Virbac: Public Release of the Year-End Consolidated Accounts at 31 December 2024

Consolidated accounts

CONSOLIDATED FINANCIAL STATEMENTS

Statement of financial position

Income statement

¹in order to provide a clearer picture of our economic performance, we isolate the impact of the allowance for depreciations of intangible assets resulting from acquisitions. This turned out to have a material impact considering the latest external growth that took place through acquisitions. Therefore, our income statement shows a current operating profit, before depreciation of assets arising from acquisitions (see note A24)

Comprehensive income statement

Statement of change in equity

¹restatement following the IAS 12 amendment related to deferred tax assets and liabilities arising from the same transaction, applicable as at January 1, 2023 (see “Accounting principles and methods applied”)

The general shareholders’ meeting of Virbac, which was held on June 21, 2024, approved the payment of a dividend of €1.32 per share for the 2023 financial year, for a total amount of €11,164,560 (reduced to €11,054,464 given the number of outstanding shares).

The “Changes in scope” line essentially reflects the impact of the acquisition of Globion's non-controlling interests which was finalized on June 21, 2024 (see note A1). The debt relating to the acquisition of non-controlling interests had been recognized in the Group's equity as of December 31, 2023. In accordance with the provisions of IFRS 10, the effects of the subsequent change in debt were recognized via equity.

The reduction of the share capital decided by the board of directors on September 13, 2024 by cancellation of 67,340 treasury shares was carried over to the “Other variations” line for an amount of €84 thousand. This line also includes, in essence, the impact on consolidated reserves of Globion's non-controlling interests reserve adjustment following the completion of the work to allocate the acquisition price.

Cash position statement

Statement of change in cash position

NOTES TO THE CONSOLIDATED ACCOUNTS

General information note

Virbac is an independent, global pharmaceutical laboratory exclusively dedicated to animal health which markets a full range of products designed for companion animals and farm animals.

The Virbac share is listed on the Paris stock exchange in section A of the Euronext.

Virbac is a public limited company governed by French law, whose governance evolved in December 2020 from an organization with an executive board and a supervisory board to an organization incorporating a general management (which relies on a Group executive committee) and a board of directors. Its trading name is “Virbac”. The company was established in 1968 in Carros.

After the joint ordinary and extraordinary shareholders' meeting held on June 17, 2014, which adopted the resolution on reviewing the by-laws, the company’s lifetime was extended to 99 years, i.e. until June 17, 2113. The head office is located at 1^ère avenue 2065m LID 06516 Carros. The company is registered in the Grasse Trade and companies register under the number 417350311 RCS Grasse (France).

Our consolidated accounts for the 2024 financial year were approved by the board of directors on March 12, 2025. They will be submitted for approval to the shareholders’ general meeting on June 19, 2025, which has the power to have the statements amended.

The explanatory notes below form part of the consolidated accounts.

Significant events over the period

Sasaeah's acquisition on April 1, 2024

On April 1, 2024, we completed the acquisition of Sasaeah. This strategic acquisition brings Virbac a leadership position in the farm animal vaccines market in Japan, notably in the cattle segment, and a large portfolio of pharmaceutical products for all the major species.

Formed through the combination of two legacy animal health providers (Fujita Pharmaceutical Co. Ltd. and Kyoto Biken Laboratories Inc.) under the stewardship of ORIX Corporation, Sasaeah generates annual revenues of about €75 million, of which around 50% from vaccines. With strong footholds in Japan, Sasaeah develops, manufactures and markets a large portfolio of veterinary products targeting both farm animals and companion animals.

Virbac will benefit from Sasaeah’s manufacturing sites in Japan and in Vietnam, its R&D capabilities as well as more than 500 passionate and skilled employees. Virbac will be propelled as a leading animal health player in Japan, with an opportunity to leverage these capabilities within the Group.

Finalization of the acquisition of Globion's minority shares’ on June 21, 2024

On June 21, 2024, we finalized the acquisition of Globion's minority shares, bringing our stake to 100%. As planned, this transaction follows the acquisition of a 74% majority stake concluded on November 1, 2023. During the 2024 financial year, in compliance with the twelve-month period provided for by IFRS 3, the Group finalized the work to allocate the acquisition price. As a result, the valuation of goodwill and the fair value of assets and liabilities acquired as a result of the business combination have been updated.

Founded in 2005, as a joint venture between Suguna Group, one of the leading Indian poultry conglomerates, and Lohmann Animal Health, a German poultry vaccines specialist, Globion has developed robust know-how and expertise in the development, manufacturing and commercialization of live and inactivated vaccines targeting a large array of avian pathogens.

Globion is based in Hyderabad where its industrial and R&D facilities employ around 120 full-time employees.

Virbac executive management change

At the beginning of July, the group has announced the resignation of Sébastien Huron from his position as chief executive officer for personal reasons. His mandate ended on September 27, 2024.

Habib Ramdani, Group chief financial officer and deputy chief executive officer prior to the departure of Sébastien Huron, was appointed as interim CEO by the board of directors, giving the appointments and remuneration committee time to recruit the next chief executive officer. Since taking office, Habib Ramdani has been supported by the Group executive committee to execute the roadmap for our Virbac 2030 project.

Capital reduction

During the meeting held on September 13, 2024, the board of directors, acting on the authorization granted by the combined shareholders’ meeting on June 20, 2023, decided to reduce the share capital of Virbac by cancelling 67,340 treasury shares. These shares were acquired during 2023 under the share buyback program authorized by the same shareholders’ meeting.

As of today, the share capital of Virbac amounts to €10,488,325, represented by 8,390,660 shares of €1.25 each, fully paid-up.

On December 31, the Dick family group holds 50.09% of the share capital of Virbac and 66.21% of its voting rights. Information on the total number of voting rights and shares, as well as the shareholder structure, are updated on the company's website corporate.virbac.com.

Acquisition of Mopsan in Türkiye on December 2, 2024

On December 2, we finalized the acquisition of Turkish company Mopsan, specialized in the distribution of petfood and companion animal health products.

With a population of more than 4 million cats, 1.3 million healthcare dogs and more than 5,000 veterinarian clinics serving companion animals, Türkiye is one of the key European markets for Virbac, which has been present in Türkiye for more than 20 years through various local distributors, and has had its own subsidiary since 2018. The acquisition of Mopsan, our distributor of products for companion animals, represents a new step for Virbac’s development in Türkiye. Mopsan has been working alongside Turkish veterinarians for over 30 years and has extensive experience in the petfood and companion animal healthcare product sector. Virbac will benefit from its extensive distribution network, in-depth knowledge of the local market and an experienced team. The company is based in Istanbul and employs nearly 50 employees.

Significant events after the closing date

There is no significant event after the closing date.

Accounting principles and methods

Compliance and basis for preparing the consolidated financial statements

The consolidated financial statements cover the twelve-month periods ended December 31, 2024 and 2023.

In line with regulation n°1606/2002 of the European parliament and of the council of July 19, 2002 on the application of international accounting standards, our consolidated financial statements are established in accordance with the international accounting standards and interpretations, which encompasses the IFRS (International financial reporting standards), the IAS (International accounting standards), as well as applicable interpretations by the SIC (Standards interpretations committee) and the Ifric (International financial reporting interpretations committee), whose application was compulsory at December 31, 2024.

Our consolidated financial statements as of December 31, 2024 have been prepared in accordance with the standard published by the IASB (International accounting standards board) and the standard adopted by the European Union as of December 31, 2023. The IFRS standard adopted by the European Union as at December 31, 2024 is available under the heading “IAS/IFRS interpretations and standards”, on the following website: http://ec.europa.eu/finance/company-reporting/standards-interpretations/index.

The consolidated financial statements have been prepared in accordance with the IFRS general principles: true and fair view, business continuity, accrual basis accounting, consistency of presentation, materiality and consolidation.

New standards and interpretations

Mandatory standards and interpretations as at January 1, 2024

■ Amendments to IAS 1 - Presentation of financial statements: classification of liabilities as current or non-current & non-current liabilities with covenants

■ Amendments to IAS and IFRS 7 - Supplier finance arrangements

■ Amendments to IFRS 16 - Leases contracts: lease liability in a sale and leaseback

IFRIC decisions applicable over the period

■ Amendment to IFRS 3 Business combination and IAS 27 Separated financial statements - Merger between parent and subsidiary

■ Amendment to IFRS 3 Business combination - Payment contingent on continued employment during a post-acquisition handover period

■ Amendment to IAS 37 Provisions, contingent assets and liabilities - Climate-related commitments

These new texts have had no significant impact on our accounts.

Consolidation rules applied

Consolidation scope and methods

In accordance with IFRS 10 “Consolidated financial statements”, our consolidated financial statements include all of the entities controlled, directly or indirectly, by Virbac, whatever equity share it may have in these entities. An entity is controlled by Virbac once the following three criteria are cumulatively met:

•     Virbac has power over the subsidiary whereby it has actual rights that give it the ability to direct relevant activities;

•     Virbac is exposed to or has rights to variable returns because of its connections to that entity;

•     Virbac has the capacity to exercise its power over this entity so as to affect the amount of returns that it receives.

Determining control takes into account potential voting rights if they are substantive, in other words, whether they can be exercised in a timely fashion when decisions about the entity’s relevant activities should be taken.

The entities over which Virbac exercises this control are fully consolidated. As applicable, any non-controlling (minority) interests are valued on the date of acquisition in the amount of the fair value of the identified net assets and liabilities.

In accordance with IFRS 11 “Partnerships”, we classify partnerships as joint ventures. Depending on the partnerships, Virbac exercises:

•     joint control over a partnership when decisions regarding the partnership’s relevant activities require unanimous consent from Virbac and the other parties sharing control;

•     significant influence over an associated company when it has the power to participate in financial and operational decisions, albeit without having the power to control or exercise joint control over these policies. Joint ventures and associated companies are consolidated using the equity method in accordance with IAS 28 “Investments in associated companies and joint ventures” standard.

The consolidated financial statements as at December 31, 2024 include the financial statements of the companies that Virbac controls indirectly or directly, in law or in fact. The list of consolidated companies is provided in note A40.

The changes in perimeter that took place during the year were the following: acquisition of Sasaeah's entities in Japan and Vietnam, and Mopsan in Türkiye.

All transactions between Group companies, as well as inter-company profits, are eliminated from the consolidated accounts.

Foreign exchange conversion methods

■ Conversion of foreign currency operations in the accounts of consolidated companies

Fixed assets and inventories acquired using foreign currency are converted into functional currency using the exchange rates in effect on the date of acquisition. All monetary assets and liabilities denominated in foreign currency are converted using the exchange rates in effect on the year-end date. The resulting exchange rate gains and losses are recorded in the income statement.

■ Conversion of foreign company accounts

In accordance with IAS 21 “Effects of changes in foreign exchange rates”, each of our entities accounts for its operations in its functional currency, the currency that most clearly reflects its business environment.

Our consolidated financial statements are presented in euros. The financial statements of foreign companies for which the functional currency is not the euro are converted according to the following principles:

•     the balance sheet items are converted at the rate in force at the close of the period. The conversion difference resulting from the application of a different exchange rate for opening equity is shown in the other comprehensive income;

•     the income statements are converted at the average rate for the period. The conversion difference resulting from the application of an exchange rate different from the balance sheet rate is shown in the other comprehensive income.

In addition, since 2024, the Group has applied IAS 29 relating to hyperinflationary economies. Türkiye is the only country covered by the Group’s scope of consolidation and has been included in the list of hyperinflationary economies since 2022. The transactions that we carry out in this country remain insignificant at Group level, and the impact in 2022 and 2023 was negligible. In 2024, it remains negligible, but as the contribution of this country is increasing, the Group has acquired a new Turkish subsidiary within its scope during the period (Mopsan), we however began to apply the provisions of IAS 29 over the period.

The impact of hyperinflation, although trivial, is treated as “Other variations” in the changes in equity, as a financial result in the income statement, and on the lines “Changes in scope and others” in the balance sheet items concerned.

Accounting principles applied

Goodwill

Goodwill is recognized as an asset in our statement of financial position and represents the excess, at the date of acquisition, of the acquisition cost over the fair value of the identifiable assets and liabilities acquired. It also includes the value of the acquired business goodwill.

In line with IAS 36 “Impairment of assets”, goodwill is at the very least tested once annually, at the end of the year, regardless of whether there is an indication of an impairment, and consistently whenever events or new circumstances indicate an impairment.

For the purposes of these tests, the asset values are grouped by CGU (Cash generating unit). In the case of goodwill, the related assets held by the legal entity are typically the smallest identifiable group of cash-flowgenerating assets. The legal entity is therefore used as a CGU. In the implementation of goodwill impairment testing, we apply a DCF (Discounted cash flow) approach. This approach consists of calculating the value in use of the CGU by discounting estimated future cash flows. When the value in use of the CGU is less than its net carrying amount, an impairment loss is recognized to reduce the net carrying amount of the CGU assets to their recoverable amount, which is defined as the higher between the net fair value and the value in use. The goodwill is first impaired, before the other assets are impaired in proportion to their weighting in the total assets of the CGU, or group of CGUs.

The future cash flows used for the impairment tests are calculated based on estimates (business plans) over a fiveyear period. IAS 36 authorizes more distant perspectives to be used in certain situations when they provide a better account of the forecasts. This is especially the case when major product launches are being considered.

All of the business plans are validated by the subsidiaries’ general management, as well as by the Group’s Finance Affairs department. The board of directors formally validates the business plans and main assumptions of impairment tests of the most significant CGUs.

For cash flow forecasts, the perpetual growth rates used, which depend on products and market growth expectations, and the discount rates based on the weighted average cost of capital after tax method, are presented in note A3. The calculation of discount rates is made by geographic area, with the support of a valuation firm. Valuations carried out during the goodwill impairment tests are sensitive to the assumptions used in regards not only to the selling price and future costs, but also to the discount and infinite growth rates. Sensitivity calculations for measuring our exposure to significant variations in these assumptions are performed.

Intangible assets

IAS 38 sets out the six criteria required to account for an intangible asset: •     technical feasibility required to complete the development project;

•     intent to complete the project;

•     ability to use the intangible asset;

•     support proving that the asset will generate future economic benefits;

•     availability of technical, financial and other resources in order to complete the project;

•     reliable valuation of the development expenditures.

■ Internal development costs

They are only recorded under intangible assets if all six IAS 38 criteria have been met.

Intangible assets are valued at their historical acquisition cost, including acquisition fees, plus, if applicable, the internal costs of employees who have contributed in the realization of the intangible asset.

■ Research and development projects acquired separately

Payments made for the separate acquisition of research and development activities are recognized as intangible assets when they meet the definition of an intangible asset, i.e. when they are a controlled resource from which future economic benefits are expected to flow, and which is identifiable, that is, separable, or it arises from contractual or legal rights.

In line with paragraph 25 of IAS 38, the first accounting criterion, which relates to the likelihood the intangible asset will generate future economic benefits, is deemed to be met for research and development activities when they are acquired separately. In this respect, amounts paid to third parties in the form of deposits or installments on generic products that have not yet been granted a Marketing authorization (MA) are recognized as an asset.

The amount of the intangible assets is reduced by any accumulated depreciation and, if applicable, accumulated impairment losses.

The intangible assets with finite useful lives are subject to a linear depreciation, as soon as the asset is ready to be used:

•     concessions, patents, licenses and marketing authorizations: amortized over their useful lives; •       standard software (office tools, etc.): amortized over a period of three or four years;

•     ERP: amortized over a period of five to ten years.

It should be noted that most of the brands owned by the Group, and recognized in our accounts following acquisitions made under IFRS 3, have an indefinite lifespan, except in some cases where we felt that it was more relevant to retain a definite life, considering a set of indicators such as: the history of the acquired brand, possible legal limitations, potential technical obsolescence, etc.

Intangible assets with indefinite useful lives are reviewed annually, to ensure that their useful life has not become finite.

During the useful life of an intangible asset, it may seem that the estimation of its useful life has become inadequate. As required by IAS 38, the duration and method of depreciation of this asset are re-examined and if the expected useful life of the asset is different from previous estimations, the depreciation period is consequently modified.

In accordance with IAS 36 “Impairment of assets”, the potential impairment loss of intangible assets is assessed each year. In the case of assets with indefinite useful lives, the tests are carried out during the second half year, regardless of whether there is any indication of impairment, and consistently whenever events or new circumstances indicate an impairment loss for assets with defined useful lives.

Intangible assets are tested for impairment in the same way as goodwill, as described in the paragraph above.

Tangible assets

In accordance with IAS 16, tangible assets are valued at their historical acquisition cost, including acquisition fees, or at their initial manufacturing cost, plus, if applicable, the internal costs of staff directly contributing to the construction of a tangible asset.

In accordance with IAS 23 revised, borrowing costs are incorporated into the acquisition costs of eligible assets. The amount of the tangible assets is reduced by any accumulated depreciation and, if applicable, accumulated impairment losses.

If applicable, assets are broken down by component, each component having its own specific depreciation period, in line with the depreciation period of similar assets.

Tangible assets are depreciated over their estimated useful lives, namely:

•     buildings:

–   structure: forty years;

–   components: ten to twenty years;

•     materials and industrial equipment:

–   structure: twenty years;

–   components: five to ten years;

–   computer equipment: three or four years;

•     other tangible assets: five to ten years.

Right of use

Our Group recognizes assets related to those leases falling within the scope of the IFRS 16 standard. Consequently, the Group has decided to separately identify the rights of use on a dedicated balance sheet line. The rights of use are generally amortized over the residual term of the contracts or over a longer term in the event of likely renewal.

Inventories and work in progress

Inventories and work in progress are accounted for at the lowest value of the cost and the net realizable value. The cost of inventories includes all acquisition costs, transformation costs and other costs incurred to bring the inventories to their current location and condition. The acquisition costs of inventories include the purchase price, customs fees and other non-retrievable taxes, as well as transport and handling costs and other costs directly attributable to their acquisition. Rebates granted to customers and other similar items are deducted from this cost.

Inventories in raw materials and supplies are evaluated in accordance with the weighted average cost method. Inventories in trading goods are also evaluated in accordance with the weighted average cost method. The acquisition cost of raw material inventories includes all additional purchase costs.

The manufacturing work in progress and the finished products are valued at their actual manufacturing cost, including direct and indirect production costs.

Finished products are valued in each of our subsidiaries at the price invoiced by the Group’s selling company, plus distribution costs; the margin included in these inventories is eliminated in the consolidated accounts, taking into account the complete average production cost stated for the Group’s selling company.

The inventories of spare parts are valued on the basis of the last purchase price.

An impairment loss is recorded where necessary to value inventories at their net realizable value, when the products become out-of-date or unusable or sometimes based on the sales forecasts of certain products in dedicated markets.

Trade receivables

Trade receivables are classified as current assets to the extent that they form part of our normal operating cycle.

Trade receivables are recognized and recorded for the initial amount of the invoice, minus any impairment recorded in the income statement. An estimation of the total bad debt is made when it becomes unlikely that the full amount will be recovered. Bad debts are written off when identified as such.

In accordance with IFRS 9, they are subject to impairment, corresponding to the estimated expected losses, determined by application of an impairment matrix (application of the simplified impairment model provided for by  IFRS 9). This approach consists of applying, to each ageing bracket, an impairment rate based on the history of credit losses, adjusted, if applicable, to take into account elements of a prospective nature.

Receivables assigned as part of a factoring contract without recourse are subject to a substantial factoring contract analysis based on the criteria set out in IFRS 9. These receivables are deconsolidated, if applicable.

Other financial assets

The other financial assets recognized in our accounts include mainly loans, other receivables, non-available cash items, and financial derivatives.

Loans and other receivables are accounted for at amortized cost, derivatives are recognized at fair value (see note A6).

Other financial assets at fair value

All of our financial assets are valued at fair value using observable data. The only financial assets that come under this category are hedging instruments and marketable securities (see note A32).

Cash and cash equivalents

The cash position is made up of bank balances, securities and cash equivalents highly liquid, readily convertible to known amounts and that can therefore be used to meet short-term cash commitments.

The majority of these investments are UCITS (Undertakings for collective investment in transferable securities) and futures contracts with maturities that are generally under three months, or, when above - without exceeding twelve months - they are easily available and can be called back without material penalties. These are in place with firstclass counterparties.

The bank accounts subject to restrictions (restricted accounts) are excluded from the cash flow and reclassified as other financial assets.

Treasury shares

Shares in the parent company held by the parent company or its consolidated subsidiaries (whether classified in the statutory accounts as non-current financial assets or marketable securities), are recognized as a deduction from shareholders’ equity at their purchase cost. Any gain or loss on disposal of these shares is directly recognized (net of tax) in shareholders’ equity and not recognized in income for the year.

Conversion reserves

This item represents the conversion variance of net opening positions for foreign companies, arising from the differences between the conversion rate at the date of entry into the consolidation and the closing rate of the period, and also other conversion differences recorded on the profit for the period arising from differences between the conversion rate of the income statement (average rate) and the closing rate for the period.

Reserves

This item represents the share attributable to the owners of the parent company in the reserves accumulated by the consolidated companies, since their entry into the scope of consolidation.

Non-controlling interests

This item represents the share of the shareholders outside the Group in the equity and the income of the consolidated companies.

Derivative instruments and hedge accounting

We hold derivative financial instruments only for the purpose of reducing our exposure to rate or exchange risks on balance sheet items and our firm or highly likely commitments.

We use hedge accounting to offset the impact of the hedged item and of the hedging instrument in the income statement, on a quasi-systematic basis, when the following conditions are met:

•     the impact on the income statement is significant;

•     the hedging links and effectiveness of the hedging can be properly demonstrated.

We hedge most of our significant and certain foreign exchange positions (receivables, liabilities, dividends, intragroup loans), as well as our future sales and purchases (see note A33).

Trade payables

Trade payables and other debts fall within the category of financial liabilities valued at amortized cost, as defined by the IFRS 9 “Financial instruments”. These financial liabilities are initially recorded at their nominal value.

Other financial liabilities

The other financial liabilities consist primarily of bank loans and financial debts. Loan and debt instruments are valued initially at the fair value of the consideration received, minus the transaction costs directly attributed to the operation. Thereafter, they are valued at their amortized cost.

Lease liability

The Group recognizes in its financial statements a liability relating to leases falling within the scope of the IFRS 16. We have chosen to isolate lease liabilities, for their current and non-current part, on a dedicated balance sheet line. These debts are discounted on the basis of rates determined with the support of an actuary, according to the country risk, the category of the underlying asset and the lease period.

Retirement plans, severance pay and other post-employment benefits

■ Defined-contribution retirement plans

The advantages associated with defined contribution retirement plans are expensed as incurred.

■ Defined-benefit retirement plans

Our liabilities arising from defined benefit retirement plans are determined using the projected unit credit actuarial method. These liabilities are measured at each reporting date. The method used to calculate the liabilities is based on a number of actuarial assumptions. The discount rate is determined in relation to the yield on investment grade corporate bonds (issuers rated “AA”). The Group’s obligations are subject to a provision for their amount, net of the fair value of the hedging assets. In accordance with IAS 19 revised, actuarial differences are recorded in the other items of the comprehensive income.

Other provisions

A provision is recognized when the Group has a present obligation resulting from a past event which will probably lead to an outflow of economic benefits that can be reasonably estimated. The amount recorded under provisions is the best estimate of the expenditure required to settle the existing obligation on the balance sheet date, and is discounted if the effect is material.

Taxation

Our subsidiaries account for their taxes based on the respective tax regulations applicable locally. The parent company and its French subsidiaries are part of a fiscally integrated group. Under the terms of the tax consolidation agreement, each consolidated company is required to account for tax as if it were taxed separately. The income or expense of tax consolidation is recognized in the parent company’s accounts.

Our Group recognizes deferred taxes on timing differences between the carrying amount and the tax base of an asset or liability. Tax assets and liabilities are not discounted.

In accordance with the IAS 12, which allows under certain conditions the offsetting of tax liabilities and receivables, the deferred tax assets and liabilities have been offset by tax entity. In situations involving a net deferred tax asset on tax loss carryforwards, it is only recognized in accordance with IAS 12 if there are strong indications that it can be offset against future taxable profits.

Non-current assets held with a view to sale and discontinued activities

IFRS 5 states that an activity is considered discontinued when the classification criteria of an asset being held with a view to sale have been fulfilled, or when the Group ceases the activity. An asset is classified as held for sale if its carrying amount will be mainly recovered through sale rather than through continued use. As at December 31, 2024, no asset was classified as held for sale.

Revenue from ordinary activities

In accordance with IFRS 15, revenue recognition is assessed in light of performance obligations and transfer of control. In relation to the accounting of the sale of products, the transfer of risks and rewards is an indicator of transfer of control, even if this is not always the key criterion.

Our income from ordinary activities reflects the sale of animal health and nutrition products. Revenue comprises the fair value before tax of the goods and services sold by the integrated companies as part of their normal operations, after elimination of intra-group sales.

Returns, discounts and rebates are recorded over the accounting period for underlying sales and are deducted from revenue. These amounts are calculated as follows:

•     provisions for rebates related to the achievement of objectives are measured and recognized at the time of the corresponding sales;

•     provisions for product returns are calculated based on management’s best estimate of the amount of products that will eventually be returned by customers. Provisions for returns are estimated based on past experience with returns, but also on items such as: inventory levels in the various distribution channels, product expiration dates, and information on the potential discontinuation of products. In each case, provisions are regularly reviewed and updated based on the most recent information at management’s disposal.

Other income accounted for into our accounts consists mainly of license fees. Each contract is subject to specific analysis in order to identify the performance obligations and to determine the progress of each one of them towards achievement at the closing date of our consolidated accounts, and revenue is recognized accordingly.

Employee costs

Employee costs mainly include the cost of retirement plans. In accordance with the revised IAS 19 standard, actuarial differences are recorded in the other items of the comprehensive income. They also include optional and compulsory profit-sharing.

Taxes and duties

We have opted for a classification of the business value added contribution/tax in the “Taxes and duties” item of the operating profit.

Operating profit

Operating profit corresponds to income from ordinary activities, minus operating expenses.

Operating expenses include:

•     purchases consumed and external costs;

•     employee costs;

•     taxes and duties;

•     depreciations and provisions;

•     other operating income and expenses.

Operating items also include tax credits that may qualify for government grants and that meet the IAS 20 criteria (relates primarily to the research tax credit).

■ Current operating profit, before depreciation of assets arising from acquisitions

In order to provide a clearer picture of our economic performance, we use the current operating profit before depreciation of assets arising from acquisitions, as the main indicator of performance. To this end, we isolate the impact of the depreciation of intangible assets resulting from acquisition transactions. Indeed, these have a material effect considering the latest external growth that took place through recent acquisitions.

■ Operating profit from ordinary activities

Operating profit from ordinary activities corresponds to operating profit, excluding the impact of other non-current income and expenses.

■ Other non-current income and expenses

Other non-current income and expenses are non-recurring income and expenses, or income and expenses resulting from non-recurring decisions or operations for an unusual amount. They are presented on a separate line in the income statement in order to make it easier to read and understand current operational performance.

They mainly include the following items which, where appropriate, are described in a note to the consolidated financial statements (note A26):

•     restructuring costs where material;

•     impairment or scrapping of assets where material according to quantitative criteria;

•     the effect of revaluing inventories acquired as part of a business combination at fair value;

•     the disposals of assets of significant value;

•     any revaluation of the participation in a subsidiary previously held, in the event of a change in control;

•     profits or costs incurred by the acquisition or sale of an asset, where material according to quantitative criteria (unless a specific treatment is set for by an applicable standard).

Net result from ordinary activities

Net profit from ordinary activities represent the net profit restated for the following items:

•     the “Other non-current income and expenses” line;

•     non-current tax, which includes the tax impact of “Other non-current income and expenses”, as well as all nonrecurring tax income and expenses.

Financial income and expenses

Financial expenses mainly include interest paid for the Group’s financing, interests on lease liabilities, negative changes in the fair value of financial instruments recognized in the income statement, as well as realized and unrealized foreign exchange losses.

Financial income includes interest income, positive changes in the fair value of financial instruments recognized in the income statement, realized and unrealized foreign exchange gains, as well as gains and losses on disposal of financial assets.

Earnings per share

The net earnings per share is calculated by dividing the net result attributable to the shareholders of the parent company by the weighted average number of shares issued and outstanding at the end of each reporting period (that is, net of treasury shares). Diluted earnings per share are calculated by dividing the net earnings attributable to the shareholders of the parent company by the weighted average number of ordinary shares outstanding, plus, in the event of the issue of dilutive instruments, the maximum number of shares that could be issued (upon conversion into ordinary shares of Virbac equity instruments, thereby giving deferred access to Virbac capital).

Main sources of uncertainty relating to estimations

Our consolidated financial statements have been established in accordance with international accounting standards, and include a number of estimates and assumptions considered as realistic and reasonable.

Certain facts and circumstances could lead to changes in estimates and assumptions, which could affect the value of assets, liabilities, equity and Group results.

Acquisition prices

Some acquisition contracts relating to business combinations or the purchase of intangible assets, include a clause that could impact the acquisition price, based on the financial performance, the success or failure of a marketing authorization, or the outcome of clinical trials.

We estimate accordingly the acquisition price at the end of the fiscal year, based on the most realistic assumptions in relation to the achievement of these objectives.

Goodwill and other intangible assets

We own intangible assets that were purchased or acquired through business combinations, in addition to the resulting goodwill. As indicated in the section “Accounting policies and methods”, we perform at least an annual impairment test of goodwill, intangible assets in progress and assets with an indefinite life, based on an assessment of future cash flows incremented by a terminal value. Valuations carried out during the goodwill impairment tests are sensitive to the assumptions used in regards not only to the selling price and future costs, but also to the discount and infinite growth rates. Sensitivity calculations for measuring our exposure to significant variations in these assumptions are performed.

In the future, we may have to depreciate these goodwill items and other intangible assets in the event of a deterioration in the outlook for the return of these assets, based on the result of the impairment tests of one of these assets.

As of December 31, 2024, the net total goodwill was €276,633 thousand and the value of the intangible assets was €251,237 thousand.

Deferred taxes

Deferred tax assets are recognized on deductible temporary differences between tax and accounting values of assets and liabilities. Deferred tax assets, and in particular those relating to tax loss carryforwards, are recognized only if it is probable, in line of IAS 12, that sufficient future taxable profits will be available within a reasonable period of time, which involves a significant amount of judgment.

At each balance sheet date, we analyze the origin of losses for each of the tax entities in question and re-measure the amount of deferred tax assets based on the likelihood of making sufficient taxable profits in the future.

Provisions for pension schemes and other post-employment benefits

As indicated in note A15, the Group has established retirement plans as well as other post-employment benefits.

The corresponding commitments were calculated using actuarial methods that take into account certain assumptions such as the benchmark salary for scheme beneficiaries and the likelihood of the persons in question being able to benefit from the scheme, and the discount rate. These assumptions are updated at each year-end.

Actuarial differences are immediately recognized in the other items of the comprehensive income.

The net amount of commitment relating to employee benefits was €20,358 thousand as at December 31, 2024.

Other provisions

Other provisions mainly relate to miscellaneous commercial and social liabilities and disputes.

No provisions are established if the company deems that the liabilities are contingent (as defined by IAS 37). As at December 31, 2024, the amount of other provisions was €9,676 thousand.

Uncertain tax positions

Ifric 23 requires the valuation and recognition of tax liabilities and tax assets in the balance sheet on the basis of uncertain tax positions. The standard creates a 100% risk of detection and introduces the following methods: the most likely amount or mathematical expectation corresponding to the weighted average of the various assumptions. Our analysis of the new tax risks identified during the year, as well as those previously accrued in accordance with IAS 37 and IAS 12, and re-evaluated at the closing date, led to the determination of a tax liability of €7.5 million in our accounts as of December 31, 2024.

A1.      Goodwill

Changes in goodwill by CGU

¹Globion included. The increase corresponds to the completion of the acquisition accounting as of December 31,

2024

The change in this position is explained by:

•     the acquisition of the companies in the Sasaeah group on April 1, 2024 for €93.4 million;

•     the acquisition of Mopsan our Turkish distributor on December 2, 2024 for €8.6 million (“Other CGU” lines);

•     the completion of Globion’s goodwill, acquired on November 1, 2023, in accordance with the provisions of IFRS 3 allowing a period of twelve months to finalize the acquisition accounting in the event of new items available since the acquisition date (+€5.9 million);

•     conversion gains and losses for €3.4 million.

Business combination

Acquisition of Sasaeah

On April 1, 2024, we completed the 100% acquisition of Sasaeah. This strategic acquisition brings Virbac a leadership position in the farm animal vaccines market in Japan, notably in the cattle segment, and a large portfolio of pharmaceutical products for all the major species.

This operation meets the criteria for a business combination defined by IFRS 3 and has, therefore, been accounted for accordingly. The fair value valuation of acquired assets and liabilities assumed is detailed below and leads to the recognition of goodwill of €93.4 million.

The purchase price consists of a payment of €203.9 million, and of the reimbursement of a debt acquired upon acquisition for €138.4 million. There is no earn-out payment. Further, it should be noted that the purchase price includes the acquisition of cash in the amount of €56.7 million.

Goodwill, which corresponds to the difference between the price paid and the fair value of the acquired net assets recorded in the Group’s consolidated accounts, is recognized or its final amount as at December 31, 2024.

The sales performed by this company over the 2024 year total circa €74.1 million (of which €52.1 million since the acquisition date) for a net result close to €10.3 million (of which €8.4 million since the acquisition date).

Acquisition of Globion India Private Ltd

On November 1, 2023, we acquired, through our subsidiary Virbac Animal Health India Private Ltd, a majority stake in Globion India Private Ltd from Suguna Holding Private Ltd. This transaction allows us to strengthen our position as a leader in animal health in India by extending Virbac India’s existing poultry ranges to the growing avian vaccine segment.

Founded in 2005, as a joint venture between Suguna Group, one of India’s leading poultry conglomerates, and Lohmann Animal Health, a German poultry vaccine specialist, Globion has developed solid know-how and expertise in the development, manufacture and marketing of live and inactivated vaccines targeting a wide range of avian pathogens.

Initially, Virbac bought 74% of the shares (installment 1). On June 21, 2024, we finalized the acquisition of Globion’s minority shares for the remaining 26% (installment 2), thus increasing our stake to 100% as of December 31, 2024

This transaction constitutes a business combination within the meaning of IFRS 3, and it was already recorded as such in the consolidated accounts closed December 31,2023, by using the partial goodwill method.

As at December 31, 2024, in accordance with the provisions of IFRS 3, which allows newly obtained information about conditions prevailing at the date of acquisition to be reflected for a period not exceeding twelve months, the calculation of goodwill, the fair value of the net assets acquired and their tax impact has been finalized. Goodwill reflects the expected synergies in the poultry segment described above.

Acquisition price under IFRS 3 was made up of:

•           a payment of €52.5 million for installment 1;

•           the installment 2 of non-controlling interests valued at €8.5 million in the context of partial goodwill. Payment of installment 2, operated in June 2024, amounted to €17.5 million. There is no price complement.

Acquisition of Mopsan Veteriner

On December 2, we finalized the acquisition of Turkish company Mopsan, specialized in the distribution of petfood and companion animal health products.

With a population of more than 4 million cats, 1.3 million healthcare dogs and more than 5,000 veterinarian clinics serving companion animals, Türkiye is one of the key European markets for Virbac, which has been present in Türkiye for more than 20 years through various local distributors, and has had its own subsidiary since 2018. The acquisition of Mopsan, our distributor of products for companion animals, represents a new step for Virbac’s development in Türkiye. Mopsan has been working alongside Turkish veterinarians for over 30 years and has extensive experience in the petfood and companion animal healthcare product sector. Virbac will benefit from its extensive distribution network, in-depth knowledge of the local market and an experienced team. The company is based in Istanbul and employs nearly 50 employees.

This transaction constitutes a business combination within the meaning of IFRS 3, and it was recorded as such in the consolidated accounts.

As the acquisition took place at the end of the year, the additional work in progress could lead to the reassessment, by the closing of the accounts for the first half of 2025, of the fair value of the net assets acquired and the associated tax impact. Indeed, IFRS 3 allows for a period not exceeding twelve months, to reflect newly obtained information regarding facts that prevailed on the date of acquisition and to retrospectively adjust the amounts of the business combination that were not final at the end of the first financial year during which the combination took place. The calculation of goodwill presented below is therefore provisional.

                                                                                                                                                                                                      10,901

                                                                                                                                                                                                        2,322

The sales performed in 2024 by this company total €13 million (of which €1.6 million since the acquisition date) for a net result close to €1.4 million (of which €0.2 million since the acquisition date).

A2.      Intangible assets

Changes in intangible assets

The other intangible assets relate essentially to IT projects, in several of the Group' subsidiaries. They all have defined useful lives.

The increase in intangible assets is explained for €69.2 million by the acquisition of Sasaeah and the review of Globion’s intangible assets following the finalization of the PPA (Purchase price allocation). The rest of the increase is linked to investments in IT projects, particularly at Virbac in France (parent company) and to R&D investments relating to new licensing contracts.

The outflows mainly come from the derecognition of assets that were fully amortized or depreciated in previous financial years and which no longer generate an inflow of resources for the Group. The “Transfers” line materializes the commissioning of these projects.

Concessions, patents, licenses and brands

The item “‘Concessions, patents, licenses and brands” includes:

•     rights relating to the patents, know-how and Marketing authorizations necessary for the Group’s production activities and commercialization procedures; • trademarks;

•     distribution rights, customer files and other rights to intangible assets.

It consists primarily of intangible assets arising from acquisitions, which are accounted for in accordance with IAS 38, as well as assets acquired as part of external growth transactions, as defined by IFRS 3.

As at December 31, 2024

As at December 31, 2023

The classification of intangible assets, based on the estimated useful life, is the result of the analysis of all relevant economic and legal factors, to conclude on whether or not there is a foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.

Innovative or differentiated products in general, and vaccines and other assets from biotechnologies in particular, are generally classified as intangible assets with indefinite useful lives, once a detailed analysis has been conducted and experts have given their opinions on their potential. This approach is based on Virbac’s past experience.

As at December 31, 2024

As at December 31, 2023

A3.      Impairment of assets

At end of the 2024 financial year, we have conducted intangible assets impairment tests. These involve comparing their net carrying amount, including acquisition goodwill, to the recoverable amount of each Cash-generating unit (CGU).

A fair value assessment of assets acquired during the financial year is conducted on the date of acquisition.

CGUs are homogeneous groups of assets whose continued use generates cash inflows that are substantially independent of cash inflows generated by other groups of assets.

The net carrying amount of the CGUs includes acquisition goodwill, tangible and intangible assets as well as other assets and liabilities that can be directly assigned to the CGUs and that contribute directly to the generation of future cash flows.

CGUs recoverable amount is determined using the value in use. This is based on estimates of future discounted cash-flows positions, commonly known as the Discounted cash flow (DCF) method.

Future cash flows are flows net of tax and are valued based on cash flow forecasts consistent with the budget and the latest mid-term estimates (business plans).

All business plans are validated by our subsidiaries’ management as well as by the Group's Financial Affairs department. The board of directors formally validates the business plans and main assumptions of impairment tests of the most significant CGUs.

Beyond the finite horizon for forecasting future cash flows set at five years for all the CGUs, an infinite growth rate is applied to the terminal value.

We have considered a zero infinite growth rate for MA and patents. The infinite growth rate was set up at 2% for subsidiaries based in mature markets such as Europe, Australia, Japan and New Zealand, except for North America, Uruguay, Colombia and Republic South Africa where we used a rate of 2.5%, consistent with the country's longterm inflation rate, at 3.5% for Chile and at 5% for emerging markets such as India.

The discount rates used for these calculations are based on the average weighted cost of capital estimated for each of the Group's cash-generating units. These are after-tax discount rates, determined by region or country (applied to after-tax cash flows) and are prepared with the support of a valuation firm.

For the 2024 financial year, the discount rates used are the following:

•     9.45% for the United States;

•     8.55% for Europe;

•     10.0% for Chile and 9.3% for the rest of Latin America;

•     9.85% for India;

•     8.45% for Far East Asia;

•     7.9% for Pacific and South Africa.

Sensitivity tests

We have also performed sensitivity analyses on key assumptions for all of the tested CGUs. Changes in assumptions are as follows:

•     increase of +2.0 points in the discount rate;

•     decrease of -2.0 points in the infinite growth rate.

These two variations in key assumptions would not result in any impairment of the assets tested except for the Chilean CGU, for which the increase of +2 points in WACC would result in an impairment of €1.7 million.

The three CGUs most sensitive to these sensitivity analyses are Chile, SBC and the United States.

Furthermore, for the five most significant CGUs, namely the United States, Chile, India, Australia and New Zealand (representing 45% of the gross value of intangible assets and goodwill as of December 31, 2024), we have carried out additional sensitivity tests by changing the Ebit ratio after tax on revenue, by more or less 2 points compared to the basis scenario.

Assuming a drop of -2.0 points in this ratio and a discount rate higher than at least +1.0 point, it would be appropriate to depreciate the Chile CGU by €5.5 million.

The changes in this ratio to arrive at break-even point, at constant discount rates and terminal growth rates, would be as follows:

•     -6.0 point change for the United States CGU;

•     -3.8 point change for the Chile CGU;

•     -30.1 point change for the India CGU;

•     -21.9 point change for the Australia CGU; •      -21.2 point change for the New Zealand CGU.

We also conduct additional sensitivity analyses based on the break-even point for all of the tested CGUs. The breakeven point refers to the discount rate, combined with a zero perpetual growth rate, on the basis of which Virbac would have to record an impairment.

For the major CGUs, the results of the break-even point are presented below.

A4.      Tangible assets

The main assets constituting the Group’s tangible assets are:

•     lands;

•     constructions, which include:

–   the buildings;

–   the development of buildings;

•     technical facilities, materials and industrial equipment;

•     other tangible assets, which notably include:

–   IT equipment;

–   office furniture.

On April 1, 2024, we completed the acquisition of Sasaeah. This acquisition contributes to a net increase in tangible assets of +€86 million, which allows us to benefit from Sasaeah production sites in Japan and Vietnam as well as these facilities.

Other significant investments during the period amounted to €74.8 million in gross value, whereas €47.3 million at the historic Carros site, including building refurbishments and new industrial equipment to increase our production capacity. We are also investing in our production sites in the United States, Australia, and to a lesser extent in Mexico or Uruguay.

Conversion gains and losses impact the item “Tangible assets” for a net amount of €1.2 million.

The “Transfers” line essentially shows the commissioning of fixed assets.

A5.      Right of use

In presenting our financial statements, we have chosen to isolate the right of use resulting from the contracts that fall within the scope of the IFRS 16, on a separate line in the statement of financial position. Changes in the right of use during 2024 are analyzed as follows:

The table below shows the right of use for each asset category:

The increase in rights of use is related to new contracts signed during the period, or renewal options approved by our subsidiaries in 2024. The year also saw the impact of changes in the scope of consolidation with the recognition of the lease contracts of the acquired entities (Sasaeah amounting to €2.7 million).

The main increases relate to the car fleet in all subsidiaries, real estate leases, notably in France for new offices, in India for several warehouses, in the United States for warehouses and offices, and in China for a new plant, as well as technical facilities, material and industrial equipments mainly in France.

The net value of the rights of use slightly increases during the period (+€3.9 million), the rise being however balanced by the allowances for depreciation amounting to €12.8 million.

Analysis of the residual rent liability

The table below shows the rent payments resulting from non-capitalized leases under exemptions set out in the standard:

A6.      Other financial assets

Change in other financial assets

¹the movements on the “Loans and other financial receivables - current” line are canceled and correspond to the intra-group financing related to the acquisition of Sasaeah (see note A18 for more details)

The amount of other financial assets increased by €8.4 million.

The main variation, on the line “Loans and other receivables, current”, is due to the acquisition of Sasaeah in Japan for €7.9 million. This amount is primarily made up of a €7.5 million hedging asset on pension liabilities (see also note A15). In the statement of financial position, this surplus hedging is shown net of the provision.

Finally, the €3 million increase in foreign exchange and interest rate derivatives is due to the JPY hedging of the loan granted by Virbac to Virbac Japan following the acquisition of Sasaeah.

 Other financial assets classified according to their maturity

As at December 31, 2024

As at December 31, 2023

A7.      Information about IFRS 12

Information about non-controlling interests

Since the acquisition of the non-controlling interests of the company Holding Salud Animal (HSA) during 2021 second semester, increasing hence our ownership to 100% in all Chile's entities, and the acquisition of the noncontrolling interests of Globion on June 21, 2024 (see note A1), the portion of non-controlling interests in our equity remains insignificant, as most of the fully consolidated entities are wholly owned. The following entities contribute to the non-controlling interests:

•     Pharma 8 Llc: entered into the consolidation scope during the 2022 financial year, this company carries our farm animal activities in the United States. This is not material;

•     Kyoto Biken Hanoi Laboratories: part of Sasaeah Group acquired in 2024 (see note A1), this entity based in Vietnam exclusively sources Kyoto Biken in Japan for the production of vaccines.

Information about equity-accounted companies

In line with IFRS 12, companies consolidated through equity method are not considered material to our financial statements, therefore information disclosed is limited to aforementioned items.

A8.     Deferred taxes

In accordance with IAS 12 standard, allowing offsetting of tax liabilities and receivables under certain conditions, deferred tax assets and liabilities have been offset by tax entity.

Variation in deferred taxes

The change in deferred taxes presented above includes, for -€448 thousand, deferred tax on the effective portion of profits and losses on hedging instruments recognized in other comprehensive income.

In accordance with the IAS 12 standard, which requires under certain conditions the offsetting of tax liabilities and receivables, the deferred tax assets and liabilities have been offset by tax entity in the statement of financial position, for €27,017 thousand.

Deferred taxes breakdown by nature

Below table indicates deferred tax positions breakdown by nature as of December 31, 2024:

                                                                                                                                                                                                                                     51,645                       84,250                        -32,605

                                                                                                                             -27,017                       -27,017

Deferred tax asset use horizon

The table below details the useful life of deferred deductible expenses:

Most tax loss carry forwards are carried forward indefinitely. They may only be used by the subsidiaries that generated the corresponding tax losses.

Non-capitalized tax losses

In addition, the amount of non-capitalized tax losses as of December 31, 2024, amounts to €52 million (compared to €62 million as of December 31, 2023), mainly resulting from our subsidiary Virbac Corporation in the United States on the one hand, and Virbac Taiwan on the other hand, whose main focus is on research and development activities. Most tax loss carry forwards (particularly those of our American subsidiary which are used since 2023 up to the tax result of the year) are carried forward indefinitely. The utilization period for tax losses generated by the Taiwan subsidiary is ten years from the date they are generated.

                                                                                                                                                                                                         1,416

                                                                                                                                                                                                            255

                                                                                                                                                                                                            933

                                                                                                                                                                                                         1,023

                                                                                                                                                                                                         6,687

                                                                                                                                                                                                            468

                                                                                                                                                                                                            464

                                                                                                                                                                                                         1,274

                                                                                                                                                                                                            754

                                                                                                                                                                                                         1,308

                                                                                                                                                                                                               —

                                                                                                                                                                                                       37,335

A9.      Inventories and work in progress

Excluding foreign exchange, net inventories increased by €65.8 million, including €47.8 million from the impact of changes in scope (see note A1) mainly due to the acquisition of Sasaeah.

The increase of €18.0 million excluding impacts of foreign exchange and changes in scope, is particularly noticeable in inventories of finished products and goods, and manufacturing work in progress, mainly at Virbac SA, the latter entity producing for the rest of the Group, and is mainly explained by the joint effects: • of the increase in activity observed over the year;

•     of the increase in our production costs.

The United States is also to a lesser extent one of the contributors to this increase, which is partially offset by a reduction in inventories in Chile as well as in the Philippines.

The ratio of inventories to revenue has increased by 1.4 point at real rates. At constant exchange rates and scope, the ratio of inventories to revenue decreased by 0.4 point.

Finally, it should be noted that the transfer movements for the period concern reclassifications carried out within the parent company, inventories of manufacturing work in progress to inventories of finished products and inventories of raw materials.

A10.    Trade receivables

The net trade receivables item is up by €31.1 million, excluding foreign exchange effects, whereas a €26.7 million of change in perimeter impact arising from the acquisition of Sasaeah. 

The €4.9 million increase observed excluding foreign exchange and changes in scope impacts is mainly due to:

•     Virbac Brazil with a combined effect of the impact of the increase in sales by volume and to a lesser extent, a slight increase in payment terms;

•     Virbac SA and Virbac France, due to a higher level of activity at the end of 2024 compared to that at the end of 2023;

•     a decrease in deconsolidated receivables in Italy offset by an increase in trade receivables (see below).

This increase is partially offset by a decrease in trade receivables in the United Kingdom, for which the balance of the item at the end of 2023 was impacted by the late payment of a major distributor, as well as in Australia, following the reduction in outstanding amounts of two main customers at the end of 2024 compared to 2023.

It should be noted that deconsolidated receivables, as they have been assigned under factoring contracts, amount to €9.0 million as at December 31, 2024 (compared with €12.0 million as at December 31, 2023). This decrease mainly concerns our Italian subsidiary, as well as the entity Alfamed, in France, due to the exit of a major customer from the factoring program.

The credit risk from trade receivables and other receivables is presented in note A33.

A11.     Other receivables

The net increase in this item is +€3.6 million, excluding the effect of scope of consolidation (+€2.9 million) and foreign exchange impact (-€1.9 million). This change is mainly due to the joint effects:

•     of the increase in other receivables on the State for €10.8 million, in particular for the parent company (+€5.9 million) due to the increase in the research tax credit receivables, as well as in Mexico, which recorded an increase in VAT receivables of +€5.6 million;

•     of the decrease in income tax receivables of -€7.4 million, including in particular -€10.5 million for the parent company which received repayment of the overpaid installments for 2023, offset by an increase of €3 million in Brazil.

The other changes are individually immaterial.

A12.    Cash and cash equivalents

The main investment vehicles used are UCITS and term accounts with a maturity of less than three months. These term deposits have the following characteristics: they are renewable by tacit agreement and may be repaid before maturity.

The decrease in marketable securities is mainly related to the distribution of dividends by one of our subsidiaries to the parent company.

Bank overdrafts correspond to the overdraft lines negotiated but not confirmed by our banks.

The variation of €57,727 thousand carried over in “Changes in scope” is mainly related to the acquisition of Sasaeah on April 1, 2024 and to a lesser extent, to the acquisition of Mopsan on December 2, 2024 (see note A1).

A13.    Assets classified as held for sale

As of the closing date of the financial year, no assets have been classified as assets held for sale.

A14.    Equity

Capital management policy

Within the framework of capital management, the Group aims to preserve the continuity of operations, to provide a return to shareholders, to procure the advantages from other partners and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group can:

•     adjust the amount of dividends paid to shareholders;

•     return capital to shareholders;

•     issue new shares; or

•     sell assets to reduce the total debts.

The Group uses various indicators, one of which is financial leverage (net debt/equity), which provides investors with a vision of debt for the Group comparative to the total equity. In particular, this equity includes the reserve for variations in the value of cash position flows.

Treasury shares

Virbac holds treasury shares with no voting rights which are intended to supply the allocation of performancerelated stock grants. The amount of these treasury shares is posted as a reduction in equity.

Shares with double voting rights

Double voting rights are granted to all shareholders whose shares have been registered in their name for at least two years. Of the 8,390,660 shares making up the share capital, 4,316,655 have double voting rights.

Share buyback program

The June 21, 2024 ordinary shareholders’ meeting authorized the Virbac parent company to buy back its treasury shares in accordance with article L225-209 et seq. of the French commercial code.

As of December 31, 2024, Virbac owned a total of 16,066 treasury shares acquired on the market for a total amount of €4,070,768 excluding costs, that is, an average cost of €253.38 per share.

The 2021 performance plan expired during the year and was allocated to the employees concerned based on the previously established performance criteria. A new performance plan was created over the financial year (see note A35).

Our liquidity contract was suspended from February 1, 2023 until June 30, 2024 and then closed on this date. No shares were purchased or disposed of by the company in connection with this during the financial year.

Furthermore, on September 13, 2024, the board of directors decided to decrease the company's capital by cancelling 67,340 shares with a nominal value of €1.25. These shares had been acquired with a view to being cancelled for a total amount of €17,541 thousand.

Treasury shares as of December 31, 2024 represent 0.19% of Virbac's capital. They are exclusively intended for the allocation of performance shares.

A resolution will be submitted for the approval of the next shareholders’ meeting authorizing the company to buy back up to 10% of the capital. Shares may be acquired with a view to:

•     ensuring liquidity or supporting the market price via an independent investment services provider pursuant to a liquidity contract in accordance with AMF (French financial market authority) regulations;

•     allocating performance-related stock grants;

•     reducing the company’s share capital by cancelling all or part of the shares purchased, subject to the adoption by the ordinary shareholder’s meeting of the resolution for authorizing a reduction in the share capital by cancelling repurchased shares.

The maximum unit purchase price may not exceed €1,000 per share. When calculating the maximum number of shares, shares already purchased under the aforementioned prior authorizations will be included, together with those that could be purchased under the liquidity agreement.

A15.    Employee benefits

The commitments related to employee benefit schemes are calculated using the projected unit credit method. Future commitments are subject to a provision for expenses.

Where a commitment is pre-financed by payments into a fund, the provision corresponds to the difference between the total commitment at the closing date and the amount of the hedging asset. The hedging asset is made up of the amount of the fund plus the investment income and any contributions paid during the year.

Change in provisions by country

¹the Virbac group acquired Fujita and Kyoto Biken Laboratories in Japan in April 2024 (acquisition of Sasaeah). The debt accumulated by Kyoto Biken Laboratories amounts to €6,921 thousand. This actuarial debt is covered by a hedging asset amounting to €14,483 thousand. The surplus of €7,561 thousand is reported in note A6 “Other financial assets”

The main equity impacts mainly concern France due to the updating of the data resulting in a loss of experience of €676 thousand, the increase in the discount rate resulting in a gain of €111 thousand, and the updating of the retirement age resulting in a gain of €503 thousand.

The amount of €805 thousand of transfers to Japan corresponds to the debt related to the acquisition of Kyoto Biken Laboratories in April 2024.

Main commitments

The main existing employee benefit plans are the ones of France, Japan, Australia, Taiwan, and South Africa. As of December 31, 2024, they contributed respectively for 57%, 9%, 7% , 6% and 5% of the total provisions for employee benefit plans.

Retirement and severance pay allowances

■ France

In accordance with the collective agreement, the Group’s French companies pay their employees an allowance on their retirement based on their salary and seniority.

The rights vested (for executives as well as or non-executives) are as follows: 12% of the monthly salary per year of seniority.

■ Taiwan

Severance pay is due when the employee reaches the age of 65 or in the event of inability to perform his/her duties. In the event of voluntary departure, vesting is subject to the following conditions:

•     a minimum of 15 years of service and being at least 55 years of age;

•     a minimum of 10 years of service and being at least 60 years of age;

•     a minimum of 25 years of service.

The amount paid depends on seniority.

The plan also covers severance pay in the event of dismissal or resignation, the amount of which varies depending on the employment start date (before or after June 30, 2005) and the employee’s seniority.

Defined-benefit retirement plans

■ Japan

•     Virbac Japan: the scheme results in payments in the form of capital. To qualify, employees must have at least two years of seniority in the company on the closing date. The amount of capital is calculated from the base salary multiplied by a coefficient based on years of service;

•     Kyoto Biken Laboratories plan: employees must have at least three years of service to be eligible for retirement benefits (three years or more for lump sum capital, and ten years or more for pension). Benefits are based on the annual accumulation of monthly salary multiplied by a coefficient depending on the years of service completed on April 1.

Medical coverage

■ South Africa

The program implemented by Virbac South Africa stipulates that the company is responsible for handling the contributions paid by retired employees who wish to enroll in voluntary medical insurance. The eligibility condition is that the employee must have joined the company before April 30, 1995.

The insurance contribution paid by Virbac South Africa is between 50% and 100%, depending on the level of coverage chosen by the beneficiary. In the event that the beneficiary should die, his or her legal successors continue to benefit from the Virbac South Africa holding under certain conditions.

Because the scheme is not restricted only to Virbac South Africa employees, it has been valued based on contributions paid by Virbac South Africa, restated to reflect the inflation rate for medical costs. Long-service leave

■ Australia

In accordance with regulations in Australia, Virbac grants employees long-service leave in line with their compensation and years of service. Each employee is entitled to two months’ leave after ten years’ service, which is acquired as follows:

•     if the employee is dismissed after five to ten years’ service, he/she is entitled to his/her proportionate share of the acquired rights;

•     if the employee leaves the company for any other reason after five to ten years of service, they have no entitlements;

•     if the employee leaves the company, for whatever reason, after ten years of service, he/she is entitled to his/ her proportionate share of the acquired rights.

The provision is calculated as the sum of the individual rights, calculated pro rata for the ratio of the employee’s years of service at the closing date to the years of service for full rights.

Calculation parameters of the main personnel benefits schemes in the Group

Assumptions as at December 31, 2024

Assumptions as at December 31, 2023

Discount rates are based on high-quality corporate bond yields with a maturity similar to that of the bond in question. In accordance with IAS 19 revised, the expected return on assets is considered to be equal to the discount rate.

A 0.5-point increase or decrease in the discount rate would entail, respectively, a reduction in the provision for employee benefits of around €1,206 thousand or an increase of approximately €1,199 thousand, recognized with the counterparty entry to other comprehensive income.

Moreover, a 0.5-point increase or decrease in the future growth rate of salaries would entail, respectively, an increase in the provision for employee benefits of around €913 thousand or a reduction of approximately €907 thousand, which would be recognized with the counterparty entry to other in other comprehensive income.

Allowance for the year

                                                                                                                                                                                                         2,338

                                                                                                                                                                                                            851

                                                                                                                                                                                                           -350

                                                                                                                                                                                                               —

                                                                                                                                                                                                               —

                                                                                                                                                                                                               —

Employer contributions (including benefits paid directly by the employer) in 2024 totaled €2,732 thousand and are estimated to reach €2,166 thousand in 2025.

Movements of amounts recognized in the statement of financial position

Below table reconciles the movements in the amounts recognized in the statement of financial position (actuarial debt, hedging assets, provision for employee benefits).

Present value as at January 1, 2024                                                                                                                                      23,316

Benefits paid by employer                                                                                                                                                              -1,203

Benefits paid by funds                                                                                                                                                                    -1,262

Cost of services rendered and financial cost                                                                                                                                   3,168

Termination/end of contract                                                                                                                                                                  —

Actuarial (gains)/losses due to demographic assumptions                                                                                                                -305

Actuarial (gains)/losses due to financial assumptions                                                                                                                       -486

Actuarial experience (gains)/losses                                                                                                                                                    968

Change of scheme — Other variations     7,200

Transfers                                                                                                                                                                                               —

Conversion gains and losses                                                                                                                                                                14

Actuarial liabilities are pre-financed in Japan, in India and South Korea through hedging assets (insurance policies) covering annual financial interest.

A16.    Other provisions

Each situation is analyzed in light of IAS 37 or Ifric 23 when there is uncertainty over the tax treatment. Tax-related provisions are intended to deal with the financial consequences of the Group’s tax audits.

Provisions that have become irrelevant over the period, either because they have been used in accordance with the initial purpose, or due to risk's extinction, have been reversed over the period.

No provisions are established if the company deems that the liabilities are contingent, and information is given in the appendix (see note A39).

A17.    Lease liability

Change in lease liability

The IFRS 16 standard introduces a single lessee accounting model for the lease contracts meeting the criteria of application, with the new lease obligation encompassing the liabilities arising from contracts previously capitalized pursuant to IAS 17.

Lease liabilities classified according to their maturity

Information related to financing activities

Decreases correspond to early terminations with no cash impact.

The increase in debt liabilities stems essentially from the new contracts or extensions of contracts relating to the fleet of vehicles, as well as lease obligations related to real estate contracts mentioned in note A5.

A18.    Other financial liabilities

Change in other financial liabilities

only drawn up to the equivalent of €200 million to repay Sasaeah existing loan and to pay a portion of the purchase price , the remainder of it having been financed by part of the available funds in the Group and our syndicated loan. At the same time, in March 2024, following our request to activate the accordion feature clause of our syndicated loan agreement, the banks in our pool agreed to increase their commitment by €150 million, taking our new available funding commitment to €350 million.

Finally, at the same time, our request for an amendment to include a new €100 million accordion facility in this syndicated contract was unanimously accepted by our banks, increasing the potential amount of our credit to €450 million. It should be noted that this new financing line includes commitments related to our CSR policy, reflecting our commitment to preserving the environment and respecting animal ethics that has been in place for several years. Negotiating these clauses ensures that we have access to controlled financial conditions and support for our needs of organic and/or external growth. The applicable credit margin is adjustable based on the annual financial ratio and, to a lesser extent, on the annual results of three CSR performance indicators already monitored within our CSR policy.

In July 2024, we proceeded with the prepayment of this bridging loan in yen in return for a drawdown on the syndicated loan and the implementation of currency hedging.

Thus, in order to ensure our liquidity, in terms of bank and disintermediated funding, our status is as follows:

•     a syndicated loan of €350 million, at variable rate, repayable in fine in October 2028 after being extended by two years, with a so-called “accordion” clause to increase funding by €100 million and which includes commitments in connection with our CSR policy;

•     a market-based contract (Schuldschein) for a total of €6 million, with maturity April 2025, at a fixed rate;

•     financing contracts with Bpifrance, for €10.2 million, depreciable and maturing in July 2027 and June 2032;

•     non-recourse factoring contracts in the United States and in Europe for US $15 million and €30 million respectively;

•     factoring contracts with recourse and export loans for US $25.1 million (i.e. approximately €24.2 million) in Chile;

•     loans for CLP 24.3 billion (i.e. approximately €23.6 million) in Chile too;

•     uncommitted credit lines in the United States for US $37 million (i.e. approximately €35.6 million).

As of December 31, 2024, the funding position is as follows:

•     the syndicated loan was drawn for €187 million;

•     market-based contract amounted to €6 million;

•     the Bpifrance financing amounted to €10.2 million;

•     non-recourse factoring lines are mobilized in Europe for an amount of €6.1 million;

•     factoring lines with recourse are mobilized in Chile for an amount of almost US $15 million;

•     the loan in Chile amounts to CLP 24.3 billion;

•     the drawn credit of our subsidiary in the United States amounted to US $24 million.

The financing agreements of the parent company include a financial covenant compliance clause that requires us to comply with an annual financial ratio based on the annual consolidated accounts, corresponding to the consolidated net debt^[5] for the period over the consolidated Ebitda^[6].

As at December 31, 2024, we comply with the financial ratio clauses, which is 0.59 and therefore below the contractual financial covenant limit of 3.75.

Other financial liabilities classified according to their maturity

As at December 31, 2024

The generation of operating cash flow, as well as negotiated overdrafts and factoring make it possible to cover short-term financial liabilities.

As at December 31, 2023

Information related to financing activities

A19.    Other payables

Other payables increased by €14.1 million, excluding foreign exchange effects. The main changes are shown below.

The decrease in “Other non-current payables” of €17.2 million is mainly due to the reversals of securities liabilities, respectively:

•     of the purchase commitment of installment 2 of Globion in India;

•     partially offset by the recognition of earn-outs relating to the acquisition of Mopsan in Türkiye over the period (see note A1).

The “Other current payables” item increased by €30.4 million mainly in connection with:

•     an increase in “Income tax payables” of +€15.1 million as a result of the increase in the tax burden provisioned in 2024 compared to the previous financial year, with a variation of +€10.8 million for the parent company, and +€2.9 million in Mexico. In addition, the acquisition of the Sasaeah group in Japan led to an increase of +€4.4 million in this item at the closing date;

•     an increase in “Other fiscal payables” of +€8.1 million, with an increase of +€2.3 million in Mexico mainly related to an increase in VAT to be paid in connection with the increase in sales volume, and an increase of €1.3 million for the parent company. The Sasaeah group is also contributing +€3.7 million to the increase in this item at the closing date;

•     an increase in social payables of €7.5 million, including +€3.6 million of changes in scope, in connection with the acquisition of Sasaeah. The rest of the variation across the Group is consistent with the increase in staff costs, related to the activity and to a lesser extent, to salary increases and inflation;

•     the various other payables amount to €100.3 million as of December 31, 2024. They mainly consist of customers - credit notes to be issued; they remain relatively stable at Group level (-€0.9 million) but vary according to the subsidiaries (see supplement below).

Below table details the type of contract-related liabilities:

Credit notes to be issued arise primarily from changes in transaction pricing, as the majority of the Group's subsidiaries grant customers year-end discounts, the amount of which is contingent on the achievement of sales objectives. The main increases were in France (+€4.6 million), in the United States (+€1.9 million), partially offset by a decrease in the United Kingdom (-€6.3 million) and in Australia (-€2.2 million).

A20.   Trade payables

This item amounted to €174.6 million as of December 31, 2024, compared to €149.6 million at the end of 2023, or a net increase of €26.4 million, excluding foreign exchange effects, which includes a €18.1 million change in scope impact.

Major changes are observed within the parent company and mainly due to:

•     the increase in operational expenditure related to the increase in activity;

•     investments made to increase our production capacity.

To a lesser extent, the United States is also participating in this increase, which is partially offset by a decrease in trade payables in Australia and South Africa.

A21.    Revenue from ordinary activities