made via the press that, following a process of internal consultation with all personnel members, Omega Pharma was to commence its internationalisation process. Shortly after the successful public capital increase in April 2000, worth EUR 80,845 million, the first step in the direction of the international market was taken with the takeover of Les Laboratoires PharmygineMdiple in France in May 2000. Omega Pharma immediately gained a hold on the French market by taking over the largest sales team on that market. With the takeover of Homeoropa and especially of Fagron, Omega Pharma secured an important position on the Dutch market. The takeover in December 2000 of Chefaro, the OTC division of Akzo Nobel, represented a new landmark in the history of Omega Pharma: from being a 100 % Belgian company at the end of 1999, Omega Pharma evolved during 2000 into an international group, specialising in healthcare products and services, with seven divisions active in eight different countries. Omega Pharma also had the opportunity of acquiring 4 companies of the OPG group, which are specialised in B2B and OTC on the Dutch market, i.e. SpruytHillen, Bufa, SAN, and Zeker voor G & G.

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During the first 13 years of its existence, Omega Pharma has always limited its operations to the Belgian market. However, the company succeeded in gaining a unique experience setting up an entire OTC/B2B organization, and any potential synergies and efficiency benefits have been thoroughly tested and adapted if necessary. This knowledge and expertise constituted the basis for the rapid internationalization, because following the acquisitions of primarily Pharmygine, Fagron, and Chefaro, the company already realised 60 % of its turnover outside Belgium in 2001. But due to these detailed preparations in Belgium, Omega Pharma knew which organization the company had to have in mind in each country, right from the start of the internationalization process, and how Omega's strategy needed to be implemented locally. This profound knowledge of synergies, efficiency, and potential partnerships is the basis of a successful takeover policy, and as a result the profitability of the acquired companies, following their integration within the Omega Pharma group, is usually significantly higher compared to stand-alone situations.

> description of activities

After this successful internationalization in 2000 and the integrations in 2001, Omega Pharma has the ambition to become the consolidator on the European pharmaceutical OTC-B2B market.

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II .2 II .2.1 II .2.1.a

GROUP STRUCTURE
Business sites Belgium The headquarters building in Nazareth (between Ghent and Courtrai, along the E17 highway), occupied in 2000, soon became too small, so the company decided to build a new office wing. The corporate group's management, along with the international marketing and product development, finance and controlling operations managements moved their offices to this building in the beginning of 2002. In the warehouse in Nazareth, all business-to-business products are stored, which are distributed from here to our customers, as well as the bulk stock of our own products destined for the Belgian market. All distributions for the own products, distributions, and generics divisions are carried out at the Pharma Distri Center in Sint-Niklaas, a pre-wholesale company which is controlled by pharmaceutical wholesale traders. For the pharmacies operations in Belgium, the company has opted for a central control in Nazareth for the own products, business-to-business, distributions, and generics divisions. Several acquired companies and/or operations were integrated at higher speed. For instance, immediately after the takeover of the business operations of Mooss Pharma, stocks were transferred to Nazareth and their sales teams joined the Belgian sales organization. ROCA's operations were transferred to Omega France. The business-to-business activities of Bufa Belgium were integrated in Medeva's operations. F&E, a company taken over in June 2001 and which is specialized in pharmacy furnishment, continues to operate from its site in Mechelen. OmegaSoft, the information technology division for pharmacists and dentists, operates from Kruibeke for the Dutch-speaking part of the country, and has built a new office building in Spy to service the French-speaking region. In the consumables department of the dental division, integration operations continued.

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The companies ALD, ADS, and Servidental, which were acquired earlier on, merged into Denteco Dental Partners, and all dispatching operations are now being controlled at the site of ABC Dental in Huizingen. Lamoral kept its head office in Bruges, and in 2002, the company will start building an additional show room in Brussels, offering services for customers in the Region of Brussels-Capital, the province of Brabant, and Wallonia. Medgenix in Wevelgem will remain Omega Pharma's only production unit in Belgium. Here, mainly our own products are manufactured, and the company also partly offers production services for third parties on a paid wage basis.
II .2.1.b

Luxembourg Following the acquisition of Promedent, Omega Pharma now also offers services for the pharmacies and dentists market sector in Luxembourg. As one of the major companies in Luxembourg focused on OTC and dental operations, the company's structure is extremely adapted for the distribution of Omega Pharma's products in the grand duchy of Luxembourg. Promedent, based in Ehlerange, is headed by Mr. Armand Hamling, manager of all operations of the Omega Pharma group in the grand duchy of Luxembourg. Omega Pharma Finance was established at the end of 2001 as well, based in Ehlerange, as the Luxembourg branch of Omega Pharma Soft Wallonie. Omega Pharma Finance is the financing department of the group, and offers the group's branches all required resources.

> description of activities

II .2.1.c

France In 2001, Pharmygine-Mdiple and Chefaro Ardeval were integrated. Both head offices were closed and a new building was erected and occupied in Montrouge (near Porte dOrlans), in Paris. From now on, all pharmaceutical operations in France will be concentrated at one location, which will also be marketing Omega France's corporate image. The new building accommodates the management team, marketing, export, and purchasing departments in France. Omega Pharma also has two production sites in France: Marseilles: this plant almost manufactures our own products. It is a production unit, mainly specialized in aerosols for louse control (Para-Poux).

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Largentire: situated in the midst of the Ardche region, this site primarily manufactures our own Chefaro Ardeval range products (including Jouvence de lAbb Soury). The dispatch centre in Amiens controls the storage, picking, and distribution of all Pharmygine products, as well as products for third parties. Dental operations in France are managed at our sites near Lyon: Dentco: Chambry Apex and Mdical Universal: Lyon.
II .2.1.d

The Netherlands Pharmaceutical operations in the Netherlands have been split up into two divisions, respectively focused on business-to-business (Fagron) and business-toconsumer activities (Chefaro). Fagron is the fastest growing Dutch pharmacy supplier, specialising in pharmaceutical raw materials, semi-finished goods, dermatological creams, and OTC products. Fagron, based in Nieuwerkerk-aan-de-IJssel, includes the following companies: Bufa: based in Uitgeest (packaging company for pharmaceutical raw materials) Spruyt-Hillen: IJsselstein (sales organization for chemical raw materials and B2B packaging materials) D. Prins: Schipladen (packaging materials and personalised printing) Zeker voor G & G: Losser (production of semi-finished products) Homeoropa: based in Ammerzoden (homoeopathic and phytotherapeutic products) Chefaro is a strong B2C sales organization offering major brands (including Predictor and Davitamon). Chefaro (based in Rotterdam) includes the following companies: SAN, based in IJsselstein: OTC products Tendem in Zwolle: sales of brand products through drugstores and pharmacies Production unit in Rotterdam (including Davitamon) The dental division in the Netherlands was also expanded, and now includes the following companies: Lamoral in Waalwijk: equipment (primarily dentist's chairs and digital radiology) De Jong Dental in De Meeren: equipment (basically for military authorities)

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OHC in Amersfoort: consumables (B2B for dentists) ABC Ducro Dental in IJsselstein: consumables
II .2.1.e

Germany - UK - Spain The group's branches in these countries are: Chefaro Deutschland: Waltrop, near Dortmund Chefaro Espaola: Barcelona Chefaro UK: Huntingdon, near Cambridge Personnel The average size of the Omega Pharma groups workforce in 2001 was 1,375 employees, compared to an average size of the workforce of 686 employees in 2000, and 137 in 1999. The most significant staff fluctuations result from: a continuous expansion of the sales teams in the different countries; in 2001, and for the first time in our history, the entire staff of Chefaro joins our work force; the disinvestment of Opodex (a production unit in Villeneuve-la-Garenne, which almost exclusively manufactured products for third parties).

II .2.2

> description of activities

Growth in size of workforce


1600 average number of personnel

Evolution of the yearly growth in size of the workforce from 1996 to 2001.

1400

1 375

1200

1000

800

686
600

400

200

29
0 1996

65
1997

119
1998

137

1999

2000

2001

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For each European country where Omega Pharma has business operations, the work force as at 31 December 2001 can be presented as shown below:

Work force per country


in absolute figures in percentages

Belgium Luxembourg The Netherlands France Spain Germany Great Britain TOTAL

536 13 299 478 46 35 20 1427

37,57 % 0,91 % 20,95 % 33,50 % 3,22 % 2,45 % 1,40 % 100 %

> description of activities

In each country, the sales teams were expanded in 2001, and as a result, we have extended our sales network for pharmacists and dentists and therefore they amount to: Belgium: 110 sales representatives for pharmacies and 50 sales representatives for dentists, medical doctors, hospitals, and homes for the elderly. France: 135 sales representatives for pharmacies and 6 for dentists. The Netherlands: 20 sales representatives in the B2C division (Chefaro) and 21 sales representatives in the B2B division (Fagron). Spain: 40 sales representatives for pharmacies. Germany: 28 sales representatives for pharmacies. UK: 12 employees for the external sales staff (8 salesmen visit independent pharmacies, while 4 account managers are responsible for pharmacy chains).
II .2.3

Group structure (on 31.03.2002) The structure of the Omega Pharma group is shown in the chart on the next page.

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Group structure (as at 31.03.2002)

COUCKINVEST NV
2%

MANAGEMENT

PUBLIC
70 %

28 %

OMEGA PHARMA NV
MARC COUCKE
Chief Executive Officer

JAN PEETERS
Chief Financial Officer Chefaro

Deputy Chief Executive Officer

SAM SABBE

TON SCHEEPENS

Jan Boone Hans Corstanje


Group Controlling Group Controlling

Mario Debel
International Marketing

OMEGA PHARMA BELGIUM


Tom Preneel

DENTAL CONSUMABLES

DENTAL EQUIPMENT

DENTAL THE NETHERLANDS


Louis van de Mortel

OMEGASOFT
Ronny Robbrecht

OMEGA PHARMA FRANCE


Jan Peeters Jean Saint-Cricq

Filip Demyttenaere Ludwig Geldof

Danil van Cutsem

OMEGA PHARMA GERMANY

OMEGA PHARMA UNITED KINGDOM

OMEGA PHARMA SPAIN


Harmen Lewin

OMEGA PHARMA THE NETHERLANDS - B2B


Ger van Jeveren Hans Waals

OMEGA PHARMA THE NETHERLANDS - B2C


Paul Hannema

OMEGA PHARMA LUXEMBOURG


Armand Hamling

Wolfgang Reese

Caspar van Dongen

= controller

32

33

II .3 II .3.1

DESCRIPTION OF PRODUCTS AND ACTIVITIES


Positioning Omega Pharma is active in the sale of high-added-value products and services to the pharmacies and other medical sectors.

Diagram of the pharmaceutical sector

Doctors Logistics

Pharmaceutical Industry

Prescription

Wholesalers OTC

> description of activities

Delivery Research OTC B2B Pharmacists B2B Hospitals, doctors, dentists, homes for the aged (Omega Medical) High added value

Within the pharmaceutical sector, a distinction may be drawn between: a. The fundamental research industry, whose core business is the conduct of research into new molecules and the provision of information to doctors in order to generate prescriptions for these new products. b. The pharmaceutical wholesalers, who use their unique logistical infrastructure to supply pharmacists several times a day. c. The OTC (over-the-counter) market, consisting of registered OTC medicines and nonregistered parapharmaceutical products, i.e. products sold at pharmacies but not requiring a prescription.

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d. The business-to-business-sector, which groups together all activities aimed at pharmacists, but not directly at consumers (e.g. pharmaceutical raw materials, capital goods, IT, etc.). Omega Pharmas goal is to build up a unique network to the pharmacists, within which as many activities as possible will be developed, providing one another with mutual reinforcement. Omega Pharma therefore restricts itself to c. and d., because a. offers too little added value to pharmacists (research and doctors prescriptions being the dominant considerations) and because b. generates gross margins that are too low and calls for specific competencies in terms of logistical efficiency. Omega Pharmas activities may therefore be summed up as follows: - OTC and business-to-business in the pharmacy or - all pharmacy activities except for research and wholesale activities.

> description of activities

II .3.2 II .3.2.a

Relations with other sectors Precisely because of its clear positioning, research and wholesale companies represent potential partners to Omega Pharma rather than competitors: All research companies also conduct a number of OTC activities. These activities require close ties to be maintained with the pharmacists, but do not constitute part of these companies core business. Omega Pharma is ready to use its own network to carry out these activities, ensuring that they receive better support and gaining Omega Pharma access to new products. The Belgian model shows that genuine win-win relations can therefore be achieved. The positioning of the pharmaceutical wholesalers and Omega Pharma can be highly complementary, with the potential for partnerships in areas such as logistics, business-to-business, extranet applications and so on.

II .3.2.b

Developments Research companies, especially in the U.S., are subject to aggressive attacks on their core business from the generics industry. As a result, the pharmaceutical research industry will become a less defensive sector, and the quality of the research pipeline will be essential. And as a consequence, we can expect all other activities to be questioned, and it would only be logical if a decision was taken for any disinvestments or partnerships for their OTC activities.
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Pharmaceutical wholesale companies have increasingly implemented a vertical integration by taking over pharmacies. Omega Pharma is therefore confident that more intensive partnerships with this business sector can be entered into, and Omega Pharma will be relying on the logistics structure of the wholesale companies, which are able to offer added value for Omega Pharma's products through their pharmacies. It appears more likely that the pharmaceutical research industry, the pharmaceutical wholesale traders, and the OTC-B2B companies will be growing into 3 clearly separate sectors, and all the major players will consistently be focusing on their own core business, and they will also close co-operation agreements to reinforce each other's core businesses.

II .3.3

Expanding the core business Omega Pharmas core business has been expanded to include three clearly-defined and complementary activities: a. Business-to-business with related sectors such as dentists, doctors, rest homes, hospitals, etc. To clarify, when Omega Pharma visits doctors, it is not in order to generate prescriptions, but to offer consumables and capital goods. b. The production of group products and production on behalf of third parties in order to maximise the returns on the capital assets involved. c. In some countries, the pharmacy channel is only partially developed, and other sales points are used to reach the consumer. However, it is important to Omega Pharma that its products are accompanied by expert advice, preferably from a pharmacist. This is why the products are sold in pharmacies in Belgium, for example, and in pharmacies and drugstores in the Netherlands.

> description of activities

II .3.4

The Belgian structure The Omega Pharma business model was first tested out exclusively in Belgium for 13 years. This was where the necessary experience was accumulated and the business plan fine-tuned, maximising the chances of successful internationalisation. For 13 years, all invitations and opportunities involving the possibility of international expansion were rejected, because a mature, profitable and experienced domestic market is an important precondition of internationalisation. The Belgian structure is also a model example for the company's international structures. A clear definition of the Belgian structure is therefore called for.

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II .3.4.a

General structure Omega Pharma operates in seven divisions: group products partnerships generics business-to-business OmegaSoft dental logistics and production

Turnover per division 2000


12 %
1

Group products

2001
15 %
9%

B2B-products Partnerships Generics OmegaSoft Dental


9%

7%

13%

Logistics & Production

> description of activities

5%

32 %

49 %

7%

11 %

It is important for each division to play its own role within Omega Pharmas core business, and for the different divisions to offer one another maximum support. Thus the pharmacy salesforce as a whole is divided into nine different teams, each specialising in a number of products. This ensures that the necessary product knowledge is available. However, at crucial moments (such as during advertising campaigns, seasonal products, campaigns by competitors) various teams may be called upon to promote a specific product to the full for a short period. In this way, the 160 representatives are able to maintain the level of specialisation and service that characterises smaller firms, while at the same time offering the strength of a large group. As a result, each division within Omega Pharma has a competitive advantage over all rival firms. Moreover, a number of overarching services are undertaken, involving various different activities, and benefitting each division. Examples include teleselling, PR, the provision of scientific information, marketing and purchasing.

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2%

12%

7%

37

In the highly fragmented OTC and business-to-business markets, Omega Pharmas business model has proved that the bundling of different pharmacy activities with high added value offers clear competitive advantages, creates efficiency and hence generates higher profitability. An efficient network is also highly attractive to potential partners, and is the basis for win-win contracts with, e.g., research firms. This has resulted in the following geographical distribution of sales:

Geographical turnover 2000


4
%

Belgium

2001
31 %

The Netherlands France Germany Spain

63 %

Great Britain

33 %

> description of activities

42 %

18 %

II .3.4.b

Own products division This division covers all parapharmaceutical products which are sold directly by the pharmacist to the consumer, as well as the groups own OTC medicines. The groups own brand products are formulated (composed) by a team of employees who are qualified pharmacists. These activities are largely conducted in collaboration with raw materials suppliers, producers or external labs. Production is outsourced principally to Belgian contract producers; as the formulae are the property of Omega Pharma, Omega Pharma remains independent of these contract producers. The increased volume and the growing number of products in the range has strengthened Omega Pharmas bargaining position and resulted in lower purchase prices. The contract producers are responsible for precision production in accordance with Omega Pharmas formulations, and hence for the level of quality delivered. This is subject to very frequent checks. Due to these collaborations with external laboratories and producers, expenses for R&D remain fractional.

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4%

3%

2%

38

It is important for Omega Pharma that its own products should create maximum added value for the sales channel (especially the pharmacists). This may be achieved thanks to the products unique quality (e.g. Predictor pregnancy tests), the extent of the range (e.g. OK food supplements) or by offering particularly good value for money (e.g. Uvesol sun products, Bodysol bodycare products). Omega Pharmas aim is to provide pharmacists with advisable products that are meant to generate repetitive purchases or even to increase the pharmacists market share in specific sectors, such as cosmetics. Through a number of acquisitions and internal developments, Omega Pharma now offers a wide range of its own products, and the importance of this division has increased accordingly. This is significant, because it is here that the highest gross margins are realised, and because synergies are created as a result. As a matter of fact, different Pharmygine products have already been introduced on the Belgian market that way. Moreover, Omega Pharma is completely free of dependence on a single product or product group: its biggest brand accounts for less than 3 % of group turnover.
II .3.4.c

> description of activities

Division partnerships Because of the worldwide trend for the major multinational pharmaceutical companies to merge in order to bundle their research activities, these companies are increasingly abandoning their marketing activities or outsourcing its distribution to local players with excellent knowledge of the local market. This presents significant opportunities for Omega Pharma in Belgium, as well as abroad in the future. The most important contracts in Belgium are with: Pharmacia, all of whose OTC products Omega Pharma promotes (e.g. Nicorette, Microlax). Sanofi Concept, for the distribution of various products including Lipofactor (anti-cellulitis). Abbott Laboratories, on behalf of which Omega Pharma distributes, among other products, the Ensure Plus range (low-calory, protein-rich, complete nutrition). Ciba Vision, the ocular division of Novartis.

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Whitehall, the OTC division of American Home Products, whose most important products are Advil (analgesics), Centrum (vitamins) and Chapstick (lip-care). Agys Pharma, a recently established Belgian OTC research company, which has developed the innovative 2Sensitive toothpaste for sensitive teeth. Reckit Benckiser, for which Omega Pharma has the exclusive right to market its OTC products (e.g. Dettol) in Belgium. Crucially, for all of these firms Omega Pharma uses its complete pharmacy-contact network, involving promotion, information, merchandising, sales, service, etc. Omega Pharma attaches great importance to the quality of the OTC products of its partners, the exclusive rights for a given country, and the right of first refusal, according to which new OTC products of partners are added to the list of the existing agreement.
II .3.4.d II .3.4.d.1

> description of activities

The generics division Partnership In October 1999, Omega Pharma entered into a long-term joint venture with Eurogenerics. This did not involve any takeover: the relationship involved is rather an intensive partnership. Eurogenerics, a subsidiary of the German Stada group, is the only company to have been active in Belgium for ten years in the development and promotion of generic medicines. Under the name EG, it is therefore the clear market leader in the area of generic medicines, a position that has been built up through ten years of active development and information work. The partnership with EG is a highly complementary partnership: EG conveys the information to the doctors, while Omega Pharma joins in the communication work and distributes to the pharmacies. The EG-Omega Pharma combination thus has an impact on the complete generic medicine cycle, enabling the conduct of a coherent policy. The partnership also benefits from a clear economic logic: EG is able to concentrate on visiting doctors (with its extensive team and ten years experience), while Omega Pharma can carry on developing its core business (its network of contacts with the Belgian pharmacists) and use this to the benefit of EG generics. Every month, the jointly generated gross margin is split between EG and Omega Pharma in accordance with certain criteria.

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At present, the market share of Eurogenerics products on the Belgian market is estimated at minimum 60%, compared to 75% in 2000. As the trade volume has continued to increase since June 2001, the number of players on the Belgian market has grown considerably.
II .3.4.d.2

Generics Generic medicines are registered medicines with proven bio-equivalence, in other words medicines which have exactly the same effect as the reference medicine. The term products of an exactly equivalent quality is therefore used, and these may only be brought onto the market after the original medicines patent has expired, i.e. after the originator has taken advantage of years of exclusivity to generate the necessary returns to pay back the costs of research. Generics are at least 20 % (and sometimes as much as 30 % or more) cheaper, and thus represent a saving for both the government and the patient. In addition, the pharmacist gets the same absolute margin on generics. The following considerations are important in the debate about generics: Research: Omega Pharma wishes to emphasise that the promotion of generic medicines may not be to the disadvantage of the research industry. On the contrary, an increase in the market share of generics should make the necessary funds available with the government to get innovative (and frequently life-saving) medicines registered more quickly and available in refundable form in Belgium. Doctors: Belgian doctors attitudes to prescriptions are a decisive factor in any breakthrough on the part of generic medicines. Eurogenerics and Omega Pharma are therefore the leading advocates of a government incentive for doctors who can show that their prescription behaviour is financially responsible. Patients: the patient must be at the centre of the overall health debate. That is why Omega Pharma regards the public debate about generics as so important: medicines that have already existed for a long time become cheaper, and the latest medicines become available more quickly: generics thus hold out a double benefit for the patient. Pharmacists: by communicating with and informing patients, the pharmacist plays an important role in the generics debate. Because of the increase in the number of generics firms, moreover, pharmacists are obliged to make a selection of generic products to keep in stock. To ensure that this is not to the detriment of the level of service provided to patients, local consultation between doctors and pharmacists is called for.

> description of activities


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These factors, combined with an uneasiness among pharmacists regarding their future profit margins (e.g. on expensive specialist medicines, or in the event of a negative price spiral), make it crucial for a sound medicine policy in Belgium for pharmacists to be closely involved in all discussions. Omega Pharma and EG are convinced that a breakthrough in generics in Belgium, represents a key factor in an innovative and future-oriented medicine policy in Belgium. This can only take place if due respect is shown to patients, doctors, pharmacists and the research industry.
II .3.4.d.3

Developments In 2001, the Belgian government took a number of measures regarding generic medical drugs. One of the most important issues is the introduction of the socalled reference prices; as a result, refunds for more expensive, non-generic medical drugs will not exceed the amount refunded for their equivalent generic products. However, the Belgian generic industry still only has 10% of the average European penetration level. To narrow the gap, several government initiatives will still be required, and the incentive of the medical doctors seems to be the most appropriate one. The following table provides an overview of the market penetration of generic medical drugs in Europe at the end of 2000.

> description of activities

Market penetration of the generics in Europe (2000)


25% 21,7 % 20% 16,0 % 15% 10% 5% 0%
The Netherlands Great Britain Germany Denmark Belgium Ireland Austria France Spain

13,0 % 10,3 % 6,8 % 5,9 % 2,4 % 2,0 % 1,4 %

0,1 %
Italy

Source: Stada (ex-factory prices)

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In 2001, less new generic products were introduced, but from 2002 up to and including 2005, various blockbusters will become generically available, due to the prescriptive period of the patents. Combining the growth of the generic market penetration level (due to government initiatives) and the generic potential (new products), we can expect a significant increase on the Belgian market for generic medical drugs.
II .3.4.e

Division business-to-business Omega Pharma is the Belgian market leader in business-to-business with pharmacists, in various sectors including the following: Chemical raw materials for magisterial preparations: magisterial preparations often represent a very good means of supplementing the existing range of medicines on offer: they are frequently inexpensive for the patient, flexible, have a high therapeutic reliability in combinations, etc. As a result of changes in the law made in 1998, which placed increased emphasis on the quality of raw materials and on their analysis, the entry barriers were raised significantly in this area. Omega Pharma was the only supplier that already offered individual products with an analysis certificate before this change in the law came in. For raw materials, Omega Pharma was the exclusive partner of BUFA (a wholly-owned subsidiary of OPG, which has since been taken over by Omega Pharma), one of the worlds biggest specialists in the packaging and preparation of pharmaceutical raw materials. A combination of the activities of Medeva and Fagron will provide unique opportunities for an increase in scale and an improved quality level in the Benelux. For extracts and tinctures, Omega Pharma has a partnership with Conforma. Packaging material, with, among other things, a joint venture with Gaasch Packaging. Accessories (e.g. measuring cups, manicure and pedicure products, aerosols, etc.), an area in which Omega Pharma offers a wide range and is continually launching new initiatives. In the business-to-business division, Omega Pharma has undertaken various acquisitions since 1999, and has combined these to build up an extremely effective division.

> description of activities


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The combination of the focus of a specialist division and the support available from the entire Omega group gives the business-to-business division a unique competitive position. At the beginning of 2002, an important decision was taken in the B2B division. For more details, please refer to Chapter Recent developments on page 119.
II .3.4.f

OmegaSoft It is essential to have the right scale in the area of pharmacy IT. With this in mind, Omega Pharma has made various acquisitions in this sector. Together with a new clientele, a market share of approximately 66 % has thus been reached. A unique competitive position has thereby been achieved, putting OmegaSoft in a position to combine a high level of service with new developments. Some 3,500 Belgian pharmacies have a complete OmegaSoft IT package. OmegaSoft offers total IT solutions, covering both hardware and software (stock management, pricing, invoicing, statistics, etc.) and delivers complete systems, including all service, maintenance and repair work; it is thus a one-stop solution provider for the pharmacist. It will be some years before the various individual programmes are fully harmonised with one another, but in the mean time new global projects can be developed for the entire clientele. OmegaSoft, which originally was based at six locations, was centralised in the course of 2001, both in Flanders (Kruibeke) and in Wallonia (Spy). Also Omega Pharma has become the market leader in dentistry IT thanks to its acquisition of Superware (Superdent) and Softomat (Grafo). Their software package offers a total solution for dentists, including customer files, diary, health insurance information, invoicing and so on, and also has the unique feature of integrated digital imaging, making it possible to build up an (extremely useful) history of the patients teeth. This has made Superware the fastest-growing dentistry IT company, and with over 1,500 users it has become the market leader. This takeover is strategically significant for Omega Pharma, as the combination of the market leader in dentistry products (the ABC group) and the market leader in dentistry IT (Superware, Softomat) delivers unique synergies. By combining equipment and information technology services, the company also managed to take a strong position with respect to the computerization process of dentists' businesses.

> description of activities


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At the beginning of 2002, an important decision was taken in the Belgian OmegaSoft division. For more details, please refer to Chapter Recent developments on page 119.
II .3.4.g

Dental division Because the suppliers' market for dentists is highly segmented, and as the Omega Pharma group has the necessary expertise to improve efficiency within a nonmature environment, the company decided to set up a dental division in 2000. The structure of the dental division was as follows: consumables, the ABC group being the basis in that respect; equipment, with Lamoral as the major business unit. Powerful synergies were developed as well, both between all dental companies, and with the pharmaceutical division (e.g. to promote Agys Pharma's products). The development of the dental division is based on a number of acquisitions. Each company, after being fully integrated in Omega Pharma, has realised a substantial growth (between 20 and 100%), demonstrating the strong competition position, the quality and enthusiasm of the management, and the added value of the group. Omega Pharma is the only group to offer both consumables, equipment, and information technology to dentists in Belgium. Omega Pharma is therefore convinced it can raise service levels to a higher level, and offer Belgian dentists all the latest technological developments.

> description of activities

II .3.4.h

Production and logistics Due to several takeovers, Omega Pharma now also owns a number of production units and logistical centres. At present, approximately 75 % of the production of Omega Pharma's products is being outsourced, and 25 % is produced by the company itself. The major production sites are as follows: Medgenix (Wevelgem, Belgium), specialised in the production of liquid medical drugs.

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Chefaro (Rotterdam, Netherlands), specialised in the production of different Chefaro products (e.g. vitamins). Chefaro Ardeval (Largentire, France), specialised in the production of different Chefaro products (e.g. Jouvence). Bufa and Medeva (Uitgeest, the Netherlands, and Braine LAlleud, Belgium), specialised in the conditioning process of pharmaceutical raw materials. Pharmygine-SCAT (Marseilles, France), specialised in the production of sprays. Mdiple Distribution (Amiens, France), specialised in pre-wholesaling activities. Worthwhile mentioning is the fact that these centres mainly manufacture products and services within the Omega Pharma group, and only produce for third parties on a limited scale.
II .3.5 II .3.5.1

Internationalisation Introduction During the first 13 years of its existence, Omega Pharma rejected any activity outside Belgium. Dozens of proposals and opportunities were turned down, because of the managements belief that internationalisation can only succeed as a process after thorough preparation, and with the precondition of a stable and healthy domestic market. By early 2000, Omega Pharmas Board of Directors judged that these conditions had been satisfied, and the first initiatives were taken. As is clear from the following summary, Omega Pharma then quickly claimed itself an important position in Western Europe. In doing so, it has arguably reaped the rewards of its intensive preparation. Moreover, the first international results are highly encouraging, demonstrating that the same business plan and positioning can also work in other countries. The fact that this business plan has been thoroughly tested out and adapted in Belgium, and that extensive experience of acquisitions and integrations has been accumulated in that country, together constitute the essential foundations on which the international structure is built. Furthermore, the financial backbone of Omega Pharma has been consolidated to a great extent following several capital increases in 2000 and 2001.

> description of activities

II .3.5.2

The European OTC-B2B market Omega Pharma's business plan up to and including 2010 is entirely focused on Europe. Because market leadership in a specific region offers a significant competitive edge, the company has limited its geographic diversification of

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operations to Europe; nevertheless, it is our ambition to gain OTC-B2B market leadership in as many European countries as possible. Omega Pharma's main objective for the following 9 years is set on Belgium, Luxembourg, the Netherlands, France, the United Kingdom, Spain, Portugal, Italy, Greece, Austria, Switzerland, and Scandinavia. The European market volume is divided by Omega Pharma into the following categories: Medical drugs not requiring a prescription: products, registered as medical drugs, sold at pharmacies. Some of these products are prescribed by physicians and in some cases reimbursed (the so-called OTX products) Previous + products sold in pharmacies not requiring a prescription (OTC): all products sold in chemists shops, both medical drugs and parapharmaceutical products (vitamins, diet products, shampoo, slimming products, etc.) Previous + B2B with pharmacies: including all products sold to pharmacies, but which are not sold to end consumers Previous + B2B with other medical sectors: including all products sold to hospitals, homes for aged people, physicians, and other medical professions, which are not sold to end consumers

EUR 11 billion

> description of activities

EUR 14 billion

EUR 18 billion

EUR 24 billion

The European OTC-B2B market (in billions of euro)


OTX

11.22

OTX + OTC

14.02

OTX + OTC + B2B with pharmacies

18.23

OTX + OTC + B2B with other medical sectors

24.35

10

15

20

25

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These figures do not include the following: generic medical drugs dental market vitamins, cosmetics, etc., sold in other shops than pharmacies The growth in the OTC market will even more be stimulated when switching from medical drugs requiring a prescription to OTC medical products. According to OTC bulletin, this switch during the 2002-2010 period is estimated at 30 billion USD or approximately 33 billion EUR (worldwide). At present, the European OTC-B2B market is characterised by a slow consolidation. The major market competitors at the moment are the OTC divisions of the research companies. The following table provides an overview of the top 10 competitors and their respective European market shares. However, this table only reflects the market share figures for the OTC market (11 billion euro). It shows that the top 5 competitors take up approximately 18 % of the market, while the 10 major competitors represent slightly more than 30 %.

> description of activities

European OTC-companies*
1 2 3 4 5 6 7 8 9 10 Novartis Glaxo Smithkline Aventis Roche Sanofi Synthlabo Pfizer Boehringer Bayer Bristol Meyers Squibb American Home Products
% .5 30

* compared to Bn 11.22 Euro

4.4 % 3.9 % 3.5 % 3.4 % 3.2 % 2.6 % 2.6 % 2.5 % 2.4 % 2.0 %

Top 1
18.4 %

Top 5 Top 10

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If we compare the market share of these companies with the total market on which Omega Pharma operates, the top competitors only have 11 % of the market, and the 10 major competitors only represent 17 %. It is therefore clear that this market is highly fragmented. Omega Pharma's European market share in 2001 is estimated at 1.41 %, i.e. 342.8 million euro (2001 turnover - turnover in generics, dental products, logistics, and production) in relation to 24.3 billion euro. Omega Pharma expects a small number of major European OTC-B2B companies will arise or force a breakthrough, which will have a significant competitive edge due to their economies of scale, realising higher profitability, and increasing market shares at the expense of smaller or local companies. One of the prerequisites of Omega Pharma is to be one of those, and the company wants a minimum share of 10 % of the total market volume by the end of 2010. Omega Pharma's ambition is a minimum turnover of 2.4 billion EUR in 2010, in order to be one of the European OTC-B2B consolidators. An intermediate target has been set, aiming at a turnover of 1 billion EUR in 2005 (based on a simultaneous internal and external growth).
II .3.5.3

> description of activities

Omega Pharma on the European OTC market The following chart illustrates the distribution of the European OTC market for the countries where Omega Pharma operates.

OTC in Europe

Belgium The Netherlands France Germany Spain United Kingdom Italy Portugal

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II .3.5.3.a

The Netherlands In the Netherlands, there are only 1,400 pharmacies (which are less focused on OTC), and these pharmacies are complemented by a wide chain of drugstores, which are also legally entitled to sell medical drugs not requiring a prescription. Because this situation is quite different compared to Belgium, the company decided to implement the following strategy: Own products dispatched to pharmacies and drugstores. Business-to-business with pharmacists, enabling the establishment of a fullyfledged and efficient network for Dutch pharmacies, which can be supplemented with OTC products. This strategy has the following advantages: Opportunities for efficient commercialization of OTC for pharmacists, a unique competitive edge based on the business-to-business activities. Special attention for pharmacists, as Omega Pharma's preferred partners. Strategy adapted to local conditions, by integrating major drugstore activities in the Dutch business plan. The practical organization is focused on 2 activities: B2C, including operations offered by Chefaro, SAN, Homeoropa, and Tendem; B2B, including operations offered by Fagron, Spruyt-Hillen, Zeker voor G & G, Prins, and Bufa. The different divisions and subdivisions are intensively working together with respect to product development, purchasing, overhead services, etc. In this way, the various business units keep focusing on their respective core activities and their specific customer groups, but they can benefit from the advantages offered by the other activities of the Omega Pharma group.

> description of activities

II .3.5.3.b

France The pharmacy market in France consists of approximately 23,000 businesses, and their approach is quite similar to the situation in Belgium. Because French pharmacists are extremely interested in OTC and parapharmaceutical products, the French market will be could have a lot in store for Omega Pharma.

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For that reason, the company decided to set the following priorities for acquisitions: sales networks for French pharmacists; solid, well-established brands; management skills and knowledge of the market. Sales networks are essential in Omega Pharma's business plan, because it enables us to launch new products quickly, efficiently, and with profit. Solid, well-established brands are imperative, because they demonstrate the historic potential of an organization, and because they constitute the basic turnover providing the opportunity of financially maintaining a comprehensive network. Management skills and knowledge of the market are important because local decisions are taken by the management on the ground, and because the intended growth in France must be supported by a national structure. For that reason, the company finalised the important acquisition of the Pharmygine-Mdiple group in May 2000, an integrated French OTC group, which already holds a structure fully focused on French pharmacists. Following the takeover of Chefaro (in December 2000), a strong sales team and a few solid brands were added to the French operations. Mooss Pharma also had smaller operations in France (Roca). During 2001, all these activities were merged, and all business units were transferred to the new head office in Montrouge (south of Paris). Here, all operations of Omega France are controlled. With more than 135 sales representatives, Omega Pharma in France is now the largest organization targeting pharmacies. Omega France probably is the perfect basis for expanding our operations, realizing synergies and distributed products, and for developing a partnership with French pharmacies (after the Belgian model).

> description of activities

II .3.5.3.c

Germany Germany, with its 22,000 pharmacies with an explicit parapharmaceutical interest, is the largest European OTC market. After Chefaro's acquisition, Omega Pharma entered the

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German OTC market, and at the end of 2001, the company took over the brand Varilind (support stockings and varix stockings). The existing operations have been expanded as well, especially the sales team, offering the company an exquisite operating base to launch a number of synergetic projects. For instance, the B2B division was set up with pharmaceutical raw materials, and Bodysol was introduced on the German market as well. After the integration of Varilind and the launch of new synergetic projects, the company will be looking for complementary takeovers in Germany to accelerate its growth in this vital OTC country.

II .3.5.3.d

United Kingdom The pharmacy market in the United Kingdom is extremely characteristic, for instance, it includes many non-pharmaceutical activities in drugstores, and there is a high penetration level of pharmacy chains. The share of pharmacy chains in the United Kingdom is approximately 48 %, and the major players are Boots Healthcare and Moss Pharmacy (a subsidiary of Alliance Unichem, the second most important European wholesale company). The European average is approximately 6.7 %. It is therefore important to have a limited number of products on the United Kingdom market, but with a sufficient market share to get references from the major pharmacy chains. To that extent, the existing Chefaro organization has been expanded, with an additional focus on key accounts and independent pharmacists.

> description of activities

II .3.5.3.e

Spain The OTC market in Spain seems to be most suitable for Omega Pharma's strategy. Therefore, the existing Chefaro Espaola organization has been expanded and prepared for a long-term growth strategy. Additionally, the company started a partnership with Pharmacia & Upjohn in the begin of 2002, and the Spanish organization of Omega Pharma will take over part of the sales organization of Pharmacia, and has become an exclusive sales partner for Pharmacia's OTC products.

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This resulted in the largest Spanish OTC organization targeting pharmacies, an advantage both our own Omega products, Pharmacia's products, synergetic products, and new partnerships will benefit from in the years to come. More than 40 sales representatives now have contacts with no less than 13,000 of all 19,600 Spanish pharmacies.

II .3.5.3.f

Portugal As a result of the partnership closed with Pharmacia, Omega Pharma has also gained access to the Portuguese OTC market. At present, the organization is still being set up, and at the same time, the parallel introduction of several new products is being prepared. Omega Pharma's objective is to serve most of the 2,460 Portuguese pharmacies by 2004.

> description of activities

II .3.5.3.g

Luxemburg Following the takeover of Promedent, Omega Pharma has attained a more direct and active position towards pharmacists in Luxembourg. Promedent's present organization seems to be highly suitable to introduce Omega's existing products on the Luxembourg market in an efficient, successful, and customer-oriented way. Results of Omega Pharma in Europe As announced in our previous annual report, Omega Pharma has decided to report its results as of 2001 in matrix format, i.e. per country and per division. In 2001, the following operating income was assessed: BE NL 37.4 3.7 25.0 9.1 0.8 76.0 FR 105.8 17.1 0.5 7.1 8.3 138.8 UK 17.7 0.8 0.2 18.7 DE 9.8 9.8 ESP 13.2 1.4 14.6 TOTAL 219.6 41.9 60.3 21.0 38.1 46.1 9.1 436.1

II .3.5.

Group products B2B Partnerships OmegaSoft Generics Dental Log. and Prod. TOTAL

35.7 18.9 34.6 21.0 38.1 29.9 178.2

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The most important reasons for the increase are as follows: increased internationalisation of the group's products, stimulated by the competitive edge of our sales networks; the growth of the existing distribution centres and the start of a few new ones, including Reckit-Benckiser in Belgium; the new legislation dating from June 2001 with regard to generic medical products; client-focused synergisms in the dental division; the market positions taken within OmegaSoft and the B2B division. Divided by country/division, the company results are as follows Operating Income (A) Belgium The Netherlands France Germany 148.3 66.9 131.7 18.7 9.8 14.6 46.1 436.1 Operating Result (B) 27.5 13.3 14.9 3.2 1.4 2.4 5.1 67.8 (B) / (A) 18.5 % 19.9 % 11.3 % 17.1 % 14.4 % 16.7 % 11.1 % 15.5 %

> description of activities

UK Spain Dental TOTAL

The operating result of the dental division has increased to 11.1 %, compared to the other companies in this division, which only succeeded in a 4 to 7 % increase of the operating result on an historical basis. Once again, it appears that synergies within the dental division offer better results. In France, the operating result has grown to 11.3 % as well. The management in France is convinced that the operating result can even be improved in 2002, to gradually become an organisation as mature and afficient as the one in Belgium.

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II .3.6 II .3.6.a

Brands Introduction Omega Pharma owns different solid brands in Europe. These brands constitute the basis for the synergetic projects, according to which a brand from a given country is commercialised in another country. During these synergetic projects, all existing and available experience is offered to the organization launching the product, but it is entitled to adapt the different aspects (formula, packaging, marketing) according to the local situation. Omega Pharma supports its brands, mainly by means of a highly active approach of customers (primarily pharmacists), and to a lesser degree by offering promotional activities in the media. As such, Omega's products are primarily sold based on advice, which has proven to yield the highest degree of repetitive purchases.

> description of activities

II .3.6.b

The main brands are: Azaron: a range of insect-repellent or insect bite care products, market leader in the Netherlands, and also available in Germany, Spain, and Belgium. Bbisol: co-market leader (along with Johnson & Johnson) in France for baby products (dummies and various baby accessories). Bergasol: French suntan products with a well-established product familiarity, and entirely new formulas. Bodysol: a full range of skin care products. In pharmacies, this product range is acknowledged as a product with a unique quality/price ratio, and is aimed

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at consumers who previously bought the product outside pharmacies, due to the higher price level of the other skin care products sold by pharmacists. It is a success story, and the product has a favourable impact on the pharmacist's market share on the global market of cosmetics products. After Bodysol's success in Belgium, it is now being introduced on the market in the Netherlands, France, and Germany.

Bodysol selling-in* 2000-2001


160000 140000 120000 100000 80000 60000 40000 number of units

* selling-in: products sold to pharmacies and pharmaceutical wholesalers

2000 2001

> description of activities

20000 0 Lipstick Shower Deo

Bodysol selling-out* 2000-2001


200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Lipstick Shower Deo number of units

* selling-out: products sold by pharmacists to end consumers

2000 2001

Clment: an entire range of veterinary products, which are sold exclusively in pharmacies in France. Contalax: a purgative medical drug which was acquired in France in 2001.

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Davitamon: a range of vitamins, market leader in the Netherlands. This is quite a full range, including vitamins for children, products for improving resistance during winter, Femfit, calcium, and Vitalis (see OK).

Vitamon baby: selling-out*


128000 127000 126000 125000 124000 123000 122000 121000 120000 119000 118000 number of units

* selling-out: products sold by pharmacists to end consumers

2000 2001

> description of activities

Multivitamin market: selling-out*


2830000 2820000 number of units

* selling-out: products sold by pharmacists to end consumers

2000
2810000 2800000 2790000 2780000 2770000 2760000

2001

Dynarax: a tonic, used in Belgium to relieve mental fatigue. Originally only available in capsules, the range of Dynarax products now also includes several liquid variants.

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Fat Control, Instaslim, and Protical: slim-down products sold in Belgium and France. The focus of slimming products is always on sensible formulas, combined with quite substantial information for pharmacists (and consumers), so the proper and precise advice can be given. Femtest: see Predictor. Ibutop: a dermatological product, to be administered in case of muscular pains, with high sales figures in France, Belgium, and Germany. Innoxa: a range of cosmetics products, specialised in lipstick and nail polish cosmetics; has the same market position as Bodysol (a unique quality/price ratio), and is continuously adapted to present-day fashion trends. Very successful in France; has now also been launched in Belgium.

Innoxa: selling-out
25000 number of units

nov-dec-jan 2000 nov-dec-jan 2001

> description of activities

+ 197 %

20000

15000

+ 125 %
10000

+ 152 % + 310 %

5000

0 Innoxa teint Innoxa eyes Innoxa lips Innoxa nails

Jaico: the research and product quality of Jaico is used to support the product ranges Repello, Azaron, and Jungle Formula, and to penetrate new markets for insect repellents. Jouvence de lAbb Soury: well-known products in France, to be administered in case of weary legs. Jungle Formula: market leader in the United Kingdom for insect-repellent products.

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Multidermol: a liquid soap which has a well-established reputation in Spain, and a high degree of consumer loyalty. Nosik: a complete range of OTC medical drugs sold in Belgium, includes nasal sprays, painkillers, etc. OK: a range introduced in Belgium in 2000 on the growth market of nutritious supplements (see http://ok.omega-pharma.be). The Davitamon product range in the Netherlands was expanded with a few OK reference products called Davitamon Vitalis. Predictor: a fast and extremely reliable pregnancy test, sold in Belgium, the Netherlands, France, Spain, and the UK. Also has a high market penetration level in Germany, under the product name Femtest. Para: European market leader in louse control. This unique formula sold as a spray is produced in Omega Pharmas own plant in Marseilles. SAN: Samenwerkende Apothekers Nederland (Co-operation of Pharmacists in the Netherlands), a comprehensive range of high-quality OTC products, exclusively sold by Dutch pharmacists. Sanodiane: a notable French brand for accessories, with a comprehensive range of special-purpose scissors, files, etc. Is partly launched on the Spanish and Belgian market. Septivon: antiseptic products. Market leader in France. Uvesol: has the same market position as Bodysol, but specialised in suntan and solarium products. To maintain an unambiguous marketing strategy, the Uvesol product range is gradually been converted to Bodysol Sun. Varilind: support stockings and varix stockings sold in Germany, with unique and personalised services for pharmacists.
II .3.6.c

> description of activities

Basis of accounting Omega Pharma has a portfolio of approximately 90 brands in different countries. A substantial number of these brands are produced internally, and are therefore not capitalised, because all costs for the development of these brands have always been charged to the profit and loss account of the year in which they incurred. A few examples are: Bodysol, Dynarax, Fat Control, Instaslim, etc.

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Some of these brands were acquired by takeovers, either directly or indirectly following a takeover of a legal entity. In a small number of cases, the brands have been capitalized, for a total amount of approximately 30 million euro, and the most important brands in that respect are Varilind, Bbisol, Innoxa, and Septivon. However, most of the brands have only been capitalised indirectly under the entry positive consolidation differences (goodwill), because they have not been written off as intangible fixed assets by the acquired company. Goodwill is depreciated annually (see the accounting rules on page 81), even if the value of the brands has increased in the meantime. Omega Pharma's top 10 brands (Predictor/Femtest, Davitamon, Innoxa, Jouvence de lAbb Soury, Azaron, Jungle Formula, Clment, Bbisol, Protical, Parapoux) yielded a turnover of approximately 98 million EUR in 2001. The Fair market value of a brand with a top 3 position in one or more countries, reflects 2 to 3 times the annual turnover. As a result, the value of the top 10 brands is estimated at approximately 250 million EUR. In the assets under goodwill of Omega Pharma on 31 December 2001, amounts to 218 million EUR. As a result, the value of the 10 major brands of Omega Pharma, all of which were acquired following takeovers, almost equals the total goodwill amount and the capitalised brands on 31 December 2001.

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FINANCIAL AND ACCOUNTING INFORMATION

FINANCIAL SUMMARY

Consolidated balance sheet Consolidated profit and loss account Report of the Board of Directors on the consolidated annual accounts Notes to the consolidated annual accounts Consolidated cash flow table Statutory auditors report on the consolidated financial statements Abridged balance sheet for Omega Pharma NV (simplified) Abridged profit and loss account for Omega Pharma NV (simplified) Appropriation of profits of Omega Pharma NV (simplified)

62 64 66 72 95 99 101 102 103

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CONSOLIDATED BALANCE SHEET

(in thousands of EURO)

ASSETS as at 31 December FIXED ASSETS Intangible fixed assets Consolidation differences Tangible fixed assets Land and buildings Plant, machinery and equipment Furniture and vehicles Leasing and similar rights Other tangible fixed assets Assets under construction and advance payments Investments Companies consolidated by the equity method - Shareholdings Other companies - Shareholdings, shares and no-par stock - Debtors CURRENT ASSETS Debtors due after one year Stock and orders in progress Stock - Raw materials and consumables - Finished products - Goods for resale Debtors due within one year Trade debtors Other debtors Investments Other investments Cash at bank and in hand Deferred charges and accrued income TOTAL

2001 282 757 36 001 217 651 27 099 6 675 5 127 2 730 6 051 6 510 6 2 006 175 175 1 831 823 1 008 331 778 16 73 849 73 849

2000 252 867 21 916 201 637 27 159 9 589 5 766 2 670 4 376 4 758 2 155 495 495 1 660 214 1 446 176 556

1999 21 321 1 169 13 246 4 901 2 950 267 426 10 1 248 2 005 59 59 1 946 1 185 761 23 922

53 084 53 084

133 076 107 411 25 665 98 996 98 996 20 282 5 559 614 535

101 647 87 034 14 613 5 470 5 470 12 260 4 095 429 423

7 189 7 189 597 6 6 586 15 433 14 939 494 97 97 808 395 45 243

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> financial and accounting information

LIABILITIES as at 31 December CAPITAL AND RESERVES Capital Issued capital Share premiums Consolidated reserves Gains or losses on exchange PROVISIONS AND DEFERRED TAXES Pensions and similar obligations Taxes Major repairs and maintenance Other liabilities and charges Deferred taxes CREDITORS Creditors due after one year Financial creditors - Leasing and similar obligations - Credit institutions Creditors due within one year Current position of creditors due after one year Financial creditors - Credit institutions - Other loans Trade credits - Suppliers - Traits payable Advance payments received on orders Taxes, remuneration and social security - Taxes - Remunerations and social security Other creditors Accrued charges and deferred income TOTAL

2001 316 743 15 375 15 375 286 046 15 278 44 10 723 1 557 2 106 554 6 353 153 287 069 79 009 79 009 5 842 73 167 205 170 56 139 19 356 19 260 96 83 583 74 661 8 922 1 075 28 391 18 033 10 358 16 626 2 890 614 535

2000 188 249 13 903 13 903 171 418 2 928

1999 17 236 11 166 11 166 4 978 1 092

7 400 1 826 1 566 4 008

159

159

233 774 29 156 29 156 4 355 24 801 202 738 10 040 71 562 71 562 64 142 58 499 5 643 2 331 16 319 8 301 8 018 38 344 1 880 429 423

27 848 5 636 5 636 1 5 635 22 065 1 368 8 936 8 936 8 428 8 428

1 689 1 001 688 1 644 147 45 243

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CONSOLIDATED PROFIT AND LOSS ACCOUNT

(in thousands of EURO)

FOR THE YEAR ENDING 31 DECEMBER Operation income Turnover Changes in stock, work in progress, finished products and orders in progress Fixed assets - own production Other operation income Operating charges Goods for resale, raw materials and consumables - Purchases - Change in stock Services and other goods Remuneration, social security and pensions Depreciation and amounts written off formation expenses, intangible and tangible fixed assets Amounts written off stock, orders in progress and goods for resale Provisions for liabilities and charges Other operating charges OPERATING PROFIT Financial income Investment income Income from current assets Other financial income Financial charges Interest and other debt charges Depreciation on goodwill Amounts written off other current assets Other financial charges PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXES

2001 436 071 430 071 317 706 4 977 368 231 218 018 221 940 (3 922) 78 255 62 526 8 830 (355) (3 964) 4 921 67 840 1 202 743 459 31 454 9 335 21 179 940

2000 179 535 177 976 (351) 1 910 156 647 96 026 103 896 (7 870) 29 634 26 903 4 014 (1 050) (737) 1 857 22 888 1 886 4 1 072 810 10 786 2 293 7 868 8 617

1999 42 297 42 236 (49) 110 36 643 24 601 26 146 (1 545) 6 092 4 731 726 449 (23) 67 5 654 114 12 11 91 2 493 436 2 013 2 42

37 588

13 988

3 275

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CONSOLIDATED PROFIT AND LOSS ACCOUNT

(in thousands of EURO)

- contin.

FOR THE YEAR ENDING 31 December

2001

2000 329 32 297 5 146

1999 79 72 7 154

Extraordinary income 254 Adjustments to provisions for extraordinary liabilities and charges 60 Gains on the disposal of fixed assets 108 Other extraordinary income 86 Extraordinary charges 5 649 Extraordinary depreciations of formation expenses, intangible and tangible fixed assets 118 Provisions for extraordinary liabilities and charges (1 025) Losses on the disposal of fixed assets 33 Other extraordinary charges 6 523 PROFIT FOR THE FINANCIAL YEAR BEFORE TAXES Corporation tax Taxes Adjustment of income taxes PROFIT FOR THE FINANCIAL YEAR Share of companies to which the equity method consolidation is applied CONSOLIDATED PROFIT Group share 32 193 (17 383) (17 545) 162 14 810

90 5 056 9 171 (6 071) (6 071)

19 135 3 200 (2 209) (2 209)

3 100

991

(319) 14 491 14 491

(64) 3 036 3 036 991 991

The appended notes constitute an integral part of these accounts

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REPORT OF THE BOARD OF DIRECTORS ABOUT THE CONSOLIDATED ANNUAL ACCOUNTS


1.1 CONSOLIDATED PROFIT AND LOSS ACCOUNT It appears from the annual accounts that the company realised a net profit of 14,491 EUR'000 during the last financial year compared to a profit of 3,036 EUR'000 during the previous financial year and a profit of 991 EUR'000 in 1999. Operating income increased from 179,535 EUR'000 in 2000 to 436,071 EUR'000 in 2001, representing an increase of 143 %. For the first time, the results of the Chefaro group have been included for the entire financial year. Internal growth was approximately 39 % in 2001. In 1999, operating income amounted to 42,297 EUR000. All divisions realised a strong increase in turnover compared to the previous financial year. The most significant developments were as follows: A successful internationalisation, resulting in 59 % of the turnover for the operations outside Belgium. The growth in all divisions in Belgium, such as the own products division (+ 92 %), partnerships (+ 54 %), business-to-business (+ 40 %), OmegaSoft (+ 74 %), and the generics division (+ 58 %). The expansion of the sales organisations in the UK, Germany, and Spain, providing the opportunity of launching synergetic projects. The merger of all business activities in France, into one efficient, future-oriented organisation. The successful co-operation in the Netherlands between the B2B organisation (controlled by Fagron) and the B2C organisation (controlled by Chefaro). The rapid growth of the dental division, due to the completed synergies and the acquired market position. Compared to 2000, the operating profit rose by 196 % to 67,840 EUR000. In 1999, operating profit amounted to 5,654 EUR000. The substantial increase of the operating profit is due to the synergetic effects, economies of scale, and the expansion of the consolidation base through acquisitions. The increase of the EBIT margin from 12.9 % to 15.8 % results from a substantial increase of the own products division's importance compared to last year; however, these results have partly been compensated by the growth of the

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generics division in Belgium. Furthermore, this is a direct result from the fact that the impact of the economies of scale and the synergies have a favourable effect not only on profits, but on costs as well. In 1999, the EBIT spread was 13.4 %; the relative decline in 2000 was primarily due to the substantial growth of the generics division during the year 2000. The adjustments to amounts written off stock, orders in progress, and trade debtors relate primarily to goods identified in the past as unsaleable. The value of these goods had previously been written down, and during the past financial year they were destroyed or sold. The cost of destroying the goods and/or the cost price of the goods appears under the heading goods for resale, raw materials, and consumables. The appropriation of the risks and costs entry (3,964 EUR000) primarily relates to restructuring costs for the Mooss group (513 EUR000), Chefaro Ardeval (1,886 EUR000), and Bufa BV (920 EUR000). These costs mainly include payments for dismissals and contract termination. During the previous year, when the financial year 1999 was compared to 2000, we noted a relative increase of employment costs compared to the turnover, which was an immediate result of a number of production and distribution operations acquired that same year. The same calculation method for the financial year 2001 compared to 2000, however, shows a decrease from 15.12 % to 14.54 %. This favourable evolution can be accounted for by the management's continued efforts for economies of scale and efficiency improvements. The group's financial results were mainly influenced by amortisation of goodwill relating to the various takeovers (including the first full-scale consolidation of the profit and loss account of the Chefaro group), for an amount of 21,179 EUR000. In 2000, amortisation of consolidation differences amounted to 7,868 EUR000, and in 1999 to 2,013 EUR000. In this respect, it is important to note that all acquisition costs incurred during the takeovers which were carried out, have been allocated to the acquisition value of the shares and have been treated in the consolidation as part of the goodwill paid on which amortisation is calculated. Interest and other debt charges rose from 2,293 EUR000 in 2000 to 9,335 EUR000 in 2001. This increase is mainly due to the interests for bank loans, taken on for the acquisition of Chefaro. During the financial year 1999, interests and other debt charges amounted to 436 EUR000. The extraordinary result is analysed in the explanatory notes (see page 91).

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The item extraordinary charges in the accounts includes a profit for an amount of 1,025 EUR000. This is primarily an appropriation of the provisions reserved for restructuring expenses in France. The profits from normal business operations amount to 37,588 EUR000 (58,767 EUR000 before amortisation of consolidation differences) compared to 13,988 EUR000 in 2000 and 3,275 EUR000 in 1999. The net operating profit (net profit corrected before the extraordinary result, after tax correction, and amortisation on consolidation differences) increased with 184 % to 39,317 EUR000 or 1.61 EUR per share. In 2000, the net operating profit amounted to 13,857 EUR000 or an equivalent of 0.64 EUR per share, compared to 3,049 EUR000 or 0.16 EUR per share in 1999. 1.2 CONSOLIDATED BALANCE SHEET The consolidated balance sheet total rose from 429,423 EUR000 in 2000 to 614,535 EUR000 in 2001. The significant increase in all individual balancesheet entries is due to the consolidation of a significant number of new companies in the accounts, the internal growth strategy, and the capital increase carried out in December 2001. It should be noted that the Chefaro group balance sheets were already entirely included in the balance sheet as on 31 December 2000, and that the financial results as of 1 January 2001 have been consolidated. In 1999, the consolidated balance sheet total was 45,243 EUR000. Intangible fixed assets The intangible fixed assets increased with 14,085 EUR000 compared to 2000. This increase is mainly due to the acquisition of the Varilind brand in Germany and the Contalax brand for the French market. The remainder of the intangible fixed assets consist mainly of the capitalised brands for Chefaro and Pharmygine, the capitalised costs relating to the purchase of medicine registrations and capitalised costs relating to software. In 1999, the total intangible fixed assets amounted to 1,169 EUR000. Goodwill Positive goodwill relates to the acquisition of the following companies: 1997: Lomed NV, Promedis NV, Apollo Export NV and PubliMate NV. 1998: Competel Pharma Systems NV, Competel Software Development NV and Roviphar BVBA. 1999: I.C.S NV, Pharmanet NV, Offilog SA, Farmix SA, Interphar NV (50,1 %), Cogestic SA, Discap BVBA, Erco 2000 BVBA and Aca Pharma BVBA.

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2000: Pegas Pharma NV, G. De Coninck BVBA, Homeoropa BV (NL), OHC BV (NL), ABC Dental and Pharmaceutical Consultancy NV, Euro Dental & Medical NV, ABC Ducro-Dental BV (NL), Denteco 2000 SA (FR), ABC Dental et Pharma SA (FR), NDP NV, Servidental SA, Superware BVBA, ICP NV, ICP Projects NV, ICP Wallonie SPRL, JJ Maes Sygma NV, Dental Group 2000 NV, Interphar NV (49,9 %), AB2M-Aposdi-Isis NV, Pharmac SA, Aposdi NV, ADS BVBA, Pharmygine group (FR), Fagron group (NL), Lamoral group and Chefaro group (NL). 2001: Bufa group, Spruyt-Hillen BV, SAN BV, Losser BV, ALD BVBA, Medeva SA, Promedent SA, D.Prins BV, Pharmaflore NV, F&E NV, Mooss group, De Jong Dental BV, Tendem BV and Softomat NV. Tangible fixed assets The consolidated net book value of tangible fixed assets as from 31 December 2001 was 27,099 EUR000, i.e. a decrease compared to the previous financial year with 60 EUR000. In 1999, the total tangible fixed assets amounted to 4,901 EUR000. The decrease for the entry Land and buildings can be accounted for by the write-downs during the financial year, a sale-and-lease-back operation with regard to the buildings in Nazareth (head office) and Spy (Omega Pharma Soft Wallonie), and the sale of the Opodex production unit (France). Please note that entry D. Leasing and other similar rights has increased with 1,675 EUR000 following the sale-and-lease-back operation mentioned above. Financial fixed assets Tectrade NV from Bruges is included in the balance sheet for an amount of 175 EUR'000 under the item Companies consolidated by the equity method. Please note the shift in item B. Other companies from 2. Debtors to 1. Shareholdings, shares and no-par stock. This regrouping is due to the conversion of the convertible loan issued to Conforma into shares. As a result, Omega Pharma is now a shareholder of this company for 10 % of the shares. Current assets Stock increased from 53,084 EUR000 at the end of 2000 to 73,849 EUR000 at the end of 2001 as a result of the consolidation of stock from acquired companies, and the significant internal growth of the various divisions. In 1999, these only amounted to 7,189 EUR000.

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Trade debtors also showed a substantial increase of 20,393 EUR000 compared to the previous financial year. This increase is due to the considerable increase in turnover and the expansion of the consolidation base. As a comparison, trade debtors on 31 December 1999 amounted to 14,939 EUR000. The entry other debtors, for a total amount of 25,665 EUR000 primarily consists of VAT liabilities and tax related debts. Capital and reserves The following changes in the capital accounts and share premiums occurred during 2001: Date 31.12.00 15.01.01 01.10.01 22.10.01 12.12.01 27.12.01 No. of shares 24,205,496 24,269,974 24,447,986 24,566,391 26,732,786 26,767,241 Amount of capital 13,903,401.92 13,940,437.65 14,042,687.74 14,110,699.57 15,355,076.87 15,374,867.83 Amount of share premium 171,417,785.84 174,107,578.45 182,005,211.85 187,153,584.67 284,505,728.99 286,046,565.28

In 2001, Omega Pharma's capital increased with 1,472 EUR000. The share premium account increased with 114,626 EUR'000, due to the acquisition of shares in other companies through the issue of new shares worth 17,277 EUR000, through capital increases with a cash value of 96,892 EUR'000, and through the exercise of share options worth 459 EUR000. The average exercise price amounted to 4.3 EUR. On 15 January 2001, the Board of Directors created 64,478 new shares to fund the share taken in Fertilis Development NV. On 1 October 2001, the Board of Directors created 178,012 new shares to fund the share taken in the Mooss Distri BVBA group. On 22 October 2001, the Board of Directors created 118,405 new shares to fund the share taken in D. Prins BV, F&E NV, Pharmaflore NV, and Medeva Pharma SA. On 12 December 2001, the Board of Directors created 2,048,643 new shares related to a private share issue, for a total amount of 98,068 EUR000 (capital and share premiums). On 27 December 2001, the Board of Directors created 34,455 new shares to fund the share taken in De Jong Dental BV, Softomat NV, and Promedent SA. These operations were carried out within the limits of the authorised capital. On each occasion, the Board of Directors drew up a special report in accordance with Article 602 of the Company Act, describing the transaction, and providing information about the share acquired in the company and the increase in capital.. The statutory auditor also drew up a report about each of these payments.

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Finally, on 12 December 2001, 117,752 new shares were created for the exercise of the second tranche of share options in connection with the share option scheme as approved by the Board of Directors on 20 April 1998. As of 31 December 2001, the company's capital was represented by 26,767,241 ordinary shares. The reserves increased with 12,350 EUR'000, resulting from an increase in the group share in the consolidated result of 14,491 EUR000, decreased with a proposal to pay a dividend for an amount of 2,141 EUR000. As a comparison, the total equity capital at the end of the financial year 1999 amounted to 17,236 EUR000. Provisions and deferred taxes The total provisions for liabilities and charges amount to 10,570 EUR000; these can be subdivided into a provision for pension liabilities for an amount of 1,557 EUR000, deferred taxes for an amount of 2,106 EUR000, major repairs and maintenance for an amount of 554 EUR000, and other liabilities and charges for an amount of 6,352 EUR000. This latter item consists of provisions made for guarantee liabilities (on dental installations), and mainly the restructuring measures in Ardeval (Chefaro France) Total deferred taxes amount to 153 EUR000. In 2000, the total of this item amounted to 7,400 EUR000 compared to 159 EUR000 in 1999. Net financial creditors Consolidated net financial creditors, defined as short- and long-term financial creditors less cash investments and liquid assets, decreased from 93,028 EUR000 to 35,226 EUR000. This fluctuation is attributable to the withdrawal of a bank credit with a consortium of banks, which was compensated by a private capital increase in December 2001, basically reserved to national and international institutional investors. In 1999, net financial debts amounted to 15,035 EUR000. Creditors due within one year In comparison with 2000, trade debts rose with 12,922 EUR000 and compared to 1999 with 68,636 EUR000, primarily due to the increased turnover resulting from the company's internal growth and an expansion of the consolidation base. Other creditors decreased with 15,199 EUR'000, which mainly is due to the payment made to Akzo Nobel, at the beginning of 2001, and the deferred payment for the takeover of the Chefaro group. At the end of 1999, other amounts payable amounted to 1,644 EUR000.

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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS


LIST OF CONSOLIDATED COMPANIES AND COMPANIES TO WHICH THE EQUITY METHOD OF CONSOLIDATION HAS BEEN APPLIED ABC Dental & Pharma SA Rue de Castiglione 5, 75001 Paris (France) ABC Dental & Pharmaceutical Consultancy NV Guido Gezellestraat 117, 1654 Huizingen (Belgi) ABC Dental Beheer BV (formerly ABC Ducro Dental) Lage Dijk 5 a, 3401 RE IJsselstein (Nederland) ACA Pharma BVBA Industrielaan 22, 7780 Komen (Belgi) Apex Delta SA Rue du Repos 31, 69007 Lyon (France) Archimed NV Lieven Bauwensstsraat 29, 8200 Sint Andries (Belgi) Arijansen & Kunze Nederland BV Molenwerf 13, 1910 AC Uitgeest (Nederland) Arun Valley Trading Company Ltd Unit 1 - Tower Close - St Peters Industrial Park Huntingdon - Cambs PE18 7DR (United Kingdom) Bufa BV Molenwerf 13, 1910 AC Uitgeest (Nederland) C.L.P. SC Rue Chaintron 2-4, 92542 Montrouge (France) Chefaro Ardeval SA Rue Chaintron 2-4, 92542 Montrouge (France) Chefaro Espaola SA Citypark Ronda de Dalt - Ctra. Hospitalet 147 08940 Cornella de Llobregat (Espaa) Chefaro International BV Keileweg 8, 3029 BS Rotterdam (Nederland) Chefaro Ireland Ltd Farnham Drive- Finglad Road, Dublin 11 (Ireland) Chefaro NV Venecoweg 26, 9810 Nazareth (Belgi) Chefaro Nederland BV Keileweg 8, 3029 BS Rotterdam (Nederland) Chefaro Proprietaries Ltd Unit 1 - Tower Close - St Peters Industrial Park Huntingdon - Cambs PE18 7DR (United Kingdom) 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %

100 % 100 % 100 % 100 %

100 % 100 % 100 % 100 % 100 %

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Cogestic NV 100 Parc Cralys - Rue Camille Hubert 23, 5032 Gembloux (Belgique) Damianus BV 100 Keileweg 8, 3029 BS Rotterdam (Nederland) De Jong Dental BV 100 Strijkviertel 33, 3454 PJ De Meeren (Nederland) Demi Pharma BV 100 Hoogeveenenweg 210, 2913 LV Nieuwerkerk a/d IJsel (Nederland) Denteco 2000 SA (formerly Denteco France SA) 100 Zac du Puits dOrdet, 73190 Challes-les-Eaux (France) Denteco Dental Partners SA (formerly Servidental) 100 Rue des Chrysanthmes 18, 4020 Lige 2 (Belgique) Deutsche Chefaro GMBH 100 Im Wirrigen 25, 45731 Waltrop (Deutschland) Discap BVBA 100 Venecoweg 26, 9810 Nazareth (Belgi) D. Prins BV 100 Rijksstraatweg 22 B, 2636 AX Schipluiden (Nederland) Euro Dental & Medical NV 100 Emile de Blutslaan 16, 1702 Dilbeek (Belgi) Fagron Farmaceuticals BV 100 Hoogeveenenweg 210, 2913 LV Nieuwerkerk a/d IJssel (Nederland) Fagron Holding BV 100 Hoogeveenenweg 210, 2913 LV Nieuwerkerk a/d IJssel ( Nederland) Fagron Ziekenhuis Service BV 100 Hoogeveenenweg 210, 2913 LV Nieuwerkerk a/d IJssel (Nederland ) F & E NV 100 Onze-Lieve-Vrouwstraat 64, 2800 Mechelen (Belgi) Fertilis Development NV 100 Rue Emile Fron 70, 1060 Sint Gillis (Belgi) Homeoropa BV 100 Kasteellaan 1, 5323 ZH Ammerzoden (Nederland) I.C.P. Projects NV 100 Sint Katriensteenweg 43, 8520 Kuurne (Belgi) I.C.P. Wallonie BVBA 100 Rue de Huy 62, 4537 Verlaine (Belgique) Industrial Cleaning Products NV 100 Sint-Katriensteenweg 43, 8520 Kuurne (Belgi) Interphar NV 100 Interleuvenlaan 66, 3001 Heverlee (Belgi) JJ Maes Sygma NV 100 Parkstraat 34, 3070 Kortenberg (Belgi)

% % % % % % % % % % % % % % % % % % % % %

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Jungle Formula Company Ltd Unit 1 - Tower Close - St. Peters Industrial Park Huntingdon - Cambs PE18 7DR (United Kingdom) Laboratoires Clment-Thkan SA Rue Chaintron 2-4, 92542 Montrouge (France) Laboratoires Pharmygine Scat SA Rue Chaintron 2-4, 92542 Montrouge (France) Laboratoires Pharmygine-Mdiple SA Rue Chaintron 2-4, 92542 Montrouge (France) Lamoral NV Lieven Bauwensstraat 29, 8200 Sint-Andries (Belgi) Lamoral Nederland BV Cartografenweg 18, 5141 MT Waalwijk (Nederland) Medeva Pharma SA Avenue du Commerce 23, 1420 Braine lAlleud (Belgique) Medgenix Benelux NV Vliegveld 21, 8560 Wevelgem (Belgi) Medical Universal SA Rue du Repos 31, 69007 Lyon (France) Mdiple Distribution SA Rue Andr Durouchez, 80052 Amiens Cedex 2 (France) Mooss Distri BVBA Venecoweg 26, 9810 Nazareth (Belgi) New Dental Prospect NV Kouterlaan 1, 9200 Dendermonde (Belgi) Omega Pharma Holding (Nederland) BV Velperweg 76, 6824 BM Arnhem (Nederland) Omega Pharma Soft Vlaanderen NV Hogenakkerhoek 5, 9150 Kruibeke (Belgi) Omega Pharma Soft Wallonie SA Parc Cralys - Rue Camille Hubert 23, 5032 Gembloux (Belgique) Oral Hygine Center BV Printerweg 15, 3821 AP Amersfoort (Nederland) Paracelcia GMBH Im Wirrigen 25, 45731 Waltrop (Deutschland) Pharmaflore NV Rue Botrieux 7, 7864 Lessines (Belgique) Pharmavit Europe NV Deuzeldlaan 36, 2900 Schoten (Belgi) Promedent SA Zare Ouest, 4384 Ehlerange (Luxembourg)

100 %

100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %

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PubliMate NV Venecoweg 26, 9810 Nazareth (Belgi) Roviphar BVBA Venecoweg 26, 9810 Nazareth (Belgi) RT Med BVBA Avenue des Aubpines 15, 1180 Brussel (Belgi) Samenwerkende Apothekers Nederland BV Europalaan 2, 3500 GL Utrecht (Nederland) Schoum SC Rue Chaintron 2-4, 92542 Montrouge (France) Similia Labo NV Deuzeldlaan 34, 2900 Schoten (Belgi) Softomat NV Kloosterstraat 77, 2990 Wuustwezel (Belgi) Spruyt Hillen BV Tinbergenlaan 1, 3401 MT IJsselstein (Nederland) Superware BVBA Ninovesteenweg 198, 9320 Erembodegem (Belgi) Tendem BV Punterweg 30, 8042 AD Zwolle (Nederland) Vivox BV Zwaanhoefstraat 4 a, 4702 LC Roosendaal (Nederland) Zeker voor G & G BV Nijverheidstraat 19, 7581 PV Losser (Nederland) Zenith Pharmaceuticals Ltd Doma Building - Arch Makarios III Avenue 227 3105 Limassol (Cyprus) Laboratoires Omega Pharma SA Rue du Marchal de Lattre de Tassigny 18, 59000 Lille (France) Tectrade NV Pieter de Conincklaan 33, 8200 Sint-Andries (Belgi)

100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %

25 % 30 %

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CONSOLIDATION CRITERIA AND MODIFICATION OF THE CONSOLIDATION BASE The following consolidation methods were used: Full consolidation Subsidiaries in which Omega Pharma has the exclusive control. Equity method Participations in associated companies. All companies are taken into consolidation as from the date of the signature of the acquisition agreement. The following consolidation methods were used for the financial year 2001: Full consolidation for subsidiaries (wholly-owned), i.e.: Apollo Export NV (until 30.06.2001, merger with Omega Pharma NV) PubliMate NV Omega Pharma Soft Vlaanderen NV Roviphar BVBA Omega Pharma Soft Wallonie NV Discap BVBA Aca Pharma BVBA Cogestic NV Erco 2000 BVBA (until 30.06.2001, merger with Omega Pharma NV) G. De Coninck BVBA (until 30.06.2001, merger with Omega Pharma NV) Pegas Pharma NV (until 30.06.2001, merger with Omega Pharma NV) Homeoropa BV Oral Hygine Center BV New Dental Prospect NV ABC group, composed by: ABC Dental & Pharmaceutical Consultancy NV Euro Dental & Medical NV ABC Dental & Pharma SA ABC Dental Beheer BV Denteco 2000 SA Industrial Cleaning Products NV I.C.P. Projects NV I.C.P. Wallonie BVBA Interphar NV

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Denteco Dental Partners SA (formerly Servidental SA name changed after the merger by absorption of the companies Advies en Dental Service BVBA and Antony Loosvelt Dental Service BVBA) Superware BVBA Pharmygine-Mdiple composed by: Laboratoires Pharmygine-Mdiple SA Laboratoires Pharmygine Scat SA Mdiple Distribution SA Laboratoires Clment-Thkan SA Medgenix Benelux NV Schoum SC CLP SC Opodex (until 01.01.2001) Fagron group composed by: Fagron Holding BV Fagron Farmaceuticals BV Demi Farma BV Fagron Hospital Services BV Zenith Pharmaceuticals Ltd JJ Maes Sygma NV Dental Group 2000 (until 30.06.2001, merger with JJ Maes Sygma NV) Lamoral Group composed by: Fertilis Development NV Lamoral NV Lamoral Nederland BV Novodent SARL (until 30.09.2001) Archimed NV RT Med BVBA Apex Delta SA Mdical Universal SA AB2M-Aposdi-Isis SA (until 30.06.2001, merger with Omega Pharma Soft Wallonie NV) Pharmac SA (until 30.06.2001, merger with Omega Pharma Soft Wallonie NV) Aposdi SA (until 30.06.2001, merger with Omega Pharma Soft Wallonie NV) Advies en Dental Service BVBA (until 30.06.2001, merger with Denteco Dental Partners SA) Chefaro group composed by: Chefaro Nederland BV Chefaro International BV Omega Pharma Holding BV (name changed, formerly Chefaro Holding BV) Damianus BV

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O M E G A P H A R M A

Chefaro NV Chefaro Proprietaries Ltd Arun Valley Trading Company Ltd Jungle Formula Company Ltd Chefaro Ireland Ltd Paracelcia GMBH Deutsche Chefaro GMBH Chefaro Ardeval SA Chefaro Espaola SA Antony Loosvelt Dental Service BVBA (as from 01-01-2001 until 30-06-2001, merger with Denteco Dental Partners SA) Bufa BV (as from 01-01-2001) Spruyt Hillen BV (as from 01-01-2001) Zeker voor G & G BV (as from 01-01-2001) Samenwerkende Apothekers Nederland BV (as from 01-01-2001) Medeva Pharma SA (as from 01-04-2001) Arijansen & Kunze Nederland BV (as from 01-04-2001) Pharmaflore NV (as from 01-07-2001) D. Prins BV (as from 01-07-2001) Promedent SA (as from 01-07-2001) F & E NV (as from 01-08-2001) Mooss Distri BVBA (as from 01-09-2001) Similia Labo NV (as from 01-09-2001) Pharmavit Europe NV (as from 01-09-2001) Vivox BV (as from 01-09-2001) De Jong Dental BV (as from 01-10-2001) Softomat NV (as from 01-10-2001) Tendem BV (as from 01-10-2001) Equity method for associated companies, i.e.: Laboratoires Omega Pharma SA - 25 % shareholding The company was consolidated by the equity method as at 31.12.1999. Profits for the years 2000 and 2001 are negligible. Tectrade NV - 30 % stake as at 31.12.2001 As at 31.12.1999, the stake in the company was 20 %. However, as Omega Pharma NV had no significant influence over the direction of Tectrade NVs policy, the stake was categorised as of 31.12.1999 under Other companies and therefore not included in the scope of consolidation. During financial year 2000, the stake was increased by 10 %, and the company is therefore now consolidated by the equity method.

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O M E G A P H A R M A

ADDITIONAL INFORMATON REGARDING THE CONSOLIDATION OF THE OMEGA PHARMA GROUP The initial goodwill for Antony Loosvelt Dental Service BVBA was determined on the basis of the capital and reserves position as at 31.12.2000. As a result, the results of this company are included for the first time, with effect from 01.01.2001 untill 30.06.2001. The initial goodwill for Bufa BV was determined on the basis of the capital and reserves position as at 31.12.2000. As a result, the results of this company are included for the first time, with effect from 01.01.2001. The initial goodwill for Spruyt-Hillen BV was determined on the basis of the capital and reserves position as at 31.12.2000. As a result, the results of this company are included for the first time, with effect from 01.01.2001. The initial goodwill for Zeker voor G & G BV was determined on the basis of the capital and reserves position as at 31.12.2000. As a result, the results of this company are included for the first time, with effect from 01.01.2001. The initial goodwill for Samenwerkende Apothekers Nederland BV was determined on the basis of the capital and reserves position as at 31.12.2000. As a result, the results of this company are included for the first time, with effect from 01.01.2001. The initial goodwill for Medeva SA was determined on the basis of the capital and reserves position as at 31.03.2001. As a result, the results of this company are included for the first time, with effect from 01.04.2001. The initial goodwill for Promedent SA was determined on the basis of the capital and reserves position as at 30.06.2001. As a result, the results of this company are included for the first time, with effect from 01.07.2001. The initial goodwill for De Prins BV was determined on the basis of the capital and reserves position as at 30.06.2001. As a result, the results of this company are included for the first time, with effect from 01.07.2001. The initial goodwill for Pharmaflore SA was determined on the basis of the capital and reserves position as at 30.06.2001. As a result, the results of this company are included for the first time, with effect from 01.07.2001.

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O M E G A P H A R M A

The initial goodwill for F & E NV was determined on the basis of the capital and reserves position as at 31.07.2001. As a result, the results of this company are included for the first time, with effect from 01.08.2001. The initial goodwill for Mooss Distri BVBA group was determined on the basis of the capital and reserves position as at 31.08.2001. As a result, the results of this company are included for the first time, with effect from 01.09.2001. The initial goodwill for Tendem BV was determined on the basis of the capital and reserves position as at 30.09.2001. As a result, the results of this company are included for the first time, with effect from 01.10.2001. The initial goodwill for Softomat BVBA was determined on the basis of the capital and reserves position as at 30.09.2001. As a result, the results of this company are included for the first time, with effect from 01.10.2001. The initial goodwill for De Jong Dental BV was determined on the basis of the capital and reserves position as at 30.09.2001. As a result, the results of this company are included for the first time, with effect from 01.10.2001.

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O M E G A P H A R M A

VALUATION RULES These valuation rules are drawn up in line with the Royal Decree of 30 January 2001 in implementation of the Company Law Code. The valuation rules relate to the valuation of all property, debtors, creditors and liabilities of any kind which relate to the business and the capital and reserves made available to it. 1. General valuation rules Separate valuation of assets Each asset constituting part of the capital is separately valued. Depreciation and write-offs are specific to the assets to which they relate. Provisions for liabilities and charges are individually set. Prudence, fairness and truth Valuations, depreciation, write-offs and provisions for liabilities and charges meet the requirements for prudence, fairness and truth. In cases where, due to lack of objective criteria of assessment, the valuation of foreseeable risks, possible losses and devaluations are unavoidably subjective, this is indicated in the notes, if the amount involved, taking account of the requirement to present a true picture, are significant. Write-offs and provisions for liabilities and charges which exceed requirements are not maintained. Acquisition value - nominal value - revaluation As a general rule, each asset is valued at its acquisition value, and entered in the balance sheet at that value, with any applicable depreciation or write-offs deducted from it. However, debtors are in principle valued at their nominal value. Tangible fixed assets, shareholdings and shares which are included under investments may be revalued in accordance with article 57 of the above-mentioned Royal Decree. 2. Special rules Formation expenses Formation expenses are taken to the profit and loss account in the year they are incurred.

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O M E G A P H A R M A

Intangible fixed assets Intangible fixed assets other than those acquired from third parties are only entered on the asset side of the balance sheet at their production cost, provided this is no higher than the economic value or than the future yield from this asset for the company. Concessions, patents and licences: Investments in licences (including software), registrations and so on are capitalised and depreciated using the linear method over a period of two to five years. The specific costs of registration are depreciated from the moment of final approval of the registration. The general costs (consultancy etc.) of registrations are depreciated from the moment of commercialisation of the authorised registrations. Software: Costs associated with the development of software acquired as a result of takeovers have not been capitalised, and have therefore been allocated to the financial year during which these have been incurred. Any costs associated with the development of new software applications by Omega Pharma Soft Vlaanderen NV and Omega Pharma Soft Wallonie SA are capitalised and written off over a period of 5 years. Software purchased from outside is capitalised and depreciated over a five-year period. Brands: Marketing costs associated with establishing Omega Pharmas brands (such as Uvesol, Bodysol, etc.) are not capitalised, and are therefore charged in full to the profit and loss account of the year in which they are incurred. Costs associated with trademark registration are depreciated over a period of five years (pro rata temporis). Brands acquired from third parties are depreciated over a period of fifteen to twenty years (pro rata temporis). Goodwill: Goodwill relating to the acquisition of the working capital is being written off on a straight-line basis over seven years. Given the nature of the goodwill, the same write-off period of seven years is used as for the goodwill on companies with similar activities. Research and development costs In keeping with Belgian accounting principles, research and development costs are capitalised and written off over a five-year period.

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Consolidation differences When a new shareholding is acquired, the difference between the acquisition price and the corresponding share of the adapted equity, after allocating any gains or losses on the assets and liabilities and a subsequent adaptation of the assets and liabilities, is included in the consolidated balance sheet. If the difference is negative, it is included in the liabilities under goodwill. If the difference is positive, it is included in the assets under goodwill. Goodwill is depreciated at a rate determined by the Board of Directors on the basis of the expected economical life of the asset in question. The depreciation period for goodwill arising on the acquisition of all companies in the consolidation has been fixed by the Board of Directors as seven to fifteen years. For companies with a more industrial character (Pharmygine, Fagron and Lamoral) or with a significant brand portfolio (Chefaro and Pharmygine), the depreciation period has been fixed as 15 years, on the basis of the longer expected useful life of the assets in question. Acquisition costs incurred during takeovers are allocated to paid goodwill (in conformity with International Accounting Standards (IAS) and in line with Belgian accounting legislation). Tangible fixed assets Tangible fixed assets are valued at their acquisition value or production cost, plus allocated costs where appropriate. Depreciation is calculated on the basis of the useful life of the asset, in accordance with the following parameters:

Asset Buildings Building purchase costs Building fixtures and fittings Plant, machinery and equipment Furniture Computer equipment, software Office equipment Vehicles Other tangible fixed assets

Method linear linear linear linear-reducing linear-reducing linear-reducing linear-reducing linear linear

Percentage 3 % - 4 % 25 % 10 % - 20 % 10 % - 40 % 20 % - 40 % 20 % - 33 % - 40 % 20 % - 40 % 20 % 25 %

balance balance balance balance

Virtually all depreciation and amortisation is calculated on a straight-line basis. Assets acquired under leasing arrangements are depreciated using the abovementioned percentages, depending on the economical life.

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O M E G A P H A R M A

Contracts entered into in connection with the package-deals offered by Omega Pharma Soft Vlaanderen NV and Omega Pharma Soft Wallonie SA are treated as finance leases insofar as the reinstatement of the invested capital may be conclusively demonstrated. The depreciation term is 4 years. The depreciation term of the computer equipment related to the renting contract equals the term of the contracts (mostly 4 years). Investments Shares and securities paid up in cash are included at their acquisition value. Stocks Raw materials, consumables and goods for resale are valued using the FIFO method at acquisition value or market value on the balance-sheet date if this is lower. Work in progress and finished products are valued at production cost, which, in addition to the purchase cost of raw materials, consumption goods and consumables, also includes those production costs which are directly attributable to the individual product or product group. Debtors These are included at nominal value. Outstanding and doubtful debtors are written down as appropriate if there is uncertainty regarding all or part of the payment on the due date. Investments and cash at bank and in hand Investments and credit balances with financial institutions are valued at nominal value or acquisition value. Devaluations are made when the realisation value on the balance sheet date is lower than the acquisition value. Deferred charges and accrued income These are included at nominal value. Unused costs particularly for promotional materials are entered at acquisition value. Provisions for liabilities and charges Provisions for liabilities and charges are formed to cover: the companys liability with regard to retirement and survivors pensions, early retirement pensions and other similar pensions or allowances; the risk of losses or costs which might arise from personal securities or collateral constituted as guarantees of creditors or third party commitments, from obligations to purchase or sell fixed assets, from the fulfilment of completed or received orders, from forward positions or agreements in foreign currencies, forward positions or agreements in goods, technical guarantees associated with sales or services already completed by the company, unresolved disputes, included taxes, or compensation for dismissal.
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O M E G A P H A R M A

Creditors (after one year within one year) Creditors are valued at nominal value on the balance-sheet date. Foreign currencies Conversion The individual subsidiaries annual accounts are drawn up in the local currency. The individual subsidiaries accounts are converted into euro on the basis of the exchange rate as at the end of the financial year to which the balance-sheet figures relate, and on the basis of the average rate of exchange for the financial year to which the profit and loss account relates. Gains or losses on exchange are accounted for in the entry Capital and reserves. Currency transactions Balance-sheet accounts compiled in foreign currencies are converted at the official rate of exchange as at the end of the financial year. For Belgian companies, this relates to accounting entries not drawn up in euro; for foreign companies, it relates to accounting entries drawn up in a currency other than that used for their financial statements or euro. Gains or losses realised as a result of these conversions and exchange differences relating to transactions during the financial year are taken to the profit and loss account. Corporation tax Corporation tax on operating results for the financial year includes cash income tax and deferred taxes. Cash corporation tax includes the expected tax liabilities on the company's taxable operating income for the financial year, based on the tax rates applicable on the balance sheet date, and any tax liability adjustments of previous years. Deferred taxes were booked according to the liability method. This method was applied to any temporary differences between the result before taxes and the book value for financial accounting purposes, for both assets and liabilities. The calculation is based on the tax rates which were applicable at the time of closing. According to this calculation method, the group is required to provide deferred taxes for the difference between the actual value of the net acquired assets and their corresponding rate of taxation resulting from a new company take-over. No provisions are made for the following temporary differences: non-tax deductible goodwill and the initial entry of assets and liabilities which do not affect the accounting profits or taxable profits.

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O M E G A P H A R M A

Deferred tax assets have only been entered if there is a good chance that adequate taxable profits will be accumulated in the future to benefit from this tax advantage. On 31 December 2001, these deferred tax assets amount to 7,463 EUR000. These primarily relate to the recoverable fiscal losses with respect to acquired companies. Deferred tax assets are reduced when it is no longer likely that the corresponding tax benefit will be realized. The valuation rule as stated above, is in accordance with the Bulletin number 46 of May 2000, issued by the Commission on Accounting Standards.

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DEFERRED TAXES AND POTENTIAL TAX LIABILITIES


(in thousands of EURO)

Analysis of heading 168 of the liabilities Deferred taxes

153 153

INTANGIBLE FIXED ASSETS

(in thousands of EURO)

Costs of Concessions, research and patents, development etc.

Goodwill

Advance payments

Acquisition value As at 1 January 2001 Acquisitions Transfers and disposals Transfers from one item to another Changes in the consolidation base As at 31 December 2001 Depreciation As at 1 January 2001 Depreciation charged Written off after transfers Transfers from one item to another Changes in the consolidation base As at 31 December 2001 Net book value as at 31 December

42 497

815 1 354

24 049 14 754 (21) 2 934 6 746 48 462

3 750 781 (2 933) 126 1 724

85 (1)

84

15 113

819 947 407

4 570 2 159 (21) 651 6 512 13 871 34 591

1 425 90 (651) (59) 805 919 84

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TANGIBLE FIXED ASSETS

(in thousands of EURO)

Land Plant, and machinery & buildings equipment

Furnitures and vehicles

Leasing and similar rights

Other tangible fixed assets

Assets under construction

Acquisition value As at 1 January 2001 Acquisitions Transfers and disposals Transfers from one item to another Changes in the consolidation base As at 31 December 2001 Depreciation As at 1 January 2001 Depreciation charged Written off after transfers Transfers from one item to another Changes in the consolidation base As at 31 December 2001 Net book value as at 31 December 2001 Land and buildings Plant, machinery and equipment Furniture and vehicles

15 845 1 432 (3 451)

21 452 1 696 (338) (443)

7 876 1 274 (968) 460 2 528 11 170

6 746 2 680 (22)

9 993 3 451 (1 766) (17)

110 13 936

(4 441) 17 926

142 9 546

1 085 12 746 6

6 256 742 (298)

15 686 1331 (295) (383)

5 206 1 281 (769) 394 2 328 8 440

2 370 1 101 (22)

5 235 2 131 (1 593) (11)

561 7 261

(3 540) 12 799

46 3 495

474 6 236

6 675

5 127

2 730

6 051 4 549

6 510

1 025 477

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INVESTMENTS

(in thousands of EURO)

Companies consolidated by the equity method

Other companies

Shareholdings Acquisition value As at 1 January 2001 Acquisitions Transfers from one item to another As at 31 December 2001 Changes in the capital and reserves of companies consolidated by the equity method Net book value as at 31 December 2001

494

214 778 (169) 823

494

(319) 175 823

Debtors Net book value as at 1 January 2001 Additions Reimbursements Net book value as at 31 December 2001 1 446 418 (856) 1 008

CONSOLIDATED RESERVES

(in thousands of EURO)

Consolidated reserves as at 1 January 2001 Group share of the consolidated profit Dividend for the financial year 2001 Consolidated reserves as at 31 December 2001

2 928 14 491 (2 141) 15 278

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GOODWILL

(in thousands of EURO)

Goodwill

Differences after application of the equity method

Net book value as at 1 January 2001 Increase in participation interest Arising from a decrease of the percentage held Depreciation Other changes Net book value as at 31 December 2001

200 216 33 376 (553) (20 952) 4 370 216 457

1 421

(227)

1 194

CREDITORS

(in thousands of EURO)

CREDITORS WITH A RESIDUAL DURATION OF up to one year more than 1 year, but up to 5 years more than 5 years

Breakdown of creditors originally due after more than one year in terms of residual duration Financial creditors Leasing and similar obligations Credit institutions Total

2 240 53 899 56 139

4 198 71 723 75 921

1 644 1 444 3 088

Debts (or part of debts) secured or irrevocably promised against collateral based on the assets of companies included in the consolidation Financial creditors (short-term + long-term) Credit institutions Total

2001 7 934 7 934

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PROFIT/LOSS

(in thousands of EURO)

2001 Net turnover Total group turnover in Belgium 170 703

2000

103 776

Average workforce and employment costs Fully consolidated companies Average workforce - Blue collar - White collar - Management Employment costs - Remuneration and social security - Pensions Average number of employees employed in Belgium by group companies

1 375 193 1 145 37 61 845 681

686 122 551 13 26 814 90

474

380

Extraordinary items Breakdown of other extraordinary income Remission of debts Other Breakdown of other extraordinary charges Costs associated with capital increases Restructuring costs Other Corporation tax Difference between the tax allocated to the consolidated profit and loss account for the financial year and for previous financial years on the one hand, and the tax actually paid or owing for these years on the other hand, insofar as this difference is material in view of future tax liabilities Effect of extraordinary items on corporation tax for the year

86 2 266 3 176 1 081

295 2 4 063 262 731

1 200 2 069

1 006 2 031

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OFF BALANCE SHEET RIGHTS AND OBLIGATIONS Collateral constituted or irrevocably promised by the companies included in the consolidation on their own assets as guarantees of debts or third party commitments: - of the companies included in the consolidation (in thousands of EURO): 12 612 Retirement and survivors' pension liabilities with regard to personnel members or executives incurred by companies included in the consolidated accounts The group has a number of pension schemes with a specific savings plan or based on fixed contributions. The assets of these pension savings schemes are in general group insurance contracts managed by third parties. These funds are basically accumulated based on the employers' and employees' contributions set according to the recommendations of accredited independent actuaries. The contribution liabilities for external pension savings schemes of the group are included in the profit-and-loss account of the financial year during which these payments have been made.

RELATIONS WITH GROUP COMPANIES AND COMPANIES IN WHICH THE GROUP HAS A SHAREHOLDING AND WHICH HAVE NOT BEEN INCLUDED IN THE SCOPE OF CONSOLIDATION
(in thousands of EURO)

2001 Companies in which the group has a shareholding Investments Shareholdings and shares Debtors Due within one year Creditors Due within one year

2000

175 167 4

495 155 29

DIRECTORS REMUNERATION The total remuneration allocated to directors of the consolidating company for their duties in it, its subsidiaries and associate companies, including retirement pension amounts allocated to the same ends to former directors or managers was 329 EUR000 in 2001.

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O M E G A P H A R M A

ADDITIONAL NOTES 1. Commitments undertaken by Omega Pharma NV In relation to the acquisition of F&E NV, Omega Pharma NV has undertaken to pay an additional bonus at the latest on 30 June 2004. This bonus depends on the performance of the Omega Pharma shares on the one hand, and on the growth and profitability of F&E NV on the other hand, and will be limited to a maximum amount of 0.372 million EUR. However, based on the market value of the shares on 31 December 2001 (50.85 EUR), the bonus would be 0.173 million EUR. In relation to the acquisition of Promedent SARL, Omega Pharma NV has undertaken to pay an additional bonus. This bonus depends on the evolution of the turnover and the profitability of Promedent SARL up to 2003, and will be limited to a maximum amount of 0.186 million EUR. In relation to the acquisition of Tendem BV, Omega Pharma NV has undertaken to pay an additional bonus at the latest on 31 December 2003. This bonus depends on the performance of Omega Pharma shares, and has a maximum limit of 1.316 million EUR. However, based on the market value of the shares on 31 December 2001 (50.85 EUR), the bonus would be 0.356 million EUR. 2. Information on section XV.A.2. Off balance sheet rights and obligations collateral The total of 12.612 EUR000 may be analysed as follows: Omega Pharma Soft Wallonie SA Pledge on working capital 559 Mortgage registration 191 Mortgage mandate 248 ACA Pharma BVBA Mortgage registration 273 I.C.P. NV Mortgage mandate 181 Registered pledge on working capital 61 Mortgage mandate 183 Mandate on working capital 84 I.C.P. Wallonie BVBA Mortgage mandate 174 New Dental Prospect NV Registered pledge on working capital 124 Interphar NV Registered pledge on working capital 167

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Medgenix Benelux NV Registered pledge on working Mortgage registration Pharmygine-Mdiple groupe Registered pledge on working JJ Maes Sygma NV Mortgage registration Lamoral NV Mortgage mandate Registered pledge on working Mandate on working capital Medeva SA Registered pledge on working Mortgage registration Pharmaflore Registered pledge on working

capital

156 645 5 467 356 248 1 239 74 992 1 016 174 12 612

capital

capital

capital

capital

For the financing taken on by Omega Pharma NV, no guarantees have been given (see item 4 below). 3. The loans taken out by Pharmygine-Mdiple Group in France (29.1 million EUR as at 31.12.2001) are backed up by a Letter of Intent to the value of 35 million EUR on the part of Omega Pharma NV. 4. Collateral constituted by Omega Pharma NV with respect to the Term Facility Agreement closed between Omega Pharma NV and a consortium of banks (BBL, Deutsche Bank, Fortis, Artesia, and ABN Amro) on 29 April 2001, will be totally released by the consortium. All outstanding debts were completely reimbursed by Omega Pharma NV on 30 April 2002. 5. In 2002, Omega Pharma NV will sign a liability statement on behalf of Omega Pharma Holding Nederland BV. 6. Furthermore, Omega Pharma NV has provided personal guarantees for the companies included in the consolidation, for an amount of 9.9 million EUR.

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CONSOLIDATED CASHFLOW TABLE

(in thousands of EURO)

2001 1. Cashflow from operating activities Profit for the financial year Adjustments for non-cash items Depreciation on goodwill Amortisation of intangible fixed assets Depreciation of tangible fixed assets (Adjustments to) amounts written off stock Bad debts written off Amounts written off other debtors Amounts written off cash investments (Profit)/loss on sale of fixed assets Change in provisions for liabilities and charges Retained profits of companies consolidated by the equity method Change in deferred taxes Total adjustments for non-cash items Changes in working capital (*) (Increase)/decrease in long-term debtors (Increase)/decrease in stock (Increase)/decrease in trade debtors (Increase)/decrease in other debtors (Increase)/decrease prepayments and accrued income Increase/(decrease) in trade creditors Increase/(decrease) in advance payments received Increase/(decrease) in social security and taxation creditors Increase/(decrease) in other creditors Increase/(decrease) in accruals and deferred income Total changes in working capital TOTAL CASHFLOW FROM OPERATING ACTIVITIES 14 491

2000

1999

3 036

991

21 179 2 361 6 586 (282) (44) (27) (76) (4 380) 319 1 200 26 836

7 868 654 3 360 (1 175) 125 5 2 58 (737) 64 1 006 11 230

2 013 162 565 324 125 2 (53) (23)

3 115

(16) (10 505) (15 629) (7 680) (1 387) 12 507 (1 196) 10 780 5 354 1 013 (6 759) 34 568

(6 714) (8 906) 4 721 326 1 707 2 010 1 353 (1 903) 404 (7 002) 7 264

(576) (8 155) (271) 163 3 642 (219) 236 146 (313) (5 347) (1 241)

(*) taking account of changes in working capital in the companies acquired during 2001 from the time of their inclusion within the scope of consolidation

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2001 2. Cashflow from investment activities Intangible fixed assets: acquisitions Intangible fixed assets: disposals Tangible fixed assets: acquisitions Tangible fixed assets: disposals Financial fixed assets: post-payments for existing shareholdings Investments: new holdings within the scope of consolidation Financial fixed assets: desinvestments Investments: takeover of claims on Chefaro Investments: other acquisitions (16 031) (10 540) 3 644 (29 976) (21 313) 2 363 (132)

2000

1999

(2 476) 1 (6 168) 638 (109 224) (55 331) 59 (172 487)

(265) 15 (3 380) 331 (2 486)

(1 752) (7 551)

TOTAL CASHFLOW FROM INVESTMENT ACTIVITIES (71 985)

3. Cashflow from financing activities Capital increases in cash (capital + share premiums) New long-term loans Repayment of long-term loans Changes in creditors due within one year Dividend distribution TOTAL CASHFLOW FROM FINANCING ACTIVITIES NET CHANGE IN CASH POSITION 98 548 95 141 (55 409) (1 200) 137 080 99 663 122 634 16 769 (6 502) 41 089 (642) 173 348 8 125 (905) (8 700) 17 730 2 794 (916) 6 104 (377) 7 605 (1 187) (1 012) (1 080) 905

Liquid assets and cash investments - start of the year (17 730) Changes in the scope of consolidation and transfers of opening positions (1 885) Liquid assets and cash investments - end of the year 119 278 CHANGE IN LIQUID ASSETS AND CASH INVESTMENTS

99 663

8 125

(1 187)

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NOTES TO THE CONSOLIDATED CASHFLOW TABLE Presentation and purposes of the cashflow table The purpose of the cashflow table is to indicate which elements are of importance for the change in cash assets available to the group between the beginning and end of the year. The various elements that affect the cash assets during the financial year may be categorised in three activities: operating activities; investment activities; financing activities. The cashflow table is compiled using the direct method, i.e. starting from the net profit/loss for the financial year, adjusted for elements that do not involve any cashflow. Notes Operating activities It should be noted in general that changes in the working capital are adjusted by the opening balances of the companies when they are included within the scope of consolidation. The increase in working capital is a direct consequence of the expansion of the groups activities, and of the acquisitions made during the year. Investment activities Investments in financial fixed assets relate to that element that was paid for in cash, including capitalised takeover costs. This concerns the following companies: Lamoral NV - balance Pegas Pharma NV - balance Chefaro group - balance Homeoropa BV - balance ALD BVBA OPG group Medeva Pharma NV F&E NV Promedent NV D. Prins BV Pharmaflore SA Mooss Distri BVBA Softomat BVBA

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For the sake of completeness, the table below provides an overview (in thousands of euros) of acquisitions (by cash or share-swap), and investments in other assets over the last three financial years. 2001 Acquisitions by cash Acquisitions by share-swap Other investments Tangible fixed assets Intangible fixed assets
(*) (*)

2000 109 224 46 507 59 6 168 2 476

1999 2 4 1 3 486 115 752 380 265

51 289 14 861 132 10 540 16 031

Take-overs paid in cash can be analysed as follows: - post-payments for existing shareholdings (mainly Chefaro group): - new participations in the consolidation base:

29 976 21 313

Financing activities The capital increases in cash relate to: - private share issue as at 12.12.2001 to a value of 98,068 EUR000 - exercise of share options as at 12.12.2001 to a value of 480 EUR000 The new long-term loans are new long-term loans taken out by PharmygineMdiple worth FRF 110 million.

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STATUTORY AUDITORS REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 TO THE SHAREHOLDERS MEETING OF THE COMPANY OMEGA PHARMA NV In accordance with legal and regulatory requirements, we are pleased to report to you on the performance of the audit mandate which you have entrusted to us. We have audited the consolidated financial statements as of and for the year ended 31 December 2001 which have been prepared under the responsibility of the board of directors and which show a balance sheet total of 614,535 EUR000 and a consolidated profit for the year of 14,491 EUR000. We have also examined the directors report. Unqualified audit opinion on the consolidated financial statements We conducted our audit in accordance with the Belgian auditing standards, as issued by the Institut des Reviseurs d'Entreprises/Instituut der Bedrijfsrevisoren. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, taking into account the legal and regulatory requirements applicable to consolidated financial statements in Belgium. In accordance with those standards, we considered the groups administrative and accounting organisation, as well as its internal control procedures. We have obtained all explanations and information required for our audit. We examined, on a test basis, evidence supporting the amounts in the consolidated financial statements. We assessed the accounting principles used, the basis of consolidation and significant estimates made by the enterprise, as well as the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion the consolidated financial statements present fairly the companys net worth and consolidated financial position as of 31 December 2001 and the consolidated results of its operations for the year then ended, in accordance with the applicable legal and regulatory requirements in Belgium and the information given in the notes to the consolidated financial statements is properly presented.

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Other certification We supplement our report with the following certification which do not modify our audit opinion on the consolidated financial statements: the consolidated directors report contains the information required by the law and is consistent with the consolidated financial statements. Brussels, 17 May 2002 Statutory auditor PricewaterhouseCoopers Reviseurs dEntreprises / Bedrijfsrevisoren Represented by Lieven Adams

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OMEGA PHARMA NV ABRIDGED BALANCE SHEET (simplified))


(in thousands of EURO)

2001 FIXED ASSETS Intangible fixed assets Tangible fixed assets Investments CURRENT ASSETS Stocks and orders in execution Debtors due within one year Investments Cash at bank and in hand Deferred charges and accrued income TOTAL ASSETS 307 794 12 730 3 879 291 185 162 971 10 535 49 340 98 000 3 172 1 924 470 765

2000 260 832 8 280 3 911 248 641 46 482 9 124 30 144 5 082 1 632 500 307 314

1999 21 512 7 687 3 212 10 613 21 253 6 274 13 952 63 592 372 42 765

CAPITAL AND RESERVES Capital Sharepremiums Legal reserve Available reserve Profit carried forward PROVISIONS AND DEFERRED TAXES Provisions for liabilities and charges CREDITORS Creditors due after one year Creditors due within one year Accrued charges and deferred income TOTAL LIABILITIES

302 826 15 375 286 046 482 52 871 10 10 167 929 54 122 112 817 990 470 765

185 696 13 903 171 418 323 52

16 935 11 166 4 978 284 507

10 10 121 608 145 121 434 29 307 314

28 28 25 802 5 108 20 674 20 42 765

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OMEGA PHARMA NV ABRIDGED PROFIT AND LOSS ACCOUNT (simplified) (in thousands of EURO) 2001 OPERATING INCOME Turnover Changes in stock, work in progress and finished products Other operating income OPERATING CHARGES Goods for resale, raw materials and consumables Services and other goods Remuneration, social security and pensions Amounts written off Depreciation Provisions for liabilities and charges Other operating charges OPERATING PROFIT FINANCIAL RESULT PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXES EXCEPTIONAL RESULT PROFIT FOR THE FINANCIAL YEAR BEFORE TAXES RESULT TAXES 90 933 90 746 2000 61 521 61 329 1999 32 853 32 847 (26) 32 30 967 21 097 4 995 2 796 1 630 437 (19) 31 1 886 (358)

187 80 391 64 861 8 235 4 730 2 400 63 102 10 542 (983)

192 55 116 42 241 6 757 3 825 1 963 285 (18) 63 6 405 2 352

9 559 (4 647) 4 912 (1 740)

8 757 (7 503) 1 254 (470)

1 528 (72) 1 456 (1 170)

NET PROFIT FOR THE FINANCIAL YEAR

3 172

784

286

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APPROPRIATION OF PROFITS OMEGA PHARMA NV (simplified)


(in thousands of EURO)

2001 Profits to be appropriated Profits for the year to be appropriated Transfers from capital and reserves From reserves Transfers to capital and reserves To statutory reserves To other reserves Result to be carried forward Profit to be carried forward Profit to be distributed as dividends Reimbursement of capital (159) 159 3 172 3 172

2000 784 784 455 455 (39) 39

1999 286 286 371 371 (15) 15

872 (2 141) 2 141 (1 200) 1 200 (642) 642

Accounting principles The rules for evaluation which are used for the individual statutory annual accounts of Omega Pharma NV are the same as the rules which are applied to the consolidated annual accounts, except for the acquisition costs incurred for take-overs, which are allocated to goodwill in the consolidated annual accounts and which are charged to the individual annual accounts. Statutory annual accounts of Omega Pharma NV In keeping with Article 105 of the Company Law Code, this annual report includes an abbreviated version of the statutory annual accounts of Omega Pharma NV. The annual report and the auditors report have been filed and are also available for consultation at the registered office. The auditor has issued an unqualified opinion on the statutory annual accounts of Omega Pharma NV for the financial year 2001 as well as for the two previous years.

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INFORMATION ABOUT OMEGA PHARMAS CORPORATE GOVERNANCE


IV .1

CORPORATE GOVERNANCE CONSIDERATIONS


The IPO highlighted the autonomous character of the company and its decisionmaking and strategy-forming bodies. Moreover, the Board of Directors of Omega Pharma strives for sound management with a view to maximising the creation of value for the shareholders and the equal treatment of all shareholders. Omega Pharma has undertaken renewed efforts during 2001 in the area of sound management, with the following initiatives: The expansion of the Board of Directors from four to six members by the appointment of : - Sam Sabbe: he now holds the position of CFO and he is also a member of the management committee. - Benoit Graulich: non-executive director. As a partner at Ernst&Young (corporate finance division), his main area of activity is in mergers and acquisitions. This puts him in a position to contribute substantial added value within the Board of Directors. Omega Pharma also strives to treat all shareholders equally in all aspects of its communication and occasional information provision exercises.

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IV .2

APPOINTMENT OF MEMBERS OF THE BOARD OF DIRECTORS


The Board of Directors has a minimum of three and a maximum of eight members, who may not be shareholders. As long as article 518 of the Companies Law remains unchanged, their term of office may not exceed six years. However, during such time as the general meeting, for whatever reason, has not filled the resultant vacancies, directors whose terms have expired remain in office. Outgoing directors may be reappointed. The general meeting may dismiss a director at any time. Half of the directors plus one shall be appointed by the general meeting from the candidates nominated at the exclusive discretion of Couckinvest, a public limited company incorporated under Belgian law, whose registered office is located at Waregemstraat 26, 8570 Vichte, provided that this latter, or its legal successors, and any entities which are directly or indirectly controlled by it or its legal successors (as defined in the Company Law Code) singly or jointly hold(s) 20 % of the companys shares at the time of both the nominated of the candidatedirector and his appointment by the general meeting, and on the understanding that should the shares held by Couckinvest or its legal successors, and any entities which are directly or indirectly controlled by it or its legal successors (as defined in the Company Law Code) represent less than 20 % of the companys capital, Couckinvest or its legal successors shall only be entitled to nominate one candidate for the Board of Directors for each tranche of shares representing 5 % of the companys capital. Provided the above-mentioned condition is complied with, the general meeting shall be obliged to appoint candidates for the relevant number of directors mandates, chosen from the list of candidates nominated by Couckinvest, in accordance with the provisions of the previous paragraph. For each mandate to be assigned, a list of at least two candidates should be submitted, and each candidate may only be nominated once for the mandates to be assigned on that occasion. This list should be deposited at the companys registered office at least five days before the date of the general meeting at which the directors will be appointed. The general meeting regains complete freedom of choice if no valid list has been submitted by this deadline.

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IV .3

COMPOSITION OF THE BOARD OF DIRECTORS


The current Board of Directors is composed as follows: Mr Marc Coucke, chairman and managing director Waregemstraat 26 8570 Vichte Mandate until after the annual meeting of 2007 Couckinvest NV, director Waregemstraat 26 8570 Vichte represented by Mr. Marc Coucke, managing director Mandate until after the annual meeting of 2007 Jan Peeters NV, managing director Baillet Latourlei 32 2930 Brasschaat represented by Mr. Jan Peeters, managing director Mandate until after the annual meeting of 2007 Mr. Sam Sabbe, director Eikendreef 25 8490 Varsenare Mandate until after the annual meeting of 2007 Mr. Lucas Laureys, non-executive director, managing director of the group Van de Velde Heidebergenpark 20 9830 Sint Martens Latem Mandate until after the annual meeting of 2004 Mr. Benoit Graulich, director Meiskensbeekstraat 33 1851 Grimbergen Mandate until after the annual meeting of 2004 Mr. Marc Coucke and Couckinvest NV jointly represent the reference shareholder. No age limit has been provided for the directors.

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IV .4

FUNCTIONING OF THE BOARD OF DIRECTORS


The Board of Directors acts on the proposals of the management committee to determine the groups strategy, and supervises the performance of the tasks of day-to-day management. Day-to-day management is entrusted to the management committee, led by the managing directors Marc Coucke and Jan Peeters. The Board of directors supervises the branches, together with the management committee. The Board of Directors met 16 times last year. The Board of Directors also supervises senior management appointments and remuneration.

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COMPOSITION AND FUNCTIONING OF THE MANAGEMENT COMMITTEE


As a result of the rapid growth and internationalisation, it proves necessary to adapt continuously the companys management structure to the new situation. The most important features of this structure are as follows: the company is run by a management committee of six people which, in consultation with the Board of Directors, determines group strategy and supervises the integration of all activities. These six people are:

Marc Coucke, 37 years old, qualified pharmacist (RUG); holder of postgraduate management diploma (Vlerick School voor Management). As chairman of the Board of Directors and managing director, he is the person who determines strategy and is the companys driving force.

Jan Peeters (37), 35 years old, graduated in Applied Economic Sciences (UFSIA) and took postgraduate diploma in management (Vlerick School voor Management). He started his career as a business analyst at Exxon Chemical International in Brussels and Paris. He joined Omega Pharma in 1993. In January, he was appointed Deputy Chief Executive Officer.

Sam Sabbe, 36 years old, graduated in law at RUG. He has worked for Omega Pharma since September 1999, where he holds the function of Chief Financial Officer. Thanks to his background as a banker at Artesia Bank (formerly Paribas Bank Belgium), particularly in the corporate banking department, he is the companys merger and takeover specialist.

Ton Scheepens, 54 years old. Former business unit manager of Chefaro, he has a wide experience in the management of international OTC organisations.

(37) Representing Jan Peeters NV.

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Mario Debel (38), 32 years old, is qualified as a pharmacist (RUG) and as a cosmetician (VUB). Since 1994 he has been active at Omega Pharma, where he devotes himself particularly to product development and marketing. He has specific responsibility for directing and coordinating integration and synergies in the area of marketing and product development. In this capacity, he provides assistance to all the groups divisions in the various countries where it operates.

Jan Boone (39), 30 years old, graduated in Applied Economic Sciences (KUL) and Lic. Spciale en Rvisorat (UMH, Mons). He started his career as a member of the audit department of a Big-Five audit company. He joined Omega Pharma in 2000 and now holds the position of Group Controller.

Activities in each individual country are directed by a national manager. In Belgium and the Netherlands, the structure is further divided into divisions. He/They has/have operational responsibility for all activities within his/their country; within the overall strategic plan proposed by the management committee in consultation with the various national managers, each of the latter is responsible for his own budget and results. In other words, he takes independent decisions, but may always turn to Mario Debels marketing unit for support. The national managers are: - France: Jan Peeters and Jean Saint-Cricq - Germany: Wolfgang Reese - Spain: Harmen Lewin - the UK: Caspar van Dongen - the Netherlands: a subdivision B2B-B2C is made for the Netherlands: B2B activities are directed by Ger van Jeveren and Hans Waals, and B2C activities by Paul Hannema. The dental activities are directed in the Netherlands by Louis van de Mortel. - Belgium: a subdivision according to the various divisions is made here: - all pharmacy activities are directed by the duo of pharmacists Ludwig Geldof / Filip Demyttenaere - dental activities (consumables) are directed by Daniel van Cutsem - dental activities (equipment) are directed by Tom Preneel - the OmegaSoft division is directed by Ronny Robbrecht. Each national or division manager is supported by a controller; they report every month to the management committee, which is itself supported by two controllers

(38) Representing MD Consult BVBA (39) Representing BM&C NV

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At regular intervals, seminars are organised off the companys premises, involving the various countries and divisions. At these, the companys overall strategy is mapped out, modifications are made to the way the company functions, the financial position and profitability are subjected to thorough analysis and personnel policy is discussed. In some cases, the non-executive directors are involved in these meetings.

IV .6

AUDITOR
PricewaterhouseCoopers Bedrijfsrevisoren B.C.B.V.A. represented by Mr Lieven Adams. The auditors term of office runs until after the general meeting of 2002.

IV .7

BOARD OF DIRECTORS', MANAGING COMMITTEE'S AND AUDITOR'S REMUNERATION


The Board of Directors total gross remuneration is EUR000 395 for the financial year 2002. Non-executive directors do not receive any remuneration. In application of the share option plan described in Chapter I.3.5, share options may also be assigned to the members of the Board of Directors. In this framework, 93,000 share options were allocated to the members of the Board of Directors, 9,000 of which were exercised during financial year 2000 and 12,600 during financial year 2001. Le nombre total dactions dtenues par les membres du Conseil dAdministration slve 7.481.356. The total remuneration of the management committee for 2002 is estimated at EUR000 605. The total number of shares held by the management committee is 7,489,563. The also hold 122,000 share options, 9,750 of which were exercised in 2000 and 13,350 in 2001. The auditors fees for the financial year 2001 were EUR000 60. During the financial year 2001, the auditor executed some special tasks for an amount of EUR000 77 for legally required assignments and advisory operations relating to the consolidation and controlling activities for semiannual results. Companies with which the auditor has a professional collaboration executed activities for an amount of EUR000 346 . These mainly concerned the executed due-diligence assignments within the framework of the different takeovers and the related capital transactions as well as general advise on legal and fiscal matters.

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TRANSACTIONS IN ACCORDANCE WITH ART. 523 & 524 OF THE COMPANY LAW CODE
According to the stipulations in the Company Law Code, any director who has a conflict of interest with respect to a decision taken by the Board of Directors, is not allowed to be present during the discussion and deliberation preceding the decision of the Board of Directors, nor can he participate in the voting procedures. Furthermore, he is obliged to notify the auditor about his conflict of interest. In 2001, these procedures had to be followed on two occasions. This section includes the contents of the minutes of the corresponding decisions, stating the reasons for the conflict of interest, and which indicate the justification and consequences for the assets of the company. 1. Following the decision of the Board of Directors of 18 June 2001 to issue warrants, within the limits set for the authorised capital of the company, for employees, advisors, and major third parties of the company and its affiliates, Messrs Marc Coucke, Benoit Graulich, and Sam Sabbe hereby declare that, upon taking the decision to issue warrants, they have been confronted with a direct conflict of interest regarding property rights which is inconsistent with any decision or operation within the legal competence of the Board of Directors in accordance with the stipulations of Article 523 of the Company Law Code. Messrs Marc Coucke, Benoit Graulich, and Sam Sabbe are in fact at present both directors and potential beneficiaries of the warrants for which the issue is discussed and decided upon during this meeting. Therefore, Messrs Marc Coucke, Benoit Graulich, and Sam Sabbe would like to ask the Board to state in the minutes of the meeting that they have completely abstained from both the discussions and voting procedures with respect to the agenda items which could raise the issue of a conflict of interest with respect to property rights on their behalf. The other directors have declared that there is no direct or indirect conflict of interest with respect to property rights which is inconsistent with any decision or operation which the Board of Directors is legally authorised to take or carry out. As a result, all legal formalities in accordance with Art. 523 of the Company Law Code have been attended to. Description of nature of the operation: the operation is carried out in accordance with the stipulations regarding the authorised capital (decision of the extraordinary general shareholder's meeting of 29 October 1998, as published in the Belgisch Staatsblad on 25 November that same year), lifting the preferential rights in favour of employees, advisors, and major third parties, and in accordance with Art. 606, 3 of the Company Law Code. The operation

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consists of issuing 149,000 share options (warrants), and each share option, upon exercise, grants the right to one new share of NV Omega Pharma to be issued, subject to the condition that the exercise price has been paid. This share option plan is introduced to the benefit of employees, advisors, and major third parties. The exercise price of each share option shall at least be equal to the value of the share for which the warrant has been issued. The value of the shares according to this share option plan is determined as follows: the value of the share of the company is equal to the arithmetic average of the closing price of the share during the last 30 stock exchange days prior to 15 June 2001, i.e. 40.57 euro per share. Motivation for the operation: the exercise price as stated above is the minimum price as stipulated in Article 598, section 2 of the Company Law Code, and shall be applicable to both employees, advisors, and major third parties of Omega Pharma NV. The intention is not to give the warrant holder a preferential treatment as such, but to stimulate them, on the one hand by offering them the prospect of contributing to the growth of the company, of which they constitute the creative force, and on the other hand to provide them the opportunity to share in the additional value which could be generated from an increase of the value of the shares to which they have subscribed. Property rights consequences of the operation (40): assuming that all share options will be subscribed to and that all these warrants will be exercised, a total of 149,000 new shares could be issued, representing 0.61 % of the total number of existing shares on the day the Board of Directors took this decision. Staff members of the Belgian company (including Mr. Sam Sabbe, who will be assigned the share options as an employee) will have to pay a price equal to 9 % of the exercise price of the share. Advisors and major third parties (including Messrs Marc Coucke and Benoit Graulich) will be selected by the Board of Directors and will be required to pay a price of at least 16 % of the exercise price of the share. As stated above, the exercise price of each share option shall at least be equal to the value of the share for which the warrant has been issued. The value of the shares according to this share option plan is determined as follows: the value of the share of the company is equal to the arithmetic average of the closing price of the share during the last 30 stock exchange days prior to 15 June 2001, i.e. 40.57 euro per share. The total number of share options assigned to Marc Coucke, Benoit Graulich, and Sam Sabbe is 56,000. 2. To meet the capital requirements of the company, the Board of Directors decided on 4 December 2001 to carry out a capital increase (along with the abolition of the preferential rights in favour of specific persons) for a maximum
(40) In case the share options are exercised, the capital increase will result in a dilution with respect to the voting rights and possibly a financial dilution due to the difference between the exercise price of the share options and the share's market price.

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amount of 137,370,000 EUR, under the suspensive condition of a subscription to the shares and the adoption of the capital increase. After the actual implementation of the capital increase, the new issued shares will be listed on the Euronext stock exchange in Brussels. For the subscription to this capital increase, the Company, assisted by the consortium of banks of BNP Paribas, Petercam, and Bank Degroof (hereafter referred to as the Underwriters), will be addressing both national and international institutional investors. The arrangements for this operation made between the Company and the Underwriters, have been recorded in writing in an Underwriting Agreement. As is usual with this type of operations, the Underwriting Agreement includes a surplus allocation option (hereafter referred to as the Option) to offer banks the possibility of dealing with possible excess allocations during the subscription period, and to stabilize the share's price on the stock exchange market during the period following the first quote of the new shares. Because this Option is legally authorised and will be stimulating the stock exchange price, and because it is important to record the arrangements made with the Underwriters in a written contract, it is in Company's own interest to grant its approval to the present Underwriting Agreement. Following the decision of the Board of Directors of 7 December 2001 approving the Underwriting Agreement between Couckinvest, BNP Paribas, Bank Degroof, and Petercam, Couckinvest and Marc Coucke have announced that they have a conflict of interest according to Article 523 of the Company Law Code with respect to the decision and the approval of the present Underwriting Agreement. For Couckinvest, this conflict of interest is caused by, on the one hand, the company being both a director and shareholder of the company, and on the other hand because it is one of the contractual parties to the Underwriting Agreement. More precisely, the excess allocation option stated in Article 3 of the Underwriting Agreement could result in a financial benefit for Couckinvest NV. For Marc Coucke, this conflict of interest is caused by the fact that, on the one hand, he is a director of the company, and that, on the other hand, he also is a majority shareholder (and director) of Couckinvest NV. Therefore, Couckinvest NV and Marc Coucke would like to state that, in accordance with Article 523 of the Company Law Code, they will not participate in the discussion and deliberation of the Board of Directors with respect to the approval of the Underwriting Agreement. As a result, Mr. Jan Peeters will be taking over the position of chairman during this meeting of the Board of Directors. Couckinvest NV and Mr. Marc Coucke furthermore announce that they have also informed the Auditor of the Company about their conflict of interest. The Board of Directors also states that the approval of the Underwriting Agreement is in accordance with Article 524 of the Company Law Code for the following reasons:

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- Couckinvest has a shareholding of 31.58 % in the Company and has preferential rights with regard to the proposal and appointment of a majority of the directors in the Board of Directors of the Company. As a result, Couckinvest NV should be considered to be a shareholder with a decisive or significant impact on the appointment of directors in accordance with Article 524 of the Company Law Code. - Article 3 of the Underwriting Agreement includes an excess allocation option according to which Couckinvest NV will grant BNP Paribas and Petercam the option of a number of existing shares (hereafter referred to as the Option) to deal with any excess allocations resulting from the private issue of new shares as planned by the Company. For this Option, a Stock Lending Agreement (hereafter referred to as the Stock Lending Agreement) was signed on 7 December 2001, by GNP Paribas and Petercam on the one hand and Couckinvest on the other hand, stating that half of the profits generated by BNP Paribas and Petercam following the exercise of the option will be paid to Couckinvest NV. This shows that the approval of the Underwriting Agreement (including the Option) could result in a direct or indirect financial benefit for Couckinvest NV. Following this adoption by the Board of Directors, the chairman and the Board of Directors have decided to proceed with the appointment of three directors, who shall be independent assessors with respect to these decisions and who will be assisted by an expert, to assess and analyze the financial consequences for the Company in a report to be submitted to the Board of Directors, including their motivated evaluation. This assessment and evaluation shall indicate the significance of these decisions for the Company and the joint shareholders, as well as the lack of any specific advantages by means of a preferential compensation which Couckinvest NV could, directly or indirectly, benefit from. The Board of Directors has appointed Messrs Lucas Laureys, Benoit Graulich, and Jan Peeters (as a representative of Jan Peeters NV) as members of this committee. Mr. Marc Lambrecht is appointed as an assistant to this committee, as an expert in accordance with Article 524 of the Company Law Code. The Board of Directors has deliberated and voted on this issue, based on the reports drawn up by the committee and the appointed expert, taking into account the abstentions as stipulated in Article 523, &1, fourth section of the Company Law Code. Furthermore, the Board of Directors has notified the Auditor about the application of this procedure in accordance with Article 524 of the Company Law Code. The Underwriting Agreement has the following financial consequences for the Company: - the Company is required to pay the Underwriters a fee for the new shares, and Couckinvest NV will pay the fee for any excess allocation Option shares.
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- the Company is also required to pay for all costs related to the issue of the shares and the listing of the new shares on the stock exchange, as well as all payable taxes and similar charges in Belgium or the United Kingdom with respect to the issue of new shares and the execution of the Underwriting Agreement. Furthermore, the Company shall be obliged to compensate the Underwriters for all costs incurred by them for this operation. Couckinvest NV has the same obligation with regard to the excess allocation Option shares. - the Company shall compensate the Underwriters for all damages suffered resulting from (i) incorrect or incomplete information provided by the Company in the information brochures or other related documents for this operation, or (ii) any violation of the statements and guarantees submitted by the Company to the Underwriters in the Underwriting Agreement. Couckinvest NV has the same obligation with regard to the excess allocation Option shares. All fees and other financial obligations of the Company ensuing from the Underwriting Agreement are consistent with the current market conditions and common for this type of operations. As a result, we can conclude that, in seeking fresh capital injections from institutional investors, it is in the Company's own interest to close an Underwriting Agreement with the Underwriters who will be assisting the Company during this operation. Granting the Option is also in the interest of the Company, because it can only be exercised to support the stock exchange price of the shares of the Company. Furthermore, Couckinvest NV will be paying all the costs and fees related to this Option. Though the Option could result in a financial benefit for Couckinvest, there is no doubt that the approval of the Underwriting Agreement (and therefore the approval of the Option) will, directly or indirectly, result in a specific advantage by means of a preferential compensation (in accordance with Article 524 of the Company Law Code) for Couckinvest NV. After all, this would mean that Couckinvest NV would be abusing its position, at the expense of the other shareholders of the Company, to benefit from a financial advantage. As a result, the decision to approve the Underwriting Agreement (and therefore the Option) should be considered to be in the Company's own interest. The expert, Mr. Marc Lambrecht, shares this opinion and evaluation in his report of 7 December 2001, the conclusion of which is stated below: - the decision to approve the Underwriting Agreement (and more specifically Article 3) should be considered to be in the general interest of the Company. - Couckinvest NV will receive no specific benefits by means of a preferential compensation.

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- the minority shareholders will by no means be treated unfairly because the excess allocation option will only be exercised to support the price of the share of Omega Pharma for a maximum period of 30 days after the closing of the operation.

IV .7

DIRECTOR'S INDEMNITY
(article 50 of the Articles of Association) As far as the law permits, the company shall be permitted to indemnify its directors, employees and representatives against any third-party compensation claims to which they may be subject as a result of breaches of their duties towards the company, errors of management and breaches of the Companies Law and the articles of association, except where such claims for compensation are attributable to malice or criminal negligence.

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RECENT DEVELOPMENTS AND PROSPECTS (continuation of the report of the Board of Directors)
V .1

TAKEOVER POLICY
Due to our highly solvent balance structures following the share capital increase for an amount of 98.07 million euro, and because most takeovers in 2001 were integrated successfully, Omega Pharma will be able to play an active part with regard to acquisitions in 2002. In that respect, the company will be focusing on small and medium-sized businesses, which are a perfect complement according to Omega Pharma's strategy, can easily be integrated, and which will have an immediate impact on the net operating profit per share. Our general rules are that 7 - 12 times the historic net operating profit will be paid, only profitable companies shall be taken into account, and any acquisition carried out shall always cover 100 % of the shares. Simultaneously, we will be paying attention to the timing of the acquisitions, so we do not have to integrate 2 significant projects within the same division, the same country, and at the same time.

V .2

PRIORITIES The priority matrix is as follows: BE NL 2 2 1 3 3 1 - 2 FR 1 1 - 2 1 3 2 3 UK 1 - 2 2 3 3 DE 2 - 1 2 - 1 2 - 1 3 2 ESP 1 - 2 3 2 - 1 2 PORT 1 3 1 3

Group products B2B Partnerships OmegaSoft Generics Dental Log. and Prod.

2 1 2 1 2

1 indicates an absolute priority, 2 means the acquisition is being examined actively, and priority level 3 is only assigned in case a unique opportunity occurs. The priorities in Belgium are Omega Medical and OmegaSoft Medical (see below).

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In Spain and Portugal, our priority is still to seek at least 1 takeover, after which the appropriate critical mass will have been reached, and new partnerships will probably be closed. Acquisitions in Germany will become our priority after the Varilind acquisition has been fully integrated. According to our expectations, this priority matrix will have been completed at the end of the first half of 2003, adding a new dimension to all Omega Pharma organisations.

V .3

RECENT DEVELOPMENTS 1. Due to a lack of new government initiatives and a delay of a few months with regard to some new registrations, the growth of generics in Belgium has shown a (temporary) break. 2. First reactions on the synergetic product launches (including Bodysol in France and Germany, Innoxa in Belgium, Azaron in Germany, Para in Spain) have been extremely encouraging in the different countries. 3. The shareholders of Agys Pharma no longer want to support the cooperation, and Omega Pharma has signed a letter of intent with respect to the takeover of the company's assets (basically the brand, stock, and customers of 2Sensitive). 4. Omega Pharma will have the exclusive right - through Fagron - to distribute the wound healing products of XCellentis. Fagron already has a significant dermatological division, which will be expanded partly due to this agreement. 5. Jan Peeters (41) was appointed DCEO. Jan Peeters was also assigned a special mission in France, to gain the necessary operational experience and to exchange the Belgian expertise with the French organisation. 6. Omega Pharma and Pharmacia have decided to merge their OTC activities in Spain and Portugal. Pharmacia has also granted the exclusive rights to sell and distribute all its OTC products in Spain and Portugal to this Omega division. This co-operation will come into effect on the 1st of April 2002 (in Spain), and on the 1st of June 2002 (in Portugal) and on an annual basis constitutes an additional turnover for both countries of 9 million EUR.
(41) Representing Jan Peeters NV.

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V .4

OMEGA MEDICAL AND OMEGASOFT MEDICAL


Due to the big market shares in B2B and IT with regard to pharmacies and dentists in Belgium, the decision was taken to expand the target group of these divisions. 1. Omega Medical: B2B (both consumables and capital goods) with medical doctors, specialists, hospitals, and homes of the elderly. Omega Pharma is convinced the excellent position of the B2B division (with respect to management, acquisitions, etc.) will constitute the perfect basis to increase its B2B efficiency with regard to these new target groups. Through acquisitions, Omega Medical will be set up, and consequently, as with the dental division, efficiency will be increased and synergies will be carried out. Omega Medical's objective is a turnover of at least 40 million EUR in 2004, which would mean the B2B in Belgium division will increase its volume with 100 %. Letters of intent for takeovers have already been signed with Van Hopplynus Ophtalm (B2B for ophthalmologists), HCC (B2B for hospitals and homes for the elderly), and Distribal (B2B for hospitals). Omega Pharma's organisation in the Netherlands is closely keeping pace with these developments, and intends to set up the Omega Medical division in the Netherlands in 2003, based on the Belgian experience. 2. OmegaSoft Medical: information technology for medical doctors and specialists. For the OmegaSoft division, which offers global computer solutions for pharmacists and dentists, an impressive IT organisation was set up, which will also prove its tremendous added value for other target groups. As a result, the existing organisation will be able to provide services for doctors and specialists all over Belgium, including management, purchasing power, databases, programming techniques, and technical services. This market is fairly segmented, with quite a number of different local and often uneconomic companies. Omega Pharma is convinced, as OmegaSoft Medical is established, it will be able to make a significant contribution to a better and more efficient computerization of medical doctors in Belgium, by speeding up the necessary consolidation, by improving quality and services, and by immediately implementing the required increase in scale (with OmegaSoft).

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As opposed to our general principles, the acquisition of turnaround candidates will be taken into account; as a matter of fact, Omega Pharma is confident these turnarounds can be produced rapidly, and furthermore, government initiatives (e.g. subsidies for information technology for medical doctors) taken recently could present this sector new prospects. With respect to general practitioners, the company is seeking a substantial market share, to be able to carry out efficiency measures, and to start proceedings for electronic prescriptions (between medical doctors and pharmacists). With respect to doctors-specialists, primarily those target groups will be examined which will offer potential synergies with equipment (Omega Medical). OmegaSoft Medical's growth will depend on the potential acquisitions, which will be examined extremely selectively. An initial agreement of intent was signed for the takeover of Optisoft, a company specialised in information technology for a.o. opticians and ophthalmologists (synergies with Van Hopplynus Ophtalm).

V .5

PROSPECTS
1. Short-term prospects: for 2002, Omega Pharma is expecting a turnover of 576 million EUR, with a net operating profit (42) of 2.61 EUR per share. The first business plan for 2003 indicates a turnover of 701 million EUR with a net operating profit of 3.33 EUR per share. These estimates do not include the new acquisitions (a.o. Omega Medical), so there is a real chance of a favourable adaptation of these figures. 2. Long-term prospects: Omega Pharma as a consolidator is convinced the company will be able to reach a global European market share in OTC/B2B of at least 10 %. As a result, the internal turnover objective for 2010 will be minimum 2.4 trillion EUR. An intermediate target of 1 billion EUR in 2005 has been budgeted.

(42) The net ordinary profit/loss is defined as the net profit/loss adjusted for the extraordinary profit/loss (after adjustment for tax) and amortisation of goodwill.

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FINANCIAL CALENDAR

General meeting of shareholders 2001 Dividend for 2001 becomes payable Announcement of first-quarter results for 2002 Announcement of second-quarter turnover figures for 2002 Announcement of half-yearly results for 2002 Announcement of third-quarter results for 2002 Announcement of fourth-quarter turnover figures for 2002 Publication of results for 2002 Analysts meeting(s)

3 June 2002 6 June 2002 15 May 2002 30 July 2002 13 September 2002 14 November 2002 31 January 2003 19 March 2003 to be determined

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FINANCIAL INFORMATION

For any clarifications required regarding the information presented in this annual report, or for more information about the Omega Pharma group, please contact: OMEGA PHARMA NV Venecoweg 26 9810 Nazareth Tel. (+32) 9 381 02 00 Fax (+32) 9 381 02 20 Marc Coucke, CEO, marc.coucke@omega-pharma.be Jan Peeters NV, DCEO, jan.peeters@omega-pharma.be Sam Sabbe, Chief Financial Officer, sam.sabbe@omega-pharma.be This annual report is also available at the following website: www.omega-pharma.be

Ce rapport annuel est galement disponible en Franais. Dit jaarverslag is eveneens verkrijgbaar in het Nederlands.

ANNUAL REPORT 2001

RECENT DEVELOPMENTS AND PROSPECTS