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Credit lines

Long-term bilateral credit lines approved by banks are a major component of our financing portfolio. As the credit lines are confirmed for up to five years, it is extremely important to maintain a particularly trusting and cooperative working relationship with the banks. We review our bank portfolio continuously, terminate business relationships with the respective bank if we determine that continuation would no longer make sense for either party and take this relationship to new banks where it is sensible to do so in the long-term. Celesio currently has long- term bilateral and syndicated lines of credit which have not been drawn totalling more than EUR 1bn. The lines of credit are provided by numerous international banking groups; most have terms of between two and five years, some can be drawn in a range of currencies and none of them, except for the EUR 500m syndi- cated loan, contains a change of control clause.

Bonds

Celesio had two bonds outstanding in fiscal 2014:

31/12/2013 31/12/2014 Coupon Maturity EUR m % Convertible bond 2014 350.0 0.0 3.75 29/10/2014 Corporate bond 2016 350.0 349.7 4.00 18/10/2016 Corporate bond 2017 500.0 499.7 4.50 26/04/2017 Convertible bond 2018 350.0 0.0 2.50 07/04/2018 Total EUR 1,550.0 849.4

The changes in convertible bonds and the corporate bonds as well as the syn- dicated loan impacted the financing portfolio in 2014. Regarding the convertible bonds, the creditors – on account of McKesson’s successful acquisition – had the possibility between 28 January and 24 March 2014 to convert their convertible bonds into shares on the basis of a (reduced) adjusted conversion price. The ma- jority of the convertible bonds were converted while the remaining minor share of outstanding convertible bonds was collected by a clean up call. There are no convertible bonds outstanding as of the end of December 2014.

For the corporate bonds, in the event that a rating event (as defined in the terms and conditions of the bonds) occurs within 90 days after a change of control, the creditors are entitled to declare their bonds due ahead of schedule at the determined nominal value plus accrued interest as of the date of repayment pursuant to the terms and conditions of the bonds. Due to the stock exchange price of the corporate bonds, investors requested a repayment of a nominal value of EUR 0.6m only.

Promissory notes

In fiscal 2014, we made use of the right of termination of two promissory notes: on 17 June 2014 EUR 27.5m was prepaid and on 2 January 2015 EUR 50.0m was prepaid from the promissory note which was terminated on 15 December 2014. Due to the cancellation of the latter, the maturity of the EUR 50.0m promissory note was reduced from 17 June 2019 to 2 January 2015. In addition, promissory notes with a nominal value of EUR 50m and GBP 40m matured in fiscal 2014.

PROMISSORY NOTES (NOMINAL VALUE) 31/12/2013 31/12/2014 Maturity

EUR m 50.0 / 15/06/2014 27.5 / 15/09/2016 50.0 50.0 02/01/2015 40.0 40.0 17/06/2019 Total EUR 167.5 90.0

PROMISSORY NOTES (NOMINAL VALUE) 31/12/2013 31/12/2014 Maturity

GBP m

/ / 15/03/2013 40.0 / 15/06/2014

Total GBP 40.0 /

As of 31 December 2014, promissory notes came to a nominal value of EUR 90.0m (previous year EUR 215.5m).

Factoring

In fiscal 2014, we once again sold receivables of our UK subsidiary Lloydspharmacy from the National Health Service (NHS) in England as well as the devolved admin- istrations of Scotland and Wales. The receivables sold had a total volume of EUR 158.7m as of year-end (previous year EUR 137.5m). Our Norwegian subsidiary Norsk Medisinaldepot also continued factoring its receivables from public-sector hospital pharmacies. The receivables sold in Norway had a volume of EUR 43.2m as of year-end (previous year EUR 44.4m). Further receivables have initially been sold by our Swedish subsidiary Admenta Sweden to the amount of EUR 5.0m (previous year EUR 0.0m).

This factoring reduces both our refinancing risk in the respective currencies and our counterparty risk. The very good credit quality of the governments that act as guarantors for the receivables minimises our interest expense. The receiva- bles sold are not recognised in our statement of financial position; this reflects the fact that the significant risks and rewards have been transferred to the purchaser. Investments

In fiscal 2014, we made overnight deposits with banks. The credit standing was the main selection criterion for banks. We define maximum investment amounts for each bank in order to minimise the risk of default in connection with the different deposit guarantee scheme directives.

Financing costs

We optimise financing costs and our counterparty risk by funding the Celesio working capital, which fluctuates daily, primarily at group level. We have set up cross-border cash pools with banks for accounts denominated in euro. We exam- ine on an ongoing basis whether further group companies can be included in these cash pools.

On 31 December 2014, Celesio AG and its group companies had met all loan obligations and other obligations arising from financing agreements. More detailed information on our financial liabilities in fiscal 2014 is provided from  page 142 onwards of the notes to the consolidated financial statements.

As of 31 December 2014, the Celesio Group had total assets of EUR 7,829.6m; an increase of EUR 231.3m compared to 31 December 2013.

The gearing, which expresses the ratio of net debt to equity, consequently im- proved as of 31 December 2014 to 0.31 compared to 0.62 as of 31 December 2013. This development was mainly driven by the conversion of the convertible bonds into equity.

Non-current assets increased by a total of EUR 0.4m to EUR 3,037.4m com- pared to the end of 2013. Of this amount, EUR 93.1m related to currency effects and EUR 116.6m related to changes in investment in property, plant and equip- ment. This was adversely affected by the depreciation of non-current assets and property, plant and equipment of EUR 121.3m, impairments on property, plant and equipment of the wholesale business in Germany of EUR 6.9m as well as impair- ment losses on goodwill at the Brazilian subsidiaries of EUR 77.0m as well as on the wholesale business in Germany of EUR 7.0m. Additionally, a depreciation of other intangible assets of EUR 10.7m in Brazil as well as software to the amount of EUR 27.4m, mainly in the United Kingdom, was recorded.

As of 31 December 2014, current assets came to EUR 4,792.2m an increase of EUR 231.7m compared to 31 December 2013. Trade receivables rose by EUR 215.7m to EUR 2,298.4m, primarily due to higher receivables in the United Kingdom and Germany, triggered by revenue growth. Currency effects amounting to EUR 23.6m also had a positive impact on trade receivables. Inventories in- creased by EUR 147.3m to EUR 1,745.1m as at 31 December 2014. This is mainly the result of higher stock levels in Brazil, Germany and the United Kingdom com- pared to the previous year and a positive currency effect of EUR 20.3m. As of 31 December 2014, cash and cash equivalents came to EUR 335.8m compared to EUR 535.7m as of 31 December 2013; a decrease of EUR 199.9m overall.

As of 31 December 2014, other receivables and other assets increased by EUR 30.8m to EUR 353.7m. This trend was essentially driven by exchange rate effects and higher VAT receivables. As of 31 December 2014, the Celesio Group reported assets as held for sale of EUR 1.0m. The fall of EUR 1.5m compared with 31 December 2013 is due to the sale of property held for sale.

As at the reporting date, we recorded a EUR 569.5m increase in equity capital to EUR 2,761.5m compared to the end of 2013. This trend is primarily attributable to the conversions of convertible bonds. The equity ratio stood at 35.3% on 31 December 2014. This equates to an increase of 6.5 percentage points compared to the end of December 2013.