8-K - PRGO - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

March 28, 2022

Perrigo Company plc

(Exact name of registrant as specified in its charter)

Commission file number 001-36353

Ireland	Not Applicable
(State or other jurisdiction of<br>incorporation or organization)	(I.R.S. Employer<br>Identification No.)

The Sharp Building, Hogan Place, Dublin 2, Ireland D02 TY74

+353 1 7094000

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities Registered pursuant to section 12(b) of the Act:

Title of each class	Trading<br>Symbol(s)	Name of each exchange<br>on which registered
Ordinary shares, €0.001 par value	PRGO	New York Stock Exchange
4.000% Notes due 2023	PRGO23	New York Stock Exchange
3.900% Notes due 2024	PRGO24	New York Stock Exchange
4.375% Notes due 2026	PRGO26	New York Stock Exchange
3.150% Notes due 2030	PRGO30	New York Stock Exchange
5.300% Notes due 2043	PRGO43	New York Stock Exchange
4.900% Notes due 2044	PRGO44	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 7.01 Regulation FD Disclosure

Attached as Exhibit 99.1 hereto are materials that Perrigo Company plc (the “Company”) intends to present to prospective lenders in connection with the launch of the syndication of new senior secured credit facilities expected to consist of (i) a $1,000 million five-year revolving credit facility (the “New Revolving Facility”) and (ii) a $300 million five-year term loan A facility and a $800 million seven-year term loan B facility (the “New Term Loan Facilities” and, together with the New Revolving Facility, the “New Senior Secured Credit Facilities”) through its indirect wholly-owned subsidiary, Perrigo Investments, LLC, as more fully described below. The materials include information relating to the Company’s pro forma Adjusted EBITDA defined in Exhibit 99.1, as well as a reconciliation of the Company’s pro forma Adjusted EBITDA to pro forma loss from continuing operations determined in accordance with GAAP.

Attached as Exhibit 99.2 hereto are the audited consolidated statements of financial position of Héra SAS (“Héra”) as of December 31, 2021 and 2020 and the related consolidated statements of profit and loss, statements of comprehensive income, statements of cash flows and statements of changes in equity for each of the years in the two-year period ended December 31, 2021.

Attached as Exhibit 99.3 hereto is the Company’s Unaudited Pro Forma Condensed Combined Financial Information as of and for the year ended December 31, 2021, which gives pro forma effect to the Transactions (as defined therein) as if they had occurred on December 31, 2021, in the case of the unaudited pro forma condensed combined balance sheet, and as of January 1, 2021, in the case of the unaudited pro forma condensed combined statement of operations.

The information in this Item 7.01, including Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3 furnished herewith, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.

There can be no assurance that any of the transactions described herein, including entering into the New Senior Secured Credit Facilities or the acquisition of Héra, will be consummated at all or on the terms currently contemplated. We urge you to read the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Item 8.01 Other Events

Attached hereto as Exhibit 99.4 is a press release issued by the Company on March 28, 2022, announcing that it has launched the syndication of the New Senior Secured Credit Facilities. The New Senior Secured Credit Facilities will be guaranteed by the Company and certain wholly-owned subsidiaries of the Company.

Subject to market and other conditions, the Company intends to borrow approximately $1,600 million, inclusive of the New Term Loan Facilities and $500 million of other unsecured debt (but excluding undrawn availability under the New Revolving Facility). The Company intends to use the net proceeds of these borrowings, together with cash on hand, to finance the purchase price for the previously announced acquisition of Héra and to refinance certain existing indebtedness of the Company and its subsidiaries, including its outstanding term loan facility and outstanding debt securities maturing in 2023. The Company will use any amounts borrowed from time to time under the New Revolving Facility, which will replace its existing revolving facility, for general corporate purposes.

The terms of the proposed refinancing, including but not limited to the principal amount, interest rate and maturity of the New Senior Secured Credit Facilities, and the consummation of the acquisition of Héra are subject to a number of significant conditions, and there can be no assurance that the Company will consummate any of these transactions on the anticipated terms or timing, or at all. In addition, entering into the New Senior Secured Credit Facilities is not conditioned upon consummation of the acquisition of Héra.

Forward-Looking Statements

Certain statements in this Current Report on Form 8-K are “forward-looking statements.” These statements relate to future events or the Company’s future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “forecast,” “plan,”

“anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or the negative of those terms or other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company’s control, including: the Company’s expectations with respect to the syndication and closing of the New Senior Secured Credit Facilities and the other contemplated refinancing transactions, and the use of net proceeds therefrom, the effect of the novel coronavirus (COVID-19) pandemic and its variants and the associated supply chain impacts on the Company’s business; general economic, credit, and market conditions; the outbreak of war between Russia and Ukraine, including the imposition of sanctions related thereto, or escalation of conflict in other regions where the Company does business; future impairment charges; customer acceptance of new products; competition from other industry participants, some of whom have greater marketing resources or larger market shares in certain product categories than the Company does; pricing pressures from customers and consumers; resolution of uncertain tax positions, including the Company’s appeal of the draft and final Notices of Proposed Assessment (“NOPAs”) issued by the U.S. Internal Revenue Service and the impact that an adverse result in any such proceedings would have on operating results, cash flows, and liquidity; pending and potential third-party claims and litigation, including litigation relating to the Company’s restatement of previously-filed financial information and litigation relating to uncertain tax positions, including the NOPAs; potential impacts of ongoing or future government investigations and regulatory initiatives; potential costs and reputational impact of product recalls or sales halts; the impact of tax reform legislation and healthcare policy; the timing, amount and cost of any share repurchases; fluctuations in currency exchange rates and interest rates; the success of the sale of the Rx business, including the ability to achieve the expected benefits thereof and the risk that potential costs or liabilities incurred or retained in connection with the transaction may exceed the Company’s estimates or adversely affect the Company’s business or operations; the consummation and success of the proposed acquisition of Héra and the ability to achieve the expected benefits thereof, including the risk that the parties fail to obtain the required regulatory approvals or to fulfill the other conditions to closing on the expected timeframe or at all, the occurrence of any other event, change or circumstance that could delay the transaction or result in the termination of the securities sale agreement or the risks that Company’s synergy estimates are inaccurate or that the Company faces higher than anticipated integration or other costs in connection with the proposed acquisition; the consummation and success of other announced acquisitions or dispositions, and the Company’s ability to realize the desired benefits thereof; and the Company’s ability to execute and achieve the desired benefits of announced cost-reduction efforts and strategic and other initiatives. An adverse result with respect to the Company’s appeal of any material outstanding tax assessments or pending litigation, including securities or drug pricing matters, could ultimately require the use of corporate assets to pay such assessments, damages from third-party claims, and related interest and/or penalties, and any such use of corporate assets would limit the assets available for other corporate purposes. These and other important factors, including those discussed under “Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2021, as well as the Company’s subsequent filings with the United States Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this Current Report on Form 8-K are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 9.01 Financial Statements and Exhibits

Exhibits

Exhibit Number	Description
99.1	Supplemental Materials, dated March 28, 2022
99.2	Audited consolidated financial statements of Héra SAS as of and for the years ended December 31, 2021 and 2020
99.3	Unaudited pro forma condensed combined financial information of the Company as of and for the year ended December 31, 2021
99.4	Press Release
104	Cover Page Interactive Data file (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	(Registrant)
	PERRIGO COMPANY PLC
	By:	/s/ Raymond P. Silcock
Dated: March 28, 2022		Raymond P. Silcock
		Chief Financial Officer

EX-99.1

Exhibit 99.1

Non GAAP Disclosure

The following provides a reconciliation of pro forma EBITDA and pro forma Adjusted EBITDA to pro forma net income (loss), which is the most directly comparable financial measure prepared in accordance with GAAP:

	Pro FormaTwelve months ended December 31, 2021
in millions (unaudited)	Perrigo			Héra()		Conversion<br>and<br>Adjustments<br>(a)			Pro Forma<br>Condensed<br>Combined
Pro forma loss from continuing operations	$	(130.9	)		)	$	(137.7	)	$	(268.6	)
Interest expense, net		125.0					48.8			173.8
Income tax expense		389.6					(17.8)			371.8
Depreciation and amortization		296.8					74.1			370.9
Pro forma EBITDA		680.5					(32.6)			647.9
Non-cash stock-based compensation expense		57.0					—			57.0
Acquisition and integration-related charges and contingent consideration adjustments		37.7					77.3			115.0
Restructuring charges and other termination benefits		16.9					1.4			18.3
Unusual litigation (b)		(365.2)					—			(365.2)
Impairment and abandonment charges		173.1					—			173.1
Indirect RX business support costs (c)		12.2					—			12.2
Other, net (d)		6.6					12.9			19.5
Non-current expense, net (e)		—					5.4			5.4
Hedging and other financial expenses, net (f)		—					1.7			1.7
Expected cost synergies (g)		—					—			46.7
Pro forma Adjusted EBITDA	$	618.8				$	66.0		$	731.6

All values are in Euros.

(a)	Includes Héra conversion to US GAAP and US dollar, and financing and acquisition adjustments.<br>
(b)	Primarily relates to proceeds received from arbitration related to our claims of fraud in connection with the<br>Omega acquisition.
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(c)	Includes certain costs, which are reported in GAAP continuing operations but were previously allocated to the<br>RX business, which has since been sold. On a go-forward basis, such costs will either be covered by the transition services agreement or eliminated.
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(d)	Includes Perrigo adjustments of $2.5 million loss on divestiture, $2.1 million separation and<br>reorganization expenses, $2.0 million loss on investment securities, as well as $12.9 million of loss on early debt extinguishment associated with financing adjustments.
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(e)	Primarily represents Héra transaction expenses, and business combination expenses.
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(f)	Primarily represents Héra expenses associated with hedging activities and foreign exchange gains and<br>losses.
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(g)	Represents management’s estimated run-rate of annual<br>cost synergies from the Héra acquisition expected to be realized within 24 months of consummation of the acquisition. The approximately €40 million of cost synergies, or US$47 million, consists of approximately €28 million in<br>logistics, selling and marketing activity synergies and approximately €12 million of fixed cost infrastructure synergies. No assurances can be made whether these synergies will be achieved in this time frame, or at all. For more information,<br>see “Part I.—Item 1A.—Risk Factors—Strategic Risks—We may not realize the benefits of business acquisitions, divestitures, and other strategic transactions, which could have a material adverse effect on our operating<br>results” of Perrigo Company plc’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
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The presentation of pro forma Adjusted EBITDA should not be construed as an inference that Perrigo’s future results will be unaffected by any of the adjusted items, or that Perrigo’s projections and estimates will be realized in their entirety or at all. In addition, because of these limitations, pro forma Adjusted EBITDA should not be considered as a measure of liquidity or discretionary cash available to Perrigo to fund its cash needs, including investing in the growth of its business and meeting its obligations. You should compensate for these limitations by relying primarily on Perrigo’s U.S. GAAP results and only use pro forma Adjusted EBITDA for supplementary analysis.

The adjustments reflected in pro forma Adjusted EBITDA have not been prepared with a view towards complying with Article 11 of Regulation S-X under the Securities Act. Pro forma Adjusted EBITDA is intended to provide additional information on a more comparable basis than would be provided without such adjustments. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. These measures are not measurements of Perrigo’s financial performance under GAAP and should not be considered in isolation or as alternatives to net income (loss), net cash flows provided by (used in) operating activities, total net cash flows or any other performance measures derived in accordance with GAAP or as alternatives to net cash flows provided by (used in) operating activities or total net cash flows as measures of Perrigo’s liquidity.

The use of pro forma Adjusted EBITDA instead of GAAP measures has limitations as an analytical tool, and you should not consider pro forma Adjusted EBITDA in isolation, or as a substitute for analysis of our results of operations and operating cash flows as reported under GAAP. For example, pro forma Adjusted EBITDA does not reflect:

•	cash expenditures or future requirements for capital expenditures;
•	changes in, or cash requirements for, working capital needs;
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•	interest expense, or the cash requirements necessary to service interest or principal payments, on debt;<br>
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•	any cash income taxes that we may be required to pay;
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•	any cash requirements for replacements of assets that are depreciated or amortized over their estimated useful<br>lives and may have to be replaced in the future; or
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•	all non-cash income or expense items that are reflected in our statements of cash flows
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The definition of and method of calculating pro forma Adjusted EBITDA may vary from the definitions and methods used by other companies, which may limit their usefulness as comparative measures. As a result of these and other limitations, this measure should not be considered as a measure of discretionary cash available to invest in the growth of our business or as a measure of our liquidity.

EX-99.2

Exhibit 99.2

KPMG Audit	Telephone:	+33 (0)1 55 68 68 68
Tour EQHO	Telefax:	+33 (0)1 55 68 73 00
2 Avenue Gambetta	Internet:	www.kpmg.fr
CS 60055<br> <br>92066 Paris la Défense<br>Cedex
France

HERA S.A.S.

Statutory auditor’s report on the consolidated

financial statements as of and for the years ended

December 31, 2020 and 2021

Years ended December 31, 2020 and 2021

HERA S.A.S.

200, avenue de Paris – 92320 Chtillon

KPMG S.A<br> <br>a French limited liability entity and<br>a member firm of the KPMG Network of independent member firms affiliated with KPMG International Limited, a private Englsh company limited by guarantee	Société anonyme d’expertise comptable et de commissariat aux comptes à directoire et conseil de surveillance. Inscrite au Tableau de l’Ordre à Paris sous le n° 14-30080101 et à la Compagnie Régionale des Commissaires aux Comptes de Versailles.et du Centre	Headquarters:<br> <br>KPMG S.A.<br><br><br>Tour Eqho<br> <br>2 avenue Gambetta<br><br><br>92066 Paris la Défense Cedex<br> <br>Capital: 5<br>497 100 €.<br> <br>Code APE 6920Z<br><br><br>775 726 417 R.C.S. Nanterre<br> <br>TVA Union<br>Européenne<br> <br>FR 77 775 726 417
KPMG Audit	Telephone:	+33 (0)1 55 68 68 68
---	---	---
Tour EQHO	Telefax:	+33 (0)1 55 68 73 00
2 Avenue Gambetta	Internet:	www.kpmg.fr
CS 60055<br> <br>92066 Paris la Défense<br>Cedex
France

HERA S.A.S

Registered office: 200, avenue de Paris – 92320 Chatillon

Statutory auditor’s report on the consolidated financial statements as of and for the years ended December 31, 2020 and 2021

To the Chairman of HERA S.A.S.;

In our capacity as Statutory Auditor of HERA S.A.S. and in compliance with your request in the context of the proposed acquisition of HERA S.A. by Perrigo Company Plc, we have audited the accompanying consolidated financial statements of HERA S.A.S. as of and for the years ended December 31, 2020 and 2021.

Due to the global crisis related to the Covid-19 pandemic, the consolidated financial statements have been prepared and audited under specific conditions. Indeed, this crisis and the exceptional measures taken in the context of the state of sanitary emergency have had numerous consequences for companies, particularly on their operations and their financing, and have led to greater uncertainties on their future prospects. Those measures, such as travel restrictions and remote working, have also had an impact on the companies’ internal organisation and the performance of the audits.

The Chairman of HERA S.A.S. is responsible for the preparation and fair presentation of these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with professional standards applicable in France and the professional doctrine of the French national auditing body (Compagnie nationale des commissaires aux comptes) related to this engagement; these standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures, on a test basis or by other means of selection, to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position and assets and liabilities of HERA S.A.S. as of December 31, 2020 and 2021 and the results of its operations for the years then ended in accordance with International Financial Reporting Standards (“IFRS”) as adopted in the European Union and in accordance with IFRS as issued by the International Accounting Standards Board.

KPMG S.A<br> <br>a French limited liability entity and<br>a member firm of the KPMG Network of independent member firms affiliated with KPMG International Limited, a private Englsh company limited by guarantee	Société anonyme d’expertise comptable et de commissariat aux comptes à directoire et conseil de surveillance. Inscrite au Tableau de l’Ordre à Paris sous le n° 14-30080101 et à la Compagnie Régionale des Commissaires aux Comptes de Versailles.et du Centre	Headquarters:<br> <br>KPMG S.A.<br><br><br>Tour Eqho<br> <br>2 avenue Gambetta<br><br><br>92066 Paris la Défense Cedex<br> <br>Capital : 5<br>497 100 €.<br> <br>Code APE 6920Z<br><br><br>775 726 417 R.C.S. Nanterre<br> <br>TVA Union<br>Européenne<br> <br>FR 77 775 726 417

HERA S.A.S. ****

Statutory auditor’s report on the consolidated financial statements

as of and for the years ended December 31, 2020 and 2021

LOGO

This report shall be governed by, and construed in accordance with French law. The Courts of France shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning the engagement letter or this report, and any matter arising from them. Each party irrevocably waives any right it may have to object to an action being brought in any of those Courts, to claim that the action has been brought in an inconvenient forum or to claim that those Courts do not have jurisdiction.

Paris la Défense March 23, 2022

KPMG Audit

Adivision of KPMG S.A.

/s/ Catherine Porta

Catherine Porta

Partner

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2021 and 2020

LOGO

STATEMENT OF FINANCIAL POSITION		4
STATEMENT OF PROFIT AND LOSS		5
CONSOLIDATED STATEMENT OF CASH FLOWS		6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY		7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS		8
1	ACCOUNTING PRINCIPLES AND METHODS	8
1.1	Reporting Entity	8
1.2	Accounting principles	8
1.2.1	Statement of compliance and accounting principles	8
1.2.2	Basis of measurement and presentation	9
1.2.3	Functional and reporting currency	9
1.2.4	Conversion of foreign currency transactions	9
1.2.5	Translation of financial statements of foreign subsidiaries whose functional currency is notthe euro	9
1.2.6	Use of Judgments and Estimates	10
1.3	Main accounting principles	10
1.3.1	Consolidation method	10
1.3.2	Business combinations	10
1.3.3	Development costs	11
1.3.4	Other intangible assets	11
1.3.5	Property, plant and equipment	12
1.3.6	Financial assets and liabilities	12
1.3.7	Inventories and work in progress	15
1.3.8	Employee benefits	15
1.3.9	Share-based payments	16
1.3.10	Provisions	16
1.3.11	Revenue from ordinary activities	17
1.3.11.1	Turnover	17
1.3.11.2	Other income from operations	17
1.3.12	Research Tax Credit	17
1.3.13	Cost of sales and other operating expenses	17
1.3.14	Non-current income and expenses	17
1.3.15	Lease agreements	18
1.3.16	Financial income and expenses	18
1.3.17	Income tax	18
1.3.18	Earnings per share	19
1.3.19	Impairment testing of non-financial assets	19
1.4	Determining fair value	19
1.5	Significant changes in accounting policies	20
1.6	Significant events of the fiscal year period	20
1.6.1	Change of scope	20
1.6.2	COVID-19	21
1.6.3	Buyback offer from PERRIGO	22
1.6.4	Ongoing legal actions	22
1.6.5	Other Information	23

2	NOTES TO THE STATEMENT OF FINANCIAL POSITION	24
2.1	Goodwill	24
2.2	Intangible assets	25
2.3	Property, plant and equipment	26
2.4	Rights of Use associated with Leases	27
2.5	Current and non-current financialassets	28
2.6	Inventories	28
2.7	Trade and other receivables	29
2.8	Other receivables	30
2.9	Cash and cash equivalents	31
2.10	Share capital	31
2.10.1	Share-based payments - Stock options and free shares	32
2.10.2	Non-controlling interests	32
2.11	Provisions for employee benefits	33
2.12	Provisions	34
2.12.1	Provisions for tax liabilities	34
2.13	Borrowings and financial debts	35
2.13.1	Changes in financial liabilities	36
2.14	Lease liabilities	37
2.15	Other debts	37
2.16	Deferred income	38
2.17	Fair value table	39
3	NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME	39
3.1	Revenue from ordinary activities	39
3.2	Operating expenses	40
3.2.1	Staff costs	40
3.2.2	Headcount	41
3.3	Other operating income and expenses	41
3.4	Other non-current income and expenses	42
3.5	Financial result	43
3.6	Income tax	43
3.6.1	Breakdown of tax expense	43
3.6.2	Reconciliation between actual and notional tax	44
3.6.3	Breakdown of deferred tax assets and liabilities	44
3.7	Earnings per share	45
3.7.1	Basic earnings per share	45
3.7.2	Diluted earnings per share	45
4	RELATED PARTIES	45
5	LITIGATION	46
6	OFF-BALANCE SHEET COMMITMENTS	46
7	FINANCIAL RISK MANAGEMENT	47
8	SUBSEQUENT EVENTS	47
9	AUDITORS’ FEES	48

STATEMENT OF FINANCIAL POSITION

in thousands of euros		December 31, 2021		December 31, 2020
Assets
Goodwill	Note 2.1		529 585		529 585
Intangible assets	Note 2.2		514 489		505 893
Tangible assets	Note 2.3		3 261		3 427
Usage rights under leasing contracts	Note 2.4		8 654		9 873
Financial assets - Non-current portion	Note 2.5		773		575
Derivative asset instruments - Non-current<br>portion			—		10
Deferred taxes - Assets	Note 3.6.3		30 618		34 577
Non-current assets		****	1 087 381	****	1 083 940
Stocks and work in progress	Note 2.6		22 726		31 543
Trade and other receivables	Note 2.7		53 599		48 423
Current tax assets	Note 2.8		10 205		6 115
Other receivables	Note 2.8		11 108		13 544
Prepayments			2 622		2 833
Financial assets - Current portion			9		9
Derivative asset instruments - Current portion			63		259
Cash and cash equivalents	Note 2.9		40 575		18 163
Current assets		****	140 907	****	120 888
TOTAL ASSETS		****	1 228 288	****	1 204 827
Equity
Share capital	Note 2.10		35 862		35 862
Share premium			319 897		319 897
Consolidated reserves - Group share			-171 588		-145 631
Profit or loss for the financial year - Group share			-3 166		-27 241
Equity - Group share		****	181 005	****	182 888
Non-controlling interests			107		29
Equity		****	181 112	****	182 917
Liabilities
Provisions for employee benefits	Note 2.11		2 441		2 266
Borrowings and financial debts - Non-current<br>portion	Note 2.13		842 692		815 415
Leasing debts - Non-current portion	Note 2.14		7 359		8 759
Deferred income - Non-current portion	Note 2.16		666		625
Derivative liability instruments - Non-current<br>portion			—		—
Deferred taxes - Liabilities	Note 3.6.3		127 508		128 658
Non-current liabilities		****	980 667	****	955 724
Provisions - Current portion	Note 2.12		822		335
Borrowings and financial debts - Current portion	Note 2.13		—		-1
Leasing debts - Current portion	Note 2.14		2 341		2 296
Trade and other payables			33 243		43 931
Current tax liabilities	Note 2.15		610		1 271
Other debts - Current portion	Note 2.15		28 405		18 163
Deferred income - Current portion	Note 2.16		137		191
Derivative liability instruments - Current portion			952		—
Current liabilities		****	66 509	****	66 187
LIABILITIES		****	1 047 176	****	1 021 911
TOTAL LIABILITIES AND EQUITY		****	1 228 288	****	1 204 827

STATEMENT OF PROFIT AND LOSS AND COMPREHENSIVE INCOME

Profit and Loss account

in thousands of euros		December 31, 2021		December 31, 2020
Turnover			255 923		201 543
Other income from operations			605		1 384
Revenue from ordinary activities	Note 3.1	****	256 529	****	202 926
Costs of sales			-73 681		-56 635
Marketing and sales costs	Note 3.2		-77 834		-63 212
General and administrative costs	Note 3.2		-33 926		-27 449
Research and development costs	Note 3.2		-9 062		-9 418
Other operating revenues	Note 3.3		1 874		1 561
Other operating expenses	Note 3.3		-2 204		-11 178
Other income	Note 3.4		111		8 031
Other expenses	Note 3.4		-4 675		-24 338
Operating Result		****	57 133	****	20 290
Financial revenues			2 205		1 251
Financial expenses			-59 559		-55 188
Financial Result	Note 3.5	****	-57 354	****	-53 937
Pre-tax Result		****	-221	****	-33 648
Income/(expenses) from taxation	Note 3.6		-2 872		6 439
Net Result		****	-3 093	****	-27 209
Of which:
Group share			-3 166		-27 241
Non-controlling interest			72		32

Basic and diluted earnings per share

in thousands of euros	December 31, 2021		December 31, 2020
Basic and diluted earnings per share		-0,09		-0,76
Other comprehensive income
in thousands of euros	December 31, 2021		December 31, 2020
Net Result	****	-3 093	****	-27 209
Revaluation of net defined benefit liability (asset)		-154		191
Related taxes		42		-55
Total items that will not be reclassified to income in the future	****	-112	****	135
Exchange differences		1 045		-282
Gains / losses at fair value		193		255
Total items likely to be reclassified to profit or loss in the future	****	1 238	****	-28
Other components of comprehensive income	****	1 126	****	108
Total Global Result	****	-1 967	****	-27 101
Of which:
Group share		-2 042		-27 132
Non-controlling interests		75		32

CONSOLIDATED STATEMENT OF CASH FLOWS

in thousands of euros		December 31, 2021		December 31, 2020
Loss of fully consolidated companies before tax			-221		-33 648
Interest charges			57 085		52 739
Net provision for amortization			2 795		4 244
Net allocation for amortization of usage right - IFRS 16			2 379		2 419
Net provision for amortization (revaluation of assets - PPA Astorg)			1 237		3 806
Net allocation to provisions			904		-530
Capital gains and losses on the disposal of tangible and intangible assets and cost of<br>disposa			193		8 907
Operating working capital			541		13 478
Stocks			9 238		-7 634
Trade and other receivables			-4 001		19 637
Trade and other payables			-4 696		1 475
Cash flows generated by operating activities		****	64 913	****	51 415
Tax income / (expenses) paid			-1 355		-71
Other components of operational activities			339		-619
Net cash flow from operational activities		****	63 897	****	50 725
Acquisition of tangible assets	Note 2.3		-427		-196
Acquisition of intangible assets	Note 2.2		-12 217		-11 031
Changes in payables to suppliers of fixed assets			3 298		-7 022
Change in financial assets			-1 026		-43
Change in the scope			-174
Other components of investment activities			-2		—
Net cash flow used in investment activities		****	-10 546	****	-18 292
Loan repayments	Note 2.13.1		-18 000		-35 030
New borrowings	Note 2.13.1		10 000		28 000
Repayment of leasing debts			-2 521		-2 355
Interest paid			-20 650		-21 264
Other components of financing activities			67		204
Net cash flow used in financial activities		****	-31 103	****	-30 446
Net cash flow		****	22 249	****	1 988
Opening cash			18 163		16 259
Effects of exchange rate fluctuations on hedging cash flow			163		-84
Closing cash			40 575		18 163
Net cash increase / (decrease)		****	22 249	****	1 988

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

In thousands of euros	Share<br>capital		Share premium		Translation<br>reserves		Fair value<br>reserves		Consolidation<br>reserves		Reserves -<br>Actuarial<br>gains and<br>losses		Equity<br>component of<br>convertible<br>bonds		Profit or loss		Total<br>transactions<br>with owners<br>of the<br>Company		Non-<br>controlling<br>interests		Total<br>shareholders’<br>equity
Equity as of January 1, 2020	****	35 862	****	319 897	****	72	****	6 564	****	- 96 975	****	- 243	****	9 636	****	- 65 014	****	209 799	****	—	****	209 799
Total income for the period
Net income																- 27 241	****	- 27 241	****	32	****	- 27 209
Other comprehensive income						- 236		255		- 62		153					****	109	****	-2	****	107
Total income for the period	****	—	****	—	****	- 236	****	255	****	- 62	****	153	****	—	****	- 27 241	****	- 27 131	****	29	****	- 27 102
Transactions with the Company’s owners																	****	—			****	—
Contributions and distributions																	****	—			****	—
Other variances										220							****	220			****	220
Total contributions and distributions	****	—	****	—	****	- 236	****	255	****	158	****	153	****	—	****	- 27 241	****	- 26 911	****	29	****	- 26 881
Equity as of December 31, 2020	****	35 862	****	319 897	****	- 165	****	6 818	****	- 96 816	****	-90	****	9 636	****	- 92 254	****	182 888	****	29	****	182 917
Equity as of January 1, 2021	****	35 862	****	319 897	****	- 165	****	6 818	****	- 96 816	****	-90	****	9 636	****	- 92 254	****	182 888	****	29	****	182 917
Total income for the period
Net income																- 3 166	****	- 3 166	****	72	****	- 3 094
Other comprehensive income						1 039		193				- 112					****	1 120	****	6	****	1 126
Total income for the period	****	—	****	—	****	1 039	****	193	****	—	****	- 112	****	—	****	- 3 166	****	- 2 046	****	78	****	- 1 968
Transactions with the Company’s owners																	****	—			****	—
Contributions and distributions																	****	—			****	—
Other variances						59				104							****	163			****	163
Total contributions and distributions	****	—	****	—	****	1 098	****	193	****	104	****	- 112	****	—	****	- 3 166	****	- 1 883	****	78	****	- 1 805
Equity as of December 31, 2021	****	35 862	****	319 897	****	934	****	7 011	****	- 96 713	****	- 201	****	9 636	****	- 95 420	****	181 006	****	107	****	181 112

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 ACCOUNTING PRINCIPLES AND METHODS

1.1 Reporting Entity

The parent company, Héra S.A.S. (hereinafter “the Company”) is a company domiciled in France with its registered office in Chatillon 92320, 200 avenue de Paris; it was established on November 16, 2015.

The financial statements of the Company and its subsidiaries controlled, directly or indirectly, by the Company are included in the consolidated financial statements.

The Héra Group (hereafter “the Group”) aspires to be a global leader in the development and commercialization of pharmaceuticals, medical devices, and cosmetics.

The Group is comprised of the following companies:

Entities	Country
Héra Sas	France	Mother
Laboratoire HRA Pharma Sas	France	100,00	%
HRA Pharma France Sas	France	100,00	%
HRA Pharma Development Sarl	France	100,00	%
HRA Pharma Deutschland GmbH	Germany	100,00	%
HRA Pharma UK & Ireland Limited	UK	100,00	%
HRA Pharma Italia Srl	Italy	100,00	%
HRA Pharma Iberia SL	Spain	100,00	%
HRA Pharma LLC	USA	100,00	%
HRA Pharma Switzerland Sarl	Switzerland	100,00	%
HRA Pharma Rare Diseases Sas	France	100,00	%
HRA Pharma Benelux	Belgium	100,00	%
HRA Pharma America Inc	USA	100,00	%
HRA Pharma APAC	Hong Kong	100,00	%
HRA Pharma Hong Kong Limited	Hong Kong	67,00	%
HRA Pharma China	China	100,00	%

1.2 Accounting principles

The consolidated financial statements were approved by the Chairman on March 23, 2022.

1.2.1 Statement of compliance and accounting principles

The consolidated financial statements have been prepared on the basis of IFRS (International Financial Reporting Standards) as adopted by the European Union, IFRS as issued by the IASB (International Accounting Standard Board) and interpretations of international standards (SIC and IFRIC) as of December 31, 2020 and 2021.

All of the European Union’s adopted texts can be found on the European Commission’s website at the following location:

http://ec.europa.eu/commission/index_fr

Effective January 1, 2021, the following standards and interpretations will apply:

The IASB’s published standards, revisions to standards, and interpretations that are mandatory as of the fiscal year 2021 are given below:

•	Amendments to IFRS 4 “Extension of the temporary exemption from IFRS 9”
•	Amendments to IFRS 9, IAS 39 and IFRS 7 “Reform of reference interest rates - Phase 2”<br>
---	---
•	Amendments to IFRS 16 “Covid-19 rent concessions beyond<br>June 30, 2021”
---	---
•	Agenda decision of the IFRS Interpretations Committee (IFRS IC): Attributing Benefit to Periods of Service (IAS<br>19)
---	---

The impact of these standards is not significant in the financial statements as of December 31, 2021.

Standards, amendments and interpretations published but not yet endorsed by the European Union and Standards, amendments and interpretations endorsed by the European Union and not early adopted by the Group:

The estimated impact of applying the IASB’s (International Accounting Rules Board) and IFRS IC’s (International Financial Reporting Standards Interpretations Committee) standards and interpretations, is not significant.

1.2.2 Basis of measurement and presentation

With the exception of specific asset and liability classes, the consolidated financial statements are prepared on a historical cost basis in accordance with IFRS. The relevant classes are listed in the notes below, as applicable.

Assets and liabilities of different types, functions, and sizes are shown individually.

Current assets and liabilities are those included in the working capital used throughout a normal business cycle. Current and non-current assets and liabilities are categorized according to whether they are due within one year as of the balance sheet date.

1.2.3 Functional and reporting currency

An entity’s functional currency is the currency of the economic environment in which it is principally active. The functional currency for subsidiaries is the local currency.

The Company’s functional currency is the euro, hence the consolidated financial statements are presented in euros. Unless otherwise stated, all financial data is expressed in thousands of euros.

1.2.4 Conversion of foreign currency transactions

Foreign currency transactions are translated into the relevant functional currencies of Group entities using the exchange rate in effect at the time of the transactions, in accordance with IAS 21.

Monetary assets and liabilities denominated in foreign currencies are converted into the functional currency at the balance sheet date using the closing rate. Exchange gains and losses are recorded in the income statement as a result of the relevant exchange variations.

1.2.5 Translation of financial statements of foreign subsidiaries whose functional currency is not the euro

Foreign subsidiaries whose functional currency is not the euro have their financial statements translated into euros as follows:

•	the balance sheets of foreign subsidiaries are translated into euros using the exchange rate prevailing at the<br>balance sheet date;

•	the income statements and cash flows of these companies are translated using the average exchange rate for the<br>period;
•	differences arising from the translation of the financial statements of foreign companies are recorded in other<br>comprehensive income under the heading “Exchange differences”.
---	---

1.2.6 Use of Judgments and Estimates

Management must use judgment and make estimates and assumptions while preparing financial statements, which affect the application of accounting policies and the reported values of assets and liabilities, income and expenses. Actual values may differ from those estimated due to changes in assumptions or economic conditions that differ from those in effect at the time the balance sheet was prepared.

The estimates and underlying assumptions are reviewed on an ongoing basis. The impact of changes in accounting estimates is recognized in the period of the change and any subsequent periods affected.

The following are some examples of key estimates and judgments used in adopting accounting policies:

•	the valuation of goodwill and intangible assets;
•	the valuation of employee benefits;
---	---
•	the valuation of provisions for risks, particularly in the event of litigation;
---	---
•	deferred tax assets on losses carried forward.
---	---

1.3 Main accounting principles

1.3.1 Consolidation method

The Group controls a subsidiary when it has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability to use its power to affect the amount of its returns.

1.3.2 Business combinations

The acquisition method is used to account for business combinations. At the time of exchange, the consideration transferred is the fair value of the assets given, equity instruments issued, and liabilities incurred. Direct costs incurred as a result of the combination are recorded in “Other operating expenses” in the period in which they occur.

Except for particular exceptions provided for in the revised IFRS 3, the assets, liabilities, and contingent liabilities of the acquired firm are measured at fair value on initial consolidation of a controlled company.

Goodwill recorded in the consolidated balance sheet represents the difference between:

•	the aggregate of the following components:
•	the consideration transferred for the acquisition of control;
---	---
•	the amount of non-controlling interests in the acquired company,<br>determined either at fair value at the acquisition date (full goodwill method) or on the basis of their proportionate share of the fair value of the net identifiable assets and liabilities acquired (partial goodwill method). This option is available<br>on a transaction-by-transaction basis;
---	---
•	for step acquisitions, the fair value at the acquisition date of the Group’s share of the net assets<br>acquired prior to the acquisition of control;
---	---
•	and the net amount of identified assets acquired and identified liabilities incurred, measured at their fair<br>value at the acquisition date.
---	---

After initial recognition, goodwill are tested for impairment in accordance with IAS 36 – Impairmentof Assets, at least once a year and whenever there is an indication that the asset may be impaired.

The difference is recognized directly in the income statement when the consideration transferred is less than the fair value of the Group’s share of the identifiable assets acquired and liabilities assumed of the subsidiary acquired.

When the accounting for a business combination may only be determined provisionally, IFRS 3 requires that the asset and liability values be adjusted within twelve months of the acquisition date.

Adjustments to the values recognized after the measurement period expires in relation to the values assigned to the assets acquired and liabilities assumed on initial consolidation are recognized prospectively in profit or loss for the year of the change and subsequent years, if any, without adjustment to goodwill.

If the changes in the initial accounting for the combination are due to an error, the values assigned to the acquired assets and liabilities, non-controlling interests, or purchase price elements are changed retrospectively, as if their corrected fair values had been recognized as of the acquisition date. Goodwill must also be adjusted accordingly, and the impact of the error correction is recognized in opening equity in the year of the error correction, in accordance with IAS 8 - Accounting policies, changes in accounting estimates and errors.

1.3.3 Development costs

Research costs for the purpose of acquiring new scientific or technical knowledge and understanding are expensed as incurred.

Development activities involve the existence of a plan or design for producing new or substantially improved products and processes. Development expenditure is recognized as an asset if and only if the costs can be reliably measured and the Group can demonstrate:

•	the technical and commercial feasibility of the product or process in the short term;
•	the recognition of probable future economic benefits;
---	---
•	and its intention and the availability of sufficient resources to complete the development and use or sell the<br>asset.
---	---

The cost of materials and directly relevant subcontracting costs required to bring the asset to its intended use are included in the expense so capitalized.

Other development costs are expensed as incurred.

With the exception of products that have an active or exploitable marketing authorization and are capable of generating future economic benefits, or that are related to the safety of the environment or people, or that are indispensable for the continuation of the business, Héra believes that the criteria laid out in IAS 38 “Intangible Assets” have not yet been met, given the risks inherent in development programs and the progress of the Group’s projects.

1.3.4 Other intangible assets

Other intangible assets include intangible assets with an indefinite useful life (trademarks and property rights acquired from a third party for drugs) as well as patents, software, licenses, and marketing authorizations acquired or developed internally by the Group with a finite useful life. They are valued at the cost of acquisition (purchase price and related expenses).

Subsequent spending on intangible assets is recognized only if it boosts the asset’s future economic benefits. Other expenses are deducted as they are incurred.

Amortization is recognized over the expected useful life of intangible assets on a straight-line basis:

• Patents:	20 years
• Development costs:	between 3 and 15 years
• Other intellectual property rights and licenses:	between 3 and 19 years

• Software:	1 to 3 years
• Licenses:	between 3 and 10 years
• Domain names:	between 1 and 5 years

1.3.5 Property, plant and equipment

Property, plant and equipment are initially recognized at acquisition cost.

If it is expected that future economic advantages connected with the asset will flow to the Group and the cost of the asset can be determined accurately, subsequent costs are included in the carrying amount of the asset or, where appropriate, recognized as a distinct asset.

Fixed assets are depreciated on a straight-line basis over the estimated useful life of the assets. Depreciation is recognized as an expense for the year.

The estimated useful lives are as follows:

• Fixtures and fittings	8 years
• Industrial equipment	10 years
• Office and computer equipment	3 years
• Furniture	10 years

Depreciation methods, useful lives and residual values are reviewed and, if necessary, adjusted at each balance sheet date.

1.3.6 Financial assets and liabilities

Financial assets and liabilities mainly include:

•	Group investments (non-consolidated investments, debt securities, etc.)<br>
•	Loans and financial receivables
---	---
•	Cash and cash equivalents
---	---
•	Borrowings and other financial liabilities
---	---
•	Derivative instruments
---	---

Financial assets

Contractual characteristics and management models are used to classify financial assets.

Non-recyclable financial assets at fair valuethrough other comprehensive income

The Group has made the irreversible decision to record investments in equity instruments at fair value through non-recyclable “other comprehensive income,” i.e., without the ability to transfer them to the income statement in the case of a sale. Only dividends received are recorded in the income statement.

Recyclable financial assets at fair value through other comprehensive income

Investments in debt instruments with a cash flow collection and resale mechanism and contractual flows consisting entirely of principal repayments and interest payments are reported at fair value with an offsetting entry in recyclable “other comprehensive income” (recyclable OCI).

Financialassets at fair value through profit or loss

Financial assets classified as fair value through profit or loss are financial assets purchased with the goal of resale in the near future or equity instruments for which the Group has not opted to define them as fair value through other comprehensive income.

Loans

Loans are measured at amortized cost if the business model is to collect contractual cash flows consisting solely of principal and interest payments.

The effective interest rate technique is used to account for interest in the income statement’s “Other financial income and costs.”

The Group has taken an approach to loan impairment that is based on the counterparty’s likelihood of default and its assessment of the credit risk’s progression. The difference between the carrying amount and the value of the expected future cash flows, discounted at the financial assets’ original effective interest rate, is the impairment loss.

Trade and other receivables

Trade receivables are recognized and recorded at their transaction price.

A depreciation is recognized based on the expected losses since the origin of the receivable. Bad debts are recognized as losses when they are identified as such.

Cash and cash equivalents

Cash equivalents are short-term, liquid investments that are readily convertible into a known amount of cash and which are subject to an insignificant risk of change in value. Cash and cash equivalents therefore includes cash at bank and in hand, as well as cash investments in marketable securities with a maturity of three months or less and with very low sensitivity to interest rate risk.

In the cash flow statement, cash and cash equivalents comprise cash in hand, demand deposits in banks, and short-term liquid investments, net of bank overdrafts. It should be noted that bank overdrafts are included in the balance sheet under “Borrowings - current portion”.

Financialliabilities

Borrowings and financial debts

Bank loans are initially valued at fair value of the consideration received, minus transaction costs that are directly traceable.

They are then measured using the effective interest rate approach at amortized cost. Specifically, using the effective interest rate method, all costs associated with the issuance of loans or bonds, as well as any difference between the issuance proceeds net of transaction costs and the redemption value, are recognized in the income statement as financial expenses over the life of the loans.

Compound instruments

Compound financial instruments issued by the Group in euros include convertible bonds which give the holder the option to convert them into a specified number of shares.

The liability component of the compound financial instrument is initially valued at the fair value that a similar liability would have if it did not have a conversion option. The equity component is the difference between the fair value of the entire compound financial instrument and the fair value of the liability component when it is first recognized.

The liability component of a compound financial instrument is measured at amortized cost using the effective interest method after initial recognition. After initial recognition, the equity component of the compound financial instrument is not remeasured.

The income statement accounts for interest on financial liabilities.

Derivative instruments

Hedging transactions in the form of derivative instruments, such as forward contracts, currency options, and interest rate options, are used by the Group to manage market risks (interest and exchange rates).

According to the standards of IFRS 9, these financial products are designated as hedging instruments and are primarily accounted for as cash flow hedges.

Hedge accounting

A cash flow hedge protects against the risk of profit or loss from variations in cash flows of an asset, obligation, or highly probable projected transaction that are linked to one or more risk components.

For the effective portion of the hedging relationship, changes in the fair value of the hedging instrument are recognized directly in the consolidated statement of comprehensive income, and for the ineffective portion, they are recorded in the income statement.

When the hedged transaction affects the income statement, cumulative changes in the fair value of the hedging instrument previously recognized in the consolidated statement of comprehensive income are recycled to the income statement.

Gains and losses are recorded in “Other operating income” for hedging operational activities and “Financial income” or “Financial expense” for hedging investment and financing activities.

The cumulative changes in the fair value of the hedging instrument previously recorded in the consolidated statement of comprehensive income are included in the initial measurement of the asset or liability concerned when the forecasted transaction results in the recognition of a non-financial asset or liability.

Hedging cost

The Group may document currency or interest rate options as hedging instruments as part of its market risk management policy, and the effectiveness of these products is assessed based on changes in intrinsic value. Depending on the nature of the risk hedged, the time value of these options is handled as a hedging cost and recognized in the consolidated statement of comprehensive income and recycled to the income statement.

Discontinuation of hedge accounting

When the criteria for hedge accounting’s application are no longer met, such as when the hedging instrument expires, is sold, terminated, or exercised, or when the hedging relationship’s market risk management purpose changes, hedge accounting is discontinued.

IBOR reform

A reform of the main reference rates is underway with the replacement of Interbank Offered Rates (IBOR) by alternative risk-free reference rates.

The Group is closely monitoring market activity as well as the publications of various bodies, particularly the IFRIC and the IASB, and has prepared itself for a gradual transition to risk-free rates.

Financial instruments (finance and derivatives) and, to a lesser extent, certain commercial contracts are likely to be affected by this reform (late payment interest, etc.).

In this context, the IASB has published several amendments to IFRS 9 and IFRS 7, including phase 2, which was adopted on January 13, 2021 and went into effect on January 1, 2021, to reflect the impact of replacing benchmark interest rates with new benchmark interest rates without any accounting impact that would not provide useful information to financial statement users.

The Group’s financial statements for 2021 are unaffected by this rate change.

1.3.7 Inventories and work in progress

The cost of inventory is determined using the F.I.F.O. (First In, First Out) method. The cost of inventories includes all direct material costs, labor costs and the allocation of indirect production costs and/or subcontracting costs.

Inventories are measured at cost or net realizable value if lower than the net book value.

An impairment loss is recognized when:

•	products are damaged and therefore, not saleable;
•	products that have expired or are nearing obsolescence between 0 and 12 months before the expiration date.<br>
---	---

1.3.8 Employee benefits

In accordance with the specific laws and provisions of each country in which it operates, the Group provides its employees with post-employment benefits (pension plans, termination benefits, etc.).

Defined contribution plans

A defined contribution plan is a post-employment benefit plan in which a company makes pre-determined contributions to a separate company and is under no legal or constructive duty to pay additional contributions. When contributions to defined contribution plans are due, they are recorded as an expense. Prepaid contributions are classified as assets if they may result in a cash refund or a reduction in future payments.

Defined benefit plans

A defined benefit plan is a post-employment plan other than a defined contribution plan.

Employees’ future benefits are estimated in exchange for services given in the current and preceding periods, and liabilities under defined benefit plans are measured separately for each plan. A certified actuary performs annual actuarial valuations using the predicted unit credit approach. This technique involves calculating the rights that employees have earned at the end of the year for all plans, taking into consideration the outlook for wage increases and the economic conditions in each country.

For post-employment benefits, the valuation is based in particular on the following methods and assumptions:

•	the retirement age, determined on the basis of the provisions applicable to each of the schemes and the<br>conditions required to qualify for a full pension;
•	the projected salary level at retirement, taking into account the expected career progression and the estimated<br>change in the retirement age;
---	---
•	the projected number of retirees determined on the basis of staff turnover rates and mortality tables available<br>in each country;
---	---
•	the discount rate determined at the balance sheet date by reference to the rate on high quality corporate bonds<br>with a duration close to that of the Group’s obligations.
---	---

The net expense recognized during the year for employee benefits includes:

-	in the Profit & Loss account:
•	the service cost corresponding to the acquisition of additional rights;
---	---

•	the net interest cost, corresponding to the interest cost on obligations net of income from hedging assets, now<br>measured using the discount rate for obligations;
•	past service cost, including the expense or income arising from plan amendments/liquidation or the introduction<br>of new plans;
---	---
•	actuarial gains and losses relating to other long-term benefits.
---	---
-	in the statement of net income and gains and losses recognized directly in other comprehensive income:<br>
---	---
•	actuarial differences relating to post-employment benefits.
---	---

Termination benefits

When the Group is manifestly committed to a specific formal strategy for either termination of employment before the typical retirement date or an offer to induce voluntary redundancy with the goal of decreasing the workforce, termination benefits are recognized as an expense. If the Group has made an offer to encourage voluntary redundancies, it is likely that the offer will be accepted, and the number of employees who will accept the offer can be reasonably anticipated, voluntary redundancy payments are recorded as an expense.

Short-term benefits

If the Group has a present legal or constructive obligation to make such payments in return for past service rendered by the employee and the obligation can be reliably estimated, a provision is recognized for the amount that the Group expects to pay in respect of short-term cash-settled incentive and profit-sharing plans and bonuses.

1.3.9 Share-based payments

Over the time during which the staff members definitively acquire the rights, the fair value established at the date of grant of the options issued to employees is recognized as an employee benefit expense, with a corresponding rise in equity. The expense amount is adjusted to reflect the actual number of vested options for which the service and performance standards are met.

The fair value of the amount to be settled to an employee for cash-settled share appreciation rights is recognized as an expenditure, with a corresponding rise in the liability, over the period in which the employees become entitled to the final payment. At each balance sheet date and at the settlement date, the liability is remeasured. Personnel expenses account for any changes in the liability’s fair value.

Regardless of how the Group obtains the equity instruments, share-based payment transactions in which the Group receives goods or services in exchange for its own equity instruments are accounted for as equity-settled transactions.

The standards of IFRS 2 are used to measure and recognize plans that have been authorized but have not yet vested as of December 31, 2021.

1.3.10 Provisions

Provisions are accounted for when the Group has a present legal or constructive obligation as a result of a past event, the obligation can be reliably estimated and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

These provisions are calculated based on the most likely assumptions at the time of the balance sheet.

1.3.11 Revenue from ordinary activities

1.3.11.1 Turnover

The Group’s revenue consists primarily of revenue from the sale of pharmaceutical products and medical devices. It is recognized when control of the goods or services is transferred to the client generally upon delivery, in accordance with the delivery and acceptance terms of the contract with the customer. Revenue is accounted for at the amount that reflects the sums that the Group expects to receive.

Revenue from product sales consists of the sale of products net of returns, rebates, discounts and allowances granted to customers. Rebates, discounts and rebates are recognized concurrently with the sales to which they relate and are identified as a variable component of the price in accordance with the provisions of IFRS 15.

1.3.11.2 Other income from operations

Other revenue includes royalties, income from licensing agreements with partners and other services.

Royalties received are recorded under “Royalties and Downpayments” on the basis of revenues generated by partners during the fiscal year and the contractual royalty rates.

1.3.12 Research Tax Credit

The French government provides tax incentives to businesses to encourage them to conduct technological and scientific research. Companies that can show that they have incurred expenses that meet the criteria (research expenses incurred in France, the European Union, or another country that has signed a tax treaty with France containing an administrative assistance clause since January 1, 2005) are eligible for a tax credit that can be used to pay corporate income tax. Except for the research tax credit arising from capitalized expenses, which is accounted for first as deferred income and then as a deduction from development costs as the expenses are amortized, this research tax credit is accounted for as a grant, as a deduction from recognized research and development costs.

1.3.13 Cost of sales and other operating expenses

The costs of manufacturing the marketed products are included in the sales costs.

The costs of distribution, promotion, and sale of pharmaceuticals are all included in marketing expenditures.

General management and support tasks are included in general and administrative costs (finance, IT, HR, etc.).

Internal and external costs of research and development studies that do not meet the criteria for the activation of new products, as well as regulatory affairs expenses, are included in research and development expenses.

1.3.14 Other income and expenses

Other income and expenses include a limited number of income and expenses, such as:

•	gains and losses on disposals of non-current tangible or intangible<br>assets;
•	impairment of non-current tangible or intangible assets;<br>
---	---
•	amortization of intangible assets acquired in business combinations;
---	---
•	restructuring costs;
---	---
•	provisions relating to major litigation for the company.
---	---

1.3.15 Lease agreements

For all leases, regardless of their nature, the Group recognizes leases as assets in the form of a right of use against a rental liability on the balance sheet. The Group recognizes a depreciation charge and an interest charge in the profit and loss account, and lease payments are included in cash flows from financing activities in the cash flow statement.

Property leases and vehicle leases are the two principal contracts affected by the standard.

1.3.16 Financial income and expenses

Net financial income / (loss) includes interest on investments, interest payable on borrowings calculated using the effective interest method, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognized in respect of financial assets, foreign exchange gains and losses on financial transactions, foreign exchange differences and discounting and undiscounting effects.

When interest income is earned using the effective interest technique, it is recorded in the income statement.

1.3.17 Income tax

Current tax expense/income and deferred tax expense/income are both included in income tax (expense or income).

Tax is included in profit or loss unless it is related to items that are directly recorded in other comprehensive income or equity, in which case it is recorded in the same manner.

Current tax is defined as (i) the estimated amount of tax payable in respect of taxable profit for a period, calculated using tax rates enacted or substantively enacted at the balance sheet date, and (ii) any adjustment to the amount of tax payable in prior periods.

Unless otherwise specified, all transitory differences between the carrying amount of assets and liabilities and their tax bases are determined and recorded using the balance sheet liability technique. Based on tax regulations that have been passed or substantively enacted by the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are projected to apply to the period when the asset is realized and the liability is settled.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities and they relate to income taxes levied by the same taxation authority, either on the same taxable entity or on different taxable entities, but which intend to settle the current tax assets and liabilities on a net basis or to realize the assets and settle the liabilities at the same time.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each balance sheet date and are recognized to the extent that it is probable that sufficient taxable profit will be available.

Deferred taxes are calculated using domestic tax rates that are projected to apply when the asset is realized and the liability is resolved, based on tax rates that have been enacted or substantially enacted by the balance sheet date, depending on the jurisdiction.

As a result, as of December 31, 2021, deferred taxes for French corporations have been recognized at the rates approved by the French National Assembly (including the 3.3% social contribution) based on the reversal schedules below:

•	27.37% in 2021;
•	25.83% in 2022 and beyond.
---	---

1.3.18 Earnings per share

Basic earnings per share are calculated by dividing the profit or loss attributable to ordinary and preference shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share are determined by adjusting the profit or loss attributable to ordinary and preference shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares (bonus share grants, warrants and stock options granted to beneficiaries).

1.3.19 Impairment testing of non-financial assets

In accordance with IAS 36 - Impairment of Non-Financial Assets, goodwill, trademarks, and non-amortizable rights of use are tested for impairment at least once a year, or more frequently if there is an indication of impairment. If there is any sign of impairment, additional assets are also subjected to impairment assessments.

In addition, at each balance sheet date, the carrying amounts of other intangible assets are examined to see whether there is any indication that the asset may be impaired. If such an indicator exists, the asset’s recoverable value is estimated.

The success of subsequent rounds of clinical research, pharmacovigilance, patent protection, the arrival of competitor treatments, or changes in actual sales compared to expectations can all be indicators of impairment.

Goodwill and assets identified in a business combination are allocated to one of the Group’s two cash-generating units, CHC (i.e., the sale of products in pharmacies, supermarkets, or e-commerce outlets and, for the most part, without prescription) and RX (i.e. the sale of prescription products and mainly comprising the rare disease activities), for the purposes of impairment testing, from the date of acquisition. These assets include, in particular, emergency contraceptive products (Compeed and Mederma), as well as RX.

Impairment tests consist of comparing the net book value of the asset or cash-generating unit with its recoverable amount, which is the higher of its fair value less costs to sell and its value in use.

Value in use is calculated as the sum of the discounted cash flows expected from the use of the asset or cash-generating unit and its ultimate disposal.

The amount that may be collected through the sale of an asset or cash-generating unit in an arm’s length transaction, minus costs directly related with the disposal, is known as fair value less costs to sell.

The Group’s weighted average cost of capital is used to discount the expected cash flows.

If the carrying value of an asset or its cash-generating unit exceeds its recoverable value, an impairment loss is recognized. Losses due to impairment are recorded in the income statement. A cash-generating unit’s impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit, and then to reduce the carrying amounts of the unit’s other assets pro rata to the carrying amount of each asset in the unit.

The methods and key assumptions specific to the asset impairment tests performed for the year ended December 31, 2021 are presented with respect to goodwill in note 2.1.

1.4 Determining fair value

The following are the valuation methodologies utilized at each level:

•	Level 1 (unadjusted quoted prices): prices available to the entity at the measurement date in active markets<br>for identical assets or liabilities;
•	Level 2 (observable inputs): data about the asset or liability other than quoted market prices included in<br>Level 1 inputs that are observable either directly (such as a price) or indirectly (i.e. derived from observable prices);
---	---

•	Level 3 (unobservable inputs): inputs that are not observable in a market, including observable inputs that<br>are subject to significant adjustments.

The following procedures were used to determine fair values for balance sheet measurement and disclosure.

(i)	Investment in equity and debt securities

The fair value of listed financial instruments measured at fair value through profit or loss or through other comprehensive income is determined by comparing their last quoted bid price at the balance sheet date to their fair value or using recognized valuation techniques such as the discounted cash flow method if the instrument is not listed.

(ii)	Trade and other receivables

The fair value of trade and other receivables is calculated using the present value of future cash flows, discounted at the current market interest rate.

(iii)	Non-derivative financial liabilities

The present value of future cash flows generated by the debt (principal and interest) at the market interest rate adjusted for a credit spread at the reporting date is used to calculate fair value for disclosure purposes.

(iv)	Derivative instruments

The fair value of derivatives is based on recognized valuation techniques such as the discounted cash flow method and includes credit risk (Credit Value Adjustment) and counterparty risk (Debit Value Adjustment).

1.5 Changes in accounting policies

The IFRIC’s agenda decision issued in May 2021 on attributing retirement benefits on length of services has no significant impact on the consolidated financial statements.

1.6 Significant events of the fiscal year period

1.6.1 Change of scope

•	As part of the Group’s development in Asia, particularly in China, HRA Pharma has established 3 entities in<br>2019:
•	HRA Pharma APAC Limited, based in Hong Kong, was founded on December 10, 2019 with the goal of managing and<br>supervising the company’s operations in Asia outside of China;
---	---
•	HRA Pharma Hong Kong Limited, based in Hong Kong, was founded on December 10, 2019 and is responsible for<br>managing and supervising the company’s operations in China;
---	---
•	HRA Pharma China (WFOE), a Shanghai-based company founded on August 6, 2019.
---	---

As of December 31, 2020:

•	HRA Pharma APAC and HRA Pharma China are wholly owned by HRA Pharma;
•	HRA Pharma Hong Kong is 67% owned by HRA Pharma and 33% owned by the partner Profex;
---	---

•	A capital of 700 thousand CNY was paid from HRA Pharma Laboratory to HRA Pharma China in June 2020;<br>
•	Activity in China began in April 2020.
---	---

1.6.2 COVID-19

Financial year 2020:

The company has taken a targeted approach to conveying the most important impacts on the year’s performance and financial position.

The information presented pertains to the main impacts of the event that are recorded in the accounts, as judged appropriate. By measuring the gross and net impacts, these effects are described, taking into account the interactions and repercussions of the event on the normal aggregates. It is also evaluated in terms of the support measures from which it may have benefited.

The global epidemic known as “Covid-19” has had a detrimental influence on the Group’s operations, owing to containment and social distancing measures implemented in most nations throughout the world, particularly in Europe.

The impact on sales was felt most acutely in the “Consumer Healthcare” area, which had a 22% drop in sales, or - 44,564 thousand euros, compared to the previous year. The “Endocrinology” segment’s sales remained unaffected (+10% in comparison to 2019).

Despite the fact that practically all points of sale (pharmacies and supermarkets in particular) were open during these periods of confinement, there was a decline in sales.

The Group has attempted to mitigate the impact of Covid-19 on its profitability by cutting costs, particularly promotional expenses (-7%, or 2,462 thousand euros, compared to 2019) and development expenses (line item “Research and development expenses” in the income statement) (-16%, or -709 thousand euros compared with 2019).

It should be highlighted that the group’s manufacturing and transportation of products has not been disrupted.

With the prolongation of the €20 million senior loan took out in March 2020 and a new €8 million loan taken out with the BPI in September 2020, the company has strengthened its liquidity and has the required resources to ensure the company’s expansion.

Except for a suspension of payment of certain social security and tax expenses during the first confinement, the Group has not sought any remedy or aid from the government. At the end of the year, these deferrals were repaid up to 80%.

Financial year 2021:

The Group’s sales increased by more than 26% in 2021 compared to 2020, reflecting the strength of its brands as well as the recovery from the Covid-19 pandemic’s consequences.

After a negative impact from Covid-19 in 2020, Compeed branded revenues rebounded dramatically in 2021.

The Group concentrated on reducing and optimizing its material costs, notably in the area of “rare diseases” as well as its operating expenses, throughout this time. These efforts paid off with an operating profit of €57.1 million, up €36.8 million (+181.5%) over the previous year.

The Group’s inventory management has also been improved.

It should be emphasized that the Group’s manufacturing and supply of products has not been disrupted.

Except for the German subsidiary, which has received 594,000 euros since the initial restriction, the Group has not sought recourse or assistance from the government.

As of December 31, 2021, all deferred payments of certain social security and tax costs made at the time of the first containment have been repaid.

1.6.3 Buyback offer from PERRIGO

Perrigo made an offer to the shareholders Astorg and Goldman Sachs Asset Management on September 8, 2021, to buy 100% of the Group’s share capital.

This offer was accepted by the shareholders in early November 2021. The sale of the Group is still subject to antitrust approval in the United States, despite the fact that all other prerequisites have been completed.

The deal is expected to be completed in the first half of 2022.

1.6.4 Ongoing legal actions

Financial year 2020:

•	In May 2018, BILIM, a Turkish generics business, requested that the Turkish counterpart of the European patent EP<br>2,419,108, which covers the protection of ella, be declared illegal by the Ankara Court.

Laboratoire HRA Pharma has filed its defense.

Laboratoire HRA Pharma withdrew the Turkish patent in January 2021, bringing the case to a close.

There were no financial or accounting implications.

•	In Europe, patent opposition procedures are pending before the European Patent Office, including the products<br>ella and Esmya:
•	Opposition to the patent on the formulation of ella and Esmya tablets: HRA has challenged the European Patent<br>Office’s first instance ruling. We predict that the appeal hearing will take place in 2021, and that the appeal judgment will be announced in 2021, with no additional information.
---	---
•	Opposition to the patent on the “Esmya” treatment: HRA filed an appeal; the hearing was place on<br>November 23, 2020, and the European Patent Office revoked the patent.
---	---

There were no financial or accounting consequences.

•	Opposition to the patent on the contraceptive method “ella”: HRA appealed the first instance judgement<br>and filed an appeal brief; the hearing before the European Patent Office’s Board of Appeal was held on October 11, 2020, and the European Patent Office revoked the patent.

There were no financial or accounting consequences.

•	Since early 2019, Laboratoire HRA Pharma and Vifor have engaged in a<br>pre-litigation over the Esmya distribution contract in Australia and New Zealand. Laboratoire HRA Pharma sought 400 thousand euros under a condition that may be reduced if a disagreement arose.<br>

Vifor expressed dissatisfaction with HRA Pharma but did not make a quantifiable claim.

On April 8, 2020, a deal was reached; HRA acknowledged the idea of contract cancellation, and neither side is responsible for any payments.

There has been no provision made.

•	Esmya Canada is the subject of a lawsuit filed in August 2019 against Apotex (Fibristal). This is a patent<br>infringement case involving the patent for tablet composition and the patent for indication.

Two similar litigations were initiated involving AbbVie, the local distributor of Esmya, the US Government and HRA against Jamp Pharma in one case and Pharma Science in the other case.

AbbVie relinquished its marketing license for Fibristal, bringing the case to a close.

Financial year 2021:

•	In Europe, ella and Esmya products are the subject of a patent opposition proceeding before the European Patent<br>Office:
•	HRA filed an appeal against the European Patent Office’s first instance ruling on the patent for the<br>formulation of ella and Esmya tablets.
---	---

HRA has filed an appeal against the European Patent Office’s first instance revocation judgment. A summons to an oral hearing before the Board of Appeal in Harr (Germany) has been issued; the hearing is scheduled for November 24, 2022. By the end of 2022, a conclusive decision on the patent’s maintenance or revocation is expected.

•	HRA filed an infringement claim against four generic makers of ellaOne products with the District Court in Korea<br>on December 23, 2021, based on the ellaOne “formulation” patent.
•	A legal battle is underway with ella’s former Austrian distributor, who has sued HRA Pharma for non-delivery of supplies.
---	---

SANOVA also blames HRA Pharma for terminating the contract with too little notice.

HRA Pharma intends to actively defend itself against this attack, it has recorded a provision of 150 thousand euros in its financial statements.

The court is now hearing the case.

1.6.5 Other Information

Financial year 2020:

•	European health authorities have conducted evaluations of the medication Esmya (containing the active ingredient<br>ulipristal acetate for the treatment of uterine fibroids in 3-month cycles at 5mg per day). The most recent decision is that of the European Union, which agreed to keep the medicine on the market but with a<br>drastically limited indication on January 11, 2021.

The product’s marketing has been halted in practically every other country on the planet.

•	At the end of 2020, Laboratoire HRA Pharma’s management decided to put the “ELLIS” and<br>“UPSI” projects on hold. As a result of this decision, items previously recognized as fixed assets have been removed for the following amounts: 8,666 thousand euros for ELLIS (net book value of 7,935 thousand euros) and<br>419 thousand euros for UPSI (net book value of 415 thousand euros).

Financial year 2021:

•	HRA France’s “rare diseases” business was transferred to HRA Pharma Rare Diseases on April 1,<br>2021.
•	HRA Pharma Development, which is wholly owned by Laboratoire HRA Pharma, was absorbed by the latter via a<br>Universal Asset Transfer on December 31, 2021.
---	---

•	On September 15, 2021, HRA Pharma LLC, which had no activity, was dissolved.
•	From July 2021, the local subsidiary in the United Kingdom began marketing Hana, a regular contraceptive tablet.<br>
---	---

2 NOTES TO THE STATEMENT OF FINANCIAL POSITION

2.1 Goodwill ****

The goodwill shown in the December 31, 2021 balance sheet is the result of the acquisition of Laboratoire HRA Pharma in 2016 for an initial €303 million, the Compeed acquisition in 2017, the acquisition of the property rights of Lysodren in 2018, the acquisition of Mederma assets in June 2019 for €57 million.

At the end of the two fiscal years, goodwill had a balance of €530 million (gross €553 million minus a €23 million impairment).

Impairment testing

Impairment tests are conducted at the level of each of the two Cash Generating Units (CGUs): RX (the sale of prescription products, which primarily includes rare disease activities) and CHC (the sale of products in pharmacies, supermarkets, or e-commerce, which, for the most part, does not require a prescription). The CHC CGU includes, for example, emergency contraceptive medications such as Compeed and Mederma).

The recoverable amount of each cash-generating unit corresponds to its value in use, which is calculated using the discounted value of the expected future cash flows. The assumptions used for the impairment tests of each cash-generating unit are reviewed annually:

•	Business plan drawn up by management for the period 2022 to 2025 with structural costs allocated according to the<br>weight of the activities of each CGU;
•	Beyond this horizon, cash flows are extrapolated by applying the expected long-term market growth rate;<br>
---	---
•	An average tax rate has been used over the business plan horizon and corresponds to the weight of the activity in<br>each area;
---	---
•	A discount rate determined by geographical area, ranging from 8% to 9.2% depending on the cash generating units<br>tested;
---	---
•	Perpetual growth rate set at 2% for the calculation of terminal values of CGUs.
---	---

The carrying amounts of the respective Cash Generating Units and the main assumptions are presented below:

in thousands of euros
Net book value as of December 31, 2020
Goodwill	63 879		465 707		529 585
Net assets	43 297		466 023		509 320
Total	107 176		931 730		1 038 905
Perpetual growth rate	2	%	2	%
Discount rate	8,2	%	8	%
Net book value as of December 31, 2021
Goodwill	63 879		465 707		529 585
Net assets	41 934		475 816		517 750
Total	105 813		941 523		1 047 335
Perpetual growth rate	2	%	2	%
Discount rate	9,2	%	8,3	%

For the years 2020 and 2021, tests were conducted to determine the sensitivity of the recoverable amount to likely changes in various actuarial assumptions, primarily the discount rate (range +/- 1%), change in cash flows (range +/- 20%), and perpetual growth rate (range +/- 1%). The sensitivity analyses were calculated by changing a single parameter and did not result in the recognition of any risk of goodwill impairment.

For the years 2020 and 2021, no impairment of goodwill has been identified***.***

2.2 Intangible assets ****

The following are the changes in “intangible assets” over the last two years:

Gross value<br><br><br>in thousands of euros	Development<br>Costs		Concessions,<br>patents,<br>trademarks<br>and licenses		Marketing<br>authorizations<br>and exploitation<br>rights		Software		Other<br>intangible<br>assets		Total
December 31, 2019	****	88 666	****	527 867	****	21 873	****	78	****	64	****	638 549
Acquisitions		10 420		350		39		222				11 031
Redeployment												0
Sales / Scrapping		-9 064		-730		-6		-23				-9 823
December 31, 2020	****	90 022	****	527 487	****	21 907	****	277	****	64	****	639 757
Acquisitions		11 349		128		726		15				12 217
Redeployment												0
Sales / Scrapping		-195						-10				-205
Exchange differences						9						9
December 31, 2021	****	101 176	****	527 615	****	22 641	****	281	****	64	****	651 778
Amortization<br><br><br>in thousands of euros	Development<br>Costs		Concessions,<br>patents,<br>trademarks<br>and licenses		Marketing<br>authorizations<br>and exploitation<br>rights		Software		Other<br>intangible<br>assets		Impairment<br>losses		Total
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
December 31, 2019	****	-41 138	****	-20 253	****	-13 806	****	-59	****	-2	****	-52 139	****	-127 397
Allowances		-4 512		-166		-1 470		-54				-1 210		-7 412
Redeployment														0
Sales / Scrapping		788		129		5		24						946
December 31, 2020	****	-44 862	****	-20 290	****	-15 271	****	-90	****	-2	****	-53 348	****	-133 864
Allowances		-1 828		-542		-1 482		-103				520		-3 437
Redeployment				186								-186		0
Sales / Scrapping		2						10						11
December 31, 2021	****	-46 689	****	-20 647	****	-16 753	****	-183	****	-2	****	-53 014	****	-137 289

Net value<br><br><br>in thousands of euros
December 31, 2019	47 528	507 614	8 067	19	62	-52 139	511 151
December 31, 2020	45 160	507 197	6 636	187	62	-53 348	505 893
December 31, 2021	54 487	506 968	5 888	98	62	-53 014	514 489

Intangible assets other than brands are amortized over a period of between 1 and 20 years.

Financial year 2020:

Over the fiscal year period, 78% of investments were made in the CGU “CHC”.

The drop in gross value is primarily due to the decision to freeze the “ELLIS” and “UPSI” projects in the “CHC” domain: 8,666 thousand euros for ELLIS (net book value of 7,935 thousand euros) and 419 thousand euros for UPSI (net book value of 415 thousand euros).

Financial year 2021:

Investments during the period mainly concern the CGU “CHC” for 89%.

2.3 Property, plant and equipment

The following is a breakdown of tangible assets:

Gross value<br><br><br>in thousands of euros	Fixtures and<br>fittings		Plant,<br>machinery and<br>equipment		Other tangible<br>fixed assets		Total
December 31, 2019	****	1 375	****	2 356	****	1 386	****	5 117
Acquisitions				100		46		145
Sales / Scrapping				-14		-41		-54
Redeployment				20		32		52
Exchange differences				-6		-5		-12
December 31, 2020	****	1 375	****	2 456	****	1 418	****	5 249
Acquisitions				395		33		427
Sales / Scrapping				-4		-1		-5
Redeployment								0
Exchange differences		1		7		6		15
December 31, 2021	****	1 376	****	2 854	****	1 456	****	5 686

Amortization<br><br><br>in thousands of euros	Fixtures and<br>fittings		Plant, machinery<br>and equipment		Other tangible<br>fixed assets		Total
December 31, 2019	****	-181	****	-702	****	-341	****	-1 224
Allowances		-156		-273		-161		-589
Write-back on						36		36
Redeployment				-20		-32		-52
Exchange differences				5		2		7
December 31, 2020	****	-336	****	-990	****	-496	****	-1 822
Allowances		-155		-280		-163		-598
disposals/scrapping				4		1		5
Redeployment								0
Exchange differences		-1		-6		-4		-11
December 31, 2021	****	-492	****	-1 272	****	-661	****	-2 426
Net value<br><br><br>in thousands of euros	Fixtures and<br>fittings		Plant, machinery<br>and equipment		Other tangible<br>fixed assets		Total
---	---	---	---	---	---	---	---	---
December 31, 2019		1 194		1 654		1 045	****	3 893
December 31, 2020		1 039		1 466		922	****	3 427
December 31, 2021		884		1 582		795	****	3 261

During the two years, no signs of deterioration were found.

2.4 Rights of Use associated with Leases

The following is a breakdown of the rights of use associated with leases:

Gross value<br><br><br>in thousands of euros	Real estate<br>property		Others		Total
December 31, 2019	****	12 222	****	1 549	****	13 771
Initial application of IFRS 16		146		719		865
Acquisitions		20				20
Sales / Scrapping		-44		-149		-193
Redeployment						0
Exchange differences		-62		-0		-62
December 31, 2020	****	12 282	****	2 119	****	14 401
Acquisitions		566		575		1 141
Sales / Scrapping		-58		-404		-462
Redeployment						0
Exchange differences		70				70
December 31, 2021	****	12 860	****	2 290	****	15 150

Amortization<br><br><br>in thousands of euros	Real estate<br>property		Others		Total
December 31, 2019	****	-1 675	****	-622	****	-2 297
Allowances		-1 823		-597		-2 419
Opening adjustment		-18		1		-17
Write-back on disposals/scrapping		44		137		181
Redeployment						0
Exchange differences		24		1		25
December 31, 2020	****	-3 448	****	-1 080	****	-4 528
Allowances		-1 772		-607		-2 379
Write-back on disposals/scrapping		47		404		451
Redeployment						0
Exchange differences		-39				-39
December 31, 2021	****	-5 212	****	-1 283	****	-6 496
Net value<br><br><br>in thousands of euros	Real estate<br>property		Others		Total
December 31, 2019		10 547		927	****	11 474
December 31, 2020		8 834		1 039	****	9 873
December 31, 2021		7 648		1 006	****	8 654

2.5 Current and non-current financialassets

The following is a breakdown of current and non-current financial assets:

	December 31, 2021				December 31, 2020
in thousands of euros	Non-current<br>financial<br>assets		Current<br>financial<br>assets		Non-current<br>financial assets		Current<br>financial<br>assets
Deposits and guarantees		688				485
Others		85				90
Total	****	773	****	0	****	575	****	0

2.6 Inventories

The breakdown of Inventories is as follows:

in thousands of euros	December 31, 2021		December 31, 2020
Inventories of raw materials and active ingredients		5 041		4 772
Inventories of intermediate and finished products		6 074		1 081
Merchandise inventories		13 469		26 663
Gross value	****	24 585	****	32 516
Provisions for impairment		-1 859		-974
Net value	****	22 726	****	31 543

Financial year 2020:

The increase in the gross value of inventories is mostly attributable to a drop in sales as a result of the health crisis, which has resulted in an increase in stocks.

Other factors support the increase in inventory:

•	Compeed’s market penetration in the United States is lower than projected;
•	Compeed packaging was modified in Germany, and there remained stocks of the old packaging as of December 31,<br>2020;
---	---
•	At the start of 2020, the Compeed Cold Sore product was reintroduced to the market;
---	---
•	The Compeed Cold Sore product was reintroduced to the market at the start of 2020; due to delivery delays,<br>products in the “Endocrinology” and “Women’s Health” sectors are back over the safety stock level.
---	---

The inventory impairment applies to both Goods and Finished Goods stocks (mainly 290 thousand euros for Mederma, 371 thousand euros for Compeed, 126 thousand euros for Metopirone and 93 thousand euros for ella).

Financial year 2021:

Improved sales performance, as well as better inventory control and procurement, are primarily responsible for the decrease in the gross value of stocks. As a result, inventory is reduced.

Changes in inventory schedule:

in thousands of euros	Net stock as<br>at 31 December<br>2020		Variations in<br>stock		Net final stock as<br>at 31 December<br>2021
Raw materials and active ingredients		4 772		268		5 041
Stocks of intermediate products		930		1 399		2 329
Stocks of finished products and goods purchased		25 841		-10 484		15 357
Total	****	31 543	****	-8 817	****	22 726

2.7 Trade and other receivables

This item can be analyzed as follows:

in thousands of euros	December 31, 2021		December 31, 2020
Accounts receivable		55 003		51 322
Provisions for impairment		-1 404		-2 898
Net value	****	53 599	****	48 423

Financial year 2020:

The change in trade receivables of - 28,202 thousand euros is mainly attributable to the decrease in Compeed and ella sales.

The decrease in impairment (- 414 thousand euros) results mainly from:

•	The reversal of the impairment provision for HRA Rare Diseases customers who are handled by our custodian CSP (-<br>369 thousand euros);
•	The settlement of invoices received from the Tunisian Pharmacie Centrale from 2016 to 2017 (- 348 thousand<br>euros);
---	---
•	Orient UPO has received payment of invoices for 2019 from its Lebanese partner Union Pharma (- 332 thousand euros);
---	---
•	As a result of the Esmya dispute with Taiwanese partner Orient Europharma (+ 126 thousand euros), an<br>impairment loss was incurred;
---	---
•	As a result of the dispute with the partner Brands 2 Africa (+ 128 thousand euros), an impairment was<br>determined;
---	---
•	An impairment loss was recorded as a result of the late payment of invoices by the partner Brand Solutions<br>Australia (+ 389 thousand euros) at the end of 2019 and February 2020.
---	---

Financial year 2021:

The increase in sales is primarily responsible for the change in trade receivables of + 3,681 thousand euros.

It should be highlighted that the average collection period for receivables has consistently decreased, owing mostly to the HRA Pharma Iberia entity, but also to late payment of invoices from the rare diseases sector’s distributor in the United States.

Trade receivables must be paid within a year.

2.8 **** Other receivables

Other receivables can be broken down as follows:

in thousands of euros	December 31, 2021		December 31, 2020
Tax receivable		7 233		5 842
Other tax receivables		2 972		274
VAT receivables		9 213		11 479
Suppliers receivables		1 780		1 976
Receivables on disposal of fixed assets		—		—
Other operating receivables		115		88
Net value	****	21 313	****	19 659

Financial year 2020:

The VAT adjustment made in 2020 on invoicing for 2018 and 2019 between Laboratoire HRA Pharma and HRA Pharma Deutschland (5,050 thousand euros) and Laboratoire HRA Pharma and HRA Pharma UK (+8,130 thousand euros) is primarily responsible for the change in the VAT item of +8,130 thousand euros (3,142 thousand euros).

Financial year 2021:

The change in “Other tax receivables” is due to a €2 million credit position following the URSSAF’s audit of HRA Pharma France’s pharmaceutical taxes.

2.9 Cash and cash equivalents

In thousands of euros	December 31, 2021		December 31, 2020
Cash		40 573		18 157
Cash in vault		2		6
Net value	****	40 575	****	18 163

Cash and cash equivalents include cash on hand.

Financial year 2020:

We recorded an increase in our cash position of 1.9 M€; this can be explained by the following events:

•	sharp decline in activity (-47% on 2020 EBITDA vs. 2019) offset by good<br>management of our WCR (+€12.7m on 2020);
•	20 million: increase in our senior debt to guarantee liquidity following the situation generated by Covid-19;
---	---
•	8 million: new loan from BPI;
---	---
•	35 million: repayment of the Revolving Credit Facility (0 RCF debt to date).
---	---

Financial year 2021:

Timing of payment has improved for the Group, with receivables collection periods falling from 90 to 78 days.

2.10 Share capital

Astorg and its co-investors Goldman Sachs Merchant Banking Division control the bulk of the Company’s capital through HERA Lux, the majority shareholder; as of April 1, 2021, the shareholders have changed ownership of their investment in the HRA Pharma Group. Since April 1, 2021, a new holding company has been established in Luxembourg, and the HERA shares have been owned by HRA Newco, which is held by HRA Lux.

This transfer solely affects HERA’s ordinary and preference shares, not the convertible bonds, which remain in the hands of HERA Lux.

The following is the breakdown of the share capital:

Breakdown of share capital
December 31, 2019	3 815 756	32 046 612	35 862 368	1	35 862 368	€
December 31, 2020	3 815 756	32 046 612	35 862 368	1	35 862 368	€
December 31, 2021	3 815 756	32 046 612	35 862 368	1	35 862 368	€

All values are in Euros.

Ordinary shares

The ordinary shares are classified as equity instruments.

Preferential shares

Preferential shares are classified as equity instruments.

Preferential shares entitle their holders to a cumulative preferential dividend subject to the existence of distributable cash and the decision of the Company’s general meeting to distribute preferential dividends.

2.10.1 Share-based payments - Stock options and freeshares

As of December 31, 2021, the instruments issued are as follows:

Type of instrument	Free Ordinary<br>Shares		Free Preferential<br>Shares		Stock Option		Total
Number		16 912		269 442		—		286 354

Stock-based compensation instruments are recognized as employee benefits expense, with a corresponding entry to equity, at the fair value of the instruments awarded at the grant date, in accordance with IFRS 2. The cost of this investment is spread out throughout the vesting period.

No movement has been recorded in 2021 on these plans.

Valuation of share-based payment transactions to be integrated:

The Black-Scholes option pricing model is used to determine the fair value of stock options issued to employees.

The share price on the valuation date, the instrument’s exercise price, estimated volatility, the weighted average life of the instruments, expected dividends, and the risk-free interest rate are all inputs to the valuation (based on government bonds). The transaction’s service and performance conditions, which are not market factors, are not taken into account for determining fair value.

2.10.2 Non-controlling interests

In April 2020, Laboratoire HRA Pharma signed an agreement with Profex, a Chinese partner, for the development of Compeed and Mederma product marketing in China. According to these agreements, Profex owns 33% of HRA Pharma Hong Kong’s capital, while Laboratoire HRA Pharma owns the remaining 67%.

Profex and Laboratoire HRA Pharma have a shareholders’ agreement that gives Laboratoire HRA Pharma a call option on Profex’s shares. This call option can be exercised in a variety of circumstances, including a change of control of the Company, and at different valuations depending on the results of the activities in China and when the option is executed.

Profex also has the right to sell its shares to Laboratoire HRA Pharma in exceptional circumstances, such as if Laboratoire HRA is intentionally in breach of its own contractual commitments. The price at which this right can be exercised varies based on the outcomes of relevant operations in China and the date on which this right is exercised, if at all.

In light of the foregoing, the Group concludes Profex’s entitlement to sell its shares to Laboratoire HRA Pharma is contingent on factors that are wholly within the Group’s control. At the balance sheet date, the Group had not recognized any financial liability related to Profex’s right to sell its shares to Laboratoire HRA Pharma.

2.11 Provisions for employee benefits

Changes in provisions for employee benefits over the two financial periods were as follows:

In thousands of euros	Provisions for staff benefits
December 31, 2019	****	1 914
Expenses		507
Reclassification
Unused reversals		-154
December 31, 2020	****	2 266
Expenses		311
Reclassification
Unused reversals		-137
December 31, 2021	****	2 441

The item Provisions for employee benefits breaks down as follows:

In thousands of euros	December 31, 2021		December 31, 2020
France		2 441		2 266
Total	****	2 441	****	2 266

Employee benefits provisions concern the French companies Héra S.A.S., Laboratoire HRA Pharma S.A.S., HRA Pharma France S.A.S., and HRA Pharma Rare Diseases S.A.S. They primarily pertain to provisions for retirement indemnities for Group employees.

At this time, no funds have been set up to satisfy these obligations.

The following are the primary actuarial assumptions that were used:

France
Discount rate	0,80%	0,35%
Gross average growth rate of payroll inflation	3,00%	1,75%
Average remaining working life of employees (in years)	23,6	23,8
Employer’s social security rates	45%	45%

The present value of the commitment is broken down as follows:

In thousands of euros	December 31, 2021		December 31, 2020
Total current value of liabilities at the beginning of the year	****	2 266	****	1 914
Current service cost		407		556
Interest expense		10		12
Actuarial gains and losses (Change in method - Equity)		-397		—
Actuarial gains and losses		154		-216
Total current value of commitments atyear-end	****	2 441	****	2 266

The cost over each financial year can be broken down as follows:

In thousands of euros	December 31, 2021		December 31, 2020
Current service cost		407		556
Interest expense		10		12
Cost for the period	****	418	****	568

No social security contributions have been paid for the years 2020 and 2021.

2.12 Provisions

Changes in provisions during the two years were as follows:

In thousands of euros	Provisions for contingencies
December 31, 2019	****	1 434
Expenses
Reclassification
Reversals used		-540
Unused reversals		-559
December 31, 2020	****	335
Dotations		781
Reclassement
Reversals used		-212
Unused reversals		-83
December 31, 2021	****	821

Financial year 2020:

A reversal of the provision in the amount of 648 thousand euros was recorded following the resolution of the disagreement with Perrigo, the Portuguese distributor; the agreement with the Tax Authorities on the tax audit resulted in the reversal of the provision created in 2019 in 2020. (383 thousand euros).

Financial year 2021:

For the research tax credit, a provision of 559,000 euros has been made for tax risks related to Laboratoire HRA Pharma’s tax audit for the years 2014 to 2016.

A provision for litigation with our partner SANOVA has also been recognized for the year 2021 in the amount of 150 thousand euros.

2.12.1 Provisions for tax liabilities

Several audits of some Group firms’ finances took place in 2021 or proceeded throughout the year:

•	Firstly, two audits were carried out by URSSAF on the social security charges of Hera and HRA Pharma Rare<br>Diseases. These two audits resulted in adjustments of less than 50 thousand euros.
•	Laboratoire HRA Pharma underwent a tax examination, which resulted in a correction that had no impact on the<br>Group’s consolidated finances.
---	---
•	A URSSAF audit of the pharmaceutical taxes owed by HRA Pharma France results in a repayment of<br>2,360 thousand euros in favor of the company.
---	---
•	Laboratoire HRA Pharma has been in a dispute with the French tax authorities since May 2017 as a result of an<br>audit covering the period from January 1, 2014 to March 31, 2016. The corporation was contesting an adjustment of €1,924 thousand and €1,059 thousand, respectively, relating to the imposition of withholding tax on sums<br>received as salary for two employees and on the research tax credit.
---	---

On April 10, 2020, HSBC bank issued a 1,924,000 deposit for direct taxes to guarantee tax payment.

The corporation is still in litigation with the Administrative Court about withholding tax, but the French tax authorities have agreed to a significant reduction in the amount claimed for research tax credit to 559 thousand euros after a hearing before the research tax credit committee. The company has agreed to accept this adjustment because it expects to recover more than 330 thousand euros over the fiscal year from April 1, 2016 to December 31, 2016.

•	An audit of HRA Pharma Iberia’s general accounting for the years 2017, 2018, 2019, and 2020 is still<br>underway.

The Spanish government has not made any claims as of today.

2.13 Borrowings and financial debts

The breakdown between current and non-current financial liabilities is shown below:

			December 31, 2021								December 31, 2020
In thousands of euros	Portion due<br>within one year		Portion due<br>between 1 and<br>5 years		Portion due<br>after 5 years		Total		Portion due<br>within one year		Portion due<br>between 1 and<br>5 years		Portion due<br>after 5 years		Total
Convertible bonds and interest on convertible bonds				303 226		53 177	****	356 403						323 263	****	323 263
Bonds and interest on bonds				486 276			****	486 276				484 129			****	484 129
Other bank loans				13			****	13				8 000			****	8 000
Revolving credit							****	0							****	0
Accrued interest on other bank loans							****	0		21					****	21
Loans and financial debts	****	0	****	789 515	****	53 177	****	842 692	****	21	****	492 129	****	323 263	****	815 414

Convertible obligations

Proceeds from the convertible bond issue (244,232,178 bonds with a par value of €1 issued on February 18, 2016 and 99,564,440 bonds with a par value of €1 issued on September 20, 2017) amounted to €343.8 million.

The convertible bonds subscribed in 2016 and 2017, were partially redeemed in fiscal 2019, for €52.6 million and €60.4 million respectively.

At the end of the two fiscal years, the amounts of these convertible bonds were €177.1 million and €35.8 million respectively. Interest on convertible bonds are capitalized and amount to €143.5 million.

Bonds

This item corresponds to four bonds: two issued on September 20, 2017 for a term of 7 years and bearing interest at a 3-month Euribor + margin of 3.5%, for amounts net of transaction costs of €80.7 million and €301 million, a third issued on March 14, 2018 for an amount net of transaction costs of €30.8 million, and a fourth issued on June 27, 2019 for a term of 6 years and 1 month and bearing interest at a 3-month Euribor + margin of 3.5%, for an amount net of transaction costs of €45.7 million.

On March 26, 2020, an additional loan of €20 million was secured for a term of 4 years and 6 months, with interest calculated at 3-month Euribor + 3.5% margin for a net value of €19.6 million.

Various hedging contracts have been drawn up by the company to cover the 3-month Euribor until December 2022.

Covenants are in place for these loans.

These obligations were fulfilled on December 31, 2021. For the next 12 months, the company expects to fulfill them.

Hedging Instruments

The Company and HRA Pharma have entered into interest rate cap agreements with Société Générale and Goldman Sachs to hedge against rising interest rates on the interest flows linked with its variable rate financing.

Portions of the Goldman Sachs hedges will expire at the end of June 2020 and again in June 2021.

Credit Revolving

In 2017, the Group established a €40 million revolving credit facility, which was increased to €60 million in June 2019; since then, the Group has made various withdrawals and repayments.

The Group had no withdrawals on this credit at the end of the two fiscal years and a financing reserve of €60 million.

Other loans

On September 28, 2020, a new loan (Club BPI) for €8 million was signed with the partner BPI for a three-year term. The conditions are as follows: the interest rate is 3-month Euribor+1.1%, plus a commitment fee of 0.95%.

This loan was fully repaid and the contract terminated on December 31, 2021 without penalty.

Currency hedging

HRA Pharma has also hedged against potential foreign exchange risks by entering into forward exchange contracts on the GBP and USD currencies with HSBC and Société Générale banks.

2.13.1 Changes in financial liabilities

In thousands of euros	Convertible<br>bonds		Bond issues		Borrowing from<br>credit<br>institutions		Interest<br>accrued on<br>borrowing		Total
December 31, 2019	****	208 858	****	462 429	****	35 000	****	84 377	****	790 664
New loans				20 000		8 000		28 213		56 213
Changes in fair value		1 838		1 700						3 538
Reclassification										0
Repayments						-35 000				-35 000
December 31, 2020	****	210 695	****	484 129	****	8 000	****	112 590	****	815 414
New loans						10 000		30 923		40 923
Changes in fair value		2 230		2 147						4 377
Reclassification										0
Repayments						-18 000		-22		-18 022
December 31, 2021	****	212 925	****	486 276	****	0	****	143 491	****	842 692

The initial terms of the loans contracted with credit institutions are presented below:

Bank	Date of signature<br>of the loan<br>agreement	Nominal amount<br>(in €)	Term	Reference rate
Convertible Bonds	févr-16	244 232 178	10 years	9%
Convertible Bonds	sept-17	99 564 440	10 years	9%
Senior Bond	sept-17	83 180 811	7 years	Euribor with a margin of 3.5%
Senior Bond	sept-17	310 819 189	7 years	Euribor with a margin of 3.5%.
Senior Bond	mars-18	31000 000	78 months	Euribor with a margin of 3.5%.
Second Lien	juin-19	48 000 000	73 months	Euribor with a margin of 8,25%
Senior Bond	mars-20	20 000 000	54 months	Euribor with a margin of 3,5%
BPI Club Loan	sept-20	8 000 000	36 months	Euribor with a margin of 1,1%

Loans can be repaid early without penalty at the company’s choice; this was the case with the €8 million BPI loan, which was repaid early on December 15, 2021.

2.14 Lease liabilities

The breakdown between current and non-current rental liabilities is as follows:

	December 31, 2021								December 31, 2020
In thousands of euros	Portion due<br>within one year		Portion due<br>between 1 and<br>5 years		Portion due<br>after 5 years		Total		Portion due<br>within one year		Portion due<br>between 1 and<br>5 years		Portion due<br>after 5 years		Total
Leasehold debts - Real estate		1 827		5 429		1 441	****	8 697		1 772		5 512		2 730	****	10 014
Leasehold debts - Movable property		514		489			****	1 002		524		517		0	****	1 040
Leasehold debts	****	2 341	****	5 917	****	1 441	****	9 699	****	2 296	****	6 029	****	2 730	****	11 055

Low-value asset contracts and short-term contracts have no significant costs.

2.15 Other debts

	December 31, 2021						December 31, 2020
in thousands of euros	Current portion		Non-current<br>portion		Total		Current portion		Non-current<br>portion		Total
Liabilities on fixed assets		3 298				3 298		—				0
Payables to employees		8 920				8 920		5 529				5 529
Social security debts		1 324				1 324		1 239				1 239
Current tax liability		147				147		575				575
Other tax liabilities		463				463		696				696
Collected VAT		4 266				4 266		4 610				4 610
Customers - Credit notes to be issued		10 197				10 197		6 372				6 372
Other liabilities		400				400		413				413
Total	****	29 015	****	0	****	29 015	****	19 434	****	0	****	19 434

The accrual for paid vacations and bonuses, as well as the accompanying social security costs, profit-sharing, and donations owed to various social organizations, are all included in the social security liabilities.

Financial year 2020:

Credit notes to be issued on French companies include the partner Céolia for the product Metopirone Japan (927 thousand euros), the partner Takeda for the products Norlevo and ella Sweden, Denmark and Norway (68 thousand euros), the product Ketoconazole (227 thousand euros) and for the product Compeed (547 thousand euros). Credit notes to be issued on overseas subsidiaries mostly concern the goods ella (1,905 thousand euros, including 1,579 thousand euros in the United States), Mederma US (1,367 thousand euros), and Compeed (827 thousand euros of which 726 thousand euros in the UK).

During the first half of 2019, an agreement was reached with the partner Preglem (Gédéon Richter Group) that resulted in the latter paying 3,561 thousand euros in royalties on previous years’ sales made by Preglem, particularly in France, the amount of which was in dispute with the French government. Preglem notified us that the dispute had been settled with a result in favor of the French State and asked us to issue a credit note of 2,468 thousand euros as a reduction of the amount received following the above-mentioned agreement. This credit note was issued in the first half of 2020, which explains in part the significant decrease in the item “Trade accounts receivable - Credit notes”.

Following Esmya’s exit from the market, it was deemed that the €7 million residual debt, which represented the last component of the royalty for the license of Preglem’s know-how, could no longer be offset by milestone payments.

As a result, the €7 million debt was eliminated after Preglem-Richter confirmed the foregoing in a letter dated November 17, 2020.

Financial year 2021:

The increase in “Customers - Credit notes to be issued” is due to a change in the classification of the rebates on sales from “Trade accounts payable” to this item.

2.16 Deferred income

	December 31, 2021						December 31, 2020
in thousands of euros	Current<br>portion		Non-current<br>portion		Total		Current<br>portion		Non-current<br>portion		Total
Deferred income / Downpayments		119		565		684		106		462		568
Deferred income relating to the research tax credit for capitalized expenses		18		101		119		85		163		248
Other						0						0
Total deferred income	****	137	****	666	****	803	****	191	****	625	****	816

Financial year 2020:

Advance payments received by the Group in relation of license agreements, but whose recognition is deferred, totaled 568 thousand euros as of December 31, 2020.

Financial year 2021:

Advance payments received by the Group in relation of license agreements, but whose recognition is deferred, totaled 684 thousand euros as of December 31, 2021.

in thousands of euros
December 31, 2019	4 653		-3 909	744
December 31, 2020	744		-176	568
December 31, 2021	568	273	-158	684

Financial year 2020:

As of December 31, 2020, no payments under license agreements were received as revenue.

As of December 31, 2020, the amount of “downpayments” recorded as revenue is 176 thousand euros.

Financial year 2021:

A total of 273 thousand euro payments has been received under license agreements signed in 2021.

At December 31, 2021, the amount of “downpayments” recorded as revenue was 158 thousand euros.

2.17 Fair value table

The following table presents the book values and fair values of financial assets and liabilities and their level in the fair value hierarchy:


Financial assets measured at amortized cost
Trade and other receivables	53 599	53 599	53 599
Financial assets measured at fair value
Financial assets	782	782	782
Derivative asset instruments	63	63	63
Cash and cash equivalents	40 575	40 575	40 575
Financial liabilities measured at amortized cost
Borrowings and financial debts	842 692	963 284	963 284
Financial liabilities measured at fair value
Derivative liability instruments	952	952	952

3 NOTES TO THE STATEMENT OF PROFIT AND LOSS

3.1 Revenue from ordinary activities

The breakdown of revenues from ordinary activities between the two areas is as follows:

	December 31, 2021								December 31, 2020
In thousands of euros	CHC		RX		Services		Total		CHC		RX		Services		Total
Turnover		212 127		43 630		166		255 923		156 852		44 279		411		201 542
Royalties and license fees		826		-221				605		545		839				1 384
Total Revenue from Ordinary Activities	****	212 954	****	43 409	****	166	****	256 529	****	157 397	****	45 118	****	411	****	202 926

Financial year 2020:

The Group’s revenue from ordinary activities, which is made up 99% of pharmaceutical items, declined by 20% in fiscal year 2020 as a result of the current health crisis.

Compeed (- 39%) and ella (- 28%), both from the Consumer Healthcare segment, were the most impacted.

On the other hand, the Metopirone product, in the segment “RX” experienced substantial growth (+ 33%), driven primarily by the North America zone (+1,446 thousand euros, or + 59%) and the Asia zone (+ 445 thousand euros, or + 18%).

Financial year 2021:

Despite a context still affected by the crisis linked to the Covid-19 pandemic, the Group’s revenue from ordinary activities, 99.8% of which is made up of pharmaceutical products, increased by 27% in the 2021 financial year.

We saw a rebound in activity, with sales of Compeed products up 48.2%, the “Women Health” section up 23.5%, and Mederma products up 25.7%.

While Covid-19 had no effect on the “rare diseases” section in 2020, it did in 2021, when many patients were unable to enter hospitals due to the priority given to Covid-19.

3.2 Operating expenses

Financial year 2020:

The “Covid-19” global pandemic had a huge impact on the company.

The Group has reduced its variable costs, particularly promotional expenses, in order to mitigate the impact of Covid-19 on its profitability.

The significance of “research and development costs” has stayed unchanged.

The costs of management and support services, as well as all Group infrastructure costs, are included in general and administrative expenses.

Financial year 2021:

The global “Covid-19” pandemic has had an impact on the business. The Group has attempted to mitigate the impact of Covid-19 on its profitability by slashing variable costs, particularly promotional costs.

The Group’s operating expenses (excluding “Other Operating Expenses and Revenues”) to Ordinary Revenue ratio has decreased slightly (47.1% vs. 49.3%), owing to lower “Marketing and sales expenses” (30.3% vs. 31.1%) and “Research and development expenses” (3.5% vs. 4.6%).

While significant promotional expenses were spent, such as those for the launch of Hana in the United Kingdom or the investment in TV commercials in the United States for Compeed and Méderma, the “Marketing and sales expenses” item has a ratio of 30.3% compared to the Ordinary Revenue, i.e. -2.5% compared to December 2020.

The costs of management and support services, as well as all of the Group’s infrastructure costs, are included in general and administrative expenses.

As a result of various tax audits, there was an increase in consultation fees.

3.2.1 Staff costs

The personnel expenses recorded in the income statement include the following items:

In thousands of euros	December 31, 2021		December 31, 2020
Wages and salaries		21 902		20 864
Social security costs		10 264		9 691
Social benefits (bonuses, annual leave, benefits....)		5 122		4 406
Retirement provision		496		556
Profit-sharing - Incentives		1 225		116
Total	****	39 009	****	35 634

Bonuses for 2021 were accrued on a 100% basis, opposed to 50% in 2020.

The income statement breaks down these expenses as follows:

In thousands of euros	December 31, 2021		December 31, 2020
Cost of sales		3 876		3 671
Marketing and sales costs		13 206		11 443
Administrative costs		17 213		14 942
Research and development costs		4 657		4 224
Other operating costs		57		338
Non-routine costs (*)		1		1 016
Total	****	39 009	****	35 634
(*)	In fiscal year 2020, we find mainly salaries + employer’s contributions (159 thousand euros), bonuses<br>+ employer’s contributions (475 thousand euros) and vacation pay + employer’s contributions (336 thousand euros).
---	---

3.2.2 Headcount

The Group had 250 employees at December 31, 2021, compared with 240 at December 31, 2020. The number of employees at the end of the years is broken down as follows:

	December 31, 2021		December 31, 2020
Cost of sales		30		31
Marketing and selling expenses		89		78
Administrative costs		97		97
Research and development costs		33		34
Total	****	250	****	240

It should be mentioned that a new profit-sharing agreement for the period of January 1, 2020 to December 31, 2022 was signed on July 27, 2020 at the UES level, which includes Laboratoire HRA Pharma, HRA Pharma France, and HRA Pharma Rare Diseases.

On July 28, 2020, a new agreement was reached for Héra, also for a three-year period.

3.3 Other operating income andexpenses

Financial year 2020:

Other operating income and expenses (- €9.6 million) correspond mainly to:

Operating income from “commercial activities”:

•	taxes (totaling €1.2 million) (including the Safeguard Clause Tax, the Social Solidarity Contribution, the<br>Tax on the Promotion of Medical Devices, and the New Contribution Tax on Sales);
•	realized foreign exchange gains and losses on trade receivables and payables (expense of €0.7 million) and<br>unrealized foreign exchange gains and losses (expense of €0.6 million);
---	---
•	Following the signing of a contract with SWIXX, the Compeed product distributor in Russia,<br>€1.25 million will be paid to them (50%in December 2020 and 50% in July 2021) to help their advertising effort and, following Covid-19, to destroy any obsolete stock they may have.<br>
---	---

Operating income related to “general expenses”:

•	depreciation of leases due to the application of IFRS 16 (amount of €2.4 million);
•	taxes (including the Territorial Economic Contribution, i.e. a total expense of €1.3 million).<br>
---	---

Financial year 2021:

Other operating income and expenses (- €0,3 million) correspond mainly to:

Operating income from “commercial activities”:

•	taxes (totaling €0.5 million) (including the Safeguard Clause Tax, the Social Solidarity Contribution, the<br>Tax on the Promotion of Medical Devices, and the New Contribution Tax on Sales);
•	realized foreign exchange gains and losses on trade receivables and payables (revenue of €0.5 million) and<br>unrealized foreign exchange gains and losses (revenue of €0.3 million);
---	---
•	Adjustments to taxes on the promotion of medical devices paid from 2018 to 2020 (total revenue of €2.4<br>million).
---	---

Operating income related to “general expenses”:

•	depreciation of leases due to the application of IFRS 16 (amount of €2.4 million);
•	Government assistance related to the impact of Covid-19 on the German<br>subsidiary’s business resulted in a 545 thousand euros profit;
---	---
•	taxes (including the Territorial Economic Contribution, i.e. a total expense of €0.8 million).<br>
---	---

3.4 Other income and expenses

Financial year 2020:

Other income and expenses (-€16.3 million) primarily consist of:

•	restructuring costs (-€2.3 million);
•	cancellation of Preglem debt following the withdrawal of Esmya from the market (+€7 million);<br>
---	---
•	amortization of revalued intangible assets (€3.8 million);
---	---
•	depreciation of Esmya assets (€1.2 million);
---	---
•	disposal of Ellis fixed assets (-€7.9 million);
---	---
•	disposal of UPSI fixed assets (-€0.4 million);
---	---
•	compensation paid to the Greek partner Arriani for breach of contract (€1.5 million);
---	---
•	costs related to the Harvey operation (€0.5 million);
---	---
•	costs generated by the integration of the Compeed product (€1.2 million);
---	---
•	costs generated by the integration of the Mederma product (€0.7 million);
---	---
•	provision for customer impairment on Downpayment Esmya (€0.75 million);
---	---
•	disposal of revalued Mederma inventories (€0.9 million).
---	---

Financial year 2021:

Other income and expenses (-€4.6 million) primarily consist of:

•	amortization of intangible assets acquired as part of a business combination (-€1.2 million);<br>
•	costs related to the PERRIGO transaction (€-1.2 million)<br>
---	---
•	disposal of revalued Mederma inventories (-€0.4 million);
---	---
•	payment fraud of the Spanish supplier UM (-€0.5 million);
---	---

•	provisions for litigation (-€0.7 million);
•	provision for tax risk (-€0.5 million).
---	---

3.5 Financial result

Financial revenue and expenses can be broken down as shown in the table below:

In thousands of euros	December 31, 2021		December 31, 2020
Foreign exchange losses		-1 879		-1 101
Interest expense on loans		-55 927		-53 395
Financial expenses related to leases		-166		-194
Currency hedging		-1 210		—
Other financial expenses		-378		-498
Total financial expenses	****	-59 559	****	-55 188
Income from financial assets and cash investments		2		—
Foreign exchange gains		2 022		787
Disposal of financial liabilities related to leases		11		12
Currency hedging		—		446
Other financial revenues		170		6
Total Financial Revenues	****	2 205	****	1 251
Total financial income	****	-57 354	****	-53 937

Foreign exchange gains and losses relate to financial transactions.

Financial year 2020:

Interest on convertible bonds (€30.1 million), bonds (€21.8 million), and the revolving credit facility (€1.4 million) make up the bulk of net financial income.

Financial year 2021:

Net financial income consists mainly of interest on convertible bonds (€33.1 million), on bonds (€22.0 million) and on the revolving credit facility (€0.7 million).

3.6 Income tax

3.6.1 Breakdown of tax expense

In thousands of euros	December 31, 2021		31 décembre 2020
Taxes payable		-250		-303
Deferred taxes		-2 622		6 741
Total	****	-2 872	****	6 439

Under current French regulations, tax losses can be carried forward indefinitely.

3.6.2 Reconciliation between actual and notional tax

In thousands of euros	December 31, 2021			31 décembre 2020
Pre-tax income of consolidated companies		-221			-33 648
Income tax rate applicable to the parent company		27,37	%		28,92	%
Theoretical tax (expense)/ income	****	60	****	****	9 731	****
Tax rate discrepancies between countries		-3 036			-4 093
Ongoing variations		335			47
Non-taxable tax credits		603			566
Recognition of tax loss carryforwards		-60			232
Non-recognition of losses carried forward		-240			-11
Other		-535			-33
Actual income tax (expense)/income	****	-2 872	****	****	6 439	****
Effective tax rate	****	-1300	%	****	19,1	%

3.6.3 Breakdown of deferred tax assets and liabilities

In thousands of euros	December 31, 2021		December 31, 2020
Deferred tax assets:
Provisions for employee benefits		631		585
Inventory margins		7 030		11 578
Deferred revenue		178		146
Deferred tax assets/losses carried forward		8 417		8 476
Tax / accounting variances		668		203
Exclusivity rights related to the Compeed acquisition		13 103		13 103
Restatement of fees related to the acquisition of Lysodren		90		90
Restatement of fees related to the Méderma acquisition		102		102
Valuation of CAPs - Interest rate hedging		43		191
Valuation of CAPs - Currency hedging		260		—
Lease agreements		97		85
Various		—		18
Total deferred tax assets in the balance sheet	****	30 618	****	34 577
Deferred tax liabilities:
Lease agreements		-4		-1
PPA (Purchase Price Allocation) - Rebranding Compeed		-92 902		-92 902
PPA - Revaluation of fixed assets		-958		-1 297
PPA - Revaluation of Lysodren rights		-9 276		-9 276
PPA - Revaluation of Méderma brands		-20 503		-20 503
PPA - Revaluation of Méderma stocks		—		-136
Discounting of the Convertible Bonds		-3 689		-4 299
Bond issue - effective interest rate calculation		-175		-157
Valuation of CAPs - Interest rate hedging		—		-11
Valuation of CAPs - Currency hedging		—		-75
Total deferred tax liabilities in the balance sheet - Published	****	-127 508	****	-128 658
Net deferred taxes	****	-96 889	****	-94 081

3.7 Earnings per share

3.7.1 Basic earnings per share

The result attributable to equity holders and a weighted average number of shares outstanding over the two years are used to compute basic earnings per share.


Net income available to shareholders (in thousands of euros)	-3 166	-27 241
Weighted average number of shares issued during	35 862 368	35 862 368
Earnings per share	-0,09	-0,76

3.7.2 Diluted earnings per share

Diluted earnings per share are calculated on the basis of earnings attributable to equity holders and a weighted average number of ordinary shares outstanding, adjusted for the effects of all potential dilutive shares.

Instruments giving deferred rights to capital (Free Shares, SO or BSPCE) are considered to be anti-dilutive as they result in an increase in earnings per share from continuing operations. Thus, the diluted earnings per share are identical to the basic earnings per share.

4 RELATED PARTIES

Transactions with key executives, directors, supervisory board members and strategic committee members:

Financial year 2020:

In thousands of euros	Related companies
Agreements authorized by the company’s General Meeting of May 24, 2012
Contribution to the HRA Pharma Foundation		150
Scientific Board	André Ulmann, Chairman of the Strategic Committee of the company and Director of Cemag	100
Agreements authorized by the general meeting of the company on July 1, 2016
Strategic advisory services to the Supervisory Board of Hera	David Colpman, Member of the Supervisory Board and Director of Consulting Colpman Ltd	101

Financial year 2021:

In thousands of euros	Related companies
Agreements authorized by the company’s General Meeting of May 24, 2012
Contribution to the HRA Pharma Foundation		30
Scientific Board	André Ulmann, Chairman of the Strategic Committee of the company and Director of Cemag	100
Agreements authorized by the general meeting of the company on July 1, 2016
Strategic advisory services to the Supervisory Board of Hera	David Colpman, Member of the Supervisory Board and Director of Consulting Colpman Ltd	25

Total remuneration of Hera’s management team:

Financial year 2020:

The total remuneration of the Hera Executive Leadership Team was 2 795 thousand euros. This broke down as 2 116 thousand euros in fixed compensation, 418 thousand euros in variable compensation and 261 thousand euros in various benefits in kind.

Financial year 2021:

The total remuneration of the Hera Executive Leadership Team was 3 269 thousand euros. This broke down as 2 158 thousand euros in fixed compensation, 850 thousand euros in variable compensation and 261 thousand euros in various benefits in kind.

5 LITIGATION

There are no pending litigations that are anticipated to have a major impact on the financial statements for the two financial years, other than those for which provisions have been made or that are stated in the notes to the financial accounts.

6 OFF-BALANCE SHEET COMMITMENTS

•	Héra and its subsidiary Laboratoire HRA Pharma have entered into a number of loans for an amount of<br>€473 million and to secure these loans, Pledge Agreements were executed on September 20, 2017 relating to:
•	shares of Laboratoire HRA Pharma held by Héra;
---	---
•	intra-group receivables
---	---
•	Similarly, and still as a guarantee, Laboratoire HRA Pharma has entered into pledge agreements relating to:<br>
---	---
•	its bank accounts;
---	---
•	the shares it holds in HRA Pharma France.
---	---
•	In the context of the partial transfer of assets relating to the “endocrinology” sector from<br>Laboratoire HRA Pharma to HRA Pharma Rare Diseases, Laboratoire HRA Pharma has entered into pledge agreements relating to:
---	---
•	its bank accounts;
---	---
•	the shares it holds in HRA Rare Diseases.
---	---
•	A pledge agreement for the balance of the 3rd rank bank accounts was entered into on March 26, 2020 between<br>HRA Pharma Rare Diseases and HSBC Corporate Trustee Company (UK).
---	---

7 FINANCIAL RISK MANAGEMENT

The Group is exposed to the following risks related to the use of financial instruments:

Credit risk

The risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual commitments is referred to as credit risk. Trade receivables and marketable securities are the main sources of this risk.

Liquidity risk

Liquidity risk refers to the possibility that the Group will have difficulty meeting its obligations when they become due. The Group’s strategy to managing liquidity risk is to ensure that, as far as feasible, it will always have enough liquidity to cover its liabilities when they are due, whether under normal or stressed conditions, without incurring unacceptable losses or harming its reputation.

The Group makes sure it has enough cash and bank accounts to cover its short-term needs.

The accounts have been prepared on a going concern basis.

Market risk

Market risk refers to the possibility that changes in market prices, such as foreign exchange rates, interest rates, and equity instrument prices, will have an impact on the Group’s earnings or the value of its financial assets. The goal of market risk management is to keep market risk exposures within acceptable bounds while maximizing the risk/reward trade-off.

Foreign exchange risk

The Group’s foreign exchange risk is reduced because research and development costs are incurred in the same currencies (USD, Euro) as the expected revenue streams (US and EU territory).

HRA Pharma has also hedged against foreign exchange risks by entering into forward exchange contracts on the GBP with HSBC bank.

Interest rate risk

The group is not significantly exposed to interest rate risk insofar as so-called “cap” hedging instruments have been contracted since 2017 at the time of the acquisition of the Compeed product portfolio.

Capital risk

The Company has the required resources to finance its activities as part of its capital management strategy, and it has no intention of exposing its shareholders to an undue dilution risk.

8 SUBSEQUENT EVENTS

On February 24, 2022, Russia, supported by Belarus, invaded Ukraine. Following this attack, a number of countries have declared sanctions against both Russia and Belarus and various Russian and Belarusian individuals and businesses. Access to the SWIFT international banking system has been suspended as part of these restrictions.

With the exception of ownership of certain trademarks and product registrations in these countries that have not been allocated a value in the Group’s accounts, the Group owns no assets in these countries and has no employees.

In 2021, the Group generated revenues of 2,305 thousand euros and an operating profit of almost 1,000 thousand euros in Russia. These results are generated exclusively by the Compeed brand. The Compeed brand is distributed in Russia by a Swiss company and all invoices are in euros. This distributor and its shareholders are not mentioned on any sanctions lists. The Group has no activity in Ukraine or in Belarus. The balance of receivables outstanding from this distributor at December 31 was 157 thousand euros.

Thus, the Group has no risk on the valuation of its assets and limited exposure on its revenues.

9 AUDITORS’ FEES

The fees paid to the Group’s statutory auditors amounted to:

Financial year 2020:

In thousands of euros	KPMG		Naolys		TOTAL
Audit of accounts		393		36		429
Other services than auditing		75		—		75
TOTAL	****	468	****	36	****	504

Financial year 2021:

In thousands of euros	KPMG		Naolys		TOTAL
Audit of accounts		367		36		402
Other services than auditing		97		—		97
TOTAL	****	464	****	36	****	500

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF PERRIGO COMPANY PLC

On September 8, 2021, Perrigo Company PLC (“Perrigo” or the “Company”) announced its intention to acquire Héra SAS (“Héra”), a leading global consumer self-care company, from funds affiliated with private equity firm Astorg and Goldman Sachs Asset Management (the “Proposed Acquisition”) in an all-cash transaction. Per the Securities Sale Agreement (the “Acquisition Agreement”), Perrigo will acquire the entire share capital of Héra for an aggregate estimated purchase price of approximately $2.1 billion, subject to certain adjustments set forth in the Acquisition Agreement. This includes the acquisition of HRA NewCo S.à.r.l., Héra Manco 1, Héra Manco 2, and Héra Manco 3 (collectively referred to as the “Holding Entities”) securities. Additionally, as part of the acquisition, Perrigo will fund the repurchase of Héra’s convertible bonds. In connection with the Proposed Acquisition, the Company expects to obtain or otherwise incur approximately $1,600 million of new financing, comprising a $300 million 5-year term loan A, an $800 million 7-year term loan B, and $500 million of additional unsecured debt (collectively, the “New Financing”), the proceeds of which, together with cash on hand, will be used to finance the Proposed Acquisition and to refinance certain existing indebtedness of the Parent and its subsidiaries (the “Proposed Refinancing”). In addition, in connection with the Proposed Refinancing, the Company also expects to replace its existing revolving credit facility with a new $1,000 million five-year revolving credit facility (the “New Revolving Credit Facility”). The Proposed Acquisition, the New Financing, the Proposed Refinancing and entering into the New Revolving Credit Facility are collectively referred to as the “Pro Forma Transactions.”

The following unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 805, “Business Combinations” (“ASC 805”), and gives effect to the Pro Forma Transactions, inclusive of:

•	the conversion of Héra’s historical financial statements from Euros to U.S. Dollars;<br>
•	the preliminary conversion of Héra’s historical financial statements prepared in accordance with the<br>International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”) to U.S. Generally Accepted Accounting Principles (“GAAP”);
---	---
•	certain reclassifications to conform Héra’s historical financial statement presentation to<br>Perrigo’s presentation;
---	---
•	application of the acquisition method of accounting under the provisions of ASC 805, and to reflect the aggregate<br>offer consideration of approximately $2.1 billion in exchange for 100% of Héra’s share capital;
---	---
•	proceeds and uses of the New Financing arrangements that are expected to be entered into in connection with the<br>Proposed Acquisition and the Proposed Refinancing; and
---	---
•	transaction costs in connection with the Proposed Acquisition.
---	---

The following unaudited pro forma condensed combined financial information and related notes have been derived from and should be read in conjunction with (i) the historical consolidated financial statements of Perrigo and the related notes included in Perrigo’s Annual Report on Form 10-K for the year ended December 31, 2021 which was filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2022, and (ii) the audited consolidated financial statements of Héra and the related notes as of and for the year ended December 31, 2021 included in this Current Report on Form 8-K. The Holding Entities have no material assets or results of operations; therefore, the Holding Entities’ historical financial information is not included in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined balance sheet as of December 31, 2021 gives effect to the Pro Forma Transactions as if they occurred or had become effective on December 31, 2021. The unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2021 gives effect to the Pro Forma Transactions as if they occurred or had become effective on January 1, 2021. Further information about this basis of presentation is provided in Note 1.

The unaudited pro forma condensed combined financial information and related notes are being provided for illustrative purposes only and do not purport to represent what the Company’s actual results of operations or financial position would have been had the Pro Forma Transactions been completed on the dates indicated, nor are they necessarily indicative of the Company’s future results of operations or financial position as of any future date or for any future period. Future results may vary significantly from the results reflected due to various factors, including those discussed in Part I, Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

The pro forma adjustments are based upon available information and certain assumptions as described in the accompanying notes to the unaudited pro forma condensed combined financial information which management believes are reasonable under the circumstances. Actual results are likely to differ from these assumptions and these differences may be material. In addition, the unaudited pro forma combined financial information does not reflect any expected cost savings, operating synergies or revenue enhancements that the combined entity may achieve as a result of the Proposed Acquisition or the costs necessary to achieve any such cost savings, operating synergies or revenue enhancements. However, there can be no assurance that any of the expected cost savings, operating synergies or revenue enhancements, or other benefits of the Proposed Acquisition expected by management, will be achieved.

The unaudited pro forma condensed combined financial information has been prepared by us using the acquisition method of accounting in accordance with GAAP. Perrigo has been treated as the acquirer in the Proposed Acquisition for accounting purposes.

Management believes the fair values recognized for the assets acquired and liabilities assumed are based on reasonable estimates and assumptions. Definitive allocations will be performed and finalized by the Company, where necessary with the services of outside valuation specialists. Accordingly, the purchase price allocation and amortization adjustments reflected in the unaudited pro forma condensed combined financial information are preliminary and subject to revision based on a final determination of fair value. Management expects to finalize accounting for the business combination as soon as practicable after closing of the Proposed Acquisition, but in no event later than one year from closing.

Perrigo Company PLC

Unaudited Pro Forma Condensed Combined Balance Sheet

As of 12/31/2021

(Inmillions)

			Héra SAS											Transaction Accounting Adjustments
			Historical<br>U.S. Dollars(IFRS)^1^			Pro FormaConversionAdjustments<br>(Note 3)					ProForma<br>(U.S.GAAP)			Financing &<br>Re-FinancingAdjustments<br>(Note 4)^2^			AcquisitionAdjustments<br>(Note 6)					Pro Forma<br>CondensedCombined
Assets
Cash and cash equivalents	1,864.9		$	46.2		$	—				$	46.2		$	564.1		$	(2,168.8	)	a	)	$	306.4
Accounts receivable, net	652.9			63.0								63.0											715.9
Inventories	1,020.2			25.8								25.8						17.8		b	)		1,063.8
Prepaid expenses and other current assets	305.8			25.1								25.1						3.8		g	)		334.7
Current assets held for sale	16.1			—								—											16.1
Total current assets	3,859.9			160.1			—					160.1			564.1			(2,147.2	)				2,436.9
Property, plant and equipment, net	864.1			3.8								3.8											867.9
Operating lease assets	166.9			9.9			0.8		a	)		10.7											177.6
Goodwill and indefinite-lived intangible assets	3,004.7			602.2								602.2						286.0		c	), e)		3,892.9
Definite-lived intangible assets, net	2,146.1			585.1			(42.7	)	b	)		542.4						921.7		d	)		3,610.2
Deferred income taxes	6.5			0.5			(0.1	)	c	)		0.4											6.9
Other non-current assets	377.5			0.9								0.9			1.4								379.8
Total non-current assets	6,565.8			1,202.4			(42.0	)				1,160.4			1.4			1,207.7					8,935.3
Total assets	10,425.7			1,362.5			(42.0	)				1,320.5			565.5			(939.5	)				11,372.2
Liabilities and Shareholders’ Equity
Accounts payable	411.2			41.5								41.5											452.7
Payroll and related taxes	118.5			11.6								11.6											130.1
Accrued customer programs	125.6			—								—											125.6
Other accrued liabilities	279.4			21.7			(0.1	)	a	)		21.6											301.0
Accrued income taxes	16.5			0.7								0.7						(4.0	)	g	)		13.2
Current indebtedness	603.8			—								—			(600.0	)							3.8
Current liabilities held for sale	32.9			—								—											32.9
Total current liabilities	1,587.9			75.5			(0.1	)				75.4			(600.0	)		(4.0	)				1,059.3
Long-term debt, less current portion	2,916.7			958.3								958.3			1,178.4			(958.3	)	f	)		4,095.1
Deferred income taxes	239.3			110.7			(10.9	)	c	)		99.8						249.8		g	)		588.9
Other non-current liabilities	530.1			11.9			(0.3	)	a	)		11.6											541.7
Total non-current liabilities	3,686.1			1,080.9			(11.2	)				1,069.7			1,178.4			(708.5	)				5,225.7
Total liabilities	5,274.0			1,156.4			(11.3	)				1,145.1			578.4			(712.5	)				6,285.0
Shareholders’ equity
Controlling interests:
Preferred shares, 0.0001 par value per share, 10 shares authorized	—			—								—						—					—
Ordinary shares, 0.001 par value per share, 10,000 shares authorized	7,043.2			404.6								404.6						(404.6	)	h	)		7,043.2
Accumulated other comprehensive income	35.5			0.6								0.6						(0.6	)	h	)		35.5
Retained earnings (accumulated deficit)	(1,927.0	)		(199.2	)		(30.7	)	a	), b), c)		(229.9	)		(12.9	)		178.2		h	)		(1,991.6	)
Non-controlling interests	—			0.1								0.1						—		h	)		0.1
Total shareholders’ equity	5,151.7			206.1			(30.7	)				175.4			(12.9	)		(227.0	)				5,087.2
Total liabilities and shareholders’ equity	10,425.7			1,362.5			(42.0	)				1,320.5			565.5			(939.5	)				11,372.2

All values are in US Dollars.

1)	Reflects mapping and reclassification adjustments to conform to Perrigo presentation. Refer to Note 2 for<br>further detail.
2)	Refer to Note 4 for further detail on the pro forma financing & re-financing transaction accounting<br>adjustments.
---	---

Perrigo Company PLC

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2021

(In millions, except per share data)

				Héra SAS											Transaction AccountingAdjustments
	Historical<br>PerrigoCompanyPLC			Historical<br>U.S. Dollars(IFRS)^1^			Pro FormaConversionAdjustments<br>(Note 3)					ProForma<br>(U.S.GAAP)			Financing &<br>Re-FinancingAdjustments<br>(Note 4)^2^			AcquisitionAdjustments<br>(Note 7)					Pro FormaCondensedCombined
Net sales	$	4,138.7		$	303.4		$	—				$	303.4					$	—				$	4,442.1
Cost of sales		2,722.5			86.2								86.2						17.8		a	)		2,826.5
Gross profit		1,416.2			217.2			—					217.2			—			(17.8	)				1,615.6
Operating expenses:
Distribution		93.0			—								—											93.0
Research and development		122.0			14.2			12.2		b	)		26.4											148.4
Selling		536.4			90.4								90.4											626.8
Administration		482.0			41.7			0.4		a	)		42.1						69.9		b	)		594.0
Impairment charges		173.1			—								—											173.1
Restructuring		16.9			—								—											16.9
Other operating expense (income)		(417.6	)		(0.3	)							(0.3	)					59.5		c	)		(358.4	)
Total operating expenses		1,005.8			146.0			12.6					158.6			—			129.4					1,293.8
Operating income		410.4			71.2			(12.6	)				58.6			—			(147.2	)				321.8
Change in financial assets		—			1.4								1.4						—					1.4
Interest expense, net		125.0			66.3			(0.2	)	a	)		66.1			48.8			(66.1	)	d	)		173.8
Other (income) expense, net		26.7			3.9								3.9											30.6
Loss on extinguishment of debt		—			—								—			12.9								12.9
Income from continuing operations before income taxes		258.7			(0.4	)		(12.4	)				(12.8	)		(61.7	)		(81.1	)				103.1
Income tax expense		389.6			3.4			(3.4	)	c	)		—			(2.7	)		(15.1	)	e	)		371.8
Net income (loss) from continuing operations		(130.9	)		(3.8	)		(9.0	)				(12.8	)		(59.0	)		(66.0	)				(268.7	)
Non-controlling interests		—			0.1								0.1						—					0.1
Net income (loss) attributable to Perrigo Company PLC		(130.9	)		(3.7	)		(9.0	)				(12.7	)		(59.0	)		(66.0	)				(268.6	)
Earnings (loss) per share
Basic		(0.98	)																		f	)		(2.01	)
Diluted		(0.98	)																		f	)		(2.01	)
Weighted-average shares outstanding
Basic		133.6																						133.6
Diluted		133.6																						133.6
1)	Reflects mapping and reclassification adjustments to conform to Perrigo presentation. Refer to Note 2 for<br>further detail.
---	---
2)	Refer to Note 4 for further detail on the pro forma financing & re-financing transaction accounting<br>adjustments.
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1. Basis of pro forma presentation

The accompanying unaudited pro forma condensed combined financial information and related notes were prepared by Perrigo in connection with the Proposed Acquisition and the Proposed Refinancing.

Perrigo’s historical financial statements were prepared in accordance with U.S. GAAP and presented in U.S. Dollars. Héra’s historical financial statements were prepared in accordance with IFRS as issued by the IASB and presented in Euros. There were no material transactions nor any balances between Perrigo and Héra as of and for the year ended December 31, 2021. As discussed in Note 2, the historical Héra financial statements have been converted from Euros to U.S. Dollars, and certain reclassifications were made to align Héra’s financial statement presentation with that of Perrigo based on a preliminary analysis. This exercise and the resulting adjustments were based on a preliminary analysis and are subject to change pending a final review.

Refer to the table below for the exchange rates used throughout the unaudited pro forma condensed combined financial information. Héra’s historical financial statements and reclassification adjustments were translated from Euros to U.S. Dollars using the period-end rate for the unaudited pro forma condensed combined balance sheet and a historical average rate during the period presented for the unaudited pro forma condensed combined statement of operations.

		U.S. Dollars/Euro
Year ended December 31, 2021	Average spot rate		1.1829
As of December 31, 2021	Period-end spot rate		1.1371

As stated above, the accompanying unaudited pro forma combined financial information and related notes were prepared using the acquisition method of accounting in accordance with ASC 805. Under ASC 805, generally all assets acquired and liabilities assumed are recorded at their acquisition date fair value. ASC 820, “Fair Value Measurement” (“ASC 820”) defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective, and it is possible the application of reasonable judgment could develop different assumptions resulting in a range of alternative estimates using the same facts and circumstances. For pro forma purposes, the fair value of Héra’s identifiable tangible and intangible assets acquired and liabilities assumed are based on a preliminary estimate of fair value. Any excess of the purchase price over the fair value of identified assets acquired and liabilities assumed will be recognized as goodwill.

Assets acquired and liabilities assumed in a business combination that arise from contingencies must be recognized at fair value if the fair value can be reasonably estimated. If the fair value of an asset or liability that arises from a contingency cannot be determined, the asset or liability would be recognized in accordance with ASC 450, “Disclosure of Certain Loss Contingencies” (“ASC 450”). If the fair value is not determinable and the ASC 450 criteria is not met, no asset or liability would be recognized.

Héra’s historical financial statements have been converted from IFRS to U.S. GAAP to align Héra’s financial statement presentation with that of Perrigo. Based on additional preliminary analysis, management is not aware of any other material differences between the accounting policies of the two companies that would continue to exist subsequent to the application of purchase accounting. Following the consummation of the Proposed Acquisition, Perrigo will conduct a more detailed review of Héra’s accounting policies in an effort to determine if differences in accounting policies require further adjustment of Héra’s results of operations or adjustment of assets or liabilities to conform to Perrigo’s accounting policies and classifications. As a result, Perrigo may identify additional differences between the accounting policies of the two companies that, when conformed, could have a material impact on this unaudited pro forma condensed combined financial information. Management has included certain reclassification adjustments for consistency in presentation as indicated in the subsequent notes.

2. Historical Héra Financial Information Reclassifications

As part of preparing the unaudited pro forma condensed combined financial information, management performed a preliminary analysis of Héra’s financial information to identify any differences in financial statement presentation as compared to the presentation of the Company.

Refer to the table below for a summary of the identified reclassification adjustments to present Héra’s condensed consolidated financial position as of December 31, 2021 to conform presentation to that of Perrigo’s.

Héra SAS Historical FinancialPosition LineItems	Perrigo Company PLCHistoricalConsolidated BalanceSheet Line Items	Héra SASHistorical<br>Financial Position<br>(Euro)		Reclassification				Héra SASAdjustedHistoricalFinancial Position<br>(Unaudited)(Euro)
(in millions)
Cash and cash equivalents	Cash and cash equivalents	€	40.6	€	—			€	40.6
Other receivables			11.1		(11.1	)	a), b)		—
Trade and other receivables			53.6		(53.6	)	a)		—
	Accounts receivable, net		—		55.4		a)		55.4
Stocks and work in progress	Inventories		22.7		—				22.7
Current tax assets			10.2		(10.2	)	b)		—
Derivative asset instruments - Current portion			0.1		(0.1	)	b)		—
Financial assets - Current portion			—		—		b)		—
Prepayments			2.6		(2.6	)	b)		—
	Prepaid expenses and other current assets		—		22.1		b)		22.1
Tangible assets	Property, plant and equipment, net		3.3		—				3.3
Usage rights under leasing contracts	Operating lease assets		8.7		—				8.7
Goodwill	Goodwill and indefinite-lived intangible assets		529.6		—				529.6
Intangible assets	Definite-lived intangible assets, net		514.5		—				514.5
Deferred taxes - Assets	Deferred income taxes - asset		30.6		(30.2	)	f)		0.4
Financial assets - Non-current portion	Other non-current assets		0.8		—				0.8
Trade and other payables			33.2		(33.2	)	c)		—
	Accounts payable				36.5		c)		36.5
Other debts - Current portion			28.4		(28.4	)	c), d), e)		—
	Payroll and related taxes		—		10.2		d)		10.2
	Accrued customer programs		—		—				—
Deferred income - Current portion			0.1		(0.1	)	e)		—
Derivative liability instruments - Current portion			1.0		(1.0	)	e)		—
Provisions - Current portion			0.8		(0.8	)	e)		—
Leasing debts - Current portion			2.3		(2.3	)	e)		—
	Other accrued liabilities		—		19.1		e)		19.1
Current tax liabilities	Accrued income taxes		0.6		—				0.6
Borrowings and financial debts - Current portion			—		—				—
	Current indebtedness		—		—				—
Borrowings and financial debts - Non-current<br>portion	Long-term debt, less current portion		842.7		—				842.7
Deferred taxes - Liabilities	Deferred income taxes - liability		127.5		(30.2	)	f)		97.3
Provisions for employee benefits			2.4		(2.4	)	g)		—
Leasing debts - Non-current portion			7.4		(7.4	)	g)		—

All values are in US Dollars.

Deferred income - Non-current portion			(0.7	)	g	)	—		—
	Other non-current liabilities		10.5		g	)	10.5		11.9
Share capital			(35.9	)	h	)	—		—
Share premium			(319.9	)	h	)	—		—
	Ordinary shares, 0.001 par value per share, 10,000 shares authorized		355.8		h	)	355.8		404.6
Consolidated reserves - Group share		)	171.6		i),<br>j)		—		—
	Accumulated other comprehensive income		0.5		i	)	0.5		0.6
Profit or loss for the financial year - Group share		)	3.2		j	)	—		—
	Retained earnings (accumulated deficit)		(175.3	)	j	)	(175.3	)	(199.2	)
Non-controlling interests	Non-controlling interests		—				0.1		0.1

All values are in Euros.

Tickmark Legend:

a)	Represents a €1.8 million reclassification of Other receivables and €53.6 million<br>reclassification of Trade and other receivables to Accounts receivable, net in order to conform to Perrigo’s presentation.
b)	Represents a €9.2 million reclassification of Other receivables, €10.2 million<br>reclassification of Current tax assets, €0.1 million reclassification of Derivative asset instruments - Current portion, and €2.6 million reclassification of Prepayments to Prepaid expenses and other current assets in order to<br>conform to Perrigo’s presentation.
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c)	Represents a €33.2 million reclassification of Trade and other payables and €3.3 million<br>reclassification of Other debts—Current portion to Accounts payable in order to conform to Perrigo’s presentation.
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d)	Represents a €10.2 million reclassification of Other debts - Current portion to Payroll and related<br>taxes in order to conform to Perrigo’s presentation.
---	---
e)	Represents a €14.9 million reclassification of Other debts - Current portion, €0.1 million<br>reclassification of Deferred income - Current portion, €1.0 million reclassification of Derivative liability instruments - Current portion, €0.8 million reclassification of Provisions - Current portion, and €2.3 million<br>reclassification of Leasing debts - Current portion to Other accrued liabilities in order to conform to Perrigo’s presentation.
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f)	Represents a €30.2 million reclassification of Deferred taxes - Assets to Deferred taxes -<br>Liabilities for jurisdictional netting in order to conform to Perrigo’s presentation.
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g)	Represents a €2.4 million reclassification of Provisions for employee benefits,<br>€7.4 million reclassification of Leasing debts - Non-current portion, and €0.7 million reclassification of Deferred income - Non-current portion to<br>Other non-current liabilities in order to conform to Perrigo’s presentation.
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h)	Represents a €35.9 million reclassification of Share capital and a €319.9 million<br>reclassification of Share premium to Ordinary shares in order to conform to Perrigo’s presentation.
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i)	Represents a €0.5 million reclassification of Consolidated reserves - Group share to Accumulated<br>other comprehensive income in order to conform to Perrigo’s presentation.
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j)	Represents a €172.1 million reclassification of Consolidated reserves - Group share and<br>€3.2 million reclassification of Profit or loss for the financial year - Group share to Retained earnings (accumulated deficit) in order to conform to Perrigo’s presentation.
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Refer to the table below for a summary of the identified reclassification adjustments to present Héra’s condensed consolidated statement of profit and loss for the year ended December 31, 2021 to conform presentation to that of Perrigo’s.

Héra SAS Historical Statement ofProfit and Loss LineItems	Perrigo Company PLC HistoricalCombined Statement ofOperationsLine Items	Héra SASHistoricalStatement ofProfitand Loss<br>(Euro)		Reclassification				Héra SASAdjustedHistoricalStatement ofProfit andLoss (Unaudited)(Euro)
(in millions)
Turnover		€	255.9	€	(255.9	)	k)	€	—
Other income from operations			0.6		(0.6	)	k)		—
	Net sales		—		256.5		k)		256.5
Costs of sales			73.7		(73.7	)	l), n), o)		—
	Cost of sales		—		72.9		l)		72.9
	Other operating expense (income)		—		(0.3	)	m)		(0.3	)	)
Marketing and sales costs			77.8		(77.8	)	l), n), o)		—
	Selling		—		76.4		o)		76.4
General and administrative costs			33.9		(33.9	)	n), m), p)		—
	Administration		—		35.2		p)		35.2
Research and development costs			9.1		(9.1	)	m), n)		—
	Research and development		—		12.0		n)		12.0
Other operating (expenses) / revenues			0.3		(0.3	)	m),<br>p)		—
Other non-current expenses			4.7		(4.7	)	l), m), q)		—
Other non-current income			0.1		(0.1	)	q)		—
Financial revenues			2.2		(2.2	)	q)		—
Financial expenses			59.6		(59.6	)	q), r), s)		—
	Interest expense, net		—		56.1		r)		56.1
	Change in financial assets		—		1.2		s)		1.2
	Other (income) expense, net		—		3.3		q)		3.3
Income / (expenses) from taxation	Income tax expense		2.9		—				2.9
Non-controlling interests	Non-controlling interests		0.1		—				0.1

All values are in US Dollars.

Tickmark Legend:

k)	Represents a €255.9 million reclassification of Turnover and €0.6 million reclassification<br>of Other income from operations to Net sales to conform to Perrigo’s presentation.
l)	Represents a €72.5 million reclassification of Héra Costs of sales, €0.2 million<br>reclassification of Marketing and sales costs, and €0.1 million reclassification of Other non-current expenses to Perrigo Cost of sales to conform to Perrigo’s presentation.<br>
---	---
m)	Represents a €1.0 million reclassification of General and administrative costs,<br>€0.5 million reclassification of Research and development costs, €2.0 million reclassification of Héra Other operating (expenses) / revenues, and €1.2 million reclassification of Other non-current expenses to Perrigo Other operating expense (income) to conform to Perrigo’s presentation.
---	---
n)	Represents a €0.2 million reclassification of Costs of sales, €2.1 million reclassification<br>of Marketing and sales costs, €0.1 million reclassification of General and administrative costs, and €9.6 million reclassification of Héra Research and development costs to Perrigo Research and development to conform to<br>Perrigo’s presentation.
---	---
o)	Represents a €1.0 million reclassification of Costs of sales and €75.4 million<br>reclassification of Marketing and sales costs to Selling to conform to Perrigo’s presentation.
---	---
p)	Represents a €32.8 million reclassification of General and administrative costs and<br>€2.4 million reclassification of Other operating (expenses) / revenues to Administration to conform to Perrigo presentation.
---	---
q)	Represents a €3.4 million reclassification of Other<br>non-current expenses, €0.1 million reclassification of Other non-current income, €2.2 million reclassification of Financial revenues, and<br>€2.3 million reclassification of Financial expenses to Other (income) expenses, net to conform to Perrigo’s presentation.
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r)	Represents a €56.1 million reclassification of Financial expenses to Interest expense, net to conform<br>with Perrigo’s presentation.
---	---
s)	Represents a €1.2 million reclassification of Financial expenses to Change in financial assets to<br>conform with Perrigo’s presentation.
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3. IFRS to U.S. GAAP Conversion adjustments

Héra’s historical consolidated financial position as of December 31, 2021 and statement of profit and loss for the year ended December 31, 2021 have been prepared in accordance with IFRS as issued by the IASB, which differs in certain material respects from U.S. GAAP. During the preparation of this unaudited pro forma condensed combined financial information, management performed a preliminary analysis of Héra’s financial information to identify differences between IFRS and U.S. GAAP, and differences in accounting policies compared to those of Perrigo. The Company’s assessment is ongoing; however, at the time of preparing the unaudited pro forma condensed combined financial information, other than the adjustments made herein, the Company is not aware of any other material differences. Management will conduct a further review of Héra’s financial information in an effort to determine if additional differences exist between IFRS and U.S. GAAP or if additional differences in accounting policies require adjustment to or reclassification of Héra’s results to conform to Perrigo’s accounting policies and classifications as required by acquisition accounting rules. As a result of that review, management may identify differences that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial information.

Adjustments are initially calculated in Euros and translated to U.S. Dollars based on the exchange rates detailed in Note 1. Refer to the table below for a summary of IFRS to US GAAP conversion adjustments and associated tax adjustments made to present Héra’s consolidated financial position as of December 31, 2021, on a basis consistent with that of Perrigo’s consolidated balance sheet:

Financial Position<br><br><br>As of December 31, 2021
Operating lease assets	0.8		—		—		0.8
Definite-lived intangible assets, net	—		(42.7	)	—		(42.7	)
Deferred income taxes - asset	—		—		(0.1	)	(0.1	)
Other accrued liabilities	(0.1	)	—		—		(0.1	)
Other non-current liabilities	(0.3	)	—		—		(0.3	)
Deferred income taxes - liability	—		—		(10.9	)	(10.9	)
Retained earnings (accumulated deficit)	1.2		(42.7	)	10.8		(30.7	)

Refer to the table below for a summary of IFRS to US GAAP conversion adjustments and associated tax adjustments made to present Héra’s condensed consolidated statement of profit and loss for the year ended December 31, 2021, on a basis consistent with that of Perrigo’s consolidated statement of operations:

Statement of Profit and Loss<br><br><br>For the year ended December 31, 2021
Research and development	—		12.2	—		12.2
Administration	0.4		—	—		0.4
Interest expense, net	(0.2	)	—	—		(0.2	)
Income tax expense	—		—	(3.4	)	(3.4	)

Tickmark Legend:

a)	Represents an adjustment to Héra’s lease arrangements to classify leases as operating leases under<br>U.S. GAAP by adjusting the right-of-use assets, lease liabilities, and related depreciation and interest expense recognized. Under IFRS all leases were accounted for as<br>finance leases. The pro forma impact to Héra’s condensed consolidated financial position resulted in an increase to the right-of-use assets, presented in<br>Operating lease assets, of $0.8 million and a decrease in lease liabilities, presented in Other accrued liabilities and Other non-current liabilities, of $0.1 million and $0.3 million,<br>respectively. The income statement is adjusted to reflect straight line rent expense by an increase of $0.4 million to the historical amortization of the<br>right-of-use asset recorded in Administration and a decrease of $0.2 million of historical interest expense resulting from finance leases which is not recognized<br>for operating leases.
b)	Represents an adjustment to reduce Héra’s capitalized development and marketing authorization<br>costs, which are capitalized under IFRS when certain criteria are met. Under U.S. GAAP research and development costs are generally expensed as incurred. The pro forma impact to Héra’s condensed consolidated financial position is a<br>reduction of capitalized development costs of $42.7 million. The net impact to Héra’s pro forma condensed consolidated statement of profit and loss for the year ended December 31, 2021, includes a $12.2 million net<br>increase to research and development expenses for costs incurred during the year ended December 31, 2021, offset by historical amortization expense related to capitalized costs.
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c)	Represents an adjustment for the income tax impact of the conversion adjustments using an estimated rate of<br>25.83%. The pro forma impact to Héra’s condensed consolidated financial position resulted in a decrease to deferred income tax assets and $0.1 million and a decrease to deferred income tax liabilities of $10.9 million,<br>respectively. The net impact to Héra’s pro forma condensed consolidated statement of profit and loss for the year ended December 31, 2021, is a decrease to income tax expense of $3.4 million.
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4. New Financing and Proposed Refinancing

Acquisitionconsideration

The Acquisition Agreement provides for purchase consideration of €959 million in cash, subject to additional amounts of interest, estimated to be €66 million, and conditional fees. Perrigo also will acquire Héra’s convertible bonds for an estimated purchase price of €343 million, including accrued interest, and repay Héra’s existing third-party indebtedness, which is estimated to be €486.8 million.

Substantially concurrently with the consummation of the Proposed Acquisition, Perrigo is expected to refinance outstanding indebtedness under its existing term loan and revolving credit facility, as well as under certain notes scheduled to mature in 2023. These debt instruments are expected to be replaced with the New Financing, comprising a $300 million 5-year term loan A, an $800 million 7-year term loan B, and $500 million of additional unsecured debt, as well as the New Revolving Credit Facility.

Use of proceeds

The Company intends to use the net proceeds of the New Financing, as well as cash on hand, to finance the Proposed Acquisition and the Proposed Refinancing and pay related fees and expenses. The Company expects to use future borrowings under the New Revolving Credit Facility for ongoing working capital and general corporate purposes.

Pro forma adjustments

The pro forma adjustments have been calculated assuming a weighted average interest rate on the New Financing of 3.9% and a weighted average life of 6.9 years. In addition, the Company expects to incur debt issuance costs of $50.3 million that will be capitalized, $48.1 million of which is related to the New Financing and $2.2 million of which is related to the New Revolving Credit Facility. The deferred debt issuance costs related to the New Financing are presented as a direct deduction from the face amount of the debt, while the deferred debt issuance costs related to the New Revolving Credit Facility are classified as Other non-current assets, net. The deferred debt issuance costs will be amortized on a straight-line basis over the life of the debt and recorded in interest expense.

A 0.125% increase or decrease in the weighted average interest rates on the New Financing would result in an increase or decrease of $2.0 million in interest expense for the year ended December 31, 2021.

The pro forma condensed combined statement of operations reflects an adjustment to Interest expense, net of $48.8 million and an adjustment to Loss on extinguishment of debt of $12.9 million related to the New Financing and the Proposed Refinancing.

The proposed refinancing of the existing term loan and notes has been treated as a debt extinguishment due to the assumption that the lending group and the corresponding debt amounts will be substantially different. The refinancing of the existing revolving credit facility has been treated as a modification except for the lenders expected to exit the facility. This analysis is subject to change based on the facts and circumstances at the date the Proposed Refinancing occurs. A portion of the existing notes are denominated in Euro and, therefore, the actual amounts paid to refinance these notes will be impacted by the Euro to USD exchange rate at the time of the refinancing.

5. Preliminary purchase price allocation

The Acquisition Agreement provides for purchase consideration of €958.8 million in cash, subject to additional amounts of interest and conditional fees. Perrigo will also acquire Héra’s convertible bonds. Refer to the table below for the preliminary calculation of consideration to be transferred under the Proposed Acquisition:

Preliminary calculation of estimated purchase consideration<br>(in millions)			Amount
Initial cash purchase price	(i	)	€	1,024.7
Estimated purchase price of Héra convertible bonds (including accrued interest)	(ii	)		343.4
Estimated repayment of Héra existing indebtedness and shareholder receivable	(iii	)		486.8
Preliminary fair value of estimated total purchase consideration in Euros				1,854.9
Foreign exchange rate	(iv	)		1.1371
Preliminary fair value of estimated total purchase consideration in			$	2,109.3

All values are in US Dollars.

(i)	Reflects the base purchase price of €958,750,000, plus estimated adjustments, including an<br>estimated €66.0 million in interest for the period through the completion date.
(ii)	Reflects the outstanding amount of Héra’s convertible bonds €212.9 million, plus certain<br>adjustments for compounded and accrued interest.
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(iii)	Reflects the Héra’s existing indebtedness and shareholder loans that Perrigo will settle at<br>closing.
---	---
(iv)	Exchange ratio used is the Euro to USD period-end spot rate as of<br>December 31, 2021.
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As stated above, the unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting in accordance with ASC 805, with Perrigo as the accounting acquirer. Accordingly, consideration to be paid by the Company to complete the Proposed Acquisition has been assigned to identifiable assets and liabilities of Héra based on estimated fair values as of the most recent year end of December 31, 2021. Management’s assignment of the consideration, shown in the table below, was based on preliminary estimates of the fair value of tangible and intangible assets acquired and liabilities assumed. The estimates and underlying assumptions, some of which cannot be finalized until the closing of the Proposed Acquisition, will be revised as additional information becomes available and those changes could be significant. Management expects to finalize accounting for the Proposed Acquisition as soon as practicable after closing of the Proposed Acquisition, but in no event later than one year from closing (in accordance with ASC 805). Prior to the end of the measurement period, if information becomes available that requires material adjustment to the purchase price assignment, such adjustments will be included prospectively.

Description (in millions)	Amount
Current Assets, excluding inventories and Prepaid expenses and other current assets	$	134.3
Inventories		43.6
Property, plant and equipment, net and Operating lease assets		14.5
Definite-lived intangible assets		1,464.1
Goodwill and indefinite-lived intangible assets		888.2
Other non-current assets		0.9
Deferred tax liability		349.2
Total current liabilities		75.4
Other non-current liabilities		11.6
Non-controlling interests		0.1
Total purchase price	$	2,109.3

Any increase or decrease in the fair value of the net assets acquired, as compared to the information shown herein, could also change the portion of the purchase consideration allocable to goodwill and could impact the operating results of the combined company following the Proposed Acquisition due to differences in the allocation of the purchase consideration, and changes in the depreciation and amortization related to some of these assets and liabilities.

6. Adjustments to the unaudited proforma condensed combined balance sheet

Refer to the items below for a reconciliation of the adjustments reflected in the unaudited pro forma condensed combined balance sheet:

a)	Changes in pro forma Cash and cash equivalents balance is calculated as follows:
Description (in millions)	Note			Amount
---	---	---	---	---	---	---
Purchase price		(i	)	$	2,109.3
One-time transaction costs		(ii	)		49.1
Insurance for representations and warranties					10.4
Pro forma adjustment to Cash and cash equivalents				$	(2,168.8	)
(i)	Purchase price consideration detailed in table above.
---	---
(ii)	One-time transaction costs include a success fee, accounting, tax and<br>audit services, legal services, and consulting services.
---	---
b)	Reflects an adjustment to Inventories based on a preliminary fair value assessment. The estimated fair value of<br>inventory acquired is preliminary and is determined based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). The final fair value<br>determinations for inventory acquired may differ from the preliminary determination, and such differences could be material.
---	---
Description (in millions)	Note			Amount
---	---	---	---	---	---	---
Fair value determination of inventory acquired		(i	)	$	43.6
Removal of Héra’s historical inventory					(25.8	)
Pro forma adjustment to Inventories				$	17.8	****
(i)	Preliminary fair values for inventory were determined based on the comparative sales valuation methodology.<br>
---	---
c)	Reflects a preliminary estimate of fair value of Héra’s net assets to be acquired, and the<br>corresponding adjustment to Goodwill:
---	---
Description (in millions)	Note			Amount
---	---	---	---	---	---	---
Purchase price consideration				$	2,109.3
Héra’s net assets to be acquired:
Total current assets, excluding inventories					134.3
Inventories					43.6
Property, plant and equipment, net and Operating lease assets					14.5
Intangible assets, net		(i	)		1,507.3
Other non-current assets					0.9
Current liabilities					(75.4	)
Deferred income taxes					(349.2	)
Other non-current liabilities					(11.6	)
Non-controlling interests					(0.1	)
Less: Net assets acquired					(1,264.3	)
Goodwill		(ii	)		845.0
Less: Héra Historical Goodwill					(602.2	)
Pro forma adjustment to Goodwill and indefinite-lived intangible assets		(ii	)	$	242.8
(i)	Intangible assets, net represents the balance of both the definite-lived intangible assets and indefinite-lived<br>intangible assets acquired based on preliminary estimates of fair value.
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(ii)	Goodwill represents the excess of the purchase price of an acquired business over the fair value of assets<br>acquired and liabilities assumed. Goodwill will not be amortized but instead tested for impairment at least annually (or more frequently if indicators of impairment arise). In the event management determines that goodwill has become impaired, the<br>Company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made.
---	---
d)	Reflects an adjustment to Definite-lived intangible assets-net based on<br>a preliminary fair value assessment. The estimated fair value of intangible assets is preliminary and is determined based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset<br>(i.e., its highest and best use). The final fair value determinations for identifiable intangible assets may differ from the preliminary determination, and such differences could be material.
---	---
Description (in millions)	Note			Amount
---	---	---	---	---	---	---
Fair value determination of definite-lived intangible assets acquired		(i	)	$	1,464.1
Removal of Héra’s historical intangible assets					(542.4	)
Pro forma adjustment to Definite-lived intangible assets, net				$	921.7	****
(i)	The definite-lived intangible assets identified were trademarks & tradenames, patents and customer<br>relationships. Preliminary fair values for these intangible assets were determined based on estimated future cash flows. Héra’s trademarks & tradenames, certain patents, and customer relationships were valued using the<br>multiperiod excess earnings method (MPEEM), which is a variation on discounted cash-flow analysis that isolates cash flows associated with a single intangible asset, rather than focusing on the whole entity, and discounts them to present value. The<br>patents were valued using the relief from royalty method, which considers both the market approach and the income approach. The assets will be amortized on a straight-line basis over their estimated useful life, ranging from 8-22 years per asset.
---	---
e)	Reflects an adjustment to goodwill and indefinite-lived intangible assets based on a preliminary fair value<br>assessment of the Company’s indefinite-lived intangible assets. The estimated fair value of intangible assets is preliminary and is determined based on assumptions that market participants would use in pricing an asset, based on the most<br>advantageous market for the asset (i.e., its highest and best use). The final fair value determinations for identifiable intangible assets may differ from the preliminary determination, and such differences could be material. The indefinite-lived<br>intangible assets identified represent in-process research and development (“IPR&D”).
---	---
f)	Reflects an adjustment to Long-term debt, less current portion for the amounts paid by the Company for<br>Héra’s convertible bonds and existing third-party indebtedness as a component of purchase price. Amounts are subject to change based upon the closing of the Proposed Acquisition.
---	---
Description (in millions)	Amount
---	---	---
Héra convertible bond amount paid off as a component of purchase price	€	212.9
Héra existing third-party indebtedness paid off as a component of purchase price		486.3
Héra accrued interest related to convertible bonds and third party indebtedness		143.5
Total amount of Long-term debt paid in purchase price (Euro)	€	(842.7)
Pro forma adjustment to Long-term debt, less current portion (USD	$	(958.3)
g)	Reflects deferred income tax liabilities resulting from preliminary fair value adjustments to intangible<br>assets. **** The estimate of deferred tax liabilities was determined based on the book and tax basis differences of the net assets acquired using the prevailing France statutory tax rate, as (I) virtually all the intangibles are in France and<br>(II) the difference in using another tax rate would not be material to the unaudited pro forma condensed combined financial information. This estimate of deferred income tax liabilities is preliminary and is subject to change based upon the<br>Company’s final determination of the fair values of tangible and identifiable intangible assets acquired and liabilities assumed by jurisdiction. In addition, the adjustment reflects the income tax benefit related to the deductible transaction<br>costs.
---	---
h)	Reflects an adjustment to Total shareholders’ equity based on the following:
---	---
Description (in millions)	PreferredShares		OrdinaryShares			AOCI			RetainedEarnings		NCI		Notes
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Elimination of Héra historical stockholders’ equity	$	—	$	(404.6	)	$	(0.6	)	$	229.9	$	—		(i	)
Recognition of transaction costs		—		—			—			(49.1)		—		(ii	)
Insurance for representations and warranties	****	—		—			—			(10.4)	****	—
Income tax benefit	****	—		—			—			7.8
Total	$	—	$	(404.6)	****	$	(0.6)	****	$	178.2	$	—
(i)	Adjustment for the elimination of Héra historical stockholders’ equity in relation to the Proposed<br>Acquisition.
---	---
(ii)	Adjustment for anticipated transaction costs, including investment banking fees, accounting, tax and audit<br>services, legal services, and consulting services, that are non-recurring and directly related to the Proposed Acquisition, but do not have a continuing impact. As a result, they are not included in the<br>unaudited pro forma condensed combined statement of operations, but they are included in the unaudited pro forma condensed combined balance sheet through an adjustment to retained earnings.
---	---

7. Adjustments to the unaudited pro forma condensed combined statement of operations

Refer to the items below for reconciliation of the adjustments reflected in the unaudited pro forma condensed combined statement of operations:

a)	Represents an adjustment to Cost of sales of $17.8 million for the year ended December 31, 2021<br>resulting from the run-off of the estimated step-up in fair value of inventory acquired. It is anticipated that this adjustment will not affect the pro forma condensed<br>combined statement of operations beyond twelve months after the acquisition date. The estimated fair value is subject to change once Perrigo has sufficient information to complete the valuation.
b)	The newly acquired intangible assets, which consist of tradenames and trademarks, patents, IPR&D, and<br>customer relationships, will be amortized on a straight-line basis over their expected useful lives. Trademarks & trade names have an average estimated useful life of 20 years, patents an estimated useful life of 8-22 years, IPR&D an indefinite useful life, and customer relationships an average useful life of 22 years. Pro forma amortization expense includes amortization expense for the newly identified intangible assets<br>less the amortization expense on Héra’s historical intangible assets. Perrigo has not completed the detailed valuation work necessary to finalize the required estimated fair values, estimated lives, or pattern of expected economic<br>benefit associated with the acquired intangible assets. Finalization of the acquisition accounting may result in material changes in the fair value of these intangible assets and/or the associated amortization expense. An increase or decrease of<br>10 percent in fair values would increase or decrease the amortization expense by approximately $10.6 million per annum. Any resulting change in the fair value would have a direct impact to future earnings via depreciation and amortization<br>expense.
---	---
Description (in millions)	Notes			Estimated FairValue (Euros)		EstimatedUseful Life(years)		Year EndedDecember 31,2021 (Euros)			Year EndedDecember 31,2021 ()
---	---	---	---	---	---	---	---	---	---	---	---	---
Amortization expense for definite-lived intangible assets				€	1,287.5		8-22	€	64.2
Less: Historical Héra amortization, adjusted		(i	)						(2.6	)		)
Pro forma net adjustment to Administration								€	61.6	****		****

All values are in US Dollars.

(i)	Historical Héra amortization includes the Depreciation & Amortization—Intangible Assets<br>for each of the following cost centers: Cost of sales, Selling, Administration, Research and development, and Other operating expense (income). The removal of historical amounts above have been adjusted for €1.4 million of research and<br>development intangible amortization, as this amount is already adjusted for in the IFRS to U.S. GAAP conversion adjustments detailed in Note 3. ****
c)	Subsequent to December 31, 2021, the Company incurred estimated additional transaction costs of<br>$49.1 million in connection with the Proposed Acquisition that are not currently reflected in the historical financial statements of Perrigo and Héra, which consist of legal and consulting related fees. Additionally, the Company<br>incurred approximately $10.4 million related to insurance fees for representations and warranties. Accordingly, an adjustment for $59.5 million was recorded within Other operating expense (income) in the unaudited pro forma combined<br>statement of income as a one-time expense incurred within twelve months of the Proposed Acquisition.
---	---
d)	Represents an adjustment to historical Interest expense, net of $66.1 million to reflect the purchase of<br>Héra’s convertible bonds and repayment of existing third-party indebtedness.
---	---
e)	Represents the income tax impact of the pro forma adjustments and historical Héra income utilizing the<br>statutory income tax rate of **** 27.37% for items related directly to the Company and 27.37% for pro forma adjustments related directly to Héra.
---	---
f)	The pro forma basic and diluted earnings per share for the year ended December 31, 2021 is based on the<br>basic and diluted weighted average shares of Perrigo. The pro forma and diluted earnings (loss) per share is calculated as follows:
---	---
Description (in millions, except per sharedata)	Year EndedDecember 31,2021
---	---	---	---
Pro forma net income attributable to Perrigo	$	(268.6	)
Historical weighted-average number of common shares outstanding
Basic		133.6
Diluted		133.6
Pro forma weighted-average number of common shares outstanding
Basic		133.6
Diluted		133.6
Pro forma net income per common share
Basic		(2.01	)
Diluted		(2.01	)

EX-99.4

Exhibit 99.4

LOGO

PERRIGO ANNOUNCES LAUNCH OF SYNDICATION OF NEW SENIOR SECURED CREDIT FACILITIES

Dublin, Ireland—March 28, 2022 — Perrigo Company plc (NYSE: PRGO) (“Perrigo” or the “Company”), a leading provider of Quality, Affordable Self-Care Products, today announced that it has launched the syndication of new senior secured credit facilities expected to consist of (i) a $1,000 million five-year revolving credit facility (the “New Revolving Facility”) and (ii) a $300 million five-year term loan A facility and a $800 million seven-year term loan B facility (the “New Term Loan Facilities” and, together with the New Revolving Facility, the “New Senior Secured Credit Facilities”) through its indirect wholly-owned subsidiary, Perrigo Investments, LLC. The New Senior Secured Credit Facilities will be guaranteed by the Company and certain wholly-owned subsidiaries of the Company.

Subject to market and other conditions, Perrigo intends to borrow approximately $1,600 million, inclusive of the New Term Loan Facilities and $500 million of other unsecured debt (but excluding undrawn availability under the New Revolving Facility). The Company intends to use the net proceeds of these borrowings, together with cash on hand, to finance the purchase price for the previously announced acquisition of Héra SAS (“Héra”) and to refinance certain existing indebtedness of the Company and its subsidiaries, including its outstanding term loan facility and outstanding debt securities maturing in 2023. The Company will use any amounts borrowed from time to time under the New Revolving Facility, which will replace its existing revolving facility, for general corporate purposes.

JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Wells Fargo Securities, LLC, BofA Securities, Inc. and HSBC Securities (USA) Inc. are the joint lead arrangers for the New Senior Secured Credit Facilities.

The terms of the proposed refinancing, including but not limited to the principal amount, interest rate and maturity of the New Senior Secured Credit Facilities, and the consummation of the acquisition of Héra, are subject to a number of significant conditions, and there can be no assurance that the Company will consummate any of these transactions on the anticipated terms or timing, or at all. In addition, entering into the New Senior Secured Credit Facilities is not conditioned upon consummation of the acquisition of Héra.

This press release is not an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of the securities in any state or other jurisdiction where such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

About Perrigo

Perrigo Company plc (NYSE: PRGO) is a leading provider of Quality, Affordable Self-Care Products and over-the-counter (OTC) health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed. Led by its consumer self-care strategy, Perrigo is the largest store brand OTC player in the U.S. in the categories in which it competes through more than 9,000 SKUs under customer ‘own brand’ labels. Additionally, Perrigo is a Top 10 OTC company by revenue in Europe, where it markets more than 200 branded OTC products throughout 28 countries.

Forward-Looking Statements

Certain statements in this press release are “forward-looking statements.” These statements relate to future events or the Company’s future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “forecast,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or the negative of those terms or other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company’s control, including: the Company’s expectations with respect to the syndication and closing of the New Senior Secured Credit Facilities and the other contemplated refinancing transactions and the use of net proceeds therefrom, the effect of the novel coronavirus (COVID-19) pandemic and its variants and the associated supply chain impacts on the Company’s business; general economic, credit, and market conditions; the outbreak of war between Russia and Ukraine, including the imposition of sanctions related thereto, or escalation of conflict in other regions where the Company does business; future impairment charges; customer acceptance of new products; competition from other industry participants, some of whom have greater marketing resources or larger market shares in certain product categories than the Company does; pricing pressures from customers and consumers; resolution of uncertain tax positions, including the Company’s appeal of the draft and final Notices of Proposed Assessment (“NOPAs”) issued by the U.S. Internal Revenue Service and the impact that an adverse result in any such proceedings would have on operating results, cash flows, and liquidity; pending and potential third-party claims and litigation, including litigation relating to the Company’s restatement of previously-filed financial information and litigation relating to uncertain tax positions, including the NOPAs; potential impacts of ongoing or future government investigations and regulatory initiatives; potential costs and reputational impact of product recalls or sales halts; the impact of tax reform legislation and healthcare policy; the timing, amount and cost of any share repurchases; fluctuations in currency exchange rates and interest rates; the success of the sale of the Rx business, including the ability to achieve the expected benefits thereof and the risk that potential costs or liabilities incurred or retained in connection with the transaction may exceed the Company’s estimates or adversely affect the Company’s business or operations; the consummation and success of the proposed acquisition of Héra and the ability to achieve the expected benefits thereof, including the risk that the parties fail to obtain the required regulatory approvals or to fulfill the other conditions to closing on the expected timeframe or at all, the occurrence of any other event, change or circumstance that could delay the transaction or result in the termination of the securities sale agreement or the risks that Company’s synergy estimates are inaccurate or that the Company faces higher than anticipated integration or other costs in connection with the proposed acquisition; the consummation and success of other announced acquisitions or dispositions, and the Company’s ability to realize the desired benefits thereof; and the Company’s ability to execute and achieve the desired benefits of announced cost-reduction efforts and strategic and other initiatives. An adverse result with respect to the Company’s appeal of any material outstanding tax assessments or pending litigation, including securities or drug pricing matters, could ultimately require the use of corporate assets to pay such assessments, damages from third-party claims, and related interest and/or penalties, and any such use of corporate assets would limit the assets available for other corporate purposes. These and other important factors, including those discussed under “Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2021, as well as the Company’s subsequent filings with the United States Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this press release are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Perrigo Company plc

Perrigo Contacts

Bradley Joseph, Vice President, Global Investor Relations & Corporate Communications, (269) 686-3373, E-mail: bradley.joseph@perrigo.com

Nicholas Gallagher, Manager, Global Investor Relations & Corporate Communications, (269) 686-3238, E-mail: nicholas.gallagher@perrigo.com