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DJ DGAP-IRE: SCHWARZ PHARMA AG: Full Year Report 2008

SCHWARZ PHARMA AG / Release of an announcement according to Article 37x of the WpHG [the German Securities Trading Act] 

03.03.2009 

Interim report according to Article 37x of the WpHG, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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3 March 2009 

Full Year Report 2008 

  - The SCHWARZ PHARMA group generated revenues of EUR424.9 million in
fiscal
    year 2008, against a figure of EUR362.1 million in the previous year
    (+17.3%). 

  - The operating result amounted to -EUR30.9 million and the net result
came
    to -EUR11.2 million. 

  - Shareholders who did not accept the cash settlement offer made by UCB
    SP GmbH in the domination and profit transfer agreement, amounting to
    EUR104.60 per share, will receive a guaranteed dividend per share of
    EUR3.43 gross / EUR3.28 net. 

  - The Annual General Meeting, at the request of UCB SP GmbH, is to decide
    on the 'squeeze-out' of minority shareholders of SCHWARZ PHARMA AG. 

  - SCHWARZ PHARMA expects sales of approximately EUR340 million and a
    positive net result in fiscal year 2009. 

The presented business figures (preliminary and unaudited) show the results
of the continuing operations of the remaining consolidated companies. 

Sales Trend January to December 2008:
Revenues: EUR424.9 million, +17.3%; sales: EUR353.1 million, +18.3% 

The SCHWARZ PHARMA group generated revenues of EUR424.9 million in fiscal
year 2008, marking a year-on-year increase of 17.3%. This figure comprises
sales amounting to EUR353.1 million (previous year: EUR298.5 million),
EUR12.4
million in royalties (2007: EUR16.0 million), and EUR59.4 million in other
revenues (2007: EUR47.6 million). Since milestone payments are now posted
in
revenues, the figures from the previous year were correspondingly adjusted
by EUR47.6 million. 

German sales declined by 8.9% to EUR154.0 million in 2008. One of the
top-selling products was the antiasthmatic drug Atmadisc(R)
(fluticasone/salmeterol) with sales of EUR58.7 million (+22.8%). Neupro(R)
(rotigotine transdermal patch) for treating Parkinson's disease recorded a
rise in sales of 38.8% to EUR22.9 million, despite a change in means of
storage (introduction of a cold chain). 

The CIS countries increased their sales by 32.0% to EUR40.1 million. 

Sales in the segment 'Rest of Europe' reached EUR93.2 million, so doubling
the figure of the previous year, stemming from a marked growth in business
transacted with former SCHWARZ PHARMA companies. The group's licensing
business with other countries (Rest of the World) amounted to EUR39.3
million
(-3.4%). 

The sales of SCHWARZ PHARMA's Asian affiliates declined slightly
year-on-year to a level of EUR26.5 million (-3.0%). 

Earnings trend January to December 2008: 

Operating result: -EUR30.9 million; net result: -EUR11.2 million 

SCHWARZ PHARMA achieved gross earnings of EUR241.0 million in 2008, marking
a
year-over-year decline of -1.6%. The company's gross margin fell from 67.6%
to 56.7%, mainly due to the Neupro(R) recall and the impact due to sold
products. 

Selling, general, and administrative expenses declined by 11.2% to EUR126.3
million. This was caused, among other things, by a reduction in human
resources expenses. 

R&D expenses declined by 15.6% to EUR74.9 million, thanks to the progress
made in the development pipeline. A number of new drugs received marketing
approval in the previous fiscal year (e.g. Vimpat(R) (lacosamide)/Epilepsy,
Neupro(R)/Restless-Legs-Syndrome). 

The amortization of intangible assets came to EUR14.8 million, so remaining
level with last year's figure. 

Fiscal year 2008 saw impairments of assets reach EUR9.7 million (previous
year: EUR0.6 million), mainly stemming from the impairment loss recorded on
a
building belonging to the Company's Irish subsidiary. 

Measures undertaken within the scope of 'SHAPE', a program for focusing on
the Company's core business segments and improving both its competitiveness
and profitability led to restructuring expenses of EUR47.4 million. 

After Other income of EUR9.6 million in fiscal year 2007, Other income
amounted to EUR1.2 million in 2008. 

The operating result in the past fiscal year thus came to -EUR30.9 million
against a figure of -EUR7.2 million in the previous year. The financial
result rose to EUR7.5 million, compared to a figure of -EUR3.3 million in
the
previous year. Income from investments improved slightly from EUR0.1
million
in the previous year to EUR0.2 million in the year under review. 

The pre-tax result amounted to -EUR23.2 million against a figure of
-EUR10.4
million in 2007. Taxes on income amounted to +EUR8.2 million, compared to
-EUR63.1 million last year. 

SCHWARZ PHARMA hence achieved a result after taxes of -EUR15.0 million from
continuing operations in fiscal year 2008, compared to a figure of -EUR73.5
million in the previous year. After minority interests of EUR0.9 million
(2007: EUR1.1 million), the group's net result comes to -EUR11.2 million. 

The contribution to earnings made by discontinued operations, presented
separately in the company's income statement, amounted to EUR4.7 million in
the past fiscal year compared to EUR943.8 million in 2007, mainly due to
deconsolidation effects stemming from Korean and Greek affiliated companies
that have left the Group. Revenues from discontinued operations came to
EUR9.3 million. Overall, expenses of EUR10.5 million and taxes on income of
+EUR0.2 million are attributable to discontinued operations. 

Balance Sheet and Employees 

Equity Ratio 18.3% 

Cash outflows for investments for the group as a whole totaled EUR52.6
million against a figure of EUR187.1 million in 2007. The major share of
investments was made in property plant and equipment, with EUR35.5 million
mainly spent on expanding the fine chemicals production facilities in
Shannon/Ireland and the plant in Zwickau/Germany. 

The balance sheet total was significant reduced due to the offset of part
of the vendor loan (originally EUR1,519.0 million), granted to UCB SP GmbH
by
SCHWARZ PHARMA in connection with the transfer of 13 SCHWARZ PHARMA
affiliated companies at the end of 2007, against profit transfer
liabilities of EUR1,327.5 million. The equity ratio correspondingly
amounted
to approximately 18.3% (2007: 10.9%) at the balance sheet date. 

In keeping with the ruling issued by Germany's Federal Financial
Supervisory Authority (BaFin), according to which SCHWARZ PHARMA
erroneously recorded a one-time payment of EUR63.3 million as an R&D
expense
in the group's income statement instead of capitalizing it as an intangible
asset pursuant to IAS 38.18, SCHWARZ PHARMA has corrected the consolidated
financial statements for the year ended 31 December 2008. Correspondingly,
the balance sheet total after regular depreciation rose by EUR52.5 million
(2007: EUR54.5 million). 

The SCHWARZ PHARMA group had an average worldwide workforce of 2,126
employees in fiscal year 2008 (2007: 3,714; -42.8%). 

Squeeze-Out Request Made 

At the start of February 2009, UCB SP GmbH, Monheim, submitted its first
formal request to the executive board of SCHWARZ PHARMA AG under Section
327a of the German Stock Corporation Act (AktG), asking for the annual
general meeting of the company to pass a resolution transferring the shares
of the remaining shareholders (minority shareholders) to UCB SP GmbH as the
principal shareholder in return for an appropriate cash settlement
(so-called 'squeeze-out'). UCB SP GmbH holds a 99.59% interest in the
common stock of SCHWARZ PHARMA AG (after deducting Treasury stock) and is
thus the principal shareholder for the purpose of Section 327a (1) 1 of the
German Stock Corporation Act (AktG). The resolution is to be passed at the
next annual general meeting of SCHWARZ PHARMA AG for the fiscal year 2008,
due to be held on 8 July 2009. UCB SP GmbH has not yet fixed the amount of
the cash settlement. 

Outlook for 2009 

In 2009, the reported external sales of the group will include, in addition
to the current third-party sales of SCHWARZ PHARMA AG and its affiliates,
the sales achieved through dealings with UCB companies outside the SCHWARZ
PHARMA group. We expect sales to show a slight decline to approximately
EUR340 million. Given the improvements targeted by 'SHAPE', a positive
Group
net result is expected for 2009. 

This outlook does not include effects stemming from the divestment of
products or from partnerships and other transactions. 

 SCHWARZ PHARMA AG and Affiliates* 

(Fiscal year Jan. 1 to Dec. 31) 

|[![CDATA[|[pre|]]]|] 

EUR million                                                  2008      2007
Continued business operations
Revenues                                                  424.9     362.1
Cost of goods sold                                        183.9     117.2
Gross profit on sales                                     241.0     244.9
Selling and marketing expenses                             87.0     102.9
General and administrative expenses                        39.3      39.4
Research and development expenses                          74.9      88.8
Amortization of intangible assets                          14.8      15.2
Impairment of assets pursuant to IAS 36                     9.7       0.6
Restructuring costs                                        47.4      14.8
Other income/expenses                                       1.2       9.6
Operating result                                          -30.9      -7.2
Interest result                                             7.5      -3.3
Income from investments                                     0.2       0.1
Pre-tax result                                            -23.2     -10.4
Taxes on income                                             8.2     -63.1
Result after taxes                                        -15.0     -73.5
Discontinued business operations

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