Company: Virbac
Industry: Veterinary pharmaceuticals
Country: France
Sector: Health Care
Company type: S.A.
Revenue (EUR): 1247000000
Employees: 6400

Reported EU Taxonomy activities:
Manufacture of medicinal products
Renovation of existing buildings
Installation, maintenance and repair of energy efficiency equipment
Acquisition and ownership of buildings
Manufacture of active pharmaceutical ingredients (API) or active substances
Manufacture, installation and associated services for leakage control technologies enabling leakage reduction and prevention in water supply systems
Transport by motorbikes, passenger cars and light commercial vehicles
Data-driven solutions for GHG emissions reductions

EU Taxonomy KPIs (currency: EUR, units: millions)
Turnover:
totalTurnover: value: 1246.901
percentage: 100%
eligibleTurnover: value: 700.991
percentage: 56%
alignedTurnover: value: 0
percentage: 0%
nonEligibleTurnover: value: 545.91
percentage: 44%
CapEx:
totalCapex: value: 73.714
percentage: 100%
eligibleCapex: value: 19.468
percentage: 26.4%
alignedCapex: value: 0.002
percentage: 0.003%
eligibleNotAlignedCapex: value: 19.465
percentage: 26.4%
nonEligibleCapex: value: 54.246
percentage: 73.6%
OpEx:
totalOpex: value: 59.1
percentage: 100%
eligibleOpex: value: N/A
percentage: 0%
alignedOpex: value: N/A
percentage: 0%
nonEligibleOpex: value: N/A
percentage: 0%

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Image /page/0/Picture/0 description: The image shows the Virbac logo. The word "Virbac" is written in white letters on a blue background. The "i" in Virbac has a red square above it. There is a red line below the word "Virbac".

### **ANNUAL REPORT 2023**

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- Interview with Sébastien Huron, chief executive officer, Virbac group 4
- Interview with Habib Ramdani, chief financial officer 6
- Committed governance to support the Virbac group's development 8

### **INTRODUCTION**

- Virbac's business model 14
- Governance and organization 16
- Main CSR risks and opportunities 23
- CSR dashboard 25
- Innovating responsibly 26
- Strengthening employee engagement 32
- Ensuring the quality of products and services 46
- Protecting the environment 50
- European green taxonomy 58

### **STATEMENT ON**

## **NON-FINANCIAL PERFORMANCE**

- Management report 72
- Report on corporate governance 108
- Consolidated accounts 160
- Statutory accounts 224
- Statement of responsibility for the annual financial report 257
- Ordinary and extraordinary shareholders' meeting of June 21, 2024: explanatory statement and draft resolutions 258
- Glossary 269

## **FINANCIAL REPORT**

Image /page/2/Picture/23 description: A close-up shot depicts a child in a plaid shirt and blue jeans, wearing red boots, crouched down and feeding a chicken from a bowl. The chicken is light brown and white, standing on the ground, pecking at the food being offered. The background is blurred, suggesting an outdoor setting.

Image /page/2/Picture/24 description: In the image, a man is carrying a child on his shoulders in a field. The man is wearing a blue shirt and jeans. The child is wearing a brown shirt and yellow boots. The man is pointing to something in the distance. There are cows in the field.

Image /page/2/Picture/25 description: A young boy is petting a dog. The boy is on the left side of the image, and he is wearing a blue shirt. The dog is on the right side of the image, and it is black and brown. The dog has its tongue hanging out. The background of the image is green.

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## **Choosing sustainability** by building our future responsibly

Image /page/3/Picture/1 description: A man in a suit and white shirt is smiling at the camera. To the right of the man is a green box with the text "Sébastien Huron Chief executive officer, Virbac group".

### **HOW DO YOU SEE THE INTERNATIONAL CONTEXT IN 2023?**

The year 2023, especially with the Israeli-Palestinian conflict, shows once again the fragility of global balances and the importance of preserving them. Increasing energy prices, soaring inflation and a sharp rise in interest rates have led to a slowdown of the worldwide economy. Climate disruption has also continued to worsen, adding to the wars and conflicts that are causing the most destitute populations to suffer, often forcing them to migrate. All my thoughts are with them right now and I hope that compassion will be more widely shared around the world.

### **WHAT IS THE IMPACT ON VIRBAC'S BUSINESS?**

We faced significant headwinds this year: the animal health market slowdown down with declining sales volumes, production difficulties for our vaccines and a cyber attack that

Image /page/3/Picture/6 description: Two people wearing white lab coats and hairnets are standing next to a piece of equipment. The person on the left is wearing safety glasses and pointing at the equipment. The person on the right is looking at the equipment. The equipment is silver and has a few buttons and knobs on it. The background is a clean room with white walls and floors.

hit us hard in the middle of the year. Despite all these factors, Virbac continued to outperform the market, with sustained organic growth in 2023.

#### **HOW DO YOU EXPLAIN THIS PERFORMANCE?**

Our results were made possible by the resilience of our business model, the relevance of our strategic choices, the rigor of our execution plans and, above all, our fantastic culture, built on the incredible involvement of our teams. It's an invaluable asset that we are committed to preserve and nurture.

#### **WHAT ARE THE STRATEGIC DIRECTIONS FOR 2023?**

The same as in previous years. This year, just as last year, we have increased our R&D spending ratio in order to maintain our organic growth in the future. We have always preferred organic growth because it is often the cheapest and most profitable one. This does not prevent us from complementing it with external growth, as we did in 2023 with the acquisition of our long-standing distributor in the Czech Republic, or with the acquisition of Globion, an Indian leader in poultry vaccines, enabling us to strengthen our positions and leadership in India.

#### **AND IN TERMS OF ORGANIZATION?**

We continued to strengthen our industrial teams to support our investment and productivity projects, as well as our sales teams. We also opened two new subsidiaries, in Ireland and the Czech Republic, to accelerate our geographic expansion plans. Finally, we reorganized our Chilean teams after a particularly difficult year.

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Image /page/4/Figure/0 description: The image shows a logo with a green circle containing a stethoscope and paw print. To the right of the logo, the text "100% dedicated to animal health for more than 50 years" is displayed. The "100%" is in green, while the rest of the text is in a darker color.

Image /page/4/Picture/1 description: The image shows a white lightbulb with a gear inside of it, set against a light green circular background. The lightbulb is illuminated with rays of light emanating from it.

**More than 20 unprecedented innovationsin veterinary medicine**

Image /page/4/Picture/3 description: The image shows a green circle with a white thumbs-up icon inside it, next to the text "7" and "of".

### **77% positive opinion**

**of the company** (Overall Perception Great Place to Work)

Image /page/4/Picture/6 description: The image shows a green circle with a white icon in the center. The icon appears to be a stylized representation of a credit card or similar rectangular object, with a checkmark inside it. The checkmark indicates approval or completion.

**100% of the Virbac pharmaceutical manufacturing sites are certified GMP**

Image /page/4/Picture/8 description: The image shows a white hand holding a small plant with two leaves, all inside a green circle. The hand is open and facing upwards, as if offering or nurturing the plant. The plant is slender and has two leaves sprouting from its stem. The green circle provides a background and frames the hand and plant.

**-4.7% of greenhouse gas emissions (scopes 1 & 2) over 3 years**

Image /page/4/Picture/10 description: The image shows three different scenes. The first scene shows a veterinarian in blue scrubs examining an orange cat with a stethoscope. The veterinarian is smiling and appears to be gentle with the cat. The second scene shows three people standing in a field with black cows in the background. The people appear to be having a conversation. The third scene shows a woman and a young girl feeding chickens. The woman and girl are both smiling and appear to be enjoying themselves.

### **NEW PRODUCTS TOO?**

This year we launched two outstanding new products. First of all Cortotic, which won two innovation awards at the annual congress of French companion animal veterinarians, turns the treatment of acute otitis externa in dogs on its head by offering veterinarians an innovative solution for first-line treatment of the disease, allowing them to reduce the use of antibiotics. Another new product is Veterinary HPM Kidney & Joint, a nutrition program designed to treat kidney and joint disease in older cats, which often suffer from both. This innovative formulation combines broad-spectrum activity, rapid onset of action and ease of use.

### **ANY OTHER HIGHLIGHTS IN 2023?**

This year marks an important milestone in our CSR approach: having achieved most of the 2025 goals we set for ourselves in 2018 several years ahead of schedule, we have taken the operational implementation of our societal goals to a new level by creating a dedicated department and producing a full carbon footprint analysis. We have also worked to continuously improve the working conditions and well-being of our employees in all the countries in which we operate, mainly through concrete initiatives based on feedback from teams as part of the Great Place To Work approach.

### **WHAT'S YOUR OUTLOOK FOR THE NEXT FEW YEARS?**

Our goal is to achieve structural profitability of 20% by 2030. To reach this, our strategy is based on several pillars. First, our R&D investments will enrich our pipeline of new products to continue to support our organic growth. Second, we remain very active in the mergers and acquisitions market, with indepth analyses of all acquisition opportunities that make sense for us. Finally, we are increasing our focus on competitiveness, particularly in manufacturing, through investments in capacity and productivity to improve our profitability in an increasingly consolidated and competitive market. With these changes, we are opting for sustainability through responsible and sustainable development, the sole guarantor of our identity, our culture, our values and our teams.

People are at the heart of our success; women and men from Virbac are dedicated to advancing the health of animals.

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## **A year** of resilience

Image /page/5/Picture/1 description: This image shows a man with short gray hair, wearing a light blue shirt and a black suit jacket. He is smiling and looking directly at the camera. To the right of the man is a teal box with the text "Habib Ramdani Chief financial officer Virbac group".

#### **WHAT CAN WE LEARN FROM 2023?**

For us, 2023 was a year of resilience. Despite the difficulties we faced, we were able to grow our revenue by approximately 5% and achieve a historic performance in our profitability before R&D.

#### **HOW DO YOU EXPLAIN THESE RESULTS?**

First and foremost, this is the result of the commitment of our teams in all our subsidiaries. They did a fantastic job in dealing with the unexpected and showed tremendous agility. Second, it is the result of the implementation of our 2030 plan and our focus on certain product ranges considered as strategic, such as pet care and pet food. Finally, we also benefit from the positive effects of our business diversification.

#### **IN OTHER WORDS?**

We now have 35 subsidiaries and if you look at the top five countries in terms of sales in 2023 (USA, France, India, Australia, Mexico), they reflect our presence around the world. We may have suffered in 2023 in China and Chile, but that was more than offset by strong performances in France, Australia and India, for example.

#### **ANY OTHER HIGHLIGHTS FROM THIS YEAR?**

We have further increased our R&D investments, which have reached almost 100 million euros by 2023, in order to develop a rich and promising project portfolio for the long term. This represents an increase in our R&D spending of more than 10% (around 0.5 points more as a percentage of sales). We have also continued to control our costs, which has allowed us to offset record inflation, particularly in salaries, and maintain an adjusted Ebit margin of around 15%. The acquisitions made in 2023 will also allow us to consolidate our presence in emerging markets. With a positive cash position, we still have plenty of room to grow our business and make future acquisitions.

Image /page/5/Picture/11 description: Three scientists are in a lab. They are wearing white lab coats and safety glasses. One of the scientists is holding a test tube with a purple liquid in it. The other two scientists are looking at the test tube. The lab is clean and well-lit.

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Image /page/6/Figure/2 description: The image shows information about a company's sales and operations. The company has 5,500 employees, which is a 1.4% increase compared to 2022. The company has sales subsidiaries in 35 countries, production sites in 11 countries, and R&D centers on 5 continents. The company's sales in 2023 are 1,247 million euros, and it is ranked 6th worldwide among veterinary drug manufacturers. 59% of the company's sales come from companion animals, and 41% come from farm animals. The company's sales increased by 4.9% at constant exchange rates and scope compared to 2022.

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## **Committed governance** to support the Virbac group's development

Our governance is based on principles that contribute to maintaining the balance required for the Virbac group's performance and successful development.

### **Separation of powers and collegiality**

Our organization integrating a general management and a board of directors meets the desire to establish a balance of power between the executive and supervisory functions. It involves a regular and effective dialogue between the general management and the board of directors, as well as mutual trust.

Collegiality is a key organizational principle in our governance. The operation of these two entities, the board of directors and the general management, is based on the search for a position shared by their respective members and on collective decisions, the result of genuine teamwork. This organization guarantees efficiency and responsiveness while being in line with the governance codes in force and in particular the Afep-Medef Code, which we use as a reference to regularly improve our practices in this area.

### **GENERAL MANAGEMENT**

The general management of the company is entrusted to Virbac chief executive officer, Sébastien Huron. His mission is to assume the strategic and operational management of the Group. He is assisted by two deputy chief executive officers and is supported by a Group executive committee. Within the framework of the strategic orientations determined by the board of directors, the general management reports to it on its actions and results.

### **Group executive committee**

At December 31, 2023, the Group executive committee is made up of eight members: the chief executive officer, the deputy chief executive officers and five other members appointed by

### **Committed and experienced management**

Our governance is based on focused governing bodies, composed of members with a strong and long-term level of commitment. Their professional experience covers many of the aspects involved in the day-to-day management of a major international group. Except the employee representative, all but one of the board of directors are senior executives with extensive operational management experience of international companies.

The members of the governing bodies, whether the board directors or the general management, are committed to providing sustained support for the Group's long-term strategy. Moreover, the involvement of the board of directors members and the non-voting advisors is not limited to their participation in formal board debates. It also takes the form of regular informal discussions and periodic *ad hoc* meetings if circumstances so require.

the general management. It is composed of three women and five men.

These members work closely together and take decisions on a collegial basis. This encourages joint reflection and teamwork. Whether for the long-term vision or operational needs, exchanges between members of the Group executive committee are frequent, enabling a high level of responsiveness in decision-making.

Image /page/7/Picture/14 description: This is a headshot of a middle-aged man with short brown hair and a light complexion. He is wearing a gray suit jacket over a white shirt. He is smiling and his teeth are visible. The background is a light gray color.

**Sébastien Huron** Chief executive officer, Virbac group

Image /page/7/Picture/16 description: A headshot of a man with short gray hair, wearing black glasses and a black suit jacket over a white shirt. He is smiling slightly and looking directly at the camera. The background is a plain light gray.

**Marc Bistuer** Director of Corporate Quality & Compliance and deputy chief executive officer qualified person

Image /page/7/Picture/18 description: A portrait of a woman with short, gray hair and glasses. She is wearing a white collared shirt with a blue and red patterned scarf, and a navy blue sweater. She is smiling and looking directly at the camera. The background is a light gray color.

Image /page/7/Picture/19 description: The image shows the text "Sophie Favini Head of Global Business Operations". The name "Sophie Favini" is in a green font, while the rest of the text is in a dark gray font.

Image /page/7/Picture/20 description: This image contains two headshots of people. The first headshot is of a woman with blonde hair, wearing a black blazer over an orange top. She is smiling and looking directly at the camera. The second headshot is of a person with short brown hair.

Chief financial officer and deputy chief executive officer

**Nathalie Pollet** Head of Global Marketing & Market Development

**Habib Ramdani** 

**André Mathieu**  Head of Global Industrial Operations, Supply Chain and Sourcing

Image /page/7/Picture/24 description: A headshot of a smiling man with short dark hair and glasses. He is wearing a white shirt and a dark blazer. The background is a light gray color.

**Bertrand Havrileck** Head of Corporate R&D

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**Francesca Cortella** Head of Corporate Human Resources

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### **BOARD OF DIRECTORS**

The board of directors determines the strategic orientations of the company's activity and supervises their implementation. It ensures the permanent control of the company management led by the general management, and the regular review of the accounts and of all major projects and investments. The board of directors involves seven directors including two independent directors.

The board of directors is supported in its work by two subcommittees, the audit committee and the appointments and compensation committee. It is assisted by two non-voting advisors, Xavier Yon, permanent representative of the company Xavier Yon Consulting Unipessoal Lda, and Rodolphe Durand, who have a consultative voice.

Image /page/8/Picture/3 description: A woman with long blonde hair is smiling at the camera. She is wearing a purple sweater over a black shirt. The background is a light gray color.

**Marie-Hélène Dick-Madelpuech**  Chairwoman

Image /page/8/Picture/5 description: This is a headshot of a middle-aged man with fair skin, a receding hairline, and a neatly trimmed beard. He is wearing a dark suit jacket over a white shirt. The background is a neutral gray color.

**Philippe Capron**  Director

### **Non-voting advisors**

Image /page/8/Picture/8 description: A woman with long brown hair is smiling in a head and shoulders shot. She is wearing a black blazer over a light-colored top. The background is a light gray color.

**Solène Madelpuech** Director

Image /page/8/Picture/10 description: A professional headshot of a woman with short brown hair and glasses. She is wearing a black blazer over a white shirt. The background is a light gray color.

**Sylvie Gueguen** Employee representative

Image /page/8/Picture/12 description: This is a headshot of a man with short, dark hair and glasses. He is wearing a dark suit jacket over a white shirt. He is smiling and looking directly at the camera. The background is a light gray color.

**Pierre Madelpuech** Vice-chairman

Image /page/8/Picture/14 description: This image shows a man with short brown hair and glasses, wearing a dark suit and blue tie. He is positioned against a light blue background. The man appears to be in his late 30s or early 40s, and he is looking directly at the camera with a slight smile.

**Cyrille Petit** Permanent representative of the company Cyrille Petit Conseil, independent director

Image /page/8/Picture/16 description: A man with glasses and a dark suit is shown in a head and shoulders shot. He has short brown hair and is wearing a white shirt with a white collar. The background is a light gray color.

**Olivier Charmeil** Independent director<sup>1</sup>

Image /page/8/Picture/18 description: The image is split in half. The left half is a blurry white background. The right half shows a man wearing glasses and a black suit. The background behind the man is a solid light gray.

**Rodolphe Durand** Non-voting advisor

#### **Audit committee**

- The audit committee is responsible for:
- controlling the monitoring of the financial reporting process and the review of the annual financial statements;

**Xavier Yon**

Unipessoal Lda, non-voting advisor

Permanent representative of the company Xavier Yon Consulting

- controlling the existence and effectiveness of the internal control and risk management systems;
- monitoring and reviewing the internal audit program implemented by the company;
- issuing a recommendation on the statutory auditors proposed for appointment by the shareholders' meeting;
- monitoring the achievement by the statutory auditors of their duties;
- ensuring that the statutory auditors comply with the conditions of independence;
- approving the provision by the statutory auditors of nonprohibited services other than certifying accounts;
- reporting to the board of directors on the performance of its duties.
- It is comprised of Philippe Capron, chairman, Cyrille Petit, permanent representative of the company Cyrille Petit Conseil, and Pierre Madelpuech.

#### **Appointments and compensation committee**

The appointments and compensation committee is responsible for:

- formulating proposals and examining applicants for the positions of directors or members of the general management;
- organizing a procedure for the selection of future independent directors;
- ensuring the implementation of a succession plan for the members of the general management;
- drawing up recommendations and proposals regarding the compensation of the members of the general management;
- remaining informed about the Virbac group's general human resources policy and more specifically, the compensation policy for the Virbac group's main executives;
- reviewing proposals and conditions relating to stock grants;
- drawing up proposals concerning the compensation of the members of the board of directors.

It is composed of Marie-Hélène Dick, chairwoman, Cyrille Petit, permanent representative of the company Cyrille Petit Conseil, independent director, and Olivier Charmeil, independant director1.

<sup>1</sup>Olivier Charmeil was co-opted by the board of directors at its meeting held on December 21, 2023, following the resignation on December 15, 2023 of OJB Conseil, represented by Olivier Bohuon. Olivier Charmeil was appointed as a member of the appointments and compensation committee on December 21, 2023

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Image /page/9/Picture/0 description: A medium shot depicts a man with a beard carrying a young girl on his shoulders in a grassy field. The man is wearing a blue t-shirt and blue jeans. The girl is wearing a brown sweater and blue shorts, and yellow boots. The man is pointing with his right arm extended. In the background, there are cows grazing in the field. The sky is overcast.

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**STATEMENT**  OF NON-FINANCIAL PERFORMANCE Integral part of the management report

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# Editorial

" We do not inherit the Earth from our ancestors; we borrow it from our children. "

(attributed to Saint-Exupéry).

This awareness should be the driving force behind the actions of humans on Earth. We understand this well.

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Making our development sustainable is a natural process for several reasons. The majority of our Group's capital is controlled by one family, that of its founder, Dr. Pierre-Richard Dick, whose profoundly human values have left their mark on the company and remain the foundation on which the company's strategy has been built.

The ability to foresee long-term outcomes and to act on these predictions has been a part of the company's DNA since our beginnings. The fact that we are a publicly traded company does not contradict this orientation, as more and more shareholders favor companies whose strategies incorporate sustainable development goals that do not impede but, on the contrary, favor economic performance.

Our mission - to create, manufacture and sell veterinary products and, more generally, solutions for the health of animals - puts our company at the heart of the One Health ecosystem, which recognizes that the health of all living beings on Earth is intrinsically linked.

Our customers, veterinarians, farmers and animal owners are becoming increasingly aware of their impact on the environment and human health. We are therefore naturally led to direct our activities accordingly.

The growth of our Group in France and internationally leads to additional requirements. We are deeply rooted in our home territory, the French Riviera. With the increase in our workforce and investments in this region, our visibility is growing and making us an example for our teams and our community, both socially and environmentally.

At the same time, we have also become a global company that derives over 59% of its revenue from outside Europe and whose subsidiaries are located across every continent. Our company must ensure that this development complies with our common principles, regardless of the territories in which it operates, particularly in the economic, social and environmental spheres.

In the social sphere, respect for human beings was one of the key values of our founder: maintaining real social dialogue, a proper remuneration and social coverage policy for employees at the lower end of the salary scale, and the trust and attention given to every employee are thus part of our traditional values. We are committed to preserving this legacy and building on it by complementing it with ambitious skill development policies.

In the environmental sphere, the company's operations guarantee that strict quality requirements are met, for example, through compliance with current Good manufacturing practices and Good laboratory practices. In addition, several years ago, we embarked on a continuous improvement strategy designed to consistently cut waste and optimize the use of resources. The search for energy effi ciencies and environmental protection are now being systematically integrated into our key decisions (investments, transport, product design, etc.).

In the economic sphere, our objective is to pursue the consistent and profi table growth the Group has experienced nearly every year since its inception. This development is based mainly on solid organic growth, driven by innovation and the quality of relationships with our customers. We regularly seek to supplement this growth with targeted acquisitions carried out while maintaining an acceptable debt level.

We are pursuing this strategy within the framework of simple and clear governance, guaranteeing a high level of transparency for our stakeholders. Without overdoing the communication, we are taking an authentic approach that targets long-term development and is considerate of our customers, employees, shareholders, partners and our environment.

### **Sébastien Huron**

Chief executive offi cer, Virbac group

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### **OUR VISION**

### **OUR VALUE CREATION MODEL**

**MAKE**

Image /page/13/Picture/2 description: The image shows a stylized representation of a DNA double helix. The helix is depicted in teal and is set against a circular, off-white background. This circular background is, in turn, placed on a larger teal background. The DNA helix is simplified, with diagonal lines indicating the rungs of the DNA ladder.

### **Our purpose**

Advancing the health of animals with those who take care of them every day, so that we can all live better together.

### **OUR STRATEGIC AREAS OF FOCUS**

### **Choosing sustainability**

(focus on societal issues for a better balance between economic growth and consideration for people and the environment)

**Providing for the well-being of our employees** (high EHS standards, transparent governance, working environment, remote working agreement, distribution of created value through rewards and bonuses)

**Accelerating development abroad**  (United States, China, Brazil, India, innovative products and services: pharmaceutical specialty products, vaccines, petfood/pet care)

**Improving the competitiveness**  of our industrial production and digitalizing our systems

Image /page/13/Figure/11 description: The image shows a list of key animal health sector issues. The issues are: Animal welfare, Feeding the planet (food security & food safety), Digitalization and Big Data, Consolidation, Regulations, and Quality.

Image /page/13/Picture/45 description: The image shows two icons with text below them. The first icon is three overlapping circles, and the text below it reads "One Health". The second icon is an arrow splitting into three arrows, and the text below it reads "Diversification".

Image /page/13/Picture/13 description: The image shows the word "Quality" at the top, followed by a white icon of three arrows pointing upwards and diverging from a single point. Below the icon, the word "Diversification" is written.

### **CREATE**

Image /page/13/Picture/15 description: The image shows a yellow lightbulb inside of a blue circle. The background is yellow with a few curved lines.

**Sustainable innovation based on technological advances and listening to caregivers**

## **R&D CENTER**

- France • United States • Australia
	- Mexico
	- Vietnam • Taiwan
	- Chile
	- Uruguay
	- China
	- India

Image /page/13/Picture/26 description: The image shows a collection of farm animals stacked on top of each other against a yellow background. At the top is a black and white cow. Below the cow is a pink pig. To the left of the pig is a dog. Below the dog is a gray cat. At the bottom is a blue fish.

### • Companion animals **SEGMENTS**

**4 SPECIALIZED**

- Ruminants • Aquaculture
- Swine

### **PARTNERSHIPS**

Image /page/13/Picture/32 description: The image shows a close-up of two hands shaking against a yellow background. One hand has a red sleeve, and the other has a blue sleeve.

• Universities • Laboratories • Biotech

### **RDL**

Approx. **9.1%** of sales revenue (before deducting the research tax credit)

 **5,500 EMPLOYEES in 37 countries**

Image /page/13/Figure/46 description: The image shows information about production facilities. It states that the facilities meet the highest international quality standards. There are R&D centers at 10 sites, including France, United States, Australia, Mexico, Vietnam, Taiwan, Chile, Uruguay, China, and India. There are plants in 11 countries, and 100% of the sites are GMP-certified. For raw materials and packaging, there are 950 suppliers and 199 M€ in purchases.

Image /page/13/Picture/38 description: The image shows a cartoon-style illustration with text. The text includes the words "SUBCO" and "PROCESS", along with the numbers "117" and "120". There is also a cartoon image of a person working at a conveyor belt.

### **SUBCONTRACTED PROCESSING 117** subcontractors

**120 M€** in purchases

Prescription Refills

Fax to:

800-950-5126

### **PURCHASES OF FINISHED GOODS**

**82** suppliers **63 M€** in purchases

**INVESTMENT**

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### **OUR ACCOMPLISHMENTS**

### **OUR VALUE SHARING**

### **SELL**

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**A personalized relationship with veterinarians, farmers, and owners in each country**

Image /page/14/Picture/6 description: A cartoon image shows a dog and a cat standing next to each other against a red background. The dog is white with brown patches on its head and ears. It has a black nose and floppy ears. The cat is light gray with yellow eyes and a long tail. The cat is smaller than the dog and is standing slightly in front of it.

**OUR VALUE CREATION MODEL**

**ANIMALS** 

**AT 10 SITES 59%** companion

Image /page/14/Picture/9 description: The image shows a cow, a pig, and a fish stacked on top of each other. The cow is on top, followed by the pig, and then the fish. The background is red.

animals **41%** farm

Image /page/14/Picture/11 description: The image shows the word "animals" in a light color against a red background.

Image /page/14/Picture/12 description: The image shows a graphic with the text "CUSTOMERS" at the top. Below that is the word "Users", followed by a bulleted list of "Veterinarians" and "Farmers". To the left of the text are cartoon-style illustrations of a veterinarian with a stethoscope and a cat, and a farmer wearing a straw hat.

### **Users**

- Veterinarians
- Farmers
- Integrators
- Owners

### **Intermediaries**

- Purchasing groups
- Distributors
- Wholesalers

### **DISTRIBUTION CENTERS**

### **Internal**

Image /page/14/Picture/24 description: The image shows a cartoon illustration of a warehouse or storage facility. The warehouse is depicted with a gray exterior and a blue interior visible through large windows. Inside, there are shelves stacked with white boxes, suggesting stored goods or inventory. The overall style is simple and cartoonish, with flat colors and minimal detail. The background is a solid red color.

In countries with industrial facilities

**External** Around the world

### **9,000 REFERENCES**

Vaccines, antibiotics, parasiticides, anti-inflammatory drugs, dermatology, dental, specialties, diagnosis, nutrition

Image /page/14/Picture/29 description: A group of five people are collaborating on a project. They are standing around a large white board with a winding line drawn on it, indicating a path or plan. One person is holding a large pencil and a speech bubble, suggesting brainstorming or idea generation. Another person is holding a flask and a funnel, possibly representing experimentation or analysis. A third person is holding a pink square, which could symbolize a building block or component of the project. The overall scene conveys teamwork, planning, and creative problem-solving.

**HUMAN 77%** of employees trained

**75%** of employees proud to say they work at Virbac

Image /page/14/Picture/32 description: The image shows five hands giving a thumbs-up gesture against a light blue background. A black line graph with upward trending peaks and valleys is behind the hands, suggesting growth or success. The hands are diverse in skin tone and sleeve patterns, with one wearing a suit jacket, another a striped shirt, and another a checkered shirt. The overall impression is positive and supportive, indicating approval or encouragement.

**+4.9%** organic growth at constant rates **FINANCIAL**

Ebita **+0.01 pts** at constant rates **27 M€** debt relief

Image /page/14/Picture/35 description: The image shows two people exchanging ideas. On the left, a person in an orange shirt is holding a lit lightbulb, symbolizing a new idea or inspiration. In the center, there is a brain, representing thought and intelligence. On the right, a person in a white coat is standing near the brain, with lightning bolts above their head, suggesting a spark of insight or a brainstorming session. The background is a light blue color.

Animal health awards **INTELLECTUAL**

Image /page/14/Picture/37 description: A digital illustration depicts two healthcare workers in a laboratory setting. On the left, a woman is seated at a gray desk, wearing a blue surgical cap and a matching short-sleeved shirt. She is holding a small vial in her hands, examining it closely. She is wearing black shoes and is seated on a black chair. To her right, a man stands next to the desk, wearing a white lab coat over a blue shirt, a blue surgical cap, and black shoes. He is holding a blue container in his gloved hands. The desk is gray and has a computer monitor mounted on a stand. Above the desk, there is a light fixture providing illumination. The background is a solid light blue color, creating a clean and sterile atmosphere.

### **INDUSTRIAL**

Virbac plants helped generate **59.4%** of Group revenue

Image /page/14/Picture/40 description: This image shows a world map with the continents colored differently. North America is red, South America is purple, Africa is light blue, Europe is dark green, Russia is dark blue, Asia is orange, and Australia is brown. The map is set against a light blue background.

### **SOCIAL AND SOCIETAL**

Regionalized R&D Virbac Foundation projects

Image /page/14/Picture/56 description: The image shows a graphic with an orange circle containing a symbol of three people connected together. A thin orange line extends upwards from the top of the circle, and another thin orange line extends to the right from the circle.

**<sup>2</sup>02<sup>3</sup> <sup>R</sup>EVENU<sup>E</sup>**

### **EMPLOYEES**

Remuneration **256.4 M€**

### **STOCKHOLDERS 49.7%** founder's family **50.3%** other

Share price performance in 2021: **+57.7%**

Image /page/14/Picture/48 description: The image shows a graphic with the text "ABILITY TO FUND FUTURE GROWTH". Above the text is an icon of a hand holding a coin, enclosed in a circle.

Operating cash flow **235.1 M€**

![safe](https://i.imgur.com/925e44l.png)

**BANKS/DEBT**

Net financial interests (profit) **0.2 M€**

**SUPPLIERS**

**560 M€** in purchases Group-wide

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## CSR at Virbac

### **GOVERNANCE AND ORGANIZATION**

In 2023, the Group decided to create a Corporate Social Responsibility (CSR) department, reporting to the deputy chief executive offi cer. This department's mission is to continue to build strategies to meet the challenges related to the three pillars of CSR (environment, social and governance), accelerate business transformation in connection with these pillars, lead and direct key initiatives at all levels of the organization, meet regulatory obligations on CSR topics and coordinate all reports and communication required in this area.

At Virbac, we believe that CSR must be managed collegially. Our dedicated management is therefore based on a steering committee that brings together the departments concerned with various economic, environmental and social issues, namely Innovation, Marketing, Environment, Health and Safety, Sourcing, Risk, Legal Compliance, Human Resources and Communications. This committee meets once a month to review progress on the implementation of the CSR roadmap. Once a quarter, a progress report on CSR work is presented to the Group executive committee, and at least once a year to the board of directors.

Internationally, we rely on a network of local correspondents specifi cally focused on the major themes of sustainable development. Data collection is carried out based on an optimized production process, including the formalization of indicators and their scope within a dedicated reference system deployed in the major subsidiaries of the Group. Non-fi nancial information is reviewed annually by sustainability audit teams.

### **A CORPORATE RESPONSIBILITY POLICY BASED ON A STRONG ETHICAL COMMITMENT**

Our Group promotes strong values that are widely communicated at all our sites and are recalled at every major event in the life of the company. In particular, they are explained during a presentation systematically given by one of the Group's managers to all new arrivals. This presentation, entitled Virbac culture, lays out the company's values as well as our purpose, our ethical commitments, and our key strategic principles implemented across the Group's various entities.

At the same time, we have set up, and have been running for several years now, several legal compliance programs to ensure, throughout the Group, proper compliance with internationally recognized standards for corruption risk prevention, international sanctions and the processing of personal data.

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### **Code of conduct**

Published and applicable to all Group employees, accessible on our websites and made available to our partners, our code of conduct sets out the principles linked to our values and is intended as a guide for making the right decisions as we conduct our business. It describes the standards, the rules to be followed in the main areas related to the company's operations, under five main topics: Who we are, We take care of each other, We act with integrity, We understand our responsibility toward others, and We protect our company.

These five main topics define:

- n the role and responsibility of each individual to behave in an appropriate and compliant manner while conducting the company's business, and in particular the role of managers in promoting a culture of integrity throughout the Group;
- n the available channels allowing stakeholders to notify Virbac in the event of a behavior in violation of our code of conduct, in particular through our whistleblowing system, Virbac Signal;
- n our renewed commitment to:
- above all, protecting human rights, and the importance of complying with, and ensuring that our partners comply with, all applicable labor standards, as well as the principles set forth by the International labor organization (ILO),
- and secondly, our zero tolerance regarding corruption, influence peddling and fraud of any kind, as well as our compliance with the relevant laws and regulations in this area.

For the Group Legal Compliance department, 2023 actions and communications made it possible to:

- n emphasize the importance of an ongoing compliance process with our comprehensive "everyday compliance" program and the management's renewed commitment to zero tolerance, especially with regard to corruption and influence peddling;
- n raise awareness in all our subsidiaries through the various committees in place locally at a country and regional level regarding the various programs underway, and the roadmap defined by program (mainly anti-corruption and personal data) validated with our Group executive committee;
- n train Virbac employees with the objective of verifying that everyone will be able to:
- understand the company's values and commitments on how to conduct business, regardless of the territory,
- identify risky situations, deal with them by

adopting appropriate behaviors, or at the very least, know whom to contact within the company for help,

 know the tools put in place by Virbac to alert the company in the event of a situation that is inappropriate or against our code of conduct or that presents a risk for our employees, our company and our managers.

### **Prevention of corruption and influence peddling**

The Anti-bribery anti-corruption (ABAC) program aims to combat and prevent corruption, bribes and influence peddling. It was created to comply with applicable laws, such as the French Sapin 2 act, the UK bribery act and the U.S. foreign corrupt practices act, if applicable. In 2016, we formalized the specific challenges of fighting corruption, in particular by deploying a dedicated Group policy written in ten languages. Members of the Group executive committee, members of the France management committee, the general managers of the subsidiaries and their executive board signed a document formalizing their commitment to comply with this policy. Our new employees based in subsidiaries must also undertake to comply strictly with this anticorruption policy through their employment contract, which expressly refers to it.

At the same time, based on consolidated mapping of corruption and influence peddling risks, we approved a project to set up a corruption risk prevention program. In 2023, the main actions undertaken and validated by local governing bodies and the Group executive committee focused on:

Image /page/16/Picture/19 description: A woman with short curly hair and glasses is sitting at a table with a laptop and a book. She is wearing a light-colored shirt and has a watch on her left wrist. She is holding a pen in her right hand and appears to be reading or writing. There is a small green plant on the table next to the laptop.

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- n **risks identified as priorities.** Working groups were formed to improve measures to prevent these risks and strengthen our internal control, for example, through the improvement of the due diligence stage in the mergers and acquisitions process by strengthening our analysis of anticorruption and international sanctions aspects, through the improvement of procedures in the event of interaction with the authorities and through the training of the International Regulatory Affairs team on these issues;
- n **the creation of a code of conduct e-learning.**  This module, in French, English and Spanish, which was launched at the end of December 2023 to train all Group employees, is part of the mandatory program for any new hire. New languages for this e-learning will emerge as we go, the objective being to have 100% of the Group's employees trained on our code of conduct;
- n **awareness-raising and training of our teams.**  Especially those who contributed to our influence peddling and corruption risk mapping. The Legal Compliance department took this opportunity to question, have discussions with, communicate with, and train the employees interviewed on the challenges of corruption in their own activities. This quality time with business teams that interact with third parties was carried out via videoconference (Latin American countries) as well as in person (France, India and South Africa, for example);
- n **the updating of procedures and the strengthening of accounting controls.** This operation was based on the results of the risk mapping and external audits carried out to assess the compliance of some of our entities in the prevention of corruption. The goal being to identify areas for improvement, take corrective action, and strengthen certain control points.

With a constant and continually renewed desire to conduct our activities with honesty and integrity and create an inclusive environment in which everyone feels safe to express themselves, Virbac has made the Virbac Signal internal whistleblowing system accessible to all its stakeholders (virbac.besignal.com). Easily accessible and secure, this whistleblowing channel makes it possible to confidentially report potential violations of our code of conduct or misconduct involving unethical, illegal or inappropriate circumstances or behavior. This system complements existing channels and enhances our compliance process. The procedure is available in sixteen languages, and is accessible directly on the platform. An FAQ has been set up to explain how to use the external whistleblowing system.

Regarding the preventive third-party assessment process: based on the results of the consolidated corruption risk map, we were able to identify third parties considered to be the most at risk. With the Sourcing, Legal Compliance, Finance and Business departments, we are developing a third-party

Image /page/17/Picture/6 description: A woman with brown hair in a bun is sitting at a table with a laptop in front of her. She is wearing a dark floral shirt. There is a window in the background.

assessment system that meets the requirements in both the prevention of corruption and responsible purchasing (for subcontractors). At the same time, improvements are planned in the selection process for partners wishing to enter into a partnership with the Group. Combined with the Virbac code of conduct, our Virbac business partner charter was created with emphasis on the strict ethical requirements adopted by the Virbac group, particularly in terms of integrity, respect for human rights, the environment and what we expect from our business partners. These two framework documents are accessible to all our stakeholders on our corporate website and are part of Virbac's CSR process and the Virbac integrity program.

### **International sanctions**

Proper compliance with international sanctions systems concerns us greatly, and we are eager to provide our products, which are essential for the health of animals and the protection of populations against zoonoses, in countries subject to sanctions when authorized to do so. This is why we work with a consultant to implement the processes and procedures necessary to ensure proper compliance with sanctions systems. This topic is also included in the assessment process for the most at-risk partners and in our mergers and acquisitions processes.

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Image /page/18/Picture/0 description: A medium shot depicts a woman with long brown hair, wearing a green sweater, sitting at a desk and smiling. She is positioned to the left of the frame, with a window visible behind her. To her right, partially out of focus, is another person with glasses, their hands clasped together. The setting appears to be a classroom or lecture hall, with wooden desks and paneling visible in the background.

### **Respect for human rights**

We are sensitive to the risks associated with noncompliance with human rights and in particular with regard to modern slavery, child labor and other related topics. We are vigilant about the application of the provisions of international conventions on this subject and are in compliance with local regulations on these subjects in all countries where special prevention measures apply to our business.

The regulatory framework in which Virbac operates at the global level (Good laboratory practices, Good clinical or manufacturing practices), and which, under the control of agencies, precisely sets the guidelines for the skills and training of the staff involved in our activities, seems to us to be conducive to very broadly preventing the use of illegal work, such as child labor or modern slavery.

Respect for human rights is particularly emphasized in our code of conduct, which applies to all our employees and is accessible to all our stakeholders, as well as in our Virbac business partner charter, thus highlighting the importance Virbac places on complying, and ensuring compliance by all our stakeholders, with all applicable labor standards, as well as the principles defined by the International labor organization (ILO). In the event of non-compliance with these international human rights standards or applicable laws on these subjects, our Virbac Signal whistleblowing system allows any stakeholder to submit a report to our Group whistleblowing contacts.

### **Protection of personal data**

Privacy protection, particularly the protection of the personal data of our employees, customers, suppliers and any other stakeholders in our operations, is an important issue for the Group. Our code of conduct outlines the fundamentals in this matter, particularly our commitments to confidentiality, minimization and security, which must accompany any processing of personal data.

Our personal data policy (also referred to as the privacy policy) and our cookies policy are available on our websites, and all our employees have access to the policy regarding personal data that concerns them on our intranet portal. Through our HR system, new hires receive a copy of the policy for their information, and they must acknowledge receipt of it.

The Group Legal Compliance department, in charge of the personal data protection compliance program, particularly the enforcement of the European general data protection regulation n°2016/679, known as the GDPR, advises and supports the business lines in their operations and defines an action plan, while prioritizing 

{19}------------------------------------------------

by risk the topics regarding the compliance of existing processing activities based on current risk mapping. In order to enable an effective rollout of the program in Europe, the Group Legal Compliance department facilitates a network of data champions, designated employees at the level of each Group subsidiary in Europe.

The latter are responsible in the subsidiary for deploying the roadmap of actions validated with the Group Privacy steering committee (or GDPR steering committee). The steering committee, created in 2018, comprises the following members: the Group chief financial officer, the Group Information Systems department and its team in charge of security, the Human Resources director, the Group general counsel, the Digital Business director and the Legal Compliance director.

While important, technological progress and the Group's international reach do not eliminate all potential risk, despite the preventive measures implemented. This is why we work to maintain and improve an effective compliance program with the aim of exploiting only the data necessary for the identified processing (with full transparency) and preventing the risk of personal data breaches and leaks.

This approach contributes to strengthening stakeholder confidence in the Group, and with this in mind, we are continuing our efforts to:

- n improve and strengthen the security of our information system and the protection of our data, including personal data, by conducting security audits and breach tests of our information system on a regular basis, whether by our internal teams or by external auditors, to assess our level of security and strengthen our preventive measures if necessary;
- n train our operational teams and our data champions on our expectations when processing personal data and their responsibility in this regard;
- n update and communicate procedures and practical guidelines for operational staff with the objective of helping them acquire the proper habits as they implement the transparency principle;
- n integrate into our processes (ideation phase and invitations to tender) the 'privacy by design' approach for any new project. To do this, we developed tools, including a questionnaire shared between the Group Information Systems department, Legal Compliance and the project manager that must be completed during the project design phase by each of the parties and validated before the implementation phase;
- n deploy the Proteus Cyber personal data management tool in all entities in Europe, particularly by incorporating for each entity:
- the register of processing activities for their data,
- the main procedures and workflows for the implementation of new processing activities,
- one of the tools enabling the tracking of individuals' requests to exercise their rights concerning their personal data and thus enabling us to respond to them in due time;
- n carry out the necessary preliminary impact assessments for processing likely to result in high risk to the rights and freedoms of natural persons.

The Group executive committee is regularly informed of the progress of these various compliance programs. A complete review of the objectives and progress of these compliance programs will be carried out before the audit committee in 2024.

### **Responsible tax policy**

We apply the laws and regulations in force in the countries where we operate. We file the required tax returns on time with the various tax authorities, and the amount due is paid.

In 2022, we created the position of International Tax director to ensure that all entities comply with their tax obligations and that the tax due in each of the subsidiaries is properly accounted for. This position relies on local financial directors, regional financial controllers and, in some countries, on tax consulting firms, and prepares a report for the audit committee.

In the area of transfer pricing, we apply OECD principles and the regulations in force in the countries of residence to our intra-group operations and aim for appropriate remuneration for all Group entities. Virbac's transfer pricing policy is documented and made available to the various tax authorities.

We undertake to maintain transparent and constructive relations with tax or governmental authorities by submitting our country-by-country reporting to the French authorities on an annual basis. Our tax strategy, based on our actual operations, is aligned with our values, which prohibit tax evasion and the implementation of any tax scheme that could compromise the Group's good reputation and its values. When we invest in a specific country, this decision is primarily driven by business objectives. Income taxes are treated in accordance with international accounting rules in the consolidated financial statements and are commented on in the notes to the consolidated accounts.

{20}------------------------------------------------

### **Integration of corporate responsibility issues into stakeholder relationships**

Innovating, producing and marketing responsibly cannot be done consistently without our entire ecosystem being involved through regular dialogue: customers, employees, suppliers, scientists, local residents, representatives of public authorities and non-governmental organizations.

The stakeholders with whom we are actively involved are identified by factors such as:

- n their contribution to a better definition of needs within the Group's areas of activity;
- n their alignment with the company's strategy and their added value;
- n their expertise in the field;
- n staff involvement in the company's operations;
- n their perception of the Group's activities and products.

Image /page/20/Picture/8 description: Two men are on a boat, one is holding a net. The man on the left is wearing sunglasses and a white polo shirt. The man on the right is wearing a green shirt and an orange life vest. They are both looking down at the net. The boat is surrounded by water and there are trees in the background.

{21}------------------------------------------------

| Stakeholders                                                                                    | Approach and frequency of dialogue                                                                                                                                                                                                                                                                                                                                               |
|-------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Veterinarians<br>Farmers<br>Pet owners<br>Distributors                                          | Continuous product information via advertising<br>Continuous information on specific animal diseases<br>Continuous support programs for veterinarians and farmers<br>Technical call centers in France, United States, etc.<br>Conferences, specialized trade shows, scientific conferences<br>Permanent websites<br>Market research<br>Social media platforms                    |
| Financial community<br>Investors<br>Analysts<br>SRI funds                                       | Meetings between analysts and investors<br>Annual shareholders' meeting<br>Website that includes all regulatory information<br>Multi-platform financial bulletins                                                                                                                                                                                                                |
| Suppliers<br>Partners                                                                           | Regular monitoring of the Group's main suppliers (annual meetings)<br>Audit plan for the Group's main suppliers<br>Formal exchanges with each call for tender and for main suppliers about financial,<br>environmental, ethical and quality criteria                                                                                                                             |
| Public authorities<br>Regulatory authorities<br>Associations of animal health<br>professionals  | Regular communication with regulators and decision-makers on critical issues that<br>affect the pharmaceutical industry, the scientific community and Virbac customers<br>Participation in industry-specific working groups                                                                                                                                                      |
| Civil society<br>Non-governmental<br>organizations<br>Journalists                               | Multiple contact options via the Group's website<br>Transparency of and accessibility to the Group's official reports<br>Local contributions to NGO initiatives                                                                                                                                                                                                                  |
| Scientific community<br>Research partners<br>Opinion leaders<br>Universities/veterinary schools | Establishment of research partnerships<br>Contribution to scientific education programs<br>Organization of technical symposia                                                                                                                                                                                                                                                    |
| Employees<br>Applicants                                                                         | Intranet, presentations and internal display networks<br>Loyalty programs for employees and newcomers<br>Plenary meetings or web conferences for managers and employees<br>Internal opinion survey and global feedback<br>Recruitment websites, professional forums and corporate culture on the Internet<br>Partnership with schools and universities<br>Social media platforms |

The relationship with our suppliers is part of this continuity, with regular exchanges, favoring proximity with local suppliers. Our policies and tools make it possible to ensure responsible purchasing practices consistent with the Group's guiding principles: supplier charter, assessment questionnaires integrating CSR criteria, targeted audits, follow-up on indicators related to CSR themes, etc.

For every invitation to tender and for the main suppliers, we administer a questionnaire evaluating their compliance with the environmental and social standards in force. Since 2015, new framework contracts have included a provision requiring compliance with these standards. In 2022, our assessment process carried out with new suppliers did not identify any risks in the area. If we were to identify a non-compliant supplier, we would require it to comply or risk terminating its contract. We also selected a platform that allows for a more refined management of suppliers (including the automatic inclusion of questionnaires and the collection of their certifications). This platform was deployed in the United States in June 2022 and will be deployed in France in 2024.

{22}------------------------------------------------

### **MAIN CSR RISKS AND OPPORTUNITIES**

We carried out a materiality analysis with a thirdparty expert in order to assess the priority sustainable development issues: social and environmental consequences of business activity, the effects of business activity on respect for human rights, the fi ght against corruption and tax evasion. This matrix was updated in 2018, reassessing the key issues and their weighting.

This approach is based on an analysis of credible internal and external sources:

- n conducting interviews with industry experts for refl ection on key CSR challenges;
- n sharing of information about surveys and internal and external communication media;
- n review of sectoral documentation;
- n media analysis, etc.

## **OUR COMMITMENTS**  FOR THE FUTURE

We summarized the results, at the cross-section of internal expectations (impact of issues on the business) and external expectations (importance of stakeholder expectations), and below, we elaborate on the most material themes through the Group's four main commitments.

In 2023, we began implementing actions from the Group's new CSR roadmap, and conducted a gap analysis of the new non-fi nancial standards of the Corporate sustainability reporting directive (CSRD), including the double materiality matrix to prepare for the implementation of these new standards starting in 2024.

- Innovating responsibly
- Strengthening employee commitment
- Ensuring the quality of products and services
- Protecting the environment

Image /page/22/Figure/14 description: This image is a Virbac's materiality matrix, which is a tool used to identify and prioritize the most important issues for a company. The matrix has two axes: Importance to stakeholders and Importance to Virbac. The issues are plotted on the matrix based on their importance to each axis. The issues that are most important to both stakeholders and Virbac are located in the upper right corner of the matrix. The issues that are least important to both stakeholders and Virbac are located in the lower left corner of the matrix. The issues in the matrix are: Responsible innovation, Employee engagement, Environment, Quality of products and services, Supplier relations, Business ethics, Governance and financial transparency, and Local contribution.

### Importance to Virbac

{23}------------------------------------------------

Our main CSR risks and opportunities are defi ned in the table below.

| Priority risks<br>and opportunities                          | Definition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Innovating responsibly                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Development of<br>innovative products<br>and services        | The veterinary pharmaceutical industry is very competitive. Each year, in order to respond to<br>market developments and needs, maintain our market share and ensure our development,<br>we devote significant resources to research and development.                                                                                                                                                                                                                                                                                                                                                                                  |
| Ethics and<br>animal welfare                                 | In a rapidly changing environment, we owe it to ourselves to provide an innovative and safe<br>range of products and services, developed and produced with respect for animal welfare.                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Strengthening employee engagement                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Attracting and<br>retaining talent                           | In France, the key skills sought for core functions (Industry, Quality Assurance, Research<br>& Development) are in high demand throughout the human and veterinary pharmaceutical<br>industries. In addition to this competition among employers, the geographic location of the<br>head office can represent a limitation to hiring, given the limited pool for spousal<br>employment, coupled with the high cost of living in the region, particularly for real estate.<br>At the same time, in emerging countries, the job market is very dynamic, but the size<br>and reputation of Virbac do not always attract the best talent. |
| Health and safety<br>at work                                 | Given the industrial nature of research and development and commercialization of our<br>activity, the possibility of a workplace accident (conventional or related to the risk of<br>contamination by products) cannot be ruled out.                                                                                                                                                                                                                                                                                                                                                                                                   |
| Diversity                                                    | Increasing diversity is a way to demonstrate the Group's ability to incorporate differences.<br>We have always considered the contribution of the various generations and cultures of the<br>countries in which we operate to be a true asset. These qualities must be demonstrated in<br>the organization and in all relationships with stakeholders.                                                                                                                                                                                                                                                                                 |
| Ensuring the quality of products and services                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Proactive right first<br>time approach                       | Through our Group quality policy, we are committed to implementing a proactive approach<br>based on doing it right the first time in order to guarantee users safe and effective products.                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Controls during the<br>product life cycle                    | As part of the manufacturing control of our products, we have implemented controls<br>before and after the release of products on the markets in order to reduce the risk<br>of defective products.                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Protecting the environment                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Sustainable use of<br>resources (energy,<br>water, material) | Our aim is to optimize the resources used by controlling the consumption of resources<br>(energy, materials) in manufacturing processes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Climate change                                               | We place particular importance on measures to mitigate our carbon footprint,<br>thus helping to fight against climate change risks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Environmental<br>discharges<br>(wastewater<br>and waste)     | As part of our veterinary medicine manufacturing business, we use substances that present<br>health, fire and/or explosion, emission and discharge risks during the various phases of<br>development and marketing (R&D, manufacturing, storage and shipping). These risks could,<br>should they materialize, cause damage to persons, property and the environment.                                                                                                                                                                                                                                                                   |

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### **CSR STRATEGY AND FACTS AND FIGURES**

|                                                 | Aims                                                                                           | 2018<br>Reference Year | 2021   | 2022    | 20231  | Progress |
|-------------------------------------------------|------------------------------------------------------------------------------------------------|------------------------|--------|---------|--------|----------|
| Innovating responsibly                          |                                                                                                |                        |        |         |        |          |
| Development of innovative products and services |                                                                                                |                        |        |         |        |          |
|                                                 | Maintain a ratio of biology RDL2<br>expenses/total RDL > 30%                                   | 40.6%                  | 31.1%  | 26.2%   | 26.5%  |          |
|                                                 | Maintain a ratio of RDL expenditures/total<br>Group revenue > 7%                               | 8.4%                   | 7.4%   | 8.3%    | 9.1%   |          |
| Animal ethics and welfare                       |                                                                                                |                        |        |         |        |          |
|                                                 | Reduce the number of animals used for<br>quality control by 50% by 2025                        | 36,361                 | 20,107 | 20,458  | 24,333 |          |
|                                                 | Strengthening employee engagement                                                              |                        |        |         |        |          |
|                                                 | Attracting and retaining talent                                                                |                        |        |         |        |          |
|                                                 | Achieve a Great Place to Work (Trust Index)<br>satisfaction rate > 70% by 2025                 | 65%                    | 73%    | -       | -      |          |
|                                                 | Health and safety at work                                                                      |                        |        |         |        |          |
|                                                 | Achieve a workplace accident<br>frequency rate < 5 by 2025                                     | 5.61                   | 4.88   | 4.25    | 3.67   |          |
|                                                 | Ensuring the quality of products and services                                                  |                        |        |         |        |          |
|                                                 | Provision of right first time products                                                         |                        |        |         |        |          |
|                                                 | Limit customer technical complaints<br>to a ratio of less than 5 per million<br>units marketed | 4.9                    | 4.0    | 4.6     | 4.6    |          |
|                                                 | Controls during the product life cycle                                                         |                        |        |         |        |          |
|                                                 | Limit the number of batch recalls to a ratio<br>< 1 per 1,000 batches marketed                 | 0.66‰                  | 0.48‰  | 0.42‰   | 0.27‰  |          |
|                                                 | Protecting the environment                                                                     |                        |        |         |        |          |
|                                                 | Sustainable use of resources                                                                   |                        |        |         |        |          |
|                                                 | Reduce energy consumption<br>(gas and electricity) by 5% by 2025 (MWh)                         | 83,161                 | 75,169 | 83,8903 | 79,026 |          |
|                                                 | Climate change                                                                                 |                        |        |         |        |          |
|                                                 | Reduce scopes 1 & 2 greenhouse<br>gas emissions by 10% by 2025<br>(CO₂ equivalent metric tons) | 23,681                 | 20,814 | 23,727  | 22,630 |          |
|                                                 | Discharges into the environment                                                                |                        |        |         |        |          |
|                                                 | Reduce by 5% the amount of COD<br>(chemical oxygen demand) generated<br>by 2025 (metric tons)  | 121                    | 113    | 100     | 86     |          |
|                                                 | Reduce the volume of ordinary<br>and hazardous industrial waste by 5%<br>by 2025 (metric tons) | 5,236                  | 4,798  | 5,380   | 4,642  |          |

*1scope: includes Chile as of 2022 for environment, health and safety indicators*

*2vaccines and immunological and bio-pharmaceutical products*

*32022 value updated to take into account self-consumed renewable energy (former value: 83,246 MWh)*

#### Methodological note

The year 2018 serves as a reference year to assess the achievement of the quantifi ed objectives as refl ected in the facts and fi gures above. Some indicators may fl uctuate depending on the activity; they are detailed in the following pages, if necessary. This report was prepared in compliance with GRI (Global reporting initiative) standards: essential compliance option. These standards have been adopted since 2011. The 2023 company scope covers 18 countries and represents 4,951 employees, or 91% of the total workforce. The scope of the principal environmental indicators covers the main production sites, which represented 59% of the Group's revenue in 2023: South Africa, Australia, United States, France, Mexico, New Zealand, Uruguay, Vietnam and Chile (entered the scope as of 2022). RDL: Research & Development + Licensing.

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# Innovating responsibly

For many years, we have sought to provide an innovative and safe range of products and services, developed and produced with respect for animal welfare. Our customers, veterinarians, farmers and animal owners around the world are becoming increasingly mindful of their impact on the environment and human health. As a responsible company, we have naturally oriented our business accordingly.

Furthermore, we focus our research on increasingly innovative and distinguished health products that address a variety of pathologies and production needs, based on the unique features of the individual geographic areas in which they appear. Every day, we are committed to the best way to achieve this, while remaining faithful to the quality requirements for the health of animals.

### **DEVELOPMENT OF INNOVATIVE PRODUCTS AND SERVICES**

The fi eld of the veterinary pharmaceutical industry is highly competitive, and every year, in order to meet market changes and needs, maintain our offer and ensure our development, we devote signifi cant resources to research and development. We place particular importance on the search for continuous improvement in the innovative solutions proposed and in the way they are developed.

### **OUR KEY OBJECTIVES**

- n **Develop new drugs that are consistent with a sensible use of antibiotics.**
- n **Develop modern alternatives to traditional treatments.**
- n **Use new environmentally friendly technologies to develop and update our products.**

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### **GOVERNANCE**

Our organization in charge of innovation is structured in research centers spread across all continents and which work in a network of key skills to generate greater synergies and creativity. This close proximity

### **OUR POLICIES AND ACTION PLANS**

### **Develop new medicines that are consistent with a sensible use of antibiotics**

The development of prevention, particularly by vaccination, is one of the ways to reduce the use of antibiotics in animal production. Our recent investments in our centers for the research, development and production of vaccines intended for farm animals in France, Australia, Chile, Uruguay and Taiwan reflect this willingness to strengthen the Group's development in this area.

We have also initiated several partnership programs with public research institutes and private companies to advance together in the development of innovative products (immunostimulants, micronutrition, biocides), some of which may be able to replace antibiotics or at least help reduce their use. New medicines that will help the veterinary profession advance toward its goal of changing its practices are also being developed. In 2023, one of these medicines was launched in European territory, offering new perspectives to veterinarians: it can be used as a first-line treatment in place of the current medicines that all contain antibiotics. It will be rolled out globally in the coming months and years. Other medicines are being developed to expand this concept to other pathologies and species.

### **Develop modern alternatives to traditional treatments**

Our goal is to develop alternatives to certain traditional, at times polluting, therapies. For example, and when it makes sense from a medical and epidemiological point of view, we look for routes of administration that have less of an impact on the environment and reduce dosages while maintaining at least the same levels of efficacy. In another area, that of animal wellbeing and bodily integrity, we have taken a new step forward thanks to the discovery of a new treatment with our customers and their needs in the different global markets allows us to have a range of relevant and adapted products and services.

that represents a real alternative to surgical castration in dogs, through hormonal regulation that neutralizes the reproductive capacity of the animal for six months or a year. The animal's well-being is preserved here. Any irreversible surgical procedure is currently unnecessary, in the interests of the animal and its owner.

### **Use new environmentally friendly technologies to develop and update our products**

For the development of new products, all Virbac R&D sites worldwide in charge of analyses now use more efficient chromatography and extraction technologies. This approach helps reduce:

- n the number of tests necessary for the development of the methods (-50%);
- n the amount of organic solvents or materials (between -50 and -90%);
- n as well as the energy consumption of the analysis devices (-50%).

The same approach is used with the same benefits throughout the product life cycle, including during regulatory updates of existing products. Beyond the methodologies, whenever a toxic solvent can be substituted with an alternative solvent, it is proactively replaced by an equivalent that is more environmentally friendly.

### **OUR RESULTS**

| Performance indicators              | 2021  | 2022  | 2023  |
|-------------------------------------|-------|-------|-------|
| % of biology RDL expenses1/total    | 31.1% | 26.2% | 26.5% |
| % of RDL expenditures/Group revenue | 7.4%  | 8.3%  | 9.1%  |

*1vaccines, immunological and biopharmaceutical products*

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### **ANIMAL ETHICS AND WELFARE**

Virbac stakeholders (customers, veterinarians, farmers, employees, etc.) are increasingly mindful of the impact of our products on the entire value chain. This is why we conduct our innovation approach and our operations in a strong ethical framework, promoting as much as possible *in vitro* testing and associating our various partners and stakeholders: suppliers, supervisory authorities, professional associations, etc.

### **STUDIES ON ANIMALS**

For the evaluation of our products in development or before marketing, our first approach is always to use methods that do not involve animals: bibliographical research, *in vitro* studies, computer modeling, etc. In some cases, when no recognized or adapted alternative method is possible, then animal studies of a necessary nature are conducted in accordance with applicable pharmaceutical rules and regulations.

These animal studies deal with:

- n animal protection: verification of the product's safety (non-toxicity, no impact on reproduction, non-carcinogenic, etc.) and its efficacy in treating or protecting the target animal;
- n human protection: verification of safety for the product user and the absence of residues in species consumed (meat, milk, eggs);
- n environmental protection: verification of the absence of toxicity for organisms other than the target species that may come in contact with the product.

#### **Preclinical and clinical studies**

Pre-clinical studies (studies carried out in animal units under standardized and controlled conditions) are governed by regulations that affect every dimension of animal studies: approval of the institutions where the studies are carried out, staff training and qualification, the provenance of the animals and their traceability, prior ethical evaluation of studies and their follow-up, controls by the authorities, ethics committees, and audits carried out by Virbac teams. These studies make it possible to verify the efficacy and safety of the products under strict conditions.

Clinical studies (conducted on owner or farm animals) are intended to confirm the efficacy and safety of the products under field conditions and are subject to a regulatory submission or prior trial authorization (depending on the country) and are conducted under the responsibility of veterinarians.

In the Group animal units, at constant scope, the different categories of animals were distributed as follows in 2023: rodents 95.4%, rabbits 3.5%, farm animals 0.5%, domestic carnivores 0.6%. Due to the recent establishment of aquaculture units within the Group and the ongoing work on the structural organization of these, the data has not been included in the scope.

**Limit the number of animals in R&D studies and quality controls by eliminating studies or replacing them with alternative methods whenever possible.** 

**Specifically, Virbac is committed to implementing a demanding policy of reducing the number of animals for quality control insofar as the proposed methods are technically feasible and acceptable from a regulatory standpoint in the countries where our products are sold.** 

#### **GOVERNANCE**

**OUR KEY OBJECTIVES**

General management defines the strategic areas of focus regarding resources for conducting animal studies and the development of alternative methods. These areas are defined by the Group's Animal Ethics department in the form of policies, action plans and control processes; this department is also responsible for promoting and ensuring compliance with ethics and animal welfare within the Group and among its partners.

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### **OUR POLICIES AND ACTION PLANS**

### **A code of ethics and policies to regulate animal studies**

The Group has developed a code of ethics relating to animal studies, which includes ten points and applies to all employees of the Group and its subcontractors. Furthermore, the Group has two policies governing animal studies: Animal ethics committee and Animal welfare.

- n The Animal ethics committee policy defines the scope, roles and responsibilities, organization, composition, ethical rules and operation of Virbac ethics committees.
- n The Animal welfare policy defines staff roles and responsibilities with regard to animal welfare. Based on the 3Rs principle (Replace, Reduce, Refine animal studies) and the Virbac code, it describes the standards to be applied to animals, studies and animal units within the Group. These standards are also required of the Group's partners for any animal studies.

### **Control process**

- n Ethics committees are set up in all areas where animal studies can be conducted. They are all governed by the same ethical principles (independence, impartiality, absence of conflict of interest) and operational principles (imposed membership categories, ethical evaluation of studies, deliberation, vote, etc.). They review 100% of studies, which can only be conducted after obtaining their approval.
- n Ethics audits are carried out, both in the Group's animal units and at its external partners in order to qualify them. With regard to outsourced studies, the Group imposes the same level of requirement on its partners: CROs (Contract research organizations), universities, etc. These requirements include the establishment of ethics committees within them, the deployment of strict procedures for monitoring their studies, respect for animal well-being and compliance with regulations.

Image /page/28/Picture/8 description: A medium shot depicts two women and a dog in what appears to be a veterinary clinic. The woman on the left is holding the dog, a Sheltie with a long, tan and white coat, in her arms. She is smiling and looking at the dog. She has dark hair pulled back in a ponytail and is wearing a maroon scrub top. The woman on the right is wearing green scrubs and has curly hair. She is looking at the dog and has her hand on its head. The background is a light-colored wall with a door in the distance.

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### **Key actions implemented**

- n The 3Rs rule, now recognized as the international standard for animal studies, is our guiding principle for the design and execution of studies in our laboratories as well as those of our partners, but also for the development of alternative methods and their promotion with regulatory agencies around the world. Such alternative methods include, for example, carrying out *in vitro* tests in lieu of *in vivo* tests, when possible, or capitalizing on reproducible tests, bibliographic research or computer modeling.
- n The various initiatives (negotiations with regulatory agencies to eliminate routine tests, production of dedicated batches for countries that do not require animal tests, replacement with *in vitro* methods, etc.) continue to pay off; they have enabled us to commit to the objective of reducing the use of animals in quality control.

n A task force implemented within Virbac is dedicated to the development of alternative methods, which is a CSR priority objective by 2030 and will ensure a reduction in the number of animals.

In France, the post-study animal adoption program, implemented in 2013, in collaboration with the main French association dedicated to the adoption of laboratory animals, has also been expanded with an employee adoption procedure, and helps maintain our goal of guaranteeing a foster family for 100% of adoptable dogs and cats. In 2023, 50 dogs and 11 cats were put up for adoption.

| Adoption | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | Overall total |
|----------|------|------|------|------|------|------|------|------|------|------|------|---------------|
| Dogs     | 135  | 183  | 56   | 68   | 50   | 83   | 66   | 54   | 44   | 16   | 50   | 805           |
| Cats     | 62   | 45   | 1    | 19   | 7    | 6    | 12   | 65   | 18   | 4    | 11   | 250           |
| Total    | 197  | 228  | 57   | 87   | 57   | 89   | 78   | 119  | 62   | 20   | 61   | 1,055         |

### **OUR RESULTS**

| Performance indicators                      | 2021   | 2022   | 2023   |
|---------------------------------------------|--------|--------|--------|
| Number of animals used for R&D studies      | 5,772  | 6,093  | 4,764  |
| Number of animals used for quality controls | 20,107 | 20,458 | 24,333 |

As some projects have entered a development phase requiring fewer animals, the number used in R&D studies decreased by 22% in 2023 compared to 2022.

The number of animals in quality control of all species combined, and at constant scope, is increasing (+19%) mainly due to the increase in sales of the rabies vaccine in Brazil, which does not recognize non-animal methods for the release of vaccines. In Europe, Oceania and Asia, since 2018, Virbac has managed to reduce the number of animals in quality control by 50%, 35% and 42%, respectively, highlighting Virbac's commitment to reducing the number of animals in quality control. For domestic carnivores, the number in quality control decreased dramatically (from 182 in 2013 to 8 in 2023, a 96% decrease), the remaining tests being dedicated to some countries whose authorities still require animal testing for the release of vaccine batches.

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Image /page/30/Picture/0 description: A woman is sitting down and holding a ginger kitten. The woman is smiling and looking at the kitten, and she is touching the kitten's nose with her finger. The woman is wearing a beige sweater and a gray turtleneck. The kitten is looking up at the woman. The background is blurry, but it appears to be a living room.

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# Strengthening employee engagement

Our success is inseparable from the commitment of our employees, commitment that is explained by the place given to women and men who are at the heart of Virbac and its major decisions. Every day, we are committed to evolving our modes of operation and meeting the ongoing challenges of globalization, changing markets and new technologies, while adhering to our values of proximity with each of our customers.

In such an environment, the issue of human capital is fully in line with that of the company, our ambition being to support the development of organizations and professions, as well as the specifi c needs of the teams, by building a strong partnership with managers and all employees.

### **GROUP GOVERNANCE AND HR POLICY**

Virbac's policy as it pertains to this issue of human capital is based on three complementary principles:

- n training, skills development, performance compensation;
- n well-being in the workplace and recognition;
- n mobility and diversity aspects that provide a valuable resource for the Group.

We pay attention to our employees' opinions, and use them as a source of inspiration in defi ning our policies and the areas of improvement to target so as to unite employees around strong values, thus increasing the commitment and motivation of all.

All employees regularly participate in a satisfaction survey that allows them to confi dentially express their expectations on a very broad range of topics, many of which involve the CSR human capital issue.

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### **ATTRACTING AND RETAINING TALENT**

The employment market has continued to evolve in recent years and is increasingly under tension. The qualified applicants we seek, whose skills are essential in the veterinary pharmaceutical industry, are becoming increasingly rare, and are not always available on the market.

Faced with this shortage, we have adjusted our recruitment strategy by identifying new search sources that complement more conventional methods such as job advertisement platforms, the organization of Group recruitment activities or the use of specialized agencies.

The measures we have implemented aim to increase the visibility of our job opportunities and promote the many professional benefits that our company offers.

The rise of digital communication channels and the increase in the number of devices available (phones, tablets, computers, etc.) have broadened our optional courses of action. Social media in particular have proven to be excellent means for disseminating our job postings around the world, with concrete results.

In short, our innovative approach and continual adaptability are at the heart of our strategy to address the challenges of recruiting in a constantly changing job market.

### **OUR KEY OBJECTIVES**

- n **Promoting employee commitment and loyalty.**
- n **Continuing training initiatives aimed at improving skills and employability.**

### **OUR POLICIES AND ACTION PLANS**

### **Recruitment policy**

We recruit in all countries and for all jobs in order to support our growth. In order to ensure the consistency and relevance of such recruitment, for several years, we have been developing digital tools to allow for better visibility of available professional opportunities. The Workday platform recruitment module was deployed in all our subsidiaries with the objective of harmonizing our Group processes in this area. All countries can publish their job offers via Workday on our internal and external career site at the same time in order to increase our visibility and develop our employer image.

This tool also allows us to manage the multicasting of our postings on different job boards (LinkedIn and other more local job sites) with a single entry point. Workday provides transparency on the recruitment process for managers (number of applications received, follow-up of candidates for interviews, etc.) and allows recruiters to manage applications directly in this system. All applications received are centralized and shared with our managers, and responses to candidates are also sent directly from this platform. The recruitment module also allows us to meet GDPR regulation requirements with regard to data retention. At the Group level, more than 550 positions were posted externally and 300 internally. Of these, 440 were filled. Approximately 530 individuals were coopted (7% of whom were recruited), and there were 547 internal transfers. Overall, more than fifteen subsidiaries posted jobs on Workday.

In France, 190 positions were posted externally and 150 internally, 170 of which were filled. In addition, over 80 internal transfers took place during the same period.

In order to promote and simplify internal mobility, a new Boost your Mobility feature is now offered at the Group level as part of our human resources management system. This portal offers each employee the opportunity to view and apply for internal offers, access the status of their applications, create job alerts, and even recommend candidates, all centralized in one place. Boost your Mobility also simplifies the updating of professional profiles by allowing employees to add their resume, diplomas and studies directly on this hub. This information will be automatically included in an application when an employee applies for an internal offer.

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Image /page/33/Picture/0 description: A man and a woman are standing and talking. The man is holding a magazine or brochure and smiling. He is wearing a white shirt, a dark blue blazer, and gray pants. The woman is wearing a tan polo shirt and dark blue pants. They are standing in a well-lit room with white walls.

Recruitment remains a very local activity linked to lines of business and cultural specificities. For this reason, the search for target profiles is managed mainly by the subsidiaries' teams in order to adapt to the context of each country and to attract talent more effectively. One of the approaches shared within our company throughout the world is the involvement of employees in the recruitment of new colleagues. To strengthen this practice, we have developed co-option programs that aim to reward employees for their contribution in identifying profiles that may meet our needs.

For example, India and China have set up a cooptation program to promote the recruitment of sales managers. Vietnam has also launched its cooptation program, encouraging employees to invite their knowledge network to apply for job offers, and Australia is encouraging this by offering to reward cooptation for both permanent and temporary positions.

Another approach is to diversify recruitment sources: our Chilean subsidiary has developed its network by working with public employment services to recruit blue-collar positions and with universities to gain access to young graduates in scientific fields. It has also launched several recruitment campaigns to attract the best talent in the pharmaceutical industry at national and international level, and uses internships to discover new talent ready to seize job opportunities within the Company.

University campuses are an important pipeline for recruitment: In this way, along with co-option, India has managed to hire nearly 150 employees from all parts of the country while maintaining costs related to the recruitment process. Uruguay also relies on a strong development of its relations with the academic community to fuel its strategy for attracting new talent.

In a highly competitive market, platforms like LinkedIn are also a good way to utilize social media. In the United States, leaders promote job opportunities through their own LinkedIn profile and professional network, and in Australia, managers are encouraged to share job openings by these same means. In Northern Europe, employees also disseminate job advertisements via their LinkedIn account. They also share the events in which the company participates (trade shows, conventions, conferences, etc.) to make its employer brand more visible, especially outside the veterinary circuit. This part of Europe has also relied on publicizing the company directly in places such as stores by communicating employment opportunities via a QR code that people can scan to obtain all the necessary information and to apply if they wish.

To meet recruitment needs, the company can also turn to internal transfers and the promotion of employees who already hold a position within the Group. Mexico, for example, continues to invest in the development of internal employees to provide sourcing within the Mexican subsidiary and other South American entities, and thus pave the way for the job succession in the future. India has implemented an internal recruitment policy by developing a five-step selection program to recruit regional sales managers, some of whom are already employed within the Indian subsidiary and promoted to these positions.

Successful recruitment also involves the formalization of policy in this area that clearly explains the processes and practices for selecting and assigning positions to be filled, all in keeping with the regulations in force in the country concerned. In this regard, China has introduced new guidelines to guide recruitment staff within its subsidiary, and our subsidiary in Taiwan asks each recruitment manager to take training before conducting candidate selection interviews. South Africa also believes that the drafting of a clear recruitment policy makes it possible to attract qualified and suitable candidates who will contribute to the success of the company while sharing its values. Indeed, while 

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a candidate's expertise and experience are important, adherence to shared values within the Group is a major contributing factor in successful recruitment.

### **Skills development policy**

In May 2023, at the Group level, we rolled out the catalog of benchmark jobs and the competency framework, two key pieces that allow everyone to play a role in their own development. Six key competencies (important abilities and behaviors) to carry out our longterm strategy were identified. These competencies are an integral part of the employment benchmark, which lists the main responsibilities and functions for each position. They specify how the individual can effectively accomplish them. Each competency is broken down into four levels, and each benchmark job has its own expected competency levels. Thus, each Virbac group employee can now use Workday to access the level associated with each of the six competencies of his or her benchmark job.

A development guide has been made available to support everyone, regardless of their profession, with advice on how to develop these key competencies. This guide can also be used by managers as a reference tool to help them support their team members in drafting development plans or preparing for career advancement. Training modules on each of the six competencies are also available so that everyone can play a role in their development.

In the same spirit, a new platform, goFLUENT, has been made freely accessible to offer everyone the opportunity to develop their language skills and thus become comfortable and communicate impactfully when interacting in English, Spanish or French. Via Workday, it allows unlimited access to e-learning resources, level tests and conversation classes in a dozen languages.

In addition, many internal experts, present in the main departments, contribute to the development of team competencies by implementing training aimed

Image /page/34/Picture/6 description: A group of five people are gathered in an office setting, seemingly engaged in a meeting or presentation. One woman stands to the left of a whiteboard, gesturing towards a diagram on it. The diagram appears to be a Venn diagram with percentages labeled, possibly representing data or statistics. Another woman, dressed in a floral dress, stands next to the whiteboard, seemingly listening to the presentation. To the right, a woman holds a blue notebook, and a man stands beside her, both looking towards the whiteboard. In the foreground, a woman sits at a desk with a laptop in front of her, her back to the viewer. The desk also has sticky notes and a pen holder on it. A second whiteboard with sticky notes is visible in the background, with words like "HEALTH" and "DOOS" written on them. The room has a modern office feel, with large windows and blinds in the background.

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at a wide audience regarding corporate issues (safety, quality, digitalization, ecological transition, etc.).

With regard to the France scope specifically, the training catalog has been expanded in order to provide a face-to-face offer in connection with the six key Virbac competencies. Emphasis was also placed on training managers, continuing the Leaders in Action program and adapting it to the specificities of the different managers' targets. Total training expenses in 2023 represent 2.55% of payroll.

On the international level, most subsidiaries devote a significant portion of their budget each year to developing their employees' skills, using both internal resources and courses provided by external trainers. An employee's training often begins as soon as he/ she joins the company and continues throughout his/ her career.

Northern Europe implemented a mentoring approach: each new hire is paired with a mentor, whose role is to facilitate their onboarding and to support them in learning about the company. Training also gives marketing teams the opportunity to participate in sales seminars with sales representatives so that they can better understand the latter's needs with regard to promotional materials. New hires are also involved in business meetings, even if this activity is not part of their area of responsibility. Our China subsidiary conducts training sessions to accelerate product and policy knowledge over a one-month period when onboarding a new employee.

India relies on in-house development, especially for the sales and marketing teams, which represent the vast majority of its employees: It has developed an internal program for salespeople to improve their skills in sales techniques. The same approach has been implemented to strengthen the knowledge and practices of the marketing teams, including the implementation of a monthly session dedicated to exchanges between employees working in this field. This quality time allows everyone to discuss their experience in the field and share success stories. The subsidiary has also set up a specific management development program entitled "Sanskar for success" (keys to success). India sees all of these internally developed training programs developed as a strength that allows it to learn and react quickly to its ever changing environment and thus ensure the sustainable growth of its business.

South Africa promotes the continuous professional development of employees to enable everyone to have the knowledge and skills necessary to carry out their function effectively. It combines internal training carried out via the online tools available to them and

Image /page/35/Picture/6 description: A person wearing a hair net, face mask, safety glasses, and blue gloves is working with machinery in a factory setting. The person is wearing a light blue gown and is standing in front of a piece of equipment with various components, including a control panel, wires, and metal structures. The background is blurred, but it appears to be a clean and well-lit industrial environment.

uses external structures to train its employees on compliance, sales or health by providing funding for these courses. It also allows employees to receive academic training by providing them with financial support when necessary, which is beneficial both for the employee and for the company in terms of productivity and skills development.

Brazil implemented a program called Campus Virbac, which aims to train its employees throughout the year on behavioral skills, such as how to give and receive feedback, or even on emotional intelligence. Regarding English courses for people who are required to use the language in their daily activities, this subsidiary uses the goFLUENT platform, now available to offer everyone the opportunity to develop their language skills. For strategic positions, this learning is verified via a TOEIC test. Uruguay also supports employees who need to improve their English language proficiency via this new platform.

Mexico maintains its investment in training to continue developing talent, stabilizing business, and improving processes. The subsidiary has created guides to help develop behavioral skills and has focused on developing leadership to foster a warm and caring environment. Developing leadership skills is also a 

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priority for Uruguay: this subsidiary has implemented specific training dedicated to the roles and responsibilities of managers and an internal training on payroll aimed at improving their knowledge in this field while debunking mistaken notions on the subject. Uruguay also dedicates a significant part of its training activities to the qualification of employees involved in the operational processes of quality control and Good manufacturing practices.

The Australian subsidiary has also developed and implemented a program for all its leaders. Based on the principles of emotional intelligence, it aims to improve the culture, commitment and well-being of team members. The United States also spends a portion of its training budget on leadership programs aimed at retaining today's talent and developing tomorrow's leaders.

### **Performance evaluation and recognition**

At Virbac, our managerial processes are developed to provide each employee with support throughout the year. These processes include several components, such as individual goal setting and performance

Image /page/36/Picture/4 description: Two scientists are working in a lab. The man is standing behind the woman and pointing at something on a tablet. The woman is sitting at a lab bench and using a pipette. They are both wearing lab coats and safety glasses. The woman is also wearing green gloves. There are various pieces of lab equipment on the bench around her.

evaluation. Manager and employee spend quality time together to set expectations and then evaluate performance.

Everyone has a key role in these processes:

- n the employee is involved in these exchanges (proposal and drafting of his/her objectives, self-assessment of his/her performance and skills, formalization of feedback to his/her manager, etc.);
- n the manager shares factual elements to back up his/her assessment, guide development and provide visibility over the coming year, in conjunction with the company's objectives.

Within the annual performance committee, our executive board also shares the assessments, remuneration and professional development scenarios of key individuals in the Group. In France, for example, during the 2023 fiscal year, 100% of employees were compensated at a level above that of the legal minimum wage. The policy for base salaries is set at +5% above the minimum for the professional branch for all categories of staff. Our policy follows a rationale of competitiveness vis-à-vis the life sciences market and is generally at the median of this market. In addition to the financial elements related to individual performance compensation, we continue to pay close attention to collective performance compensation plans. For this reason, several mechanisms are already in place, such as a triennial incentive agreement renegotiated in 2023 and a profit-sharing agreement signed in 2008. The amounts from these agreements or voluntary payments may be invested in mutual funds, in the employee savings plan or in the employee retirement savings plan. Since 2016, leave days that have not been taken may also be paid into the employee retirement savings plan, up to a limit of ten days per year.

The Brazilian subsidiary also signed a corporate agreement with the employee representatives, which, in addition to the profit-sharing program, provides for the payment of an amount calculated according to the position level and subject to the achievement of defined objectives. This agreement also states that, if the objectives set at the corporate level are exceeded, a 20% increase will be applied to profit sharing.

Virbac India, which consists mainly of sales and marketing teams, implemented a recognition and reward policy based on performance metrics defined at the end of the year for the coming year, and calculated through a monthly evaluation process based on quantitative and qualitative criteria. This policy has paid off by sustaining business growth year after year.

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In China, the subsidiary has launched recognition programs to reward the efforts of employees achieving very good performance: one called "Quarterly sales acceleration", which offers a special bonus to the best salespeople in the field, and the other, which rewards the best sales of products from the HPM nutrition range. The Taiwanese subsidiary, meanwhile, congratulates employees for their remarkable attitudes and results by awarding them a Value Award and granting "honor" leave to encourage the best performers.

In addition to the recognition program developed and facilitated internally that allows an employee to honor another employee, Mexico has launched three communication campaigns to encourage recognition: Virbac Pride, where employees present their experience in a video, Leadership stories, where leaders explain how they have overcome difficulties encountered in managing their teams (which gives some the opportunity to find their mentor), and Who we are, where employees share their hobbies and interests in a document.

The organization of events to celebrate performance is also a sign of gratitude that employees appreciate. Uruguay invited its employees to participate in a three-day event in Argentina to celebrate the achievement of sales targets and to thank them for their contribution to this success. Chile, meanwhile, held quarterly ceremonies during which a large number of employees were honored by members of leadership and their teams.

### **OUR RESULTS**

| Performance indicators                                                                                              | 2021  | 2022  | 2023  |
|---------------------------------------------------------------------------------------------------------------------|-------|-------|-------|
| Absenteeism                                                                                                         | 3.09% | 3.01% | 3.45% |
| Employee turnover rate                                                                                              | 11.2% | 13.1% | 14.0% |
| Great Place to Work Trust Index                                                                                     | 73%   | -     | -     |
| Percentage of employees on payroll as of 12/31 who took<br>at least one training course/total headcount as of 12/31 | 81%   | 72%   | 77%   |

Image /page/37/Picture/6 description: A woman wearing a hair net, safety glasses, and a light blue lab coat is working in a lab. The lab has shelves and equipment in the background.

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### **HEALTH AND SAFETY AT WORK**

Over the years, this priority area for the Group has become ingrained in the corporate culture. Our priority actions, which are borne by EHS management, are to ensure that industrial equipment and the risks associated with the use of chemicals comply with local regulations.

### **OUR KEY OBJECTIVES**

**To increase the safety of employees in the workplace by implementing action plans such as better protection against potentially hazardous materials, improved ergonomics and psychosocial hazard management, which aim to reduce the number of workplace accidents.**

### **GOVERNANCE**

Created in 2015, our Group EHS department has put in place a rigorous policy to identify and assess safety risks and to develop means of prevention and methods of monitoring their effectiveness. We have defined severity and frequency criteria to better target the actions to be implemented to reduce the number of accidents and to include human and organizational factors in the in-depth analysis of these events.

The objective is to avoid any recurrence of accidents and to develop a safety culture for all our company staff, external company staff and temporary workers.

### **OUR ACTION PLANS**

#### **Safety culture**

In all countries, we implement numerous preventive measures concerning the health and safety of our employees. Multi-year action plans on production machine compliance are thus in place at all major industrial sites: Australia, United States, Chile, Mexico and France. Chemical risk management is also taken into account, starting with product design, first on the choice of components but also on the number and type of analyses that must be performed at the different steps in the process.

Image /page/38/Picture/11 description: A person in a lab coat is holding a piece of paper in a laboratory setting. The background is filled with machinery and equipment, suggesting a sterile or controlled environment. The person's hand is visible, holding the paper, and there is a pen nearby, implying they may be taking notes or recording data. The overall impression is one of scientific research or manufacturing.

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In 2023, we continued to focus our efforts at our industrial sites in France by continuing our audits with respect to compliance with the five golden rules, and by initiating a program to develop a strong safety culture with the French Industrial Operations department intended to:

- n make sense of safety;
- n impact people and behaviors;
- n capitalize on what has already been implemented;
- n deploy innovative tools;
- n build a resilient EHS system;
- n reduce accidents.

At the same time, internationally, and particularly in Chile, risk prevention campaigns related to the use of cell phones during on-site movement have been initiated, thus reducing the number of accidents by half between 2022 and 2023.

### **Management of psychosocial hazards**

With regard to psychosocial hazards, the various departments in our company, supported by HR teams and designated partners (management and the workforce, the workplace physician, the workplace social worker, etc.), are continuing their global approach to the quality of life at work. In 2023, the GPTW action plan defined in 2022 was fully implemented on:

- n **well-being at work** (creation of "quiet" spaces for confidential professional exchanges, deployment of the Klaxit application to encourage carpooling between employees, evolution of telework with the inclusion of a new form and publication of quizzes to test knowledge on working guidelines);
- n **recognition** (portraits of employees in their daily work, coaching to support new employees as they start their positions, mentoring to develop technical and behavioral skills, easier access to job offers to promote internal mobility, and creation of the HR newsletter to simplify access to HR information);
- n **participatory management** (launch of peer feedback to promote recognition and development and promote cross-functional collaboration).

In connection with our GPTW action plan for well-being at work and as part of the week dedicated to well-being at work (WBW) every June in France, we organized an event in 2023 with scheduled yoga sessions at the office. Guided by an outside facilitator, these sessions consist of practicing relaxation and concentration exercises through simple movements and breathing and relaxation techniques practiced on office chairs in work attire. We offered employees the opportunity to participate in a yoga session and discover the benefits of this practice, adapted to the workplace, to improve their well-being.

Workplace well-being service have been strengthened by the addition of an additional partner to have a joint duo and ensure even wider coverage for the prevention or management of personal or professional situations. Discussions between the elected psychosocial hazards representatives and management have also made it possible to deal with and prevent individual or collective risky situations.

In addition to traditional whistleblowing channels (direct supervisors, Human Resources, social worker, occupational physician, staff representative), employees also have, under French law n°2016- 1691 of December 9, 2016, on transparency, the fight against corruption and the modernization of economic life, known as the Sapin 2 act, access to a whistleblowing platform that allows them to report, anonymously or not, facts or practices that violate the rights and policies of countries.

At the international level, subsidiaries also pay particular attention to the management of psychosocial hazards and the well-being of employees. Mexico, Chile and Northern Europe regularly launch assessments in this area to measure potential risky situations and work first and foremost on prevention. Brazil has set up a call service provided by an external partner allowing employees to discuss health-related topics, both from a psychological and a financial standpoint, as well as social and legal assistance needs.

Uruguay combines prevention, promotion and direct actions: occupational medicine is involved in the recruitment phase to identify risks and then through annual follow-up appointments. Conferences and workshops are organized to address different topics: cardiovascular disease, blood pressure, eating habits, etc. Lastly, the doctor can also intervene to help find solutions for problems related to convalescence.

The Vietnamese subsidiary also takes steps to improve the management of these risks: For example, it has implemented teleworking to improve work-life balance. It also organizes workshops on psychological health as well as sports days for its employees. In addition to the information and prevention programs shared monthly with employees, South Africa organizes Vitality Days, during which employees can undergo a set of medical tests to allow them to assess their health and obtain medical assistance if a risky situation is detected.

Finally, Australia has expanded its psychological support service by adding financial or other support to help employees who need it. It has also developed a training module for managers and leaders to raise awareness on topics related to psychological health.

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Image /page/40/Picture/0 description: Three women in lab coats are in a laboratory. Two of the women are facing each other and smiling. The woman in the middle is holding a laptop. There is a machine with a screen in the background.

### **OUR RESULTS**

| Performance indicators          | 2021 | 2022 | 2023 |
|---------------------------------|------|------|------|
| Frequency of work accidents     | 4.88 | 4.25 | 3.67 |
| Severity rate of work accidents | 0.33 | 0.15 | 0.22 |

*The frequency rate used is based on French regulations and defined as the number of work accidents that resulted in at least one lost workday, divided by the number of hours worked, multiplied by one million.*

*The severity rate used is based on French regulations and defined as the number of lost days following accidents at work that resulted in at least one lost workday, divided by the number of hours worked, multiplied by one thousand.*

The frequency rate of our Group's occupational accidents, within the scope of the eighteen countries, has clearly improved in 2023 compared to 2022, reaching a new all-time record of 3.67. This improvement is the result of preventive actions related to the development of the safety culture, as described above.

### **DIVERSITY**

Increasing diversity within Virbac allows us to continually improve our ability to integrate differences. Openness and ability to integrate are fundamental elements for innovation, adapting companies and identifying opportunities. These qualities must be demonstrated in both the organization and the outside world.

Image /page/40/Picture/8 description: The image shows a blue arrow pointing to the right. On the left side of the arrow, the text "OUR KEY OBJECTIVES" is written in white. On the right side of the arrow, the text "Encourage equal treatment and diversity of employees." is written in blue.

### **GOVERNANCE**

For Virbac, gender equality in the workplace is fundamental and requires that no form of discrimination exists or is tolerated, both in terms of access to employment and promotion, as well as in wage policy and other determinants of working conditions.

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### **OUR POLICIES AND ACTION PLANS**

Our diversity policy aims to guarantee equal treatment of staff, encourage diversity among people and human relationships and maintain worker employability. It is built around three key areas of focus: gender equality, disability, and age mix.

### **Gender equality**

Within the defined scope, six countries have a pay gap of between -5% and +5% between women and men (South Africa, Chile, Colombia, France, New Zealand and Vietnam), and five other countries (Spain, United States, Italy, Japan and Uruguay) have a ratio of between -10% and +10%, all professional categories included. The weighted ratio, across all categories, represents a rate of 92%.

When it comes to equal pay for men and women, actions are taken to measure gaps, identify causes and take action. In France, for example, we signed a new agreement in 2019 which established the principles of gender equality in career paths (access to vocational training, wage equality between women and men in an equivalent occupation and for the same level of competence and work-life balance). This agreement reaffirms our willingness to analyze and reduce any gender pay gaps using a methodology that makes it possible to study them based on the gender equality index calculated by the Ministry of labor, employment and integration (index that amounts to 88 points out of 100 for our company in 2023). At the same time, we dedicate a specific budget to closing gaps in order to implement these salary adjustment measures each year.

In 2023, ten countries were given an internal grading tool that makes it possible to better manage internal equity, have a rational approach to external competitiveness and establish compensation and benefits policies. We regularly conduct Groupwide surveys on compensation in order to ensure that it remains competitive in the job market, and adjustments are made if necessary.

With regard to recruiting for key positions, priority is given to internal and local candidates. Recruitment decisions (internal or external) are based exclusively on the skills and qualification criteria for the position. The candidate's nationality, gender or age does not play a role in our decision. As much as possible, we entrust leadership positions to local managers in order to be as close as possible to customers and the market culture. In 2023, within the defined scope, 93% of senior managers were local hires, and the management of ten subsidiaries was made up strictly of local hires.

Image /page/41/Figure/7 description: This bar chart compares the number of women and men in different regions: Europe, North America, Latin America, Pacific, Asia, and Africa & Middle East. In Europe, there are 992 women and 728 men. In North America, there are 251 women and 282 men. In Latin America, there are 481 women and 543 men. In the Pacific, there are 171 women and 155 men. In Asia, there are 127 women and 1,087 men. In Africa & Middle East, there are 55 women and 79 men.

### **2023 gender distribution by geographic area**

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Europe (58%) and the Pacific region (52%) are the two regions where women are in the majority. The North America and Latin America regions, with 47%, each exhibit a very balanced proportion. Africa and the Middle East, with 41%, show a more significant imbalance. Asia has the lowest number of women in the workforce (10%). This very low representation is due to India, which has only 19 women per 955 men, or 2% of our staff in this country. India remains a special case: the sales teams, for reasons pertaining to local culture, job stress and security (visits to farms on two wheelers), are more naturally made up of men. Excluding India, the Asian area still consists mostly of men at 55%.

This year, Mexico launched a week dedicated to women, during which activities and presentations on topics of interest to them were offered, making this event a great success. The Mexican subsidiary also extended the duration of maternity leave compared to the regulations in effect in order to fully support the maternity leave period and thus promote a gradual return to work. The Brazil subsidiary participates in an annual Human Resources forum that conducts awareness-raising activities with an emphasis on the importance of recruiting women, particularly in management positions.

In Chile, the percentage of women recruited to positions of responsibility (management and leadership) has increased considerably, with an executive committee consisting of equal numbers of men and women. As a rule, the subsidiary puts great emphasis on an inclusive culture that ensures gender equity by offering men and women equal job opportunities and compensation based on the position held, not on gender. The analysis of pay indicators by job family shows that the average wage gap between women and men does not exceed 5%. It should be noted that for some job families, such as supervisor or manager, remuneration is shown to be higher for women compared to men.

Vietnam also ensures equal treatment between women and men in all HR processes (recruitment, salary reviews, promotions, etc.). Today, the subsidiary is led by a woman who serves as managing director, and the women/men ratio of her direct reports is 6:4.

This is also the case in South Africa, where a woman is at the head of the subsidiary, even though the majority of management positions, nearly 70%, are held by men. Responding to local legislation that promotes equal opportunities between women and men is a challenge in a work environment where it is difficult to find rare or advanced language skills to meet business needs in certain geographic areas of the country.

When recruiting, China and Taiwan also emphasize the importance of ensuring that candidate selection criteria are based solely on the expected competencies related

Image /page/42/Picture/6 description: A medium shot depicts a smiling Black man with glasses, wearing a pink polo shirt and a blue lanyard with an ID badge, standing at a round table with a laptop. He is looking to his right, seemingly engaged in a conversation with people partially visible on either side of him. The table is light-colored, and the laptop is silver. The background includes a light-colored wall with a framed picture and a door.

to the positions to be filled, without discriminating based on the candidate's gender.

Australia participates in a federal government-initiated program to promote women's return to work after a career break and keep them employed. This innovative approach is designed to increase the proportion of women in the workforce as well as to encourage them to take on leadership positions. Through this contribution, the subsidiary intends to support women's return to work and promote their inclusion in the workplace by exchanging information with other companies participating in the same program on the Australian continent.

The Australian subsidiary has implemented a series of actions to increase the representation of women in operational and executive management teams while being careful to adjust any differences in pay compared to men. In order to continue on this path in the coming years, it has developed a program for talented women to develop their leadership and give them the opportunity to become mentors.

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### **Disabled workers**

For several years, we have been reaffirming our commitment and desire to promote the employment of disabled workers and to ensure their integration and working conditions by applying a set of measures that revolve around five axes.

- n **Adjusting workstations:** certain disabilities require the use of workstation or organizational adjustments for which we take full responsibility in order to facilitate working conditions. When recruiting or changing the job of an employee with a disability, regardless of the cause, the new position is subject to the necessary adjustments prior to taking up the position.
- n **Supporting employees in their administrative procedures:** in order to help and encourage employees with disabilities in their procedures with the competent authorities to obtain recognition as beneficiaries of the employment obligation or its renewal, exceptional leave of absence is granted and remunerated. These employees also receive support from the occupational health team, which is available to support them in their efforts.
- n **Helping employees who have a child with a disability:** to reaffirm our support to the employees concerned, in France we grant one day per year of additional paid leave.
- n **Enabling disabled workers to better balance professional and personal life:** the adjustment and adaptation of living conditions within the company is an essential factor in inserting and integrating disabled workers under good conditions.
- n **Participating in the well-being of disabled workers beyond the framework of the company,** by granting them one additional day

of leave per year, and through the payment of a bonus in order to share in any arrangement of their living conditions at home that is necessary due to their disability.

Our subsidiaries pay the same attention to the employment of workers with disabilities and to the adaptation of their work environment to promote their inclusion in the teams (adaptation of their workstations on-site and at home, organization of their working hours, etc.). One of the members of the Human Resources team in Chile has been certified as an inclusion manager: Their role is to promote equal opportunities for people with disabilities to develop within the company. As for Taiwan and Vietnam, these subsidiaries also make every effort to adapt the work stations and working conditions of employees with disabilities and thus support their employability.

Australia has begun a partnership with an organization created by the Australian government that helps people with disabilities or permanent medical conditions find jobs.

Through the implementation of this pilot program, a disabled employee was hired at the Milperra storage warehouse.

### **Age and culture diversity**

We have always considered the contribution of the various generations and cultures of the countries in which we are established to be a true asset. Compliance by our employees with the values defined in our code of conduct is a prerequisite for any policy that values human capital. In the context of the extended company, the proper understanding by our partners of the rules related to employment practices is taken into consideration by the departments involved.

Image /page/43/Picture/13 description: In a well-lit office setting, three individuals are seated in blue chairs around a glass coffee table, engaged in what appears to be a business discussion. The man on the left, dressed in a light blue shirt and khaki pants, is holding a white cylindrical object, possibly a product sample or prototype. He is looking towards the woman in the center, who is wearing a dark blazer over a light-colored blouse. A laptop is open on the table in front of her, along with two white bottles and a folder. To the right, a woman in a patterned gray dress and black tights is also seated, facing the other two. In the background, a group of four people are seated in red chairs, seemingly in a separate conversation. A large picture of cows grazing in a field is visible on the wall, adding a touch of nature to the modern office environment.

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Brazil is working on a project to set up a Diversity Committee that will consist of representatives of minorities and volunteers to work on this subject in order to raise awareness about the problems encountered, especially in the professional environment. The Mexican subsidiary has launched a study to assess the level of inclusion of all types of diversity within its subsidiary.

In terms of age diversity, Chile values and promotes the inclusion of different generations, believing that they all contribute to development and innovation within organizations. While some countries such as Taiwan do not hesitate to recruit seniors by providing them with the necessary training to acquire new skills, others have a harder time convincing hiring managers to agree to hire older employees who nevertheless have good professional experience.

The variety of nationalities and cultural backgrounds within the subsidiaries is a real strength for our Group.

India has decided to implement an equal opportunity policy emphasizing the importance of each person in a country that is very diverse in terms of cultures and languages. Meanwhile, the Australian subsidiary has developed a diversity, equity, inclusion and belonging (DEIB) strategy by creating a group of volunteer employees from different functions. Its objective is to study areas for improvement to develop the DEIB footprint within departments. Australia also dedicates an event to highlighting this cultural diversity: Harmony Week.

### **OUR RESULTS**

| Performance indicators | 2021 | 2022 | 2023 |
|------------------------|------|------|------|
| Gender pay ratio       | 77%  | 81%  | 82%  |

This ratio is obtained by dividing the total remuneration of women/female workforce by the total remuneration of men/male workforce, taking into account the weighting of the workforce by country.

In terms of the company scope (excluding India), the gender ratio, across all categories, is equal to 82% in 2023 compared to 81% in 2022 and 77% in 2021.

In India, in 2023, there were 19 women per 955 men, or 2% of the population. The low representation of women combined with the proportion of India in the overall workforce (about 20%) makes the ratio irrelevant and volatile from one year to the next. This ratio would be 85% by including India.

### **OUR RESULTS**

| Performance indicators                                     | 2021 | 2022 | 2023 |
|------------------------------------------------------------|------|------|------|
| Gender pay ratio for the executive and management category | -    | -    | 84%  |

In 2022, employees were divided into six categories: executive, senior executive, director, manager, supervisor, and individual contributor. The gender pay ratio was then calculated based on three categories: executive, senior executive and director, representing a panel of 190 employees.

The implementation of the job catalog in May 2023 led to a change in the distribution of employees into four main categories: executive, management, professional, support/para-professional.

With the executive category only affecting 33 employees in 2023, it appeared more appropriate to broaden the basis of comparison by also including the management category for better representation. It should be noted that this change makes the comparison irrelevant with regard to past years.

Thus, the gender ratio, based on total remuneration, calculated by taking the weighted average of each headcount comprising the categories concerned, shows a rate of 84% for 2023, excluding India due to representation (1 woman per 171 men in the defined categories). This ratio would be 104% by including India.

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# Ensuring the quality of products and services

### **QUALITY AND SAFETY OF PRODUCTS AND SERVICES**

In the pursuit of continuous improvement, we place great importance on the quality of our products and services to offer high standards to our stakeholders: veterinarians, farmers and animal owners. The demand for food is increasing worldwide, due to the growing population, which is increasingly mindful of its diet. In the face of this trend, our ambition is to work towards continuous improvement of livestock animals' health to contribute to a global supply of better quality meat and milk at a lower cost.

Regarding companion animals, we are mobilizing to offer veterinarians and animal owners medicines, vaccines, health products and a range of foods that are tailored to a carnivorous diet (in adequacy with the animals' needs) and make it possible to extend the lifespan of animals and improve their quality of life.

This in turn contributes to the improved well-being of the owners and is of particular benefi t to people who live alone.

### **A GROUP QUALITY POLICY**

Our quality policy is the commitment of the Group executive committee to mobilize each employee to strengthen the quality culture in our daily activities. It applies to all sites, subsidiaries, subcontractors and suppliers.

The strategy aims to control our activities, comply with current regulations and improve our performance:

- n by working on the right fi rst time approach (each person must ensure that his/her activity is carried out correctly the fi rst time);
- n by encouraging continuous improvement and innovative thinking;
- n by putting quality at the heart of competitiveness.

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### **OUR KEY OBJECTIVES**

- n **Do it right first time to ensure a high level of customer satisfaction.**
- n **Maintain a customer technical complaint ratio of less than five per million units marketed.**

### **GOVERNANCE**

### **An organization dedicated to quality**

In order to ensure proper application of best practices at various stages of the product life cycle, we have deployed a dedicated Group-wide organization that covers the topics of quality control and quality assurance. This organization, comprising more than 100 employees and spread out over various Group sites, implements the Group's quality policy based on three areas of focus: product control, pharmaceutical compliance and sustainable economic output. The goal is to elevate the quality standards to comply with and anticipate the regulatory requirements that apply to the various research and production sites, as well as the commercial subsidiaries, and to ensure the Group's sustainability. At the same time, this quality system allows us to efficiently detect, trace and address all quality incidents inherent in the pharmaceutical business.

### **ACTION PLANS**

In compliance with the regulations of each country, we meet the highest quality-safety-effectiveness standards applicable. These standards involve every stage in the product life cycle, meaning before they are marketed and after they are placed on the market.

Through our quality policy, we are committed to maintaining a high level of product and service quality with a right first time approach, enabling us to reduce waste and damage throughout the manufacturing

### **Regulatory monitoring**

We have had an efficient regulatory monitoring system in place for several years, enabling us to stay abreast of regulatory developments applicable to all of our ranges. This monitoring system is carried out through inter-professional organizations:

- n at a national level with, for example, the *Syndicat de l'industrie du médicament vétérinaire (SIMV)* in France, the National Office of Animal Health (NOAH) in the United Kingdom and the *Bundesverband für Tiergesundheit e.V. (BfT)* in Germany, etc.;
- n regionally with, for example, AnimalhealthEurope, or AHI (Animal Health Institute) in the United States;
- n at the global level with HealthforAnimals (Global animal medicines association).

process until placement on the market. right first time is deployed throughout the organization and is measured at the end customer.

In 2023, we remained below five complaints per million units marketed, despite the inclusion of new, recently launched products that, in generating a significant number of questions, still require special support for customers.

### **OUR RESULTS**

| Performance indicators                                   | 2021 | 2022 | 2023 |
|----------------------------------------------------------|------|------|------|
| Ratio of technical complaints per million units marketed | 4.0  | 4.6  | 4.6  |

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### **CONTROLS DURING THE PRODUCT LIFE CYCLE**

### **OUR KEY OBJECTIVES**

- n **Limit the number of product non-compliances on the market (regulation, labeling, promotion).**
- n **Maintain batch recalls at less than 1 per 1,000 batches marketed.**

### **GOVERNANCE**

In addition to the inspections regularly carried out by the regulatory authorities, our Production and Quality Control teams present at each of our industrial sites carry out a set of checks throughout the production chain. These checks are necessary before and after marketing of the products.

### **PRE-MARKETING CONTROLS**

### **Pre-development and development phase**

We implement Good laboratory practices (GLP) relating in particular to data traceability, then select CROs (Contract research organizations) working in accordance with these GLPs.

 100% of products subject to pharmaceutical registration are subject to verification for Animal/ Human/Environmental safety, quality, stability and efficacy.

### **Purchasing and subcontracting**

Our teams systematically qualify the materials purchased from suppliers (active ingredients, excipients, packaging) in terms of quality and reliability. When possible, they identify several sources to limit the risk of disruptions and prioritize purchases from leaders in pharmaceutical equipment. Finally, we use outsourcing from subcontractors specialized by pharmaceutical form.

 100% of active ingredient suppliers are qualified and analyzed during certification.

### **Production phase**

During the production phase, we implement current Good manufacturing practices (cGMP) that are applied through the certification of all of our manufacturing sites. Actions are also implemented at the production tool level in order to ensure end-of-productionline product quality that is in compliance from the start, thus limiting scrap or damage of materials or finished products.

 100% of products, whether subject to pharmaceutical registration or not, undergo component and raw material control at every manufacturing stage.

- 100% of Virbac industrial sites are certified.
- 100% of employees are trained in manufacturing processes.

### **Distribution phase**

For the transporting of medicines, we apply Good distribution practices (GDPs), such as compliance with the cold chain, when required by the nature of the products. Regarding the organization of transportation in accordance with regulations governing the shipping of high-risk products, safety data sheets for raw materials and finished products are made available to staff and carriers. Hazardous products are transported in packaging that meets current standards.

### **Packaging and promotion**

The development or selection of specific packaging is determined on the basis of a product safety assessment. We strive to develop diagrams and pictograms and appropriate communication media for an optimal understanding of information that is fundamental to consumer health and safety. For all promotional communications, Virbac complies with the scientific and technical claims demonstrated during the development stage of the product. Finally, any product claim is scientifically demonstrated and made available to regulatory agencies in compliance with the requirements defined by national or supranational veterinary pharmaceutical agencies.

 100% of products, whether subject to pharmaceutical registration or not, and nutritional products that do not require pharmaceutical registration are subject to advisory and support measures for the product users.

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### **POST-MARKETING CONTROLS**

### **Pharmacovigilance**

In accordance with regulatory requirements, we monitor the future of pharmaceutical and nutritional products that we market in terms of safety and efficacy. This is thanks to a dedicated organization comprising a person qualified in pharmacovigilance (veterinarian) and a qualified interim person, who compile all the cases, analyze them, and decide whether or not these adverse effects are attributable to the use of the medicine or food in question, and officially report these cases to the supervisory authorities when appropriate. Taking into account the pharmacovigilance outcomes allows Virbac to improve knowledge of its products (for example: the addition of precautions for use), thus making their use safer.

 100% of products, whether subject to pharmaceutical registration or not, and nutritional products that do not require pharmaceutical registration are subject to monitoring using the pharmacovigilance and nutrivigilance mechanism.

### **ONGOING RESEARCH ON STABILITY**

To ensure the efficacy over time of its pharmaceutical products that require registration, Virbac carries out ongoing research on their stability.

 100% of products requiring pharmaceutical registration are subject to ongoing stability studies.

### **Key actions related to our quality strategy**

The Quality benchmark was designed on a collaborative basis that integrates standards for all production and research sites, in all departments and toward all subsidiaries, while taking into account the regulations and the diversity of products and formulations. The Virbac quality system (VQS) was then expanded to integrate the Group's organizations, processes, tools and Group quality standards (core model).

We have more precisely identified and updated the skills required, acquired and to be developed, so as to provide suitable training plans designed to enhance team skills and embrace a pharmaceutical culture. Finally, we have deployed a multidisciplinary team (research and development, production and quality assurance), aligned to deliver products on time and with the expected level of quality to satisfy our customers' expectations.

 The Group Quality benchmark was built and shared with 100% of the R&D centers and production sites.

Image /page/48/Picture/12 description: A woman is sitting down and holding a Shiba Inu dog in her lap. The dog is smiling and has its tongue sticking out. The woman is wearing a blue and white patterned dress. There are green plants in the background.

### **OUR RESULTS**

| Performance indicators                                                                    | 2021  | 2022  | 2023  |
|-------------------------------------------------------------------------------------------|-------|-------|-------|
| Rate of batch recalls per 1,000 batches marketed                                          | 0.48‰ | 0.42‰ | 0.27‰ |
| Rate of non-compliance with regulations<br>and voluntary codes for 1,000 batches marketed | 0.67‰ | 1.00‰ | 0.74‰ |
| Rate of labeling non-conformities<br>per 1,000 product references                         | 0.78‰ | 1.01‰ | 0.37‰ |
| Rate of promotional non-conformities<br>per 1,000 product references                      | 0.00‰ | 0.00‰ | 0.11‰ |

Overall, more precise development and better control of production processes have improved the quality of distributed products. No cases of non-compliance with voluntary codes and regulations posed any danger to the health of animals. No packaging non-compliance has had any consequences on the distribution of the products.

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## Protecting the environment

Protecting the environment is a growing challenge and a priority for our company. Beyond initiatives deployed at the subsidiary level, our ambition lies in our proactive efforts to reduce the environmental footprint of all our activities and products.

### **GOVERNANCE AND A GROUP ENVIRONMENTAL POLICY**

At the organizational level, our global EHS department, attached to the new Group Quality and Compliance department, demonstrates the Group's desire to accelerate its approach to reducing its environmental footprint.

One of these initiatives involves reframing scope and reporting methods, an indispensable precondition for gaining a global overview of exposure to environmental damage risks at the Group level. We have also committed to developing a training and awareness segment dedicated to environmental themes for both existing employees and for the new hires. External stakeholders were also involved in the effort, with the inclusion of environmental clauses in supplier assessment questionnaires.

These initiatives, in conjunction with the rollout of audits throughout an expanded range of subsidiaries (Mexico, Taiwan, United States, Australia, New Zealand, Uruguay, Vietnam and Chile), demonstrate our desire for consistency in the deployment of a Group-driven strategy.

### **SUSTAINABLE USE OF RESOURCES**

In the context of optimization of the resources we employ, we seek to control the consumption of energy, water and materials used in our manufacturing processes.

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### **OUR KEY OBJECTIVES**

- n **Reduce energy consumption by 5% by 2025.**
- n **Control water intake.**
- n **Reduce the overall share of materials, including all packaging placed on the market.**

### **OUR ACTION PLANS**

### **Energy**

For several years, we have been working to reduce energy consumption by carrying out equipment replacement actions for better efficiency, thermal insulation and air conditioning optimization. We have also established consumption indicators that are as close as possible to end users for better control of energy expenditures. At all of our industrial sites around the world, we strive to address energy consumption by using the Best available techniques (BATs) applicable to our activity, whether this is for choosing new equipment or through ongoing monitoring.

Examples of achievements in 2023.

### **France**

In addition to the work carried out in 2021 and 2022 on all air conditioning and heating systems at the administrative offices for France industrial management and the roof insulation work, we also invested in a new, more energy-efficient furnace in 2023.

### **Vietnam**

In 2023, an enhanced preventive maintenance plan was initiated for all air conditioning systems and energy-intensive equipment (pumps and engines in particular).

### **Mexico**

In 2023, Mexico led a project to evaluate renewable energy production facility options.

### **South Africa**

In 2023, our industrial site in South Africa fully exploited its new solar renewable energy production facilities, bringing the share of renewable energy versus its total electricity consumption to 30%.

Reducing the energy intensity of our activities and our products is clearly a competitiveness lever, placing Virbac on a virtuous path, which will subsequently help reduce our overall CO2 emissions. Thus, at our sites in France (which represent more than 50% of the Group's production), gas consumption decreased by 13% compared to 2022, thanks in particular to the replacement of a boiler with a modulating burner and a boiler stack economizer.

### **Water**

We are also striving to lower water consumption at equivalent activity volumes by setting up recycling or production facilities for various BAT-compliant grades of water. The reduction in water consumption intensity at the French sites (which account for more than 50% of the Group's production) reached 30% over the same period.

We integrate the environmental context of the areas in which we operate into our analyses. With the exception of the South African site, which is located in a water stress area according to the FAO (Food and agriculture organization) and the WRF (Water risk filter) criteria, no other Group production site is located in a water stress area identified as such.

### **France**

In 2023, France experienced significant water stress. By applying government guidelines and stopping intramammary range production activities at Carros, we were able to stop the removal of well water, representing 30,000 m3 per year.

### **South Africa**

In 2023, our industrial site in South Africa carried out a preventive maintenance campaign on all its water networks, leading to the treatment of a large number of leaks and the reduction of consumption by 23%

### **Raw materials and packaging**

Again with a view to the sustainable use of resources, we are committed to fine-tuning our consumption of active ingredients, excipients and packaging items as much as possible in order to avoid product wastage or packaging proliferation.

With the help of our strategic suppliers, we have also given a new impetus to innovation that can reduce wrapping and packaging. This requires optimized 

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supply management to limit warehousing and internal transfers. We are also progressing on optimizing flows and the speed of shipments. Finally, we launched a project to minimize waste at all stages of the industrial process.

Primary packaging that comes in contact with medicines is subject to strict pharmaceutical industry quality standards that limit the use of materials originating from recycling channels. However, a cross-functional think tank was put in place at the end of 2021 with the first concrete action being to take into account these concepts, in particular that of recyclability, as a criterion of choice in all current and future projects.

For companion animal products that do not require a Marketing authorization (MA), we integrate ecodesign principles as early in the creation process as possible. These same principles are implemented for secondary or tertiary packaging, from the research and development stage, in partnership with our suppliers.

In 2023, this mobilization allowed us to:

n launch several new products in Europe and the United States with recyclable and recycled plastic packaging for a hygiene product, among others;

n launch a new food supplement in more than 28 countries (Europe and Asia), which incorporates ingredients from a sustainable culture (Krill meal with MSC label) and is presented in recyclable packaging, incorporating 25% recycled material.

Our other actions for the year focused on preparatory work aimed at:

- n strengthening the presence of natural ingredients in our products for companion animals;
- n raising awareness of the biodegradability of our hygiene and treatment shampoos;
- n increasing the proportion of recycled or recyclable materials in the packaging of our products for companion animals.

| Performance indicators                                  | 2021    | 2022    | 2023    |
|---------------------------------------------------------|---------|---------|---------|
| Gas consumed (MWh)                                      | 30,437  | 30,071  | 27,698  |
| Electricity consumed (MWh)                              | 44,732  | 53,819  | 51,329  |
| Energy intensity                                        | 538     | 528     | 459     |
| Water sampled by source (m³)                            | 226,323 | 313,840 | 264,061 |
| Volume of packaging released to market (in metric tons) | 4,769   | 4,832   | 4,052   |

### **OUR RESULTS**

*Energy intensity is the ratio between energy consumption (gas and electricity) and the value added in thousands of euros at the Group level (direct labor costs + indirect production costs).*

In 2023, our gas consumption was down (by 8%) compared to 2022, as was our electricity consumption (by 5%). Note that the 2022 electricity value has been adjusted to take into account self-consumed renewable energy (former value: 53,175 MWh), and is thus comparable to consumption in 2023.

Compared to activity, total energy consumption decreased by 13% (energy intensity factor). Like energy, water consumption at the Group level is down by 16%.

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Image /page/52/Picture/0 description: A man in a white lab coat, hair net, and gloves is standing in front of a machine with a touch screen. He is holding a stylus in his right hand and touching the screen. In his left hand, he is holding a tablet. There are several buttons and switches on the machine. In the background, another person in a lab coat and hair net is visible.

### **DISCHARGES INTO THE ENVIRONMENT**

As part of our veterinary medicine manufacturing business, we use substances that present health, fire and/or explosion, emission and discharge risks during the various phases of development and marketing, from R&D and manufacturing to storage and shipping.

To limit these risks, which could cause harm to people, property and the environment, we comply with the safety measures prescribed by the laws and regulations in force, implement current Good manufacturing practices and Good laboratory practices and provide training to our employees. Our manufacturing sites and research and development facilities are also regularly inspected by regulatory authorities.

Due to the nature of our pharmaceutical manufacturing activity (especially confining technologies), we do not generate any visual, noise or olfactory pollution. Therefore, we are focusing on the real impacts of our activity, atmospheric emissions, effluents or hazardous waste resulting from our activities or products by increasingly investing in environmental compliance: taking into account EHS impacts in the management of industrial projects, improvements in the environmental performance of existing facilities, etc.

Furthermore, the Group's environmental principles are adapted to countries according to different local regulations. Here again, the objective is to identify good practices at the subsidiary level to be consolidated within the Group context.

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### **OUR KEY OBJECTIVES**

- n **Limit the volume of water discharged and its COD (Chemical oxygen demand) content.**
- n **Reduce the total amount of waste generated by 5% by 2025.**

### **OUR ACTION PLANS**

### **Effluents**

For effluents as well as other environmental releases, our goal is to facilitate across the Group the consolidation of the various local initiatives carried out locally and subject to specific regulatory frameworks, in particular on the optimization of the frequency at which our facilities are cleaned. In this sense, our vigilance translates into conservative guidelines. For example, many sites must recover and treat a large portion of manufacturing water discharges in accordance with related standards for hazardous waste.

At the Carros site in France, following the work carried out in recent years on the effluent treatment plant, we have invested in a new system for regulating the pH of these effluents with CO2 instead of acid, as well as in an effluent pretreatment system to reduce COD.

### **Hazardous waste**

In addition to the constant search to control the volumes generated and improve collection for maximum treatment and recycling, we ensure traceability of all our hazardous waste up to the point of disposal: soiled packaging; laboratory, production, medicinal or infectious wastes; and chemical effluents (mostly incinerated and therefore thermally treated or recycled for solvent recovery).

Controlling waste volumes also begins at the research and development stage by considering treatment application methods so as to limit wastage and residues that could harm the environment (targeting/ optimizing sprays, for example).

It should be noted that at the Carros site in France, we have signed a new hazardous waste management contract with a target of 80% recovery.

Image /page/53/Picture/12 description: A person wearing a white lab coat, hair net, and face mask is standing in a laboratory. The person is facing away from the camera and towards a piece of machinery. The laboratory is clean and well-lit, with white walls and floors. There are shelves of equipment and supplies in the background.

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### **OUR RESULTS**

| Performance indicators                               | 2021  | 2022  | 2023  |
|------------------------------------------------------|-------|-------|-------|
| COD (metric tons)                                    | 113   | 100   | 86    |
| Volume of hazardous industrial waste (metric tons)   | 2,153 | 2,118 | 1,922 |
| Volume of ordinary industrial waste (metric tons)    | 2,646 | 3,262 | 2,719 |
| Intensity of ordinary and hazardous industrial waste | 34    | 34    | 27    |

*The intensity of industrial waste is the ratio between the waste generated (ordinary and hazardous) and the added value in thousands of euros at the Group level (direct labor costs + indirect production costs).*

The sharp decreases at the highest COD-generating sites, Carros in France and Guadalajara in Mexico, account for the decrease by 14%. This is due in part to the installation of a new water treatment plant at the historic Carros site in France.

In 2023, the total amount of waste generated decreases significantly by 9% for hazardous waste and by 17% for non-hazardous waste. Compared to activity, the decrease is even sharper, with a drop of 20%.

### **CLIMATE CHANGE**

The risks related to the effects of climate change encouraged us to contribute to the reduction in greenhouse gas emissions. In our company, the direct and indirect emissions of greenhouse gases (scopes 1 and 2, as defined in the greenhouse gas (GHG) protocol represent emissions linked to the consumption of various forms of energy (in this case, gas and electricity) at all industrial sites worldwide, as well as the greenhouse gas emissions related to refrigerants.

Other indirect greenhouse gas emissions (scope 3, downstream) reflect emissions linked to the shipping of finished products from all sites to the end customer.

In 2023, we initiated a project to complete our carbon footprint assessment on indirect emissions (scope 3) using the GHG protocol method, and performed an initial data consolidation for 2022. The approach will be continued in 2024 on the 2023 annual data in order to refine the results and thus prepare the carbon footprint assessment for 2024. These elements will help structure the Group's decarbonization trajectory.

### **OUR KEY OBJECTIVES**

n **Reduce scopes 1 and 2 greenhouse gas emissions by 10% by 2025.**

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### **OUR ACTION PLANS**

#### **Scopes 1 & 2 greenhouse gas (GHG) emissions**

**Actions on direct and indirect emissions (industrial site consumption and GHGs related to refrigerant fluids):**

- n optimization of energy consumption: thermal insulation of installations, the energy recovery system on the wastewater treatment station for biological production units (Carros), solar boiler for industrial hot water (Mexico), generalization of plans to replace lighting with LED at almost all industrial sites;
- n concerning emissions related to refrigerant gases: reinforcement of maintenance plans at industrial sites in Australia and Mexico, as well as a program to replace the most polluting fluids with fluids with low CO2 emissions.

#### **Scope 3 greenhouse gas emissions**

### **Actions on emissions resulting from the transport of finished products:**

n the new calculation method implemented since 2018 has enabled us to increase the reliability of subsidiary data based on emissions coefficients given by the French environment and energy management agency (see www.bilans-ges.ademe.fr);

- n shipping of finished products: destination grouping and limitation of air transport;
- n transporting employees: inter-site shuttles, external shuttles, incentive policies to limit the carbon impact of company vehicles, carpooling, etc.

In addition to these initiatives, the Guadalajara site in Mexico continued its reforestation campaign in 2023, by more than 50 trees, thanks to the involvement of employees and their families. A similar initiative is underway in Vietnam.

| Performance indicators                                    | 2021   | 2022   | 2023   |
|-----------------------------------------------------------|--------|--------|--------|
| GHG scopes 1 & 2 (metric tons of CO₂ equivalent)          | 20,814 | 23,727 | 22,630 |
| GHG scope 3 downstream<br>(metric tons of CO₂ equivalent) | 11,093 | 10,228 | 8,303  |
| GHG intensity scope 1, 2 & 3                              | 229    | 215    | 181    |

### **OUR RESULTS**

*The emission factors used for calculating emissions of the various scopes are from the French site of the French environment and energy management agency (Ademe) at https://bilans-ges.ademe.fr. The intensity of greenhouse gases is the ratio between the GHGs emitted (scopes 1, 2 and 3) and the added value in thousands of euros at the Group level (direct labor costs + indirect production costs).*

Our scopes 1 and 2 greenhouse gas emissions fell by 5% in 2023 compared to 2022, and by 12% with respect to operations, for an intensity of 132, far below our target of 164.

Our scope 3 emissions (downstream transport) decreased substantially (by 19%). This sharp decrease is mainly due to the reduction in air transport from sites in France. It should be noted that the 2022 values of the scope 3 GHGs were the subject of an error correction due to double counting of the Carros site data in 2022.

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Image /page/56/Picture/0 description: A person is running with a dog on a grassy hill. The sun is shining brightly in the background, creating a silhouette effect for the person. The dog is on a leash and appears to be keeping pace with the person. The grass on the hill is green and lush, and there are some wildflowers scattered throughout. The sky is blue with some white clouds.

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### **EUROPEAN GREEN TAXONOMY - ELIGIBILITY/ALIGNMENT**

As a result of the sustainable finance action plan launched in 2018 by the European commission, European regulation 2020/852 of June 18, 2020, establishes a framework to promote "sustainable" investments in the European Union, called the "European green taxonomy." In accordance with this regulation, starting with the fiscal year ended December 31, 2021, we are required to release the share of our taxonomy-eligible activity – revenue, capital expenditures (Capex) and operational expenditures (Opex) – on the first two environmental objectives related to climate change.

For financial statements for the year ending December 31, 2022, the requirement has been extended and now calls for an analysis of the alignment for the climate objectives for the three financial indicators (revenue, Capex and Opex). To be considered sustainable, an activity must contribute substantially to one of the six environmental objectives listed below, not hinder the other five according to the Do no significant harm (DNSH) principle and comply with minimum safeguards. The taxonomy regulation is supplemented by two delegated acts: the first published in April 2021 specifying the technical environmental criteria for the first two objectives, the second published in July 2021 specifying the expected taxonomy reporting methods.

For the accounts closed on December 31, 2023, the obligation was extended to include an analysis of the eligibility of the four complementary objectives: transition to a circular economy, prevention and reduction of pollution, sustainable use and protection of aquatic and marine resources, and protection and restoration of biodiversity and ecosystems.

The taxonomy's six environmental objectives are:

- n climate change mitigation (2021 eligibility/2022 alignment);
- n climate change adaptation (2021 eligibility/2022 alignment);
- n transition to a circular economy (2023 eligibility);
- n pollution prevention and reduction (2023 eligibility);

Image /page/57/Picture/10 description: The image shows a farm with a red barn and a silo. There are cows in the field, and a wagon is parked nearby. The grass is green, and the sky is blue.

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- n sustainable use and protection of aquatic and marine resources (2023 eligibility);
- n biodiversity and ecosystem protection and restoration (2023 eligibility).

The eligibility analysis of the four additional objectives was conducted in accordance with the taxonomy regulation. It follows from this analysis that the Group is mainly concerned with the objective of preventing and reducing pollution, and as such must declare its share of revenue generated and Capex and Opex incurred in its medicine production.

The eligibility and alignment assessment was conducted on the basis of a detailed analysis of the Group's activities, based on the processes, existing reporting systems and assumptions made with management and business experts in France and in our main subsidiaries. The following departments contributed to the reflection:

n Group Consolidation department for the financial data;

Image /page/58/Picture/5 description: The image shows a herd of cattle grazing in a field. The cattle are of various colors, including brown, white, and black. The field is mostly brown and muddy, with some green grass visible in the foreground. In the background, there is a line of trees and a clear blue sky.

- n Financial Affairs department of the subsidiaries in scope;
- n facilities management, industrial management for buildings and maintenance;
- n fleet managers and Group Regulatory department;
- n Legal, Insurance and EHS departments for the assessment of climate DNSH;
- n Compliance, HR, Legal and Tax departments for the analysis of minimum safeguards;
- n CSR department.

The whole consists of a methodology whose significant elements – assumptions, interpretations, clarifications and methodological limitations – are described below. The Group will revise this method and the figures resulting in light of regulatory developments, in particular with the implementation of the Corporate sustainability reporting directive from 2024 onwards.

It should be noted that this work was carried out with the support of an external board, which assisted the Group in appropriating the concepts to be implemented, facilitating training/information sessions, and lastly, analyzing the criteria required to justify the alignment of activities.

### **DNSH criteria**

All Do no significant harm criteria were assessed at the Virbac group level and locally by the subsidiaries. The Group did not evaluate the Do no significant harm criteria at the value chain level.

The DNSHs (circular economy, pollution, aquatic and marine resources, biodiversity and climate) were studied activity by activity to assess their alignment.

### Climate change adaptation

The Group conducted a preliminary analysis of the exposure and vulnerability of its activities to physical climate risks, as defined in section II of appendix A of the European regulation. This analysis was conducted by management on the basis of the reports of our insurers on the prevention of natural and climatic risks at our industrial sites, and on the basis of internal knowledge at our main sites. In 2023, the Group enhanced this approach with simulations of global warming scenarios, based on the IPCC's assumptions, which made it possible to map the risks identified and their degree of importance for our industrial sites worldwide. On this basis, we are now working to complete our action plans to limit the potential impact of these risks.

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### **Minimum safeguards**

In accordance with the guiding principles for minimum safeguards described in article 4 of the taxonomy regulation, economic activities that substantially contribute to one of the climate objectives and meet the relevant generic and specific DNSHs must also demonstrate compliance with the minimum safeguards. Compliance with the minimum safeguards was assessed at the Virbac group level only. In all our activities, we take into account the OECD guidelines for multinational enterprises and the UN guiding principles on business and human rights, including the principles and rights set out in the ILO declaration on fundamental principles and rights at work and the International bill of human rights.

The Group used the report on the minimum safeguards of the platform on sustainable finance to ensure compliance with the principles set forth in the preamble to the statement of non-financial performance, in the paragraph entitled "A corporate responsibility policy based on a strong ethical commitment," starting on page 16, and in particular the body of measures put in place by the Group:

- n the Virbac code of conduct and business partner charter, on page 17;
- n the Human rights, in the Respect for human rights paragraph, on page 19;
- n prevention of corruption, in the Prevention of corruption and influence peddling paragraph, on pages 17-18;
- n responsible taxation, in the Responsible tax policy paragraph, page 20;
- n fair competition, on page 17.

### **Taxonomy revenue**

As defined by the regulation, an activity is deemed taxonomy-eligible if it is on the list of sectors covered by the climate change mitigation and adaptation objectives. The selection of covered sectors is based on two areas of consideration: sectors with high emission rates and sectors where economic activities have the potential to allow substantial reductions in GHG emissions in other sectors.

As a pharmaceutical group, Virbac does not belong to sectors with a high carbon impact, such as the energy, construction and transport sectors. Furthermore, as the products offered by the Group do not contribute to reducing the emissions of other sectors, the Group does not have activities that are taxonomy-eligible under the two climate objectives.

In 2023, the analysis conducted on the four complementary objectives (transition to a circular economy, prevention and reduction of pollution, sustainable use and protection of aquatic and marine resources, and protection and restoration of biodiversity and ecosystems) leads to the conclusion that Virbac, like the pharmaceutical sector, is directly concerned with the objective of preventing and reducing pollution.

The statistical classification of economic activity (*NACE*) codes that concern Virbac are as follows: C21.1 Manufacture of basic pharmaceutical products and C21.2 Manufacture of pharmaceutical preparations.

For this reason, Virbac declares the share of its revenue generated on its active ingredient manufacturing (PPC1.1 activity), as well as its medicine manufacturing (PPC 1.2 activity). To do this, management reviewed its entire net consolidated revenue and used as a basis the European definition of medicines as available on the European website: https://www.ema.europa.eu/ en/glossary/medicinal-product.

In this case, the eligible revenue includes all manufacturing of medicines or related products. The consolidated net revenue of the animal nutrition, diagnostics, and hygiene ranges, and non-medicine care ranges is deemed ineligible. With regard to the scope, it should be noted that only the manufacturing carried out at our own industrial sites, or through subcontracting, was selected to assess the eligible share. Trade products (purchase/resale) were considered ineligible regardless of the nature of the product.

The Group will review this methodology and the resulting figures based on regulatory developments and FAQs from the first fiscal year of implementation.

For the 2023 financial year, the consolidated net revenue eligible for the pollution prevention and reduction objective amounts to €701 million, that is, 56% of the Group's consolidated revenue.

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| Financial year<br>2023                                                                                                                    |            | 2023         |                                    | Substantial contribution criteria |                               |               |                      |               |                   | DNSH criteria<br>("Do no significant harm") |                                |            |                       |                |                   |                         |                                                                                      |                                 |                                     |
|-------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------|------------------------------------|-----------------------------------|-------------------------------|---------------|----------------------|---------------|-------------------|---------------------------------------------|--------------------------------|------------|-----------------------|----------------|-------------------|-------------------------|--------------------------------------------------------------------------------------|---------------------------------|-------------------------------------|
| Economic<br>activities (1)                                                                                                                | Code (2)   | Turnover (3) | Proportion of turnover, year N (4) | Climate change mitigation (5)     | Climate change adaptation (6) | Water (7)     | Circular Economy (8) | Pollution (9) | Biodiversity (10) | Climate Change Mitigation (11)              | Climate Change Adaptation (12) | Water (13) | Circular Economy (14) | Pollution (15) | Biodiversity (16) | Minimum Safeguards (17) | Proportion of taxonomy-aligned (A.1.)<br>or -eligible (A.2.) turnover, year N-1 (18) | Category enabling activity (19) | Category transitional activity (20) |
|                                                                                                                                           |            | € thousand   | %                                  | Y; N;<br>N/EL                     | Y; N;<br>N/EL                 | Y; N;<br>N/EL | Y; N;<br>N/EL        | Y; N;<br>N/EL | Y; N;<br>N/EL     | Y/N                                         | Y/N                            | Y/N        | Y/N                   | Y/N            | Y/N               | Y/N                     | %                                                                                    | E                               | T                                   |
| A. Taxonomy-eligible activities                                                                                                           |            |              |                                    |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                      |                                 |                                     |
| A.1. Environmentally sustainable activities (taxonomy-aligned)                                                                            |            |              |                                    |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                      |                                 |                                     |
| Turnover of<br>environmentally<br>sustainable<br>activities (taxo-<br>nomy-aligned)<br>(A.1)                                              |            | 0            | 0%                                 |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         | 0%                                                                                   |                                 |                                     |
| Of which enabling                                                                                                                         |            | 0            | 0%                                 |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         | 0%                                                                                   | E                               |                                     |
| Of which transitional                                                                                                                     |            | 0            | 0%                                 |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         | 0%                                                                                   |                                 | T                                   |
| A.2. Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)                                   |            |              |                                    |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                      |                                 |                                     |
|                                                                                                                                           |            |              |                                    | EL;<br>N/EL                       | EL;<br>N/EL                   | EL;<br>N/EL   | EL;<br>N/EL          | EL;<br>N/EL   | EL;<br>N/EL       |                                             |                                |            |                       |                |                   |                         |                                                                                      |                                 |                                     |
| Manufacture of<br>medicinal products                                                                                                      | PPC<br>1.2 | 700,991      | 56%                                | N/EL                              | N/EL                          | N/EL          | N/EL                 | EL            | N/EL              |                                             |                                |            |                       |                |                   |                         | 0%                                                                                   |                                 |                                     |
| Turnover of<br>taxonomy<br>eligible but not<br>environmentally<br>sustainable<br>activities (not<br>taxonomy-aligned<br>activities) (A.2) |            | 700,991      | 56%                                | 0%                                | 0%                            | 0%            | 0%                   | 56%           | 0%                |                                             |                                |            |                       |                |                   |                         | 0%                                                                                   |                                 |                                     |
| A. Turnover<br>of taxonomy<br>eligible activities<br>(A.1+A.2)                                                                            |            | 700,991      | 56%                                | 0%                                | 0%                            | 0%            | 0%                   | 56%           | 0%                |                                             |                                |            |                       |                |                   |                         | 0%                                                                                   |                                 |                                     |
| B. Taxonomy-non-eligible activities                                                                                                       |            |              |                                    |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                      |                                 |                                     |
| Turnover of<br>taxonomy-non<br>eligible activities                                                                                        |            | 545,910      | 44%                                |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                      |                                 |                                     |
| Total (A+B)                                                                                                                               |            | 1,246,901    | 100%                               |                                   |                               |               |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                      |                                 |                                     |

|     |  | Proportion of turnover/total turnover |                                 |
|-----|--|---------------------------------------|---------------------------------|
|     |  | Taxonomy-aligned per objective        | Taxonomy-eligible per objective |
| CCM |  | 0%                                    | 0%                              |
| CCA |  | 0%                                    | 0%                              |
| WTR |  |                                       | 0%                              |
| CE  |  |                                       | 0%                              |
| PPC |  |                                       | 56%                             |
| BIO |  |                                       | 0%                              |

{61}------------------------------------------------

Image /page/61/Picture/0 description: A person wearing a white hard hat, glasses, and a blue face mask is standing in a warehouse. They are wearing a yellow safety vest over a light blue shirt. The person is holding a black clipboard in their left hand and using their right hand to write on a box on a shelf. The shelves are full of boxes, and the warehouse is well-lit.

### **Capex taxonomy**

As defined by article 8 (2) (b) of regulation (EU) 2020/852, the denominator of the Capex taxonomy corresponds to the acquisitions of tangible assets (IAS 16) and intangible assets (IAS 38), the acquisition of rights of use (in accordance with IFRS 16). In addition, assets acquired through business combinations (IFRS 3), excluding goodwill, are included in the lines of the table below, with the exception of Globion India, which entered the consolidation scope in the last quarter of 2023. It should be noted that the Virbac group has no investment processed according to Investment Property (IAS 40) and Agriculture (IAS 41) standards.

### **Eligibility analysis**

Capex flows are derived from consolidated accounting data. They were analyzed transversally by the Finance teams of each subsidiary and local experts. The flows related to investments that are individually eligible under CCM 6.5, CCM 7.2 - 7.7 and WTR 1.1 activities are thus identified by the local teams on the basis of the guidelines communicated by the Group in accordance with the taxonomy regulation.

According to the updated taxonomy regulation, the Group extended its analysis to Capex category A (related to an eligible activity) under PPC 1.1 and PPC 1.2 activity, which made it possible to identify Capex related to the pharmaceutical active ingredient (PPC 1.1) and medicinal product (PPC 1.2) manufacturing activities.

A comprehensiveness analysis was conducted in the form of workshops to ensure that no other activities related to climate and environmental objectives were omitted within the scope of analysis.

Eligible Capex is mainly found in the list of the following Capex (the reference in parentheses corresponds to the classification by activity as defined by the taxonomy):

- n transport by motorcycles, private cars and light utility vehicles (CCM/CCA 6.5);
- n renovation of existing buildings (CCM/CCA 7.2, CE 3.2);
- n installation, maintenance and repair of energy efficiency equipment (CCM/CCA 7.3);
- n installation, maintenance and repair of charging stations for electric vehicles in buildings and parking spaces attached to buildings (CCM/CCA 7.4);
- n installation, maintenance and repair of instruments and devices for the measurement, regulation and control of the energy performance of buildings (CCM/CCA 7.5);
- n installation, maintenance and repair of renewable energy technologies (CCM/CCA 7.6);
- n acquisition and ownership of buildings (CCM/CCA 7.7);
- n data-based solutions for reducing GHG emissions (CCM/CCA 8.2);
- n manufacture of pharmaceutical active ingredients (API) or active substances (PPC 1.1);
- n manufacture of medicines (PPC 1.2);
- n manufacturing, installation and associated services

{62}------------------------------------------------

for leak-control technologies to reduce and prevent leaks in water supply systems (WTR 1.1).

In 2023, it should be noted that no Capex was identified for activities 7.4, 7.5, 7.6 and 8.2.

### **Alignment analysis**

An alignment analysis was conducted for both climate objectives. Capex flows related to CCM 6.5, CCM 7.2, CCM 7.3 and CCM 7.7 activities were analyzed with regard to the technical criteria for substantial contribution and DNSH by each subsidiary. The application of the criteria is intended to comply with the text of the taxonomy. However, it should be specified that Virbac management was required to interpret the texts as described below.

### **Substantial contribution criteria**

- n Climate change mitigation (CCM) 7.7: Virbac refers to the DEEPKI index for the top 15% energy performance of buildings on a national scale.
- n Climate change adaptation (CCA): climate risk analysis and adaptation roadmap are underway. Virbac believes that the substantial contribution criterion for climate change adaptation activities has not been met to date: "The economic activity has implemented physical and non-physical solutions substantially reducing the most significant physical climate risks that are important for this activity." Therefore, not all Capex flows related to eligible investments for climate change adaptation activities are considered aligned.

### **Generic DNSH**

Appendix A DNSH Climate change adaptation: an exposure analysis was conducted in collaboration with the Group's risk management. Construction of a climatic risk analysis and an adaptation roadmap are underway to meet taxonomy reporting and CSRD requirements. Virbac believes that this analysis will be finalized by 2025. CCM activities are therefore considered aligned if other criteria are met, based on the principle that the adaptation DNSH (appendix A) will be satisfied by 2025.

### **Specific DNSH**

Climate change mitigation - 6.5 DNSH pollution: the regulatory evolution affecting DNSH pollution for activity 6.5 requires Virbac to collect information (in this case, tire labels) too complex given the resources available to date in subsidiaries. As a result, it was agreed that no vehicle met the requirements of this DNSH, and therefore, no activity is aligned in 6.5.

### **Minimum safeguards**

Virbac's human rights policy will be made available by 2025. This charter will make it possible to cover the expectations of minimum human rights safeguards of the reporting taxonomy and will contribute to the preparation for compliance with the Corporate sustainability due diligence directive (CSDDD).

In 2023, the Capex taxonomy denominator totaled €73.7 million.

In the 2023 financial year, total eligible Capex is up compared to 2022 due to our sustained investment policy. It amounts to €19.4 million, that is, 26% of the total. They mainly concern vehicle rentals (€2.2 million), renovations and acquisitions of buildings (€5.7 million), and Capex related to our medicine production activities (€11.4 million).

The aligned Capex amounts to €0.002 million, that is, 0.003% of the total Capex. They mainly concern equipment that helps reduce our energy consumption.

The analysis was carried out over the entire scope from the consolidated accounting data, for each asset category, thus avoiding the risks of double counting.

Image /page/62/Picture/18 description: A person in a blue lab coat is holding a black handheld device with a screen that reads "OPEN DATE" and a keypad. The person is using their right hand to press a button on the keypad. The device is being used in a factory setting with machinery in the background.

{63}------------------------------------------------

| Financial year 2023                                                                                                                                                |                                         | 2023       |                                 | Substantial contribution criteria |                               |               |                      |               |                   |                                | DNSH criteria<br>("Do no significant harm") |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|------------|---------------------------------|-----------------------------------|-------------------------------|---------------|----------------------|---------------|-------------------|--------------------------------|---------------------------------------------|------------|-----------------------|----------------|-------------------|-------------------------|----------------------------------------------------------------------------------|---------------------------------|-------------------------------------|
| Economic activities (1)                                                                                                                                            | Code (2)                                | Capex (3)  | Proportion of Capex, year N (4) | Climate Change mitigation (5)     | Climate change adaptation (6) | Water (7)     | Circular economy (8) | Pollution (9) | Biodiversity (10) | Climate Change mitigation (11) | Climate change adaptation (12)              | Water (13) | Circular economy (14) | Pollution (15) | Biodiversity (16) | Minimum safeguards (17) | Proportion of taxonomy-aligned (A.1.)<br>or eligible (A.2.) Capex, year N-1 (18) | Category enabling activity (19) | Category transitional activity (20) |
|                                                                                                                                                                    |                                         | € thousand | %                               | Y; N;<br>N/EL                     | Y; N;<br>N/EL                 | Y; N;<br>N/EL | Y; N;<br>N/EL        | Y; N;<br>N/EL | Y; N;<br>N/EL     | Y/N                            | Y/N                                         | Y/N        | Y/N                   | Y/N            | Y/N               | Y/N                     | %                                                                                | E                               | T                                   |
| A. Taxonomy-eligible activities                                                                                                                                    |                                         |            |                                 |                                   |                               |               |                      |               |                   |                                |                                             |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| A.1. Environmentally sustainable activities (taxonomy-aligned)                                                                                                     |                                         |            |                                 |                                   |                               |               |                      |               |                   |                                |                                             |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| Installation, maintenance and<br>repair of energy efficiency equipment                                                                                             | CCM 7.3,<br>CCA 7.3                     | 2          | 0.003%                          | Y                                 | N                             | N/EL          | N/EL                 | N/EL          | N/EL              | Y                              | Y                                           | Y          | Y                     | Y              | Y                 | Y                       | 0%                                                                               | E                               |                                     |
| Capex of environmentally<br>sustainable activities<br>(taxonomy-aligned) (A.1)                                                                                     |                                         | 2          | 0.003%                          | 0.0%                              | 0.0%                          | 0.0%          | 0.0%                 | 0.0%          | 0.0%              |                                |                                             |            |                       |                |                   |                         | 1.8%                                                                             |                                 |                                     |
| Of which enabling                                                                                                                                                  |                                         | 2          | 0.003%                          | 0.0%                              | 0.0%                          | 0.0%          | 0.0%                 | 0.0%          | 0.0%              |                                |                                             |            |                       |                |                   |                         | 1.0%                                                                             | E                               |                                     |
| Of which transitional                                                                                                                                              |                                         | 0          | 0.0%                            |                                   |                               |               |                      |               |                   |                                |                                             |            |                       |                |                   |                         | 0.8%                                                                             |                                 | T                                   |
| A.2. Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)                                                            |                                         |            |                                 |                                   |                               |               |                      |               |                   |                                |                                             |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
|                                                                                                                                                                    |                                         |            |                                 | EL;<br>N/EL                       | EL;<br>N/EL                   | EL;<br>N/EL   | EL;<br>N/EL          | EL;<br>N/EL   | EL;<br>N/EL       |                                |                                             |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| Transport by motorbikes, passenger<br>cars and light commercial vehicles                                                                                           | CCM 6.5,<br>CCA 6.5                     | 2,236      | 3.0%                            | EL                                | EL                            | N/EL          | N/EL                 | N/EL          | N/EL              |                                |                                             |            |                       |                |                   |                         | 6.0%                                                                             |                                 |                                     |
| Renovation of existing buildings                                                                                                                                   | CCM 7.2,<br>CCA, 7.2, CE 3.2            | 5,353      | 7.3%                            | EL                                | EL                            | N/EL          | EL                   | N/EL          | N/EL              |                                |                                             |            |                       |                |                   |                         | 2.7%                                                                             |                                 |                                     |
| Acquisition and ownership<br>of buildings                                                                                                                          | CCM 7.7,<br>CCA 7.7                     | 331        | 0.4%                            | EL                                | EL                            | N/EL          | N/EL                 | N/EL          | N/EL              |                                |                                             |            |                       |                |                   |                         | 3.9%                                                                             |                                 |                                     |
| Renovation of production site of<br>active pharmaceutical ingredients                                                                                              | CCM 7.2, CCA<br>7.2, CE 3.2,<br>PPC 1.1 | 427        | 0.6%                            | EL                                | EL                            | N/EL          | EL                   | EL            | N/EL              |                                |                                             |            |                       |                |                   |                         | 0.0%                                                                             |                                 |                                     |
| Renovation of production site of<br>medicinal product                                                                                                              | CCM 7.2, CCA<br>7.2, CE 3.2,<br>PPC 1.2 | 1,003      | 1.4%                            | EL                                | EL                            | N/EL          | EL                   | EL            | N/EL              |                                |                                             |            |                       |                |                   |                         | 0.0%                                                                             |                                 |                                     |
| Manufacture of active<br>pharmaceutical ingredients (API)<br>or active substances                                                                                  | PPC 1.1                                 | 2,092      | 2.8%                            | N/EL                              | N/EL                          | N/EL          | N/EL                 | EL            | N/EL              |                                |                                             |            |                       |                |                   |                         | 0.0%                                                                             |                                 |                                     |
| Manufacture of medicinal products                                                                                                                                  | PPC 1.2                                 | 7,956      | 10.8%                           | N/EL                              | N/EL                          | N/EL          | N/EL                 | EL            | N/EL              |                                |                                             |            |                       |                |                   |                         | 0.0%                                                                             |                                 |                                     |
| Manufacture, installation and asso-<br>ciated services for leakage control<br>technologies enabling leakage<br>reduction and prevention in water<br>supply systems | WTR 1.1                                 | 68         | 0.1%                            | N/EL                              | N/EL                          | EL            | N/EL                 | N/EL          | N/EL              |                                |                                             |            |                       |                |                   |                         | 0.0%                                                                             |                                 |                                     |
| Capex of taxonomy-eligible but<br>not environmentally sustainable<br>activities (not taxonomy-aligned<br>activities) (A.2)                                         |                                         | 19,465     | 26.4%                           | 10.7%                             | 0.0%                          | 0.1%          | 0.0%                 | 15.6%         | 0.0%              |                                |                                             |            |                       |                |                   |                         | 12.5%                                                                            |                                 |                                     |
| A. Capex of taxonomy-eligible<br>activities (A.1+A.2)                                                                                                              |                                         | 19,468     | 26.4%                           | 10.7%                             | 0.0%                          | 0.1%          | 0.0%                 | 15.6%         | 0.0%              |                                |                                             |            |                       |                |                   |                         | 14.3%                                                                            |                                 |                                     |
| B. Taxonomy-non-eligible activities                                                                                                                                |                                         |            |                                 |                                   |                               |               |                      |               |                   |                                |                                             |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| Capex of taxonomy-non-eligible<br>activities                                                                                                                       |                                         | 54,246     | 73.6%                           |                                   |                               |               |                      |               |                   |                                |                                             |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| Total (A+B)                                                                                                                                                        |                                         | 73,714     | 100%                            |                                   |                               |               |                      |               |                   |                                |                                             |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
|                                                                                                                                                                    |                                         |            |                                 |                                   |                               |               |                      |               |                   |                                |                                             |            |                       |                |                   |                         |                                                                                  |                                 |                                     |

{64}------------------------------------------------

|     | Proportion of Capex/total Capex |                                 |
|-----|---------------------------------|---------------------------------|
|     | Taxonomy-aligned per objective  | Taxonomy-eligible per objective |
| CCM | 0.003%                          | 12.7%                           |
| CCA | 0%                              | 12.7%                           |
| WTR |                                 | 0.1%                            |
| CE  |                                 | 9.2%                            |
| PPC |                                 | 15.6%                           |
| BIO |                                 | 0.0%                            |

### **Opex taxonomie**

In 2023, the amount of the Opex denominator as defined by the taxonomy regulation amounts to €59.1 million, that is, 5.6% of the Group's current operating expenses (that is, less than 10% of total Group operating expenses). In view of this insignificant amount, which relates to expenditures that do not constitute the core of our activity, the work carried out concludes that this indicator is not material for Virbac. In accordance with the regulation, the analysis of Opex eligibility has therefore not been carried out.

Image /page/64/Picture/3 description: Three men are standing outside in front of a herd of cattle. The man on the left is bald and wearing a blue button-down shirt and khaki pants. He is smiling and looking at the other two men. The man in the middle is wearing a green shirt and has a stethoscope around his neck. The man on the right is wearing a blue polo shirt. The background is a green field with trees.

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| Financial year 2023                                                                                                             |          | 2023       |                                |                               |                               | Substantial contribution criteria |                      |               |                   | DNSH criteria<br>("Do no significant harm") |                                |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
|---------------------------------------------------------------------------------------------------------------------------------|----------|------------|--------------------------------|-------------------------------|-------------------------------|-----------------------------------|----------------------|---------------|-------------------|---------------------------------------------|--------------------------------|------------|-----------------------|----------------|-------------------|-------------------------|----------------------------------------------------------------------------------|---------------------------------|-------------------------------------|
| Economic<br>activities (1)                                                                                                      | Code (2) | Opex (3)   | Proportion of Opex, year N (4) | Climate change mitigation (5) | Climate change adaptation (6) | Water (7)                         | Circular economy (8) | Pollution (9) | Biodiversity (10) | Climate change mitigation (11)              | Climate change adaptation (12) | Water (13) | Circular economy (14) | Pollution (15) | Biodiversity (16) | Minimum safeguards (17) | Proportion of taxonomy-aligned (A.1.)<br>or -eligible (A.2.) Opex, year N-1 (18) | Category enabling activity (19) | Category transitional activity (20) |
|                                                                                                                                 |          | € thousand | %                              | Y; N;<br>N/EL                 | Y; N;<br>N/EL                 | Y; N;<br>N/EL                     | Y; N;<br>N/EL        | Y; N;<br>N/EL | Y; N;<br>N/EL     | Y/N                                         | Y/N                            | Y/N        | Y/N                   | Y/N            | Y/N               | Y/N                     | %                                                                                | E                               | T                                   |
| A. Taxonomy-eligible activities                                                                                                 |          |            |                                |                               |                               |                                   |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| A.1. Environmentally sustainable activities (taxonomy-aligned)                                                                  |          |            |                                |                               |                               |                                   |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| Activity 1                                                                                                                      | NA       | NA         | 0%                             | NA                            | NA                            | NA                                | NA                   | NA            | NA                | NA                                          | NA                             | NA         | NA                    | NA             | NA                | NA                      | 0%                                                                               |                                 |                                     |
| Activity 2                                                                                                                      | NA       | NA         | 0%                             | NA                            | NA                            | NA                                | NA                   | NA            | NA                | NA                                          | NA                             | NA         | NA                    | NA             | NA                | NA                      | 0%                                                                               |                                 |                                     |
| Opex of environmentally sustainable activities<br>(taxonomy-aligned)<br>(A.1)                                                   |          | NA         | 0%                             | 0%                            | 0%                            | 0%                                | 0%                   | 0%            | 0%                |                                             |                                |            |                       |                |                   |                         | 0%                                                                               |                                 |                                     |
| Of which enabling                                                                                                               |          | NA         | 0%                             | 0%                            | 0%                            | 0%                                | 0%                   | 0%            | 0%                |                                             |                                |            |                       |                |                   |                         | 0%                                                                               | E                               |                                     |
| Of which transitional                                                                                                           |          | NA         | 0%                             |                               |                               |                                   |                      |               |                   |                                             |                                |            |                       |                |                   |                         | 0%                                                                               |                                 | T                                   |
| A.2. Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities)                         |          |            |                                |                               |                               |                                   |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
|                                                                                                                                 |          |            |                                | EL;<br>N/EL                   | EL;<br>N/EL                   | EL;<br>N/EL                       | EL;<br>N/EL          | EL;<br>N/EL   | EL;<br>N/EL       |                                             |                                |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| Activity 1                                                                                                                      | NA       | NA         | 0%                             | NA                            | NA                            | NA                                | NA                   | NA            | NA                |                                             |                                |            |                       |                |                   |                         | 0%                                                                               |                                 |                                     |
| Activity 2                                                                                                                      | NA       | NA         | 0%                             | NA                            | NA                            | NA                                | NA                   | NA            | NA                |                                             |                                |            |                       |                |                   |                         | 0%                                                                               |                                 |                                     |
| Opex of<br>taxonomy-eligible but<br>not environmentally<br>sustainable activities<br>(not taxonomy-aligned<br>activities) (A.2) |          | NA         | 0%                             | 0%                            | 0%                            | 0%                                | 0%                   | 0%            | 0%                |                                             |                                |            |                       |                |                   |                         | 0%                                                                               |                                 |                                     |
| A. Opex of taxonomy<br>eligible activities<br>(A.1+A.2)                                                                         |          | NA         | 0%                             | 0%                            | 0%                            | 0%                                | 0%                   | 0%            | 0%                |                                             |                                |            |                       |                |                   |                         | 0%                                                                               |                                 |                                     |
| B. Taxonomy-non-eligible activities                                                                                             |          |            |                                |                               |                               |                                   |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
| Opex of<br>taxonomy-non-eligible<br>activities                                                                                  |          | NA         | 100%                           |                               |                               |                                   |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                  |                                 |                                     |
|                                                                                                                                 |          |            |                                |                               |                               |                                   |                      |               |                   |                                             |                                |            |                       |                |                   |                         |                                                                                  |                                 |                                     |

|     | Proportion of Opex/total Opex  |                                 |
|-----|--------------------------------|---------------------------------|
|     | Taxonomy-aligned per objective | Taxonomy-eligible per objective |
| CCM | 0%                             | 0%                              |
| CCA | 0%                             | 0%                              |
| WTR |                                | 0%                              |
| CE  |                                | 0%                              |
| PPC |                                | 0%                              |
| BIO |                                | 0%                              |

{66}------------------------------------------------

### **Annex III - Model 1 - Nuclear energy and fossil gas activities**

|    | Activities related to nuclear energy                                                                                                                                                                                                                                                                                                          |    |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
| 1. | The undertaking carries out, funds or has exposures to research, development, demonstration<br>and deployment of innovative electricity generation facilities that produce energy from nuclear<br>processes with minimal waste from the fuel cycle.                                                                                           | NO |
| 2. | The undertaking carries out, funds or has exposures to construction and safe operation of new<br>nuclear installations to produce electricity or process heat, including for the purposes of district<br>heating or industrial processes such as hydrogen production, as well as their safety upgrades,<br>using best available technologies. | NO |
| 3. | The undertaking carries out, funds or has exposures to safe operation of existing nuclear<br>installations that produce electricity or process heat, including for the purposes of district<br>heating or industrial processes such as hydrogen production from nuclear energy, as well<br>as their safety upgrades.                          | NO |
|    | Fossil gas activities                                                                                                                                                                                                                                                                                                                         |    |
| 4. | The undertaking carries out, funds or has exposures to construction or operation of electricity<br>generation facilities that produce electricity using fossil gaseous fuels.                                                                                                                                                                 | NO |
| 5. | The undertaking carries out, funds or has exposures to construction, refurbishment,<br>and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.                                                                                                                                                        | NO |
| 6. | The undertaking carries out, funds or has exposures to construction, refurbishment and<br>operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.                                                                                                                                                          | NO |

#### *Methodological note*

This assessment was conducted on the basis of a detailed analysis of the Group's activities, based on the processes, existing reporting systems and assumptions made with management. The whole consists of a methodology whose significant elements (assumptions, interpretations, clarifications and methodological limitations) are described above.

#### **Capex**

In accordance with the definition in the appendix to article 8 of the delegated act, the Group's eligible share of Capex within the meaning of the taxonomy is calculated by determining the ratio of the following financial aggregates:

– for the denominator: the sum of the increases in the gross value of intangible and tangible assets on the balance sheet and increases in the gross value of the right of use of long-term rental assets recognized under IFRS 16 (see notes A2, A4 and A5 in the consolidated accounts, on pages 178, 182 and 183 of the annual report). The analysis was carried out over the entire scope from the consolidated accounting data, for each asset category, thus avoiding the risks of double counting; – for the numerator: the sum of Capex identified in the denominator as being linked to taxonomy-eligible activities according to the list described above.

#### **Opex**

The value of Opex (operating expenditure) in the denominator was calculated in accordance with the definition in the appendix to article 8 of the delegated act. The total costs of external research and development studies, building renovation, short-term rental and maintenance and repair of the Group's assets represented less than 10% of the total of the Group's Opex as of December 31, 2023, which was not considered representative of its business model.

{67}------------------------------------------------

**Report of one of the statutory auditors, appointed as independent third party, on the verification of the consolidated non-financial performance statement**

Year ended December 31, 2023

To the shareholders' meeting,

in our capacity as statutory auditor of your company (hereinafter the "Entity"), appointed as independent third party ("Third Party") and accredited by the French accreditation committee (Cofrac - Cofrac validation/verification accreditation under number 3-1886 scope available at www.cofrac.fr), we have conducted procedures to express a limited assurance conclusion on the historical Information (observed or extrapolated) in the consolidated non-financial statement, prepared in accordance with the Entity's procedures (hereinafter the "Guidelines"), for the year ended December 31, 2023 (hereinafter the "Information" and the "Statement", respectively), presented in the Group management report pursuant to the legal and regulatory provisions of articles L225-102-1, R. 225-105 and R225-105-1 of the French commercial code *(Code de commerce)*.

### **Conclusion**

Based on the procedures we have performed as described in the section "Nature and scope of procedures" and the evidence we have obtained, nothing has come to our attention that cause us to believe that the non-financial statement is not prepared in accordance with the applicable regulatory provisions and that the Information, taken as a whole, is not fairly presented in accordance with the Guidelines, in all material respects.

### **Comment**

Without qualifying the conclusion expressed above and in accordance with article A225-3 of the French commercial code, we remind that the declaration does not cover the consolidated scope of the Group. Are excluded 10% of the total workforce (social results) and 48% of the total revenues of the Group (environmental results).

#### **Preparation of the non-financial performance statement**

The absence of a commonly used generally accepted reporting framework or a significant body of established practice on which to draw to evaluate and measure the Information allows for different, but acceptable, measurement techniques that can affect comparability between entities and over time.

Consequently, the Information needs to be read and understood together with the Guidelines, summarised in the Statement and available on the Entity's website or on request from its headquarters.

#### **Limits inherent in the preparation of the Information**

As stated in the Statement, the Information may be subject to uncertainty inherent to the state of scientific and economic knowledge and the quality of external data used. Some Information is sensitive to the choice of methodology and the assumptions or estimates used for its preparation and presented in the Statement.

#### **Responsibility of the company**

The board of directors is responsible for:

- n selecting or establishing suitable criteria for the preparation of the Information;
- n preparing a Statement pursuant to legal and regulatory provisions, including a presentation of the business model,

a description of the main non-financial risks, a presentation of the policies implemented considering those risks and the outcomes of said policies, including key performance indicators and the Information set-out in article 8 of regulation (EU) 2020/852 (green taxonomy);

- n preparing the Statement by applying the Entity's "Guidelines" as referred above; and
- n designing, implementing and maintaining internal control over Information relevant to the preparation of Information that is free from material misstatement, whether due to fraud or error.

The Statement has been endorsed by the board of directors.

### **Responsibility of the statutory auditor appointed as independent third party**

Based on our work, our responsibility is to express a limited assurance conclusion on:

- n the compliance of the Statement with the requirements of article R225-105 of the French commercial code;
- n the fairness of the Information provided pursuant to part 3 of sections I and II of article R225-105 of the French commercial code, *i.e.* the outcomes of policies, including key performance indicators, and measures relating to the main risks, hereinafter the "Information."

As we are engaged to form an independent conclusion on the Information as prepared by management, we are not permitted to be involved in the preparation of the Information as doing so may compromise our independence.

It is not our responsibility to provide a conclusion on:

- n the Entity's compliance with other applicable legal and regulatory provisions (particularly with regard to the Information set-out in article 8 of regulation (EU) 2020/852 (green taxonomy), the French duty of care law and against corruption and tax evasion);
- n the compliance of products and services with the applicable regulations.

### **Applicable regulatory provisions and professional guidance**

We performed the work described below in accordance with articles A225-1 *et seq* of the French commercial code, with our verification program consisting of our own procedures and with the professional guidance issued by the French institute of statutory auditors *(Compagnie nationale des commissaires aux comptes)* applicable to such engagement, in particular the professional guidance issued by the *Compagnie nationale des commissaires aux comptes*, *Intervention du commissaire aux comptes – Intervention de l'OTI – Déclaration de performance extra-financière,* and acting as the verification programme and with the international standard ISAE 3000 (revised).

### **Independence and quality control**

Our independence is defined by article L821-28 of the French commercial code and French code of ethics for statutory auditors *(Code de déontologie)*. In addition, we have implemented a system of quality control including documented policies and procedures aimed at ensuring compliance with applicable legal and regulatory requirements, ethical requirements and the professional guidance issued by the French institute of statutory auditors *(Compagnie nationale des commissaires aux comptes)* relating to this engagement.

{68}------------------------------------------------

#### **Means and resources**

Our work engaged the skills of five people between December 2022 and April 2023 and took a total of four weeks. To assist us in conducting our work, we referred to our corporate social responsibility and sustainable development experts. We conducted around fifteen interviews with people responsible for preparing the Statement.

### **Nature and scope of procedures**

We are required to plan and perform our work to address the areas where we have identified that a material misstatement of the Information is likely to arise.

The procedures we performed were based on our professional judgement. In carrying out our limited assurance engagement on the Information:

- n we obtained an understanding of all the consolidated entities' activities and the description of the main risks associated;
- n we assessed the suitability of the criteria of the Guidelines with respect to their relevance, completeness, reliability, neutrality and understandability, taking into account, where appropriate, best practices within the sector;
- n we verified that the Statement includes each category of social and environmental Information set out in section III of article L225-102-1, as well as Information regarding compliance with human rights and anticorruption and tax avoidance legislation.
- n we verified that the Statement provides the Information required under article R225-105 II of the French commercial code where relevant with respect to the main risks, and includes, where applicable, an explanation for the absence of the Information required under article L225-102-1 III, paragraph 2 of the French commercial code;
- n we verified that the Statement presents the business model and a description of the main risks associated with all the consolidated entities, including where relevant and proportionate, the risks associated with their business relationships, their products or services, as well as their policies, measures and the outcomes thereof, including key performance indicators associated to the main risks;
- n we referred to documentary sources and conducted interviews to:
- assess the process used to identify and confirm the main risks as well as the consistency of the outcomes, including the key performance indicators used, with respect to the main risks and the policies presented; and
- corroborate the qualitative Information (measures and outcomes) that we considered to be the most important1. Concerning certain risks or Information, our work was carried out on the consolidating entity, while for other risks, our work was carried out on the consolidating entity and on a selection of entities.
- n we verified that the Statement covers the consolidated scope, *i.e.* all companies within the consolidation scope in accordance with article L233-16 of the French commercial code, with the limits specified in the Statement;
- n we obtained an understanding of internal control and risk management procedures implemented by the Entity and assessed the data collection process aimed at ensuring the completeness and fairness of the Information;
- n for the key performance indicators and other quantitative outcomes that we considered to be the most important2, we implemented:
- analytical procedures that consisted in verifying the proper consolidation of collected data as well as the consistency of changes there to;
- tests of details, using sampling techniques, in order to verify the proper application of definitions and procedures and reconcile the data with supporting documents. This work was carried out on a selection of contributing entities3 and covers between 33% and 66% of the consolidated data relating to the key performance indicators and outcomes selected for these tests.
- n we assessed the overall consistency of the Statement in relation to our knowledge of all the consolidated entities.

The procedures performed in a limited assurance review are less in extent than for a reasonable assurance opinion in accordance with the professional Guidelines of the French national institute of statutory auditors *(Compagnie nationale des commissaires aux comptes)*; a higher level of assurance would have required us to carry out more extensive procedures.

Paris-La Défense, April 7, 2024

One of the statutory auditors,

Deloitte & Associés

Jérémie Perrochon - Partner, Audit

Julien Rivals - Partner, Sustainability Services

<sup>1</sup>**qualitative information selected:** review of the Great Place to Work questionnaire and actions to achieve a 70% satisfaction rate; review of controls carried out as part of the development of innovative products and services (focus on measuring the ratio of RDL expenses to total group revenue)

<sup>2</sup>**quantitative social information selected:** total staff on December 31; staff turnover rate; number of employees present on December 31 who have taken at least one training session; female to male salary ratio per category; frequency and severity rate of work accidents; absenteeism rate

**quantitative environmental information selected:** water withdrawn by source (m3); COD content (tons); volume of hazardous waste (tons); volume of non-hazardous waste (tons); gas consumption (MWh); electricity consumption (MWh); direct and indirect greenhouse gas emissions scopes 1 & 2 (tCO2eq) <sup>3</sup>**selected entities:** Virbac SA, Virbac France, Virbac Mexico (environmental information), Virbac Chile (social information)

{69}------------------------------------------------

Image /page/69/Picture/0 description: A young boy with blond curly hair is kneeling down and reaching out with his right arm. He is wearing a navy blue polo shirt and shorts. The background is blurred, but appears to be a natural setting with trees and rocks.

{70}------------------------------------------------

**FINANCIAL REPORT**

{71}------------------------------------------------

# Management report

### **2023 KEY EVENTS**

### **Cyberattack**

Virbac was the subject of a cyberattack on the night of June 19 to 20, 2023, on several of its sites around the world. Exceptional measures were immediately taken as soon as we became aware of this attack, and a crisis unit, including experts dedicated to cyber security, was set up in order to assess the impacts on our systems and quickly organize the corrective measures necessary to ensure business continuity.

This attack resulted in a slowdown or temporary interruption of some of our services, which was however contained thanks to the responsiveness and mobilization of our teams. Indeed, we have been able to rely on the integrity of our information systems and our data (not corrupted) till June 19, and on reinforced measures of internal control implemented from June 20 on.

Remediation continued throughout the summer and by August, we were operating almost normally again on all of our functions. We have also since strengthened all of our IT infrastructures.

Although the impact of the cyberattack on the financial statements for the year was limited, its remediation nevertheless generated some additional costs and the major impacts have been related to the vaccine production in Carros.

### **Inflation**

Cost increases continued in 2023, as expected and in smaller proportions compared to 2022. Their impacts were, however, limited by price increases for some of our products as well as the negotiation over several years of certain contracts supplies.

### **Vaccines**

The year 2023 has been impacted by limitations in the production capacity of dog and cat vaccines, which were more significant than expected.

This has weighed on our absorption of fixed costs as well as on our sales, given the low level of our vaccine inventories.

### **Acquisition of GS Partners on May 2, 2023**

On May 2, 2023, we completed the acquisition of 100% of the shares of GS Partners, our long-standing distributor in the Czech Republic and Slovakia and also one of our oldest distributors in Central Europe.

This acquisition, which represents several years of successful partnership between our teams and GS Partners, fully aligns with our external growth strategy. It will enable us to become more autonomous in fast-growing markets and to secure and further develop our business in these two countries while strengthening our presence in Central Europe, where our products for animal health are already accessible through our presence in Hungary and Poland. About twelve GS Partners employees joined Virbac's teams as part of the acquisition.

The acquisition was treated for accounting purposes as a business combination in our consolidated statements, in accordance with IFRS 3. Information relating to IFRS 3 is presented in note 1 to the consolidated accounts.

### **Acquisition of Globion on November 1, 2023**

On November 1, 2023, we completed the acquisition of a majority stake in Globion India Private Ltd. This transaction will 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.

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Globion is based in Hyderabad, where its industrial and R&D facilities employ approximately 120 full-time people and generate an annual revenue of approximately €12 million.

The acquisition of this first installment, of 74% of the capital, was treated for accounting purposes as a business combination in our consolidated accounts, in accordance with IFRS 3. Information relating to IFRS 3 is presented in note 1 of the consolidated accounts appendix. The consolidated accounts also include the provisions of the acquisition contract relating to the remaining 26% minority interests (see notes 1 and 19).

### **Virbac launches a share buyback program**

Following the decision of the board of directors on June 19, 2023 and its approval by the shareholder's meeting, we contemplate to buy back 100,000 of our own shares (less than 1.25% of the capital). The main objective is to decrease the company's share capital by canceling treasury shares purchased.

The limits of the program as set by the shareholder's meeting are the following:

- nature of shares: ordinary shares;
- maximum of the company's share capital: 10%;
- maximum number of shares: 845,800. It should be noted that in the event of a capital increase through incorporation of reserves and allocation of performance-related stock grants, a share split or reverse shares split, this amount will be adjusted by a multiplier equal to the ratio between the number of shares in the share capital prior to the transaction and the number after the transaction;
- maximum purchase price per share: €1,000.

To implement this program with a view to reducing capital by canceling shares, Virbac's board of directors has appointed an investment services provider, with a mandate expiry date on September 30, 2024. The terms of the mandate will relate to a maximum volume of 100,000 Virbac shares (representing less than 1.25% of the company's capital as of December 31, 2023) for a unit purchase price not exceeding €270 and a total volume of buyback therefore not exceeding €27,000,000. Shares redeemed under this mandate will be fully canceled by our company.

As of December 31, 2023, the number of shares repurchased in this context is 67,343 shares for a total amount of €17.5 million (see note A14 in the appendix to the consolidated accounts).

### **Olivier Charmeil co-opted by the board of directors**

Pursuant to the proposal of the appointments and compensation committee, the board of directors during its meeting held December 21, 2023 decided to co-opt Olivier Charmeil as a director. Olivier Charmeil replaces OJB Conseil, represented by Olivier Bohuon, who has resigned after being an independent director for twelve years.

Olivier Charmeil is considered to be an independent director in accordance with the independence criteria adopted by the board of directors and set out in the *Afep-Medef* Code. The board of directors is thus composed of one-third independent directors (the director representing employees is not taken into account for the calculation of the independence balance, in accordance with current legal provisions and the *Afep-Medef* Code).

The ratification of the co-optation of Olivier Charmeil for the remainder of OJB Conseil's term of office (*i.e.* expiring at the end of the shareholders' meeting to be held in 2026 to approve the financial statements for the financial year ending December 31, 2025) will be submitted to the next shareholders' meeting on June 21, 2024.

The members of the board of directors also decided to appoint Olivier Charmeil as a member of the appointments and compensation committee for the duration of his term of office.

### **EVENTS SUBSEQUENT TO DECEMBER 31, 2023**

### **Acquisition of Sasaeah in Japan**

On March 6, 2024, Virbac signed a definitive agreement with ORIX Corporation for the acquisition of its animal health subsidiary Sasaeah for an enterprise value of approximately €280 million.

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 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.

Upon completion, this strategic acquisition will bring to 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. Virbac will benefit from Sasaeah's local 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 across Asia.

Completion of the transaction is not subject to any regulatory approval; it was closed April 1, 2024.

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### **RESEARCH & DEVELOPMENT ACTIVITY**

At Virbac, we base product innovation on:

- an analysis of future market needs and trends based on ongoing customer feedback. New product development times require us to anticipate future markets as well as societal and regulatory changes in order to provide customers and markets with products that will be needed in the future;
- technological advances: science progresses at an increasingly rapid pace and offers possibilities for treatment and prevention in the health field. Today, we have access to technological solutions that we did not consider only five to ten years ago. These can significantly change the efficiency and safety of existing preventive or curative treatments, and sometimes offer solutions to incurable diseases for which no treatment exists. We have permanent access to these technological solutions through numerous partnerships with local universities and biotechnology companies.

In addition to the projects resulting from the synergy between needs and technologies developed by R&D teams around the world, we also have an active business development and commercial licensing policy to enhance our product offering.

Our R&D centers are located on all five continents so that we can be as close as possible to production centers. These centers have specialized teams and work collaboratively with other Virbac R&D centers to broaden their skills in specific areas. Their activity is supported by dedicated laboratory facilities (analytical, formulation, process, etc.) operating either in the biological field or in the pharmaceutical field, or both. We also regularly use external R&D centers (CROs: Contract research organizations) that we entrust these studies to.

These main R&D centers are supported by regulatory affairs departments located in key subsidiaries, which ensure the filing of marketing authorization files, when required by the regulations. In the majority of these subsidiaries, R&D has satellite teams backed by regulatory affairs departments. These satellite teams have neither a laboratory nor a production unit, but can design and subcontract developments to CROs if specific local studies need to be added to the main project file.

Since 2012, using regional R&D centers located around the world, we have adopted both a corporate biological R&D organization and a pharmaceutical R&D organization. This worldwide organisation makes it possible to allocate all the resources and skills of the R&D centers to major projects, to improve collaboration and to ensure a global vision in terms of regulations and R&D quality. The products developed mirror the Group's strategic sectors: companion animals, ruminants, swine and aquaculture. The innovative products developed for these sectors can then be marketed in the countries and meet customers' expectations.

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### **ANALYSIS OF CONSOLIDATED FINANCIAL STATEMENTS**

### **Revenue performance**

In 2023, our consolidated revenue reached €1,246.9 million, up +2.5% from the year before at real exchange rates and +4.9% at constant rates. Note that the impact on revenue growth resulting from the integration of GS Partners (acquisition of our distributor in the Czech Republic closed in May) and Globion (acquisition in India closed in November) representing only 0.3 point of growth, is not deemed material and is therefore not restated.

### **Performance by segment**

|                               | 2023<br>revenue<br>at actual rates | Growth by segment at constant exchange rates and perimeter | > -5% | - 5% to<br>0% | 0% to<br>+ 5% | +5% to<br>+10% | +10% to<br>+15% | > 15% |
|-------------------------------|------------------------------------|------------------------------------------------------------|-------|---------------|---------------|----------------|-----------------|-------|
| in € million                  |                                    |                                                            |       |               |               |                |                 |       |
| Parasiticides                 | 116.6                              |                                                            | -3.9% |               |               |                |                 |       |
| Immunology                    | 78.9                               | -7.6%                                                      |       |               |               |                |                 |       |
| Antibiotics/dermatology       | 113.8                              |                                                            |       |               | 5.5%          |                |                 |       |
| Specialties                   | 139.4                              |                                                            |       |               | 6.2%          |                |                 |       |
| Equine                        | 33.4                               |                                                            |       | 1.4%          |               |                |                 |       |
| Specialized petfood           | 119.4                              |                                                            |       |               |               |                | 22.4%           |       |
| Others                        | 119.2                              |                                                            | -0.5% |               |               |                |                 |       |
| Companion animals             | 720.7                              |                                                            |       | 3.5%          |               |                |                 |       |
| Bovine parasiticides          | 76.3                               |                                                            |       | 4.9%          |               |                |                 |       |
| Bovine antibiotics            | 96.0                               |                                                            |       |               |               | 11.5%          |                 |       |
| Other ruminants products      | 208.1                              |                                                            |       |               | 7.4%          |                |                 |       |
| Pig/poultry antibiotics       | 31.1                               |                                                            | -0.8% |               |               |                |                 |       |
| Other pig/poultry<br>products | 44.1                               |                                                            |       |               |               |                | 25.1%           |       |
| Aquaculture                   | 37.4                               | -12.4%                                                     |       |               |               |                |                 |       |
| Farm animals                  | 493.0                              |                                                            |       |               | 6.7%          |                |                 |       |
| Other businesses              | 33.2                               |                                                            |       |               | 8.6%          |                |                 |       |
| Revenue                       | 1,246.9                            |                                                            |       | 4.9%          |               |                |                 |       |

### **Companion animals**

In 2023, this business line represented 57.8% of revenue, up +3.5% at constant exchange rates and scope compared with 2022.

This growth was essentially driven by the remarkable double-digit growth of the petfood, as well as good contribution of specialties and antibiotics/dermatology ranges. However, vaccine activity impacted by stock-outs during the year fell by -7.6% in 2023.

### **Farm animals**

In 2023, this business line represented 39.5% of revenue, up +6.7% at constant exchange rates and scope compared with 2022, thanks to the ruminant products (+7.8% at constant rates) and swine sector (+13.1% at constant rates). Meanwhile, aquaculture fell by -12.4%, particularly impacted by the slowdown in activity in Chile, particularly with regard to antibiotics and vaccines, during the first half of the year.

### **Other business lines**

These business lines, which represent 2.7% of consolidated revenue in 2023, correspond to markets of lesser strategic importance for the Group, and which mainly include the industrial processing for third parties in the United States, including the sales of Sentinel® Spectrum® to MSD Animal Health, and in Australia.

### **Performance by geographic regions**

Geographically, all areas grew in 2023. In Europe (+5.7% at constant rates) growth is mainly driven by France (+4.9% at constant rates), the countries of Northern and Southern Europe (respectively +4.0% and +4.9% at constant rates), as well as by the growth in Turkey, whose business volume more than doubled compared to 2022. In the Asia/Pacific area (+4.0% at constant rates), the main contributors are first India (excluding Globion) (+6.1% at constant rates) then Australia and New Zealand (+4.9% and +6.7% respectively at constant rates) which largely offset the decline observed in China (-10.8% at constant rates) while activity in Southeast Asian countries remains stable. In Latin America (+4.9% at constant rates), we see very good growth dynamics in all our commercial locations, excluding Chile, which, despite a rebound in the second half of the year, remains penalized by the sharp 

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slowdown in our aquaculture activity observed in the first half of the year, particularly with regard to antibiotics and vaccines. Our activity in the United States grew by +3.5% at constant rates despite an inventory reduction effect observed in distribution throughout the year.

It should also be noted that the impact on revenue growth resulting from the integration of GS Partners (acquisition of our distributor in the Czech Republic closed in May) and Globion (acquisition in India closed in November) is only 0.3 point. Growth at constant rates excluding these two acquisitions would have been +4.6%.

Image /page/75/Figure/2 description: This bar chart compares data from 2022 and 2023 across different regions: France, Europe (excluding France), North America, Latin America, Africa & Middle East, Asia, and Pacific. In France, the values are 139.9 for 2022 and 146.7 for 2023. For Europe (excluding France), the values are 342.1 for 2022 and 362.9 for 2023. In North America, the values are 161.8 for 2022 and 167.4 for 2023. For Latin America, the values are 195.7 for 2022 and 205.3 for 2023. In Africa & Middle East, the values are 40.6 for 2022 and 44.1 for 2023. In Asia, the values are 218.8 for 2022 and 225.7 for 2023. Lastly, in the Pacific region, the values are 117.4 for 2022 and 123.8 for 2023.

in € million

The major contributions by geographical area are as follows:

### **France**

In 2023, sales in France increased by +4.9% at constant and actual exchange rates compared to 2022, driven by growth in petfood in the companion animal segment. The farm animal segment is also progressing thanks to injectable antibiotics.

### **Europe (excluding France)**

Business in Europe grew over the period by +6.1% at constant rates (5.0% at actual rates). All subsidiaries are growing, including our subsidiary in Turkey, which grew +143% at constant rates driven by the dynamism of petfood for the companion animal segment. Southern Europe also grew by +4.9% at constant exchange rates. Spain (+6.0%) contributed to this growth, as well as Italy (+4.2%), thanks to the growth of the companion animal segment in specialties, petfood and dermatology ranges. Northern Europe is showing a +4.0% growth at constant rates driven by the good performance of the companion animal segment, also thanks to petfood, the progression of specialties and the dermatology range.

#### **North America**

The North America area posted a +3.5% growth at constant rates (+0.9% at actual rates). This progress is based on the performance of specialties, dermatology and dental ranges for the companion animals, and farm animal products.

#### **Latin America**

In 2023, the Latin America area recorded a growth of +4.9% at constant exchange rates (+8.4% at actual rates), mainly driven by Mexico, Brazil and Colombia. Mexico and Central America's +11.8% performance at constant exchange rates was driven by both segments, primarily by companion animals thanks to petfood and vaccines, and by the farm animal segment thanks to the ruminants activity. Brazil grew by +12.0% at constant rates thanks to food supplements, parasiticides and cattle injectable antimicrobials, and thanks to dermatology, dental range and internal parasiticides for the companion animal segment. Colombia and Andes recorded a more moderate growth of +3.1% at constant rates, driven by all ruminants ranges.

Chile's sales are declining (-8.8% at constant rates), in particular due to the underperformance of antibiotics for salmons and aquaculture vaccines.

#### **Asia**

Revenue increased by +3.2% at constant rates in this region (-3.9% at actual rates), mainly due to very strong performance in India (+7.7 % at constant rates), all ranges, apart from aquaculture, participating in this 

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progression and benefiting from the acquisition of Globion from November and strong growth in Vietnam (+34.7% at constant rates) driven by sales of Suigen PCV2, and to a lesser extent Thailand.

The other countries saw their sales decrease: China (-10.8% at constant rates), in a difficult market context, the Philippines (-45.5% at constant rates) due to the decline in sales of Nutri-plus gel, Japan (-5.8% at constant rates) declining in the companion animal segment, in a context of a market losing momentum, Taiwan (-4.9% at constant rates) whose decline is mainly explained by the slowdown in the market this year, impacting our sales of Suigen HC in the country, and to a lesser extent, in connection with the cessation of production of Dexoryl; and finally Korea (-6.9% at constant rates) which saw its Zoletil sales decline this year and which was also impacted by a slowdown in the ruminant sector due to strong competition in the large animal market, particularly on prices, leading to market loss.

### **Africa & Middle East**

Growth at constant rates of +8.7% (-2.7% at actual rates) in this region was generated by South Africa, driven by the ruminant, including parasiticides.

### **Pacific**

The Pacific region ended the year at +5.5% growth at constant rates (-1.3% at actual rates). Australia saw growth in the area, recording a +4.9% increase in sales at constant rates, mainly due to the farm animal segment through the good performance of Multimin, ovine and caprine products. Also note in Australia, the launch of Afilaria in the companion animal segment. New Zealand recorded +6.7% growth at constant rates, driven by the excellent performance of the injectable antimicrobials range and intramammaries for farm animals.

### **2023 major launches**

The major product launches and ranges in 2023 are:

### **United States**:

• Allerderm foam: micellar water-based no-rinse foam cleanser for both dogs and cats.

### **Europe**:

- Cortotic: antimicrobial-free solution recommended as a first line treatment of acute erythematoceruminous otitis externa in dogs;
- Suigen Rota Coli: vaccine against neonatal piglet diarrhea caused by rotavirus or colibacilli.

### **India**:

- Agrimin Forte: food supplement for farm animals;
- Veterinary HPM: specialized petfood for dogs and cats.

### **Japan**:

• Evicto: selamectin-based endectocide for dogs and cats.

### **Thailand, Taiwan and South Africa**:

• Tulissin: tulathromycin-based antibiotic injectable solution for farm animals.

### **Australia**:

• Afilaria: long-acting injectable suspension for the preventive treatment of heartworm disease in dogs.

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### **Analysis of the results**

### **Changes in results**

| in € million                                                                                   | 2023    | %     | 2022<br>restated¹ | %     | Variation |
|------------------------------------------------------------------------------------------------|---------|-------|-------------------|-------|-----------|
| Revenue from ordinary activities                                                               | 1,246.9 | 100.0 | 1,216.2           | 100.0 | 2.5%      |
| Margin on purchasing costs                                                                     | 813.0   | 65.2  | 795.0             | 65.4  | 2.3%      |
| Current operating expenses<br>Depreciations and provisions                                     | -580.2  | 46.5  | -565.8            | 46.5  | 2.5%      |
|                                                                                                | -44.7   | 3.6   | -42.6             | 3.5   | 4.8%      |
| Current operating profit before depreciation of<br>intangible assets arising from acquisitions | 188.1   | 15.1  | 186.6             | 15.3  | 0.8%      |
| Depreciations of intangible assets arising from<br>acquisitions                                | -3.2    | 0.3   | -3.8              | 0.3   | -12.8%    |
| Operating profit from ordinary activities                                                      | 184.9   | 14.8  | 182.8             | 15.0  | 1.1%      |
| Other non-current income and expenses                                                          | -0.9    |       | -3.3              |       | —%        |
| Operating profit                                                                               | 184.0   | 14.8  | 179.5             | 14.8  | 2.5%      |
| Financial income and expenses                                                                  | -9.8    | 0.8   | -3.1              | 0.3   | 220.0%    |
| Profit before tax                                                                              | 174.2   | 14.0  | 176.4             | 14.5  | -1.3%     |
| Income tax                                                                                     | -53.5   |       | -55.6             |       | -3.9%     |
| Share from companies' result accounted for by the<br>equity method                             | 0.4     |       | 0.5               |       | -13.3%    |
| Result for the period                                                                          | 121.1   | 9.7   | 121.3             | 10.0  | -0.2%     |
| Net result attributable to the non-controlling interests                                       | 0.2     |       | 0.6               |       | -67.6%    |
| Net result attributable to the owners of the<br>parent company                                 | 121.3   | 9.7   | 121.9             | 10.0  | -0.5%     |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023 (see note "Accounting principles and methods")

### **Margin on purchasing costs**

Margin on purchasing costs increased by €18 million. This increase is mainly due to the increase in revenue in 2023, which allowed to absorb part of the increase in our raw material costs, purchases being directly impacted by the general inflationary context.

### **Current operating expenses**

Current net operating expenses amounted to €580.2 million in 2023, showing an increase at actual rates of +14.4 million (+2.5%) compared to 2022.

This change is explained by an increase in personnel costs, linked to the impact of salary increases in a context of inflation, as well as the strengthening of our workforce in R&D functions in particular, partially offset by a reduction in freight costs which had risen sharply since the start of the pandemic, and by a reduction in temporary staff costs, particularly in France.

### **Current operating profit before depreciation of intangible assets arising from acquisitions**

Operating profit from ordinary activities before the depreciation of intangible assets arising from acquisitions increased by +0.8% compared to the previous financial year, rising from €186.6 million at the end of 2022 to €188.1 million as of December 31, 2023. Operating profit from ordinary activities before the depreciation of intangible assets arising from acquisitions expressed as a percentage of revenue was +15.1% in 2023 at actual exchange rates, and +15.3% at constant exchange rates, *i.e.* at the same level as on December 31, 2022 at constant exchange rates.

The main contributors to our operating profit are France, the United Kingdom and Germany in Europe, India, Australia and New Zealand in Asia/Pacific, as well as Mexico and Brazil in Latin America.

### **Allowance for amortization of intangible assets resulting from acquisitions**

The decrease in this item is linked to the end of the depreciation of two assets in 2023, partially offset by the depreciation of new assets following the acquisition of the company Globion in India.

### **Other non-current income and expenses**

Other non-current income and expenses represented a net expense of €0.9 million in 2023, compared to a €3.3 million net expense in 2022. In 2023, they consist of €1 million in restructuring costs in Chile, €0.8 million in the impact of the revaluation of the stocks of our new subsidiary in the Czech Republic (in connection with IFRS 3), 

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offset by a recovery debt on acquisition of securities for €0.9 million. In 2022, they consisted of €3.3 million in depreciation of intangible assets (mainly brands) for which we no longer expected sales.

### **Financial income and expenses**

Net financial expenses were €9.8 million, compared to €3.1 million in the previous financial year.

The cost of net financial debt increases, going from an income of €1.1 million in 2022 to an expense of €0.2 million in 2023. This change results from the increase in the cost of gross debt for +€5.2 million due to interest owed on bank loans in the United States and Chile, where bank financing was put in place during the financial year. This impact is, however, offset by a strong increase in cash and cash equivalent income (+€3.9 million) following the increase in investments in one of our subsidiaries during the year.

Foreign exchange loss rises from -€0.7 million in 2022 to -€15.8 million in 2023. This variation is mainly explained by the unhedged exposure in Chilean peso given the strong depreciation of the currency over the year.

### **Taxes for the financial year**

Tax expense for the 2023 financial year amounted to €53.5 million, compared to €55.6 million in 2022.

This decrease is explained by the good performances achieved by our subsidiaries established in countries applying corporate tax rates lower than the tax rate of the parent company, such as India or Vietnam, through the capitalization of tax loss carryforwards generating a reduction in the tax charge, particularly in Chile, but also by a reduction in tax income in terms of French tax integration. The effective tax rate also decreases from 28.98% to 27.16%. The evolution of this rate is explained in note A28 of the consolidated accounts.

### **Net result**

The net profit - Group share amounted to €121.3 million in 2023, compared to €121.9 million in the previous year, *i.e.* a decrease of -€0.6 million at actual rates.

The profit attributable to the non-controlling interests amounts to -€0.2 million in 2023 compared to -€0.6 million in 2023. In 2022, the result attributable to non-controlled interests concerns the company Pharma 8 Llc. In 2023, it also includes the share of profit from the non-controlled interests of the company Globion India Private Ltd, in which we took a majority stake of 74%.

### **Bridge from net result to net result from ordinary activities**

Since 2018, we use a new performance indicator: net result from ordinary activities, corresponding to the consolidated net profit, restated from other non-current income and expenses, as well as non-current taxes, which include the tax impact of "Other non-current income and expenses", and all non-recurring tax income and expenses. The reconciliation of the net profit with the current net profit for the period is shown below.

| in € million                                                                                      | Net result<br>IFRS<br>2023 | Cancellation<br>of additional<br>price | Restructuring<br>costs | Revalua<br>tion of<br>acquire<br>d stocks | Non-<br>current tax<br>expense | Net result<br>from<br>ordinary<br>activities<br>2023 |
|---------------------------------------------------------------------------------------------------|----------------------------|----------------------------------------|------------------------|-------------------------------------------|--------------------------------|------------------------------------------------------|
| Revenue from ordinary activities                                                                  | 1,246.9                    |                                        |                        |                                           |                                | 1,246.9                                              |
| Current operating profit before<br>depreciation of intangible assets arising<br>from acquisitions | 188.1                      |                                        |                        |                                           |                                | 188.1                                                |
| Depreciations of intangible assets arising from<br>acquisitions                                   | -3.2                       |                                        |                        |                                           |                                | -3.2                                                 |
| Operating profit from ordinary activities                                                         | 184.9                      | —                                      | —                      | —                                         | —                              | 184.9                                                |
| Other non-current income and expenses                                                             | -0.9                       | -0.9                                   | 1.0                    | 0.8                                       |                                | 0.0                                                  |
| Operating profit                                                                                  | 184.0                      | -0.9                                   | 1.0                    | 0.8                                       | —                              | 184.9                                                |
| Financial income and expenses                                                                     | -9.8                       |                                        |                        |                                           |                                | -9.8                                                 |
| Profit before tax                                                                                 | 174.2                      | -0.9                                   | 1.0                    | 0.8                                       | —                              | 175.0                                                |
| Income tax                                                                                        | -53.5                      | 0.2                                    | -0.3                   | -0.2                                      | -0.8                           | -54.6                                                |
| Share from companies' result accounted for by<br>the equity method                                | 0.5                        |                                        |                        |                                           |                                | 0.5                                                  |
| Result for the period                                                                             | 121.1                      | -0.7                                   | 0.7                    | 0.6                                       | -0.8                           | 120.9                                                |

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### **Analysis of the financial situation**

### **Consolidated balance sheet**

| in € million                                            | 2023  | 2022 restated |
|---------------------------------------------------------|-------|---------------|
| Net assets                                              | 664.6 | 589.0         |
| Operating WCR                                           | 253.8 | 223.2         |
| Invested capital                                        | 918.3 | 812.2         |
| Equity attributable to the owners of the parent company | 900.3 | 839.6         |
| Non-controlling interests and provisions                | 70.4  | 51.9          |
| Net debt                                                | -52.4 | -79.4         |
| Financing                                               | 918.3 | 812.2         |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023 (see note "Accounting principles and methods")

### **Net assets**

The items including in this line and their variations are detailed hereafter.

### ■ **Goodwill**

Goodwill amounted to €165.4 million at the end of 2023, compared to €145.1 million at the end of 2022. The variation in this item comes on the one hand from the acquisition of the companies GS Partners, our distributor in the Czech Republic, on May 2, and Globion, in India on November 1, and on the other hand from conversion differences for -€6.6 million.

Please note, however, that the amount of goodwill recognized as of December 31, 2023 following the acquisition of Globion is provisional. Indeed, the operation having taken place at the end of the year, the additional work in progress could lead to a reassessment, between now and the closing of the accounts for the first half of 2024, of the fair value of the net assets acquired and the associated tax impact.

### ■ **Intangible assets**

This item amounted to €185.1 million at the end of 2023, compared to €154.4 million at the end of 2022. The increase in intangible assets is explained for €33.4 million by the acquisition of Globion. The rest of the increase is linked to investments in IT projects carried out by Virbac in France (parent company) and to R&D investments relating to new licensing contracts.

### ■ **Tangible assets**

This item amounted to €268.0 million at the end of 2023, compared to €240.6 million at the end of 2022. The increase in tangible assets of +€46.4 million (in gross value at constant scope), corresponds for more than half to investments made on the historic site of Carros in the fitting out of our buildings, as well as in the acquisition of land but also new industrial equipment in order to increase our production capacities. Other significant investments during the period took place in the United States, Australia, Uruguay and Chile, with investments made on production sites, and to a lesser extent in our R&D centers.

Furthermore, the acquisition in 2023 of Globion in India contributed to a net increase in tangible assets of + €11.7 million.

### ■ **Right of use**

This item, which corresponds to the capitalization of lease contracts according to the IFRS 16 standard, amounted to €32.9 million at the end of 2023, compared to €34.6 million at the end of 2022. The gross increase in "rights of use" reflects new contracts or renewal options signed to by our subsidiaries in 2023. The main increases relate to the car fleet contracts in all subsidiaries, to real estate leases in India for several warehouses, in the Philippines and China in particular, as well as on computer equipment contracts in France.

The net value of the rights of use, however, decreases slightly due to depreciation charges for the period which amount to €11.5 million for 2023.

### ■ **Other financial assets and shares in companies accounted for by the equity method**

This item amounted to €13.1 million at the end of 2023, compared to €14.2 million at the end of 2022. It includes mainly loans granted and other fixed receivables (€5.9 million), foreign exchange and interest rate derivatives (€2.5 million) and investments accounted for by the equity method (€4.2 million).

The variation in this item is mainly explained by a drop in fixed receivables, particularly in the United States following the end of the factoring program, and by conversion differences.

### **Elements of WCR (Working capital requirements)**

The items comprising this line and their variations are described below.

### ■ **Inventories and work in progress**

This item amounted to €339.7 million at the end of 2023, compared to €330.9 million at the end of 2022, *i.e.* a net change of +€12.3 million, excluding foreign exchange, which mainly concerns the inventories of raw materials as 

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well as the inventories of finished goods and trading goods. This change is essentially correlated with the increase in business over the year.

The largest contributors to the increase in inventories were Australia and France, partially offset by a reduction in inventories in Chile.

### ■ **Trade receivables**

The net trade receivables item is up by +€24.6 million, excluding foreign exchange effects, and amounts to €168 million (excluding credit notes to be issued).

This increase mainly applies to the United Kingdom, (+€9 million), Chile (+€4.3 million) and Brazil (+€3.8 million), in relation to a higher level of activity in the last quarter of 2023 compared to 2022, and the United States (+ €4.3 million) following the end factoring of receivables. Furthermore, in the United Kingdom, the increase in customer receivables is also explained by the late payment of a major distributor whose receivable was collected in January 2024.

The de-consolidated receivables, because sold under factoring contracts, amount to €12.0 million as of December 31, 2023 (compared to €16.9 million as of December 31, 2022). This decrease is linked to the end of the program in the United States (€7.8 million of de-consolidated receivables as of December 31, 2022), which partially offsets an increase in de-consolidated receivables in Italy.

### ■ **Trade payables**

This item amounted to €149.6 million as of December 31, 2023, compared to €155.8 million at the end of 2022, which represents a net decrease of -€4.9 million excluding foreign exchange effects. The main variations concern the parent company and are explained in particular by a downward trend over the financial year in purchases of raw materials impacting the item of current supplier debts, partially offset by an increase in supplier debts for tangible assets in connection with investments in France in order to increase our production capacities.

### ■ **Other elements of WCR**

As of December 31, 2023, this item represented a net liability of €104.2 million, compared to €98.2 million as of December 31, 2022.

The main variations in this item are linked to the recognition of a contractual price supplement on the acquisition of the company Globion in India, the increase in credit notes to be issued and the increase in social debts, and are partly offset by an increase in tax receivables and other receivables from the State, as well as an increase in the receivable from the factor in Italy. For more information, refer to notes A11 and A19.

### **Net debt**

The calculation of the net debt is presented hereafter:

| in € million                                            | 2023   | 2022restated1 |
|---------------------------------------------------------|--------|---------------|
| Loans                                                   | 82.4   | 52.9          |
| Bank overdrafts                                         | 2.5    | 0.7           |
| Lease liabilities                                       | 35.1   | 36.8          |
| Exchange rate and interest rate derivatives             | 1.2    | 1.1           |
| Other elements of financial debt                        | 2.2    | 6.5           |
| Treasury and treasury equivalents                       | -175.9 | -177.4        |
| Net debt                                                | -52.4  | -79.4         |
| Equity attributable to the owners of the parent company | 900.3  | 839.6         |
| Net debt ratio                                          | -5.8%  | -9.5%         |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023 (see note "Accounting principles and methods")

Changes in net debt are presented in the graph of the "Financing" section, hereafter.

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### **Financing**

### **Changes in net debt**

in € million

Image /page/81/Figure/3 description: This image is a waterfall chart showing the changes in net debt. The opening net debt is -79.4. The net cash flow is -167.8. Investments are 59.9. WCR is 49.3. Acquisitions are 55.3. Dividends are 10.7. Other items are 18.6. Non cash impacts are 4.8. Foreign exchange adjustments are -3.7. The closing net debt is -52.4.

The effect of foreign exchange on closing net debt was favorable. At constant exchange rates, the amount of net debt as of December 31, 2023 amounted to -€48.7 million (including €3.7 million of foreign exchange impact).

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### **Changes in cash flow**

### in € million

Image /page/82/Figure/3 description: This bar chart compares operational cash flow and net cash flow for 2022 and 2023. In 2022, the operational cash flow was 229.9, and the net cash flow was 168.6. In 2023, the operational cash flow was 235.1, and the net cash flow was 167.8.

During 2023, we obtained unanimous agreement from our pool of banks to extend the maturity of our syndicated loan by one year, with a new maturity date of October 18, 2028. This credit agreement, signed in October 2021, is accompanied by an "accordion" clause allowing us to increase the financing by €150 million, which can bring the total commitment to €350 million. Furthermore, this new financing line includes commitments related to our CSR policy, reflecting our commitment for several years to protect the environment and respect animal ethics. Negotiating these clauses ensures that we have access to controlled financial conditions and support our needs as we evolve. 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.

- Thus, in order to ensure our liquidity, in terms of bank and disintermediated funding, our status is as follows:
- a syndicated loan of €200 million, the characteristics of which are explained above;
- market-based contracts (*Schuldschein*) for a total of €6 million, with maturity April 2025, at a fixed rate;
- financing contracts with Bpifrance, for €12.3 million, amortizable and maturing in July 2027 and June 2032;
- factoring contracts with recourse and export loans for US \$46 million in Chile;
- uncommited credit lines in the United States for US \$37 million.

As of December 31, 2023, the funding position is as follows:

- market-based contracts amounted to €6 million;
- the Bpifrance financing amounted to €12.3 million;
- factoring lines with recourse mobilized for an amount of US \$24.6 million;
- the drawn credit of our subsidiary in the United States amounted to US \$18 million;
- the syndicated contract's line of credit is not mobilized.

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 consolidated accounts, corresponding to the consolidated net debt<sup>1</sup> for the period over the consolidated Ebitda<sup>2</sup> .

As at December 31, 2023, we comply with the financial ratio clauses, which is -0.24 and therefore below the contractual financial covenant limit of 3.75.

1 for the purpose of calculating the covenant, consolidated net debt refers to the sum of other current and noncurrent financial liabilities, namely the following items: loans, bank loans, accrued interest liabilities, liabilities related to finance leases, profit sharing, interest rate and foreign exchange derivatives, and others; minus the amount of the following items: cash and cash equivalents, term deposits, and foreign exchange and interest rate assets derivatives as shown in the consolidated accounts

2 under the contractual definition, consolidated Ebitda refers to operating profit for the period under review, plus the allowances for depreciation and provisions, net of reversals, and dividends received from non-consolidated subsidiaries

The company's financing capacity is sufficient to fund its cash requirements.

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### **Group workforce**

As of the end of December 2023, Virbac had 5,459 employees in 37 countries: 2,361 women (43.2%) and 3,098 men (56.8%).

35.2% of our workforce are in Europe, of which 1,526 are in France, that being 28.0%.

The workforce as of December 31, 2023 increased by 1.4% compared with the one as of December 31, 2022.

### **Breakdown of Group employees by type**

Image /page/83/Figure/5 description: This image is a bar chart comparing the number of women and men in different regions: Europe, North America, Latin America, Pacific, Asia, and Africa & Middle East. In Europe, there are 1,116 women and 807 men. In North America, there are 251 women and 282 men. In Latin America, there are 488 women and 553 men. In the Pacific region, there are 171 women and 155 men. In Asia, there are 278 women and 1,220 men. In Africa & Middle East, there are 57 women and 81 men.

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Image /page/84/Figure/1 description: This image is a bar chart comparing data from 2022 and 2023 across different regions: Europe, North America, Latin America, Pacific, Asia, and Africa & Middle East. In Europe, the values are 1,848 for 2022 and 1,923 for 2023. In North America, the values are 527 for 2022 and 533 for 2023. In Latin America, the values are 1,049 for 2022 and 1,041 for 2023. In the Pacific, the values are 320 for 2022 and 326 for 2023. In Asia, the values are 1,502 for 2022 and 1,498 for 2023. In Africa & Middle East, the values are 140 for 2022 and 138 for 2023. The legend indicates that the gray bars represent 2022 data, and the gold bars represent 2023 data.

### **Changes in Group employee numbers by region**

### **Changes to employee numbers by function**

|                        | 2023  |        | 2022  |        |
|------------------------|-------|--------|-------|--------|
| Production             | 1,852 | 33.9%  | 1,887 | 35.0%  |
| Administration         | 745   | 13.6%  | 707   | 13.1%  |
| Commercial & marketing | 2,225 | 40.8%  | 2,252 | 41.8%  |
| Research & development | 637   | 11.7%  | 540   | 10.0%  |
| Total                  | 5,459 | 100.0% | 5,386 | 100.0% |

### **ANALYSIS OF THE ACCOUNTS OF THE PARENT COMPANY**

### **Statutory accounts**

As of December 31, 2023, revenue for Virbac's parent company amounted to €378.5 million compared with €410.8 million in 2022, showing a decrease of -€32.3 million (-7.86%).

The portion of the revenue generated by Virbac with the Group's subsidiaries accounted for 91.6% of its total sales. The remaining 8.4% involved direct sales by Virbac in countries where the company does not have any subsidiary. In 2023, both segments are decreasing. The companion animal segment is mainly impacted by the drop in sales of vaccines, external parasiticides and dental products. The farm animal segment shows a decline in both the ruminant and swine markets.

The financial result at the end of December 2023 amounted to €63 million, which is a rise of €91 million compared to 2022. This change is mainly due to a -€84 million decrease of depreciation on investments in subsidiaries. The 2023 fiscal year also saw an increase of +€9 million in dividends received from Virbac's subsidiaries and €0.9 million in income from loans.

Non-recurring income for 2023 amounts to -€3.9 million, a -€2 million decrease compared to 2022. This change is mainly explained by the allowance of a provision for impairment of intangible assets linked to MAs and brands for 

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an amount of €0.5 million as well as the increase in exceptional depreciation following the commissioning of the new vaccine line.

### **Table of net result over the previous five fiscal years (Virbac parent company)**

| in €                                                                                | 2019        | 2020        | 2021        | 2022        | 2023        |  |  |  |
|-------------------------------------------------------------------------------------|-------------|-------------|-------------|-------------|-------------|--|--|--|
| Financial position at year end                                                      |             |             |             |             |             |  |  |  |
| Share capital                                                                       | 10,572,500  | 10,572,500  | 10,572,500  | 10,572,500  | 10,572,500  |  |  |  |
| Number of existing shares                                                           | 8,458,000   | 8,458,000   | 8,458,000   | 8,458,000   | 8,458,000   |  |  |  |
|                                                                                     |             |             |             |             |             |  |  |  |
| Overall results from operations                                                     |             |             |             |             |             |  |  |  |
| Revenue excluding taxes                                                             | 276,148,677 | 293,640,198 | 381,107,380 | 410,827,124 | 378,528,235 |  |  |  |
| Earnings before tax, employee profit sharing,<br>depreciations and provisions       | 56,521,273  | 170,788,570 | 91,943,145  | 109,824,774 | 85,713,826  |  |  |  |
| Income tax payable                                                                  | -7,731,676  | -5,708,101  | 1,588,411   | 2,647,524   | -12,902,953 |  |  |  |
| Employee profit sharing                                                             | —           | —           | —           | —           | —           |  |  |  |
| Allowances for depreciations and provisions                                         | 19,196,160  | 25,373,801  | 22,004,574  | 109,479,720 | 37,325,018  |  |  |  |
| Earnings after tax, employee profit sharing,<br>depreciations and provisions        | 45,056,789  | 151,122,870 | 68,350,160  | -2,302,470  | 61,291,761  |  |  |  |
| Earnings distributed                                                                | —           | 6,343       | 10,572      | 11,165      | 11,165      |  |  |  |
| Result from operations per share                                                    |             |             |             |             |             |  |  |  |
| Earnings after tax, employee profit sharing,<br>before depreciations and provisions | 7.60        | 20.87       | 10.68       | 12.67       | 11.66       |  |  |  |
| Earnings after tax, employee profit sharing,<br>depreciations and provisions        | 5.33        | 17.87       | 8.08        | -0.27       | 7.25        |  |  |  |
| Dividend per share                                                                  | —           | €0.75       | €1.25       | €1.32       | €1.32       |  |  |  |
| Personnel                                                                           |             |             |             |             |             |  |  |  |
| Average number of employees                                                         | 1,114       | 1,106       | 1,153       | 1,196       | 1,311       |  |  |  |
| Total payroll                                                                       | 59,941,993  | 59,029,640  | 62,636,560  | 67,249,477  | 73,129,009  |  |  |  |
| Total benefits paid (social security, other<br>employee benefits, etc.)             | 28,818,016  | 29,132,678  | 32,782,699  | 33,238,984  | 34,006,058  |  |  |  |

A dividend of €11,165 thousand (*i.e.* €1.32 per share) was paid for the 2022 financial year.

#### **Non-deductible expenses**

Non tax-deductible expenses, in the sense of article 39-4 of the French general tax code, consisting of vehicle rentals, amounted to €516,188 for the 2023 financial year.

#### **Share buyback program**

The June 20, 2023 ordinary shareholders' meeting authorized the Virbac parent company to buy back its treasury shares in accordance with article L225-209 of the French commercial code.

On December 31, 2023, Virbac held a total of 88,281 treasury shares, acquired on the market for a total of €23,363,081 excluding fees, for an average price of €264.64 per share.

During the financial year, the company bought 77,434 treasury shares (at an average price of €267.23) including 4,091 actions in the framework of the liquidity contract, 67,343 shares as part of the share buyback program in the process of being canceled in whole or in part with a view to reducing the capital as well as 6,000 shares as part of the performance share plans. Concerning the liquidity contract, 5,005 own shares (at an average price of €253.54) were sold.

A new performance plan was drawn up in 2023 (see note B10 of the statutory accounts).

### **Payment terms**

According to articles L441-6-1 and D441-4 of the French commercial code, the information on payment terms of suppliers and customers of the Virbac parent company is shown below.

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### **Supplier payment terms**

### ■ **As at December 31, 2023**

|                                                                                | Article D4411.-1: received invoices not paid at the closing date of the<br>period, for which the maturity date has expired |                 |                  |                  |                     |                              |
|--------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|-----------------|------------------|------------------|---------------------|------------------------------|
| in €                                                                           | 0 day<br>(as<br>indication)                                                                                                | 1 to 30<br>days | 31 to 60<br>days | 61 to 90<br>days | 91 days<br>and over | Total<br>(1 day and<br>over) |
| [A] Portion in delay of payment                                                |                                                                                                                            |                 |                  |                  |                     |                              |
| Number of related invoices                                                     | 4,407                                                                                                                      |                 |                  |                  |                     | 711                          |
| Amount excluding tax of related invoices                                       | 29,710,655                                                                                                                 | 1,859,956       | 157,456          | -110,765         | 549,414             | 2,456,061                    |
| Percentage of total purchases (excluding tax) for<br>the period                | 10.8%                                                                                                                      | 0.7%            | 0.1%             | 0.0%             | 0.2%                | 0.9%                         |
| [B] Excluded invoices from [A] linked to contentious or non booked receivables |                                                                                                                            |                 |                  |                  |                     |                              |
| Number of excluded invoices                                                    | 94                                                                                                                         |                 |                  |                  |                     |                              |
| Total amount of excluded invoices                                              | 178,150                                                                                                                    |                 |                  |                  |                     |                              |
| [C] Used reference payment terms                                               |                                                                                                                            |                 |                  |                  |                     |                              |
| Payment terms used for the calculation of<br>payment delays                    | Contractual terms: terms granted to the suppliers (agreements/invoices)<br>Legal terms: -                                  |                 |                  |                  |                     |                              |

### ■ **As at December 31, 2022**

|                                                                                | Article D4411.-1: received invoices not paid at the closing date of the period, for which the maturity date has expired |              |               |               |                  |                        |
|--------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|--------------|---------------|---------------|------------------|------------------------|
| in €                                                                           | 0 day (as indication)                                                                                                   | 1 to 30 days | 31 to 60 days | 61 to 90 days | 91 days and over | Total (1 day and over) |
| [A] Portion in delay of payment                                                |                                                                                                                         |              |               |               |                  |                        |
| Number of related invoices                                                     | 4,933                                                                                                                   |              |               |               |                  | 1,477                  |
| Amount excluding tax of related invoices                                       | 37,394,886                                                                                                              | 5,098,097    | 724,600       | 349,385       | 280,370          | 6,452,452              |
| Percentage of total purchases (excluding tax) for the period                   | 10.0%                                                                                                                   | 1.4%         | 0.2%          | 0.1%          | 0.1%             | 1.7%                   |
| [B] Excluded invoices from [A] linked to contentious or non booked receivables |                                                                                                                         |              |               |               |                  |                        |
| Number of excluded invoices                                                    | 98                                                                                                                      |              |               |               |                  |                        |
| Total amount of excluded invoices                                              | 1,508,729                                                                                                               |              |               |               |                  |                        |
| [C] Used reference payment terms                                               |                                                                                                                         |              |               |               |                  |                        |
| Payment terms used for the calculation of payment delays                       | Contractual terms: terms granted to the suppliers (agreements/invoices)<br>Legal terms: -                               |              |               |               |                  |                        |

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### **Customer payment terms**

### ■ **As at December 31, 2023**

|                                                                                | Article D. 4411.-2: issued invoices not paid at the closing date of the<br>period, for which the maturity date has expired |                 |                  |                  |                                                                         |                              |
|--------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|-----------------|------------------|------------------|-------------------------------------------------------------------------|------------------------------|
| in €                                                                           | 0 day<br>(as<br>indication)                                                                                                | 1 to 30<br>days | 31 to 60<br>days | 61 to 90<br>days | 91 days<br>and over                                                     | Total<br>(1 day<br>and over) |
| [A] Portion in delay of payment                                                |                                                                                                                            |                 |                  |                  |                                                                         |                              |
| Number of related invoices                                                     | 956                                                                                                                        |                 |                  |                  |                                                                         | 316                          |
| Amount excluding tax of related invoices                                       | 86,835,508                                                                                                                 | 5,593,035       | 1,309,474        | 419,187          | 10,880,672                                                              | 18,202,368                   |
| Percentage of total purchases (excluding tax) for<br>the period                | 22.2%                                                                                                                      | 1.4%            | 0.3%             | 0.1%             | 2.8%                                                                    | 4.6%                         |
| [B] Excluded invoices from [A] linked to contentious or non booked receivables |                                                                                                                            |                 |                  |                  |                                                                         |                              |
| Number of excluded invoices                                                    | 26                                                                                                                         |                 |                  |                  |                                                                         |                              |
| Total amount of excluded invoices                                              | 420,559                                                                                                                    |                 |                  |                  |                                                                         |                              |
| [C] Used reference payment terms                                               |                                                                                                                            |                 |                  |                  |                                                                         |                              |
| Payment terms used for the calculation of<br>payment delays                    |                                                                                                                            |                 |                  |                  | Contractual terms: terms granted to the customers (agreements/invoices) | Legal terms: -               |

### ■ **As at December 31, 2022**

|                                                                                | Article D. 4411.-2: issued invoices not paid at the closing date of the period, for which the maturity date has expired |              |               |                |                  |                        |
|--------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|--------------|---------------|----------------|------------------|------------------------|
| in €                                                                           | 0 day (as indication)                                                                                                   | 1 to 30 days | 31 to 60 days | 61 to 90 days  | 91 days and over | Total (1 day and over) |
| [A] Portion in delay of payment                                                |                                                                                                                         |              |               |                |                  |                        |
| Number of related invoices                                                     | 1,166                                                                                                                   |              |               |                |                  | 96                     |
| Amount excluding tax of related invoices                                       | 82,118,182                                                                                                              | 2,262,931    | 2,271,755     | 1,439,618      | 186,487          | 6,160,791              |
| Percentage of total purchases (excluding tax) for the period                   | 19.4%                                                                                                                   | 0.5%         | 0.5%          | 0.3%           | —%               | 1.5%                   |
| [B] Excluded invoices from [A] linked to contentious or non booked receivables |                                                                                                                         |              |               |                |                  |                        |
| Number of excluded invoices                                                    | 21                                                                                                                      |              |               |                |                  |                        |
| Total amount of excluded invoices                                              | 385,962                                                                                                                 |              |               |                |                  |                        |
| [C] Used reference payment terms                                               |                                                                                                                         |              |               |                |                  |                        |
| Payment terms used for the calculation of payment delays                       | Contractual terms: terms granted to the customers (agreements/invoices)                                                 |              |               | Legal terms: - |                  |                        |

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### **INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS**

In accordance with order n°2017-1162 of July 12, 2017, as well as decree n°2017-1174 of July 18, 2017 on various measures to simplify and clarify the obligations of information for which companies are responsible, our description of internal control and risk management systems are now included in the management report. This report has been drawn up based on contributions from several departments, in particular our Financial Affairs, Legal and Human Resources departments as well as the Group Risk Management department, and has been reviewed and validated by our general management. We then subsequently communicated the entire report to the statutory auditors and to the audit committee for review before final approval by our board of directors.

This report was approved by the board of directors at its meeting on March 15, 2024.

### **Definition and aims of internal control and risk management**

### **Framework**

We have drawn on the reference framework and its application guide, first published in January 2007 and updated on July 22, 2010 by the *AMF* (French financial markets authority), in order to define its internal control and risk management framework so as to structure its approach. In accordance with a recommendation from *AMF* report 2010-15 dated December 7, 2010, we decided to present the different information requested pursuant to the plan specified in the reference framework.

### **Scope**

The scope of the internal control and risk management systems includes the parent company and the companies included in the Group's consolidated accounts.

The list of our subsidiaries is given in note A40 of the consolidated accounts.

### **Objectives and principles of the internal control and risk management system**

Our risk management system sets out to identify, prioritize, process and manage the Group's key risk exposures.

In this capacity, the risk management system assists in:

- creating and preserving our Group's value, assets and reputation;
- providing a secure basis for decision-making in support of our strategic, operational and financial objectives;
- deploying a culture of risk in our organization by engaging all stakeholders.

Internal control sets out to ensure that:

- our economic and financial objectives are achieved in compliance with applicable laws and regulations;
- the orientations determined by our board of directors are implemented;
- our capital is enhanced and our assets are protected;
- the integration of acquired companies is carried out in accordance with our Group rules;
- and that our financial and accounting information depicts a true and fair view.

The internal control and overall risk management system must promote and secure our Group's industrial and economic development by helping to prevent and control the risks to which it is exposed, all within an environment of control which is suited to its business areas and their respective issues.

In line with the fixed objectives, our internal control and risk management system is based on the following structuring elements:

- appropriate and sustainable organization;
- internal distribution of reliable and targeted information;
- implementation of this system;
- suitable control activities that help to prepare and process accounting and financial information;
- continuous management and formalization of the areas of improvement.

### **Limits**

An internal control system can only provide reasonable assurance, and never an absolute one, as regards overall risk control and limitation of obstacles to achieve our objectives. The probability of actually achieving these objectives is subject to the limits inherent in any internal control system, whether potential failings in the decisionmaking process are concerned, or the need for reviewing the cost/profit ratio before implementing controls, or the malfunctions that may occur due to a failure or human error.

### **An appropriate and sustainable governance**

### **System components**

The control environment which is essential for the internal control system, for good risk management and for the application of procedures, is based on a specific organization of behavioral and human aspects.

### **Organization**

Our internal control organization is based, first of all, on key factors that are anchored deep within our company's culture and which have formed the basis of its success, such as taking the initiative, placing trust in our Group's workers and providing them with a sense of responsibility. Our operational organization of internal control is structured around three levels: Group, areas and subsidiaries. Each level is directly involved and is given 

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responsibility for designing and implementing the control in accordance with the level of centralization desired by our general management. At each of these three levels, our internal control is broken down into specific organizational procedures, delegation of responsibilities, raising awareness and training of staff which are consistent with our Group's general framework. It requires heavy involvement on the part of each operational or functional manager by expecting them to adopt the policies and procedures defined at our Group level, play a role in implementing and complying with them and finalize them via measures that are adapted to the special nature of the business activities or the areas under their responsibility.

The control system implemented within our Group is also based on a stronger governance structure, which guarantees that decisions are transparent and traceable, while still preserving the principles of subsidiarity and decentralization that are viewed as essential and necessary for optimum management of industrial and commercial activities in the Group.

### **Governance of subsidiaries within the Group**

Our subsidiaries are almost all directly or indirectly wholly owned by the Virbac group. Special attention is paid to the composition of the boards of directors of our subsidiaries. Each appointment or change of a director must be validated by the members of our general management.

For companies which are not wholly owned, the rules of governance are defined and governed by shareholders' agreements.

### **Code of conduct**

Since June 2015, our core commitments, in the industries in which we operate, have been incorporated into our code of conduct. This document, revised in 2022, replaces the previous version adopted in 2014. More comprehensive, more precise and more responsive to the priorities of our Group, it is written in sixteen languages and available on our Intranet and is distributed to all our employees. Our code of conduct includes our fundamental principles regarding business conduct, safeguarding assets, and our corporate approach to privacy and social responsibility. This document formalizes the ethical values and operating principles of our company. In publishing our code of conduct, we undertake to adhere and ensure adherence by our partners and suppliers to the regulations and standards that apply to our activities, in the areas of finance, competition as well as in the social sphere.

### **Reference documents**

We have provided employees with other reference documents describing practical rules applicable to specific areas covered by our code of conduct. These documents are available on our Intranet and are listed below.

### ■ **Supplier charter**

Our supplier charter aims to define the rules governing our relationships with our suppliers, as well as the guiding principles that we expect to see applied by our suppliers in the conduct of their business.

### ■ **Group anti-bribery policy**

Our anti-bribery policy describes the appropriate conduct governing relations between us and our third parties, either in the public or private sector. It specifies, among other things, the conditions under which it is possible to offer or accept gifts and invitations. In 2016, we implemented a new Group anti-bribery policy. Our general management signed a commitment to comply and ensure compliance with this policy.

### ■ **Market abuse prevention policy**

With the entry into force on July 3, 2016 of European regulation 596/2014 of April 16, 2014 on market abuse, of act 2016-819 of June 21, 2016 on reforming the sanctions system for dealing with market abuse and of act 2016-1691 of December 9, 2016 on transparency, the fight against corruption and modernizing the economy, we implemented a market abuse prevention policy (thereby replacing our stock market charter of ethics). One of the aims of our policy is to increase employees' awareness of the notion of insider information and sensitive information, the obligations of employees who have access to insider or unreleased sensitive information (blackouts periods), sanctions incurred for breaches of confidentiality related to the possession of this type of information. We also established an insider information monitoring committee that meets whenever necessary, and we maintain lists of individuals with access to information as required by regulation whenever insider information is identified.

### ■ **Group ethics charter**

In accordance with regulations and with the focus on providing safe and effective products, we, like any pharmaceutical company, must resort to animal testing in very specific cases: when they are necessary and if, at this stage, there is no other alternative method available that has been approved by the authorities. However, we will give preference to all alternative methods available and actively encourage any initiatives to replace, reduce, or refine animal testing. To ensure implementation of these founding principles, we have developed an ethical charter that applies to all of our employees and our external partners.

### ■ **Group social networking principles**

This document describes rules throughout our company governing social networking for personal use.

### **Procedures and standards governing activities**

Our functional departments have defined Group policies for all processes supplying the financial statements, in particular sales, purchases and stock and property management. They lay down Group policies which define the organization, responsibilities and particular operating and reporting principles in the respective area of expertise under their responsibility. These policies are then broken down into specific procedures for monitoring, rule validation, authorization and accounting.

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For example, we have implemented the following policies:

- a purchasing policy which determines our rules, our aims and best practices related to purchasing and ethics;
- a "scope of power" procedure that determines the internal rules to be followed for certain decisions of our subsidiary managers or corporate function managers;
- a financial manual that lists all the rules related to the financial closing of our accounts and to the global reporting, to be used by our subsidiaries;
- a policy for securing payment methods which defines the methods that must be implemented in order to prevent the risks of fraud;
- a policy for protecting individuals aimed at providing the same level of protection to all our employees, whether they are expatriates, locals or on special assignments;
- a safety and environmental policy which lays down the rules of conduct for a permanent reduction in the risks inherent in any industrial activity;
- an investment policy, which is validated by our general management when the strategic plans and then the budgets are drawn up. Any major investment foreseen in these budgets is still subject to a further validation by our Global Industrial Operations department or by our board of directors. Any change that may occur during the financial year relating to projects that have been budgeted is subject to special prior authorization;
- an information system security policy.

In parallel with this body of procedures, in general internal by-laws, we comply with the different frames of reference that apply within the pharmaceutical industry. These texts outline the management operations for each stage, at the research and development method level or at the level of drug and vaccine manufacturing standards, packaging, distribution, sales and marketing or promotion.

### **Human resources management policy**

Human resources management plays a part in our internal control system and allows us to ensure that our employees have a suitable skills level in relation to the roles and responsibilities entrusted to them, and that they are aware of their responsibilities and their limits, in addition to being aware of and complying with our Group rules.

### ■ **Recruitment and development policy**

We recruit in all countries and for all jobs in order to support our growth. Our Human Resources department defines standards and verifies practices in order to ensure the consistency and relevance of the recruitment process.

In parallel, we have implemented an employee performance and development management process known as *Perf*  (covering performance, evaluation, compensation and training); this process comprises of several different parts, which include setting individual objectives and annual achievements assessed by line managers.

Within the annual performance committee, our Group executive committee shares the assessments, remuneration and professional development possibilities of the 60 key individuals in the Group, as well as the potential top performers identified through the *Perf* process.

### ■ **Remuneration policy**

We carry out an annual salary review, particularly concerning base salaries and individual and collective bonuses. The salary review is carried out in accordance with an overall policy aimed at strengthening the competitiveness, consistency and development of our employees within the Group. The bonus practices applicable in the Group are otherwise consistent and are based mainly on comparable criteria in terms of value and type.

### **Main players**

Since a decision of the December 15, 2020 shareholders' meeting, our company has taken the form of a public limited company with a board of directors, instead of the form of a supervisory board and executive board. Below is a presentation of governance method applied since and throughout most of 2023. The governance is detailed in the Corporate governance report, pages 108 to 159.

### **Board of directors and speciliazed committees**

Our board of directors deliberates on all matters falling within its legal and regulatory powers.

It strives to foster the creation of long-term value by the company by taking into account the social and environmental challenges of its business activities. It proposes, if necessary, any changes to the articles of association that it considers appropriate.

The board of directors determines the strategic direction of the company's activities, including its multi-year strategic guidance for corporate social responsibility. It decides on major operations and ensures their implementation. With the exception of the powers expressly attributed to shareholders' meetings and within the limits of the company's purpose, the board deals with any issue concerning the proper operation of the company and settles matters concerning it through its deliberations.

It shall also carries out the checks and verifications that it deems appropriate.

Our board of directors is assisted in its work by two committees, an audit committee and an appointments and compensation committee, which have advisory powers and carry out their activities under the responsibility of the board of directors, which alone has the legal power to make decisions and remains accountable for the performance of its duties.

Within its area of competence, each committee issues proposals, recommendations and opinions as appropriate, and reports on its tasks at the next meeting of the board of directors.

### **Our audit committee**

The audit committee is responsible for:

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- ensuring the monitoring of the financial reporting process and the review of the annual financial statements;
- the periodic review of the mapping of the Group's major risks;
- ensuring the existence and effectiveness of the internal control and risk management systems;
- following and reviewing the internal audit program implemented by the company;
- issuing a recommendation on the statutory auditors proposed for appointment by the shareholders' meeting; • monitoring the statutory auditors' performance of their duties;
- ensuring that the statutory auditors comply with the conditions of independence;
- approving the provision by the statutory auditors of non-prohibited services other than certifying accounts;
- and reporting to the board of directors on the performance of its duties.

### **Our appointments and compensation committee**

- The main tasks of our appointments and compensation committee are:
- drawing up proposals and reviewing candidates for the positions of directors or members of general management by seeking to achieve a balanced membership of the board, including gender representation;
- developing a procedure for the selection of future independent directors;
- ensuring that a succession plan is in place for members of general management;
- drawing up recommendations and proposals regarding general management's compensation;
- remaining informed about the Virbac group's general human resources policy and more specifically, the compensation policy for the Virbac group's main executives;
- reviewing proposals and conditions for awarding performance-related stock grants;
- drawing up proposals regarding the amounts of remuneration (formerly directors' fees) for the members of the board of directors.

### **General management and its committees**

The company's general management is assumed by a general manager who is not a member of the board of directors. His or her mission is to ensure the strategic and operational management of the Group.

The general manager is assisted by two deputy general managers and supported by a Group executive committee. General management reports on its strategic choices and performance to the board of directors.

Our general manager is responsible for supervising and coordinating the activities of all members of the Group executive committee. He performs all the legal functions of a company head and takes responsibility accordingly. He represents our company and acts on its behalf in all circumstances and particularly before the courts. In the Company's internal organization, he supervises the Global Marketing & Market Development, Global Business Operations, Global Industrial Operations, Supply Chain and Sourcing, Corporate R&D, Corporate Human Resources, Corporate Communications, New Products and Regulatory Affairs, Business Development, Petfood & Pet care division, Aquaculture sales and marketing and board office.

Our deputy general manager assumes the missions of the qualified person of Virbac, in line with articles L5142-1 *et seq.* of the French public health code. In the company's internal organization, he supervises the Quality & Compliance department, the Environment, Health and Safety (EHS) department, the Corporate Social Responsibility (CSR) department, the Legal compliance department, the Insurance and Risk Management department and the Business Digital Programs department.

Our chief financial officer and deputy general manager is responsible for the Group's financial policy and oversees the Finance department, the Legal department and the Information Systems department.

### **Group executive committee**

General management is supported by the Group executive committee.

At 31 December 2023, the Group executive committee is composed of eight members: the general manager, the deputy general managers and five other members appointed by the general management. These members work closely together and make decisions collectively. This way of working encourages joint reflection and teamwork. Whether for long-term vision or operational needs, exchanges between members of the Group executive committee are frequent, which allows for a high level of responsiveness in decision making.

Our Group executive committee is composed of the following members:

- Sébastien Huron, chief executive officer, Virbac Group;
- Habib Ramdani, chief financial officer and deputy chief executive officer;
- Marc Bistuer, director of Corporate Quality & Compliance and deputy chief executive officer qualified person;
- Nathalie Pollet, head of Global Marketing & Market Development;
- Sophie Favini, head of Global Business Operations;
- André Mathieu, director of Global Industrial Operations, Supply Chain and Sourcing;
- Bertrand Havrileck, head of Corporate R&D;
- Francesca Cortella, head of Corporate Human Resources.

### **France management committee**

At December 31, 2023, the France management committee is composed of fourteen members. This committee is responsible for decision-making, coordination and reporting on all issues affecting the Group's French companies and represents a platform from which information is disseminated to the various departments.

Our France management committee is chaired by the general manager, Sébastien Huron and is composed of the following members:

- head of Global Marketing & Market Development;
- director of Global Industrial Operations, Supply Chain and Sourcing;
- head of Corporate R&D;

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- head of Corporate Human Resources;
- Corporate Sourcing director;
- head of Corporate Communications;
- head of New Products and Regulatory Affairs;
- finance director;
- Global Supply Chain director;
- Group general counsel;
- French Industrial Operations director;
- chief information officer;
- chairwoman of the Virbac France subsidiary.

### **Operational departments**

In accordance with the operational decentralization principles within our Group, the managers of each business activity have the necessary powers for organizing, directing, managing and delegating the operations for which they are responsible.

Each activity favors the organization which is best suited to its markets, taking into account its specific sales, industrial and geographical features. The managers are responsible for adopting internal control systems consistent with their organizations as well as our Group principles and rules. For example, for our subsidiaries whose risk management system has been deployed, each director is in charge of monitoring its subsidiary's risks. The same goes for each regional director with the various mappings being conducted in the area.

### **Functional departments**

Our central functional departments (Finance, Legal, Human Resources, Communications, Information Systems, Quality and Compliance) have a dual task: organization and control of Group operations falling within their respective skills area and technical assistance with operational activities in these areas, where required. As for the risk management system, our operational departments are in charge of coordinating all actions related to Groupwide risk identification.

The presence of the central functions and their organization play a significant role in Group internal control systems. The managers of these functions exercise, in particular, functional authority over all managers who carry out tasks falling within their skills area in the operational activities.

### **Insurance and Risk Management department**

We have evolved our organization in terms of risk management during the year 2023 with the grouping of the risk management and insurance and prevention functions in order to strengthen its role as a full player in the risk management system and the internal control of the Group. Reporting hierarchically to the Group Quality & Compliance director (member of the Group management committee), our Insurance and Risk Management director is responsible for defining and implementing risk management systems.

He coordinates risk analysis, makes a contribution across the organization and contributes in sharing best practices between Group entities and departments, thereby helping to develop a risk management culture across the Group. His roles and responsibilities are shown in detail on page 94 of this report.

### **Internal distribution of reliable and targeted information**

Information and communication are connected with the information flows which support the internal control procedures, from the orientations expressed by our management to action plans. They contribute to the control environment being implemented, as well as to the distribution of an internal control culture and the promotion of relevant control activities that play a part in risk control.

There are different aims:

- informing all our employees and making them aware of the implementation of best practices;
- sharing experiences so as to promote the use of these best practices, including internal control and risk management systems.

Special communication tools that we deploy, encourage the achievement of these aims. Tools such as Intranet allow our Group policies and procedures to be distributed. We also strive to provide each of its newly recruited managers with a view over our entire Group and its organization, main business areas and strategy. Introduction sessions for new recruits, which we either organize at the head office or locally, are part of this effort. Finally, in addition to the training sessions organized by the operational divisions, our seminars allow employees to improve certain professional skills (finance, marketing, human resources, project management, etc.) and encourage an exchange of best practices.

The information and the communication channels also rely on our information systems. Our Group Information Systems department is responsible for all Group information systems. It is made up of departments that are under the direct responsibility of the Group Information Systems department and of decentralized departments within the operational divisions. The role of these Group departments is to define information system policies, to coordinate the processes for managing the information systems function and to manage global IT infrastructure and services in line with Group priorities. The decentralized departments develop and manage the specific applications within their divisions, as well as the dedicated IT infrastructure and services.

Upward and downward information channels have been defined so as to allow the timely transmission of relevant and reliable information.

In terms of information feedback, accounting and financial information is processed in accordance with processes and with collaborative reporting and control tools (collaborative reporting and consolidation software shared throughout our Group under the authority of the Financial Affairs department).

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For downward information flows, resolutions from the decision-making bodies are relayed via the relevant departments. Any change in the regulatory framework relating to whatever matter is communicated to the relevant entities and departments in an appropriate manner.

Finally, our communications aimed at stakeholders is governed by the appropriate systems for the sake of guaranteeing the quality of the information.

In addition, we have distributed a crisis management procedure to our subsidiaries with the objective to anticipate, as far as possible, the potential occurrence of any crises through deployment of management and alert principles covering all areas and activities of our Group.

### **Implementation of the risk management system**

### **Aims**

In order to strengthen our ability to anticipate, analyze and prioritize our risks of all kinds and to ensure the adequacy of the development of our Group with regard to these risks, the Risk Management department was created at the end of 2009. Our organization changed in 2023 by bringing together the Risk Management department with the Insurance and Prevention department within the same department.

Our Insurance and Risk Management department has built its methodological framework in line with best practices and market standards and in particular the *AMF* reference framework on risk management and internal control systems.

The aims of our Insurance and Risk Management department are based on the following areas:

- know and anticipate: ensure that there is constant monitoring of the risks within our Group in order to guarantee that none are forgotten or underestimated and to forecast any development in their nature or intensity;
- organize: ensure that the main risks identified are actually taken into account by our organization, at the most appropriate level. Numerous operational risks are managed by our subsidiaries; head office takes care of other risks which require special skills or that have an essentially cross-organizational or strategic component;
- control: ensure that the organizations and methods in place are effective in reducing the risks identified;
- train: gradually develop a risk management culture among all relevant managers and do so through appropriate training in France and internationally;
- inform: notify the general management of any changes in the situation.

### **Regular structured analysis of the main Group risks**

The risk management system is based on the internal control environment and is part of a continuous process for identifying, assessing and managing risk factors that are likely to have an impact on the aims being achieved and the opportunities that could improve performance. Providing an awareness of the responsibilities related to identifying, assessing and managing risks should be spread out through all appropriate levels of our organization.

A formal and more accurate report of the main risks for the Group and the methods of management and control of these is shown in the chapter on "Risk factors" on pages 97 *et seq.* of this report.

Thanks to a structured process aimed at understanding and analyzing our main risks, we are able to assess the adequacy of the existing internal control systems, implement relevant action plans for their improvement and, more generally, to provide increased protection for our Group's enterprise value in compliance with applicable laws and regulations.

### **Risk management system**

The risk management system is based on a clearly defined risk management process and organization:

- the organization is placed under the responsibility of our Insurance and Risk Management department, which is supported by two committees (the audit committee and the Group executive committee) which validate our risk management policy and the processes used to identify, assess and address risks. The organization also includes "risk owners", whose role is to define and oversee the action plans for the Group's major risks;
- the risk management process is based on:
	- identifying risks: through the risk map of the Group's major risks, its main exposures can be assessed. It was fully updated in 2021;

– assessing risks: senior managers play an active role in assessing and prioritizing the risks identified. These managers have extensive experience in the animal health sector and the company itself, which represents an asset with regard to ascertaining the impact, the occurrence and the management of each risk;

– addressing risks: each risk classified as a major risk has been analyzed and prioritized. A risk owner has been appointed for each major risk. The risk owners are mainly the senior managers who are members of the three committees referred to above. Their role is to design and implement action plans in coordination with the different operational and functional organizations, in order to limit the company's exposure to the risks for which they are responsible;

– management of actions: our Insurance and Risk Management department coordinates the whole process in partnership with the risk owners.

For Virbac, risk management forms part of a continuous improvement cycle of the internal control system by becoming anchored in company processes and consistently taking into account the fundamental issues that can be found in our organization, whether it is operational, legal, regulatory or related to governance.

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### **Suitable control activities supporting the process of preparing and processing accounting and financial information**

Our system not only covers the processes for preparing financial information, but also all the upstream operational processes that help to produce this information. Internal control in all its forms, but especially the one related to finance and operations, is essential for our company. Our ongoing aim is to maintain the balance between the decentralization required for our activities, better operational and financial control and the dissemination of skills and best practices.

### **Dedicated financial organization**

Our control system and our procedures for producing accounting and financial information are consistent within our Group. Our system is made up of a cross-functional accounting organization throughout our Group, harmonized accounting standards, one single consolidated reporting system and quality control of the financial and accounting information produced.

Accounting and financial operations are managed by our Group Financial Affairs department. In 2019, the Financial Affairs department decided to make some organizational changes so as to be more efficient and further optimize its resources.

This organization now includes:

- a Financial Affairs department that oversees the following activities:
	- all accounting services (accounts receivable, accounts payable and general accounting). These services are grouped under the same management, which will increase synergies and cross-functionality;

– the Treasury and Financing department, which is mainly responsible for coordinating and monitoring our Group's financial debt and financial result reporting. With regard to exposure to exchange rate risks in particular, the guidelines of the Financial Affairs department forbid speculation and only allow for the hedging of positions that, whether current or future, are certain;

– the Consolidation and Reporting department: resulting from a merger of the statutory and management teams, this new department aims to streamline the preparation of financial information and analyses and improve data production times, both current and forecasted; it now handles statutory consolidation as well as management consolidation, which allows for monitoring and analysis of the company's internal performance; it is also responsible for the correct implementation of international accounting standards throughout the Group;

– the Tax department: this department, also newly-established, serves as an expert in international tax standards. It strengthens headquarters' presence within our subsidiaries to help them face ever-increasing regulatory challenges;

- a Group Controlling department responsible for the reporting and analysis of Business, Industrial, R&D and support services activities;
- a Financial Studies and Projects department: among other things, this department is responsible for ensuring financial support for acquisition projects. It is also responsible for system implementation and transformation, in partnership with the Information Systems department. Lastly, it plays a major role in monitoring our external financial communications and our investor relations.

The financial directors of each subsidiary play a key role on behalf of the decentralized organization for the accounting and financial functions. They are mainly responsible for ensuring that all internal accounting and financial control procedures are applied correctly in every subsidiary. Each subsidiary financial director reports functionally to an area financial controller who operates at the area level. On a functional level, it reports to a Group manager of Management Control.

### **Suitable tools: procedures and reference frameworks**

The accounting and financial rules set out in the special instructions, drafted by our Group Financial Affairs department, apply to all operational and legal entities in the Group. In compliance with the IFRS (International financial reporting standards) adopted in the European Union, these rules include the following factors:

- a reminder of the general accounting principles and instructions that must be followed;
- a detailed chart of accounts;
- a confirmation of the Group accounting methods applicable for the most significant items and/or transactions;
- control procedures for the largest account categories, and in particular the main reconciliations to be carried out for controlling the information produced;
- rules defining the framework of the management information known as financial handbook;
- rules to be followed in order to manage cash flow requirements and financing thereof, investments of cash surpluses, hedging of exchange rate risks.

Our financial affairs department regularly updates these documents, in particular each time new accounting standards are modified or applied. We have set up a reporting system, which has been deployed in all our entities in order to ensure the quality and reliability of the financial information. It is supplied via the local accounting data, either by an interface, by drawing the required data from the ERP (Enterprise resource planning), financial modules available to our entities, or by manual entry.

We have defined special procedures for off-balance sheet commitments. These latter items stem essentially from guarantees provided by our company. The provision of securities, deposits and guarantees is subject to the following controls:

- for our parent company, special authorizations from the board of directors whenever such guarantees exceed the annual authorization limits given to the chief executive officer;
- for our subsidiaries, material off-balance sheet commitments must be reviewed in advance by the parent company.

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### **Formal processes**

The financial processes we have implemented contribute to the quality and reliability of the accounting and financial information.

Accounting (statutory) and management consolidation processes are now the responsibility of the single Consolidation and Reporting department.

### **Accounting consolidation process**

Information is generated via the half-yearly and annual consolidation process underpinned by accounting principles applicable to all our subsidiaries, thereby ensuring consistency of methodology.

### **Management consolidation process and reporting**

Our Consolidation and Reporting department coordinates the monthly budgetary consolidation and reporting process within our Group, using information provided by our different operational departments and our affiliates. Concordance between the management information from reporting and the accounting data constitutes the key principle of control for ensuring the reliability of accounting and financial information. The management reporting system is used to monitor the monthly results and the main management indicators and to compare them with the budget and with the results from the previous financial year. The management indicators are explained and analyzed by our consolidation and reporting department in collaboration with our local financial directors.

Each month, the general management examines the summaries from the management reporting, analyzes the significant variations and decides on any corrective actions to be implemented whenever necessary.

### **Treasury process**

A process for establishing an annual treasury plan was also implemented across the Group, making it possible to control and consolidate the forecasts of cash movements of our subsidiaries, a sign of the accuracy of sales and expenditure forecasts and of working capital requirement management: customer collection, stock management and supplier payment terms.

Our policy of pooling excess cash and financing requirements daily in the euro zone allows us to reduce our net positions and manage our deposits or financings in an optimized way. Outside Europe, our policy of cash pooling was also implemented in order to limit counterparty risks and to optimize the use of lines of credit.

### **Items likely to have an impact in the event of a public offer**

Pursuant to article L225-100-3 of the French commercial code, the items likely to have an impact in the event of a public offer, *i.e*. the existence of a double voting right granted to all shares registered in the name of the same shareholder for at least two years, are set out in the annual report on page 158.

Thus our main shareholder, the Dick family group, holds 49.7% of shares and 66.2% of voting rights.

### **Management of systems and areas for improvement**

### **Actions to monitor and improve systems**

We implement continuous improvement actions for our risk management and internal control systems under the supervision of the audit committee and the board of directors.

### **Board of directors**

The role of our board of directors and its special committees is described on pages 110-126 of this report.

#### **Group executive committee**

Our Group executive committee is responsible for defining and managing the approach to internal control and risk management, relying on our different operational departments to implement these measures (see page 92 of this report). Our functional departments carry out investigations into operations in their respective areas through their network of experts or via regular audits (see page 93 of this report).

### **Statutory auditors**

All the accounting and financial elements prepared by our consolidated subsidiaries are subject to, at least, a limited audit during half-yearly closing for the most significant entities, and to an audit carried out by our external auditors when the year closes. The audit tasks in the different countries are given to the members of our Group's network of statutory auditors. They certify the regularity, sincerity and fair view presented by the consolidated accounts and the individual statutory accounts. They are informed of the key factors in the financial year ahead in the process of preparing the financial statements and they present a summary of their work to the Group accounting and financial managers and to the audit committee at the half-yearly stage and when the year closes.

### **Financial communication**

The importance and increasing role of communication and the need to deliver comprehensive, quality financial information have led us to acquire the functions and skills required to present this information and to control risks to the corporate reputation.

### **Annual report and periodic financial information**

Our Financial Affairs department is responsible for preparing our annual report and periodic financial information, working closely with our Corporate Communications department, which involves, in particular:

• defining and validating information in the annual report, the half-year report and periodic financial announcements;

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- supervising the work carried out by the annual report steering committee;
- distributing financial information;
- applying the stock market regulations regarding financial communication and managing relations with the *AMF*.

### **Press releases**

Our Corporate Communications department is responsible for media activities which could have an impact on the image, reputation and integrity of the Virbac brand name. To achieve this, it works very closely with the Financial Affairs department, in particular in activities and by distributing information which could have an impact on Virbac's share price.

### **RISK FACTORS**

Like any organization, our Group is prompted to take risks, look for opportunities and create value. The stake of our Group's general risk management mechanism lies in its ability to identify risks, whether they are recurrent or emerging, and to control them over time.

Throughout 2023, we continued our efforts with the roll-out of our general risk management process through reliance on our risk management information system that was implemented in 2014. More specifically, in 2023, we continued to work on updating action plans to mitigate the key risks identified as part of the latest Group risk mapping update.

Generally speaking, each risk identified is described in detail and assigned to a risk owner in charge of providing follow-up as well as defining and managing the implementation of adequate control measures.

We presented the organization and methods for how the tool was implemented within our Group in detail in the preceding paragraph of the report.

As part of the major risk mapping update performed in 2021, we had conducted a review of risks that could have a significant adverse effect on our business, our financial situation or our profit, and we consider that, so far, and to the best of our knowledge, there are no significant risks other than those presented in this report.

However, certain risks not detailed here or not identified to date may potentially affect our Group's results, objectives, image or share price.

### **Risks related to the Group's business activities and strategy**

The animal health market has undergone significant changes over recent years which have given rise to new challenges for the animal health sector which our Group has taken into account in its strategy (by market and by species).

### **Risks related to innovation process (research, development and licensing) and product registration**

### **Risk factors**

The field of the veterinary pharmaceutical industry is highly competitive, and every year, in order to meet changing market needs, maintain our market share and ensure our development, we devote significant resources to research and development.

In 2023, we committed 9,1% of our revenue (before R&D tax credit) to our RDL (Research, development and licensing), before taking into account the research tax credit. The R&D process usually extends over several years and has various stages for testing, among other things, the efficacy and safety of products. In each of these stages, there is a risk that the objectives are not met and that a project where large amounts were invested is abandoned, including at an advanced stage of development.

Once the research and development phase is complete, as a veterinary pharmaceutical company, we must obtain, where necessary, all the administrative authorizations required, the marketing authorizations, to market our products. This phase is often long and complex, and we have no guarantee of success. Indeed, the filing of a registration dossier with the appropriate authority provides no automatic guarantee that the authorization to market the product will be granted. Such authorization may be only partial, *i.e.* limited to certain countries or indications. Once a MA has been obtained, products are subject to ongoing controls and their marketing may potentially be restricted, or they may be withdrawn from the market. Our products placed on the market may also be subject to regulatory developments, which in some cases could require a new registration and therefore the performance of new clinical trials.

Consequently, the current investments in respect of the development and launch of future products may involve costs that will not necessarily generate additional revenue.

Along with in-house R&D projects which are the subject of extremely defined processes and regular monitoring of the various projects underway, we also pursue a license acquisition policy allowing us to have access to new products ready to be marketed or projects under development that we oversee to completion. In the same way as with in-house R&D projects, there is always a risk that these projects will not be successful or that the commercial potential will prove to be less attractive than expected, possibly resulting in these assets being impaired.

### **Risk management mechanisms**

We seek to limit these risks by first employing stringent selection criteria for the research and development projects in which we invest. Similarly, we use in-depth research to target the products for which licenses must be granted. Finally, we rely on the expertise of our Regulatory Affairs department which is responsible for filing, monitoring and renewing Marketing authorizations.

The animal health market is highly regulated and we display a very strong commitment to compliance by putting in place all necessary means to achieve it.

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### **Risks associated with the emergence of a pandemic**

### **Risk factors**

Like all companies, we can be exposed to viral pandemic like the Covid-19 one.

Some of our suppliers or production sites could be located in areas with a higher circulation of the virus, which could consequently impact our production level. The same goes for our head office and our subsidiaries, where certain processes or the health of our employees could have been affected. Lastly, our business could also be affected by a global slowdown or economic standstill caused by the emergence of a pandemic. This could occur, for example, due to a drop in visits to veterinarians or to a strain on the distribution of products.

### **Risk management provisions**

During the Covid-19 pandemic, a crisis unit has been set up to monitor the situation resulting from this pandemic and make the necessary decisions.

Very strict health measures have been deployed in all our units, aimed primarily at safeguarding the health of our employees. Teleworking has been massively deployed in all activities that do not require an on-site presence. For other activities (production, R&D, etc.), critical processes have been reviewed to maintain our activity levels and to meet the medicinal needs of our customers. We have also reviewed stock levels, identified risk areas and prepared the activation of alternative sources, where applicable. These measures may be reactivated in the event of a new pandemic.

### **Risks associated with product compliance**

### **Risk factors**

Our Group may also be exposed to a temporary or permanent suspension of the operation of its products if they present, in the opinion of the competent authorities, a critical deviation from the regulations in force concerning them.

### **Risk management mechanisms**

Our Group strives to ensure that our factories and manufacturing processes meet the highest level of compliance with existing benchmarks (Good manufacturing practices and others). We have defined and rolled out a quality management mechanism in all our manufacturing facilities worldwide. This mechanism helps to flag and correct any identified deviation between a manufactured product and its regulatory framework. The Quality Assurance department is responsible for defining and rolling out this system throughout our Group, and ensures proper implementation of the system by conducting its own audits. It also provides follow-up on action plans related to recommendations it may be called upon to make.

### **Risks associated with product liability**

#### **Risk factors**

Our product liability may be questioned if adverse side effects from drugs occur (not detected during clinical trials prior to MA) or if any default in quality should occur. The consequences of such events could be the recall of marketed batches, or loss, temporary or permanent, of the MA. If our liability were to be confirmed relative to major claims, our financial position could be greatly affected, as well as our reputation. Drug recall costs would also be added in the event of a quality problem.

#### **Risk management mechanisms**

We constantly strengthen our pharmacovigilance procedures and our quality checks on all products that we market. In the context of pharmacovigilance procedures, we conduct a systematic review and regular analysis of the safety profile of our products to ensure the safe use of drugs by monitoring the side effects attributable thereto. Moreover, we have product liability insurance that applies to all subsidiaries.

### **Risks associated with the distribution channels**

#### **Risk factors**

We operate in a large number of countries, either through our subsidiaries or through distributors in countries where we do not have subsidiary. We have numerous distribution channels, and their characteristics depend on the country of marketing. However, our products are primarily distributed through wholesalers and purchasing groups which supply veterinarians. Despite the supervision of these relationships by contracts that are regularly revised, this distribution mode could create for our Group some dependency or insufficient control of our presence and our development.

Moreover, in certain countries the animal health sector has shown for some years now a trend towards the concentration of distributors and veterinarians within veterinary clinics networks. Likewise, new distribution channels, such as the Internet, for example, have appeared. We remain vigilant about these developments and their potential subsequent impacts on our revenue and margins.

#### **Risk management mechanisms**

To reduce our dependence on distributors and reduce the effects of potential consolidation, we have implemented a policy of securing our margins and consolidating our market positions. This policy involves systematically studying the possibility of bringing distribution in-house whenever sales are of a sufficient size in a given market. We then opt for the most appropriate solution, either acquiring our distributor or establishing a new distribution business. In

{98}------------------------------------------------

2023, we bought our historic distributor in the Czech Republic and Slovakia, and we created Virbac Ireland at the beginning of the year.

In more general terms, we strive to constantly adapt our marketing strategy in order to limit associated risks, and to take advantage of the opportunities which arise from these changes.

### **Risks related to increased competition**

### **Risk factors**

The animal health sector has become increasingly competitive. Our products are sold in competitive markets in terms of pricing, financial conditions and product quality.

We often face strong competitors larger than ourselves or with greater resources. A consolidation trend has emerged in recent years with the grouping of certain laboratories (through mergers or acquisitions, or through the sale of their animal health or human health activities). New forms of competition can also be seen, such as the verticalization of activities among certain large distributors, local development of innovative players in niche markets, or even new strategic partnerships between smaller market players. These developments could alter our competitive environment, thereby impacting volumes and/or prices.

### **Risk management mechanisms**

We analyze and constantly monitor the movements of our competitors across all markets. We have a policy of external growth through acquisitions and/or partnerships, enabling us notably to participate in the on-going consolidation in the sector.

Furthermore, we remain on the lookout for opportunities that could arise from mergers between major players (divestment of businesses).

### **Risks related to the external growth policy of the Group**

### **Risk factors**

Since our inception, we have pursued an active external growth policy that has led us to be present today in many countries and to have a wide range of products. We aim to continue this policy in the future to bolster our geographic presence and product offerings.

This choice of growth through acquisition entails financial and operational risks, especially related to the valuation of assets and liabilities and the integration of employees, activities and products purchased.

These acquisitions involve, in particular, the following uncertainties:

- the assumptions of future profitability taken into account in valuations that could not be verified;
- we may not successfully integrate acquired companies and their product ranges.

This external growth can sometimes take the form of a partnership (joint-venture) whereby we do not directly or solely engage in managing the operations of the businesses in which we have invested. This situation may result in governance issues if the various shareholders are not aligned on strategic objectives.

### **Risk management mechanisms**

We have defined a rigorous process for mergers and acquisitions to cover the analysis of potential targets and the integration of acquired companies:

- applying strict criteria for investment profitability;
- establishing expert, multidisciplinary teams, supported where necessary by external consultants, in charge of implementing in-depth due diligence.

This process requires the approval of the chief executive officer and/or the board of directors prior to any acquisition.

We now have experience gained from past acquisitions which allows us to understand a wide variety of situations related to this type of partnership.

### **Risks associated with the ability to attract and retain key talent**

### **Risk factors**

In France, the key skills sought for core functions (Industry/Quality Assurance/R&D) are in high demand throughout the pharmaceutical, human and veterinary medicine industries. In addition to competition amongst employers, the geographical location of the head office can represent a limitation to hiring, given the limited pool for spousal employment, coupled with the high cost-of-living in the region, particularly the cost of real estate.

Meanwhile, in emerging countries, the job market is very dynamic, and our size and reputation cannot always attract the best talent.

### **Risk management mechanisms**

The ability to identify, recruit, integrate, develop and retain the key talent we need in order to achieve our development plan is a major challenge for our Group, not to mention a priority for the Human Resources department, which serves as a liaison with the main functional and operational departments in question.

With that in mind, the HR talent management strategy consists of repeatedly and continually pointing out the dynamic and competitive nature of our Group from a standpoint of career development and compensation, while stepping up our presence in schools and universities, as well as partnerships with major employment stakeholders in the industry.

So as to reinforce this strategy, over the last few years, we have developed an employer offering which formalizes internal and external communication in the Group as an employer. We now have a strong employer message to support our growth both in France and abroad by making retention of key talent one of our priorities.

{99}------------------------------------------------

### **Country risk**

### **Risk factors**

We are an international group, which may have to operate in countries subject to certain geopolitical and economic instability and in which we have production units.

### **Risk management mechanisms**

We remain vigilant, and closely follow the level of political or economic instability in certain countries to anticipate possible response or prevention methods if the level were to reach a magnitude that could have a major impact on employees, assets or our operations.

Additionally, we use *Coface* hedging, the leading French insurance company specializing in export credit insurance to secure our operations in certain regions.

### **Industrial and environmental risks**

Because of our activities carried out in various strategic sites worldwide, we are subject to industrial and environmental risks which could result in significant additional operating costs and liability in case of fire or explosion.

The ultimate risk would be temporary or permanent closure of a site for non-compliance with certain rules or following a major incident.

However, we pay a particular attention to industrial risk prevention and environmental protection, in line with our social and environmental policy.

The responsibility for industrial risk management falls mainly to the line managers, who monitor compliance with regulations and standards in this field by implementing operating procedures, quality systems and a series of security measures, as defined and dictated by our Group, in cooperation with our insurers.

More information regarding the industrial and environmental risk factors related to our activities can be found in the Statement of non-financial performance on pages 10 *et seq.*

### **Risks related to the use of hazardous materials**

### **Risk factors**

As part of our veterinary medicine manufacturing business, we use substances that present health, fire and/or explosion, air pollution and spillage risks during the various phases of the production and marketing processes (R&D, manufacturing, storage and transport). These risks could, should they materialize, cause damage to persons, property and the environment.

### **Risk management mechanisms**

To limit these risks, and as a minimum, we comply with the safety measures required by the laws and regulations in force, implement Good manufacturing and laboratory practices, and ensure that our employees are trained. Our manufacturing sites and research and development facilities are also regularly inspected by regulatory authorities.

### **Risk of business interruption due to equipment or strategic facilities losses or downtime**

### **Risk factors**

Like any industrial activity, our production sites are exposed to the possibility of unforeseen incidents that could result in the temporary suspension of production or permanent closure of the site.

These potential incidents are of various types: fire, machine breakdown, explosion, natural disaster, contamination, malicious acts or storage of hazardous materials.

Furthermore, considering the specific nature of the pharmaceutical industry, a national health authority may be called upon in certain situations to impose an administrative business suspension. This may affect our ability to achieve our goals, depending on the potential length of such a suspension.

### **Risk management mechanisms**

We have developed a process to ensure safety in our industrial facilities. The probability of such events occurring and any related potential impact production levels and profits are therefore limited by the following measures:

- buildings are in compliance with regulatory safety requirements (*e.g.* standardized fire detection systems on the sites);
- annual audits of facilities are performed;
- insurers make preventive visits and audits;
- ongoing investments are made to improve and secure production-related operations activities.

In 2013, we set up a new structure by creating a Global Industrial and Corporate Quality Assurance department that aims to develop and sustain the production assets over time. This allows, on one hand, to comply with all applicable local regulations, and on the other hand, to create conditions for greater flexibility and synergy with our different production sites. This organization evolved in 2023, separating Corporate Quality Assurance from Industrial Management to strengthen internal control of these strategic topics for our Group. Additionally, in the past few years, we have significantly enhanced our industrial and quality assurance processes at the St. Louis site in the United States, which led the FDA in 2019 to confirm the GMP status of this site after an audit. Finally, we have taken out operating loss insurance, which also covers for losses incurred as a consequence of a deficiency from our suppliers.

{100}------------------------------------------------

### **EHS risks (Environment, health and safety)**

### **Risk factors**

As part of our activities, we are subject to a set of regulations related to health, safety and environmental issues. The majority of the production sites in France are subject to operating regulations issued by the supervisory authorities.

These regulations include requirements that our sites must meet regarding environmental matters, including waste management, the volume and quality of water discharges, and safety and risk prevention rules.

The operating regulations to which our sites are subject are at declaration or authorization level. No site is subject to regulation of the European Seveso directive.

Failure to comply with these regulations could result in fines and financial burden and potentially lead to the closure of a site by the administrative authorities.

Meanwhile, given the nature of our activity, we may have an impact on the environment even if it does not cause visual, noise or olfactory pollution.

Finally, given the nature of our industrial activities, the possibility of an accident occurring at the workplace (either conventional or related to the risk of contamination by products) cannot be ruled out, even if the dangerousness of such activities must be appreciated with regard to other industries considered more dangerous.

### **Risk management mechanisms**

Protecting the environment and the safety of our employees are among our key priorities.

We pay special attention to ensure that our different sites comply with existing regulations. We have an EHS department whose mission is to guide and assist the operational departments in developing and maintaining an adequate level of protection for people and the environment.

Practically, the exposure of employees is covered by specific measures presented on pages 39-40 of the annual report:

- defining a clear and precise safety organization;
- establishing a prevention policy and a continuous improvement approach.

For this purpose, we have pursued the implementation of tools and means of support for all teams thanks to:

- the Reflex Prevention approach (awareness-raising and training of employees in work safety);
- the analysis of accidents in the workplace as a performance indicator;
- medical evaluation before each recruitment (for instance in the United States).

Finally, we take EHS matters into account during the due diligence of acquisition of new industrial sites.

### **Risks associated with the effects of climate change**

We have not identified any significant financial risk associated with the short-term effects of climate change. Currently, only three subsidiaries have their activity somehow exposed to climate effects. These are South Africa, India and Australia: long periods of drought, or alternatively floods, could impact the financial situation of their customers (mainly farmers), resulting in repercussions on the farm animal activity of these subsidiaries.

### **Risk management mechanisms**

Generally speaking, we are strongly committed to preserving the environment. We therefore place particular importance on measures to reduce our carbon footprint, particularly in terms of energy consumption (see Statement of non-financial performance pages 55 to 67).

### **Legal risks**

We give special importance to legal risk management, particularly given the complexity and growing intensity of the competitive and regulatory environment and our growth. The Legal department oversees the prevention and management of legal risks in conjunction with other departments and operational teams.

### **Risks related to the maintenance of intellectual property rights**

#### **Risk factors**

Our success rests largely on our ability to obtain and effectively protect our intellectual property rights and, in particular, our brands, our registration files, formulae, technology and our trademarks.

We incur a dual risk: the risk of a competitor attacking or exploiting our intellectual property rights, and the risk of being sued for infringement by third party rights holders.

#### **Risk management mechanisms**

The protection of our intellectual property relies on two departments working in close collaboration.

Within the R&D department, the role of the patents team includes:

- drafting and filing patent applications related to innovative techniques or products;
- monitoring the competition in order to guard against abusive use of rights by a third party;
- analyzing third party patents from the development phase of new products in order to avoid exposure to a possible infringement situation.

The Legal department oversees, across the Group, the selection, registration and protection of the various brands and registered domain names, opposes third-party brands that could be infringing on the Group's rights and manages all disputes related to intellectual property. It also protects our patterns and models and raises awareness among the various players in the company about the need to respect the rights of third parties.

{101}------------------------------------------------

### **Risks related to regulatory changes**

### **Risk factors**

Regulatory risks arise from our exposure to changes in laws and regulations, particularly those regarding public health policies. Any changes in legislation may impact our profits and financial position.

We must obtain and retain Marketing authorizations required for the manufacture and sale of our products. Given our international presence, those regulatory authorizations are issued by authorities or agencies in several countries. Withdrawal of a previous authorization or not obtaining authorization for a new product may have an adverse effect on our operating profits.

It should be noted that the pharmaceutical industry is subject to increased attention from authorities and the public, which results in the regular issuance of tougher governing rules.

#### **Risk management mechanisms**

Each of our functional and operational department is responsible for implementing an ongoing monitoring mechanism in order to identify or anticipate any regulatory change which could impact our activities.

Where appropriate, each department may be required to rely on local experts in those countries where our Group distributes its products.

A Group Regulatory and Public Affairs department provides permanent monitoring of the pharmaceutical regulations to which our Group is subject.

### **Risk of litigation**

### **Risk factors**

Our company is established worldwide. In the conduct of our business, we may be involved in disputes, legal, arbitration or administrative proceedings and class actions anywhere in the world. All significant disputes are routinely assessed and managed by the Legal department, with the assistance, where necessary, of external consultants.

### **Risk management mechanisms**

We consider that the provisions recorded in the accounts in respect of these disputes are sufficient to cover the exposed financial risk if convicted.

As of the date of this annual report and to our knowledge, there is no current legal proceeding in which our company would be threatened that could have significant effects on the financial position or profitability of the Group.

### **Financial risks**

The financial risk management policy is controlled centrally by our Financial Affairs department and in particular its Treasury and Financing department.

Strategies for financing, investment, and interest and exchange rate risk hedging are thus systematically reviewed and monitored by the Financial Affairs department. The operations carried out by our local teams are also managed and monitored by our Treasury and Financing department.

The holding of financial instruments is conducted with the sole purpose of reducing exposure to exchange rate and interest rate risks and has no speculation purpose.

### **Market risks**

#### **Currency exchange risks**

### ■ **Risk factors**

The currency risk arises from the impact of fluctuations in exchange rates on the Group's financial flows when carrying out our activities. Due to our strong international presence, we are exposed to the foreign exchange risk on transactions, and the foreign exchange risk on the conversion of the financial statements of our foreign subsidiaries.

### ■ **Risk management mechanisms**

Our policy is to hedge foreign currency risk on transactions when the extent of exposure and the risk of currency fluctuations are high. Accordingly, we use various instruments available on the market and generally employ foreign exchange forwards or options. The details associated with this risk are presented in note A33 of the consolidated accounts.

#### **Interest rate risks**

### ■ **Risk factors**

Our income statement may be impacted by the interest rate risk. In fact, unfavorable rate changes can thus have a negative impact on our financing costs and future cash flows.

Our exposure to the interest rate risk arises from the fact that our main lines of credit are at variable rate; therefore the cost of debt may increase in the event of a rise in interest rates.

### ■ **Risk management mechanisms**

To manage these risks and optimize the cost of our debt, we monitor developments and market rate expectations, and we limit our exposure by establishing interest rate hedges, with instruments available on the market such as 

{102}------------------------------------------------

caps or swaps of interest rates (fixed rate) not exceeding the length and value of our actual commitments. The details associated with this risk are presented in note A33 of the consolidated accounts.

Following the announcement by the UK Financial conduct authority (FCA) of its intention to no longer compel banks to contribute to the Libor quotations and in order to ensure the continuity of our financial activities, we ensured that the financing contracts whose interest rates were indexed to the Libor which were to be eliminated on December 31, 2021 had been renegotiated. In choosing the replacement index, we preferred the Risk free rate (RFR) recommended by the International swaps and derivatives association (ISDA).

### **Liquidity risk**

### ■ **Risk factors**

Liquidity is defined as our capacity to meet our financial payment deadlines as part of our current business and to find new funding sources as needed, so as to maintain a continual balance between our income and expenditures. As part of our operations, our program of recurring investments and active policy of external growth, we are thus exposed to the risk of not being sufficiently liquid to fund our growth and development.

### ■ **Risk management mechanisms**

The policy of pooling surplus cash and funding needs in all areas helps to refine our net position and to optimize the management of investments and funding requirements, ensuring Virbac's ability to meet its financial commitments and maintain an optimal level of availability commensurate with its size and needs.

We ensure that our financing resources and surpluses cover our cash requirements and ensure compliance with our financial ratio (debt covenant).

### **Other financial risks**

### **Fraud risks**

### ■ **Risk factors**

The Group could be victim of internal or external fraud that could lead to financial losses and affect our reputation.

### ■ **Risk management mechanisms**

We are committed to strengthening internal control and give particular importance to making our employees aware of these issues. Our head office teams regularly give strong guidance and guidelines on this subject. Segregation of duties, as well as a central, regional and local management control mechanisms and the appointment of regional controllers help strengthen control and reduce the probability of such practices occurring. Upon acquiring new companies, we integrate them into these mechanisms for the prevention of unethical practices.

We have proceeded with training and roll-out of best practices processes that, among other things, are intended to prevent the risk of fraud.

Virbac's code of conduct underscores our commitment to pursue our activities in accordance with the law and ethics, and also defines the nature of the relationships we wish to have with our partners.

#### **Credit risk**

### ■ **Risk factors**

Credit risk may arise when the Group grants credit to customers on payment terms. The risk of insolvency, or even default by some of them, may result in non-payment and thus negatively impact the Group's income statement and net cash position.

### ■ **Risk management mechanisms**

The Group limits this type of risk thanks to the very high fragmentation and dispersal of its customers throughout all countries in which we operate. Based on the regulations in force, the Treasury department recommends the uses, the ratings, the credit-insurance limits, the maximum payment periods and sets credit limits for customers to be applied by operational entities. The Treasury and Financing department manages and controls these credit aspects for the French entities for which it is directly responsible and recommends the same practices *via* guidelines and best practices for the Group. Furthermore, there is a credit insurance group framework contract for which any subsidiary is or may be eligible when it comes to this kind of risk. The details associated with this risk are presented in note A33 of the consolidated accounts.

#### **Counterparty risk**

### ■ **Risk factors**

The Group is exposed to counterparty risk within its contracts and financial instruments that we buy, in the event that the debtor refuses to honor all or part of his commitment or finds himself *in fine* unable to do so.

### ■ **Risk management mechanisms**

We pay particular attention to the choice of financial institutions we use, and are even more critical when it comes to investing available cash.

Nevertheless, we consider our exposure to counterparty risk to be limited, considering the quality of our major counterparties. In fact, investments are only made with first-class banking entities. The details associated with this risk are presented in note A33 of the consolidated accounts.

{103}------------------------------------------------

### **Inflation risks**

### ■ **Risk factors**

The Group is exposed to a risk of inflation over its costs, which could reach such levels that we can no longer offset it through our price increases, our operational improvement and our product mix. This risk could lead to a loss of competitiveness of our business.

### ■ **Risk management mechanisms**

We regularly follow-up on the trend in our purchase prices and the impact of inflation in order to anticipate and assess the magnitude of any potential impact. Our Corporate Sourcing department, in collaboration with the management of Management Control, pays a special attention to the negotiation of our contracts. We also make every effort to adjust our selling prices in line with the impacts of inflation, and we also monitor changes in our selling prices on a regular and frequent basis. We work to optimize our product mix to optimize our margin, and we implement productivity improvements whenever possible.

### **Operational risks**

By their very nature, our different activities, encompassing the entire value chain in the sector, expose us to various operational risks. The Global Industrial Operations and Corporate Quality Assurance department, as well as Corporate Sourcing, contribute to securing the associated risks.

### **Risks of dependence on third parties for supply or manufacturing of certain products**

### **Risk factors**

The majority of raw materials and active ingredients forming the composition of products that our company manufactures are provided by third parties.

In certain cases, we also use contract manufacturing organizations or industrial partners who have production capacities or expertise in particular technologies.

But there are, for certain supplies or certain technologies, situations where diversification is difficult if not impossible, which could then result in a risk of shortages or price pressures. These single-sourcing cases are structural and characteristic of the pharmaceutical industry.

### **Risk management mechanisms**

The selection of suppliers is performed according to strict criteria and, to the extent possible, we diversify our sources by referencing multiple vendors, while ensuring that these sources provide sufficient characteristics of quality and reliability. To limit these risks, we have broadened our approach to identify as many diversified suppliers as possible, and may in certain cases secure our supply chain by acquiring the technologies and capacities we lack and that create too high a dependency.

Whatever the solution adopted, we systematically ensure upstream the sustainability of the source. In addition, we have regularly updated the mapping of our major suppliers, including contract reviews and an analysis of possible alternative sources.

### **Risks related to safety and reliability of information systems**

### **Risk factors**

Our business is based in part on highly integrated information systems. Failure of these systems could directly impact our business and our profit. Other risk factors may be considered, such as intrusion, piracy, theft of knowledge, know-how or confidential information, system shut-down of one or more systems following a computer failure, obsolescence of a part of the IT system (application, server, etc.) as well as regulatory developments particularly linked to the Internet (licenses and copyright, personal data, etc.).

### **Risk management mechanisms**

Our Group Information Systems department (ISD) ensures the ongoing security of the information systems and networks. The areas covered are:

- organization and general security of information systems;
- physical security (intrusion, accidents);
- networks (local, remote, internet);
- the availability of applications and data.

The ISD regularly develops and updates all measures to preserve the confidentiality of data, protect information systems against intrusion and minimize the risk of interruptions of service (backup, redundancy and server backup procedures, disaster recovery plan, and so forth).

In addition, an IT systems-use code is applied to all our employees.

### **Insurance and risk coverage**

### **General coverage policy**

Our insurance policy is underpinned by a risk prevention and protection approach specific to our activities. We regularly review our insurable risks and financial coverage with the assistance of an international broker who is part of an integrated network. In this regard, all contracts have been harmonized at Group level, and the parent 

{104}------------------------------------------------

company provides assistance and support to the subsidiaries as part of its international insurance programs for the establishment of local insurance policies.

The broker ensures coordination and control of these programs in conjunction with its local contacts.

Insurable risks are covered by our Group insurance policies with a level of coverage that we deem appropriate, given our circumstances, barring any wholly unforeseeable events.

### **Insurance programs**

The international damage and operational losses insurance program, as well as the general third-party liability and product liability international insurance program, cover our entire Group.

A single Group-wide international transport insurance program covers all goods transported across the globe under the responsibility of Virbac or its subsidiaries.

The coverage levels were set on the basis of our risk profile. Despite unequal local resources, this centralization of our risks coverage provides a better level of protection for all our entities, while realizing economies of scale.

Property, buildings and equipment are insured against damage based on full replacement value, purchase price or production cost of merchandise and operating losses based on the loss of gross margin.

Our main production facilities are subject to a prevention inspection program conducted by the leading insurance company's Risk Studies and Prevention department as part of the damage and operational losses program. We do not have a captive insurance or reinsurance company.

We do not have a Captive Insurance or Reinsurance Company.

### **STATEMENT OF NON-FINANCIAL PERFORMANCE**

Following the transposition into French law of the European directive 2014/95/EU of October 22, 2014 on the disclosure of non-financial information (by ordinance 2017-1180 of July 19, 2017 and decree 2017-1265 of August 9, 2017), Virbac publishes its Statement of non-financial performance on pages 10 to 69 of the annual report. This statement presents the Group's values and rules of conduct in social and societal fields, human rights, the fight against corruption, tax evasion, and the environment.

### **2024 OUTLOOK**

As for the 2024 financial year, we confirm our objective of growth in revenue at constant rates and scope of between 4% and 6% as well as a ratio of "current operating income before depreciation of assets from acquisitions" (adjusted Ebit) to "revenue" around 15% at constant exchange rates. As announced in our previous communications, this level of profitability takes into account an intentional continued increase in our R&D investments representing nearly +0.5 point as a percentage of revenue compared to 2023.

We reaffirm our ambition to achieve an adjusted Ebit ratio of 20% by 2030: in this regard, we plan in the coming years to gradually restore our investments in R&D to the normative and historical level of the Group, *i.e.* around 2.0 points below the percentage of R&D on revenue for 2024.

### **PROVISIONAL TIMETABLE FOR FINANCIAL COMMUNICATION**

The provisional timetable for 2024 is as follows:

- January 17, 2024 after the close of trading: communication of 2023 annual revenue;
- March 19, 2024 after the close of trading: communication of 2023 annual profit;
- April 16, 2024 after the close of trading: communication of revenue for the first quarter of 2024;
- June 21, 2024: annual shareholders' meeting;
- July 16, 2024 after the close of trading: communication of revenues for the second quarter of 2024;
- September 13, 2024 after the close of trading: communication of first half profits for 2024;
- October 17, 2024 after the close of trading: communication of revenues for the third quarter of 2024;
- January 16, 2025 after the close of trading: communication of 2024 annual revenue.

{105}------------------------------------------------

### **FEES OF THE STATUTORY AUDITORS AND MEMBERS OF THEIR NETWORKS BORNE BY THE GROUP**

### **As at December 31, 2023**

|                                                                            | Deloitte |         |         | Novances - David & Associes<br>Nexia network |         |       |
|----------------------------------------------------------------------------|----------|---------|---------|----------------------------------------------|---------|-------|
| in € thousand                                                              | Audit    | Network | Total   | Audit                                        | Network | Total |
| Issuer1                                                                    | 202.5    | —       | 202.5   | 61.4                                         | —       | 61.4  |
| Consolidated subsidiaries                                                  | 8.4      | 756.0   | 764.4   | 27.0                                         | 74.9    | 101.9 |
| Audit and limited review of<br>the individual and<br>consolidated accounts | 211.0    | 756.0   | 967.0   | 88.3                                         | 74.9    | 163.2 |
| Issuer                                                                     | 39.9     | —       | 39.9    | 1.1                                          | —       | —     |
| Consolidated subsidiaries                                                  | —        | 12.9    | 12.9    | —                                            | —       | —     |
| Other services2                                                            | 39.9     | 12.9    | 52.8    | 1.1                                          | —       | —     |
| Total fees                                                                 | 250.9    | 768.9   | 1,019.8 | 89.4                                         | 74.9    | 163.2 |
|                                                                            | 96%      | -%      |         | 100%                                         | -%      |       |
|                                                                            | -%       | 100%    |         | -%                                           | 100%    |       |
|                                                                            | 84%      | 98%     |         | 99%                                          | 100%    |       |
|                                                                            | 100%     | -%      |         | -%                                           | -%      |       |
|                                                                            | -%       | 100%    |         | -%                                           | -%      |       |
|                                                                            | 16%      | 2%      |         | -%                                           | -%      |       |
|                                                                            | 100%     | 100%    |         | 99%                                          | 100%    |       |

1 the fees charged to the issuer this year include extra costs generated by the specific diligences linked to the cyberattack

2 the services other than the certification of the accounts provided by the statutory auditors to the issuer, consolidating entity, and to its affiliates correspond to the following elements:

• certificate relating to the Statement of non-financial performance;

• certificates relating to the calculation of the financial ratio (banking covenants)

### **As at December 31, 2022**

|                                                                                     |              | Deloitte   |              |              |             | Novances - David & Associes<br>Nexia network |             |              |
|-------------------------------------------------------------------------------------|--------------|------------|--------------|--------------|-------------|----------------------------------------------|-------------|--------------|
| in € thousand                                                                       |              | Audit      | Network      | Total        |             | Audit                                        | Network     | Total        |
| Issuer                                                                              | 150.0        | 100%       | —            | <b>150.0</b> | 57.7        | 100%                                         | —           | <b>57.7</b>  |
| Consolidated subsidiaries                                                           | —            | —%         | 724.3        | <b>724.3</b> | —           | —%                                           | 79.6        | <b>79.6</b>  |
| <b>Audit and limited review of<br/>the individual and<br/>consolidated accounts</b> | <b>150.0</b> | <b>83%</b> | <b>724.3</b> | <b>874.3</b> | <b>57.7</b> | <b>100%</b>                                  | <b>79.6</b> | <b>137.3</b> |
| Issuer                                                                              | 30.0         | 100%       | —            | <b>30.0</b>  | —           | —%                                           | —           | —            |
| Consolidated subsidiaries                                                           | —            | —%         | 25.2         | <b>25.2</b>  | —           | —%                                           | —           | —            |
| <b>Other services1</b>                                                              | <b>30.0</b>  | <b>17%</b> | <b>25.2</b>  | <b>55.2</b>  | —           | —%                                           | —           | —            |
| Total fees                                                                          | 180.0        | 100%       | 749.5        | 929.5        | 57.7        | 100%                                         | 79.6        | 137.3        |

1 the services other than the certification of the accounts provided by the statutory auditors to the issuer, consolidating entity, and to its affiliates correspond to the following elements:

• certificate relating to the Statement of non-financial performance;

• certificates relating to the calculation of the financial ratio (banking covenants)

{106}------------------------------------------------

{107}------------------------------------------------

# Report on corporate governance

Since a decision of the shareholders' meeting on December 15, 2020, our company has taken the form of a public limited company with a board of directors, instead of the form with a supervisory board and executive board.

The first board of directors meeting, held immediately after the shareholders' meeting, decided unanimously to separate the functions of the chairman of the board of directors and the chief executive officer.

The board of directors then appointed Sébastien Huron as chief executive officer and Habib Ramdani as deputy chief executive officer and Marc Bistuer as deputy chief executive officer and qualified person. These mandates were renewed by the board of directors at its meeting on December 12, 2023.

This report was submitted to the audit committee, whose recommendations were taken into account, and was unanimously adopted by the board of directors at its meeting on March 15, 2024.

The report refers to the recommendations of the Corporate governance code for listed companies drawn up by *Afep*  and *Medef* (*Afep-Mede*f Code), which was adopted by the former supervisory board as its code of reference. This choice was not called into question by the board of directors. The *Afep-Medef* Code can be consulted online at the following address: www.medef.com.

Following recommendations from the *AMF* (French financial markets authority), a summary table on page 130 lists the *Afep-Medef* Code provisions that the company has decided not to implement and gives the reasons for this.

### **GOVERNANCE BODIES**

Our governance is based on principles that provide the balance required for the Virbac group's performance and successful development.

### **Separation of powers and collegiality**

On December 15, 2020, the company adopted an organization that integrates general management and a board of directors, now the most common form of governance for publicly traded French companies. This organization reflects the desire for a balance of power between executive and supervisory functions. It involves regular and effective dialogue between general management and the board of directors, as well as mutual trust.

Collegiality is a key organizational principle in our governance. These two entities, the board of directors and general management, operate on a shared vision among their respective members and on collective decisionmaking resulting from genuine teamwork. This organization guarantees efficiency and responsiveness while being in line with current governance codes, in particular the *Afep-Medef* Code, to which we refer to regularly improve our practices in this area.

### **Committed and experienced management**

Our governance is based on tightly knit corporate bodies, composed of members with a strong and enduring commitment. Their professional experience covers many aspects of the day-to-day management of a large international group. Apart from the director representing the employees, all but one of the directors are senior business executives with extensive operational experience in international companies.

The commitment of the members of the management bodies, whether on the board of directors or in general management, is built on sustained support for the Group's long-term strategy. Furthermore, the involvement of the directors and its non-voting advisors is not limited to their active participation in formal board discussions. It also includes regular informal discussions and *ad hoc* meetings when circumstances so require.

{108}------------------------------------------------

### **COMPANY OFFICERS**

|                        |                                                            | Public limited company with a board of directors                                                                                                                                                                                                                                                                                                                |
|------------------------|------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Executive officers     | Executive officers                                         | . Chief executive officer: Sébastien Huron<br>. Deputy chief executive officer: Habib Ramdani<br>. Deputy chief executive officer, qualified person: Marc Bistuer                                                                                                                                                                                               |
| Non-executive officers | Non-executive officer<br>Members of the board of directors | . Chairwoman of the board of directors: Marie-Hélène<br>Dick-Madelpuech<br>. Members of the board of directors:<br>- Pierre Madelpuech, vice-chairman;<br>- Philippe Capron;<br>- Olivier Charmeil;<br>- Solène Madelpuech;<br>- Cyrille Petit, permanent representative of the company<br>Cyrille Petit Conseil;<br>- Sylvie Gueguen, employee representative. |

{109}------------------------------------------------

### **THE BOARD OF DIRECTORS**

### **Composition of the board of directors as of March 15, 2024**

| Composition of the board of directors as of March 15, 2024                                     |          |        |             |                                    |                    |                                                                                                                                      |                                   |                                                             |
|------------------------------------------------------------------------------------------------|----------|--------|-------------|------------------------------------|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|-------------------------------------------------------------|
| Personal information of the members of the board of directors                                  |          |        |             | Position on the board of directors |                    |                                                                                                                                      | Participation in board committees |                                                             |
|                                                                                                | Age      | Gender | Nationality | Number of shares as of 31.12.23    | Independence       | Initial date of appointment                                                                                                          | Term of office expires            |                                                             |
| Marie-Hélène Dick-Madelpuech Chairwoman of the board of directors                              | 59 years | Female | French      | 1,635                              |                    | Year of 1st appointment: 1998                                                                                                        | 2024                              | Appointments and compensation committee                     |
| Pierre Madelpuech Vice-chairman                                                                | 63 years | Male   | French      | 110                                |                    | Year of 1st appointment: 1995                                                                                                        | 2025                              | Audit committee                                             |
| Philippe Capron                                                                                | 65 years | Male   | French      | 442                                |                    | Year of 1st appointment: 2004                                                                                                        | 2026                              | Audit committee                                             |
| Olivier Charmeil                                                                               | 61 years | Male   | French      | 10                                 |                    | Year of 1st appointment: 2023                                                                                                        | 2026                              | Appointments and compensation committee                     |
| Solène Madelpuech                                                                              | 30 years | Female | French      | 10                                 |                    | Year of 1st appointment: 2017                                                                                                        | 2024                              |                                                             |
| Cyrille Petit Permanent representative of Cyrille Petit Conseil                                | 53 years | Male   | French      | 260                                | Independent member | Year of 1st appointment: 2019 Permanent representative of Cyrille Petit Conseil since March 2020                                     | 2025                              | . Audit committee . Appointments and compensation committee |
| Sylvie Gueguen Employee representative                                                         | 59 years | Female | French      | 138                                | N/A                | Year of 1st appointment: 2018                                                                                                        | October 2024                      |                                                             |
| Non-voting advisors                                                                            |          |        |             |                                    |                    |                                                                                                                                      |                                   |                                                             |
| Xavier Yon Permanent representative of Xavier Yon Consulting Unipessoal Lda Non-voting advisor | 83 years | Male   | French      | N/A                                | N/A                | Year of 1st appointment: 2014 personally and as permanent representative of Xavier Yon Consulting Unipessoal Lda since December 2017 | 2024                              |                                                             |
| Rodolphe Durand Non-voting advisor                                                             | 52 years | Male   | French      | N/A                                | N/A                | Year of 1st appointment: 2021                                                                                                        | 2024                              |                                                             |

{110}------------------------------------------------

### **Profile, experience and positions of the members of the board of directors - situation as of December 31, 2023**

### **Marie-Hélène Dick-Madelpuech, chairwoman of the board of directors**

| • Age and nationality                    | 59 years, French |
|------------------------------------------|------------------|
| • First appointment                      | 1998             |
| • Current term ends                      | 2024             |
| • Number of shares held as of 31.12.2023 | 1,635            |

Chairwoman of the board of directors since December 2020. Previously chairwoman of the supervisory board. Chairwoman of the appointments and compensation committee of the board of directors, previously chairwoman of compensation committee of the supervisory board.

Veterinary doctor and MBA graduate from HEC (business school), executive of the Panpharma Group, which specializes in the field of injectable medicines for healthcare establishments.

| List of positions                                                                                                                                                                  |                                                                                                           |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|
| Current positions                                                                                                                                                                  | Expired positions                                                                                         |
| Positions in Group companies:                                                                                                                                                      | Non-Group positions and functions<br>exercised over the past five years but no<br>longer in effect: none. |
| · vice-chairwoman of the Fondation d'entreprise Virbac (corporate foundation)<br>(France).                                                                                         |                                                                                                           |
| Positions in companies outside of the Group:                                                                                                                                       |                                                                                                           |
| · chairwoman and general manager of the company Okelen, SA (France);<br>· permanent representative of the company Okelen, chairing Panmedica, SAS<br>(France);                     |                                                                                                           |
| · chairwoman of the board of directors of Panpharma, SA (France);                                                                                                                  |                                                                                                           |
| · associate manager of the société civile Ilouet (France);                                                                                                                         |                                                                                                           |
| · director of Panpharma Australia Pty Limited (Australia);                                                                                                                         |                                                                                                           |
| · director of Panpharma UK Limited (United Kingdom);                                                                                                                               |                                                                                                           |
| · co-manager of the société civile immobilière Samakeur MH (France);                                                                                                               |                                                                                                           |
| · manager of the société civile Investec (France);                                                                                                                                 |                                                                                                           |
| · co-manager of the société civile Du Regard (France);                                                                                                                             |                                                                                                           |
| · co-manager of Okolline (France).                                                                                                                                                 |                                                                                                           |
| None of the above companies are listed on a stock exchange.                                                                                                                        |                                                                                                           |
| director of the company Beneteau (France), listed on the Paris stock exchange,<br>member of the strategic committee and the compensation, appointments and<br>governance committee |                                                                                                           |

{111}------------------------------------------------

### **Pierre Madelpuech, vice-chairman of the board of directors**

| • Age and nationality                  | 63 years, French                                                                                               |
|----------------------------------------|----------------------------------------------------------------------------------------------------------------|
| • First appointment                    | 1995 (personally) and 2005 (as permanent representative of the company Asergi).<br>Renamed personally in 2017. |
| • Current term ends                    | 2025                                                                                                           |
| • Number of shares held as of 31.12.23 | 110                                                                                                            |

Member of the audit committee. Previously member of the audit committee of the supervisory board.

Member of Virbac's board of directors acting as vice-chairman since December 2020. Previously member of the supervisory board acting as vice-chairman, appointed by decision (co-optation) by the supervisory board on September 5, 2017, to replace the company Asergi, which resigned.

Previously permanent representative of Asergi, member of Virbac's supervisory board until September 5, 2017.

ENSAM engineer and MBA graduate from HEC (business school), Pierre Madelpuech manages several companies controlled by him.

| List of positions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
| Current positions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Expired positions                                                                                   |
| Positions in Group companies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Non-Group positions and functions<br>exercised over the past five years but no<br>longer in effect: |
| none                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | . manager of the company ART'PRO, SARL<br>(France).                                                 |
| Positions in companies outside of the Group:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                     |
| . manager of the company Asergi, SARL (France);<br>. director of the company Panpharma, SA (France);<br>. director of the company Okelen, SA (France);<br>. general manager of the company Panmedica, SAS (France);<br>. manager of the company Arteis Développement, SARL (France);<br>. general manager of the company RPG, SAS (France);<br>. associate manager of the société civile immobilière Igresa (France);<br>. manager of the company Crearef, SARL (France);<br>. manager of the company Crea Négoce, SARL (France);<br>. manager of the company Color'I, SARL (France);<br>. manager of the société civile P2LM (France);<br>. chairman of the company Fra Angelico, SAS (France);<br>. co-manager of the société civile Du Regard (France);<br>. co-manager of the société civile immobilière Okolline (France);<br>. manager of the company SERG1 (France).<br>None of these companies are listed on a stock exchange. |                                                                                                     |

{112}------------------------------------------------

### **Philippe Capron, director**

| • Age and nationality                  | 65 years, French |
|----------------------------------------|------------------|
| • First appointment                    | 2004             |
| • Current term ends                    | 2026             |
| • Number of shares held as of 31.12.23 | 442              |

Chairman of the audit committee of the board of directors. Previously chairman of the audit committee and member of the compensation committee of the supervisory board.

A graduate of HEC (business school) and the Institut d'Études Politiques de Paris (Institute for political studies in Paris), Philippe Capron is an ENA (National school of administration) alumnus and served as financial inspector. Since 2018 Philippe Capron has been a partner in the Investment Bank Perella Weinberg Partners France S.A.S.

| List of positions                                                                |                                                                                                     |
|----------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
| Current positions                                                                | Expired positions                                                                                   |
| Positions in Group companies:                                                    | Non-Group positions and functions<br>exercised over the past five years but no<br>longer in effect: |
| none                                                                             |                                                                                                     |
| Positions in companies outside of the Group:                                     | . director of Econocom Group SA/NV<br>(Belgium), a company listed on the<br>Euronext.               |
| . general manager of the company Perella Weinberg Partners France SAS, unlisted; |                                                                                                     |
| . chairman of BREMZ, SAS, an unlisted company.                                   |                                                                                                     |

{113}------------------------------------------------

### **Olivier Charmeil, director**

| • Age and nationality       | 61, French |
|-----------------------------|------------|
| • First appointment         | 2023       |
| • End of term               | 2026       |
| • Shares held on 12/31/2023 | 10         |

Member of the appointments and compensation committee of the board of directors.

Director appointed by co-optation of the board of directors on December 21, 2023, to replace the company OJB Conseil, represented by Olivier Bohuon, resigned.

A graduate of HEC–Paris (business school) and the *Institut d'études politiques de* Paris (Institute for political studies in Paris), his experience is as follows:

. 1989: bank of the European Union, Mergers & Acquisitions department;

. since 1994: various functions within the Sanofi group (head of Business Development at Sanofi Pharma; chief financial officer for Asia, vice-chairman of International Operations Development, chairman and chief executive officer of Sanofi Synthélabo France; senior vice-chairman in charge of integration between Sanofi and Aventis; senior vice-chairman Asia/Pacific & Japan for Sanofi Aventis; executive vice-chairman, Vaccines, and chief executive officer of Sanofi Pasteur).

| List of positions                                                                                                                                     |                                                                                                          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
| Current positions                                                                                                                                     | Expired positions                                                                                        |
| Positions in Group companies:                                                                                                                         | Non-Group mandates and functions<br>exercised over the past five years but no<br>longer in effect: none. |
| none                                                                                                                                                  |                                                                                                          |
| Positions in companies outside of the Group:                                                                                                          |                                                                                                          |
| · executive vice-chairman of the General Medicine division and member of the<br>executive committee of Sanofi SA, listed on the Paris stock exchange; |                                                                                                          |
| · director of GenOway SA (France), listed on the Paris stock exchange;                                                                                |                                                                                                          |
| · manager of the société civile immobilière La Jonchée (France);                                                                                      |                                                                                                          |
| · manager of the société civile immobilière La Coronette (France);                                                                                    |                                                                                                          |
| · manager of the société civile immobilière Kermaria (France);                                                                                        |                                                                                                          |
| · member of the board of directors of the European federation of pharmaceutical<br>industries and associations (EFPIA).                               |                                                                                                          |

{114}------------------------------------------------

|  |  |  | Solène Madelpuech, director |
|--|--|--|-----------------------------|
|--|--|--|-----------------------------|

| • Age and nationality | 30 years, French |
|-----------------------|------------------|
| • First appointment   | 2017             |
| • Current term ends   | 2024             |

• Number of shares held as of 31.12.23 10

Member of the board of directors. Previously member of the supervisory board of Virbac, appointed by decision (co-optation) of the supervisory board of September 5, 2017 as a replacement of Jeanine Dick, who resigned.

Graduated with a BSc in management from Warwick business school and a Master in management from London business school.

| List of positions                                                              |                                                                                                     |
|--------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
| Current positions                                                              | Expired positions                                                                                   |
| Positions in Group companies:                                                  | Non-Group positions and functions<br>exercised over the past five years but no<br>longer in effect: |
| none                                                                           | • general manager UK of Sight Diagnostics<br>(United Kingdom).                                      |
| Positions in companies outside of the Group:                                   |                                                                                                     |
| • co-manager of the société civile immobilière Samakeur MH (France);           |                                                                                                     |
| • member of the supervisory board of the société civile Investec (France);     |                                                                                                     |
| • Transformation, Integration and Alliance Management director for the company |                                                                                                     |

Theramex HQ UK Limited (United Kingdom).

None of these companies are listed on a stock exchange.

### **Cyrille Petit, permanent representative of the company Cyrille Petit Conseil, director**

| • Age and nationality                                                      | 53 years, French  |
|----------------------------------------------------------------------------|-------------------|
| • First appointment                                                        | 2019 (personally) |
| • Current term ends                                                        | 2025              |
| • Number of shares held by company<br>Cyrille Petit Conseil as of 31.12.23 | 260               |

Member of the audit committee of the board of directors and member of the appointments and compensation committee since March 18, 2022. Previously member of the audit committee of the supervisory board.

Personally member of the supervisory board until his resignation and since March 19, 2020 as legal representative of the company Cyrille Petit Conseil.

A graduate of HEC-Paris (business school), his professional experience is as follows:

. since 2019: development and Strategy director (Bracco Group);

· 2019 strategy and mergers & acquisitions consulting;

· 2012-2018: director of Development and chairman of Global Business Services and member of the executive committee (Smith & Nephew plc);

· 2008-2012: director of World Development and member of the board of management (General Electric Transportation);

· 2002-2008: director of Development (General Electric Healthcare).

| List of positions                                                                      |                                                                                                     |
|----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
| Current positions                                                                      | Expired positions                                                                                   |
| Positions in Group companies:                                                          | Non-Group positions and functions<br>exercised over the past five years but no<br>longer in effect: |
| none                                                                                   | · director of the company Flowonix Inc<br>(United States);                                          |
| Positions in companies outside of the Group:                                           | · director of the company Reapplix A/S<br>(Denmark).                                                |
| · president of the company Cyrille Petit Conseil, SAS (France);                        |                                                                                                     |
| · manager of the société civile immobilière Caducée (France);                          |                                                                                                     |
| · manager of the société civile immobilière Berteaux 2000 (France);                    |                                                                                                     |
| · manager of the société civile immobilière Familiale du Manoir de Kerminizy (France); |                                                                                                     |
| · manager of the société civile immobilière Happy Family (France);                     |                                                                                                     |
| · director of the company Blue Earth Diagnostics Ltd (United Kingdom);                 |                                                                                                     |
| · director of the company Blue Earth Therapeutics Ltd (United Kingdom);                |                                                                                                     |
| · director of Braco Horizons Ltd (United Kingdom);                                     |                                                                                                     |
| · director of the company Blue Earth Diagnostics Inc (United States);                  |                                                                                                     |
| · director of the company Euromedica A.E. (Greece).                                    |                                                                                                     |
| None of the companies are listed on a stock exchange.                                  |                                                                                                     |

. director of Polerean Imaging PLC (United Kingdom), a company listed on the AIM

market of the London stock exchange.

{115}------------------------------------------------

### **Sylvie Gueguen, director employee representative**

| • Age and nationality   | 59 years, French |
|-------------------------|------------------|
| • First appointment     | 2018             |
| • Current term ends     | October 2024     |
| • Number of shares held | 138              |

Director of Virbac's Preclinical and Clinical Biological Product Development department.

| List of positions                            |                                                                                                           |
|----------------------------------------------|-----------------------------------------------------------------------------------------------------------|
| Current positions                            | Expired positions                                                                                         |
| Positions in Group companies:                | Non-Group positions and functions<br>exercised over the past five years but no<br>longer in effect: none. |
| none                                         |                                                                                                           |
| Positions in companies outside of the Group: |                                                                                                           |
| none                                         |                                                                                                           |

### **Organization of the board of directors**

The company is managed by a board of directors composed of seven directors, including one employee representative.

The applicable rules for appointing members of the board of directors are the legal and statutory rules set out in article 10 of the articles of association, the main provisions of which are described below.

The directors shall be appointed by the ordinary shareholders' meeting, which may dismiss them at any time.

A director who is a physical person cannot be appointed, nor can their term of office be renewed, once they have reached the age of 70.

Each director must own, or become the owner within three months of their appointment, of at least ten (10) shares in registered form.

The term of office of the directors is three years. Terms of office shall be renewed on a rotational basis in order to ensure that regular renewal of board members occurs in the most equal proportions possible. By exception, the ordinary shareholders' meeting may, to set up such a rotation, appoint a director for a term of one, two or three years. By way of derogation, the first directors may be appointed for a different term, as long as this term does not exceed three years.

Any outgoing member may be reelected.

In the event of a vacancy due to the death or resignation of one or more directors, the board of directors may, between two general meetings, make temporary appointments, subject to ratification at the next ordinary shareholders' meeting.

Every director undertakes to comply with the obligations incumbent upon them in this capacity and in particular those relating to limits on the number of corporate mandate they are authorized to hold.

The board of directors shall comprise, in addition to the directors whose number and method of appointment are set out in articles L225-17 and L225-18 of the French commercial code, one or two directors representing the employees pursuant to the provisions provided by law.

The number of directors representing the employees shall be equal to two when the number of directors referred to in articles L225-17 and L225-18 of the French commercial code is greater than eight, and one if the number of directors is equal to or less than eight.

The director or directors representing the employees shall be appointed by the Economic and social committee, in accordance with legal and regulatory provisions.

### **Conflicts of interest**

Directors are required to disclose to the board of directors any situation involving a conflict of interest, even a potential one, in accordance with article 4.4 of the board of directors' internal bylaws, an extract of which is reproduced below.

"Each director must act in all circumstances in the interest of the company, regardless of any other interest.

Each director must ensure not to engage in any activity that would place him or her in a situation in which there is a conflict of interest with the company.

In a situation where a conflict of interest arises or may arise between the company's interest and his or her direct or indirect personal interest or the interest of the shareholder or group of shareholders he or she represents, the director concerned must:

- inform the board of directors as soon as he or she becomes aware of the situation;
- and determine the consequences with regard to his or her mandate. Thus, as the case may be, he or she must:
	- either abstain from participating in the vote of the corresponding deliberation;

– or not attend the board of directors meeting during which the member finds himself or herself in a situation where there is a conflict of interest.

A director who feels that he or she is no longer able to fulfill his or her role on the board must resign." These rules also apply to non-voting advisors.

{116}------------------------------------------------

### **Functioning of the board of directors**

The board of directors shall meet at least once every quarter and as often as the interests of the company may require, either at headquarters or at any other place indicated in the notice of convocation, or by teleconference. It shall be convened by any means, even verbally, by the chairman. If the chairman is unable, it shall be convened by the vice-chairman.

If the chairman and vice-chairman are unable, it shall be convened by the chief executive officer.

The statutory auditors shall be called in to the meetings of the board of directors.

If the functions of chief executive officer and chairman of the board of directors are separated, the chief executive officer may also request that the chairman convokes the board of directors with a determined agenda. When it has not met for more than two months, at least one-third of the directors may request that the chairman calls a meeting with a determined agenda.

In 2023, the board of directors met eight times via videoconference and face-to-face when possible.

The directors may also meet during the year for informal work and discussion sessions.

The meetings of the board of directors shall be chaired by the chairman of the board of directors or, failing that, by the vice-chairman. In the absence of the chairman and vice-chairman, the board of directors shall designate, for each session, one of its members to chair the meeting.

To calculate the *quorum* and the majority, directors participating in the meeting by means of videoconference, conference call or any other means that may be recognized by the legislation in force, except for the preparation of annual and consolidated accounts and the management report, are deemed to be present, within the limits provided by law.

A director may be represented at a meeting by another director who cannot hold more than one proxy.

The board of directors shall meet in the presence of the chief executive officer and the chief financial officer in order to receive all the information required for the agenda. When the board of directors has to deliberate on matters concerning members of general management, the said members present are asked to excuse themselves from the meeting so that the board can debate and deliberate without them present. In March 2023 and in March 2024, portions of the board of directors meetings were held without the chief executive officer and the deputy chief executive officer. In addition, the chief executive officer and the deputy chief executive officer did not attend the December 21, 2023 meeting relating to the appointment by co-optation of director Olivier Charmeil.

#### **Informing the board of directors**

Pursuant to article 2.2 of the internal bylaws, documents enabling the directors to make fully informed decisions on the items on the agenda are communicated to the directors within a reasonable period of time before the board of directors meeting, except in the event of an emergency or the need to ensure complete confidentiality. Outside of meetings, directors receive all important information relating to the company.

The directors assess for themselves whether the information communicated to them is sufficient and, if necessary, ask for any additional information that they deem useful.

The chairman regularly informs the board of directors of the financial position, cash position, financial commitments and significant events of the company.

The directors may meet with the company's main executives, even without the corporate officers present, but by informing them in advance.

Any new director may request training on the specifics of the company and the Group, their lines of business and their sectors of activity.

The board of directors may, during each of its meetings, in the event of an emergency, and on the proposal of the chairman, deliberate on matters not included in the agenda that has been communicated to it.

#### **Assessing the operations of the board**

In accordance with the provisions of the *Afep-Medef* Code, the board of directors conducts an annual assessment of its operations in order to improve the effectiveness of its work, and at least once every three years, a formal assessment, which may be carried out with the assistance of an external consultant.

The board of directors reviews its composition, organization and operation, and conducts a similar review of its committees.

Once a year, the board of directors devotes an item on the agenda of one of its meetings to a discussion regarding its operations.

The purpose of this formal assessment is threefold:

- to take stock of how the board and its committees operate;
- to verify that important issues are properly prepared and discussed;
- and to assess the effective contribution of each director to the work of the board.

The board of directors of March 21, 2023, discussed the operation of the board of directors and the chairwoman of the board of directors gave an individualized annual review of exchanges and improvements with each member of 

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the board of directors. The directors possess strong and complementary skills, with very good knowledge of Virbac's key functions and its issues. Non-voting advisors bring their skills in their respective field, including strategy and CSR.

Pursuant to the recommendations established by the *Afep-Medef* Code, Cyrille Petit, permanent representative of the company Cyrille Petit Conseil, independent director and member of the appointments and compensation committee, carried out a formalized evaluation of the board of directors at the beginning of 2024. The evaluation was carried out through a questionnaire sent to all directors, the summary of which was provided at the appointments and compensation committee meeting on March 8, 2024 and presented and discussed at the board of directors meeting on March 15, 2024.

The evaluation was carried out on the basis of the eight board meetings held in 2023 (four quarterly face-to-face meetings and four extraordinary meetings by video conference organized in view of the acquisition projects and the cyberattack), with all directors and non-voting advisors present.

Regarding the composition of the board of directors, the evaluation showed that the directors appreciate the wide diversity of very high-level profiles and the diverse skills and experiences of the board members.

Regarding the operation of the board and the work of the committees, the directors find that they work well together, and information is exchanged constructively, thanks in particular to reciprocal listening. It was also pointed out that the limited number of directors facilitates discussions, engagement and decision-making. Directors are satisfied with the work of the committees and consider that these bodies work and review topics in detail, with clear and concise feedback to the board. Directors also consider that the information received for meetings is excellent and transmitted well in advance. In addition, the chief executive officer's opening statements on business activity at the beginning of the board meeting are greatly appreciated by the directors.

With regard to points for development, directors point out the importance of:

(i) improving the running of board meetings held by video conference to make it easier for all directors to speak;

(ii) implementing a reference document summarizing any proposed acquisition project to prior approval by the board of directors;

(iii) continuing to provide directors with animal-health market press clippings and analytical notes;

(iv) monitoring the implementation of Corporate sustainability reporting directive (CSRD) standards by the audit committee with an annual report to the board of directors;

(v) implementing annual monitoring of high potential employees by the appointments and compensation committee;

(vi) involving external experts to prepare certain new areas or topics such as artificial intelligence or certain technological developments.

### **Regulated agreements**

Pursuant to the article L22-10-12 of the French commercial code, the board of directors has implemented an internal control procedure for agreements related to routine transactions entered into under normal conditions in order to regularly assess whether these agreements meet and continue to meet these conditions.

The procedure for assessing whether agreements can be regarded as routine and normal is applied when an agreement has been entered into either directly or through an intermediary:

- between the company and its chief executive officer or one of its deputy chief executive officers, one of its directors, or between the company and a shareholder holding more than 10% of the voting rights or, in the case of a shareholder company, the company controlling it within the meaning of article L233-3 of the French commercial code, or between the company and another organization, if the chief executive officer, one of the deputy chief executive officers or one of the directors of the company is an owner, partner with unlimited liability, manager, director, member of the supervisory board or, in general, a manager of this other corporation;
- between the company and another company in the Group, other than a company wholly owned by the company, of which one of the executives, as defined in article L225-38 of the French commercial code, is also the chief executive officer, a deputy chief executive officer or a director of the company.

The methodology used to assess whether these agreements are routine transactions entered into under normal conditions is as follows:

- the Financial Affairs department and the Legal department meet whenever necessary to review these new agreements and the relevance of the criteria used in distinguishing between routine and regulated agreements, and with regard to current agreements, consider whether or not to reclassify them due to circumstances that may result in modification of the criteria used at the time of conclusion;
- if agreements are classified as regulated agreements, the procedure provided by law shall be applied under the supervision of the Legal department;
- the list and information regarding these current routine agreements are conveyed annually to the board of directors to allow it to assess, when deemed necessary, whether the agreements still meet these normal and routine conditions;
- pursuant to the law, individuals directly or indirectly involved in any of these agreements do not participate in its assessment.

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### **Policy of staggered terms for the members of the board of directors**

Terms of office for members of the board of directors have been staggered to comply with the recommendations of the *Afep-Mede*f Code.

### **Board of directors' internal bylaws**

The board of directors appointed by the general shareholders' meeting of December 15, 2020, adopted its internal bylaws at its first meeting on December 15, 2020. These internal regulations were amended by a decision of the board of directors on March 21, 2023.

The internal bylaws govern the operation of the board and its committees, as well as the board's duties and powers. The internal bylaws also specify the rights and duties of the members of the board of directors and, in particular, the code of ethics that applies to board members. In accordance with the recommendations of the *Afep-Medef* Code, they also provide for cases of prior approval by the board of directors.

The internal bylaws are published on the website https://corporate.virbac.com/fr/home/discover-virbac/ governance.html.

### **Responsibilities of the board of directors**

The board of directors deliberates on all matters falling within its legal and regulatory powers.

It strives to foster the creation of long-term value by the company whilst taking into account the social and environmental challenges of its business activities. It proposes, if necessary, any changes to the articles of association that it considers appropriate.

The board of directors determines the strategic direction of the company's activities, including multi-year strategic directions for corporate social responsibility. It decides on major operations and ensures their implementation. With the exception of the powers expressly attributed to shareholders' meetings and within the limits of the company's purpose, the board may deal with any issue concerning the proper operation of the company and settles matters concerning it through its deliberations.

It shall also carry out the checks and verifications that it deems appropriate.

### **The board of directors performs these principal functions:**

- it chooses its governance structure (separation or unification of the functions of chairman and chief executive officer);
- it appoints and dismisses the corporate officers;
- It sets the compensation of the chairman, the chief executive officer and the deputy chief executive officers;
- it authorizes the granting of sureties, endorsements and guarantees;
- it authorizes, prior to their conclusion, the regulated agreements;
- it establishes a procedure for regularly assessing whether current agreements entered into under normal conditions meet these conditions;
- it closes the annual corporate and consolidated financial statements, the interim financial statements, and the forecast management documents;
- it approves the terms of the management report and the report on corporate governance;
- it convenes and approves the agendas for shareholders' general meetings;
- it approves the annual budget;
- it verifies the quality and truthfulness of the information provided to shareholders as well as to the financial market, in particular through financial statements and the annual report;
- it expresses its opinion on all decisions relating to the company's major strategic, economic, social, environmental, financial and technological orientations and ensures their implementation by general management;
- it is kept informed of market trends, the competitive environment and the main challenges facing the company, including in the area of corporate social responsibility;
- it regularly examines, in relation to the strategy it has defined, the opportunities and risks such as financial, legal, operational, social and environmental risks, and the measures taken accordingly;
- it ensures, where appropriate, that a system for the prevention and detection of corruption and influence peddling is in place and receives all the information necessary for this purpose;
- it also ensures that the executive officers implement a policy of non-discrimination and diversity within the company;
- it deliberates on the company's policy in terms of professional and salary equality between all employees and between women and men;
- it establishes, on the recommendation of general management, targets for gender diversity within the management bodies. It also describes the gender diversity policy applied to the management bodies in the Corporate governance report, as well as the objectives of this policy, the procedures for implementing it and the results obtained during the past financial year, and, where appropriate, the reasons why the objectives were not achieved, and the measures taken to remedy the situation;
- it validates the methods of implementation of the corporate social responsibility strategy and the action plan as proposed by general management, and thereafter annually the results obtained. It examines the opportunity, if any, to adapt the action plan or modify the objectives in view of, in particular, the evolution of the company's strategy, technologies, shareholder expectations and the economic ability to implement it;
- it decides on the creation of committees;
- it is consulted for prior approval of any operation deemed to be major at the Group level, involving investment, organic growth, external acquisition, disposal or internal restructuring, particularly if it falls outside the company's announced strategy.

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### **Prior authorizations from the board of directors**

Notwithstanding the legal provisions relating to the authorizations that must be granted by the board (regulated agreements, endorsements and guarantees), the following are subject to prior authorization by the board because of their nature or their significance:

- acquisitions or disposals of assets, or investments not included in the annual investment budget of a unit amount of more than 30 million euros, or for investments below this threshold, leading to a cumulative multiyear budget of 30 million euros being exceeded for a single project;
- issues and/or operations substantially affecting the Group's strategy, financial structure or scope of activity;
- financial transactions with a material impact on the Group's statutory accounts or consolidated accounts, and in particular (within the framework of the authorizations that may be granted by the shareholders' general meeting) the issuing of securities that give access to capital or market debt instruments;
- the allocation to employees of incentive instruments giving access to the company's capital, in particular shares subject to performance conditions (within the framework of authorizations that may be granted by the shareholders' meeting).

Each year, the board of directors determines the number of permanent authorizations granted to the chief executive officer and relating to sureties, endorsements, guarantees and securities granted by Virbac (intra-group or granted to guarantee the obligations of French or foreign third parties).

### **Procedure concerning the succession of corporate officers**

The board of directors, at its meeting of March 18, 2022, approved the procedure established for the succession of corporate officers. In particular, it provides that in the event of early and sudden departure of corporate officers, a list of potential candidates is established (and revised, where applicable), if necessary pending recruitment. The succession policy as established in 2022 was reviewed in 2023 by the appointments and compensation committee and the directors. The procedures remains unchanged.

### **Procedure for the selection of future independent directors**

The board of directors, at its March 18, 2022 meeting, approved the procedure for the selection of future independent directors, including their profiles and skills, as well as recruitment methods. In respect of this procedure, the directors and non-voting advisors will meet to establish the profile of the future independent director, and the chief executive officer will also be consulted. Once the profile is established, members of the board of directors will be able to propose potential candidates and the appointments and compensation committee will expand the search with a specialized firm, where appropriate.

In accordance with the established criteria, the board of directors was looking for a new director consistent with its diversity policy, namely an independent, competent director with international professional experience, Frenchspeaking, preferably in the pharmaceutical industry or in a related field, able to attend in-person board meetings whenever possible.

After meeting with several candidates, the appointments and compensation committee selected Olivier Charmeil's application, his profile meeting the needs identified by the board of directors and the independence criteria defined by the *Afep-Medef* Code. At the recommendation of the appointments and compensation committee the board of directors at its meeting of December 21, 2023 appointed Olivier Charmeil by co-option for the remaining term of office of OJB Conseil, which resigned, *i.e.* until the end of the ordinary shareholders' meeting which will approve in 2026 the financial statements for the financial year that will end December 31, 2025. The ratification of Olivier Charmeil's appointment by co-optation will be submitted to the June 21, 2024 shareholders' meeting.

### **The board of directors' relationship with shareholders**

Article 4.4 of the *Afep-Medef* Code provides that shareholder relations with the board of directors, in particular on matters of corporate governance, may be entrusted to the chairman of the board of directors or, where applicable, to the independent lead director.

The company did not wish to appoint a lead director. Relations with the shareholders, particularly on corporate governance matters, are handled, at the request of the chairwoman of the board of directors, by the Group's Financial Affairs department.

### **Criteria for director independence**

At its meeting on March 15, 2024, the board of directors reviewed the independence criteria for its members based on the criteria set out in the *Afep-Medef* Code.

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#### Independence criteria set out in the *Afep-Medef C*orporate governance code:

**Criterion 1: employee corporate officer within the past five years**

Not to be and not to have been within the previous five years:

• an employee or executive officer of the company;

• an employee, executive officer or director of a company consolidated within the corporation;

• an employee, executive officer or director of the company's parent company or a company consolidated within this parent

company.

**Criterion 2: cross-directorships**

Not to be an executive officer of a company in which the corporation holds a directorship, directly or indirectly, or in which an employee appointed as such or an executive officer of the corporation (currently in office or having held such office within the last five years) holds a directorship.

**Criterion 3: significant business relationships**

Not to be a customer, supplier, commercial banker, investment banker or consultant:

• that is significant to the corporation or its Group;

• or for which the corporation or its group represent a significant portion of its activity.

The evaluation of the significant otherwise of the relationship with the company or its Group must be debated by the board, and the quantitative and qualitative criteria that led to this evaluation (continuity, economic dependence, exclusivity, etc.) must be explicitly stated in the annual report.

#### **Criterion 4: family ties**

Not to be related by close family ties to a company officer.

#### **Criterion 5: auditor**

Not to have been an auditor of the corporation within the previous five years.

**Criterion 6: period of office exceeding twelve years**

Not to have been a director of the corporation for more than twelve years. Loss of the status of independent director occurs on the date of the twelfth anniversary.

#### **Criterion 7: status of non-executive officer**

A non-executive officer cannot be considered independent if he or she receives variable compensation in cash or in the form of securities or any compensation linked to the performance of the corporation or the Group.

#### **Criterion 8: status of the major shareholder**

Directors representing major shareholders of the corporation or its parent company may be considered independent, provided that these shareholders do not take part in the control of the company. Nevertheless, beyond a 10% threshold in capital or voting rights, the board, upon a report from the nominations committee, should systematically review the qualification as independent, in the light of the make up of the corporation's capital and the existence of a potential conflict of interest.

The board of directors discussed whether significant ties existed between the members considered to be independent and the company or one of the Group's companies.

The board of directors noted that none of these members had a direct or indirect business relationship with the company or the Group and, in particular, that none of the aforementioned members was a "customer, supplier, corporate banker or investment banker" of the company or Group and that none of these members had established any particular interest or special relationship with the Group or its officers.

Accordingly, the board of directors declared that two board members, in addition to the member of the board of directors representing the employees, namely:

- Cyrille Petit, permanent representative of Cyrille Petit Conseil, and
- Olivier Charmeil

meet all the independence criteria of the *Afep-Medef* Code, and has therefore confirmed the independence of the two members mentioned above.

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### **Summary table of criteria applied to each member of the board of directors as of March 15, 2024**

| Criteria¹                                                                | Marie-Hélène<br>Dick-<br>Madelpuech | Pierre<br>Madelpuech | Solène<br>Madelpuech | Philippe<br>Capron | Olivier<br>Charmeil | Cyrille<br>Petit<br>permanent<br>representative of Cyrille<br>Petit Conseil |
|--------------------------------------------------------------------------|-------------------------------------|----------------------|----------------------|--------------------|---------------------|-----------------------------------------------------------------------------|
| Criterion 1: employee<br>corporate officer within<br>the past five years | ✓                                   | ✓                    | ✓                    | ✓                  | ✓                   | ✓                                                                           |
| Criterion 2: cross-<br>directorships                                     | ✓                                   | ✓                    | ✓                    | ✓                  | ✓                   | ✓                                                                           |
| Criterion 3: significant<br>business relationships                       | ✓                                   | ✓                    | ✓                    | ✓                  | ✓                   | ✓                                                                           |
| Criterion 4: family ties                                                 | X                                   | X                    | X                    | ✓                  | ✓                   | ✓                                                                           |
| Criterion 5: auditor                                                     | ✓                                   | ✓                    | ✓                    | ✓                  | ✓                   | ✓                                                                           |
| Criterion 6: period of<br>office exceeding twelve<br>years               | X                                   | X                    | ✓                    | X                  | ✓                   | ✓                                                                           |
| Criterion 7: status of<br>non-executive officer                          | ✓                                   | ✓                    | ✓                    | ✓                  | ✓                   | ✓                                                                           |
| Criterion 8: status of<br>the major shareholder                          | X                                   | ✓                    | ✓                    | ✓                  | ✓                   | ✓                                                                           |

In this table, "✓" signifies that a criterion for independence is satisfied and "X" signifies that a criterion for independence is not satisfied;

### **Diversity policy applied to the board of directors**

At the meeting on December 12, 2023, the directors assessed the diversity policy applicable to the board during 2023 and for the years to come.

To ensure that the work of the board of directors continues under the best possible conditions and continues to gain in quality, the directors remain attentive to the fact that the board is composed of independent, competent members with international professional experience, French-speaking, preferably in the pharmaceutical industry or in a related field, able to attend in-person board meetings whenever possible.

With regard to the diversity of its composition, the board of directors' policy aims to maintain the current level of diversity, particularly with regard to the skills and independence of its members (two independent directors<sup>1</sup> ), representation of women and men (two female directors<sup>1</sup> ), the ages of its members (between 30 and 65 years), seniority on the board (from 28 years of seniority to a recent co-optation appointment), qualifications (business, engineering, veterinarian schools) and professional international experience. Details of the skills and expertise for each of the directors, validated by the board of directors, are summarized in the table below.

1 the female director representing employees not being counted in application of the *Afep-Medef* Code

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|                                                                     | Marie-<br>Hélène<br>Dick-<br>Madelpuech | Pierre<br>Madelpuech | Solène<br>Madelpuech | Philippe<br>Capron | Cyrille Petit<br>représentant<br>permanent de<br>Cyrille Petit<br>Conseil | Olivier<br>Charmeil | Sylvie Gueguen |
|---------------------------------------------------------------------|-----------------------------------------|----------------------|----------------------|--------------------|---------------------------------------------------------------------------|---------------------|----------------|
| Corporate<br>management                                             | ✔                                       | ✔                    | ✔                    | ✔                  | ✔                                                                         | ✔                   |                |
| International<br>expertise                                          | ✔                                       | ✔                    | ✔                    | ✔                  | ✔                                                                         | ✔                   |                |
| Financial<br>expertise                                              | ✔                                       | ✔                    | ✔                    | ✔                  | ✔                                                                         | ✔                   |                |
| Strategy and<br>mergers-<br>acquisitions                            | ✔                                       | ✔                    | ✔                    | ✔                  | ✔                                                                         | ✔                   |                |
| Knowledge of<br>the<br>pharmaceutical<br>and veterinary<br>industry | ✔                                       | ✔                    | ✔                    | ✔                  | ✔                                                                         | ✔                   | ✔              |
| Veterinary<br>expertise                                             | ✔                                       |                      |                      |                    |                                                                           |                     | ✔              |
| Research and<br>innovation                                          | ✔                                       |                      |                      |                    | ✔                                                                         | ✔                   | ✔              |
| Digital/<br>e-commerce                                              |                                         | ✔                    | ✔                    |                    |                                                                           | ✔                   |                |
| CSR/HR/talent                                                       | ✔                                       | ✔                    | ✔                    | ✔                  | ✔                                                                         | ✔                   |                |

Lastly, it should be noted that no member of the board of directors combines his or her position with an employment contract within the Virbac group (except the employee representative).

### **Changes that occurred within the membership of the board of directors and committees - situation as of March 15, 2024**

|                                            | Departure                                                                              | Appointment                                                            | Reappointment                                                                                             |
|--------------------------------------------|----------------------------------------------------------------------------------------|------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|
| Board of directors                         | The company OJB Conseil,<br>represented by<br>Olivier Bohuon<br>(on December 21, 2023) | Olivier Charmeil<br>(appointment by co-option on<br>December 21, 2023) | Philippe Capron<br><br>The company OJB Conseil,<br>represented by<br>Olivier Bohuon (on June 20,<br>2023) |
| Audit committee                            | None                                                                                   | None                                                                   | Philippe Capron                                                                                           |
| Appointments and<br>compensation committee | The company OJB Conseil,<br>represented by<br>Olivier Bohuon (on December<br>21, 2023) | Olivier Charmeil (on December<br>21, 2023)                             | The company OJB Conseil,<br>represented by<br>Olivier Bohuon (on June 20,<br>2023)                        |

### **Committees of the board of directors**

The board of directors is assisted in its work by two committees, an audit committee and an appointments and compensation committee, which have advisory powers and carry out their activities under the responsibility of the board of directors, which alone has the legal power to make decisions and remains accountable for the performance of its duties.

Pursuant to article 2.2 of the internal bylaws, documents enabling the directors to make fully informed decisions on the items on the agenda are communicated to the directors within a reasonable period of time before the board of directors meeting, except in the event of an emergency or the need to ensure complete confidentiality. The same rule is followed for audit committee meetings. Finally, given the location of the company's headquarters in the 

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region, the audit committee's meeting on the annual accounts is held the day before the board of directors' meeting, unless otherwise specified.

Pursuant to article 6 paragraph 4 of the internal bylaws, the committees may request external technical studies on subjects within their competence, at the company's expense, after informing the chairman of the board of directors or the board of directors itself, and provided that they report on the studies to the board.

Within its area of competence, each committee issues proposals, recommendations and opinions as appropriate, and reports on its tasks at the next meeting of the board of directors.

Pursuant to article 2.3 of the internal bylaws, the board of directors deals with matters relating to corporate social responsibility. Therefore, a committee was not established specifically for the corporate social responsibility issues.

### **Audit committee**

The audit committee is responsible for:

- controlling the monitoring of the financial reporting process and the review of the company statutory and consolidated annual financial statements;
- periodically reviewing the mapping of the Group's major risks;
- controlling the existence and effectiveness of the internal control and risk management systems;
- monitoring and reviewing the internal audit program implemented by the company;
- issuing a recommendation on the statutory auditors proposed for appointment by the shareholders' meeting;
- monitoring the performance by the statutory auditors of their duties;
- ensuring that the statutory auditors comply with the conditions of independence;
- approving the provision by the statutory auditors of non-prohibited services other than certifying accounts;
- and reporting to the board of directors on the performance of its duties.

On December 15, 2020, the board of directors decided to appoint as member of the audit committee:

- Philippe Capron, chairman;
- Pierre Madelpuech;
- Cyrille Petit as representative of Cyrille Petit Conseil.

The aforementioned directors have the necessary qualifications to be members of this committee. All three have financial and accounting skills, which they have developed as part of their professional experience (financial inspector, investment banker, mergers and acquisitions consultant, etc.). They also have a good knowledge of the Group's accounting and financial procedures.

The composition of the audit committee was confirmed by the board of directors at its meeting on March 15, 2024, notwithstanding the non-independence of Philippe Capron, who was kept as a member and chairman of the audit committee given his extensive expertise in financial matters and his experience in this position.

The audit committee, chaired by Philippe Capron met five times in 2023. All members of the audit committee attended all meetings.

Over the course of 2023, the audit committee reviewed the 2022 annual financial statements and the 2023 halfyear financial statements.

It checked the financial information and approved the accounting treatment for the financial year's major transactions, submitted either by the statutory auditors or by the members of general management. The committee also worked on the impacts of the cyberattack on the Group, and found that this cyberattack did not affect accounting data integrity.

The audit committee also noted progress of the measures taken by general management to ensure the establishment and effectiveness of internal control procedures, to identify risks of any kind, and implement the measures considered necessary to manage them. This risk review concerns in particular financial, legal, operational, social and environmental risks as well as off-balance sheet commitments. The audit committee also reviewed the summaries of the various audits and follow-up audits carried out during 2023.

In addition, the audit committee took note of regulatory developments with regard to non-financial reporting (CSRD) as of January 1, 2024, for which the Group has prepared.

The chief executive officer and the deputy chief executive officer-chief financial officer participate in audit committee meetings at the request of its members for the presentation of accounts and risks and to answer their questions. Then, at the request of the committee, they leave the meeting in order to allow the members of the audit committee to interview the statutory auditors and deliberate without them present.

The statutory auditors may participate in meetings of the audit committee when their presence has been deemed necessary by the audit committee.

### **The appointments and compensation committee**

The main tasks of the appointments and compensation committee are:

- drawing up proposals and reviewing candidates for the positions of directors or members of general management;
- developing a procedure for the selection of future independent directors;
- ensuring that a succession plan is in place for members of general management;

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- drawing up recommendations and proposals regarding the compensation of members of general management;
- remaining informed about the Virbac group's general human resources policy and, more specifically, the compensation policy for the Virbac group's main executives;
- reviewing proposals and conditions for awarding performance-related stock grants;
- drawing up proposals regarding the amounts of directors' fees for the members of the board of directors.

The board of directors of December 15, 2020 appointed the following as members of the appointments and compensation committee:

- Marie-Hélène Dick-Madelpuech, chairwoman;
- Olivier Bohuon as representative of the company OJB Conseil;
- Cyrille Petit as representative of the company Cyrille Petit Conseil.

Following the resignation of the company OJB Conseil from its position as director, the board of directors having coopted Olivier Charmeil to replace it as director, also decided to appoint him as a member of the appointments and compensation committee and took note of the new composition of this committee which, as of March 15, 2024, is therefore still composed as follows:

- Marie-Hélène Dick-Madelpuech, chairwoman;
- Cyrille Petit as representative of the company Cyrille Petit Conseil;
- Olivier Charmeil.

The appointments and compensation committee is comprised primarily of independent directors and is presided over by the chairwoman of the board of directors. The board of directors believes that Marie-Hélène Dick-Madelpuech acts independently and impartially, given that she does not rule on her own compensation, but on the compensation of executive corporate officers, that she is not an executive corporate officer, and that she chairs this committee in the interest of all shareholders and the company.

The chief executive officer is involved in the work of the committee with regard to the mission of appointing members of the deputy general management and management bodies, as well as in the development of the succession plan for these directorates. The chief executive officer also assists the committee in the selection of new directors. The chief executive officer does not attend meetings or parts of meetings in which his compensation is the subject of deliberations.

The compensation committee met twice in 2023. All the members of the compensation committee attended these meetings.

At these meetings, the following topics were covered:

- the review of the 2022 performance of the members of the general management (executive officers) with respect to their variable compensation;
- the compensation for 2023 of the members of the general management;
- the review of compensation paid to the Group's main executives;
- the implementation of a new free share plan;
- the review of a succession plan for corporate officers and the Group's senior managers;
- the search for and selection of a new director, co-opted on December 21, 2023.

### **Non-voting advisors**

- Xavier Yon Consulting Unipessoal Lda, represented by Xavier Yon, who was a non-voting advisor, was reappointed as a non-voting advisor by the shareholders' general meeting of June 20, 2023 for a term of one year.
- Mr. Rodolphe Durand, who was a non-voting advisor, was appointed again as a non-voting advisor by the shareholders' meeting of June 20, 2023, for a term of one year.

Non-voting advisors attend board of directors meetings in an advisory and non-decision-making capacity. Non-voting advisors are bound by the same confidentiality obligations as directors. They receive all documents communicated to the members of the board of directors.

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### **Xavier Yon permanent representative of the company Xavier Yon Consulting Unipessoal Lda, non-voting advisor**

| • Age and nationality | 83 years, French |
|-----------------------|------------------|
| • 1st appointment     | 2014             |
| • Current term ends   | 2024             |

Graduate of the *Faculté des Sciences de* Paris and the Harvard business school, formely president and CEO of Laboratoires Galderma. Since June 2019 he acts as president of the *Fondation d'Entreprise* Virbac (corporate foundation). He has been member of the supervisory board, either personally or as a legal representative of the XYC company, from 2004 until the end of 2013.

Since 2014 he is permanent representative of the company XYC, and then of the company Xavier Yon Consulting Unipessoal Lda, acting as non-voting advisor.

### **Rodolphe Durand, non-voting advisor**

| • Age and nationality | 52 years, French |
|-----------------------|------------------|
| • 1st appointment     | 2021             |
| • Current term ends   | 2024             |

With a master's degree in philosophy (*Sorbonne*), a master's in finance and a doctorate in management (*HEC-Paris*), Rodolphe Durand joined *HEC* Paris in 2004. He currently holds the Joly family chair in purposeful leadership at *HEC-Paris* and is the academic director of the Society and Organizations institute, which he launched in 2008.

Before that, he led the Strategy and Corporate Policy department (2009-2013), was the academic director of the MSc in strategic management (2012-2015), and was in particular a guest professor at New York university (Stern business school, 2011), the university of Cambridge (Judge business school, 2011), and the London business school (2013). He was also a visiting scholar at Harvard business school (2012) and at Insead (2020).

### **GENERAL MANAGEMENT**

The company's general management is assumed by a chief executive officer who is not a member of the board of directors. His or her mission is to ensure the strategic and operational management of the Group. The chief executive officer is assisted by two deputy chief executive officers and is supported by a Group executive committee. As part of the strategic directions determined by the board of directors, the general management reports to it on its actions and results.

The board of directors has established as a rule that executive officers (chief executive officer and deputy chief executive officers) hold a minimum number of registered shares in the company up to:

- three years' gross fixed and variable compensation for the chief executive officer;
- two years' gross fixed and variable compensation for deputy chief executive officers.

This level of holding may be satisfied by an obligation to retain free shares that may be allocated to each of the corporate officers, within the framework of the performance related stock grants plans implemented in accordance with the decisions voted on by the shareholders (see details in the compensation policy of each corporate officer).

At its December 12, 2023 meeting, the board of directors has renewed the following positions for a period of three years:

- Sébastien Huron, chief executive officer;
- Habib Ramdani, deputy chief executive officer;
- Marc Bistuer, deputy chief executive officer.

Pursuant to article L5142-1 of the French public health code, Marc Bistuer was reappointed as a qualified person.

### **Distribution of responsibilities between the chief executive officer and the deputy chief executive officers**

At its meeting of December 12, 2023, the board of directors approved the distribution of functions and responsibilities between the chief executive officer and the deputy chief executive officers as follows:

- Sébastien Huron is the chief executive officer and oversees the Global Marketing & Market Development, Global Business Operations, Global Industrial Operations, Supply Chain and Sourcing, Corporate R&D, Corporate Human Resources, Corporate Communications, New Products and Regulatory Affairs, Business Development, Petfood & Pet care division, Aquaculture sales and marketing and board office.
- Habib Ramdani is a deputy chief executive officer and chief financial officer and is responsible for Group financial policy. He oversees the Finance department, the Legal department and the Information Systems department.

{126}------------------------------------------------

• Marc Bistuer is a deputy chief executive officer and Virbac's qualified person. He oversees the Quality & Compliance department, the Environment, Health and Safety (EHS) department, the Corporate Social Responsibility (CSR) department, the Legal compliance department, the Insurance and Risk Management department and the Business Digital Programs department.

### **General management personal information**

|                                                    | General management<br>personal information |        |             |                                          | Position within the general<br>management                                                                                                                                      |               |
|----------------------------------------------------|--------------------------------------------|--------|-------------|------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|                                                    | Age                                        | Gender | Nationality | Number of<br>shares as<br>of<br>31.12.23 | Initial date of appointment                                                                                                                                                    | End of term   |
| Sébastien Huron<br>Chief executive<br>officer      | 53 years                                   | Male   | French      | 3,420                                    | Chief executive officer since December<br>15, 2020<br>Date of 1st appointment:<br>. as chairman of the executive board:<br>2017<br>. as member of the executive board:<br>2012 | December 2026 |
| Habib Ramdani<br>Deputy chief<br>executive officer | 47 years                                   | Male   | French      | 1,200                                    | Deputy chief executive officer since<br>December 15, 2020<br>Date of 1st appointment: 2016 as<br>member of the executive board                                                 | December 2026 |
| Marc Bistuer<br>Deputy chief<br>executive officer  | 62 years                                   | Male   | French      | 7,338                                    | Deputy chief executive officer since<br>December 15, 2020                                                                                                                      | December 2026 |

### **Profile, experience and positions of the members of the general management**

| Sébastien Huron, chief executive officer |                                                                                                                                             |
|------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| • Age and nationality                    | 53 years, French                                                                                                                            |
| • First appointment                      | . chief executive officer since December 15, 2020<br>. as chairman of the executive board: 2017<br>. as member of the executive board: 2012 |
| • Renewal of the mandate                 | December 2023                                                                                                                               |
| • Current term ends                      | December 2026                                                                                                                               |
| • Number of shares held as of 31.12.23   | 2,100 shares held in the nominal register<br>1,320 bearer shares                                                                            |

Veterinary doctor, he joined the Virbac group in 2006. He has been a member of the executive board since December 2012, then became the chairman in 2017. He was appointed chief executive officer following the adoption by the company of the legal form of *société anonyme* with a board of directors. On December 12, 2023, the board of directors reappointed Sébastien Huron as chief executive officer for a period of three years.

### **List of positions**

#### **Current positions Expired positions**

longer in effect: none. . director of the company Virbac Limited (United Kingdom);

. director of the company Pharma 8 (United States).

### **Positions in companies outside of the Group:**

. manager of the s*ociété civile immobilière* P.A.T.H. (France);

. manager of *société civile immobilière* P.A.P.S. (France).

None of these companies are listed on a stock exchange.

**Positions in Group companies:** Non-Group positions and functions exercised over the past five years but no

{127}------------------------------------------------

### **Habib Ramdani, deputy chief executive officer**

| • Age et nationality                   | 47 years, French                                                                                             |
|----------------------------------------|--------------------------------------------------------------------------------------------------------------|
| • First appointment                    | . as deputy chief executive officer since December 15, 2020<br>. as member of the executive board: June 2016 |
| • Renewal of the mandate               | December 2023                                                                                                |
| • Current term ends                    | December 2026                                                                                                |
| • Number of shares held as of 31.12.23 | 1,200 shares held in the nominal register                                                                    |

Graduate of Centrale Paris, he was appointed deputy director of Financial Affairs effective February 1, 2016 and subsequently chief financial officer effective April 1, 2016. He was then appointed as a member of the executive board in June 2016, then as deputy chief executive officer on December 15, 2020, following the adoption by the company of the legal form of *société anonyme* with a board of directors. He was reappointed as deputy chief executive officer for a period of three years by the board of directors on December 12, 2023.

### **List of positions**

**Current positions Expired positions**

- longer in effect: none. · chairman of the company Interlab, SAS (France);
- . permanent representative of Virbac, director of the company Virbac Chile Spa (Chile);
- . permanent representative of Virbac, director of the company Virbac Patagonia Limitada (Chile);
- . director of the company Virbac Corporation (United States);
- . treasurer of the company PP Manufacturing Corporation (United States);
- . director of Virbac (Thailand) Co Ltd.

#### **Positions in companies outside of the Group:**

. director of the company Pharcor SAS (France), an unlisted company.

### **Marc Bistuer, deputy chief executive officer**

| • Age et nationality                   | 62 years, French                                          |
|----------------------------------------|-----------------------------------------------------------|
| • First appointment                    | as deputy chief executive officer since December 15, 2020 |
| • Renewal of the mandate               | December 2023                                             |
| • Current term ends                    | December 2026                                             |
| • Number of shares held as of 31.12.23 | 7,338 shares held in the nominal register                 |

Doctor of pharmacy, industry option, Marc Bistuer, director of Corporate Quality & Compliance was appointed deputy executive officer and qualified person on December 15, 2020. He was re-elected as deputy chief executive officer for a period of three years and designated a qualified person by the board of directors on December 12, 2023.

| List of positions                                                       |                                                                                                           |
|-------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|
| Current positions                                                       | Expired positions                                                                                         |
| <b>Positions in Group companies:</b>                                    | Non-Group positions and functions<br>exercised over the past five years but no<br>longer in effect: none. |
| . director of the company Bioanimal Corp. S.A. (Chile);                 |                                                                                                           |
| . director of the company Productos Quimicos Ehlinger S.A. (Chile);     |                                                                                                           |
| . director of the company PP Manufacturing Corporation (United States). |                                                                                                           |
| <b>Positions in companies outside of the Group:</b>                     |                                                                                                           |
| . manager of the company Estrade, SARL (France).                        |                                                                                                           |

**Positions in Group companies:** Non-Group positions and functions exercised over the past five years but no

{128}------------------------------------------------

| Changes that occurred within the membership of the general management |           |             |                                                                                                                                                          |
|-----------------------------------------------------------------------|-----------|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                       | Departure | Appointment | Reappointment                                                                                                                                            |
| General management                                                    | None      | None        | . Sébastien Huron: chief<br>executive officer<br>. Habib Ramdani: deputy chief<br>executive officer<br>. Marc Bistuer: deputy chief<br>executive officer |

### **Group executive committee**

General management is supported by the Group executive committee.

At the end of December 2023, the Group executive committee is composed of eight members: the chief executive officer, the deputy chief executive officers and five other members appointed by general management. These members work closely together and make decisions collectively. This way of working encourages joint reflection and teamwork. Whether the topic concerns long-term vision or operational needs, exchanges between the members of the Group executive committee are frequent, which allows for a high level of responsiveness in decision making. It is made up of three women and five men.

The Group executive committee is composed of the following members:

- Sébastien Huron, chief executive officer, Virbac Group;
- Habib Ramdani, chief financial officer and deputy chief executive officer;
- Marc Bistuer, director of Corporate Quality & Compliance and deputy chief executive officer qualified person;
- Nathalie Pollet, head of Global Marketing & Market Development;
- Sophie Favini, head of Global Business Operations;
- André Mathieu, director of Global Industrial Operations, Supply Chain and Sourcing;
- Bertrand Havrileck, head of Corporate R&D;
- Francesca Cortella, head of Corporate Human Resources.

### **The France executive committee**

As of 31 December 2023, the France executive committee is composed of fourteen members: the chief executive officer and thirteen other members appointed by general management. This committee is responsible for decisionmaking, coordination and reporting on all issues affecting the Group's French companies and represents a platform from which to disseminate information to the various departments. It is made up of six women and eight men.

Our France management committee is chaired by the chief executive officer, Sébastien Huron, and is composed of the following members:

- head of Global Marketing & Market Development;
- director of Global Industrial Operations, Supply Chain and Sourcing;
- head of Corporate R&D;
- head of Corporate Human Resources;
- Corporate Sourcing director;
- head of Corporate Communications;
- head of New Products and Regulatory Affairs;
- Finance director;
- Global Supply Chain director;
- Group general counsel;
- French Industrial Operations director;
- chief information officer;
- chairwoman of the Virbac France subsidiary.

### **Gender diversity policy for governing bodies**

Under the "Rixain" law of December 24, 2021, aimed at accelerating women's participation in economic and professional life, the board of directors at its meeting on March 18, 2022 asked the general management to implement an action plan concerning the gender diversity policy in the governing bodies with objectives set over time, with a deadline of March 1, 2029 at the latest, in accordance with applicable legislation, and keep them regularly informed about the progress of this plan.

With regard to the gender diversity policy for governing bodies, the board of directors, acting on a proposal from general management, set a gender diversity objective for the above-mentioned management committees of 30% of the total number of seats in these two bodies to be held by women.

The management informed the board of directors at its meeting on March 15, 2024 that this objective, as in previous years, is currently exceeded. As of December 31, 2023, the ratio of women in the two aforementioned governing bodies amounted to 38.01% (it was 30.4% in 2021 and 31.25% in 2022). The board of directors welcomed this positive development, which brings us nearer to its goal of a gender diversity ratio of 40%. It will be up to the general management to continue to ensure that this ratio is maintained as much as possible while maintaining the ambition to rise to 40% in the coming years. It should be noted that the achievement of the goal set by the board of directors took place before implementation of the obligations arising from the "Rixain" law, namely to achieve a target of at least 30% of women and men members of governing bodies from March 1, 2026, and 40% from March 1, 2029.

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The percentage of women among the 10% of positions with the highest responsibility within the Economic and social unit formed around Virbac<sup>1</sup> is 35.4% in France. Even though this ratio is also increasing since it rose from 30% in 2021 to 34% in 2022 and then 35.4% in 2023, an increase of 18%, the company is aware that an effort must be made to improve the rate of representation of women among the 10% of positions with high level responsibilities and that this is an important issue for the years to come.

1 the ratio is calculated on the total number of employees in gradings D, E and F (corresponding to positions with high level responsibility) for Virbac, Virbac France, Virbac Nutrition, Virbac Diagnostics and Alfamed.

### **SUMMARY TABLE OF EXCEPTIONS TO THE RECOMMENDATIONS OF THE AFEP-MEDEF CODE**

| Recommendations of the<br>Afep-Medef Code (The<br>"Code")                                                                                                                                                       | Company practices and justifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Reference            |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|
| Shareholder relations with the<br>board of directors<br>(article 4.4 of the Code)                                                                                                                               | The company did not wish to appoint a lead director. Relations with the<br>shareholders, particularly on corporate governance matters, are handled, at<br>the request of the chairwoman of the board of directors, by the Group's<br>Financial Affairs department.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | page 120             |
| Specialized committee on<br>corporate social responsibility<br>(article 16 of the Code)                                                                                                                         | Pursuant to article 2.3 of the internal bylaws, the board of directors deals with<br>matters relating to corporate social responsibility. Therefore, a committee was<br>not established specifically for corporate social responsibility issues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | page 124             |
| Composition of the audit<br>committee<br>(article 17.1 of the Code)                                                                                                                                             | The board of directors has kept the composition of the audit committee<br>unchanged, despite the loss of independence under the Afep-Medef Code of<br>Philippe Capron. Philippe Capron has been maintained as a member and<br>chairman of the audit committee given his extensive financial expertise and<br>experience in this position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | page 124             |
| Appointments and<br>compensation committee –<br>Committee overseeing<br>compensation chaired by an<br>independent member and<br>includes a director<br>representing the employees<br>(article 19.1 of the Code) | The board of directors took note of the terms of the letter of October 20, 2023<br>received from the French financial markets authority (AMF) on the<br>chairmanship of the compensation committee by a non-independent director.<br>The board of directors has set up a single committee responsible for two tasks,<br>namely appointments and compensation and wishes to maintain the<br>established terms of chairmanship and operation. The board of directors<br>considers that the chairwoman, a non-independent director, exercises her<br>duties independently and impartially since she is not ruling on her own<br>compensation but on that of the executive corporate officers, that she is not<br>herself an executive corporate officer, and that she chairs this committee in<br>the interest of all shareholders and the company. It should also be noted that<br>the proposals made by the appointments and compensation committee are<br>reviewed and may be discussed at the board of directors meeting that<br>approves them and in which the director representing the employees<br>participates. | pages 124<br>and 125 |
| Non-competition clause<br>(article 25.4 of the Code)<br>The board provides for a<br>stipulation authorizing it to waive<br>the implementation of this<br>agreement upon the departure of<br>the executive       | The board of directors took note of the terms of the letter dated November 3,<br>2023 received from the High committee for corporate governance on this<br>point. The board of directors points out that the pension schemes currently in<br>force, and to which the chief executive officer will be eligible, currently allow,<br>without restriction, combined employment-retirement. In addition, it is<br>common for people having held positions in the pharmaceutical industry to<br>pursue professional activities beyond the age of 65, including as consultants.<br>In addition, because of his position, the chief executive officer has access to all                                                                                                                                                                                                                                                                                                                                                                                                                                                      | page 138             |

of the group's strategic information.

{130}------------------------------------------------

### **SPECIAL PROCEDURES REGARDING SHAREHOLDER PARTICIPATION AT SHAREHOLDERS' MEETINGS**

Shareholders' meetings are called and deliberate in the legally required manner. Meetings are either held at headquarters or at any other place specified in the meeting notice. Meetings are presided over by the chairwoman of the board of directors. The roles of scrutineers are filled by the two members of the shareholders' meeting with the highest numbers of votes and who accept this position. The meeting's board appoints the secretary, who need not be a shareholder.

The company reserves the right to modify these terms and conditions for the shareholders' meeting to be held in 2024 if health conditions or any other situation that may justify it so requires, in accordance with the legislative and regulatory provisions that may still be taken due to these exceptional circumstances.

The main powers of the ordinary shareholders' meeting consist of the right to approve or reject the parent statutory accounts and the consolidated accounts, to allocate profits, to decide on the distribution of dividends, to appoint or dismiss the members of the board of directors and to appoint the statutory auditors. The ordinary shareholders' meeting also has the right to vote on the compensation of corporate officers. Decisions by the ordinary shareholders' meeting are made by a majority of the votes of shareholders present or represented.

The extraordinary shareholders' meeting may make decisions such as amending the articles of association, authorizing financial transactions that may change the share capital, approving or rejecting proposed mergers or spin-offs and granting or refusing shares subscription or purchase options plans or performance-related stock grants. Decisions of the extraordinary shareholders' meeting are made by a two-thirds majority of the votes of the shareholders present or represented.

Irrespective of the number of shares he or she owns, any shareholder is entitled to attend the shareholders' meeting or to be represented there by another shareholder, a spouse, the partner with whom he or she has entered into a civil solidarity pact under French law as well as by any other individual person or legal entity of his or her choice, or alternatively to vote by mail. Legal entity shareholders attend general shareholders' meetings through their legal representatives or any person they appoint for the purposes thereof. In line with the law, the entitlement of shareholders to attend shareholders' meetings in person, by proxy or by mail is subject to the registration of the shares in the name of the shareholder or in the name of the intermediary acting on his behalf, on the second business day prior to the meeting, no later than midnight Paris time, either in the registered share accounts administered for the company by its agent or in the bearer share accounts held by the authorized banking or financial intermediary, acting as security custodian.

The registration of shares in the bearer share accounts held by the authorized intermediary must be confirmed by a certificate issued by the latter and, attached to the postal voting or proxy form or admission card request filled out in the name of the shareholder or on behalf of the shareholder represented by the registered intermediary. To be valid, postal voting or proxy forms must have been effectively received at the company's headquarters or the location specified in the meeting notice at the latest three days prior to the date set for the shareholders' meeting, except where a shorter period is specified in the meeting notice.

Each shareholder is entitled to exercise as many votes as the shares they hold or represent without limitation. Nevertheless, a double voting right is granted to all fully paid-up shares that have been registered in the name of the same shareholder for at least two years.

### **COMPENSATION OF CORPORATE OFFICERS**

The legal regime governing the compensation of corporate officers was amended by law n°2019-486 of May 22, 2019, known as the "*Pacte*" law, and for its implementation, by order n°2019-1234 of November 27, 2019, and decree n°2019-1235 of the same day.

In accordance with article L22-10-8 of the French commercial code, the board of directors, on the recommendation of the appointments and compensation committee, establishes a policy for the compensation of corporate officers.

The principles and criteria for determining, allocating and granting the fixed, variable and extraordinary components of the total compensation and benefits of any kind attributable to directors and officers are presented below.

The board of directors and the appointments and compensation committee take into account and apply the principles recommended by the *Afep-Medef* Code, *i.e*., completeness, balance between the elements of compensation, comparability, coherence, intelligibility of the rules and proportionality. They ensure that the compensation policy is in line with the company's interests, contributes to its sustainability and is consistent with its business strategy.

At the shareholders' meeting, a proposal will be made to vote on the compensation policy for corporate officers for their term of office, for the 2024 financial year, as described below, and to approve the variable compensation components paid or allocated to corporate officers for the 2023 financial year.

{131}------------------------------------------------

### **Policy for executives and non-executive officers**

### **General principles**

In the interests of the company and its shareholders, the board of directors defines a compensation policy that achieves the following objectives:

- attract and retain the best talents, essential to the company's development. The proposed compensation must therefore be competitive, in line with the skills required by the company and in line with market practices;
- define a balanced compensation structure that reflects the executive's level of responsibility;
- promote performance and long-term growth and align the interests of corporate officers with those of the company and its shareholders. As such, the compensation of corporate officers is subject to performance conditions;
- take into account the conditions of compensation and employment of Virbac employees;
- take into account the company's corporate social responsability objectives. The performance criteria include non-financial objectives in the social and environmental fields in order to promote the company's development in an environmentally friendly manner and with a long-term approach.

The compensation policy for corporate officers is established by the board of directors, on the recommendation of the appointments and compensation committee, and is subject to vote by shareholders.

With regard to the members of the board of directors, the shareholders' meeting determines the annual total amount allocated to the members of the board of directors as compensation for their director duties. The board of directors shall then determine the rules for the distribution of this annual aggregate amount among the directors.

With regard to non-executive corporate officers (chairwoman of the board of directors) and executive officers (chief executive officer and deputy chief executive officers), the appointments and compensation committee assesses the compensation policy on an ongoing basis and examines any adjustments to be made to this policy.

In order to prepare the compensation policy for corporate officers, the appointments and compensation committee conducts an analysis of the applicable governance rules and developments in this area and takes note of the expectations expressed by investors.

The compensation policy for corporate officers is determined taking into account the compensation and employment conditions of the company's employees. The appointments and compensation committee and the board of directors establish a compensation structure for corporate officers that is consistent with that applicable to the company's and the Group's key executives.

At the beginning of the year, the appointments and compensation committee reviews the compensation policy for directors, the chairwoman of the board of directors, the chief executive officer and the deputy chief executive officers. It presents the board of directors with the various components of the compensation policy in light of the principles set out above, in particular the fixed and variable share of compensation.

The appointments and compensation committee also assesses the achievement of the various objectives set for the previous year that will be subject to approval by the board of directors. The variable portion due for fiscal year N is paid, if applicable, during fiscal year N+1 after the shareholders' meeting, subject to a favorable vote by the shareholders.

Long-term compensation, if any, takes the form of performance-related stock grants, for which the appointments and compensation committee proposes ambitious performance criteria. It proposes the number of performancerelated stock grants to be allocated to corporate officers.

On the basis of the work of the appointments and compensation committee, the board of directors:

- defines the compensation policy for corporate officers for the current financial year;
- evaluates the performance of executive officers and approves the annual variable compensation for the previous financial year;
- approves, where appropriate, the terms of the long-term incentive plans and allocates performance-related stock grants for the current financial year.

The decision-making process followed for the determination of the compensation policy is also applicable in case of review.

In order to prevent conflicts of interest, the chairwoman of the board of directors, who presides over the appointments and compensation committee, does not take part in the work of this committee or in the vote of the board of directors concerning her own compensation.

All elements of the compensation policy for corporate officers will be submitted to a vote at Virbac's next shareholders' meeting.

{132}------------------------------------------------

### **Compensation policy for members of the board of directors and the non-voting advisors**

### **Fixed and variable compensation**

The shareholders' meeting sets the maximum annual amount that may be allocated to the members of the board of directors as well as to non-voting advisors as compensation for their mandate.

The directors' compensation policy sets out the criteria for the allocation of this amount. The method of compensation distribution includes a variable part that takes into account the active participation of the directors on the board and in committees.

The following criteria are taken into account to determine distribution of the maximum total annual amount set by the shareholders' meeting between the directors and the non-voting advisors:

- attendance at formal meetings;
- presence or absence on board committees.

Thus, on March 16, 2021, the board of directors decided that the amount of compensation paid to each member of the board of directors could vary according to his or her participation in board meetings (based on four meetings per year) as follows:

- attendance at a minimum of 75% of the board meetings will result in receiving 100% of the compensation;
- attendance at 50% of the board meetings will result in receiving 75% of the compensation;
- attendance at 25% of the board meetings will result in receiving 50% of the compensation.

This policy encourages attendance and effective participation of the members of the board of directors in the board and committee work. The involvement of members of the board of directors in the company's management activities is not limited to their participation in periodic formal discussions of the board of directors. The length of the board of directors meetings, which are held over half a day, as well as the current increased rate of participation, makes it possible to affirm that the current allocation mechanism guarantees the attendance of the members of the board of directors.

The shareholders' meeting of June 20, 2023, allocated to the directors and to the non-voting advisors the total sum of €220,000, of which €213,000 was actually allocated to directors and non-voting advisors.

A proposal will be made at the shareholders' meeting on June 21, 2024, to vote on the allocation of a total amount of €230,000 to the directors and the non-voting advisors for the year 2024. This sum will be distributed by the board of directors among the directors and the non-voting advisors according to the criteria described in this section.

### **Extraordinary compensation**

Extraordinary compensation may be granted to certain members of the board of directors for any specific duties entrusted to them by the board of directors. The board of directors determines its amount.

### **Contract of employment or services concluded with the company**

No employment or service contract has been concluded between the company and the members of the board of directors or the non-voting advisors.

### **Compensation policy for the chairwoman of the board of directors**

Compensation for the chairwoman of the board of directors consists of:

- a fixed amount in respect of her directorship, the amount of which is calculated in accordance with the criteria applicable to all directors as presented above;
- a fixed amount for her duties as chairwoman, the amount of which is decided by the board of directors.

No fixed or variable compensation other than that mentioned above is paid by the company to the chairwoman of the board of directors.

In accordance with the recommendations of the *Afep-Medef* Code, the compensation of the chairwoman of the board of directors consists solely of a fixed salary. The chairwoman of the board of directors does not receive any variable compensation (annual or long-term incentive), nor does she have any retirement or pension benefits. Nor does she receive any post-mandate compensation (severance pay or non-competition pay).

The board of directors of March 15, 2024 decided to increase the chairwoman's compensation to €125,000. This represents an increase of 13.6% compared to the compensation applied in 2023, which had remained unchanged since the 2021 financial year.

{133}------------------------------------------------

### **Compensation policy for members of general management**

### **Compensation policy for the chief executive officer**

The compensation policy for the chief executive officer provides for a balanced distribution between the three components of total annual compensation: fixed compensation, variable compensation and long-term compensation.

The board of directors reserves the right, in the event that a new chief executive officer is appointed, to allow him or her to benefit from an allowance for the assumption of duties and/or performance-related stock grants to compensate for the loss of the benefits that he or she previously enjoyed, pending approval by the shareholders' meeting of a new compensation policy.

All elements of the chief executive officer's compensation policy will be submitted to a vote at Virbac's next shareholders' meeting.

### **Employment contract**

The chief executive officer does not have an employment contract.

### **Fixed compensation**

The fixed compensation of the chief executive officer reflects the responsibilities, experience and missions entrusted.

On March 15, 2024, the board of directors decided to increase his gross annual amount to €449,440 for 2024, including €45,000 for his mandate as director within Virbac Ltd.

### **Variable compensation**

The chief executive officer has a variable compensation target that represents a percentage of his fixed compensation. It takes into account the missions entrusted to him as well as his responsibilities and experience. This variable compensation is consistent with the company's compensation practices.

The board of directors sets out the financial and non-financial criteria for determining the chief executive officer's variable compensation and the targets to be reached. It ensures that the criteria and targets are aligned with Virbac's strategic key issues and annual priorities. It gives precedence to quantitative criteria over qualitative criteria, which, when they exist, underpin a limited portion of the variable compensation. Finally, the board of directors is careful to ensure that the criteria are easy to understand and simple.

The amount actually attributable to the chief executive officer with respect to a given financial year will depend on the extent to which the objectives for that year are achieved, as defined by the board of directors, which meets each year in March, following the advice of the appointments and compensation committee. The degree to which each of these objectives can be achieved at 100% is strategic information that cannot be made public for confidentiality reasons.

On March 15, 2024, the board of directors decided to set the variable compensation of the chief executive officer for the 2024 financial year on the basis of a gross target bonus of €269,664 based on reaching 100% of the objectives set, *i.e.*, 60% of his fixed compensation.

The actual amount of gross annual variable compensation paid for 2024 will depend on the extent to which quantitative and qualitative targets, including a CSR criterion, are met. This is determined as follows:

| Criteria                                                                                                               | Weighting<br>(if all objectives are 100% achieved) |
|------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------|
| Group revenues as budgeted                                                                                             | 30%                                                |
| Ebita before RDL as budgeted                                                                                           | 45%                                                |
| Level of debt relief as budgeted                                                                                       | 15%                                                |
| Ebitda of Sasaeah Holdings Co. Ltd and its subsidiaries as budgeted in Virbac's<br>basic twelve-month acquisition plan | 5%                                                 |
| CSR objective                                                                                                          | 5%                                                 |

### **CSR objectives**

The two CSR objectives to be achieved are the following:

- CSR training (50%): ensure that at least 80% of France management at the SMF level will complete the "climate fresk" workshops by December 31, 2024;
- accident frequency rate (50%): number of lost-time accidents in France divided by number of hours worked is less or equal to 5.

The variable compensation allocated for the 2024 financial year will be determined a posteriori by a decision of the board of directors after consultation with the appointments and compensation committee, taking into account the rules below.

{134}------------------------------------------------

The rules for allocation in relation to the percentage of the objective actually achieved are as follows:

- Group revenue: no bonus below 95% of the objective; 100% of the bonus when objective is reached or exceeded, linearity between the two;
- Ebita before RDL: no bonus below 95% of the objective; 100% of the bonus when objective is reached or exceeded, linearity between the two;
- debt relief: no bonus below 100% of the objective;
- Ebitda of Sasaeah Holdings Co. Ltd and its subsidiaries as budgeted in Virbac's basic twelve-month acquisition plan: no bonus below 95% of the target; 100% of the bonus at the target, linearity between the two;
- CSR objectives: no bonus below 100% of the objective.

It is specified that in the event that 85% of the Ebita objective before RDL is not achieved, or in the event of negative net profit - Group share, (excluding elements corresponding to the result of an impairment test), all of the above bonuses may be cancelled, even if certain objectives are achieved, at the discretion of the board of directors on the recommendation of the appointments and compensation committee.

The board of directors may use its discretionary power to adapt and/or modify the criteria and/or their calculation grid, either upwards or downwards, on the recommendation of the appointments and compensation committee, should special circumstances arise. Under no circumstances may these adjustments result in an increase in the ceiling of the annual variable compensation compared to the fixed compensation.

Overall, Sébastien Huron's variable compensation is capped at 60% of his annual fixed compensation.

In any event, payment of the variable compensation will take place, if applicable, after and subject to approval by the shareholders' meeting to be held in 2025.

### **Long-term compensation**

In accordance with the reiterated authorization of the shareholders' meeting, certain employees and managers of Virbac and its subsidiaries have received long-term compensation in the form of performance-related stock grants since 2006. The goal of these compensation mechanisms is not only to encourage executives to plan their work for the longer term, but also to bring their interests into line with the company's corporate interest and the interest of shareholders. It is specified that all the shares issued under performance-related stock grants are always recorded as registered shares.

The chief executive officer is eligible for the award of performance-related stock grants.

These awards are contingent on the achievement of a performance target. The performances taken into account are not linked to the performance of other companies or a benchmark sector because there are very few reliable comparisons. The majority of companies with an activity and size similar to that of Virbac are either unlisted or are divisions or spin-offs of large listed pharmaceutical groups.

The performance conditions to be met for the acquisition of performance-related stock grants are measured against the internal objectives of consolidated operating profit and the Group's consolidated net debt at the close of the second full financial year following the plan's start date. These elements therefore take into account the Group's performance over more than two financial years.

If the target is met, all of the registered shares in question are acquired. In the event that it is not met, and for certain plans, terms and conditions are provided for allowing the acquisition of a smaller number of shares depending on the percentage of the target achieved.

1 - As a reminder, the March 16, 2021, board of directors meeting and the March 18, 2022, board of directors meeting each decided to open a new performance-related stock grants plan for certain employees and corporate officers of the company (the 2021 and 2022 plans). Under these new performance-related stock grants plans, a maximum of 950 shares may be granted to Sébastien Huron under the 2021 plan, and 500 shares under the 2022 plan.

### **Conditions of the plans 2021 & 2022:**

- beneficiaries: the chief executive officer of Virbac as well as employees of the Virbac group;
- retention period: minimum period of two years (except in the case of disability or death) during which the securities acquired must be retained and therefore cannot be sold, beyond which the shares are transferable, subject to the holding obligations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2023 for the 2021 plan, or the financial year ended December 31, 2024, for the 2022 plan.
- This indicator, equal to [(10 x Ebita) net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2024 for the 2021 plan, or early 2025 for the 2022 plan. The level given as a target for this indicator as at December 31, 2023 or at December 31,2024, as the case may be, is strategic information that cannot be made public for confidentiality reasons.

– if 100% of the objective is reached by the end of 2023 or by the end of 2024, as applicable, the conditions for the acquisition of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;

– if 95% or less of this objective is achieved by the end of 2023 or by the end of 2024, as applicable, the acquisition conditions will not be met;

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– between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% (*i.e.*, as an illustration, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

The 2021 and 2022 plans provide for adjustments to the calculation of the indicator based on the exchange rates of the principal currencies.

2 - On March 18, 2022, the board of directors decided to open a new performance-related stock grants plan only to the chief executive officer (the 2022 special plan). This plan is intended to compensate for the elimination of the supplementary pension insurance plan in favor of the former members of the executive board as decided by the supervisory board on March 12, 2019.

### **Conditions of the 2022 special plan:**

• number of shares: 5,000;

- adjustment of the number of shares acquired: the board of directors may lower the number of shares acquired at each tranche, according to a predetermined formula (confidential) to take into account any increases in tax and social security charges borne by the company in connection with this plan;
- retention period: minimum period of two years (except in the case of disability or death) during which the acquired shares must be retained and therefore cannot be sold;
- performance indicator: it is based on the achievement of an annual objective of the ratio of Ebit as a % of consolidated revenue (Ebit) defined as follows: consolidated recurring and non-recurring operating profit (consolidated operating profit)/consolidated revenue, excluding taxes;
- performance objective: each year, if the Ebit is greater than or equal to a predetermined level (confidential), the beneficiary will be credited one point. Below this level, he will not be credited with any points.
	- tranche 1: acquisition of 1,000 shares in 2027:

– if the beneficiary has been credited 5 points over the five financial years ended (2022, 2023, 2024, 2025, 2026)

or

– if the beneficiary has only been credited 4 points over these five financial years AND, over a calendar year, he has not reached the required level, but the level reached is higher than another predefined level (confidential).

In all other cases, no shares will be acquired.

• tranche 2: acquisition of 1,000 shares in 2030:

– if the beneficiary has been credited 3 points over the three financial years ended (2027, 2028, 2029).

or – if over a calendar year, he has not reached the required level, but the level reached is higher than another predefined level (confidential) AND if he has been credited 5 points in tranche 1.

In all other cases, no shares will be acquired.

• tranche 3: acquisition of 3,000 shares in 2033:

– if the beneficiary has been credited 3 points over the three financial years ended (2030, 2031, 2032) or

– if the beneficiary has only been credited 2 points over these three financial years AND, over a calendar year, he has not reached the required level, but the level reached is higher than another predefined level (confidential) AND he was credited 7 points in tranches 1 and 2 or

– if the beneficiary has only been credited 1 point over these three financial years AND, over the two other calendar years, he has not reached the required level, but the level reached is higher than another predefined level (confidential) AND he was credited a minimum of 8 points in tranches 1 and 2. In all other cases, no shares will be acquired.

• allocation schedule: the allocation will be carried out in three tranches according to the following schedule:

• tranche 1

– date of grant of rights: July 1, 2022;

– date of acquisition of shares: April 1, 2027;

– maximum number of shares that can be acquired (subject to the achievement of performance objectives and at constant exchange rates for the company and compliance with the condition of presence): 1,000; – end date of the retention period (subject to the additional limitations imposed by the board of directors -

see pages 126 and 154): April 1, 2029.

• tranche 2

– date of grant of rights: July 1, 2022;

– date of acquisition of shares: April 1, 2030;

– maximum number of shares that can be acquired (subject to the achievement of performance objectives and at constant exchange rates for the company and compliance with the condition of presence): 1,000; – end date of the retention period (subject to the additional limitations imposed by the board of directors -

see pages 126 and 154): April 1, 2032.

• tranche 3

– date of grant of rights: July 1, 2022;

– date of acquisition of shares: April 1, 2033;

– maximum number of shares that can be acquired (subject to the achievement of performance objectives and at constant exchange rates for the company and compliance with the condition of presence): 3,000;

– end date of the retention period (subject to the additional limitations imposed by the board of directors see pages 126 and 154): April 1, 2035.

• conditions related to presence in the Group: in order to be able to acquire the shares and therefore have them delivered, the beneficiary must have been present within the Group (Virbac SA or any company in which Virbac directly or indirectly holds a stake of more than 50%):

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- until December 31, 2026, for tranche 1;
- until December 31, 2029, for tranche 2;
- and until December 31, 2032, for tranche 3.

In the event of resignation, contractual termination, dismissal for any reason whatsoever, as well as in the event of departure before each of these dates, the beneficiary will lose any right to receive all or part of the shares allocated and not yet acquired.

In the event of disability classified in the 2nd and 3rd categories provided for by the French social security code or death of the beneficiary, after June 30, 2026, for tranche 1, June 30, 2029, for tranche 2 and June 30, 2032, for tranche 3, the right to receive the shares will be maintained and the shares allocated under the current tranche on the date of the beneficiary's disability or death will be issued to the beneficiary on the acquisition date. The shares allocated under the following tranches will be lost. The shares issued under the provisions of this paragraph will not be bound from this date by the two-year retention and non-transferability conditions.

3 - On March 21, 2023, the board of directors decided to open a new performance-related stock grants plan. Under this new performance-related stock grants plan, a maximum of 800 shares may be granted to Sébastien Huron.

#### **Conditions of the plan 2023:**

- beneficiaries: the chief executive officer of Virbac as well as employees of the Virbac group;
- retention period: minimum period of two years (except in the case of disability or death) during which the securities vested must be retained and therefore cannot be sold, beyond which the shares are transferable, subject to the holding obligations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2025. This indicator, equal to [(10 x Ebita) – net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2026. The level given as a target for this indicator as of December 31, 2025, is strategic information that cannot be made public for confidentiality reasons.

– if 100% of the objective is reached by the end of 2025, the conditions for vesting of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;

– if 95% or less of this objective is achieved by the end of 2025, the vesting conditions will not be met;

– between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% (i.e., to illustrate, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

4 - On March 15, 2024, the board of directors decided to open a new performance-related stock grants plan. Under this new performance-related stock grants plan, a maximum of 950 shares may be allocated to Sébastien Huron.

### **Conditions of the 2024 plan:**

• beneficiaries: the chief executive officer of Virbac as well as employees of the Virbac group;

- retention period: minimum period of two years (except in the case of disability or death) during which the securities vested must be retained and therefore cannot be transferred, beyond which the shares are transferable, subject to the holding obligations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2026. This indicator, equal to [(10 x Ebita) – net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2027. The level given as a target for this indicator as at December 31, 2026, is strategic information that cannot be made public for confidentiality reasons.
	- if 100% of the target is reached by the end of 2026, the conditions for vesting of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;
	- if 95% or less of this target is achieved by the end of 2026, the vesting conditions will not be met;

– between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% (i.e., to illustrate, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

### **Extraordinary compensation**

In the event of special circumstances and subject to justification, the board of directors reserves the right to pay extraordinary compensation.

### **Other benefits**

In addition to the various components of compensation, the chief executive officer receives the benefits listed below.

### ■ **Company vehicle**

The chief executive officer receives a company vehicle, in accordance with the policy defined by the appointments and compensation committee.

### ■ **Health insurance plan, maternity benefits, provident and pension insurance plans**

The chief executive officer is covered by the health, maternity, provident and pension insurance plans available to all the company's executives, under the same conditions of contributions and benefits as those defined for the company's other executives.

### ■ **Unemployment insurance plan**

The chief executive officer is covered by a unemployment insurance for company's chief executive officers, which is based on the 70 over one year formula, the amount of annual contributions not allowed to exceed €15,000.

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### **Forced retirement severance pay**

The board of directors may decide to grant compensation in the event of the termination of the duties of a corporate officer.

The compensation that Sébastien Huron, chief executive officer, could receive is determined on the basis of the following objectives:

- insofar as the Group's operating profit from ordinary activities to net revenue ratio is lower than 4% on average over the last four financial half-years ended (for example: for a departure in May in year N: the period taken into account to calculate the ratio is from January 1 of year N-2 to December 31 of year N-1), no compensation will be due;
- insofar as the ratio of operating profit from ordinary activities to the Group's net revenue is greater than or equal to 4% on average over the last four closed accounting half-years (for example: for a departure in May in year N: the period taken into account to calculate the ratio is from January 1 of year N-2 to December 31 of year N-1), the compensation due will be €550,000; however, to the extent that the ratio of operating profit from ordinary activities to the Group's net revenue is greater than or equal to 7% on average over the last two closed accounting half-years (for example: for a departure in August in year N: the period taken into account to calculate the ratio is July 1 of year N-1 to June 30 of year N), the compensation will be increased to €700,000.

In addition, the conditions for payment or non-payment of this severance pay are as follows:

- the severance pay may only be paid in the event of a forced departure, initiated by the company, including in the context of a non-renewal of the term of office at its end date, or of a renewal of the term of office under conditions that are less favorable than those applicable before the renewal (with regard to his fixed compensation and the percentage of his target variable compensation and his severance pay in case of forced departure) causing a departure from the company;
- it will not be owed in the event of resignation, full pension retirement, retirement once the age limit for being a chief executive officer is reached or in the event of dismissal for gross negligence.

### **Non-competition payments**

The board of directors may decide to grant compensation in return for the non-competition commitment of the chief executive officer, after the termination of his corporate mandate, on the basis of the following.

Sébastien Huron, chief executive officer, shall not work directly or indirectly for or hold any corporate office or otherwise engage in any activity in any group or company directly or indirectly involved in the research, development, manufacture and/or marketing of animal health products in countries where Virbac has a subsidiary or equity interest.

This non-competition obligation applies until the end of a period of eighteen months after the effective cessation of his corporate mandate within the company and gives rise to the payment of a non-competition indemnity. The board of directors decided that the compensation for the non-competition clause may be paid even if Sébastien Huron asserts his rights to retirement or beyond his sixty-fifth birthday, given the specificity of the animal health sector but also because of the possibility of combined employment-retirement.

In consideration of the non-competition obligation, Sébastien Huron will receive each month, during the entire noncompete period, a payment in an amount equal to 80% of his fixed gross monthly compensation received for the company's last financial year ended (including any other compensation related to his mandates within the Virbac group). This payment will be limited, for this eighteen-month period, to a maximum gross amount of €500,000.

The company's board of directors reserves the right to waive compliance with this non-competition clause by the chief executive officer upon the termination of his corporate mandate, but this waiver may not be exercised by the board of directors before the chief executive officer's sixtieth birthday, and notice shall be given by registered letter with acknowledgment of receipt or through any other written means to the chief executive officer within a maximum period of three months from the announcement of this resignation in the event of resignation initiated by him, or immediately in the other cases, at the time of the effective termination of the mandate. In the event of waiver of the non-competition clause under these provisions, no compensation shall be payable. In all other cases, the compensation will be due throughout the eighteen-month period.

The cumulative amount of the non-competition indemnity calculated on the basis of the fixed compensation for 2024 and the forced retirement severance pay (as the case may be) does not exceed the amount of two years' compensation (fixed and variable) of the chief executive officer (on the basis of his 2023 compensation).

### **Compensation policy for deputy chief executive officers**

The compensation policy for deputy chief executive officers provides for a balanced distribution between the three components of total annual compensation: fixed compensation, variable compensation and long-term compensation.

### **Employment contract**

The deputy chief executive officers have an employment contract entered into before they take office as deputy chief executive officers, under which they receive their full compensation. The duties of the deputy chief executive officers under their employment contracts are distinct from their duties as corporate officers. They do not receive any other compensation for their mandate.

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The board of directors reserves the right, in the event that new deputy chief executive officers are appointed, to allow them to benefit from an allowance for the assumption of duties and/or exceptional performance-related stock grants to compensate for the loss of the benefits they previously enjoyed, pending the approval by the shareholders' meeting of a new compensation policy.

#### **Fixed compensation**

The fixed compensation of the deputy chief executive officers reflects the responsibilities, experience and missions entrusted.

#### **Variable compensation**

Each deputy chief executive officer has a variable compensation target that represents a percentage of his or her fixed compensation. It takes into account the missions entrusted to him or her as well as his or her responsibilities and experience. This variable compensation is consistent with the company's compensation practices.

The board of directors sets out the financial and non-financial criteria for determining the deputy chief executive officers' variable compensation and the targets to be reached. It ensures that the criteria and targets are aligned with Virbac's strategic key issues and annual priorities. It gives precedence to quantitative criteria over qualitative criteria, which, when they exist, underpin a limited portion of the variable compensation. Finally, the board of directors is careful to ensure that the criteria are easy to understand and simple.

The amount actually attributable to each deputy chief executive officer with respect to a given financial year will depend on the extent to which the objectives for that year are achieved, as defined by the board of directors, which meets each year in March, following the advice of the appointments and compensation committee. The degree to which each of these objectives can be achieved at 100% is strategic information that cannot be made public for confidentiality reasons.

#### **Long-term compensation**

In accordance with the reiterated authorization of the shareholders' meeting, certain employees and managers of Virbac and its subsidiaries have received long-term compensation in the form of performance-related stock grants since 2006. The goal of these compensation mechanisms is not only to encourage executives to plan their work for the longer term, but also to bring their interests into line with the company's corporate interest and the interest of shareholders. It is specified that all the shares issued under performance-related stock grants are always recorded as registered shares.

Deputy chief executive officers are eligible for the award of performance-related stock grants.

These awards are contingent on the achievement of a performance target. The performances taken into account are not linked to the performance of other companies or a benchmark sector because there are very few reliable comparisons. The majority of companies with an activity similar to that of Virbac are either unlisted or are divisions or spin-offs of large listed pharmaceutical groups.

The performance conditions to be met for the acquisition of performance-related stock grants are measured against the internal objectives of consolidated operating profit and the Group's consolidated net debt (net debt) at the close of the second full financial year following the plan's start date. These elements therefore take into account the Group's performance over more than two financial years.

If the target is met, all of the shares in question are vested. In the event that it is not met, and for certain plans, terms and conditions are provided for allowing the acquisition of a smaller number of shares depending on the percentage of the target achieved.

#### **Other benefits**

In addition to the various components of compensation, deputy chief executive officers receive the benefits listed below.

### ■ **Company vehicle**

Deputy chief executive officers receive a company vehicle in accordance with the policy defined by the appointments and compensation committee.

### ■ **Health insurance plan, maternity benefits, provident and pension insurance plans**

Deputy chief executive officers are covered by the health, maternity, provident and pension insurance plans available to all the company's executives, under the same conditions of contributions and benefits as those defined for the company's other executives.

#### ■ **Unemployment insurance plan**

Deputy chief executive officers are covered by the unemployment insurance plan for company employees.

#### ■ **Forced retirement severance pay**

The deputy chief executive officers do not receive any non-statutory severance pay, but may be entitled to severance pay under their employment contract (for more information, see employment contract of each deputy chief executive officer).

#### ■ **Non-competition payments**

Deputy chief executive officers are not subject to any non-competition commitments in connection with their mandate or their employment contract and are therefore not entitled to receive any non-competition payments.

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### **Extraordinary compensation**

In the event of special circumstances and subject to justification, the board of directors reserves the right to pay extraordinary compensation.

### **Compensation policy for Habib Ramdani**

### **Employment contract**

The employment contract was concluded in 2016 for an indefinite period.

The notice period in case of departure (especially in case of dismissal) is three months.

The amount of severance pay is set in accordance with the applicable collective agreement, as follows:

- before five years of presence, the statutory allowances apply;
- between five and ten years of presence: 0.3 month of reference salary per year included in the tranche;
- from eleven years of presence onwards, the indemnity is calculated by cumulative seniority tranche, as follows:

– for the tranche ranging from eleven to fifteen years of presence: 0.6 month of reference salary per year included in the tranche,

– for the tranche beyond sixteen years of presence: 1.2 month of reference salary per year included in the tranche.

The reference salary is that defined according to the legal provisions in force.

### **Fixed and variable compensation**

On March 15, 2024, the board of directors decided to set Habib Ramdani's gross annual fixed compensation under his employment contract at €257,139 for the 2024 financial year.

The board of directors has set the amount of Habib Ramdani's gross annual variable compensation for the 2024 financial year at €102,855 based on 100% achievement of the objectives set, *i.e.*, 40% of his fixed compensation.

The actual amount of gross annual variable compensation paid for 2024 will depend on the achievement of quantitative targets determined as follows for 2024:

| Criteria                                                                                                               | Weighting<br>(if all objectives are 100% achieved) |
|------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------|
| Group revenues as budgeted                                                                                             | 30%                                                |
| Ebita before RDL as budgeted                                                                                           | 45%                                                |
| Level of debt relief as budgeted                                                                                       | 15%                                                |
| Ebitda of Sasaeah Holdings Co. Ltd and its subsidiaries as budgeted in Virbac's<br>basic twelve-month acquisition plan | 5%                                                 |
| CSR objective                                                                                                          | 5%                                                 |

### **CSR objectives**

The two CSR objectives to be achieved are the following:

- CSR training (50%): ensure that at least 80% of France management at the SMF level will complete the "climate fresk" workshops by December 31, 2024;
- accident frequency rate (50%): number of lost-time accidents in France divided by number of hours worked is less or equal to 5.

The variable compensation allocated for the 2024 financial year will be determined a posteriori by a decision of the board of directors after consultation with the appointments and compensation committee, taking into account the rules below.

The rules for allocation in relation to the percentage of the objective actually achieved are as follows:

- Group revenue: no bonus below 95% of the objective; 100% of the bonus when objective is reached or exceeded, linearity between the two;
- Ebita before RDL: no bonus below 95% of the objective; 100% of the bonus when objective is reached or exceeded, linearity between the two;
- debt relief: no bonus below 100% of the objective;
- Ebitda of Sasaeah Holdings Co. Ltd and its subsidiaries as budgeted in Virbac's basic twelve-month acquisition plan: no bonus below 95% of the target; 100% of the bonus at the target, linearity between the two;
- CSR objectives: no bonus below 100% of the objective.

It is specified that in the event that 85% of the Ebita objective before RDL is not achieved, or in the event of negative net profit - Group share, (excluding elements corresponding to the result of an impairment test), all of the above bonuses may be cancelled, even if certain objectives are achieved, at the discretion of the board of directors on the recommendation of the appointments and compensation committee.

The board of directors may use its discretionary power to adapt and/or modify the criteria and/or their calculation grid, either upwards or downwards, on the recommendation of the appointments and compensation committee, 

{140}------------------------------------------------

should special circumstances arise. Under no circumstances may these adjustments result in an increase in the ceiling of the annual variable compensation compared to the fixed compensation.

Overall, Habib Ramdani's variable compensation is capped at 40% of his fixed annual compensation.

In any event, payment of the variable compensation will take place, if applicable, after and subject to approval by the shareholders' meeting to be held in 2025.

### **Long-term compensation**

1- As a reminder, the March 16, 2021, board of directors meeting and the March 18, 2022, board of directors meeting each decided to open a new performance-related stock grants plan (the 2021 and 2022 plans). Under these new performance-related stock grants plans, a maximum of 475 shares may be granted to Habib Ramdani under the 2021 plan, and 250 shares under the 2022 plan.

### **Conditions of the plans 2021 & 2022:**

- beneficiaries: the Virbac group's chief executive officer and employees;
- retention period: minimum period of two years (except in the case of disability or death) during which the securities acquired must be retained and therefore cannot be transferred, beyond the transferability subject to the limitations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2023 for the 2021 plan, or the financial year ended December 31, 2024, for the 2022 plan. This indicator, equal to [(10 x Ebita) – net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2024 for the 2021 plan, or early 2025 for the 2022 plan. The level given as a target for this indicator as at December 31, 2023 or at December 31, 2024, is strategic information that cannot be made public for confidentiality reasons.

– if 100% of the target is reached by the end of 2023 or at the end of 2024, as applicable, the conditions for the acquisition of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;

– if 95% or less of this objective is achieved by the end of 2023 or at the end of 2024, as applicable, the acquisition conditions will not be met;

– between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% *(i.e*., as an illustration, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

The 2021 and 2022 plans provide for adjustments to the calculation of the indicator based on the exchange rates of the principal currencies.

2 - On March 21, 2023, the board of directors decided to open a new performance-related stock grants plan. Under this new performance-related stock grants plan, a maximum of 350 shares may be granted to Habib Ramdani.

### **Conditions of the plan 2023:**

- beneficiaries: the chief executive officer of Virbac as well as employees of the Virbac group;
- retention period: minimum period of two years (except in the case of disability or death) during which the securities acquired must be retained and therefore cannot be transferred, beyond which the shares are transferable subject to the limitations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2025. This indicator, equal to [(10 x Ebita) – net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2026. The level given as a target for this indicator as at December 31, 2025, is strategic information that cannot be made public for confidentiality reasons.

– if 100% of the objective is reached by the end of 2025, the conditions for the acquisition of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;

– if 95% or less of this objective is achieved by the end of 2025, the acquisition conditions will not be met;

– between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% (*i.e.*, as an illustration, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

3 - On March 15, 2024, the board of directors decided to open a new performance-related stock grants plan. Under this new performance-related stock grants plan, a maximum of 400 shares may be granted to Habib Ramdani.

### **Conditions of the 2024 plan:**

• beneficiaries: the chief executive officer of Virbac as well as employees of the Virbac group;

- retention period: minimum period of two years (except in the case of disability or death) during which the securities vested must be retained and therefore cannot be transferred, beyond which the shares are transferable, subject to the holding obligations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2026. This indicator, equal to [(10 x Ebita) – net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2027. The level given as a target for this indicator as at December 31, 2026, is strategic information that cannot be made public for confidentiality reasons.

– if 100% of the target is reached by the end of 2026, the conditions for vesting of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;

– if 95% or less of this target is achieved by the end of 2026, the vesting conditions will not be met;

{141}------------------------------------------------

– between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% (i.e., to illustrate, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

### **Other benefits**

In addition to the various components of compensation, Habib Ramdani receives the benefits listed above pages 139 and 140.

### **Compensation policy for Marc Bistuer**

### **Employment contract**

The employment contract was concluded in 1989 for an indefinite period.

The notice period in case of departure (especially in case of dismissal) is three months.

The amount of severance pay is set in accordance with the applicable collective agreement, as follows:

- before five years of presence, the statutory allowances apply;
- between five and ten years of presence: 0.3 month of reference salary per year included in the tranche;
- from eleven years of presence onwards, the indemnity is calculated by cumulative seniority tranche, as follows:

– for the tranche ranging from eleven to fifteen years of presence: 0.6 month of reference salary per year included in the tranche,

– for the tranche beyond sixteen years of presence: 1.2 month of reference salary per year included in the tranche.

The reference salary is that defined according to the legal provisions in force.

### **Fixed and variable compensation**

On March 15, 2024, the board of directors decided to set Marc Bistuer's gross annual fixed compensation under his employment contract at €260,804 for the 2024 financial year.

The board of directors set Marc Bistuer's gross annual variable compensation for the 2024 financial year at €78,241 based on 100% achievement of the objectives set, *i.e*., 30% of his fixed compensation.

The actual amount of gross annual variable compensation paid for 2024 will depend on the achievement of quantitative targets determined as follows for 2024:

| Criteria                                                                                                                                                  | Weighting<br>(if all objectives are 100% achieved) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------|
| Group revenues as budgeted                                                                                                                                | 30%                                                |
| Ebita before RDL as budgeted                                                                                                                              | 40%                                                |
| CSR objective                                                                                                                                             | 10%                                                |
| Stock write-off lower than a defined threshold (on the industrial scope: France<br>(Virbac SA), USA, Chile)                                               | 10%                                                |
| Back orders/due orders for pharmaceutical products (excluding vaccines and<br>petfood): on average below a certain threshold in the second half of 2024   | 5%                                                 |
| Back orders/due orders for vaccines: number of vials of vaccines produced above a<br>threshold and number of vials of vaccines released above a threshold | 5%                                                 |

### **CSR objectives**

The two CSR objectives to be achieved are the following:

- CSR training (50%): ensure that at least 80% of France management at the SMF level will complete the "climate fresk" workshops by December 31, 2024;
- accident frequency rate (50%): number of lost-time accidents in France divided by number of hours worked is less or equal to 5.

The variable compensation actually awarded with respect to the 2024 financial year will depend on the extent to which the objectives are achieved and will be determined a posteriori by decision of the board of directors after consultation with the appointments and compensation committee, applying the rules set out below.

The rules for allocation in relation to the percentage of the objective actually achieved are as follows:

- Group revenue: no bonus below 95% of the objective. 100% of the bonus when objective is reached or exceeded, linearity between the two;
- Ebita before RDL: no bonus below 95% of the objective. 100% of the bonus when objective is reached or exceeded, linearity between the two;
- CSR objectives: no bonus below 100% of the objective;

{142}------------------------------------------------

- write-off of stocks: on industrial companies (Virbac SA, Virbac Corporation, Virbac Chile): payment of 100% of the bonus if the level reached within the scope is less than or equal to the objective. However, if the goal is not achieved within the scope, but the global target for the Group is achieved, 100% payment ; payment at 50% in the event the global level meets the global target but is below a second threshold.
- back orders/due orders for pharmaceutical products (excluding vaccines and petfood): payment of 100% of the bonus if the target is reached; payment of 50% of the bonus if the level reached is below the target but above a second threshold;
- back orders/due orders and number of vials released: payment 100% of the bonus if the number of vials released is above the target ; payment of 50% of the bonus if the number of vials released is less than the target but greater than a second threshold.

It is specified that in the event that 85% of the Ebita objective before RDL is not achieved, or in the event of negative net profit - Group share, (excluding elements corresponding to the result of an impairment test), all of the above bonuses may be cancelled, even if certain objectives are achieved, at the discretion of the board of directors on the recommendation of the appointments and compensation committee.

The board of directors may use its discretionary power to adapt and/or modify the criteria and/or their calculation grid, either upwards or downwards, on the recommendation of the appointments and compensation committee, should special circumstances arise. Under no circumstances may these adjustments result in an increase in the ceiling of the annual variable compensation compared to the fixed compensation.

Overall, Marc Bistuer's variable compensation is capped at 30% of his annual fixed compensation.

All elements of the compensation policy for the deputy chief executive officer will be submitted to a vote at Virbac's next shareholders' meeting.

In any event, payment of the variable compensation will take place, if applicable, after and subject to approval by the shareholders' meeting to be held in 2025.

### **Long-term compensation**

1 - As a reminder, the March 16, 2021, board of directors meeting and the March 18, 2022, board of directors meeting each decided to open a new performance-related stock grants plan (the 2021 and 2022 plans). Under these performance-related stock grants plan, a maximum of 300 shares may be granted to Marc Bistuer under the 2021 plan, and 150 shares under the 2022 plan.

### **Conditions of the plans 2021 & 2022:**

- beneficiaries: the Virbac group's chief executive officer and employees;
- retention period: minimum period of two years (except in the case of disability or death) during which the securities acquired must be retained and therefore cannot be transferred, beyond the transferability subject to the limitations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2023 for the 2021 plan, or the financial year ended December 31, 2024, for the 2022 plan. This indicator, equal to [(10 x Ebita) – net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2024 for the 2021 plan, or early 2025 for the 2022 plan. The level given as a target for this indicator as at December 31, 2023 or at December 31, 2024, is strategic information that cannot be made public for confidentiality reasons.

– if 100% of the objective is reached by the end of 2023, or by the end of 2024, as applicable, the conditions for the acquisition of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;

– if 95% or less of this objective is achieved by the end of 2023 or by the end of 2024, as applicable, the acquisition conditions will not be met;

– between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% (*i.e.*, as an illustration, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

The 2021 and 2022 plans provide for adjustments to the calculation of the indicator based on the exchange rates of the principal currencies.

2 - On March 21, 2023, the board of directors decided to open a new performance-related stock grants plan. Under this new performance-related stock grants plan, a maximum of 240 shares may be granted to Marc Bistuer.

### **Conditions of the plan 2023:**

• beneficiaries: the chief executive officer of Virbac as well as employees of the Virbac group;

- retention period: minimum period of two years (except in the case of disability or death) during which the securities acquired must be retained and therefore cannot be transferred, beyond the transferability subject to the limitations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2025. This indicator, equal to [(10 x Ebita) – net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2026. The level given as a target for this indicator as at December 31, 2025, is strategic information that cannot be made public for confidentiality reasons.

– if 100% of the objective is reached by the end of 2025, the conditions for the acquisition of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;

{143}------------------------------------------------

– if 95% or less of this objective is achieved by the end of 2025, the acquisition conditions will not be met; – between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% (*i.e.*, as an illustration, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

3 - On March 15, 2024, the board of directors decided to open a new performance-related stock grants plan. Under this new performance-related stock grants plan, a maximum of 240 shares may be granted to Marc Bistuer.

### **Conditions of the 2024 plan:**

- beneficiaries: the chief executive officer of Virbac as well as employees of the Virbac group;
- retention period: minimum period of two years (except in the case of disability or death) during which the securities vested must be retained and therefore cannot be transferred, beyond which the shares are transferable, subject to the holding obligations set by the board of directors (pages 126 and 154);
- performance indicator: formula linked to the adjusted consolidated operating profit (Ebita) and the consolidated net debt (net debt) for the financial year ended December 31, 2026. This indicator, equal to [(10 x Ebita) – net debt], will be calculated on the basis of the audited consolidated accounts approved by the board of directors in early 2027. The level given as a target for this indicator as at December 31, 2026, is strategic information that cannot be made public for confidentiality reasons.

– if 100% of the target is reached by the end of 2026, the conditions for vesting of the shares will be fulfilled, and the shares will be delivered as soon as possible to the beneficiaries;

– if 95% or less of this target is achieved by the end of 2026, the vesting conditions will not be met;

– between 95% and 100%, 20% of the planned shares will be delivered for each 1% reached above 95% (i.e., to illustrate, 20% of the planned shares for a 96% achievement, 50% of the planned shares for a 97.5% achievement and 100% of the planned shares for a 100% achievement).

### **Other benefits**

In addition to the various components of compensation, Marc Bistuer receives the benefits listed above on pages 139 and 140.

### **Compensation of the executives and non-executives officers for the 2023 financial year**

The compensation components paid in the 2023 financial year or awarded with respect to the same financial year to executives and corporate officers will be submitted to a vote at the shareholders' meeting.

### **Compensation of the members of the board of directors and the non-voting advisors for the 2023 financial year**

The shareholders' meeting on June 20, 2023, approved the payment of a total sum of €220,000 as compensation to the directors and non-voting advisors.

{144}------------------------------------------------

| Meetings of board of<br>directors and<br>committees                | Board of<br>directors<br>attendance<br>(eight meetings in<br>2023) | Audit<br>committee<br>attendance<br>(five meetings in<br>2023) | Appointments<br>and<br>compensation<br>committee<br>(two meetings in<br>2023) |
|--------------------------------------------------------------------|--------------------------------------------------------------------|----------------------------------------------------------------|-------------------------------------------------------------------------------|
| Marie-Hélène Dick-Madelpuech                                       | 100% present at<br>meetings                                        | N/A                                                            | 100% present at<br>meetings                                                   |
| Pierre Madelpuech                                                  | 100% present at<br>meetings                                        | 100% present at<br>meetings                                    | N/A                                                                           |
| Olivier Bohuon permanent<br>representative of OJB Conseil1         | 100% present at<br>meetings                                        | N/A                                                            | 100% present at<br>meetings                                                   |
| Philippe Capron                                                    | 100% present at<br>meetings                                        | 100% present at<br>meetings                                    | N/A                                                                           |
| Solène Madelpuech                                                  | 100% present at<br>meetings                                        | N/A                                                            | N/A                                                                           |
| Cyrille Petit permanent representative<br>of Cyrille Petit Conseil | 100% present at<br>meetings                                        | 100% present at<br>meetings                                    | 100% present at<br>meetings                                                   |
| Sylvie Gueguen employee<br>representative                          | 100% present at<br>meetings                                        | N/A                                                            | N/A                                                                           |

### **Attendance of board of director's members**

1 end of director's mandate as of December 21, 2023

At its meeting on September 12, 2023, the board of directors, taking into account the high attendance rates of directors at formal meetings, their presence or absence from board committees, and their participation in preparatory meetings, decided to distribute this amount among its members and to compensate the non-voting advisors as follows:

|                                                                              | Amounts allocated for the 2023<br>financial year (paid in 2024) | Amounts allocated for the 2022<br>financial year (paid in 2023) |
|------------------------------------------------------------------------------|-----------------------------------------------------------------|-----------------------------------------------------------------|
| In €                                                                         | Compensation                                                    | Compensation                                                    |
|                                                                              |                                                                 |                                                                 |
| Marie-Hélène Dick-Madelpuech                                                 | 27,000                                                          | 25,000                                                          |
| Pierre Madelpuech                                                            | 27,000                                                          | 25,000                                                          |
| OJB Conseil represented by Olivier<br>Bohuon1                                | 27,000                                                          | 25,000                                                          |
| Philippe Capron2                                                             | 30,000                                                          | 28,500                                                          |
| Solène Madelpuech                                                            | 27,000                                                          | 25,000                                                          |
| Cyrille Petit Conseil represented by<br>Cyrille Petit                        | 27,000                                                          | 25,000                                                          |
| Non-voting advisor, XYC Unipessoal Lda,<br>company represented by Xavier Yon | 24,000                                                          | 22,500                                                          |
| Non-voting advisor, Rodolphe Durand                                          | 24,000                                                          | 22,500                                                          |
| Total                                                                        | 213,000                                                         | 198,500                                                         |

1 end of director's mandate as of December 21, 2023

2 Philippe Capron's compensation takes into account his duties as chairman of the audit committee

### **Compensation of the chairwoman of the board of directors for the 2023 financial year**

In her capacity as chairwoman of the board of directors, Marie-Hélène Dick-Madelpuech is eligible for specific compensation and has been awarded the sum of €110,000 for the 2023 financial year, according to the deliberations of the board of directors on September 12, 2023, in accordance with the compensation policy voted by the shareholders' meeting of June 20, 2023.

{145}------------------------------------------------

The table below summarizes the total compensation paid or allocated to Marie-Hélène Dick-Madelpuech for the 2023 financial year.

| In €                                    | Amounts allocated for the 2023<br>financial year (compensation as a<br>director paid in 2024) | Amounts allocated for the 2022<br>financial year (compensation as a<br>director paid in 2023) |
|-----------------------------------------|-----------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
| As chairwoman of the board of directors | 110,000                                                                                       | 110,000                                                                                       |
| As member of the board of directors     | 27,000                                                                                        | 25,000                                                                                        |
| Total                                   | 137,000                                                                                       | 135,000                                                                                       |

### **Compensation of the chief executive officer and deputy chief executive officers for the 2023 financial year**

The shareholders' general meeting of June 20, 2023, approved the compensation policy applicable to the chief executive officer and deputy chief executive officers

In accordance with *Afep-Medef* recommendations, a summary of all types of compensation granted to corporate officers is presented below. The following tables present the details for each of the corporate officers.

### **Summary of the gross amounts due or allocated for the 2023 financial year**

| In €            | Compensation due<br>or allocated for<br>2023 | Value of stock<br>options granted in<br>2023 | Value of<br>performance<br>related stock<br>grants allocated in<br>2023 | Total<br>compensation |
|-----------------|----------------------------------------------|----------------------------------------------|-------------------------------------------------------------------------|-----------------------|
| Sébastien Huron | 673,421                                      | —                                            | 225,600                                                                 | 899,021               |
| Habib Ramdani   | 344,221                                      | —                                            | 98,700                                                                  | 442,921               |
| Marc Bistuer    | 328,539                                      | —                                            | 67,680                                                                  | 396,219               |
| Total           | 1,346,181                                    | —                                            | 391,980                                                                 | 1,738,161             |

### **Summary of the gross amounts due or allocated for the 2022 financial year**

| In €            | Compensation due<br>or allocated for<br>2022 | Value of stock<br>options granted in<br>2022 | Value of<br>performance<br>related stock<br>grants allocated in<br>2022 | Total<br>compensation |
|-----------------|----------------------------------------------|----------------------------------------------|-------------------------------------------------------------------------|-----------------------|
| Sébastien Huron | 597,892                                      | —                                            | 1,850,750                                                               | 2,448,642             |
| Habib Ramdani   | 310,936                                      | —                                            | 84,125                                                                  | 395,061               |
| Marc Bistuer    | 291,025                                      | —                                            | 50,475                                                                  | 341,500               |
| Total           | 1,199,853                                    | —                                            | 1,985,350                                                               | 3,185,203             |

### **Gross compensation of Sébastien Huron, chief executive officer**

|                            | 2023 financial year                      |                                              | 2022 financial year                      |                                              |
|----------------------------|------------------------------------------|----------------------------------------------|------------------------------------------|----------------------------------------------|
| In €                       | Amounts due<br>for the financial<br>year | Amounts paid<br>during the<br>financial year | Amounts due<br>for the financial<br>year | Amounts paid<br>during the<br>financial year |
| Fixed compensation         | 379,000                                  | 379,000                                      | 355,000                                  | 355,000                                      |
| Variable compensation      | 233,200                                  | 182,600                                      | 182,600                                  | 203,400                                      |
| Extraordinary compensation | —                                        | —                                            | —                                        | 60,000                                       |
| Directors' fees1           | 45,000                                   | 45,000                                       | 45,000                                   | 45,000                                       |
| Benefits in kind           | 16,221                                   | 16,221                                       | 15,292                                   | 15,292                                       |
| Total                      | 673,421                                  | 622,821                                      | 597,892                                  | 678,692                                      |

1 paid by a Group subsidiary

{146}------------------------------------------------

### **Compensation components owed or awarded for 2023**

| Nature                                                                                               | Amounts or<br>valuation to be<br>voted on | Presentation                                                                                                                                                                                                                                                                                                                                                                                                          |
|------------------------------------------------------------------------------------------------------|-------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Fixed compensation                                                                                   | 424,000                                   | On March 21, 2023, the board of directors, further to the<br>recommendation of the appointments and compensation committee,<br>decided to increase the annual fixed compensation up to €424,000.                                                                                                                                                                                                                      |
| Annual variable compensation                                                                         | 233,200                                   | At its meeting on March 21, 2023, the board of directors determined<br>the variable compensation components for 2022. It amounts to 55%<br>of the fixed compensation, including directors' fees. The board of<br>directors meeting of March 15, 2024, decided on the levels of<br>achievement of the 2023 objectives and the resulting variable share.<br>For more information, refer to details provided here below. |
| Multi-annual variable compensation                                                                   | NA                                        | No deferred variable compensation.                                                                                                                                                                                                                                                                                                                                                                                    |
| Extraordinary compensation                                                                           | NA                                        | No extraordinary compensation.                                                                                                                                                                                                                                                                                                                                                                                        |
| Stock options, performance-related<br>stock grants or any other long-term<br>compensation components | 225,600                                   | Allocation of 800 performance-related stock grants under the 2023<br>free share allocation plan. This conditional allocation of performance<br>related stock grants in 2023 represents 16.7% of the total number of<br>performance shares allocated in 2023 and 0.0095% of the share<br>capital as at December 31, 2023.<br>For more information, refer to<br>details provided here below.                            |
| Directors' fees                                                                                      | 45,000                                    | Directors' fees received with respect to terms held in the Group's<br>subsidiary companies in 2023.                                                                                                                                                                                                                                                                                                                   |
| Valuation of benefits in kind                                                                        | 16,221                                    | Company vehicle and CSM contribution.                                                                                                                                                                                                                                                                                                                                                                                 |

**Compensation components owed or awarded for the financial year ended that are or were voted on at the shareholders' meeting under the procedure for regulated agreements and commitments**

| Nature                     | Amounts voted on | Presentation                                                                 |
|----------------------------|------------------|------------------------------------------------------------------------------|
| Severance pay              | No payment       | For more information, refer to pages 138 and 148 of the financial<br>report. |
| Non-competition payment    | No payment       | For more information, refer to pages 138 and 148 of the financial<br>report  |
| Supplementary pension plan | NA               |                                                                              |

### **Fixed compensation**

In 2023, Sébastien Huron received a fixed annual compensation of €424,000, including director's fees, *i.e.*, a total fixed compensation of €440,221, including benefits in kind.

As a reminder, during the 2022 financial year, he received a fixed annual compensation of €400,000, including director's fees, *i.e.*, a total fixed compensation of €415,292, including benefits in kind.

#### **Evaluation criteria for the variable portion**

The maximum variable portion of Sébastien Huron's compensation represents 55% of his fixed compensation (including any compensation paid by Group subsidiaries), and its amount is calculated for the 2023 financial year with regard to the following criteria:

| Criteria                 | Weighting | Level of achievement of the objective set |
|--------------------------|-----------|-------------------------------------------|
| Group revenue            | 35%       | 100%                                      |
| Adjusted Ebit before RDL | 45%       | 100%                                      |
| Debt reduction           | 15%       | 100%                                      |
| CSR objective            | 5%        | 100%                                      |

Consequently, for the 2023 financial year, Sébastien Huron's variable compensation amounts to €233,200, *i.e.,* 55% of his fixed annual compensation and director fees.

The payment of variable compensation is subject to the approval of compensation components at the next ordinary shareholders' meeting in accordance with article L22-10-134 of the French commercial code.

### **Unemployment insurance plan**

The chief executive officer is covered by a unemployment insurance for company's chief executive officers, which is based on the rule of 70 over one year, in accordance with this organization's general conditions, and whose contributions will be entirely paid by the company, but will be claimed as a benefit in kind for the chief executive officer. The amount of annual contributions for 2023 amounts to €13,857.

{147}------------------------------------------------

### **Forced retirement severance pay**

see page 138

### **Non-competition payments**

see page 138

The chief executive officer did not receive any non-competition compensation for the 2023 financial year.

### **Gross compensation of Habib Ramdani, deputy chief executive officer**

|                            |                                          | 2023 financial year                          |                                          | 2022 financial year                          |  |
|----------------------------|------------------------------------------|----------------------------------------------|------------------------------------------|----------------------------------------------|--|
| en €                       | Amounts due<br>for the financial<br>year | Amounts paid<br>during the<br>financial year | Amounts due<br>for the financial<br>year | Amounts paid<br>during the<br>financial year |  |
| Fixed compensation         | 244,895                                  | 244,895                                      | 233,233                                  | 233,233                                      |  |
| Variable compensation      | 97,958                                   | 77,433                                       | 77,433                                   | 90,576                                       |  |
| Extraordinary compensation | —                                        | —                                            | —                                        | 30,000                                       |  |
| Directors' fees            | —                                        | —                                            | —                                        | —                                            |  |
| Benefits in kind           | 1,368                                    | 1,368                                        | 270                                      | 270                                          |  |
| Total                      | 344,221                                  | 323,696                                      | 310,936                                  | 354,079                                      |  |

### **Compensation components owed or awarded for 2023**

| Nature                                                                                               | Amounts or<br>valuation to be<br>voted on | Presentation                                                                                                                                                                                                                                                                                                                                                                                         |
|------------------------------------------------------------------------------------------------------|-------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Fixed compensation                                                                                   | 244,895                                   | On March 21, 2023, the<br>board of directors, further to the<br>recommendation of the appointments and compensation committee,<br>decided to increase the annual fixed compensation up to €244,895.                                                                                                                                                                                                  |
| Annual variable compensation                                                                         | 97,958                                    | The board of directors meeting of March 21, 2023, decided on the<br>variable compensation components for 2022. It amounts to 40% of his<br>fixed compensation. The board of directors meeting of March 15,<br>2024, decided on the levels of achievement of the 2024 objectives and<br>the resulting variable share. For more information, refer to details<br>provided here below.                  |
| Multi-annual variable compensation                                                                   | NA                                        | No deferred variable compensation.                                                                                                                                                                                                                                                                                                                                                                   |
| Extraordinary compensation                                                                           | NA                                        | No extraordinary compensation.                                                                                                                                                                                                                                                                                                                                                                       |
| Stock options, performance-related<br>stock grants or any other long-term<br>compensation components | 98,700                                    | Allocation of 350 performance-related stock grants under the 2023<br>free share allocation plan. This conditional allocation of performance<br>related stock grants in 2023 represents 7.3% of the total number of<br>performance-related stock grants allocated in 2023 and 0.0041% of<br>the share capital as at December 31, 2023. For more information,<br>refer to details provided here below. |
| Directors' fees                                                                                      | NA                                        | No directors' fees were received.                                                                                                                                                                                                                                                                                                                                                                    |
| Valuation of benefits in kind                                                                        | 1,368                                     | Company vehicle.                                                                                                                                                                                                                                                                                                                                                                                     |

**Compensation components owed or awarded for the financial year ended that are or were voted on at the shareholders' meeting under the procedure for regulated agreements and commitments**

| Nature                     | Amounts voted on | Presentation                               |
|----------------------------|------------------|--------------------------------------------|
| Severance pay              | NA               | No severance pay (see page 139).           |
| Non-competition payment    | NA               | No non-competition payment (see page 140). |
| Supplementary pension plan | NA               |                                            |

### **Fixed compensation**

During the 2023 financial year, Habib Ramdani received a fixed annual compensation of €244,895, *i.e.*, a total fixed compensation of €246,263, including benefits in kind, under his employment contract. As a reminder, Habib Ramdani received, during the 2022 financial year, a fixed annual compensation of €233,233, *i.e.* a total fixed compensation of €233,503 including benefits in kind under his employment contract.

{148}------------------------------------------------

### **Evaluation criteria for the variable portion**

For the 2022 financial year, the maximum variable portion of Habib Ramdani's compensation represents, as a percentage thereof, 40% of his fixed compensation (including any element of compensation paid to Group subsidiaries), and its amount is calculated as per the following criteria:

| Criteria                 | Weighting | Level of achievement of the objective set |
|--------------------------|-----------|-------------------------------------------|
| Group revenue            | 35%       | 100%                                      |
| Adjusted Ebit before RDL | 45%       | 100%                                      |
| Debt reduction           | 15%       | 100%                                      |
| CSR objective            | 5%        | 100%                                      |

Consequently, for the 2023 financial year, Habib Ramdani's variable compensation amounts to €97,958 which is 40% of his annual fixed compensation.

The payment of variable compensation is subject to the approval of compensation components at the next ordinary shareholders' meeting held in accordance with article L22-10-34 of the French commercial code.

#### **Conditions for termination of the employment contract**

see page 140.

{149}------------------------------------------------

### **Gross compensation of Marc Bistuer, deputy chief executive officer**

|                            |  | 2023 financial year                      |                                              | 2022 financial year                      |                                              |
|----------------------------|--|------------------------------------------|----------------------------------------------|------------------------------------------|----------------------------------------------|
| en €                       |  | Amounts due<br>for the financial<br>year | Amounts paid<br>during the<br>financial year | Amounts due<br>for the financial<br>year | Amounts paid<br>during the<br>financial year |
| Fixed compensation         |  | 250,773                                  | 250,773                                      | 237,662                                  | 237,662                                      |
| Variable compensation      |  | 56,424                                   | 52,049                                       | 52,049                                   | 61,700                                       |
| Extraordinary compensation |  | 20,000                                   | —                                            | —                                        | 30,000                                       |
| Directors' fees            |  | —                                        | —                                            | —                                        | —                                            |
| Benefits in kind           |  | 1,342                                    | 1,342                                        | 1,314                                    | 1,314                                        |
| Total                      |  | 328,539                                  | 304,164                                      | 291,025                                  | 330,676                                      |

#### **Compensation components owed or awarded for 2023**

| Nature                                                                                               | Amounts or<br>valuation to be<br>voted on | Presentation                                                                                                                                                                                                                                                                                                                                                                                         |
|------------------------------------------------------------------------------------------------------|-------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Fixed compensation                                                                                   | 250,773                                   | On March 21, 2023, the board of directors, further to the<br>recommendation of the appointments and compensation committee,<br>decided to increase the annual fixed compensation up to €250,773.                                                                                                                                                                                                     |
| Annual variable compensation                                                                         | 56,424                                    | The board of directors meeting of March 21, 2023, decided on the<br>variable compensation components for 2022. It amounts to 40% of his<br>fixed compensation. The board of directors meeting of March 15,<br>2024, decided on the levels of achievement of the 2024 objectives and<br>the resulting variable share. For more information, refer to details<br>provided here below.                  |
| Multi-annual variable compensation                                                                   | NA                                        | No deferred variable compensation.                                                                                                                                                                                                                                                                                                                                                                   |
| Extraordinary compensation                                                                           | 20,000                                    | The board of directors of March 15, 2024, at the suggestion of the<br>appointments and compensation committee, decided to allocate<br>exceptional compensation of €20,000 gross.                                                                                                                                                                                                                     |
| Stock options, performance-related<br>stock grants or any other long-term<br>compensation components | 67,680                                    | Allocation of 240 performance-related stock grants under the 2023<br>free share allocation plan. This conditional allocation of performance<br>related stock grants in 2023 represents 5.0% of the total number of<br>performance-related stock grants allocated in 2023 and 0.0028% of<br>the share capital as at December 31, 2023. For more information,<br>refer to details provided here below. |
| Directors' fees                                                                                      | NA                                        | No directors' fees were received.                                                                                                                                                                                                                                                                                                                                                                    |
| Valuation of benefits in kind                                                                        | 4,342                                     | Company vehicle.                                                                                                                                                                                                                                                                                                                                                                                     |

**Compensation components owed or awarded for the financial year ended that are or were voted on at the shareholders' meeting under the procedure for regulated agreements and commitments**

| Nature                     | Amounts voted on | Presentation                               |
|----------------------------|------------------|--------------------------------------------|
| Severance pay              | NA               | No severance pay (see page 139).           |
| Non-competition payment    | NA               | No non-competition payment (see page 140). |
| Supplementary pension plan | NA               | NA                                         |

### **Fixed compensation**

During the 2023 financial year, Marc Bistuer received a fixed annual compensation of €250,773, *i.e.*, a fixed total compensation of €252,115, including benefits in kind, under his employment contract. As a reminder, he received, during the 2022 financial year, a fixed annual compensation of €237,662, *i.e.*, a fixed total compensation of €238,976, including benefits in kind.

{150}------------------------------------------------

### **Evaluation criteria for the variable portion**

For the 2023 financial year, the maximum variable portion of Marc Bistuer's compensation represents 30% of his fixed compensation (including any element of compensation paid to Group subsidiaries), and its amount is calculated as per the following criteria:

| Criteria                                | Weighting | Level of achievement of the objective set |
|-----------------------------------------|-----------|-------------------------------------------|
| Group revenue                           | 30%       | 100%                                      |
| Adjusted Ebit before RDL as<br>budgeted | 40%       | 100%                                      |
| CSR objective                           | 5%        | 100%                                      |
| Inventory level                         | 15%       | —%                                        |
| Back orders/due orders                  | 10%       | —%                                        |

Consequently, for the 2023 financial year, Marc Bistuer's variable compensation amounts to €56,424 *i.e.,* 22,5% of his fixed compensation

The payment of variable compensation is subject to the approval of compensation components at the next ordinary shareholders' meeting held in accordance with article L22-10-34 of the French commercial code.

### **Extraordinary compensation**

The board of directors of March 15, 2024, on the recommendation of the appointments and compensation committee, decided to grant Marc Bistuer an exceptional compensation of €20,000 gross, given his contribution and his major impacts on the success of numerous strategic projects in 2023 in a complicated context, particularly related to the cyberattack.

### **Conditions for termination of the employment contract**

See page 142.

### **Shares subscription or purchase options to executive corporate officers**

The company does not have an allocation plan for shares subscription or purchase options to benefit executive corporate officers.

### **Performance-related stock grants**

### **Performance-related stock grants allocated to executive officers**

The executive board, then the board of directors, since the change in governance in December 2020, in accordance with the authorization from the shareholders' meeting, granted an allocation of performance-related stock grants for certain employees and directors at Virbac and its subsidiaries. In the last five financial years:

- performance-related stock grants under performance plans were allocated in 2019 and 2020;
- a performance plan was implemented on March 16, 2021;
- two performance plans were implemented on March 18, 2022;
- a new performance plan was implemented on March 21, 2023.

The board of directors of March 21, 2023, decided to open a new performance-related stock grant allocation plan (*PAG* 2023) for the benefit of Virbac's chief executive officer, deputy chief executive officers as well as the employees of the Virbac Group. The number of shares attributable to executive corporate officers (chief executive officer and deputy chief executive officers) was validated by the board of directors on March 21, 2023. The list of employees benefiting from the performance-related stock grants and the number of shares to be allocated were validated by the board of directors of June 19, 2023. See details on pages 137, 141 and 144, as well as in the table below.

The board of directors of March 15, 2024, decided to open a new performance-related stock grant allocation plan (*PAG* 2024) for the benefit of Virbac's chief executive officer, deputy chief executive officers as well as the employees of the Virbac Group. The number of shares attributable to executive corporate officers (chief executive officer and deputy chief executive officers) was validated by the board of directors on March 15, 2024. The list of employees benefiting from the performance-related stock grants and the number of shares to be allocated will be validated at an upcoming meeting of the board of directors. See details on pages 137, 141 and 144 and in the table below.

{151}------------------------------------------------

| History of performance-related stock plans |                       |           |           |                                  |                                   |                                        |
|--------------------------------------------|-----------------------|-----------|-----------|----------------------------------|-----------------------------------|----------------------------------------|
|                                            | PAG 2019              | PAG 2020  | PAG 2021  | PAG 2022<br>n°1                  | PAG 2022<br>n°2 (special<br>plan) | PAG 2023                               |
| Date of the executive board                | 30/6/2019             | —         | —         | —                                | —                                 | —                                      |
| Date of the board of directors             | —                     | 19/6/2020 | 16/3/2021 | 18/3/2022<br>21/6/2022           | 18/3/2022<br>21/6/2022            | 21/3/2023<br>19/6/2023                 |
| Total number of shares allocated           | 4,000                 | 1,600     | 6,225     | 4000                             | 5,000                             | 4,800                                  |
| of which the number assigned to:           |                       |           |           |                                  |                                   |                                        |
| Sébastien Huron                            | —                     | —         | 950       | 500                              | 5,000                             | 800                                    |
| Christian Karst1                           | 4,000                 | 1,600     | —         | —                                | —                                 | —                                      |
| Habib Ramdani                              | —                     | —         | 475       | 250                              | —                                 | 350                                    |
| Marc Bistuer2                              | —                     | —         | 300       | 150                              | —                                 | 240                                    |
| Acquisition date                           | 2021                  | 2021      | 2023      | see pages<br>135, 141 and<br>143 | see pages 136<br>and 137          | see pages<br>pages 137,<br>141 and 144 |
| Availability date                          | 2023                  | 2023      | 2025      | see pages<br>135, 141 and<br>143 | see pages 136<br>and 137          | see pages<br>pages 137,<br>141 and 144 |
| Performance conditions                     | see information below |           |           |                                  |                                   |                                        |
| Shares acquired                            | 3,800                 | —         | 4,875     | —                                | —                                 | —                                      |
| Number of shares cancelled or<br>lapsed    | 200                   | 1,600     | 1,350     | —                                | —                                 | —                                      |
| Number of shares remaining at<br>year-end  | 0                     | 0         | 0         | 4,000                            | 5,000                             | 4,800                                  |

<sup>1</sup>Christian Karst, general manager until December 15, 2020, retired in 2021

<sup>2</sup>Marc Bistuer became deputy chief executive officer on December 15, 2020

{152}------------------------------------------------

### **2019 plan**

|                 | Number of shares<br>allocated | Valuation<br>of shares¹ | Acquisition<br>date | Availability<br>date |
|-----------------|-------------------------------|-------------------------|---------------------|----------------------|
| Christian Karst | 4,000                         | €672,800                | 2021                | 2023                 |
| Total           | 4,000                         | €672,800                |                     |                      |

1 based on the method used for the consolidated accounts

### **Performance condition:**

the objective is based on the acquisition of exploitation rights for third-party products that complement Virbac's various internal R&D projects around the world, through the signing of commercial licensing agreements and enabling the short-term generation of sales and additional margins optimizing the Group's profitability.

The initial number of 4,000 shares provided for in the 2019 plan was reduced to 3,800 shares, after the adjustment made based on the achievement of objectives. These 3,800 shares were acquired by the beneficiary in 2021.

### **2020 plan**

|                 | Number of shares<br>allocated | Valuation<br>of shares1 | Acquisition<br>date | Availability<br>date |
|-----------------|-------------------------------|-------------------------|---------------------|----------------------|
| Christian Karst | 1,600                         | €312,000                | -                   | -                    |
| Total           | 1,600                         | €312,000                |                     |                      |

1 based on the method used for the consolidated accounts

### **Performance condition:**

the objective is based on the acquisition of exploitation rights for third-party products that complement Virbac's various internal R&D projects around the world, through the signing of commercial licensing agreements and enabling the short-term generation of sales and additional margins optimizing the Group's profitability.

The 2020 performance-related stock grant became irrelevant, following the retirement of Christian Karst in 2021.

### **2021 plan**

|                 | Number of shares allocated | Valuation of shares¹ | Acquisition date | Availability date¹ |
|-----------------|----------------------------|----------------------|------------------|--------------------|
| Sébastien Huron | 950                        | €221,825             | 2024             | 2026               |
| Habib Ramdani   | 475                        | €110,913             | 2024             | 2026               |
| Marc Bistuer    | 300                        | €70,050              | 2024             | 2026               |
| Total           | 1,725                      | €402,788             |                  |                    |

1 based on the method used for the consolidated accounts

2 subject to the limitations set by the board of directors (see pages 126 and 154)

### **Performance condition**: refer to pages 135, 141 and 143 of the financial report

### **2022 plan**

|                 | Number of shares<br>allocated | Valuation<br>of shares1 | Acquisition<br>date | Availability<br>date2 |
|-----------------|-------------------------------|-------------------------|---------------------|-----------------------|
| Sébastien Huron | 500                           | €168,250                | 2025                | 2027                  |
|                 | 1,000                         | €336,500                | 2027                | 2029                  |
|                 | 1,000                         | €336,500                | 2030                | 2032                  |
|                 | 3,000                         | €1,009,500              | 2033                | 2035                  |
| Habib Ramdani   | 250                           | €84,125                 | 2025                | 2027                  |
| Marc Bistuer    | 150                           | €50,475                 | 2025                | 2027                  |
| Total           | 5,900                         | €1,985,350              |                     |                       |

1 based on the method used for the consolidated accounts

2 subject to the limitations set by the board of directors (see pages 126 and 154)

**Performance condition**: refer to pages 135 - 137, 141 and 143 of the financial report

{153}------------------------------------------------

### **2023 plan**

|                 | Number of shares<br>allocated | Valuation<br>of shares¹ | Acquisition<br>date | Availability<br>date2 |
|-----------------|-------------------------------|-------------------------|---------------------|-----------------------|
| Sébastien Huron | 800 €                         | 225,600                 | 2026                | 2028                  |
| Habib Ramdani   | 350 €                         | 98,700                  | 2026                | 2028                  |
| Marc Bistuer    | 240 €                         | 67,680                  | 2026                | 2028                  |
| Total           | 1390                          | 391980                  |                     |                       |

1 based on the method used for the consolidated accounts

2 subject to the limitations set by the board of directors (see pages 126 and 154)

On June 21, 2021, the shareholders' meeting adopted a resolution to extend for a new 38-month period the possibility of allocating company performance-related stock grants, in compliance with the provisions of article L225-197-1 *et seq.* of the French commercial code.

This resolution allows for performance-related stock grants to be awarded to managers or comparable employees, or certain categories thereof, as well as to the corporate officers referred to in article L225-197-1 of the French commercial code, both for Virbac and the companies that are either directly or indirectly associated with it according to article L225-197-2 of the French commercial code.

The total number of performance-related stock grants awarded may not represent over 1.0% of Virbac's capital. It is also pointed out that the number of performance-related stock grants awarded to the corporate officers during the term of the authorization may not exceed 0.5% of the capital as of the day of the award. The allocation is made with no dilution, the company purchasing the number of required shares on the market.

Similar to the prior authorization, the bonus performance-related stock grants will only be definitive at the end of a vesting period of at least two years, with the shares then held also having to be retained for at least two years from the end of the vesting period. The board of directors will determine the identity of the beneficiaries as well as the terms and grant criteria for the shares that will be linked to the improvement in the Group's performance levels.

The corporate officers have undertaken not to enter into hedging transactions for their risk on performance-related stock grants until the end of the share lock-in period set by the board of directors.

The chief executive officer and the deputy chief executive officers have also agreed to retain 35% of the performance-related stock grants to the chief executive officer and 25% of the performance-related stock grants to the deputy chief executive officers, as long as they remain active in the Group. This retention commitment will no longer apply should they build up a portfolio of Virbac shares representing two years of annual target compensation (gross fixed compensation + gross variable compensation), with the exception of the chief executive officer, for whom this amount has been set at three years' annual target compensation.

A new resolution will be proposed at the next shareholders' meeting to renew the authorization for a further period of three years under the same conditions.

### **Multi-year variable compensation**

The chief executive officer and deputy chief executive officers do not receive any multi-year variable compensation.

The components constituting the compensation and benefits of any kind paid during the 2022 financial year or awarded in respect of the same financial year to the chief executive officer and deputy chief executive officers will be subject to the vote of the shareholders' meeting.

{154}------------------------------------------------

### **Compensation ratios and annual evolution of Virbac's compensation and performance ratios**

| Changes in the compensation of the<br>members of the executive board (in €) | 2019      | 2020      | 2021       | 2022       | 2023        |
|-----------------------------------------------------------------------------|-----------|-----------|------------|------------|-------------|
| Marie-Hélène Dick1                                                          |           |           |            |            |             |
| Total compensation due or awarded for<br>the year                           | 111,500   | 117,400   | 135,000    | 135,000    | 137,000     |
| Evolution/N-1                                                               | -4%       | 5%        | 15%        | -%         | 1%          |
| Ratio of compensation over average earnings                                 | 2.0       | 2.0       | 2.2        | 2.3        | 2.3         |
| Evolution/N-1                                                               | -0,2point | 0 point   | +0,2 point | +0,1 point | 0 point     |
| Ratio of compensation over median earnings                                  | 2.4       | 2.5       | 2.6        | 2.7        | 2.7         |
| Evolution/N-1                                                               | -0,2point | 0 point   | +0,2 point | +0,1 point | 0 point     |
| Sébastien Huron2                                                            |           |           |            |            |             |
| Total compensation due or awarded for<br>the year                           | 555,361   | 579,838   | 884,221    | 2 448 6426 | 899,021     |
| Evolution/N-1                                                               | -5%       | 4%        | 52%        | 177%       | -63%        |
| Ratio of compensation over average earnings                                 | 9.9       | 10.0      | 14.5       | 41.0       | 14.3        |
| Evolution/N-1                                                               | '-1 point | 0 point   | 5 points   | 26 points  | '-27 points |
| Ratio of compensation over median earnings                                  | 12.1      | 12.1      | 17.5       | 48.1       | 17.7        |
| Evolution/N-1                                                               | '-1 point | 0 point   | 5 points   | 31 points  | '-30 points |
| Habib Ramdani3                                                              |           |           |            |            |             |
| Total compensation due or awarded for<br>the year                           | 298,770   | 311,097   | 458,524    | 395,061    | 442,921     |
| Evolution/N-1                                                               | -10%      | 4%        | 47%        | -14%       | 12%         |
| Ratio of compensation over average earnings                                 | 5.3       | 5.4       | 7.5        | 6.6        | 7.0         |
| Evolution/N-1                                                               | '-1 point | 0 point   | 2 points   | -1 point   | 0 point     |
| Ratio of compensation over median earnings                                  | 6.5       | 6.5       | 9.1        | 7.7        | 8.7         |
| Evolution/N-1                                                               | '-1 point | 0 point   | 3 points   | -1 point   | 1 point     |
| Christian Karst4                                                            |           |           |            |            |             |
| Total compensation due or awarded for<br>the year                           | 1,151,984 | 809,136   | —          | —          | —           |
| Evolution/N-1                                                               | 142%      | -30%      | —          | —          | —           |
| Ratio of compensation over average earnings                                 | 20.5      | 14.0      | —          | —          | —           |
| Evolution/N-1                                                               | 12 points | -7 points | —          | —          | —           |
| Ratio of compensation over median earnings                                  | 25.1      | 16.9      | —          | —          | —           |
| Evolution/N-1                                                               | 14 points | -8 points | —          | —          | —           |
| Marc Bistuer5                                                               |           |           |            |            |             |
| Total compensation due or awarded for<br>the year                           | —         | —         | 391,162    | 341,500    | 396,219     |
| Evolution/N-1                                                               | —         | —         | —          | -13%       | 16%         |
| Ratio of compensation over average earnings                                 | —         | —         | 6.4        | 5.7        | 6.3         |
| Evolution/N-1                                                               | —         | —         | —          | -1 point   | 1 point     |
| Ratio of compensation over median earnings                                  | —         | —         | 7.8        | 6.7        | 7.9         |
| Evolution/N-1                                                               | —         | —         | —          | -1 point   | 1 point     |
| Total compensation due or awarded to<br>the members of the top executives 6 | 2,117,615 | 1,817,471 | 1,868,907  | 3,320,203  | 1,875,161   |
| Evolution/N-1                                                               |           | -14 %     | 3 %        | 78 %       | -44 %       |

1 chairwoman of the supervisory board until December 15, 2020. Chairwoman of the board of directors since that date

2 chairman of the executive board until December 15, 2020. Chief executive officer since that date

3 a member of the executive board until December 15, 2020. Deputy chief executive officer since that date 4

chief executive officer until December 15, 2020 5 deputy chief executive officer since December 15, 2020

6 this amount includes the value of the performance shares granted under the plans set up at each financial years 

{155}------------------------------------------------

Note that the value of these performance-related stock grants is totally theoretical. On the one hand, the shares have not vested to date: what has vested since June 21, 2022, is simply a right to get the shares. This right is subject to several very strict vesting conditions that must be complied with in order for these shares to vest. The first condition is a condition of presence in the company before the definitive vesting dates (*i.e.*, 2027 for 1,000 shares, 2030 for 1,000 shares and 2033 for 3,000 shares, respectively). The second condition is a very strict performance condition of the company. Performance is analyzed over long periods of three to five years, with a continuous five-year performance required for the first installment, and not taking into account market conditions, the macroeconomic or geopolitical context outside Virbac. This condition therefore makes obtaining these shares very uncertain. Furthermore, if these shares are finally vested, they may not be sold for at least two years (the required holding period), *i.e.*, 2029, 2032 and 2035, respectively, for the main installment.

Finally, the valuation of these performance-related stock grants corresponds to the book value recognized at the vesting date of this right. This gross value is therefore theoretical and non-representative of the value of the shares at the end of the holding period, which depends, in the event of vesting, on the stock market price, which may change significantly between now and the date of their sale

| Virbac average earnings (€) | 2019      | 2020      | 2021     | 2022      | 2023      |
|-----------------------------|-----------|-----------|----------|-----------|-----------|
|                             | 56,107    | 57,813    | 60,786   | 59,878    | 63,311    |
| Evolution/N-1               | 4%        | 3%        | 5%       | -1%       | 6%        |
| Average ratio5              | 38        | 31        | 31       | 55        | 30        |
| Evolution/N-1               | 10 points | -7 points | -1 point | 25 points | -26points |

5 executive compensation/average Virbac compensation

| Virbac median earnings (€) | 2019      | 2020      | 2021     | 2022      | 2023       |
|----------------------------|-----------|-----------|----------|-----------|------------|
|                            | 45,925    | 47,859    | 50,450   | 50,956    | 50,872     |
| Evolution/N-1              | 4 %       | 4 %       | 5 %      | 1 %       | -%         |
| Median ratio6              | 46        | 38        | 37       | 65        | 37         |
| Evolution/N-1              | 12 points | -8 points | -1 point | 28 points | -28 points |

6 executive compensation/median Virbac compensation

| Current operating profit                                        | 2019    | 2020    | 2021    | 2022 retraité¹ | 2023    |
|-----------------------------------------------------------------|---------|---------|---------|----------------|---------|
| before depreciation of assets<br>arising from acquisitions (k€) | 122,447 | 128,875 | 173,171 | 186,559        | 188,142 |
| Evolution/N-1                                                   | 39%     | 5%      | 34%     | 8%             | 1%      |
| Net result (k€)                                                 | 54,422  | 141,769 | 115,691 | 121,295        | 121,088 |
| Evolution/N-1                                                   | 159%    | 160%    | -18%    | 5%             | —%      |

1 reprocessing following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable on January 1, 2023 (see note "Accounting principles and methods")

Pursuant to article L22-10-9 of the French commercial code, for the calculation of the average compensation, the scope used is that of the Virbac, Virbac France, Virbac Diagnostics (formerly Bio Véto Test) and Alfamed companies, representing more than 95% of the workforce in France, and whose reference workforce amounted to 1432 employees in 2023, including 714 managers. This scope is representative of Virbac's various lines of business. For the sake of comparison, and in accordance with the *Afep-Medef* Code recommendations, the staff used to calculate average and median compensation corresponds to a full-time equivalent staff. This workforce is defined on the basis of employees present in the company on January 1 of the reference year, excluding corporate officers. Compensation is calculated from all amounts due or allocated during the financial year in question, and consists of fixed compensation, variable compensation, employee savings and performance-related stock grants.

{156}------------------------------------------------

### **Contracts, plans and compensation**

| Corporate managing officers                                                                                                                                                                                                                                   | Employment<br>contract | Supplementary<br>pension plan if<br>conditions<br>fulfilled | Compensation or<br>other benefits<br>due or likely to<br>be due following<br>the term or due<br>to change of<br>function | Compensation<br>due to a<br>non-competition<br>clause |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|-------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------|
| Sébastien Huron<br>Position:<br>chief executive officer since December<br>15,2020<br>Previously chairman of the executive board<br>since December 2017 until December 15,<br>2020<br>Term end date of chief executive officer's<br>mandate: December 2026     | No                     | No                                                          | Yes                                                                                                                      | Yes                                                   |
| Habib Ramdani<br>Position:<br>deputy chief executive officer since December<br>15, 2020<br>Previously member of the executive board<br>since June 2016 until December 15, 2020<br>Term end date of deputy chief executive<br>officer's mandate: December 2026 | Yes                    | No                                                          | No                                                                                                                       | No                                                    |
| Marc Bistuer<br>Position:<br>deputy chief executive officer since December<br>15, 2020<br>Term end date of deputy chief executive<br>officer: December 2026                                                                                                   | Yes                    | No                                                          | No                                                                                                                       | No                                                    |

### **TRADING IN COMPANY SHARES**

Pursuant to the provisions of articles L621-18-2 of the French monetary and financial code and 223-26 of the general regulations of the *AMF*, we hereby present a summary of the transactions carried out during the past financial year by managers and related parties in respect of which the Group was notified.

### **By corporate managing officers and related parties**

|                 | Number of shares | Cumulated amount of transactions |
|-----------------|------------------|----------------------------------|
| Sébastien Huron | 1,320            | €342,040                         |
| Purchases       | 1,320            | €342,040                         |
| Sales           | 0                | €—                               |

### **By members of the board of directors and related parties**

|                  | Number of shares | Cumulated amount of transactions |
|------------------|------------------|----------------------------------|
| Olivier Charmeil | 10               | €3,620                           |
| Purchases        | 10               | €3,620                           |
| Sales            | 0                | €—                               |

### **Prohibition periods preceding the publication of annual and interim financial statements**

At the beginning of each year, the company communicates to all persons concerned, including corporate officers, the prohibition periods provided for in article 19.11 of regulation 596/2014 with regard to the publication of annual 

{157}------------------------------------------------

or half-year financial statements and the prohibition periods defined by the *AMF* recommendation (DOC 2016-08) for quarterly financial statements. The same people also receive a reminder message at the beginning of each prohibition period.

### **SHARE CAPITAL STRUCTURE**

### **As of December 31, 2023**

|                      | Shares number | Voting rights number | Capital share | Voting rights share |
|----------------------|---------------|----------------------|---------------|---------------------|
| Dick family group    | 4,203,226     | 8,403,507            | 49.70%        | 66.24%              |
| Company savings plan | 47,683        | 93,262               | 0.56%         | 0.74%               |
| Public               | 4,118,810     | 4,190,198            | 48.70%        | 33.02%              |
| Treasury shares      | 88,281        | —                    | 1.04%         | —%                  |
| Total                | 8,458,000     | 12,686,967           | 100.00%       | 100.00%             |

### **As of December 31, 2022**

|                      | Shares number | Voting rights number | Capital share | Voting rights share |
|----------------------|---------------|----------------------|---------------|---------------------|
| Dick family group    | 4,203,226     | 8,403,507            | 49.70%        | 65.91%              |
| Company savings plan | 47,765        | 93,344               | 0.56%         | 0.73%               |
| Public               | 4,191,157     | 4,252,193            | 49.55%        | 33.36%              |
| Treasury shares      | 15,852        | —                    | 0.19%         | —%                  |
| Total                | 8,458,000     | 12,749,044           | 100.00%       | 100.00%             |

### **Delegation granted by the shareholders' meeting concerning capital increases**

There is no delegation of authority granted by the shareholders' meeting in the area of capital increases; the company did not experience any capital increase.

### **Information likely to have an impact in the event of a public offering**

Pursuant to article L22-10-11 of the French commercial code, it should be noted that certain shares have special control rights.

Treasury shares (15,852 shares) carry no voting rights.

A double voting right is granted to all shareholders holding their registered shares for at least two years. The following shares carry double voting rights:

Image /page/157/Figure/12 description: This image is a pie chart showing the distribution of ownership. The largest portion is held by the Dick family group with 4,200,281. The second largest portion is held by the public with 71,388. The smallest portion is held by the company savings plan with 45,579.

{158}------------------------------------------------

### **Thresholds crossed**

As of January 11, 2023, the company La Financière de l'Échiquier crossed the 2% of Virbac capital threshold downward. As of that date, it owned 169,963 shares, or 2.009% of the total number of shares and 1.332% of the voting rights.

### **STOCK MARKET DATA**

| in €                | 2019   | 2020   | 2021   | 2022   | 2023   |
|---------------------|--------|--------|--------|--------|--------|
| Highest share price | 250.00 | 244.00 | 448.50 | 442.00 | 363.50 |
| Lowest share price  | 112.20 | 132.20 | 200.50 | 215.00 | 228.00 |
| Average share price | 169.82 | 198.68 | 310.68 | 331.62 | 280.05 |
| Closing share price | 236.50 | 238.00 | 424.50 | 228.00 | 359.50 |

### **Employee holdings in share capital**

Pursuant to article L225-102 of the French commercial code, the employees of the company and companies associated with them owned 75,966 Virbac shares, representing a share capital of 0.90%, which were held through an employee savings plan and registered performance-related stock grants as of December 31, 2023.

### **Relations with individual investors**

The corporate.virbac.com website has a financial information section that is regularly updated. It allows Group financial information to be obtained and downloaded: press releases, annual and interim financial statements and annual reports. Internet users may also email questions pertaining to Group financial matters to finances@virbac.com.

Since 2007, in accordance with the obligations of the transparency directive and the general regulation of the *AMF*, the Investors part contains all of the information required by the directive.

### **Relations with institutional investors**

The corporate managing officers are widely involved in communicating with the investors and analysts they meet over the course of the year, primarily in the Paris and London markets.

Analyst meetings and conference calls are arranged to coincide with the publication of results, acquisitions or other major events for the Group.

The Financial Affairs department is available to answer any questions investors and analysts may have regarding the Group's strategy, products, published results or major events.

{159}------------------------------------------------

# Consolidated accounts

## **CONSOLIDATED FINANCIAL STATEMENTS**

### **Statement of financial position**

| in € thousand                                              | Notes | 2023      | 2022 restated1 |
|------------------------------------------------------------|-------|-----------|----------------|
| Goodwill                                                   | A1-A3 | 165,372   | 145,110        |
| Intangible assets                                          | A2-A3 | 185,109   | 154,397        |
| Tangible assets                                            | A4    | 268,016   | 240,643        |
| Right of use                                               | A5    | 32,940    | 34,595         |
| Other financial assets                                     | A6    | 6,243     | 6,256          |
| Share in companies accounted for by the equity method      | A7    | 4,244     | 4,423          |
| Deferred tax assets1                                       | A8    | 22,323    | 24,668         |
| Non-current assets                                         |       | 684,246   | 610,093        |
| Inventories and work in progress                           | A9    | 339,663   | 330,909        |
| Trade receivables                                          | A10   | 167,977   | 146,290        |
| Other financial assets                                     | A6    | 2,636     | 3,538          |
| Other receivables                                          | A11   | 85,302    | 65,407         |
| Cash and cash equivalents                                  | A12   | 175,906   | 177,383        |
| Current assets                                             |       | 771,484   | 723,528        |
| Assets classified as held for sale                         | A13   | —         | —              |
| Assets                                                     |       | 1,455,730 | 1,333,620      |
| Share capital                                              |       | 10,573    | 10,573         |
| Reserves attributable to the owners of the parent company1 |       | 889,728   | 829,066        |
| Equity attributable to the owners of the parent company    | A14   | 900,301   | 839,639        |
| Non-controlling interests                                  | A14   | 9,616     | -351           |
| Equity                                                     |       | 909,917   | 839,288        |
| Deferred tax liabilities1                                  | A8    | 31,560    | 25,765         |
| Provisions for employee benefits                           | A15   | 19,606    | 18,589         |
| Other provisions                                           | A16   | 7,299     | 6,833          |
| Lease liability                                            | A17   | 25,001    | 27,392         |
| Other financial liabilities                                | A18   | 40,689    | 18,014         |
| Other payables                                             | A19   | 22,612    | 7,154          |
| Non-current liabilities                                    |       | 146,767   | 103,747        |
| Other provisions                                           | A16   | 2,309     | 1,039          |
| Trade payables                                             | A20   | 149,629   | 155,820        |
| Lease liability                                            | A17   | 10,144    | 9,415          |
| Other financial liabilities                                | A18   | 47,709    | 43,199         |
| Other payables                                             | A19   | 189,256   | 181,113        |
| Current liabilities                                        |       | 399,047   | 390,585        |
| Liabilities                                                |       | 1,455,730 | 1,333,620      |

{160}------------------------------------------------

### **Income statement**

| in € thousand                                                                        | Notes | 2023      | 2022 restated² | Variation |
|--------------------------------------------------------------------------------------|-------|-----------|----------------|-----------|
| Revenue from ordinary activities                                                     | A21   | 1,246,901 | 1,216,187      | 2.5%      |
| Purchases consumed                                                                   | A22   | -433,873  | -421,192       |           |
| External costs                                                                       | A23   | -230,155  | -235,527       |           |
| Personnel costs                                                                      |       | -342,840  | -321,907       |           |
| Taxes and duties                                                                     |       | -15,294   | -14,188        |           |
| Depreciations and provisions                                                         | A24   | -44,652   | -42,610        |           |
| Other operating income and expenses                                                  | A25   | 8,055     | 5,796          |           |
| Current operating profit before depreciation of assets<br>arising from acquisitions¹ |       | 188,142   | 186,559        | 0.8%      |
| Depreciations of intangible assets arising from acquisitions                         | A24   | -3,265    | -3,743         |           |
| Operating profit from ordinary activities                                            |       | 184,876   | 182,816        | 1.1%      |
| Other non-current income and expenses                                                | A26   | -878      | -3,296         |           |
| Operating result                                                                     |       | 183,998   | 179,519        | 2.5%      |
| Financial income and expenses                                                        | A27   | -9,845    | -3,077         |           |
| Profit before tax                                                                    |       | 174,153   | 176,443        | -1.3%     |
| Income tax²                                                                          | A28   | -53,520   | -55,673        |           |
| Share from companies' result accounted for by the equity<br>method                   | A7    | 455       | 525            |           |
| Result for the period                                                                |       | 121,088   | 121,295        | -0.2%     |
| attributable to the owners of the parent company                                     |       | 121,298   | 121,943        | -0.5%     |
| attributable to the non-controlling interests                                        |       | -210      | -648           | -67.6%    |
| Profit attributable to the owners of the parent company, per<br>share                | A30   | €14.40    | €14.43         | -0.2%     |
| Profit attributable to the owners of the parent company, diluted<br>per share        | A30   | €14.38    | €14.42         | -0.3%     |

1 in 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)

{161}------------------------------------------------

### **Comprehensive income statement**

| in € thousand                                                   | 2023    | 20221<br>restated | Variation |
|-----------------------------------------------------------------|---------|-------------------|-----------|
| Result for the period1                                          | 121,088 | 121,295           | -0.2%     |
| Conversion gains and losses                                     | -11,951 | 2,418             |           |
| Effective portion of gains and losses on hedging instruments    | -1,473  | 1,180             |           |
| Items subsequently reclassifiable to profit and loss            | -13,424 | 3,597             | -473.1%   |
| Actuarial gains and losses                                      | -1,939  | 2,478             |           |
| Items not subsequently reclassifiable to profit and loss        | -1,939  | 2,478             | -178.3%   |
| Other items of comprehensive income (before tax)                | -15,363 | 6,076             | -352.9%   |
| Tax on items subsequently reclassifiable to profit and loss     | 381     | -305              |           |
| Tax on items not subsequently reclassifiable to profit and loss | 527     | -624              |           |
| Comprehensive income                                            | 106,632 | 126,442           | -15.7%    |
| attributable to the owners of the parent company                | 107,304 | 127,068           | -15.6%    |
| attributable to the non-controlling interests                   | -672    | -626              | 7.3%      |

{162}------------------------------------------------

| in € thousand                            | Share<br>capital | Share<br>premiums | Reserves | Conversion<br>reserves | Result<br>for the<br>period | Equity<br>attributable<br>to the owners<br>of the parent<br>company | Non<br>controlling<br>interests | Equity  |
|------------------------------------------|------------------|-------------------|----------|------------------------|-----------------------------|---------------------------------------------------------------------|---------------------------------|---------|
| Equity as at<br>12/31/2021               | 10,573           | 6,534             | 614,947  | -20,281                | 113,162                     | 724,935                                                             | 256                             | 725,191 |
| Impact of IAS 12<br>amendment1           | —                | —                 | 324      | —                      | —                           | 324                                                                 | —                               | 324     |
| Equity as at<br>01/01/2022<br>retstated1 | 10,573           | 6,534             | 615,271  | -20,281                | 113,162                     | 725,259                                                             | 256                             | 725,515 |
| 2021 allocation of<br>net income         | —                | —                 | 102,589  | —                      | -102,589                    | —                                                                   | —                               | —       |
| Distribution of<br>dividends             | —                | —                 | —        | —                      | -10,573                     | -10,573                                                             | -17                             | -10,590 |
| Treasury shares                          | —                | —                 | -2,124   | —                      | —                           | -2,124                                                              | —                               | -2,124  |
| Changes in scope                         | —                | —                 | —        | —                      | —                           | —                                                                   | 28                              | 29      |
| Other variations                         | —                | —                 | 9        | —                      | —                           | 9                                                                   | 8                               | 17      |
| Comprehensive<br>income                  | —                | —                 | 2,729    | 2,396                  | 121,943                     | 127,068                                                             | -626                            | 126,442 |
| Equity as at<br>12/31/2022<br>restated1  | 10,573           | 6,534             | 718,474  | -17,885                | 121,943                     | 839,640                                                             | -351                            | 839,288 |
| 2022 allocation of<br>net income         | —                | —                 | 110,779  | —                      | -110,779                    | —                                                                   | —                               | —       |
| Distribution of<br>dividends             | —                | —                 | —        | —                      | -11,165                     | -11,165                                                             | -7                              | -11,172 |
| Treasury shares                          | —                | —                 | -18,289  | —                      | —                           | -18,289                                                             | —                               | -18,289 |
| Changes in scope                         | —                | —                 | -15,865  | —                      | —                           | -15,865                                                             | 10,647                          | -5,219  |
| Other variations                         | —                | —                 | -1,325   | —                      | —                           | -1,325                                                              | —                               | -1,325  |
| Comprehensive<br>income                  | —                | —                 | -2,505   | -11,488                | 121,298                     | 107,304                                                             | -672                            | 106,632 |
| Equity as at<br>12/31/2023               | 10,573           | 6,534             | 791,269  | -29,373                | 121,298                     | 900,301                                                             | 9,616                           | 909,917 |

### **Statement of change in equity**

1 restatement 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 20, 2023, approved the payment of a dividend of €1.32 per share for the 2022 financial year, for a total amount of €11,164,560.

The "Changes in scope" line for the financial year relates to the acquisition of Globion in India (see note A1).

The "Other variations" line corresponds to the impact net of tax of a correction to the amortization of intangible assets. These should be fully amortized. It should be noted, however, that these assets relate to products that we continue to market, and therefore still generate resource inflows for the Group.

{163}------------------------------------------------

### **Cash position statement**

| in € thousand                                                                  | 2023    | 2022     |                   |
|--------------------------------------------------------------------------------|---------|----------|-------------------|
| Cash and cash equivalents                                                      | 177,383 | 172,787  |                   |
| Bank overdraft                                                                 | -639    | -628     |                   |
| Accrued interests not yet matured                                              | -65     | -23      |                   |
| Opening net cash position                                                      | 176,679 | 172,136  |                   |
| Cash and cash equivalents                                                      | 175,906 | 177,383  |                   |
| Bank overdraft                                                                 | -2,517  | -639     |                   |
| Accrued interests not yet matured                                              | -31     | -65      |                   |
| Closing net cash position                                                      | 173,358 | 176,679  |                   |
| Impact of exchange rates                                                       | -5,345  | -4,856   |                   |
| Impact of changes in scope                                                     | 7,977   | —        |                   |
| Net change in cash position                                                    | -5,952  | 9,398    |                   |
| in € thousand                                                                  | Notes   | 2023     | 2022<br>restated1 |
| Result for the period1                                                         |         | 121,088  | 121,295           |
| Elimination of share from companies' profit accounted for by the equity method | A7      | -455     | -525              |
| Elimination of depreciations and provisions                                    | A16-A24 | 47,618   | 49,066            |
| Elimination of deferred tax change                                             | A8      | 1,686    | -5,739            |
| Elimination of gains and losses on disposals                                   | A25     | 1,973    | 439               |
| Other income and expenses with no cash impact                                  |         | -4,090   | 4,092             |
| Cash flow                                                                      |         | 167,820  | 168,627           |
| Net financial interests paid                                                   | A27     | 159      | -1,140            |
| Income tax accrued for the period                                              |         | 51,454   | 61,716            |
| Cash flow before financial interests and income tax                            |         | 219,433  | 229,203           |
| Effect of net change in inventories                                            | A9      | -9,027   | -55,771           |
| Effect of net change in trade receivables                                      | A10     | -22,040  | -37,836           |
| Effect of net change in trade payables                                         | A20     | -9,941   | 25,443            |
| Income tax paid                                                                |         | -61,457  | -75,428           |
| Effect of net change in other receivables and payables                         | A11-A19 | 1,673    | 13,374            |
| Effect of change in working capital requirements                               |         | -100,792 | -130,219          |
| Net cash flow generated by operating activities                                |         | 118,641  | 98,984            |
| Acquisitions of intangible assets                                              | A2-A20  | -18,859  | -14,834           |
| Acquisitions of tangible assets                                                | A4-A20  | -41,042  | -38,743           |
| Disposals of intangible and tangible assets                                    | A25     | 203      | 374               |
| Change in financial assets                                                     | A6      | 645      | -1,154            |
| Change in debts relative to acquisitions                                       |         | -925     | -475              |
| Acquisitions of subsidiaries or activities                                     |         | -62,367  | —                 |
| Disposals of subsidiaries or activities                                        |         | —        | —                 |
| Withholding tax on distributions                                               |         | —        | —                 |
| Dividends received                                                             |         | 475      | —                 |
| Net cash flow allocated to investing activities                                |         | -121,869 | -54,832           |
| Dividends paid to the owners of the parent company                             | A36     | -11,165  | -10,573           |
| Dividends paid to the non-controlling interests                                |         | 12       | -8                |
| Change in treasury shares                                                      |         | -19,422  | -3,451            |
| Transactions between the Group and owners of non-controlling interests         |         | —        | —                 |
| Increase/decrease of capital                                                   |         | —        | —                 |
| Cash investments                                                               |         | —        | —                 |
| Debt issuance                                                                  | A18     | 88,651   | 85,439            |
| Repayments of debt                                                             | A18     | -50,492  | -96,478           |
| Repayments of lease obligation                                                 | A17     | -10,149  | -10,824           |
| Net financial interests paid                                                   | A27     | -159     | 1,140             |
| Net cash flow from financing activities                                        |         | -2,723   | -34,755           |
| Change in cash position                                                        |         | -5,952   | 9,398             |

{164}------------------------------------------------

### **Statement of change in cash position**

{165}------------------------------------------------

### **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 1ère 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 2023 financial year were approved by the board of directors on March 15, 2024. They will be submitted for approval to the shareholders' general meeting on June 21, 2024, which has the power to have the statements amended.

The explanatory notes below form part of the consolidated accounts.

### **Significant events over the period**

### **Cyberattack**

Virbac was the subject of a cyberattack on the night of June 19 to 20, 2023, on several of its sites around the world. Exceptional measures were immediately taken as soon as we became aware of this attack, and a crisis unit, including experts dedicated to cyber security, was set up in order to assess the impacts on our systems and quickly organize the corrective measures necessary to ensure business continuity.

This attack resulted in a slowdown or temporary interruption of some of our services, which was contained thanks to the responsiveness and mobilization of our teams. We have been able to rely on our systems and data (not corrupted) till June 19, and on reinforced measures of internal control implemented from June 20 on.

Corrective action continued throughout the summer, and as of the month of August, we have been operating almost normally across all our operations again. We have also recovered all IT data and applications while further strengthening our IT infrastructures.

Although the impact of the cyberattack on the financial year results is limited, it resulted in additional costs and the major impacts have been related to the vaccine production in Carros.

### **Inflation**

Cost increases continued in 2023, as expected and to a lesser extent compared to 2022. However, their impacts have been limited by price increases in some of our products, as well as the negotiation over several years of certain supply contracts.

### **Vaccines**

2023 has been impacted by temporary limitations in the production capacity of dog and cat vaccines, which were more significant than expected.

This has weighed on our absorption of fixed costs as well as on our sales, given the low level of our vaccine inventories.

### **Acquisition of GS Partners on May 2, 2023**

On May 2, 2023, we completed the acquisition of 100% of the shares of GS Partners, our long-standing distributor in the Czech Republic and Slovakia and also one of our oldest distributors in Central Europe.

This acquisition, which represents several years of successful partnership between our teams and GS Partners, fully aligns with our external growth strategy. It will enable us to become more autonomous in fast-growing markets and to secure and further develop our business in these two countries while strengthening our presence in Central Europe, where our products for animal health are already accessible through our presence in Hungary and Poland. About twelve GS Partners employees joined Virbac's teams as part of the acquisition.

The acquisition was treated for accounting purposes as a business combination in our consolidated statements, in accordance with IFRS 3. Information relating to IFRS 3 is presented in note 1 to the consolidated accounts.

### **Acquisition of Globion on November 1, 2023**

On November 1, we completed the acquisition of 74% of Globion India Private Ltd. This transaction will 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.

{166}------------------------------------------------

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.

Globion is based in Hyderabad, where its industrial and R&D facilities employ approximately 120 full-time people and generate an annual revenue of approximately €12 million.

The acquisition of this first tranche for 74% of the capital, was treated for accounting purposes as a business combination in our consolidated accounts, in accordance with IFRS 3. Information relating to IFRS 3 is presented in note 1 of the consolidated accounts appendix. The consolidated accounts also include the provisions of the acquisition contract relating to the remaining 26% minority interests (see notes 1 and 19).

### **Virbac launches a share buyback program**

Following the decision of the board of directors on June 19, 2023 and its approval by the shareholder's meeting, we contemplate to buy back 100,000 of our own shares (less than 1.25% of the capital). The main objective is to decrease the company's share capital by canceling treasury shares purchased.

This buy back program takes place within the limits of the program as set by the shareholder's meeting which are the following:

- nature of shares: ordinary shares;
- maximum of the company's share capital: 10%;
- maximum number of shares: 845,800. It should be noted that in the event of a capital increase through incorporation of reserves and allocation of performance-related stock grants, a share split or reverse shares split, this amount will be adjusted by a multiplier equal to the ratio between the number of shares in the share capital prior to the transaction and the number after the transaction;
- maximum purchase price per share: €1,000.

To implement this program with a view to reducing capital by canceling shares, Virbac's board of directors has appointed an investment services provider, with a mandate expiry date on September 30, 2024. The terms of the mandate will relate to a maximum volume of 100,000 Virbac shares (representing less than 1.25% of the company's capital as of December 31, 2023) for a unit purchase price not exceeding €270 and a total volume of buyback therefore not exceeding €27,000,000. Shares redeemed under this mandate will be fully canceled by our company.

As of December 31, 2023, the number of shares purchased in this context is 67,343 shares representing a total of €17.5 million (see note A14).

### **Significant events after the closing date**

### **Acquisition of Sasaeah in Japan**

On March 6, 2024, Virbac signed a definitive agreement with ORIX Corporation for the acquisition of its animal health subsidiary Sasaeah for an enterprise value of approximately €280 million.

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 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.

Upon completion, this strategic acquisition will bring to Virbac a leadership position in the farm animal vaccine market in Japan, notably in the cattle segment, and a large portfolio of pharmaceutical products for all the major species. Virbac will benefit from Sasaeah's local 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 across Asia.

Completion of the transaction is not subject to any regulatory approval; it was closed April 1, 2024.

### **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, 2023 and 2022.

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, 2023.

{167}------------------------------------------------

Our consolidated financial statements as of December 31, 2023 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, 2023 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, 2023**

- **IFRS 17** *-* **Insurance contracts including amendments to IFRS 17**
- **First application of IFRS 17 and IFRS 9 Comparative information**
- **Amendment to IAS 1 and IFRS practice statement 2** *-* **Disclosure of accounting policies**
- **Amendment to IAS 8 Accounting policies, change in accounting estimates and errors: definition of change in accounting estimates**
- **Amendments to IAS 12 Income taxes: deferred tax related to assets and liabilities arising from a single transaction**

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

Indeed, the only impact of these new standards and applications on our consolidated accounts relates to the IAS 12 amendment, which clarifies the exemption of the accounting of deferred tax assets and liabilities arising from a single transaction. This exemption is not applicable if it results in different deductible and taxable temporary differences later on. This exemption was used by the Group since the first application of IFRS 16 Leases, on January 1, 2019. The amendment application being retrospective, we have restated our financial statements to take into account the effect of the amendment in the equity opening balance as at January 1, 2022 (which corresponds to the opening balance of the first comparative period). The impact is a positive adjustment of €0.3 million in the Group equity. The net result impact at December 31, 2023 is a deferred tax loss of €24 thousand.

The economic and social environment in France during the first semester of 2023 has also been impacted by the French pension reform, which was voted on April 14, 2023, which progressively raises the retirement age from 62 to 64 years, and increases the mandatory number of years required to earn a full pension to 43 years. We have assessed the impact of this reform on our retirement plans in France, which is a loss of €0.3 million recognized through equity (see note A15).

Further, in September 2023, the French *Cour de cassation* rendered a decision that confirmed the right to employees to acquire annual leave whilst on a sick leave, regardless of the reasons for the sick leave or the length of it. The application of this decision was immediate. The impact on the Group accounts was nonetheless immaterial.

Last, since 2022, Turkey was added to the list of hyperinflationary economies. However, the operations we carry out in that country are not material at the Group level. Thus, in the absence of significant impact, the provisions of IAS 29 were not applied as at December 31, 2023.

### ■ **Amendments to IAS 12 - Income taxes: international tax reform, Pillar 2 model rules.**

The Finance bill in France for 2024 transposed the European directive concerning global anti-base erosion rules ("GLOBE" rules) and adopted the OECD Pillar 2 model rules.

The Group, falling within the scope of the new legislation, has carried out an initial assessment of its potential exposure to the new legislation with its entry into force.

This assessment is based on the most recent tax filings, country-by-country reporting and financial statements of the Group's constituent entities. Based on the assessment, as the effective tax rates in the jurisdictions in which the Group operates are above 15%, the Group does not expect any exposure to the new legislation at this stage.

The Group expects to be in a position to reassess the potential exposure in its next interim financial statements for the period ending June 30, 2024. The Group is currently engaged with tax specialists to assist it with applying the new legislation.

### **Standards and interpretations available for early adoption from January 1, 2023 on but not yet adopted by the EU**

The standards and interpretations listed below will be applicable from January 1, 2024 on:

■ **Amendments to IAS 7 and IFRS 7 - Supplier finance arrangements**

{168}------------------------------------------------

We have chosen not to adopt these standards and interpretations early, choosing instead to conduct an analysis of the implications involved in adopting them. Where necessary, we will apply these standards in our accounts once they are adopted by the European Union

**Standards and interpretations released but not yet applicable as at January 1, 2023**

- **Amendments to IFRS 16 Leases contracts: lease liability in a sale and leaseback**
- **Amendments to IAS 1 Presentation of financial statements: classification of liabilities as current or non-current**
- **Amendments to IAS 1 Presentation of financial statements: non-current liabilities with covenants**

### **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, 2023 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 GS Partners (now Virbac Czech Republic s.r.o) and of Globion India Private Ltd.

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.

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### **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. This option was not selected for the current financial year.

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.

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, 

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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.

For the purpose of these tests, we take into account the sales generated by the CGU. When carrying out intangible assets impairment tests, we take an approach based on estimated future cash flows (estimate of value in use). The future cash flows used for the impairment tests are calculated based on estimates (business plans) over a five-year period (or more if required as mentioned above). 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 depend on products and market growth expectations, and the discount rates are based on the weighted average cost of capital after tax method. They are presented in note A3.

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.

### **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 an 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.

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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 

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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.

The 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, 2023, 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 

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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, 2023, the net total goodwill was €165,372 thousand and the value of the intangible assets was €185,109 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 

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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 €19,606 thousand as at December 31, 2023.

### **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, 2023, the amount of other provisions was €9,608 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 €6.2 million in our accounts as of December 31, 2023.

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### **A1. Goodwill**

### **Changes in goodwill by CGU**

| in € thousand | Gross value<br>as at<br>12/31/2022 | Impairment<br>value as at<br>12/31/2022 | Book value<br>as at<br>12/31/2022 | Increases | Sales | Impair-<br>ment | Conversion<br>gains and<br>losses | Book value<br>as at<br>12/31/2023 |
|---------------|------------------------------------|-----------------------------------------|-----------------------------------|-----------|-------|-----------------|-----------------------------------|-----------------------------------|
| United States | 64,251                             | -3,650                                  | 60,601                            | —         | —     | —               | -2,050                            | 58,555                            |
| India         | 13,007                             | —                                       | 13,007                            | 22,241    | —     | —               | -493                              | 34,755                            |
| Chile         | 25,911                             | —                                       | 25,911                            | —         | —     | —               | -1,816                            | 24,095                            |
| New Zealand   | 15,123                             | -154                                    | 14,969                            | —         | —     | —               | -603                              | 14,360                            |
| SBC           | 7,873                              | —                                       | 7,873                             | —         | —     | —               | -279                              | 7,594                             |
| Denmark       | 4,643                              | —                                       | 4,643                             | —         | —     | —               | —                                 | 4,643                             |
| Uruguay       | 4,461                              | —                                       | 4,461                             | —         | —     | —               | -155                              | 4,300                             |
| Peptech       | 3,493                              | —                                       | 3,493                             | —         | —     | —               | -122                              | 3,372                             |
| Australia     | 3,274                              | -312                                    | 2,962                             | —         | —     | —               | -60                               | 2,902                             |
| Italy         | 1,585                              | —                                       | 1,585                             | —         | —     | —               | —                                 | 1,585                             |
| Colombia      | 1,353                              | —                                       | 1,353                             | —         | —     | —               | 199                               | 1,552                             |
| Greece        | 1,358                              | —                                       | 1,358                             | —         | —     | —               | —                                 | 1,358                             |
| Other CGUs    | 4,616                              | -1,722                                  | 2,894                             | 4,667     | —     | —               | -1,268                            | 6,293                             |
| Goodwill      | 150,948                            | -5,838                                  | 145,110                           | 26,908    | —     | —               | -6,646                            | 165,372                           |

The change in this item results in part from the acquisition of GS Partners, our distributor in the Czech Republic, on May 2, and Globion, in India on November 1, and from exchange differences for -€6.6 million.

### **Business combination**

### **GS Partners acquisition**

On May 2, 2023, we completed the acquisition of 100% of the shares of our historic distributor in the Czech Republic and Slovakia, also one of our oldest distributors in Central Europe.

This acquisition allows us to become more autonomous in fast-growing markets and to secure and further develop our business in these two countries while strengthening our presence in Central Europe, where our products for animal health are already accessible through our subsidiaries in Hungary and Poland (vaccines, reproduction, parasiticide and auricular ranges).

About twelve GS Partners employees joined Virbac's teams as part of the acquisition.

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 taken over is detailed below and leads to the recognition of a final goodwill of €4.7 million.

| in € thousand                                | Valuation |
|----------------------------------------------|-----------|
| Inventories sale price                       | 2,092     |
| Costs to incur to sell inventories           | -172      |
| Fair value of inventories acquired           | 1,920     |
| Tangible assets                              | 48        |
| Trade receivables and other receivables      | 718       |
| Cash and cash equivalents                    | 5,250     |
| Goodwill                                     | 4,667     |
| Fair value of acquired assets                | 10,683    |
| Trade payables and other payables            | -892      |
| Deferred tax liabilities arising from IFRS 3 | -157      |
| Fair value of acquired liabilities           | -1,049    |
| Acquisition price                            | 11,554    |

The purchase price consists of a payment of €10.1 million, a debt on securities of €0.6 million paid during the second semester, and an earn-out clause payable in four installments, the cumulative amount of which cannot exceed €0.8 million, to be paid over four fiscal years. These earn-outs, the payment of which is deemed highly 

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probable, were recorded in the other current financial liabilities in the amount of €0.2 million and non-current in the amount of €0.6 million.

It should be noted that the purchase price includes the acquisition of cash in the amount of €5.3 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, reflects the expected synergy effects and is mainly explained by:

- the integration of the downstream margin of our distributor in the Czech Republic and Slovakia;
- the integration of an experienced sales team;
- the strengthening of our position in Central Europe, from now on, with a direct commercial presence in both countries, which will facilitate future launches of new products.

The sales performed by this company total €6.1 million (of which €3.9 million since the acquisition date) for a net result close to €2.3 million (of which €0.2 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.

At the end of this agreement, Virbac bought 74% of the shares (first tranche). The contract also sets the terms of acquisition of the remaining 26% (second tranche). These lead to a firm buyout commitment on the part of Virbac, subject to the lifting of a condition precedent which the Group does not have at hand, and which has not been carried out on the closing date. The purchase price of both tranches is fixed.

Given established governance arrangements, Virbac has full control of the company within the meaning of IFRS 10. Globion is therefore consolidated in the Group's accounts using the full consolidation method. Furthermore, as the parties are contractually committed to the execution of tranche 2, IAS 32 § 23 requires the recognition of a debt that we have chosen to charge to the Group's share of equity, and which explains the "Change in scope" line in the statement of change in equity. This debt amounts to €18.5 million before discounting. However, the uncertain nature of the lifting of the condition precedent associated with this tranche 2 justifies the maintenance of the rights of minority interests and therefore the recognition of non-controlling interests in the statement of financial position. The amount of non-controlling interests recognized in the accounts thus amount to €10.6 million.

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

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 2024, 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. It reflects the expected synergies in the poultry segment described above.

| in € thousand                                                 | Fair value in the consolidated accounts at December<br>31,2023 |
|---------------------------------------------------------------|----------------------------------------------------------------|
| Total amount paid as at December 31, 2023 (first tranche)     | 52,544                                                         |
| Group part of the fair value of the net assets acquired (74%) | 30,302                                                         |
| Provisionnal Goodwill                                         | 22,242                                                         |

{177}------------------------------------------------

| in € thousand                            | Fair value in the consolidated accounts at December 31,2023 |
|------------------------------------------|-------------------------------------------------------------|
| Intangible assets                        | 33,381                                                      |
| Tangible assets                          | 11,614                                                      |
| Other assets                             | 204                                                         |
| Inventory and work-in-progress           | 2,177                                                       |
| Cash and cash equivalents                | 2,726                                                       |
| Provisions                               | -157                                                        |
| Deferred tax liability                   | -9,021                                                      |
| Financial liabilities                    | -277                                                        |
| Other operating receivables and payables | 301                                                         |
| Total                                    | 40,949                                                      |

The sales performed by this company total €12 million (of which €1.9 million since the acquisition date) for a net result close to €1 million (of which €0.3 million since the acquisition date).

### **A2. Intangible assets**

### **Changes in intangible assets**

|                                         | Concessions, patents, licenses<br>and brands |             | Other<br>intangible<br>assets | Intangible<br>assets<br>in progress | Intangible<br>assets |
|-----------------------------------------|----------------------------------------------|-------------|-------------------------------|-------------------------------------|----------------------|
| in € thousand                           | Indefinite life                              | Finite life |                               |                                     |                      |
| Gross value as at<br>12/31/2022         | 112,337                                      | 112,049     | 80,897                        | 21,288                              | 326,570              |
| Acquisitions and other increases        | 208                                          | 2,241       | 962                           | 13,256                              | 16,666               |
| Disposals and other decreases           | -15,956                                      | -2,554      | -99                           | -671                                | -19,280              |
| Changes in scope                        | 25,622                                       | 7,274       | 61                            | 530                                 | 33,487               |
| Transfers                               | 244                                          | 4,223       | 1,611                         | -6,989                              | -911                 |
| Conversion gains and losses             | -5,707                                       | -3,699      | -473                          | -342                                | -10,221              |
| Gross value as at<br>12/31/2023         | 116,747                                      | 119,533     | 82,958                        | 27,072                              | 346,311              |
| Depreciation as at<br>12/31/2022        | -19,131                                      | -87,185     | -64,612                       | -1,245                              | -172,174             |
| Depreciation expense                    | —                                            | -5,174      | -4,465                        | —                                   | -9,639               |
| Impairment losses (net of<br>reversals) | 126                                          | 386         | —                             | 513                                 | 1,025                |
| Disposals and other decreases           | 15,827                                       | 1,846       | 84                            | —                                   | 17,757               |
| Changes in scope                        | —                                            | -47         | -58                           | —                                   | -106                 |
| Transfers                               | -1                                           | -984        | -14                           | —                                   | -999                 |
| Conversion gains and losses             | —                                            | 2,587       | 321                           | 26                                  | 2,933                |
| Depreciation as at<br>12/31/2023        | -3,180                                       | -88,571     | -68,745                       | -707                                | -161,203             |
| Net value as at 12/31/2022              | 93,206                                       | 24,864      | 16,284                        | 20,043                              | 154,397              |
| Net value as at 12/31/2023              | 113,568                                      | 30,962      | 14,213                        | 26,366                              | 185,108              |

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 €33.3 million by the acquisition of Globion. 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 (assets relating to the Leishmaniosis vaccine in particular).

The "Transfers" line materializes the commissioning of these projects.

{178}------------------------------------------------

### **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, 2023**

| in € thousand           | Acquisition<br>date | Brands | Patents<br>and<br>know-how | Marketing<br>authorizations<br>and registration<br>rights | Customers<br>lists and<br>others | Total   |
|-------------------------|---------------------|--------|----------------------------|-----------------------------------------------------------|----------------------------------|---------|
| United States: iVet     | 2021                | 1,114  | —                          | —                                                         | 1,273                            | 2,387   |
| SBC                     | 2015                |        | 3,735                      | 2,035                                                     |                                  | 5,770   |
| Uruguay: Santa Elena    | 2013                | 3,548  | 9,007                      | 112                                                       |                                  | 12,667  |
| Australia: Axon         | 2013                | 885    | 571                        |                                                           |                                  | 1,457   |
| Australia: Fort Dodge   | 2010                | 1,487  | 442                        |                                                           |                                  | 1,929   |
| New Zealand             | 2012                | 3,143  | 499                        | 206                                                       | 919                              | 4,767   |
| Centrovet               | 2012                | 16,381 | 25,350                     | 12                                                        | 1,936                            | 43,679  |
| Multimin                | 2011-2012           | 3,037  | 2,297                      |                                                           |                                  | 5,334   |
| Peptech                 | 2011                | 952    |                            |                                                           |                                  | 952     |
| Colombia: Synthesis     | 2011                | 1,443  |                            | 186                                                       |                                  | 1,630   |
| Schering-Plough Europe  | 2008                | 1,711  | —                          | —                                                         |                                  | 1,711   |
| India: GSK              | 2006                | 9,802  |                            |                                                           |                                  | 9,802   |
| Others                  |                     | 31,004 | 4,206                      | 8,751                                                     | 8,486                            | 52,440  |
| Total intangible assets |                     | 74,508 | 46,107                     | 11,302                                                    | 12,614                           | 144,530 |

The "Other" line is mainly explained by the acquisition of Globion; the amounts of intangible assets identified during the business combination are likely to change, the amount of goodwill being provisional as of December 31, 2023.

### **As at December 31, 2022**

| in € thousand              | Acquisition<br>date | Brands | Patents<br>and<br>know-how | Marketing<br>authorizations<br>and registration<br>rights | Customers<br>lists and<br>others | Total   |
|----------------------------|---------------------|--------|----------------------------|-----------------------------------------------------------|----------------------------------|---------|
| United States: iVet        | 2021                | 1,154  | —                          | —                                                         | 1,494                            | 2,648   |
| SBC                        | 2015                |        | 3,923                      | 2,123                                                     | —                                | 6,046   |
| Uruguay: Santa Elena       | 2013                | 3,675  | 9,432                      | 210                                                       | —                                | 13,318  |
| Australia: Axon            | 2013                | 918    | 719                        | —                                                         | —                                | 1,636   |
| Australia: Fort Dodge      | 2010                | 1,541  | 458                        | —                                                         | —                                | 2,000   |
| New Zealand                | 2012                | 3,275  | 581                        | 286                                                       | 1,245                            | 5,386   |
| Centrovet                  | 2012                | 17,615 | 27,691                     | 7                                                         | 3,168                            | 48,481  |
| Multimin                   | 2011-2012           | 3,218  | 2,867                      | —                                                         | —                                | 6,085   |
| Peptech                    | 2011                | 987    | —                          | —                                                         | —                                | 987     |
| Colombia: Synthesis        | 2011                | 1,197  | —                          | 229                                                       | —                                | 1,426   |
| Schering-Plough<br>Europe  | 2008                | 1,711  | —                          | 347                                                       | —                                | 2,058   |
| India: GSK                 | 2006                | 10,217 | —                          | —                                                         | —                                | 10,217  |
| Others                     |                     | 6,573  | 3,426                      | 5,922                                                     | 1,861                            | 17,782  |
| Total intangible<br>assets |                     | 52,082 | 49,096                     | 9,123                                                     | 7,769                            | 118,070 |

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.

{179}------------------------------------------------

### **As at December 31, 2023**

| in € thousand                                            | Intangible assets with<br>indefinite life | Intangible assets with<br>finite life | Total   |
|----------------------------------------------------------|-------------------------------------------|---------------------------------------|---------|
| Brands                                                   | 74,508                                    | —                                     | 74,508  |
| Patents and know-how                                     | 36,742                                    | 9,364                                 | 46,107  |
| Marketing authorizations (MA) and<br>registration rights | 2,302                                     | 8,999                                 | 11,302  |
| Customers lists and others                               | 15                                        | 12,599                                | 12,614  |
| Total intangible assets                                  | 113,568                                   | 30,963                                | 144,530 |

### **As at December 31, 2022**

| in € thousand                                            | Intangible assets with<br>indefinite life | Intangible assets with<br>finite life | Total   |
|----------------------------------------------------------|-------------------------------------------|---------------------------------------|---------|
| Brands                                                   | 52,082                                    | —                                     | 52,082  |
| Patents and know-how                                     | 38,643                                    | 10,453                                | 49,096  |
| Marketing authorizations (MA) and<br>registration rights | 2,376                                     | 6,747                                 | 9,123   |
| Customers lists and others                               | 104                                       | 7,664                                 | 7,769   |
| Total intangible assets                                  | 93,206                                    | 24,864                                | 118,070 |

No brands are classified as intangible assets with finite useful lives. Therefore, no trademarks are amortized.

### **A3. Impairment of assets**

At end of the 2023 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 2023 financial year, the discount rates used are the following:

- 10.8% for the United States;
- 9.8% for Europe;
- 11.3% for Chile and 10.6% for the rest of Latin America;
- 11.2% for India and 9.7% for the rest of Asia;
- 9.1% for Oceania and South Africa.

{180}------------------------------------------------

### **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 €8.3 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 55% of the gross value of intangible assets and goodwill as of December 31, 2023), 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 €5.3 million. And assuming a drop of -2.0 points in this ratio and a discount rate higher than at least +2.0 points, it would be appropriate to depreciate the United States CGU to the tune of €7.4 million.

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

- -3.7 point change for the United States CGU;
- -3.7 point change for the Chile CGU;
- -29.2 point change for the India CGU;
- -23.5 point change for the Australia CGU;
- -19.7 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.

| in € thousand | Net book value<br>of CGU<br>as at 12/31/2023 | Discount rate, combined into a zero<br>perpetual growth rate, from which<br>impairment is established |
|---------------|----------------------------------------------|-------------------------------------------------------------------------------------------------------|
| United States | 161,119                                      | 13.0%                                                                                                 |
| Chile         | 96,472                                       | 10.3%                                                                                                 |
| India: GSK    | 46,747                                       | 90.4%                                                                                                 |
| Australia     | 40,117                                       | 49.7%                                                                                                 |
| New Zealand   | 28,502                                       | 27.2%                                                                                                 |
| Uruguay       | 34,344                                       | 35.3%                                                                                                 |
| SBC           | 29,148                                       | 17.3%                                                                                                 |
| Antigenics    | 14,778                                       | 96.7%                                                                                                 |
| Peptech       | 10,401                                       | 393.6%                                                                                                |
| Multimin      | 8,640                                        | 174.2%                                                                                                |
| Denmark       | 8,533                                        | 81.8%                                                                                                 |

{181}------------------------------------------------

### **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.

| in € thousand                        | Lands  | Buildings | Technical<br>facilities,<br>materials and<br>equipment | Other<br>tangible<br>assets | Tangible<br>assets in<br>progress | Tangible<br>assets |
|--------------------------------------|--------|-----------|--------------------------------------------------------|-----------------------------|-----------------------------------|--------------------|
| Gross value as at 12/31/2022         | 18,342 | 207,672   | 245,342                                                | 34,105                      | 26,597                            | 532,059            |
| Acquisitions and other increases     | 6,751  | 5,316     | 7,597                                                  | 2,493                       | 24,205                            | 46,362             |
| Disposals and other decreases        | –      | -583      | -2,121                                                 | -807                        | -275                              | -3,787             |
| Changes in scope                     | 2,761  | 4,760     | 4,301                                                  | 14                          | –                                 | 11,836             |
| Transfers                            | –      | 6,641     | 7,975                                                  | 1,057                       | -15,591                           | 81                 |
| Conversion gains and losses          | -619   | -2,899    | -3,555                                                 | -406                        | -249                              | -7,729             |
| Gross value as at 12/31/2023         | 27,235 | 220,906   | 259,539                                                | 36,456                      | 34,686                            | 578,823            |
| Depreciation as at 12/31/2022        | –      | -114,423  | -152,666                                               | -24,326                     | –                                 | -291,416           |
| Depreciation expense                 | –      | -9,295    | -14,014                                                | -3,047                      | –                                 | -26,356            |
| Impairment losses (net of reversals) | –      | –         | 310                                                    | –                           | -499                              | -189               |
| Disposals and other decreases        | –      | 439       | 1,889                                                  | 777                         | –                                 | 3,105              |
| Changes in scope                     | –      | –         | -174                                                   | –                           | –                                 | -174               |
| Transfers                            | –      | –         | 14                                                     | –                           | –                                 | 14                 |
| Conversion gains and losses          | –      | 1,405     | 2,450                                                  | 352                         | –                                 | 4,207              |
| Depreciation as at 12/31/2023        | –      | -121,874  | -162,191                                               | -26,243                     | -499                              | -310,807           |
| Net value as at 12/31/2022           | 18,342 | 93,248    | 92,676                                                 | 9,779                       | 26,597                            | 240,642            |
| Net value as at 12/31/2023           | 27,235 | 99,033    | 97,348                                                 | 10,213                      | 34,187                            | 268,015            |

The increase in tangible assets of €46.4 million (in gross value at constant scope), corresponds for more than half to investments made on the historic site of Carros in the fitting out of our buildings, as well as in the acquisition of land, but also new industrial equipment in order to increase our production capacities. Other significant investments during the period took place on our production sites in the United States, Australia, Uruguay, and to a lesser extent in our R&D centers.

Furthermore, the 2023 acquisition of Globion in India contributed to a net increase in tangible assets of €11.7 million.

The "Transfers" line essentially shows the commissioning of fixed assets.

{182}------------------------------------------------

### **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 2023 are analyzed as follows:

| in € thousand                        | Right of use |
|--------------------------------------|--------------|
| Gross value as at 12/31/2022         | 62,478       |
| Increases                            | 10,685       |
| Decreases                            | -7,565       |
| Changes in scope                     | 27           |
| Transfers                            | -10          |
| Conversion gains and losses          | -669         |
| Gross value as at 12/31/2023         | 65,106       |
| Depreciation as at 12/31/2022        | -27,883      |
| Allowances                           | -11,524      |
| Impairment losses (net of reversals) | —            |
| Termination of contracts             | 6,992        |
| Changes in scope                     | -173         |
| Transfers                            | 101          |
| Conversion gains and losses          | 322          |
| Depreciation as at 12/31/2023        | -32,166      |
| Net value as at 12/31/2022           | 34,595       |
| Net value as at 12/31/2023           | 32,940       |

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

| in € thousand                    | Lands<br>and<br>buildings | Technical<br>facilities,<br>materials and<br>equipment | Transportation<br>equipment | Hardware<br>/software | Office<br>equipment<br>and others | Total   |
|----------------------------------|---------------------------|--------------------------------------------------------|-----------------------------|-----------------------|-----------------------------------|---------|
| Gross value as at<br>12/31/2022  | 38,996                    | 3,494                                                  | 15,130                      | 4,097                 | 761                               | 62,478  |
| Increases                        | 1,871                     | 896                                                    | 6,954                       | 854                   | 110                               | 10,685  |
| Decreases                        | -1,856                    | -553                                                   | -4,714                      | -322                  | -121                              | -7,565  |
| Changes in scope                 | 277                       | —                                                      | —                           | —                     | —                                 | 277     |
| Transfers                        | —                         | -29                                                    | -101                        | 29                    | —                                 | -101    |
| Conversion gains and losses      | -853                      | -1                                                     | 189                         | 14                    | -16                               | -669    |
| Gross value as at<br>12/31/2023  | 38,435                    | 3,807                                                  | 17,457                      | 4,672                 | 734                               | 65,106  |
| Depreciation as at<br>12/31/2022 | -15,642                   | -1,929                                                 | -8,426                      | -1,447                | -439                              | -27,883 |
| Allowances                       | -4,884                    | -816                                                   | -4,586                      | -1,084                | -154                              | -11,524 |
| Termination of contracts         | 1,820                     | 349                                                    | 4,384                       | 322                   | 117                               | 6,991   |
| Changes in scope                 | -173                      | —                                                      | —                           | —                     | —                                 | -173    |
| Transfers                        | —                         | 34                                                     | 74                          | -34                   | 27                                | 101     |
| Conversion gains and losses      | 429                       | -7                                                     | -98                         | -11                   | 9                                 | 322     |
| Impairment as at<br>12/31/2023   | -18,450                   | -2,370                                                 | -8,652                      | -2,254                | -440                              | -32,166 |
| Net value as at 12/31/2022       | 23,354                    | 1,565                                                  | 6,704                       | 2,650                 | 322                               | 34,595  |
| Net value as at 12/31/2023       | 19,985                    | 1,437                                                  | 8,805                       | 2,418                 | 294                               | 32,940  |

The increase in rights of use is related to new contracts signed during the period, or renewal options approved by our subsidiaries in 2023. The main increases relate to the car fleet in all subsidiaries (+€7.0 million), real estate leases relating to offices and warehouses in Philippines and China in particular, and IT contracts in France.

{183}------------------------------------------------

However, the net value of the rights of use decreased slightly during the period (-€1.7 million), due to the allowances for depreciation amounting to €11.5 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:

| in € thousand                        | Residual rental costs |
|--------------------------------------|-----------------------|
| Variable rental costs                | -1,580                |
| Rental costs on short-term contracts | -1,282                |
| Rental costs on assets of low value  | -1,260                |
| Residual rental costs                | -4,122                |

### **A6. Other financial assets**

### **Change in other financial assets**

| in € thousand                          | 2022  | Increases | Decreases | Change in<br>consolidat<br>ion scope | Transfers | Conversion<br>gains and<br>losses | 2023  |
|----------------------------------------|-------|-----------|-----------|--------------------------------------|-----------|-----------------------------------|-------|
| Loans and other financial receivables  | 5,730 | 350       | -114      | 100                                  | -         | -316                              | 5,750 |
| Currency and interest rate derivatives | 89    | -         | -46       | -                                    | -         | -                                 | 43    |
| Restricted cash                        | 118   | 11        | -         | -                                    | -         | -5                                | 124   |
| Other                                  | 319   | -         | -2        | -                                    | 1         | 7                                 | 325   |
| Other financial assets, non-current    | 6,256 | 362       | -162      | 100                                  | 1         | -313                              | 6,243 |
| Loans and other financial receivables  | 1,050 | -         | -892      | -                                    | -         | -17                               | 140   |
| Currency and interest rate derivatives | 2,488 | 7         | -         | -                                    | -         | -                                 | 2,495 |
| Restricted cash                        | —     | —         | —         | —                                    | —         | —                                 | —     |
| Other                                  | —     | —         | —         | —                                    | —         | —                                 | —     |
| Other financial assets, current        | 3,538 | 8         | -892      | -                                    | -         | -17                               | 2,636 |
| Other financial assets                 | 9,794 | 369       | -1,054    | 100                                  | 1         | -330                              | 8,879 |

The amount of other financial assets is relatively stable. The main variation comes from the reduction in security deposits paid under factoring contracts, particularly in the United States.

### **Other financial assets classified according to their maturity**

### **As at December 31, 2023**

|                                           | in € thousand | less than 1 year | from 1 to 5 years | more than 5 years | Total |
|-------------------------------------------|---------------|------------------|-------------------|-------------------|-------|
| Loans and other financial receivables     |               | 140              | 5,661             | 89                | 5,891 |
| Currency and interest rate<br>derivatives |               | 2,495            | 43                | —                 | 2,539 |
| Restricted cash                           |               | —                | —                 | 124               | 124   |
| Other                                     |               | —                | 325               | —                 | 325   |
| Other financial assets                    |               | 2,636            | 6,029             | 214               | 8,879 |

{184}------------------------------------------------

### **As at December 31, 2022**

| in € thousand                             | less than 1 year | from 1 to 5 years | more than 5 years | Total |
|-------------------------------------------|------------------|-------------------|-------------------|-------|
| Loans and other financial receivables     | 1,050            | 4,963             | 767               | 6,780 |
| Currency and interest rate<br>derivatives | 2,488            | 89                | —                 | 2,577 |
| Restricted cash                           | —                | 72                | 46                | 118   |
| Other                                     | —                | 319               | —                 | 319   |
| Other financial assets                    | 3,539            | 5,443             | 813               | 9,794 |

### **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, 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;
- Globion India Private Ltd: acquired at the end of 2023, this entity specializing in the avian sector only contributes 0.2% of the Group's sales over the integration period.

### **Information about equity-accounted companies**

|                                                       | Company's individual accounts using equity method |        |       | Consolidated financial<br>statements |                    |                    |     |
|-------------------------------------------------------|---------------------------------------------------|--------|-------|--------------------------------------|--------------------|--------------------|-----|
| in € thousand                                         | Balance<br>sheet total                            | Equity | Sales | Result                               | Share of<br>equity | Share of<br>result |     |
| AVF Animal Health Co Ltd                              | NA                                                | NA     | —     | —                                    | 4,244              | 455                |     |
| Share in companies accounted for by the equity method |                                                   |        |       |                                      |                    | 4,244              | 455 |

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**

| in € thousand            | 2022<br>restated1 | Variations | Transfers | Change in<br>consolidation<br>scope | Conversion<br>gains and<br>losses | 2023   |
|--------------------------|-------------------|------------|-----------|-------------------------------------|-----------------------------------|--------|
| Deferred tax assets      | 46,663            | -3,402     | 576       | 41                                  | -690                              | 43,186 |
| Deferred tax liabilities | 47,759            | -2,097     | -2        | 9,216                               | -2,453                            | 52,423 |
| Deferred tax offset      | -1,096            | -1,305     | 578       | -9,176                              | 1,763                             | -9,237 |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023.

The change in deferred taxes presented above includes, for +€381 thousand, deferred tax on the effective portion of profits and losses on hedging instruments recognized in other comprehensive income.

{185}------------------------------------------------

### **Deferred taxes breakdown by nature**

Below table indicates deferred tax positions breakdown by nature as of December 31, 2023:

| in € thousand                                         | Deferred<br>tax<br>assets | in € thousand                                 | Deferred<br>tax<br>liabilities |
|-------------------------------------------------------|---------------------------|-----------------------------------------------|--------------------------------|
| Internal margin on inventories                        | 16,557                    | Adjustments on intangible assets              | 28,020                         |
| Retirement and end of career severance<br>commitments | 4,275                     | Adjustments on tangible assets                | 6,094                          |
| Sales adjustments (IFRS 15)                           | 1,994                     | Adjustments on fiscal provisions              | 8,287                          |
| Inventory adjustments (IAS 2)                         | 2,043                     | Activation of expenses linked to acquisitions | 815                            |
| Other non-deductible provisions                       | 5,321                     | Other income taxed in advance                 | 283                            |
| Other charges with deferred deduction                 | 1,767                     | Lease contracts (IFRS 16)                     | 8,923                          |
| Lease contracts (IFRS 16)                             | 9,449                     |                                               |                                |
| Tax loss carryforwards                                | 1,781                     |                                               |                                |
| Total by nature                                       | 43,186                    | Total by nature                               | 52,423                         |
| Impact of compensation by fiscal entity               | -20,864                   | Impact of compensation by fiscal entity       | -20,864                        |
| Deferred net tax assets                               | 22,322                    | Deferred net tax liabilities                  | 31,559                         |

### **Deferred tax asset use horizon**

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

|                                                                       | Deferred tax<br>assets as at<br>12/31/2023 | less than<br>1 year | from<br>1 to 5 years | more than<br>5 years |
|-----------------------------------------------------------------------|--------------------------------------------|---------------------|----------------------|----------------------|
| in € thousand                                                         |                                            |                     |                      | Use horizon          |
| Deferred tax on other charges with deferred deduction in Chile        | 1,041                                      | —                   | 1,041                | —                    |
| Deferred tax on tax losses carried forward                            | 1,781                                      | 473                 | 1,308                | —                    |
| Deferred tax on retirement and end of career severance<br>commitments | 4,275                                      | 1,152               | 1,074                | 2,049                |
| Deferred tax on other bases                                           | 36,089                                     | 28,429              | 6,149                | 1,511                |
| Total deferred tax assets                                             | 43,186                                     | 30,053              | 9,572                | 3,560                |

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, 2023, amounts to €62 million (compared to €65 million as of December 31, 2022), 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 began to be activated during 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.

| Expiry date   | in € thousand |
|---------------|---------------|
| 2024          | 1,101         |
| 2025          | 1,449         |
| 2026          | 252           |
| 2027          | 866           |
| 2028          | 5,619         |
| 2029          | 1,666         |
| 2030          | 481           |
| 2031          | 477           |
| 2032          | 1,310         |
| 2033          | 775           |
| Over 10 years | —             |
| Unlimited     | 48,019        |

{186}------------------------------------------------

| in € thousand                 | Raw materials and supplies | Work in progress | Finished products and goods for resale | Inventories and work in progress |
|-------------------------------|----------------------------|------------------|----------------------------------------|----------------------------------|
| Gross value as at 12/31/2022  | 108,276                    | 25,514           | 220,381                                | 354,172                          |
| Variations                    | -237                       | 3,514            | 12,428                                 | 15,705                           |
| Changes in scope              | 540                        | 74               | 3,483                                  | 4,097                            |
| Conversion gains and losses   | -1,437                     | -41              | -2,643                                 | -4,121                           |
| Gross value as at 12/31/2023  | 107,142                    | 29,061           | 233,649                                | 369,852                          |
| Depreciation as at 12/31/2022 | -5,612                     | -728             | -16,922                                | -23,262                          |
| Allowances                    | -2,738                     | -1,290           | -20,082                                | -24,110                          |
| Reversals                     | 2,513                      | 728              | 13,385                                 | 16,625                           |
| Conversion gains and losses   | 129                        | —                | 429                                    | 558                              |
| Depreciation as at 12/31/2023 | -5,708                     | -1,290           | -23,191                                | -30,189                          |
| Net value as at 12/31/2022    | 102,664                    | 24,786           | 203,459                                | 330,909                          |
| Net value as at 12/31/2023    | 101,434                    | 27,771           | 210,458                                | 339,663                          |

### **A9. Inventories and work in progress**

Excluding foreign exchange, net inventories increased by €12.3 million, including €4.1 million from the impact of changes in scope (see note A1). This increase relates in particular to production in progress as well as finished goods and goods for resale.

This variation is correlated with the increase in activity observed over the year and it also aims to anticipate future orders.

The main contributors to the increase in inventories are Australia, the United Kingdom and France, partially offset by a reduction in inventories in Chile.

### **A10. Trade receivables**

| in € thousand                 | Trade receivables |
|-------------------------------|-------------------|
| Gross value as at 12/31/2022  | 148,709           |
| Variations                    | 22,334            |
| Changes in scope              | 2,740             |
| Conversion gains and losses   | -2,983            |
| Gross value as at 12/31/2023  | 170,800           |
| Depreciation as at 12/31/2022 | -2,419            |
| Allowances                    | -941              |
| Reversals                     | 646               |
| Changes in scope              | -149              |
| Conversion gains and losses   | 40                |
| Depreciation as at 12/31/2023 | -2,822            |
| Net value as at 12/31/2022    | 146,290           |
| Net value as at 12/31/2023    | 167,977           |

The net trade receivables item is up by €24.6 million, excluding foreign exchange effects.

This increase mainly concerns the United Kingdom, Brazil and Chile, due to a higher level of activity in the last quarter of 2023 compared to 2022, and the United States following the end of the use of factoring of receivables. Furthermore, in the United Kingdom, the increase in customer receivables is also explained by the late payment of a major distributor whose receivable was collected in January 2024.

It should be noted that receivables de-consolidated as sold under factoring contracts amounted to €12 million as of December 31, 2023 (compared with €16.9 million as of December 31, 2022). This change is due to the termination of the United States program.

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

{187}------------------------------------------------

### **A11. Other receivables**

| in € thousand                                | 2022   | Variations | Change in<br>consolidation<br>scope | Transfers | Conversion<br>gains<br>and losses | 2023   |
|----------------------------------------------|--------|------------|-------------------------------------|-----------|-----------------------------------|--------|
| Income tax receivables                       | 11,961 | 9,631      | —                                   | —         | -199                              | 21,392 |
| Social receivables                           | 627    | 102        | 5                                   | —         | —                                 | 734    |
| Other State receivables                      | 35,765 | 5,225      | 631                                 | —         | 84                                | 41,705 |
| Advances and prepayments on orders           | 2,887  | 1,033      | 45                                  | —         | 26                                | 3,992  |
| Depreciation on various other<br>receivables | —      | —          | —                                   | —         | —                                 | —      |
| Prepaid expenses                             | 9,296  | 88         | 58                                  | —         | -123                              | 9,319  |
| Other various receivables                    | 4,871  | 3,150      | 179                                 | 10        | -51                               | 8,160  |
| Other receivables                            | 65,407 | 19,229     | 918                                 | 11        | -263                              | 85,302 |

The net increase in this item is +€20.1 million, excluding foreign exchange effects, and is mainly explained by the joint effects of:

• the increase in tax receivables of +€9.9 million from the parent company linked in particular to an amount of tax advances paid in 2023 greater than the provision for tax due for the financial year;

• the increase in other receivables from the French government linked in particular to the parent company to an increase in VAT and in the research tax credit receivables;

• the increase in "Other various receivables" corresponding mainly to receivables owed by the factor in Italy.

The other changes are individually immaterial.

### **A12. Cash and cash equivalents**

| in € thousand                     | 2022    | Variations | Change in<br>scope | Transfers | Conversion gains<br>and losses | 2023    |
|-----------------------------------|---------|------------|--------------------|-----------|--------------------------------|---------|
| Available funds                   | 67,265  | 5,455      | 7,977              | 2         | -1,405                         | 79,294  |
| Marketable securities             | 110,118 | -9,564     | —                  | —         | -3,943                         | 96,611  |
| Cash and cash equivalents         | 177,383 | -4,109     | 7,977              | 2         | -5,348                         | 175,906 |
| Bank overdraft                    | -639    | -1,877     | —                  | —         | —                              | -2,517  |
| Accrued interests not yet matured | -65     | 34         | —                  | —         | —                              | -31     |
| Overdraft                         | -704    | -1,843     | —                  | —         | —                              | -2,547  |
| Net cash position                 | 176,679 | -5,951     | 7,977              | 2         | -5,348                         | 173,358 |

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 increase in marketable securities mainly concerns one of our subsidiaries, which has €83 million in term deposits as at 31 December 2023, held by leading financial institutions.

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

### **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.

{188}------------------------------------------------

### **A14. Equity**

| in € thousand                                           | 2023    | 2022 restated |
|---------------------------------------------------------|---------|---------------|
| Capital                                                 | 10,573  | 10,573        |
| Premiums linked to capital                              | 6,534   | 6,534         |
| Legal reserve                                           | 1,089   | 1,089         |
| Other reserves and retained earnings                    | 650,505 | 663,874       |
| Consolidation reserves                                  | 146,077 | 58,497        |
| Conversion reserves                                     | -29,377 | -17,885       |
| Actuarial gains and losses                              | -6,398  | -4,985        |
| Result for the period                                   | 121,298 | 121,943       |
| Equity attributable to the owners of the parent company | 900,301 | 839,639       |
| Other reserves and retained earnings                    | 10,358  | 367           |
| Conversion reserves                                     | -533    | -70           |
| Result for the period                                   | -210    | -648          |
| Non-controlling interests                               | 9,616   | -351          |
| Equity                                                  | 909,917 | 839,288       |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023

### **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 8,458,000 shares making up the share capital, 4,317,248 have double voting rights.

### **Share buyback program**

The June 20, 2023 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, 2023, Virbac owned a total of 88,281 treasury shares acquired on the market for a total amount of €23,363,081 excluding costs, that is, an average cost of €264.64 per share.

During the financial year, the company bought 77,434 treasury shares (at an average price of €267.23) including 4,091 shares under the animation contract, 67,343 shares under the share buyback program in the process of being canceled as well as 6,000 shares under performance share plans. As part of the securities animation contract, 5,005

Treasury shares as of December 31, 2023 represent 1.04% of Virbac's capital. They are intended in part for the animation of the security, the allocation of performance shares as well as a securities repurchase program in the process of being canceled in whole or in part in accordance with the twenty-first resolution adopted by the shareholders' meeting of June 20, 2023.

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;

treasury shares were sold (at an average price of €253.54)

{189}------------------------------------------------

• 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.

It should be noted that the Group suspended the liquidity contract for the share on February 3, 2023.

### **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**

|                                            |  | 2022   | Allowances | Reversals | Change in<br>scope | Equity | Conversion<br>gains and<br>losses | 2023   |
|--------------------------------------------|--|--------|------------|-----------|--------------------|--------|-----------------------------------|--------|
| France                                     |  | 9,642  | 848        | -728      | —                  | 1,645  | —                                 | 11,406 |
| Italy                                      |  | 708    | 81         | -146      | —                  | 11     | —                                 | 655    |
| Germany                                    |  | 195    | —          | -57       | —                  | —      | —                                 | 138    |
| Greece                                     |  | 128    | 21         | —         | —                  | —      | —                                 | 149    |
| Mexico                                     |  | 318    | 76         | -32       | —                  | -14    | 37                                | 385    |
| Korea                                      |  | -213   | 111        | -141      | —                  | 114    | 12                                | -117   |
| Taiwan                                     |  | 1,234  | 139        | -37       | —                  | —      | -42                               | 1,295  |
| Thailand                                   |  | 1,294  | 118        | -502      | —                  | -121   | -33                               | 756    |
| Philippines                                |  | 22     | 12         | —         | —                  | -3     | -1                                | 31     |
| Uruguay                                    |  | 745    | —          | -764      | —                  | —      | 19                                | —      |
| Retirement and severance pay<br>allowances |  | 14,071 | 1,406      | -2,407    | —                  | 1,633  | -8                                | 14,697 |
| Japan                                      |  | 1,817  | 188        | -112      | —                  | -26    | -183                              | 1,685  |
| Defined benefit retirement plans           |  | 1,817  | 188        | -112      | —                  | -26    | -183                              | 1,685  |
| South Africa                               |  | 867    | 90         | -59       | —                  | 136    | -99                               | 936    |
| Medical coverage                           |  | 867    | 90         | -59       | —                  | 136    | -99                               | 936    |
| India                                      |  | 321    | 350        | -279      | 157                | 196    | -27                               | 717    |
| Allowances for absence                     |  | 321    | 350        | -279      | 157                | 196    | -27                               | 717    |
| Australia                                  |  | 1,377  | 178        | -96       | —                  | —      | -48                               | 1,411  |
| Austria                                    |  | 64     | 18         | —         | —                  | —      | —                                 | 81     |
| Spain                                      |  | 72     | 8          | —         | —                  | —      | —                                 | 80     |
| Other long term benefits                   |  | 1,513  | 204        | -96       | —                  | —      | -48                               | 1,572  |
| Provisions for employee benefits           |  | 18,589 | 2,239      | -2,952    | 157                | 1,939  | -366                              | 19,606 |

The main impacts on equity mainly concern France due to the updating of data generating a loss of experience of €903 thousand, the reduction in the discount rate generating a loss of €450 thousand, and the shift in retirement age leading to a loss of €291 thousand.

The changes brought about by the pension reform, modifying the minimum retirement age and the conditions for obtaining the full rate, applicable since September 2023 in France, were treated in equity (OCI) according to IAS 19.

The amount of €157 thousand in scope movements in India corresponds to the debt linked to the acquisition of the company Globion on November 1, 2023.

{190}------------------------------------------------

### **Main commitments**

The main existing employee benefit plans are the ones of France, Japan, Australia, Taiwan, and South Africa. As of December 31, 2023, they contributed respectively for 58%, 9%, 7% , 7% 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**

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.

### **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, 2023**

|              | Discount rate | Future salary growth |
|--------------|---------------|----------------------|
| France       | 3.15%         | 2.50%                |
| Japan        | 1.40%         | 2.00%                |
| Australia    | 5.00%         | 3.00%                |
| South Africa | 11.15%        | 7.40%                |
| Taiwan       | 1.38%         | 4.50%                |

{191}------------------------------------------------

### **Assumptions as at December 31, 2022**

|           | Discount rate | Future salary growth |
|-----------|---------------|----------------------|
| France    | 3.70%         | 2.50%                |
| Japan     | 1.10%         | 2.00%                |
| Australia | 3.70%         | 5.00%                |
| Thailand  | 2%-2,5%       | 4.00%                |
| Taiwan    | 1.50%         | 4.50%                |

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 €749 thousand or an increase of approximately €748 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 €643 thousand or a reduction of approximately €608 thousand, which would be recognized with the counterparty entry to other in other comprehensive income.

### **Allowance for the year**

| in € thousand                                                 | 2023 allowance |
|---------------------------------------------------------------|----------------|
| Cost of services rendered                                     | 1,705          |
| Financial cost                                                | 781            |
| Interest income                                               | -247           |
| Change of scheme                                              | —              |
| Immediate recognition of actuarial (gains)/losses in the year | —              |
| Administrative costs recognized in expenses                   | —              |
| Net cost or gain (-) recognized in income                     | 2,239          |

Employer contributions (including benefits paid directly by the employer) in 2023 totaled €2,952 thousand and are estimated to reach €2,113 thousand in 2024.

{192}------------------------------------------------

### **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).

| in € thousand                                           | Actuarial liability |
|---------------------------------------------------------|---------------------|
| Present value as at January 1, 2023                     | 22,380              |
| Benefits paid by employer                               | -2,532              |
| Benefits paid by funds                                  | -556                |
| Cost of services rendered and financial cost            | 2,482               |
| Termination/end of contract                             | —                   |
| Actuarial (gains)/losses due to demographic assumptions | 297                 |
| Actuarial (gains)/losses due to financial assumptions   | 457                 |
| Actuarial experience (gains)/losses                     | 1,138               |
| Change of scheme                                        | —                   |
| Other variations                                        | —                   |
| Transfers                                               | 157                 |
| Conversion gains and losses                             | -542                |
| Present value as at December 31, 2023                   | 23,281              |

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

| in € thousand                      | Hedging assets |
|------------------------------------|----------------|
| Fair value as at January 1, 2023   | 3,791          |
| Contributions paid                 | 420            |
| Benefits paid by funds             | -560           |
| Interest income                    | 247            |
| Actuarial gains/(losses)           | -46            |
| Tax on premiums paid               | —              |
| Other variations                   | —              |
| Conversion gains and losses        | -177           |
| Fair value as at December 31, 2023 | 3,674          |

| in € thousand                                                              | Employee benefits |
|----------------------------------------------------------------------------|-------------------|
| Fair value of hedging assets                                               | -3,674            |
| Present value of actuarial liability                                       | 23,281            |
| Assets (-) or liabilities recognized in provisions as at December 31, 2023 | 19,606            |

| in € thousand                                    | Employee benefits |
|--------------------------------------------------|-------------------|
| Provision to liabilities as at January 1, 2023   | 18,589            |
| Charge/gain recognized in income - allowance     | 2,239             |
| Amount recognized in equity                      | 1,939             |
| Employer contributions/benefits paid - reversal  | -2,952            |
| Other events                                     | —                 |
| Transfers                                        | 157               |
| Conversion gains and losses                      | -366              |
| Provision to liabilities as at December 31, 2023 | 19,606            |

{193}------------------------------------------------

### **A16. Other provisions**

| in € thousand                          | 2022  | Allowances | Reversals | Changes<br>in scope | Transfers | Conversion<br>gains and losses | 2023  |
|----------------------------------------|-------|------------|-----------|---------------------|-----------|--------------------------------|-------|
| Trade disputes and labor<br>litigation | 2,342 | 551        | -205      | -                   | -         | 2                              | 2,690 |
| Fiscal disputes                        | 2,912 | 942        | -318      | -                   | -         | 169                            | 3,704 |
| Various risks and charges              | 1,578 | 229        | -903      | -                   | -         | -                              | 905   |
| Other non-current provisions           | 6,833 | 1,722      | -1,426    | -                   | -         | 171                            | 7,299 |
| Trade disputes and labor<br>litigation | 774   | -          | -121      | -                   | -         | -27                            | 627   |
| Fiscal disputes                        | -     | -          | -         | -                   | -         | -                              | -     |
| Various risks and charges              | 265   | 1,555      | -81       | -                   | -         | -56                            | 1,682 |
| Other current provisions               | 1,039 | 1,555      | -202      | -                   | -         | -83                            | 2,309 |
| Other provisions                       | 7,872 | 3,277      | -1,628    | -                   | -         | 88                             | 9,608 |

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**

| in € thousand                 | 2022   | New<br>contracts<br>and<br>renewals | Repayments<br>and<br>cancellations | Change in<br>consolidation<br>scope | Transfers | Conversion<br>gains<br>and losses | 2023   |
|-------------------------------|--------|-------------------------------------|------------------------------------|-------------------------------------|-----------|-----------------------------------|--------|
| Lease liability - Non-current | 27,392 | 6,293                               | -1                                 | 138                                 | -8,480    | -343                              | 25,001 |
| Lease liability - Current     | 9,415  | 3,035                               | -10,721                            | –                                   | 8,480     | -64                               | 10,144 |
| Lease liability               | 36,807 | 9,328                               | -10,722                            | 138                                 | –         | -407                              | 35,145 |

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**

|                               |                  |                   | Payments          |               |  |
|-------------------------------|------------------|-------------------|-------------------|---------------|--|
| in € thousand                 | less than 1 year | from 1 to 5 years | more than 5 years | Total         |  |
| Lease liability - Non-current | –                | 19,381            | 5,620             | <b>25,001</b> |  |
| Lease liability - Current     | 10,144           | –                 | –                 | <b>10,144</b> |  |
| Lease liability               | 10,144           | 19,381            | 5,620             | 35,145        |  |

### **Information related to financing activities**

|                 |        | Cash flows |          |          | Non-cash flows                |           |                             |        |
|-----------------|--------|------------|----------|----------|-------------------------------|-----------|-----------------------------|--------|
| in € thousand   | 2022   | Repayments | Increase | Decrease | Change in consolidation scope | Transfers | Conversion gains and losses | 2023   |
| Lease liability | 36,807 | -10,149    | 9,328    | -573     | 138                           | —         | -407                        | 35,145 |
| Lease liability | 36,807 | -10,149    | 9,328    | -573     | 138                           | —         | -407                        | 35,145 |

{194}------------------------------------------------

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 new IT contracts or real estate contracts mentioned in note A5.

### **A18. Other financial liabilities**

### **Change in other financial liabilities**

| in € thousand                              | 2022   | Increase | Decrease | Changes<br>in scope | Transfer | Conversion<br>gains and losses | 2023   |
|--------------------------------------------|--------|----------|----------|---------------------|----------|--------------------------------|--------|
| Loans                                      | 17,995 | 31,651   | —        | —                   | -2,270   | -6,758                         | 40,618 |
| Employee profit sharing                    | 19     | 2        | —        | —                   | —        | —                              | 22     |
| Currency and interest rate<br>derivatives  | —      | —        | —        | —                   | —        | —                              | —      |
| Other                                      | —      | —        | -84      | 138                 | —        | -4                             | 50     |
| Other non-current<br>financial liabilities | 18,014 | 31,653   | -84      | 138                 | -2,270   | -6,762                         | 40,690 |
| Loans                                      | 34,953 | 56,046   | -49,415  | —                   | 2,270    | -2,025                         | 41,830 |
| Bank overdrafts                            | 640    | 1,877    | —        | —                   | —        | —                              | 2,517  |
| Accrued interests not yet<br>matured       | 65     | —        | -34      | —                   | —        | —                              | 31     |
| Employee profit sharing                    | 1,076  | 951      | -993     | —                   | —        | 101                            | 1,135  |
| Currency and interest rate<br>derivatives  | 6,465  | —        | -4,269   | —                   | —        | —                              | 2,196  |
| Other                                      | —      | —        | —        | —                   | —        | —                              | —      |
| Other current financial<br>liabilities     | 43,199 | 58,874   | -54,711  | —                   | 2,270    | -1,924                         | 47,709 |
| Other financial liabilities                | 61,213 | 90,527   | -54,795  | 138                 | —        | -8,685                         | 88,399 |

During the financial year 2023, our bank pool responded favorably and unanimously to our request for an extension of the maturity of our syndicated loan by one year, with a new maturity date of October 18, 2028. This credit agreement, signed in October 2021, includes an "accordion" clause that allow us to increase the financing by €150 million, which can bring the total commitment to €350 million. Furthermore, this new financing line includes commitments related to our CSR policy, reflecting our commitment for several years to protect the environment and respect animal ethics. Negotiating these clauses ensures that we have access to controlled financial conditions and support our needs as we evolve. 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.

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

- a syndicated loan of €200 million, the characteristics of which are explained above;
- market-based contracts (*Schuldschein*) for a total of €6 million, with maturity April 2025, at a fixed rate;
- financing contracts with Bpifrance, for €12.3 million, amortizable and maturing in July 2027 and June 2032;
- factoring contracts with recourse and export loans for US \$46 million in Chile;
- uncommited credit lines in the United States for US \$37 million.

As of December 31, 2023, the funding position is as follows:

- market-based contracts amounted to €6 million;
- the Bpifrance financing amounted to €12.3 million;
- factoring lines with recourse mobilized in Chile for an amount of US \$24.6 million;
- the drawn credit of our subsidiary in the United States amounted to US \$18 million;
- the syndicated contract's line of credit is not mobilized.

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<sup>1</sup> for the period over the consolidated Ebitda<sup>2</sup> .

As at December 31, 2023, we comply with the financial ratio clauses, which is -0.24 and therefore below the contractual financial covenant limit of 3.75.

1 for the purpose of calculating the covenant, consolidated net debt refers to the sum of other current and noncurrent financial liabilities, namely the following items: loans, bank loans, accrued interest liabilities, liabilities related to finance leases, profit sharing, interest rate and foreign exchange derivatives, and others; minus the 

{195}------------------------------------------------

amount of the following items: cash and cash equivalents, term deposits, and foreign exchange and interest rate assets derivatives as shown in the consolidated accounts

2 under the contractual definition, consolidated Ebitda refers to operating profit for the period under review, plus the allowances for depreciation and provisions, net of reversals, and dividends received from non-consolidated subsidiaries

The company's financing capacity is sufficient to fund its cash requirements.

The decrease in liabilities on foreign exchange derivatives is due to the renewal in 2023 of the hedging of our US dollar debt carried out in a market context close to that of the closing, unlike in 2022. Indeed, in 2022, the average price of these hedges dedicated to our US dollar debt was far from the 2022 closing price with an unfavorable market value.

### **Other financial liabilities classified according to their maturity**

### **As at December 31, 2023**

|                                        | Payments         |                   |                   | Total  |
|----------------------------------------|------------------|-------------------|-------------------|--------|
| in € thousand                          | less than 1 year | from 1 to 5 years | more than 5 years |        |
| Loans                                  | 41,830           | 38,680            | 1,938             | 82,448 |
| Bank overdrafts                        | 2,517            | —                 | —                 | 2,517  |
| Accrued interests not yet matured      | 31               | —                 | —                 | 31     |
| Employee profit sharing                | 1,135            | 22                | —                 | 1,156  |
| Currency and interest rate derivatives | 2,196            | —                 | —                 | 2,196  |
| Other                                  | —                | 50                | —                 | 50     |
| Other financial liabilities            | 47,709           | 38,752            | 1,938             | 88,399 |

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, 2022**

|                                        | Payments         |                   |                   |        |
|----------------------------------------|------------------|-------------------|-------------------|--------|
| in € thousand                          | less than 1 year | from 1 to 5 years | more than 5 years | Total  |
| Loans                                  | 34,953           | 15,432            | 2,563             | 52,948 |
| Bank overdrafts                        | 640              | —                 | —                 | 640    |
| Accrued interests not yet matured      | 65               | —                 | —                 | 65     |
| Employee profit sharing                | 1,076            | 19                | —                 | 1,095  |
| Currency and interest rate derivatives | 6,465            | —                 | —                 | 6,465  |
| Other                                  | —                | —                 | —                 | —      |
| Other financial liabilities            | 43,199           | 15,452            | 2,563             | 61,213 |

### **Information related to financing activities**

|                                           |        | Cash flows |            |            | Non-cash flows      |           |                                   |        |
|-------------------------------------------|--------|------------|------------|------------|---------------------|-----------|-----------------------------------|--------|
|                                           | 2022   | Issuance   | Repayments | Fair value | Changes<br>in scope | Transfers | Conversion<br>gains and<br>losses | 2023   |
| in € thousand                             |        |            |            |            |                     |           |                                   |        |
| Non-current financial<br>liabilities      | 17,995 | 31,652     | -          | -          | -                   | -2,270    | -6,758                            | 40,618 |
| Current financial<br>liabilities          | 34,953 | 56,046     | -49,415    | -          | -                   | 2,270     | -2,025                            | 41,830 |
| Employee profit sharing                   | 1,095  | 953        | -993       | -          | -                   | -         | 101                               | 1,156  |
| Currency and interest<br>rate derivatives | 6,465  | -          | -          | -4,269     | -                   | -         | -                                 | 2,196  |
| Others                                    | -      | -          | -84        | -          | 138                 | -         | -4                                | 50     |
| Other financial<br>liabilities            | 60,508 | 88,651     | -50,493    | -4,269     | 138                 | -         | -8,685                            | 85,850 |

{196}------------------------------------------------

| in € thousand                      | 2022    | Variations | Changes<br>in scope | Transfers | Conversion<br>gains and losses | 2023    |
|------------------------------------|---------|------------|---------------------|-----------|--------------------------------|---------|
| Income tax payables                | —       | —          | —                   | —         | —                              | —       |
| Social payables                    | —       | —          | —                   | —         | —                              | —       |
| Other fiscal payables              | —       | —          | —                   | —         | —                              | —       |
| Advances and prepayments on orders | —       | —          | —                   | —         | —                              | —       |
| Prepaid income                     | 1,846   | -393       | —                   | —         | -3                             | 1,450   |
| Various other payables             | 5,308   | 45         | 16,763              | —         | -954                           | 21,162  |
| Other non-current payables         | 7,154   | -348       | 16,763              | —         | -957                           | 22,612  |
| Income tax payables                | 10,221  | 8          | 166                 | —         | -125                           | 10,270  |
| Social payables                    | 61,767  | 4,734      | 198                 | —         | -479                           | 66,220  |
| Other fiscal payables              | 11,226  | -1,215     | 41                  | —         | -88                            | 9,964   |
| Advances and prepayments on orders | 437     | 13         | 24                  | —         | -19                            | 456     |
| Prepaid income                     | 1,036   | 95         | —                   | —         | -7                             | 1,124   |
| Various other payables             | 96,426  | 4,272      | 825                 | -20       | -280                           | 101,223 |
| Other current payables             | 181,113 | 7,908      | 1,254               | -20       | -999                           | 189,256 |
| Other payables                     | 188,267 | 7,559      | 18,017              | -20       | -1,956                         | 211,868 |

### **A19. Other payables**

Other payables increased by €25.6 million, excluding foreign exchange effects. The main changes are shown below.

The increase in "Other non-current creditors" mainly results from the recognition of the debt with respect to the commitment to purchase tranche 2 of Globion Group in India, and to a lesser extent from the earn-outs provided for as part of the acquisition of GS Partners in the Czech Republic (see note A1).

The "Other creditors-current" item increases by €9.2 million (excluding foreign exchange effects) mainly in connection with:

- an increase in "Social liabilities" of €1.9 million on the parent company, with an increase in the provision for paid leave and related expenses, and an increase in the United States of €1.1 million corresponding to the provisions for bonuses and overtime worked by employees at the end of the year;
- an increase in "Other miscellaneous liabilities" of €5.1 million. This line largely comprises liabilities on contracts entered into with customers with a change of +€5.6 million over the financial year (see details below). The change is also explained by an increase in provisions on customer returns in the United States (+€0.9 million), offset by a decrease of -€1.9 million in other current liabilities relating to remaining iVet earn-outs, half having been paid, and the last part having been canceled (see note A26).

Below table details the type of contract-related liabilities:

| in € thousand                      | 2022   | Variations | Changes<br>in scope | Transfers | Conversion<br>gains and losses | 2023   |
|------------------------------------|--------|------------|---------------------|-----------|--------------------------------|--------|
| Advances and prepayments on orders | 437    | 13         | 24                  | —         | -19                            | 456    |
| Customers - credits to be issued   | 88,346 | 5,572      | —                   | —         | -191                           | 93,727 |
| Customer liabilities               | 88,783 | 5,585      | 24                  | —         | -210                           | 94,182 |

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 (+€5.1 million), in the United Kingdom (+€1.2 million) and in Australia (+€0.8 million), partially offset by a decrease in the United States (-€1.5 million).

{197}------------------------------------------------

### **A20. Trade payables**

| in € thousand                                         | 2022    | Variations | Changes<br>in scope | Transfers | Conversion gains<br>and losses | 2023    |
|-------------------------------------------------------|---------|------------|---------------------|-----------|--------------------------------|---------|
| Current trade payables                                | 142,459 | -10,135    | 2,931               | -12       | -2,041                         | 133,201 |
| Trade payables -<br>suppliers of intangible<br>assets | 5,302   | -2,221     | —                   | —         | -21                            | 3,061   |
| Trade payables -<br>suppliers of tangible<br>assets   | 8,059   | 5,321      | 17                  | —         | -30                            | 13,367  |
| Trade payables                                        | 155,820 | -7,036     | 2,948               | -12       | -2,091                         | 149,629 |

This item amounted to €149.6 million as of December 31, 2023, compared to €155.8 million at the end of 2022, or a net decrease of €4.1 million, excluding foreign exchange effects.

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

• a downward trend in purchases of raw materials impacting the current trade payables item;

• an increase in trade payables from tangible assets related to investments in France in order to increase our production capacity.

### **A21. Revenue from ordinary activities**

| in € thousand                           | 2023      | 2022      | Change |
|-----------------------------------------|-----------|-----------|--------|
| Sales of finished goods and merchandise | 1,437,698 | 1,390,988 | 3.4%   |
| Services                                | 468       | 453       | 3.3%   |
| Additional income from activity         | 2,894     | 2,547     | 13.6%  |
| Royalties paid                          | 464       | 627       | -26.0% |
| Gross sales                             | 1,441,524 | 1,394,615 | 3.4%   |
| Discounts, rebates and refunds on sales | -148,852  | -142,859  | 4.2%   |
| Expenses deducted from sales            | -34,347   | -25,463   | 34.9%  |
| Financial discounts                     | -10,854   | -8,879    | 22.2%  |
| Provisions for returns                  | -570      | -1,227    | -53.5% |
| Expenses deducted from sales            | -194,623  | -178,428  | 9.1%   |
| Revenue from ordinary activities        | 1,246,901 | 1,216,187 | 2.5%   |

The expenses presented within the revenue are mainly made up of the following elements:

- amounts paid under commercial cooperation contracts (commercial communication actions, provision of statistics, etc.);
- cost of business operations (including loyalty programs), the amount of which is directly related to the revenue generated.

Provisions for customer returns are calculated using a statistical method, based on historical returns.

### **Evolution**

In 2023, our annual revenue amounted to €1,246.9 million compared to €1,216.2 million, *i.e.* an overall change of +2.5% compared to the same period of 2022 and +4.9% at constant exchange rates. The impact on revenue growth resulting from the integration of GS Partners (acquisition of our distributor in the Czech Republic closed in May) and Globion (acquisition in India closed in November) is only 0.3 point.

Growth at constant rates excluding these two acquisitions would have been +4.6%. This performance demonstrates, against a backdrop of normalization of market growth, the resilience of our business model significantly tested by two intrinsic and adverse one-off effects over the year. As a reminder, this relates to the temporary limitation of our capacity to produce vaccines for companion animals, and the cyberattack on June 19, which forced us to close factories for several weeks.

All areas are growing in 2023. Europe (+5.7% at constant rates) is mainly driven by France (+4.9% at constant rates), the countries of Northern and Southern Europe (respectively +4.0% and +4.9% at constant rates), as well as by the growth in Turkey, whose business volume more than doubled compared to 2022. In the Asia/Pacific area (+4.0% at constant rates), the main contributors are first India (excluding Globion) (+6.1% at constant rates) then Australia and New Zealand (+4.9% and +6.7% respectively at constant rates) which largely offset the decline observed in China (-10.8% at constant rates) while activity in Southeast Asian countries remains stable. In Latin America (+4.9% at constant rates), we see very good growth dynamics in all our commercial locations, excluding Chile, which, despite a rebound in the second half of the year, remains penalized by the sharp slowdown in our aquaculture activity observed in the first half of the year, particularly with regard to antibiotics and vaccines. Our activity in the United States grew by +3.5% at constant rates despite an inventory reduction effect observed in distribution throughout the year.

{198}------------------------------------------------

### **A22. Purchases consumed**

| in € thousand                              | 2023     | 2022     | Change |
|--------------------------------------------|----------|----------|--------|
| Inventoried purchases                      | -397,923 | -435,854 | -8.7%  |
| Non-inventoried purchases                  | -37,509  | -33,153  | 13.1%  |
| Supplementary charges on purchases         | -7,035   | -8,243   | -14.7% |
| Discounts, rebates and refunds obtained    | 374      | 286      | 30.8%  |
| Purchases                                  | -442,093 | -476,964 | -7.3%  |
| Change in gross inventories                | 15,705   | 61,816   | -74.6% |
| Allowances for depreciation of inventories | -24,110  | -20,631  | 16.9%  |
| Reversals of depreciation of inventories   | 16,625   | 14,586   | 14.0%  |
| Net variation in inventories               | 8,220    | 55,771   | -85.3% |
| Consumed purchases                         | -433,873 | -421,192 | 3.0%   |

The 3.0% increase in purchases consumed is in line with business growth. The decrease in stock purchases of 7.3% compared to the previous period is due to the decrease in purchases of raw materials and goods, due to the consumption of existing security stocks. The decrease in change in inventory is attributable to a slowdown in the change in inventory of finished products, resulting from the use of existing inventory (see note A9).

### **A23. External costs**

External costs amounted to €230.2 million compared to €235.5 million in 2022, *i.e.* a decrease of 2.3% at actual rates for an amount of -€5.4 million. This reduction mainly comes from the decrease in freight transport costs worldwide. These costs had risen sharply since the start of the pandemic but have returned to lower levels. In France, there is a decrease in temporary staff costs, partly offset by the increase in staff charges, as well as a decrease in external study costs. In the United States, marketing expenses are slightly down after a 2022 impacted by the launch of several products (the dental and petfood range, in particular), while subcontracting costs for new projects have increased. Maintenance costs increased slightly over the period but remain relatively stable in proportion to revenue.

### **A24. Depreciation, impairment and provisions**

| in € thousand                                     | 2023           | 2022           | Change        |
|---------------------------------------------------|----------------|----------------|---------------|
| Allowances for depreciation of intangible assets1 | -6,374         | -6,045         | 5.4%          |
| Allowances for impairment of intangible assets    | —              | -770           | -100.0%       |
| Allowances for depreciation of tangible assets    | -26,356        | -24,857        | 6.0%          |
| Allowances for impairment of tangible assets      | -499           | -33            | 1405.6%       |
| Allowances for depreciation of right of use       | -11,524        | -11,173        | 3.1%          |
| Reversals for depreciation of intangible assets   | —              | 2              |               |
| Reversals for impairment of intangible assets     | 1,025          | 80             | 1181.3%       |
| Reversals for depreciation of tangible assets     | —              | —              |               |
| Reversals for impairment of tangible assets       | 310            | 327            | -5.2%         |
| <b>Depreciation and impairment</b>                | <b>-43,418</b> | <b>-42,469</b> | <b>2.2%</b>   |
| Allowances of provisions for risks and charges    | -2,561         | -2,904         | -11.8%        |
| Reversals of provisions for risks and charges     | 1,326          | 2,763          | -52.0%        |
| <b>Provisions</b>                                 | <b>-1,235</b>  | <b>-141</b>    | <b>775.9%</b> |
| <b>Depreciations and provisions</b>               | <b>-44,652</b> | <b>-42,610</b> | <b>4.8%</b>   |

1 excluding allowance for depreciations of intangible assets arising from acquisitions

{199}------------------------------------------------

### **Allowances for depreciation of intangible assets arising from acquisitions**

| in € thousand                                                | 2023   | 2022   |
|--------------------------------------------------------------|--------|--------|
| SBC                                                          | -48    | -51    |
| Uruguay: Santa Elena                                         | -100   | -154   |
| Australia: Axon                                              | -122   | -132   |
| New Zealand                                                  | -332   | -377   |
| Centrovet                                                    | -1,511 | -1,507 |
| Multimin                                                     | -437   | -483   |
| Colombia: Synthesis                                          | -83    | -86    |
| Schering-Plough Europe                                       | -476   | -954   |
| India: Globion                                               | -157   | —      |
| Depreciations of intangible assets arising from acquisitions | -3,265 | -3,743 |

The decrease in this item is due to the fact that one of the intangible assets resulting from the acquisition of Schering-Plough products was fully amortized as of June 30, 2023.

### **A25. Other operating incomes and expenses**

| in € thousand                                   | 2023   | 2022   | Change  |
|-------------------------------------------------|--------|--------|---------|
| Royalties paid                                  | -3,430 | -5,028 | -31.8%  |
| Grants received (including research tax credit) | 14,111 | 10,356 | 36.3%   |
| Allowances for depreciation of receivables      | -941   | -896   | 5.0%    |
| Reversals of depreciation of receivables        | 646    | 665    | -2.9%   |
| Bad debts                                       | -257   | -453   | -43.3%  |
| Net book value of disposed assets               | -2,176 | -813   | 167.7%  |
| Income from disposal of assets                  | 125    | 340    | -63.2%  |
| Other operating income and expenses             | -22    | 1,625  | -101.4% |
| Other operating income and expenses             | 8,055  | 5,796  | 39.0%   |

The item "Other current income and expenses" shows a change of +39%, and is mainly explained by:

- the increase in the amount of tax credits recorded in grants, which amounts to €14.1 million in 2023, compared to €10.4 million in 2022;
- the decrease in royalties paid following the end of a royalty agreement in Australia over the period.

These variations are partially offset by:

- the decrease in other income and expenses, mainly explained by the income of €3.0 million received in March 2022 from Elanco. This was the second and last payment on the €7 million payment commitment from Elanco, as compensation for Virbac's continuation of development projects;
- the result of the disposal of intangible and tangible assets, which shows a capital loss of €2.1 million in 2023 mainly due to the scrapping of intangible assets of the parent company individually not significant, compared to a capital loss of €0.5 million in 2022.

The other changes are individually immaterial.

{200}------------------------------------------------

### **A26. Other non-current income and expenses**

As of December 31, 2023, a net charge of €0.9 million was recorded, consisting of the following elements:

| in € thousand                                                                                         | 2023 |
|-------------------------------------------------------------------------------------------------------|------|
| Revaluation impact of the debt on iVet shares acquired in the United States in 2021 (earn-out clause) | 925  |
| Revaluation of inventories acquired in Czech Republic (purchase accounting method)                    | -807 |
| Restructuring costs in Chile                                                                          | -997 |
| Other non-current income and expenses                                                                 | -878 |

As of December 31, 2022, this item breaks down as follows:

| in € thousand                                                 | 2022   |
|---------------------------------------------------------------|--------|
| Impairment of assets (brands) and loss of value of related MA | -3,296 |
| Other non-current income and expenses                         | -3,296 |

In view of market trends, certain brand assets and corresponding MAs, obtained through acquisitions and with an indefinite useful life, will no longer be able to be valued in the future and, as such, have been impaired at December 31, 2022, for the amount of €3.3 million.

### **A27. Financial income and expenses**

| in € thousand                                             | 2023          | 2022          | Change         |
|-----------------------------------------------------------|---------------|---------------|----------------|
| Gross cost of financial debt                              | -8,882        | -3,691        | 140.7%         |
| Income from cash and cash equivalents                     | 8,724         | 4,831         | 80.6%          |
| <b>Net cost of financial debt</b>                         | <b>-158</b>   | <b>1,140</b>  | <b>-113.9%</b> |
| Foreign exchange gains and losses                         | -15,788       | -673          | 2245.5%        |
| Changes in foreign currency derivatives and interest rate | 5,687         | -3,404        | -267.1%        |
| Other expenses                                            | -273          | -398          | -31.3%         |
| Other income                                              | 687           | 258           | 166.3%         |
| <b>Other financial income or expenses</b>                 | <b>-9,687</b> | <b>-4,217</b> | <b>129.7%</b>  |
| Financial income and expenses                             | -9,845        | -3,077        | 220.0%         |

The cost of financial debt includes the interest charges on borrowings as well as interest on lease liabilities, which amounts to €1,634 thousand as of December 31, 2023.

The €5.2 million increase in the cost of gross debt is mainly related to interest due on bank borrowings in the United States and Chile, where bank financing was put in place.

This impact is offset by a sharp increase in cash position and cash equivalents (+€3.9 million) driven by higher investments in one of our subsidiaries during the year.

In other financial income and expenses, unhedged exposure in Chilean pesos mainly contributes to the change in foreign exchange loss between the two accounting years given the sharp 8% depreciation of the Chilean peso. Net foreign exchange loss amounted to 10.1 million as of December 31, 2023.

{201}------------------------------------------------

### **A28. Income tax**

|                                                     | 2023    |         | 2022 restated1 |         |
|-----------------------------------------------------|---------|---------|----------------|---------|
| in € thousand                                       | Base    | Tax     | Base           | Tax     |
| Profit before tax                                   | 174,153 |         | 176,443        |         |
| Adjustment for tax credits                          | -13,976 |         | -10,139        |         |
| Adjustment of non-recurring items                   | 28,202  |         | 16,881         |         |
| Profit before tax, after adjustments                | 188,380 |         | 183,185        |         |
| Tax currently payable for French companies          |         | -7,144  |                | -14,738 |
| Tax currently payable for foreign companies         |         | -44,691 |                | -46,673 |
| Tax currently payable                               |         | -51,834 |                | -61,411 |
| Deferred tax for French companies                   |         | -5,425  |                | 129     |
| Deferred tax for foreign companies                  |         | 3,740   |                | 5,610   |
| Deferred tax                                        |         | -1,686  |                | 5,739   |
| Tax accounted for                                   |         | -53,520 |                | -55,673 |
| Restatement of adjustments on tax currently payable |         | 3,330   |                | 3,034   |
| Restatement of adjustments on deferred tax          |         | -973    |                | -453    |
| Depreciation of deferred tax assets                 |         | —       |                | —       |
| Tax after restatements                              |         | -51,163 |                | -53,092 |
| Effective tax rate                                  |         | 27.16%  |                | 28.98%  |
| Theoretical tax rate                                |         | 25.83%  |                | 25.83%  |
| Theoretical tax                                     |         | -48,658 |                | -47,317 |
| Difference between theoretical tax and recorded tax |         | 4,862   |                | 8,356   |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023

The theoretical tax rate considered by the Group is the corporate tax rate in effect in France (including the additional contribution of 3.3%).

The effective tax rate in 2023 is 27.16% compared to 28.98% in 2022.

This decline is attributable to the good performance achieved by our subsidiaries located in countries applying corporate tax rates lower than the parent company's tax rate, such as India or Vietnam, and the capitalization of tax losses generating a reduction in the tax charge, particularly in Chile.

### **Restated profit before tax**

The pre-tax profit and the tax charges have been the subject of the restatements described below in order to determine the effective tax rate for the 2023 financial year.

### **Adjustment for tax credits**

These are the main tax credits recognized into the operating profit from ordinary activities in accordance with IAS 20. The amount corresponds to the research tax credit for French entities, as well as the research tax credit equivalent in Chile, Brazil, New Zealand and Australia.

### **Adjustment for tax bases related to non-taxable items**

This amount mainly includes:

- accounting income or expenses with no tax impact, including in particular permanent differences in entities in France and abroad (-€4.9 million);
- as well as losses incurred by subsidiaries for which no deferred tax assets in connection with their tax loss carryforwards are recognized as of December 31, 2023 (mainly the Virbac Corporation, Virbac Taiwan and Virbac Shanghai Trading subsidiaries), for a total amount of -€23.3 million.

### **Tax after restatements**

Adjustments to the tax charges are described below.

### **Neutralizing the adjustments for the tax currently payable**

This amount mainly corresponds:

- to neutralizations of tax expenses without any accounting basis (-€0.3 million);
- to withholding tax and Ifric 23 provisions (-€3.0 million).

{202}------------------------------------------------

### **Neutralizing the adjustments for the deferred tax expense**

This amount represents tax expenses or income without any accounting basis, namely the change in the bases or rates of deferred tax assets and liabilities at the beginning of the financial year (change in estimates).

### **A29. Bridge from net result to net result from ordinary activities**

| in € thousand                                                                          | Net IFRS<br>result | Cancellation<br>of price<br>complement | Restructuring<br>costs | Revaluatio<br>n of<br>acquired<br>inventories | Non-current<br>tax expense | Net result<br>from ordinary<br>activity |
|----------------------------------------------------------------------------------------|--------------------|----------------------------------------|------------------------|-----------------------------------------------|----------------------------|-----------------------------------------|
| Revenue from ordinary activities                                                       | 1,246,901          | —                                      | —                      | —                                             | —                          | 1,246,901                               |
| Current operating profit before<br>depreciation of assets arising from<br>acquisitions | 188,142            | —                                      | —                      | —                                             | —                          | 188,142                                 |
| Depreciation of intangible assets arising<br>from acquisitions                         | -3,265             | —                                      | —                      | —                                             | —                          | -3,265                                  |
| Operating profit from ordinary<br>activities                                           | 184,876            | —                                      | —                      | —                                             | —                          | 184,876                                 |
| Other non-current income and expenses                                                  | -878               | -925                                   | 997                    | 807                                           | —                          | —                                       |
| Operating result                                                                       | 183,998            | -925                                   | 997                    | 807                                           | —                          | 184,876                                 |
| Financial income and expenses                                                          | -9,845             | —                                      | —                      | —                                             | —                          | -9,845                                  |
| Profit before tax                                                                      | 174,153            | -925                                   | 997                    | 807                                           | —                          | 175,031                                 |
| Income tax                                                                             | -53,520            | 194                                    | -269                   | -153                                          | -816                       | -54,564                                 |
| Share from companies' result accounted<br>for by the equity method                     | 455                | —                                      | —                      | —                                             | —                          | 455                                     |
| Result for the period                                                                  | 121,088            | -731                                   | 728                    | 654                                           | -816                       | 120,922                                 |

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

- the "Other non-current income and charges" item, the details of which are presented in the A26 note;
- non-current tax, which includes the tax impact of "Other non-current income and expenses", as well as all nonrecurring tax income and expenses.

{203}------------------------------------------------

### For the record, the operating net profit for the 2022 financial year was as follows:

| in € thousand                                                                          | Net IFRS<br>result<br>restated1 | Impairment<br>of assets | Restructuring<br>costs | Other<br>items | Non-current<br>tax expense | Net result<br>from ordinary<br>activity |
|----------------------------------------------------------------------------------------|---------------------------------|-------------------------|------------------------|----------------|----------------------------|-----------------------------------------|
| Revenue from ordinary activities                                                       | 1,216,187                       | —                       | —                      | —              | —                          | 1,216,187                               |
| Current operating profit before<br>depreciation of assets arising from<br>acquisitions | 186,559                         | —                       | —                      | —              | —                          | 186,559                                 |
| Depreciation of intangible assets arising<br>from acquisitions                         | -3,743                          | —                       | —                      | —              | —                          | -3,743                                  |
| Operating profit from ordinary<br>activities                                           | 182,816                         | —                       | —                      | —              | —                          | 182,816                                 |
| Other non-current income and expenses                                                  | -3,296                          | 3,296                   | —                      | —              | —                          | —                                       |
| Operating result                                                                       | 179,519                         | 3,296                   | —                      | —              | —                          | 182,816                                 |
| Financial income and expenses                                                          | -3,077                          | —                       | —                      | —              | —                          | -3,077                                  |
| Profit before tax                                                                      | 176,443                         | 3,296                   | —                      | —              | —                          | 179,739                                 |
| Income tax                                                                             | -55,673                         | -851                    | —                      | —              | 475                        | -56,049                                 |
| Share from companies' result accounted<br>for by the equity method                     | 525                             | —                       | —                      | —              | —                          | 525                                     |
| Result for the period                                                                  | 121,295                         | 2,445                   | —                      | —              | 475                        | 124,215                                 |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023

### **A30. Earnings per share**

|                                                                            | 2023         | 2022 restated1 |
|----------------------------------------------------------------------------|--------------|----------------|
| Profit attributable to the owners of the parent company                    | €121,967,044 | €121,943,071   |
| Total number of shares                                                     | 8,458,000    | 8,458,000      |
| Impact of dilutive instruments, before dilution                            | 8,421,787    | 8,448,180      |
| Impact of dilutive instruments                                             | 15,426       | 6,093          |
| Weighted average number of shares, after dilution                          | 8,437,213    | 8,454,274      |
| Profit attributable to the owners of the parent company, per share         | €14.40       | €14.43         |
| Profit attributable to the owners of the parent company, diluted per share | €14.38       | €14.42         |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023

### **A31. Operating segments**

In accordance with IFRS 8, we provide information by segment as used internally by the Group executive committee, which is now the chief operating decision maker (CODM) following the change of governance in December 2020.

Our level of segment information is the geographic sector. The breakdown by geographic area covers seven sectors, according to the place of establishment of our assets:

- France;
- Europe (excluding France);
- Latin America;
- North America;
- Asia;
- Pacific;
- Africa & Middle-East.

The Group's operating activities are organized and managed separately, according to the nature of the markets. The two market segments are companion animals and farm animals but the latter is not considered an industry information level for the reasons listed below:

- nature of the products: the majority of the therapeutic segments are common to companion and farm animals (antibiotics, parasiticides, etc.);
- manufacturing operations: the production chains are common to both segments and there is no significant difference in sources of supply;

{204}------------------------------------------------

- customer type or category: the distinction is between the ethical (veterinary) and OTC (Over the counter) sectors;
- internal organization: our management structures are organized by geographic zone. Throughout the Group, there is no management structure based on market segments;
- distribution methods: the main distribution channels depend more on the country than the market segment. In certain cases, the sales forces may be the same for both market segments;
- nature of the regulatory environment: the regulatory bodies governing Marketing authorizations are identical regardless of the segment.

In the information presented below, the sectors therefore correspond to geographic zones (areas where our assets are located). The results for France include the head office expenses and a substantial proportion of our research and development expenses.

### **As at December 31, 2023**

|                                                                                         | France  | Europe<br>(excluding<br>France) | Latin<br>America | North<br>America | Asia    | Pacific | Africa &<br>Middle-East | Total     |
|-----------------------------------------------------------------------------------------|---------|---------------------------------|------------------|------------------|---------|---------|-------------------------|-----------|
| Revenue from ordinary activities                                                        | 192,164 | 326,742                         | 213,631          | 164,927          | 204,103 | 115,666 | 29,668                  | 1,246,901 |
| Current operating profit before<br>depreciation of assets arising from<br>acquisitions1 | 45,117  | 32,396                          | 31,519           | -5,573           | 42,038  | 39,164  | 3,481                   | 188,142   |
| Result attributable to the owners of<br>the parent company                              | 33,322  | 24,070                          | 9,682            | -10,130          | 34,907  | 26,901  | 2,546                   | 121,298   |
| Non-controlling interests                                                               | 1       | —                               | 17               | -307             | 79      | —       | —                       | -210      |
| Group consolidated result                                                               | 33,323  | 24,070                          | 9,699            | -10,437          | 34,985  | 26,901  | 2,546                   | 121,088   |

1 in order to present a better vision of our economic performance, we isolate the impact of depreciation charges on intangible assets resulting from acquisition operations. Consequently, our income statement indicates current operating income before amortization of assets resulting from acquisitions (see note A24)

| in € thousand             | France  | Europe<br>(excluding<br>France) | Latin<br>America | North<br>America | Asia    | Pacific | Africa &<br>Middle-<br>East | Total     |
|---------------------------|---------|---------------------------------|------------------|------------------|---------|---------|-----------------------------|-----------|
| Assets by geographic area | 387,421 | 131,383                         | 279,811          | 219,842          | 292,694 | 128,593 | 15,986                      | 1,455,730 |
| Intangible investment     | 12,314  | 32                              | 349              | 3,534            | 426     | 10      | —                           | 16,666    |
| Tangible investment       | 29,358  | 545                             | 4,239            | 5,458            | 2,940   | 3,588   | 234                         | 46,362    |

No customer represents more than 10% of total revenue.

In addition to the above information, we also present the revenue of the main countries whose revenue is considered material in relation to their importance within the Group (more than 15% of Group revenue). In 2023, only France is above this threshold with €192.2 million, compared to €191.9 million in 2021.

{205}------------------------------------------------

### **As at December 31, 2022**

| in € thousand                                                                            | France  | Europe<br>(excluding<br>France) | Latin<br>America | North<br>America | Asia    | Pacific | Africa<br>&<br>Middle-East | Total     |
|------------------------------------------------------------------------------------------|---------|---------------------------------|------------------|------------------|---------|---------|----------------------------|-----------|
| Revenue from ordinary activities                                                         | 191,858 | 302,646                         | 196,842          | 161,893          | 212,968 | 117,507 | 32,473                     | 1,216,187 |
| Current operating profit before<br>depreciations of assets arising from<br>acquisitions1 | 47,116  | 28,848                          | 33,640           | -3,974           | 40,893  | 35,741  | 4,296                      | 186,559   |
| Profit attributable to the owners of the<br>parent company2                              | 34,611  | 21,750                          | 13,115           | -5,995           | 31,126  | 24,356  | 2,980                      | 121,943   |
| Non-controlling interests                                                                | —       | —                               | 31               | -680             | —       | —       | —                          | -648      |
| Consolidated profit                                                                      | 34,611  | 21,750                          | 13,146           | -6,675           | 31,126  | 24,356  | 2,980                      | 121,295   |

1 in order to present a better vision of our economic performance, we isolate the impact of depreciation charges on intangible assets resulting from acquisition operations. Consequently, our income statement indicates current operating income before amortization of assets resulting from acquisitions (see note A24)

2 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023 (see "Accounting principles and methods applied")

| in € thousand                       | France  | Europe (excluding France) | Latin America | North America | Asia    | Pacific | Africa & Middle-East | Total            |
|-------------------------------------|---------|---------------------------|---------------|---------------|---------|---------|----------------------|------------------|
| Assets by geographic area restated1 | 340,831 | 100,181                   | 271,661       | 231,445       | 244,067 | 129,700 | 15,735               | <b>1,333,620</b> |
| Intangible investment               | 10,832  | 2                         | 255           | 4,636         | 93      | 12      | 4                    | <b>15,835</b>    |
| Tangible investment                 | 24,148  | 1,010                     | 3,959         | 5,069         | 3,576   | 2,070   | 271                  | <b>40,102</b>    |

1 restatement following amendment IAS 12 relating to deferred tax assets and liabilities resulting from the same transaction applicable as of January 1, 2023 (see "Accounting principles and methods applied")

### **A32. Financial assets and liabilities**

### **Breakdown of assets and liabilities measured at fair value**

In accordance with IFRS 7, "Financial instruments - Disclosures", measurements at fair value of financial assets and liabilities must be classified according to a hierarchy which comprises the following levels:

- level 1: the fair value is based on (unadjusted) quoted prices in active markets for identical assets or liabilities; • level 2: the fair value is based on data other than the quoted prices mentioned in level 1, which are directly or indirectly observable for the asset or liability in question;
- level 3: the fair value is based on inputs relating to the asset or liability which are not based on observable market data, but on internal data.

For financial asset and liability derivatives recognized at fair value, we use measurement techniques involving observable market data (level 2), particularly for interest rate swaps, forward purchases and sales, or foreign currency options. The model incorporates various inputs such as the spot and forward exchange rates or the interest rate curve.

### **Financial assets**

The different asset classes are as follows:

{206}------------------------------------------------

### **As at December 31, 2023**

| in € thousand                                   | Financial<br>assets at<br>amortized<br>cost | Financial<br>assets at fair<br>value through<br>income | Financial assets<br>at fair value<br>through other<br>comprehensive<br>income | Total   | Fair value<br>hierarchy |
|-------------------------------------------------|---------------------------------------------|--------------------------------------------------------|-------------------------------------------------------------------------------|---------|-------------------------|
| Non-current derivative financial<br>instruments | —                                           | —                                                      | 43                                                                            | 43      | 2                       |
| Other non-current financial assets              | 6,200                                       | —                                                      | —                                                                             | 6,200   | 3                       |
| Trade receivables                               | 167,977                                     | —                                                      | —                                                                             | 167,977 | 3                       |
| Other receivables                               | 8,160                                       | —                                                      | —                                                                             | 8,160   | 3                       |
| Current derivative financial instruments        | —                                           | 1,995                                                  | 501                                                                           | 2,495   | 2                       |
| Other current financial assets                  | 140                                         | —                                                      | —                                                                             | 140     | 3                       |
| Cash and cash equivalents                       | 174,988                                     | 918                                                    | —                                                                             | 175,906 | 1                       |
| Financial assets                                | 357,465                                     | 2,913                                                  | 544                                                                           | 360,921 |                         |

### **As at December 31, 2022**

| in € thousand                                   | Financial<br>assets at<br>amortized<br>cost | Financial<br>assets at fair<br>value through<br>income | Financial assets<br>at fair value<br>through other<br>comprehensive<br>income | Total   | Fair value<br>hierarchy |
|-------------------------------------------------|---------------------------------------------|--------------------------------------------------------|-------------------------------------------------------------------------------|---------|-------------------------|
| Non-current derivative financial<br>instruments | —                                           | —                                                      | 89                                                                            | 89      | 2                       |
| Other non-current financial assets              | 6,167                                       | —                                                      | —                                                                             | 6,167   | 3                       |
| Trade receivables                               | 146,290                                     | —                                                      | —                                                                             | 146,290 | 3                       |
| Other receivables                               | 4,872                                       | —                                                      | —                                                                             | 4,872   | 3                       |
| Current derivative financial instruments        | —                                           | 1,232                                                  | 1,256                                                                         | 2,488   | 2                       |
| Other current financial assets                  | 1,050                                       | —                                                      | —                                                                             | 1,050   | 3                       |
| Cash and cash equivalents                       | 175,350                                     | 2,033                                                  | —                                                                             | 177,383 | 1                       |
| Financial assets                                | 333,729                                     | 3,265                                                  | 1,345                                                                         | 338,339 |                         |

### **Financial assets at amortized cost**

The financial assets valued at depreciated cost are non-debt derivative instruments (loans and receivables in particular) whose contractual cash flows consist only of payments representative of the principal and interest on this principal, and whose management model consists of holding the instrument in order to collect the contractual cash flows.

This category includes other loans and receivables as well as deposits and guarantees (which appear in "Other financial assets"), trade receivables (recorded for the initial amount of the invoice after deduction of provisions for impairment) and other operational receivables excluding tax and social security receivables, as well as the cash and cash equivalents with regard to items almost as liquid as cash, such as term deposits with a maturity of three months or less at the time of purchase, and which are held by leading financial institutions.

The depreciated cost of these assets does not, at the closing date, show a significant difference in relation to their fair value.

### **Financial assets at fair value through income statement**

Interest or exchange rate derivative instruments designated as fair value hedges and financial derivatives not designated as hedges are classified as financial assets at fair value through the income statement.

This category also includes marketable securities acquired by us for sale or redemption in the short term. They are measured at fair value at the balance sheet date, and any fair value changes are recognized in income. The fair values of marketable securities are mainly determined with reference to the market price (buying or selling price as applicable).

### **Financial assets at fair value through other comprehensive income**

The following are classified as financial assets at fair value by other comprehesive income: interest rate or exchange rate derivative instruments qualified as hedging of future cash flows and fair value hedges (for the carry forward/ backward and time value portion of options). With regards to future flows, these hedging instruments are put in place for future exchange exposures (budget) and for interest on the debt/investment at variable rates. The transfer to profit or loss takes place when cash flows are realized and therefore upon the fall of the

instruments.

{207}------------------------------------------------

### **Financial liabilities**

The different classes of financial liabilities are as follows:

### **As at December 31, 2023**

| in € thousand                                            | Loans<br>and<br>debts | Financial<br>liabilities at<br>fair value<br>through<br>income | Financial<br>liabilities at fair<br>value through<br>other<br>comprehensive<br>income1 | Total   | Fair value<br>hierarchy |
|----------------------------------------------------------|-----------------------|----------------------------------------------------------------|----------------------------------------------------------------------------------------|---------|-------------------------|
| Non-current derivative financial instruments             | —                     | —                                                              | —                                                                                      | —       |                         |
| Other non-current financial liabilities                  | 40,690                | —                                                              | —                                                                                      | 40,690  | 3                       |
| Trade payables                                           | 149,629               | —                                                              | —                                                                                      | 149,629 | 3                       |
| Other payables                                           | 122,385               | —                                                              | —                                                                                      | 122,385 | 3                       |
| Current derivative financial instruments                 | —                     | 1,589                                                          | 608                                                                                    | 2,196   | 2                       |
| Bank overdrafts and accrued interests not yet<br>matured | 2,517                 | 31                                                             | —                                                                                      | 2,547   | 2                       |
| Other current financial liabilities                      | 42,965                | —                                                              | —                                                                                      | 42,965  | 3                       |
| Financial liabilities                                    | 358,186               | 1,620                                                          | 608                                                                                    | 360,412 |                         |

### **As at December 31, 2022**

| in € thousand                                            | Loans and<br>debts | Financial<br>liabilities at<br>fair value<br>through<br>income | Financial<br>liabilities at<br>fair value<br>through other<br>comprehensive<br>income1 | Total   | Fair value<br>hierarchy |
|----------------------------------------------------------|--------------------|----------------------------------------------------------------|----------------------------------------------------------------------------------------|---------|-------------------------|
| Non-current derivative financial instruments             | —                  | —                                                              | —                                                                                      | —       |                         |
| Other non-current financial liabilities                  | 18,014             | —                                                              | —                                                                                      | 18,014  | 3                       |
| Trade payables                                           | 155,820            | —                                                              | —                                                                                      | 155,820 | 3                       |
| Other payables                                           | 101,734            | —                                                              | —                                                                                      | 101,734 | 3                       |
| Current derivative financial instruments                 | —                  | 6,071                                                          | 394                                                                                    | 6,465   | 2                       |
| Bank overdrafts and accrued interests not yet<br>matured | 640                | 65                                                             | —                                                                                      | 705     | 2                       |
| Other current financial liabilities                      | 36,029             | —                                                              | —                                                                                      | 36,029  | 3                       |
| Financial liabilities                                    | 312,237            | 6,135                                                          | 394                                                                                    | 318,766 |                         |

1 hedge accounting is used to record changes in fair value in equity

As of December 31, 2023, the cost of gross financial indebtedness was €8,882 thousand, compared to €3,691 thousand as of December 31, 2022.

### **A33. Risk management associated with financial assets and liabilities**

Our financial risk management policy is controlled centrally by the Group's Financial Affairs department and in particular its Treasury and Financing department.

Strategies for financing, investment, and interest and exchange rate risk hedging are thus systematically reviewed and monitored by the Financial Affairs department. The operations carried out by our local teams are also managed and monitored by the Group's Treasury and Financing department.

The holding of financial instruments is conducted with the sole purpose of reducing exposure to exchange rate and interest rate risks and has no speculation purpose.

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

When it comes to cash position flow hedging, based on backing and maturities, these flows can occur and affect profit in the current-year or in subsequent years.

### **Credit risk**

### ■ **Risk factors**

Credit risk may arise when we grant credit to customers on payment terms. The risk of insolvency, or even default by some of them, may result in non-payment and thus negatively impact our income statement and net cash position.

Trade receivables 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 the IFRS 9 

{208}------------------------------------------------

standard). This approach consists of applying an impairment rate to the respective debtors ageing categories, based on the history of credit losses, adjusted, if applicable, to take into account elements of a prospective nature. As of December 31, 2023, the Group's maximum exposure to credit risk was €167,977 thousand, which represents the amount of trade receivables as presented in our consolidated accounts.

The risk on sales between Group companies is not material, to the extent that we ensure that our subsidiaries have the necessary financial structure to honor their liabilities.

### ■ **Risk management mechanisms**

We limit the negative consequences of this type of risk thanks to the very high fragmentation and dispersal of our customers throughout all of the countries in which we operate. Our Treasury department recommends maximum payment terms in accordance with the regulations in force, customary uses, the rating, the limits imposed by credit insurance, and sets the customer credit limits to be applied by each operating entity. The Treasury and Financing department manages and controls these credit aspects for the French entities for which it is directly responsible, and recommends the same practices via guidelines and best practices for the Group. In addition, there is a master credit group insurance contract that benefits or can benefit any of our subsidiaries when this type of risk has been identified.

The following statements provide a breakdown of trade receivables by their maturity:

### **As at December 31, 2023**

|                           | Receivables<br>due | Receivables overdue for |            |             |             |  | Impaired | Total   |
|---------------------------|--------------------|-------------------------|------------|-------------|-------------|--|----------|---------|
| in € thousand             |                    | < 3 months              | 3-6 months | 6-12 months | > 12 months |  |          |         |
| France                    | 26,291             | 946                     | 270        | —           | —           |  | 390      | 27,897  |
| Europe (excluding France) | 33,300             | 3,675                   | 54         | —           | —           |  | 1,418    | 38,447  |
| Latin America             | 41,262             | 2,132                   | 155        | —           | —           |  | 581      | 44,130  |
| North America             | 17,474             | 3,096                   | 12         | —           | —           |  | 5        | 20,588  |
| Asia                      | 15,281             | 1,088                   | 209        | 120         | 2           |  | 421      | 17,121  |
| Pacific                   | 10,204             | 5,562                   | 316        | 19          | —           |  | 6        | 16,106  |
| Africa & Middle-East      | 6,312              | 199                     | —          | —           | —           |  | 1        | 6,512   |
| Trade receivables         | 150,123            | 16,698                  | 1,015      | 139         | 2           |  | 2,822    | 170,800 |

### **As at December 31, 2022**

|                           | Receivables<br>due | Receivables overdue for |            |             |             |          | Total   |
|---------------------------|--------------------|-------------------------|------------|-------------|-------------|----------|---------|
| in € thousand             |                    | < 3 months              | 3-6 months | 6-12 months | > 12 months | Impaired |         |
| France                    | 31,064             | 1,158                   | 406        | 31          | —           | 269      | 32,928  |
| Europe (excluding France) | 25,391             | 2,475                   | 270        | 24          | —           | 1,269    | 29,429  |
| Latin America             | 28,128             | 3,810                   | 203        | —           | —           | 732      | 32,873  |
| North America             | 14,603             | 1,949                   | 139        | —           | —           | 4        | 16,695  |
| Asia                      | 13,084             | 1,478                   | 63         | 64          | 201         | 137      | 15,027  |
| Pacific                   | 12,479             | 5,905                   | 107        | —           | —           | 6        | 18,497  |
| Africa & Middle-East      | 3,002              | 257                     | —          | —           | —           | 2        | 3,261   |
| Trade receivables         | 127,751            | 17,032                  | 1,188      | 119         | 201         | 2,419    | 148,710 |

Receivables due and not settled are periodically analyzed and classified as bad debts whenever the risk that the receivable will not be fully recovered appears. The amount of the provision recorded at closing is defined based on the expected credit loss at maturity.

Bad debts are recognized as losses when identified as such.

{209}------------------------------------------------

### **Counter-party risk**

### ■ **Risk factors**

We are exposed to counterparty risk within the context of the contracts and financial instruments which we subscribe to, in the event that the debtor refuses to honor all or part of its commitment or finds itself ultimately unable to do so.

### ■ **Risk management mechanisms**

We pay particular attention to the choice of financial institutions we use, and we are even more critical when it comes to investing available cash.

Nevertheless, we consider our exposure to counterparty risk to be limited, considering the quality of our major counterparties. In fact, investments are only made with first-class banking entities.

In regards of other financial assets and particularly liquid assets, when possible the cash position surpluses of the subsidiaries are generally pooled by the parent company, which is in charge of managing them centrally, in the form of short-term interest-bearing deposits. We only work with leading banking counterparties.

### **Liquidity risk**

### ■ **Risk factors**

Liquidity is defined as our capacity to meet our financial payment deadlines as part of our current business and to find new funding sources as needed, so as to maintain a continual balance between our income and expenditures. As part of our operations, our program of recurring investments and active policy of external growth, we are thus exposed to the risk of not being sufficiently liquid to fund our growth and development.

### ■ **Risk management mechanisms**

Our policy of pooling surplus cash positions and funding needs in all areas helps to refine our net position and to optimize the management of investments and funding requirements, thus ensuring our ability to meet our financial commitments and to maintain an optimal level of availability commensurate with our size and needs.

In respect to our specific review of the liquidity risk, we regularly carry out a detailed review of our outstanding amounts, thus ensuring compliance with our financial covenant (debt covenant).

As of December 31, 2023, the ratio amounted to -0.24, which is below the contractual financial covenant threshold of 3.75. This ratio is calculated by taking into account the application of the IFRS 16 standard (see notes A18).

During this same period, we primarily have a €200 million revolving credit line maturing in October 2028, which has not been mobilized, and unconfirmed credit lines in the United States amounting to US \$37 million, of which US \$18 million has been used.

We can also use additional short-term credit lines consisting in non-recourse factoring programs drawn for €12 million as at December 31, 2023.

With regard to our prospects, our cash position and financial resources are sufficient to fund our cash position requirements.

### **Fraud risks**

### ■ **Risk factors**

We are exposed to cases of internal or external fraud that could result in financial losses and affect our reputation.

### ■ **Risk management mechanisms**

We are committed to strengthening internal control and give particular importance to making our teams aware of these issues. Our head office teams regularly provide strong guidance and guidelines on this subject. Segregation of duties, as well as a central, regional and local management control mechanism and the appointment of regional controllers help strengthen control and reduce the probability of such practices occurring. Upon acquiring new companies, we integrate them into these mechanisms for the prevention of unethical practices.

We have proceeded with training and roll-out of best practices processes that, among other things, are intended to prevent the risk of fraud.

We have implemented a tool to check the consistency of the bank details/company tax ID number pair to increase our payment chain security through automation of the control process, as well as to protect us from the risk of wire fraud.

Virbac's code of conduct underlines the Group's commitment to pursue our activities in accordance with the law and ethics, and also defines the nature of the relationships we wish to have with our partners.

### **Market risks**

### **Exchange rate risk**

### ■ **Risk factors**

The currency risk arises from the impact of fluctuations in exchange rates on our financial flows when carrying out our activities. Due to our strong international presence, we are exposed to the foreign exchange risk on transactions, and the foreign exchange risk on the conversion of the financial statements of our foreign subsidiaries. We carry out transactions in currencies other than the euro, our reference currency. The exchange rate risk is monitored using dashboards generated by the IT system (ERP). The items are updated based on *ad hoc* reports.

{210}------------------------------------------------

The majority of our exchange rate risk is centralized on the parent company, which invoices its subsidiaries in their local currency. In the case of sales to countries with exotic currencies, the invoices are denominated in euros or American dollars.

Taking into account our purchases and sales in other currencies, we are exposed to exchange rate risks mainly for the following currencies: US dollar, pound sterling, Swiss franc and various currencies in Asia, the Pacific, and Latin America.

Given our exchange rate risk exposure, currency fluctuations have a significant impact on our income statement, both in terms of conversion and transaction risk.

### ■ **Risk management mechanisms**

In order to protect ourselves against unfavorable variations in the various currencies in which sales, purchases or specific transactions are denominated, our policy we hedge most of our significant and certain foreign exchange positions (receivables, liabilities, dividends, intra-group loans), as well as our future sales and purchases. Accordingly, we use various instruments available on the market and generally employ foreign exchange forwards or options.

Derivative financial exchange instruments are presented below, at market value:

| in € thousand                             | 2023 | 2022   |
|-------------------------------------------|------|--------|
| Fair value hedges                         | 681  | -4,660 |
| Cash flow hedges                          | -107 | 862    |
| Net investment hedges                     | —    | —      |
| Derivatives not qualifying for hedges     | -275 | -173   |
| Derivative financial exchange instruments | 299  | -3,977 |

The derivative instruments held at closure do not all qualify for hedging in the consolidated accounts. In such a case, value variations directly impact the profit for the period.

### **Interest rate risk**

### ■ **Risk factors**

Our income statement may be impacted by the interest rate risk. Indeed, unfavorable rate changes can thus have a negative impact on our financing costs and future financial flows.

Our exposure to interest rate risk results from the fact that our main lines of credit are at variable rates; therefore, the cost of debt may increase in the event of an increase in interest rates.

Our exposure to rate risk is mainly due to the revolving credit line indexed to the Euribor set up at Virbac as well as the credit lines in the United States historically indexed to the Libor US\$ and more recently to the Secured overnight financing rate (SOFR). As of December 31, 2023, only the United States line has been mobilized for US \$18 million.

Following the UK Financial conduct authority (FCA) decision to no longer require banks to contribute to Libor quotes, our financing contracts and rate hedges are now indexed to the risk-free rates (RFR) recommended by the ISDA (International swaps and derivatives association), adjusted in some cases by a spread set according to their methodology, in order to make the transition as economically neutral as possible.

The current amount on the credit lines is the following:

|                                  | 2023                          |               | 2022                          |               |
|----------------------------------|-------------------------------|---------------|-------------------------------|---------------|
| in € thousand                    | Average real<br>interest rate | Book value    | Average real<br>interest rate | Book value    |
| Chile: Centrovet                 | 7.8%                          | 23,113        | 6.0%                          | 24,431        |
| France                           | 1.4%                          | 18,113        | 1.4%                          | 20,036        |
| <b>Fixed rate debt</b>           |                               | <b>41,225</b> |                               | <b>44,466</b> |
| Chile: Virbac Chile              | 10.4%                         | 24,934        |                               |               |
| United States                    | 6.0%                          | 16,289        | 4.8%                          | 6,563         |
| Mexico                           | —                             | —             | 11.4%                         | 1,918         |
| <b>Variable rate debt</b>        |                               | <b>41,223</b> |                               | <b>8,481</b>  |
| Bank overdrafts                  | —                             | 2,517         | —                             | 640           |
| <b>Loans and bank overdrafts</b> |                               | <b>84,966</b> |                               | <b>53,588</b> |

{211}------------------------------------------------

### ■ **Risk management mechanisms**

To manage these risks and optimize the cost of our debt, we monitor developments and market rate expectations, and we limit our exposure by establishing interest rate hedges, with instruments available on the market such as caps or swaps of interest rates (fixed rate) not exceeding the length and value of our actual commitments. Interest rate derivatives are shown below, at market value:

| in € thousand                         | 2023 | 2022 |
|---------------------------------------|------|------|
| Fair value hedges                     | —    | —    |
| Cash flow hedges                      | 43   | 89   |
| Net investment hedges                 | —    | —    |
| Derivatives not qualifying for hedges | —    | —    |
| Derivative financial rate instruments | 43   | 89   |

### **Specific impacts from hedging exchange rate and interest rate risks**

### ■ **Risk factors**

The purpose of hedge accounting is to offset the impact of the hedged item and of the hedging instrument in the income statement. In order to qualify for hedge accounting, all hedging relationships must satisfy a series of stringent conditions in terms of documentation, likelihood of occurrence, effectiveness of the hedge and measurement reliability.

### ■ **Risk management mechanisms**

We only engage in hedging transactions designed to hedge actual or certain exposure; therefore, we do not create any speculative risk.

Financial derivatives are designated as hedges when the hedging relationship can be demonstrated or documented. The exchange rate derivatives used for cash flow hedging generally mature within one year at most.

|                                  | Nominal        |                | Positive fair value |              | Negative fair value |              |
|----------------------------------|----------------|----------------|---------------------|--------------|---------------------|--------------|
| in € thousand                    | 2023           | 2022           | 2023                | 2022         | 2023                | 2022         |
| Forward exchange contract        | 159,835        | 158,344        | 2,255               | 2,166        | 1,648               | 6,045        |
| OTC option exchange              | 61,534         | 44,542         | 240                 | 322          | 549                 | 420          |
| <b>Exchange instrument</b>       | <b>221,370</b> | <b>202,886</b> | <b>2,495</b>        | <b>2,488</b> | <b>2,196</b>        | <b>6,465</b> |
| Swap rate                        | —              | —              | —                   | —            | —                   | —            |
| Interest rate options            | —              | —              | —                   | —            | —                   | —            |
| Cross currency swap              | 7,833          | 7,833          | 43                  | 89           | —                   | —            |
| <b>Interest rate instruments</b> | <b>7,833</b>   | <b>7,833</b>   | <b>43</b>           | <b>89</b>    | <b>—</b>            | <b>—</b>     |
| Derivative financial instruments | 229,202        | 210,719        | 2,539               | 2,577        | 2,196               | 6,465        |

### **Supply risks**

The raw materials used to manufacture our products are supplied by third parties. In certain cases, we also use contract manufacturing organizations or industrial partners who have expertise in or master particular technologies. As far as possible, we diversify our sources of supply by choosing several suppliers, while ensuring that these various sources embody the characteristics of sufficient quality and reliability.

Nevertheless, there are, for certain supplies or certain technologies, situations where diversification is practically impossible, which can result in a disruption to the supply or pressure on prices.

To limit these risks, we take a broad approach to identifying as many diversified suppliers as possible, and may in certain cases secure our supply chain by acquiring the technologies and capacities we lack and that create an excessive dependency. We also mitigate these risks by implementing the appropriate safety inventory policy.

In 2023, we pursued our policy of securing and building up safety stock, which enabled us to cope with certain tensions. The macroeconomic situation generated by the conflict between Russia and Ukraine, characterized by high inflation, continued to adversely impact the cost of some of our supplies. We are committed to implementing measures to limit impacts and to monitor the potential consequences on our supplies due to the tension on maritime navigation in the Red Sea since December 2023.

{212}------------------------------------------------

### **A34. Composition of Virbac share capital**

|                                            | 2022        | Increase | Decrease | 2023        |
|--------------------------------------------|-------------|----------|----------|-------------|
| Number of authorized shares                | 8,458,000   | —        | —        | 8,458,000   |
| Number of shares issued and fully paid     | 8,458,000   | —        | —        | 8,458,000   |
| Number of shares issued and not fully paid | —           | —        | —        | —           |
| Outstanding shares                         | 8,442,148   | 5,005    | -77,434  | 8,369,719   |
| Treasury shares                            | 15,852      | 77,434   | -5,005   | 88,281      |
| Nominal value of shares                    | €1.25       | —        | —        | €1.25       |
| Virbac share capital                       | €10,572,500 | —        | —        | €10,572,500 |

### **A35. Performance-related stock grant plans**

The executive board, then the board of directors since the change of governance in December 2020, and in accordance with the authorization from the shareholders' general meeting, granted allocations of performancerelated stocks to certain employees and directors at Virbac and its subsidiaries.

### **Fair value of performance-related stock grant plans**

In accordance with IFRS 2, these plans were valued in our consolidated accounts based on the allocated shares' fair value on their allocation date.

The 2021 performance-related stock grants plan, allocated on March 16, 2021, is valued at €1,453,538, which translates into 6,225 shares at €233.50 each. This amount was deferred over a vesting period of 34 months. The impact recognized in the income statement as of December 31, 2023, amounts to €709 thousand, including social contributions.

The March 18, 2022, the board of directors decided to implement a new performance-related stock grants plan for a total of 4,000 shares, granted in two installments:

- 900 shares whose distribution was decided on March 18, 2022, subject to approval by the annual shareholders' meeting held on June 21, 2022 (for shares distributed to corporate officers), for a total value of €302,850 (*i.e* 900 shares valued at €336.50) spread over a vesting period of 30 months;
- as well as 3,100 shares whose distribution was decided by the board of directors on September 13, 2022, for a total valuation of €1,057,100 (*i.e* 3,100 shares valued at €341) spread over a vesting period of 28 months.

The impact recorded on the income statement as of December 31, 2023, for these two installments is €624 thousand, including contribution.

In addition, on March 18, 2022, the board of directors also decided, subject to the approval of the shareholders' meeting of June 21, 2022, which effectively occurred, to allocate a second 2022 performance-related stock grants plan in three installments, with the shares allocated on July 1, 2022, for all three installments:

- an initial installment, representing 1,000 shares, valued at €336.50 (*i.e* a total of €336,500) over a vesting period of 57 months, which generated an expense of €80 thousand for the contribution year included;
- a second installment, representing 1,000 shares, valued at €336.50 (*i.e* a total of €336,500) over a vesting period of 93 months, which generated an expense of €49 thousand for the contribution year included;
- a third installment, representing 3,000 shares, valued at €336.50 (*i.e* a total of €1,009,500) over a vesting period of 129 months, which generated an expense of €107 thousand for the contribution year included.

On June 19, 2023, the board of directors decided to implement a new performance-related stock grants plan for a total of 4,800 shares, granted in two installments:

- 1,390 shares whose distribution was decided on June 19, 2023, subject to approval by the annual shareholders' meeting held on June 20, 2023 (for shares distributed to corporate officers), which effectively occurred, for a total value of €391,980 (*i.e*., 1,390 shares valued at €282) spread over a vesting period of 33 months;
- as well as a second installment covering 3,410 shares valued at €285.50 (or €973,555 in total) spread over a vesting period of 30 months.

The impact recorded on the income statement as of December 31, 2023, for these two installments is €362 thousand, including contribution.

### **A36. Dividends**

In 2023, a €11,165 thousand dividend was distributed to the owners of the parent company, representing a €1.32 dividend per share.

For the financial year 2023, a proposal will be made to the shareholders' meeting to allocate a net dividend of €1.32 per share, with a nominal value of €1.25, that is a global amount of €11,165 thousand.

{213}------------------------------------------------

### **A37. Workforce**

### **Evolution of workforce by geographic area**

|                           | 2023  | 2022  | Variation |
|---------------------------|-------|-------|-----------|
| France                    | 1,526 | 1,467 | 4.0%      |
| Europe (excluding France) | 397   | 381   | 4.2%      |
| Latin America             | 1,041 | 1,049 | -0.8%     |
| North America             | 533   | 527   | 1.1%      |
| Asia                      | 1,498 | 1,502 | -0.3%     |
| Pacific                   | 326   | 320   | 1.9%      |
| Africa & Middle-East      | 138   | 140   | -1.4%     |
| Workforce                 | 5,459 | 5,386 | 1.4%      |

### **Distribution of workforce by position**

|                        |       | 2023   |       | 2022   |
|------------------------|-------|--------|-------|--------|
| Manufacturing          | 1,852 | 33.9%  | 1,887 | 35.0%  |
| Administration         | 745   | 13.6%  | 707   | 13.1%  |
| Business               | 2,225 | 40.8%  | 2,252 | 41.8%  |
| Research & Development | 637   | 11.7%  | 540   | 10.0%  |
| Workforce              | 5,459 | 100.0% | 5,386 | 100.0% |

### **A38. Information on related parties**

### **Compensation of the members of the board of directors**

|                                                                            | 2023         |                    | 2022         |                    |
|----------------------------------------------------------------------------|--------------|--------------------|--------------|--------------------|
|                                                                            | Compensation | Directors'<br>fees | Compensation | Directors'<br>fees |
| Marie-Hélène Dick                                                          | €110,000     | €27,000            | €110,000     | €25,000            |
| Pierre Madelpuech                                                          | —            | €27,000            | —            | €25,000            |
| Solène Madelpuech                                                          | —            | €27,000            | —            | €25,000            |
| Philippe Capron                                                            | —            | €30,000            | —            | €28,500            |
| Company OJB Conseil represented by Olivier Bohuon                          | —            | €27,000            | —            | €25,000            |
| Company Cyrille Petit represented by Cyrille Petit                         | —            | €27,000            | —            | €25,000            |
| Sylvie Gueguen                                                             | —            | —                  | —            | —                  |
| Non-voting advisor Company XYC Unipessoal Lda<br>represented by Xavier Yon | —            | €24,000            | —            | €22,500            |
| Non-voting advisor, Rodolphe Durand                                        | —            | €24,000            | —            | €22,500            |
| Total                                                                      | €110,000     | €213,000           | €110,000     | €198,500           |

{214}------------------------------------------------

### **Compensation of the members of the general management**

### **As at December 31, 2023 - Gross amounts due**

|                 | Fixed compensation<br>(including benefit<br>in kind) | Compensation linked to<br>terms of office for<br>administrator on<br>Group companies | Variable<br>compensation | Total<br>compensation |
|-----------------|------------------------------------------------------|--------------------------------------------------------------------------------------|--------------------------|-----------------------|
| Sebastien Huron | €395,221                                             | €45,000                                                                              | €233,200                 | €440,220              |
| Habib Ramdani   | €246,263                                             | —                                                                                    | €97,958                  | €246,263              |
| Marc Bistuer    | €252,115                                             | —                                                                                    | €76,424                  | €252,115              |
| Total           | €893,599                                             | €45,000                                                                              | €407,582                 | €1,346,181            |

### **As at December 31, 2022 - Gross amounts due**

|                 | Fixed compensation<br>(including benefits<br>in kind) | Compensation linked to<br>terms of office for<br>administrator on<br>Group companies | Variable<br>compensation | Total<br>compensation |
|-----------------|-------------------------------------------------------|--------------------------------------------------------------------------------------|--------------------------|-----------------------|
| Sebastien Huron | €370,282                                              | €45,000                                                                              | €182,600                 | €597,882              |
| Habib Ramdani   | €233,503                                              | €0                                                                                   | €77,433                  | €310,936              |
| Marc Bistuer    | €238,976                                              | €0                                                                                   | €52,049                  | €291,025              |
| Total           | €842,761                                              | €45,000                                                                              | €312,082                 | €1,199,843            |

Compensation paid for the 2023 financial year represents fixed compensation paid in 2023, compensation paid in 2023 in relation to terms of office for directors in the Group companies, variable compensation paid in 2024 in relation to 2023 and benefits in kind granted in 2023 (company car).

### **Calculation criteria for the variable portion**

Each member of the general management has a variable compensation target, which is a percentage of his/her fixed compensation.

The variable compensation for members of the general management is essentially based on the following objectives:

- growth of revenue from ordinary activities;
- growth in operating profit from ordinary activities;
- the Group's cash position and debt management;
- CSR-related targets.

### **Other benefits**

In addition to the various compensation items, general management members enjoy the benefits described below.

### ■ **Company vehicle**

The chief executive officer as well as the deputy chief executive officers receive a company vehicle, in accordance with the policy defined by the compensation committee.

### ■ **Health insurance plan, maternity benefits, pension and retirement**

The chief executive officer and the deputy chief executive officers have the same health insurance, maternity benefits and pension and retirement plans as those provided to all the company's executives, under the same contribution and benefit conditions as those defined for the other company executives.

### ■ **Unemployment insurance plan**

The chief executive officer is covered by the private GSC (unemployment insurance for company's chief executive officers) plan, which is based on the 70-for-one-year formula. The amount of the annual contributions over time shall not exceed €15,000.

The deputy chief executive officers have the same unemployment insurance plan as that provided to the company's employees.

### ■ **Forced retirement severance pay**

The board of directors may decide to grant an indemnity in the event of the termination of the duties of a corporate officer.

The compensation that Sébastien Huron, chief executive officer, could receive is determined on the basis of the following objectives:

- insofar as the Group's operating profit from ordinary activities to net revenue ratio is lower than 4% on average over the last four financial half-years ended (for example: for a departure in May in year N: the period taken into account to calculate the ratio is from January, 1 of year N-2 to December, 31 of year N-1), no compensation will be due;
- insofar as the ratio of operating profit from ordinary activities to the Group's net revenue is greater than or equal to 4% on average over the last four closed accounting half-years (for example: for a departure in May in

{215}------------------------------------------------

year N: the period taken into account to calculate the ratio is from January, 1 of year N-2 to December, 31 of year N-1), the compensation due will be €550,000; however, to the extent that the ratio of operating profit from ordinary activities to the Group's net revenue is greater than or equal to 7% on average over the last two closed accounting half-years (for example: for a departure in August in year N: the period taken into account to calculate the ratio is July, 1 of year N-1 to June, 30 of year N), the compensation will be increased to €700,000.

Severance pay shall only be paid out in the event of a forced departure at the company's initiative. It will not be owed in the event of resignation, full pension retirement, retirement once the age limit for being a chief executive officer is reached or in the event of dismissal for gross negligence.

Deputy chief executive officers do not receive any extra-legal severance pay, but may be entitled to severance pay under their employment contract.

### ■ **Non-competition payments**

Sébastien Huron agreed to a non-competition commitment in the event he leaves office, in consideration of which a non-competition payment is provided for.

In consideration of the non-competition obligation, Sébastien Huron will receive each month, during the entire competition ban period, a payment in an amount equal to 80% of his fixed gross monthly compensation received for the company's last financial year-end (including directors' fees and any other compensation related to his functions within the Virbac group). This payment will be limited, for this eighteen-month period, to a maximum gross amount of €500,000.

Deputy chief executive officers are not subject to any non-competition commitments in connection with their office or their employment contract and are therefore not entitled to receive any non-competition indemnity.

### ■ **Performance-related stock grant plans**

In accordance with the authorization of the shareholders' meeting, certain employees and managers of Virbac and its subsidiaries have received long-term compensation in the form of performance-related stock grants since 2006. The performance conditions to be met for the acquisition of performance-related stock grants are measured against the internal objectives of consolidated operating profit and the Group's consolidated net debt at the close of the second full financial year following the plan's start date. These elements therefore take into account the Group's performance over more than two financial years.

The performance-related stock grant plans granted to members of the general management for the past five financial years are as follows:

|                 | Number of shares 2018 plan | Number of shares 2021 plan | Number of shares 2022 plan | Number of shares 2023 plan |
|-----------------|----------------------------|----------------------------|----------------------------|----------------------------|
| Sebastien Huron | 1,600                      | 950                        | 5,500                      | 800                        |
| Habib Ramdani   | 1,000                      | 475                        | 250                        | 350                        |
| Marc Bistuer    | 300                        | 300                        | 150                        | 240                        |
| Total           | 2,900                      | 1,725                      | 5,900                      | 1,390                      |

{216}------------------------------------------------

### **A39. Off-balance sheet commitments**

### ■ **Bonds or guarantees granted by Virbac or some of its subsidiaries**

| in € thousand    | Nature                                                                                         | Validity limit date | 2023  | 2022  |
|------------------|------------------------------------------------------------------------------------------------|---------------------|-------|-------|
| Virbac Patagonia | Escrow payment related to the acquisition debt<br>of the non-controlling interests (HSA Group) | —                   | 3,383 | 3,549 |
| Virbac Uruguay1  | Mortgage security on the industrial site                                                       | Annual renewal      | 3,620 | 3,750 |
| Guarantees given |                                                                                                |                     | 7,003 | 7,323 |

1 guarantee granted as part of a long-term bank loan not drawn on the closing date

### ■ **Contingent liabilities**

Virbac and its subsidiaries are at times involved in litigation, or other legal proceedings, generally linked to disputes related to intellectual property rights, disputes involving competition law and tax matters.

Each situation is analyzed under IAS 37 or Ifric 23 when it concerns relative uncertainty surrounding tax treatment (see notes A16 and A19).

No provision is made when the company considers a liability to be potential, and information is provided in the notes to the financial statements.

As of December 31, 2023, we have not identified any contingent liabilities.

{217}------------------------------------------------

### **A40. Scope of consolidation**

| Company name                                      | Locality          | Country        | 2023    |               | 2022    |               |
|---------------------------------------------------|-------------------|----------------|---------|---------------|---------|---------------|
|                                                   |                   |                | Control | Consolidation | Control | Consolidation |
| <b>France</b>                                     |                   |                |         |               |         |               |
| Virbac (parent company)                           | Carros            | France         | 100.00% | Full          | 100.00% | Full          |
| Interlab                                          | Carros            | France         | 100.00% | Full          | 100.00% | Full          |
| Virbac France                                     | Carros            | France         | 100.00% | Full          | 100.00% | Full          |
| Virbac Nutrition                                  | Vauvert           | France         | 100.00% | Full          | 100.00% | Full          |
| Virbac Diagnostics                                | La Seyne-sur-Mer  | France         | 100.00% | Full          | 100.00% | Full          |
| Alfamed                                           | Carros            | France         | 99.70%  | Full          | 99.70%  | Full          |
| <b>Europe (excluding France)</b>                  |                   |                |         |               |         |               |
| Virbac Belgium SA                                 | Wavre             | Belgium        | 100.00% | Full          | 100.00% | Full          |
| Virbac Nederland BV1                              | Barneveld         | Netherlands    | 100.00% | Full          | 100.00% | Full          |
| Virbac (Switzerland) AG                           | Glattbrugg        | Switzerland    | 100.00% | Full          | 100.00% | Full          |
| Virbac Ltd                                        | Bury St. Edmunds  | United Kingdom | 100.00% | Full          | 100.00% | Full          |
| Virbac SRL                                        | Milan             | Italy          | 100.00% | Full          | 100.00% | Full          |
| Virbac Danmark A/S                                | Kolding           | Denmark        | 100.00% | Full          | 100.00% | Full          |
| Virbac Pharma Handelsgesellshaft mbH              | Bad Oldesloe      | Germany        | 100.00% | Full          | 100.00% | Full          |
| Virbac Tierarzneimittel GmbH                      | Bad Oldesloe      | Germany        | 100.00% | Full          | 100.00% | Full          |
| Virbac SP zoo                                     | Varsovie          | Poland         | 100.00% | Full          | 100.00% | Full          |
| Virbac Hungary Kft                                | Budapest          | Hungary        | 100.00% | Full          | 100.00% | Full          |
| Virbac Hellas SA                                  | Agios Stefanos    | Greece         | 100.00% | Full          | 100.00% | Full          |
| Virbac Espana SA                                  | Barcelone         | Spain          | 100.00% | Full          | 100.00% | Full          |
| Virbac Österreich GmbH                            | Vienne            | Austria        | 100.00% | Full          | 100.00% | Full          |
| Virbac de Portugal Laboratorios Lda               | Almerim           | Portugal       | 100.00% | Full          | 100.00% | Full          |
| Virbac Hayvan Sagligi Limited Şirketi             | Istanbul          | Turkey         | 100.00% | Full          | 100.00% | Full          |
| Virbac Ireland Ltd                                | Dublin            | Ireland        | 100.00% | Full          | 100.00% | Full          |
| Virbac Czech Republic s.r.o (former GS Partners)  | Prague            | Czech Republic | 100.00% | Full          | —%      | —             |
| <b>North America</b>                              |                   |                |         |               |         |               |
| Virbac Corporation1                               | Westlake          | United States  | 100.00% | Full          | 100.00% | Full          |
| PP Manufacturing Corporation                      | Framingham        | United States  | 100.00% | Full          | 100.00% | Full          |
| Pharma 8 Llc                                      | Wilmington        | United States  | 70.00%  | Full          | 70.00%  | Full          |
| Company name                                      | Locality          | Country        | 2023    |               | 2022    |               |
|                                                   |                   |                | Control | Consolidation | Control | Consolidation |
| Latin America                                     |                   |                |         |               |         |               |
| Virbac do Brasil Industria e Comercio<br>Ltda     | Sao Paulo         | Brazil         | 100.00% | Full          | 100.00% | Full          |
| Virbac Mexico SA de CV                            | Guadalajara       | Mexico         | 100.00% | Full          | 100.00% | Full          |
| Virbac Colombia Ltda                              | Bogota            | Colombia       | 100.00% | Full          | 100.00% | Full          |
| Laboratorios Virbac Costa Rica SA                 | San Jose          | Costa Rica     | 100.00% | Full          | 100.00% | Full          |
| Virbac Chile SpA                                  | Santiago          | Chile          | 100.00% | Full          | 100.00% | Full          |
| Virbac Patagonia Ltda                             | Santiago          | Chile          | 100.00% | Full          | 100.00% | Full          |
| Holding Salud Animal SA                           | Santiago          | Chile          | 100.00% | Full          | 100.00% | Full          |
| Centro Veterinario y Agricola Limitada            | Santiago          | Chile          | 100.00% | Full          | 100.00% | Full          |
| Farquimica SpA                                    | Santiago          | Chile          | 100.00% | Full          | 100.00% | Full          |
| Bioanimal Corp SpA2                               | Santiago          | Chile          | —%      | Full          | 100.00% | Full          |
| Productos Quimicos Ehlinger2                      | Santiago          | Chile          | —%      | Full          | 100.00% | Full          |
| Centrovet Inc                                     | Allegheny         | United States  | 100.00% | Full          | 100.00% | Full          |
| Centrovet Argentina                               | Buenos Aires      | Argentina      | 100.00% | Full          | 100.00% | Full          |
| Inversiones HSA Ltda2                             | Santiago          | Chile          | —%      | Full          | 100.00% | Full          |
| Rentista de capitales Takumi Ltda2                | Santiago          | Chile          | —%      | Full          | 100.00% | Full          |
| Virbac Uruguay SA                                 | Montevideo        | Uruguay        | 99.17%  | Full          | 99.17%  | Full          |
| Virbac Latam Spa                                  | Santiago          | Chile          | 100.00% | Full          | 100.00% | Full          |
| Asia                                              |                   |                |         |               |         |               |
| Virbac Trading (Shanghai) Co. Ltd                 | Shanghai          | China          | 100.00% | Full          | 100.00% | Full          |
| Virbac H.K. Trading Limited                       | Hong Kong         | Hong Kong      | 100.00% | Full          | 100.00% | Full          |
| Asia Pharma Ltd                                   | Hong Kong         | Hong Kong      | 100.00% | Full          | 100.00% | Full          |
| Virbac Korea Co. Ltd                              | Seoul             | South Korea    | 100.00% | Full          | 100.00% | Full          |
| Virbac (Thailand) Co. Ltd                         | Bangkok           | Thailand       | 100.00% | Full          | 100.00% | Full          |
| Virbac Taiwan Co. Ltd                             | Taipei            | Taiwan         | 100.00% | Full          | 100.00% | Full          |
| Virbac Philippines Inc.                           | Taguig City       | Philippines    | 100.00% | Full          | 100.00% | Full          |
| Virbac Japan Co. Ltd                              | Osaka             | Japan          | 100.00% | Full          | 100.00% | Full          |
| Virbac Asia Pacific Co. Ltd                       | Bangkok           | Thailand       | 100.00% | Full          | 100.00% | Full          |
| Virbac Vietnam Co. Ltd                            | Ho Chi Minh Ville | Vietnam        | 100.00% | Full          | 100.00% | Full          |
| Virbac Animal Health India Private<br>Limited     | Mumbai            | India          | 100.00% | Full          | 100.00% | Full          |
| AVF Animal Health Co Ltd<br>Hong-Kong             | Hong Kong         | Hong Kong      | 50.00%  | Equity        | 50.00%  | Equity        |
| AVF Chemical Industrial Co Ltd China              | Jinan (Shandong)  | China          | 50.00%  | Equity        | 50.00%  | Equity        |
| Shandong Weisheng Biotech Co., Ltd                | Jinan (Shandong)  | China          | 50.00%  | Equity        | 50.00%  | Equity        |
| Globion India Private Ltd                         | Hyderabad         | India          | 74.00%  | Full          | -%      | 0             |
| Pacific                                           |                   |                |         |               |         |               |
| Virbac (Australia) Pty Ltd1                       | Milperra          | Australia      | 100.00% | Full          | 100.00% | Full          |
| Virbac New Zealand Limited                        | Hamilton          | New Zealand    | 100.00% | Full          | 100.00% | Full          |
| Africa & Middle-EastVirbac RSA (Proprietary) Ltd1 | Centurion         | South Africa   | 100.00% | Full          | 100.00% | Full          |

1 pre-consolidated levels

{218}------------------------------------------------

1 pre-consolidated levels

2 entities were merged in Centrovet Ltda

{219}------------------------------------------------

# Statutory auditors' report on the consolidated financial statements

For the year ended December 31, 2023

*This is a translation into English of the statutory auditors' report on the financial statements of the company issued in French and it is provided solely for the convenience of English-speaking users.*

*This statutory auditors' report includes information required by European regulations and French law, such as information about the appointment of the statutory auditors or verification of the management report and other documents provided to shareholders.*

*This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.*

To the Virbac's annual general meeting,

### **OPINION**

in compliance with the engagement entrusted to us by your annual general meeting, we have audited the accompanying consolidated financial statements of Virbac for the year ended December 31, 2023.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as of December 31, 2023 and of the results of its operations for the year then ended in accordance with International financial reporting standards as adopted by the European Union.

The audit opinion expressed above is consistent with our report to the audit committee.

### **BASIS FOR OPINION**

### **Audit framework**

We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the "Statutory auditors' responsibilities for the audit of the consolidated financial statements" section of our report.

### **Independence**

We conducted our audit engagement in compliance with independence requirements of the French commercial code (*Code de commerce*) and the French code of ethics (*Code de déontologie*) for statutory auditors, for the period from January 1, 2023 to the date of our report, and specifically we did not provide any prohibited non-audit services referred to in article 5(1) of regulation (EU) n°537/2014.

### **JUSTIFICATION OF ASSESSMENTS - KEY AUDIT MATTERS**

In accordance with the requirements of articles L821-53 and R821-180 of the French commercial code relating to the justification of our assessments, we bring your attention to the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period, as well as our responses to those risks.

These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on specific items of the consolidated financial statements.

{220}------------------------------------------------

### **Key audit matter: measurement of goodwill and indefinite-life intangible assets on Chile CGU (notes A1, A2, A3)**

As of December 31, 2023, goodwill and indefinite-life intangible assets are recorded in the Group's consolidated balance sheet in the amount of €165.4 million and €113.6 million, respectively.

Goodwill of the Chile CGU is valued at €24.1 million, as presented in the note A1 "Goodwill" to the consolidated financial statements.

The indefinite-life intangible assets of this CGU mainly consist of trademarks, patents, know-how, marketing authorizations and registration fees.

At least once annually or whenever there is indication of loss in value, management verifies that the value in use of these assets (based on estimated discounted future cash flows) exceeds their net carrying amount in order to ensure they do not present a risk of loss in value. Impairment testing methods implemented and a breakdown of the assumptions adopted are presented in the "Goodwill" and "Intangible assets" sections of the "Accounting principles and methods" note and note A3, "Impairment of assets" to the consolidated financial statements.

The impairment tests performed by management on the assets of the Chile CGU require management to make significant judgments and assumptions, notably concerning:

- forecast future cash flows and particularly forecast sales and future costs;
- discount rates and long-term growth rates used to forecast these flows.

Accordingly, a change in these assumptions is likely to modify the value in use of these assets.

We considered the measurement of goodwill and indefinite-life intangible assets, of the aforementioned CGU, to be a key audit matter due to the inherent uncertainties surrounding the realization of forecasts underlying the calculation of value in use and also due to their materiality in the consolidated financial statements.

### **Our response**

We obtained the most recent business plans from management and impairment tests for the CGUs and group of CGUs. Using this information, we performed a critical review of the implementation of this methodology and the following procedures on the Chile CGU:

- we assessed the reasonableness of the key assumptions adopted for determining:
	- cash flows with respect to the economic and financial context in which the CGU operates. We also analyzed the consistency of these cash flow forecasts with the most recent management estimates, as presented to the board of directors in the budget process, it being specified that the board of directors approves the main business plans;
	- the long-term growth rate underlying these flows, substantiating it with external market analyses;
- we assessed the discount rates adopted by management with the help of an appraisal firm, comparing it with our own estimated rates, prepared with the assistance of our valuation specialists;
- we tested the calculations and the consistency of the impairment testing structure based on procedures performed by our valuation specialists;
- we compared forecasts adopted for prior periods with the corresponding actual results to assess the attainment of past objectives;
- we tested the arithmetical accuracy of the impairment tests performed on the Chile CGU by the company;
- we obtained and reviewed sensitivity tests performed by the management;
- we also performed our own sensitivity tests to verify that sensitivity tests based on reasonably possible changes in key assumptions would not give rise to asset impairment;
- we assessed the appropriateness of the disclosures in the "Goodwill" and "Intangible assets" paragraphs of the "Accounting principles and methods" note and Notes A1 and A3 to the consolidated financial statements.

### **SPECIFIC VERIFICATIONS**

We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations of the information pertaining to the Group presented in the board of directors' management report.

We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.

We attest that the consolidated non-financial statement required by article L225-102-1 of the French commercial code is included in the information pertaining to the Group presented in the management report, it being specified that, in accordance with the provisions of article L823-10 of the Code, we have verified neither the fair presentation nor the consistency with the consolidated financial statements of the information contained therein. This information should be reported on by an independent third party.

{221}------------------------------------------------

### **OTHER LEGAL AND REGULATORY VERIFICATIONS OR INFORMATIONS**

### **Format of presentation of the consolidated financial statements intended to be included in the annual financial report**

We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by the statutory auditor relating to the annual and consolidated financial statements presented in the European single electronic format, that the presentation of the consolidated financial statements intended to be included in the annual financial report mentioned in article L451-1-2, I of the French monetary and financial code (*Code monétaire et financier*), prepared under the responsibility of chief executive officer, complies with the single electronic format defined in the European delegated regulation n°2019/815 of December 17, 2018. As it relates to consolidated financial statements, our work includes verifying that the tagging of these consolidated financial statements complies with the format defined in the above delegated regulation.

Based on the work we have performed, we conclude that the presentation of the consolidated financial statements intended to be included in the annual financial report complies, in all material respects, with the European single electronic format.

Due to the technical limitations inherent to the block-tagging of the consolidated financial statements according to the European single electronic format, the content of certain tags of the notes may not be rendered identically to the accompanying consolidated financial statements.

Moreover, we have no responsibility to verify that the consolidated financial statements that will ultimately be included by your company in the annual financial report filed with the AMF are in agreement with those on which we have performed our work.

### **Appointment of the statutory auditors**

We were appointed as statutory auditors of Virbac by your annual general meeting held on June 29, 1998 for Novances David & Associés and on June 30, 2004 for Deloitte & Associés.

As at December 31, 2023, Novances - David & Associés was in the twenty-sixth consecutive year of mandate without interruption and Deloitte & Associés was in the twentieth consecutive year of mandate without interruption.

### **RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS**

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International financial reporting standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the company or to cease operations.

The audit committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risks management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.

The consolidated financial statements were approved by the board of directors.

### **STATUTORY AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS**

### **Objectives and audit approach**

Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As specified in article L821-55 of the French commercial code, our statutory audit does not include assurance on the viability of the company or the quality of management of the affairs of the company.

{222}------------------------------------------------

As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises professional judgment throughout the audit and furthermore:

- identifies and assesses the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
- obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
- evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the consolidated financial statements;
- assesses the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the company to cease to continue as a going concern. If the statutory auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the consolidated financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein;
- evaluates the overall presentation of the consolidated financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation;
- obtains sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. The statutory auditor is responsible for the direction, supervision and performance of the audit of the consolidated financial statements and for the opinion expressed on these consolidated financial statements.

### **Report to the audit committee**

We submit a report to the audit committee which includes in particular a description of the scope of the audit and the audit program implemented, as well as significant audit findings. We also report, if any, significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified.

Our report to the audit committee includes the risks of material misstatement that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period and which are therefore the key audit matters, that we are required to describe in this report.

We also provide the audit committee with the declaration provided for in article 6 of regulation (EU) n°537/2014, confirming our independence pursuant to the rules applicable in France such as defined in particular by articles L821-27 to L821-34 of the French commercial code and in the French code of ethics for statutory auditors. Where appropriate, we discuss with the audit committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.

Nice and Marseille, April 11, 2024

The statutory auditors

French original signed by

**Novances-David & Associés Deloitte & Associés**

Jean-Pierre Giraud Hugues Desgranges Jérémie Perrochon

{223}------------------------------------------------

# Statutory accounts

## **FINANCIAL STATEMENTS**

### **Balance sheet - Assets**

| in € thousand                                  | Notes | Gross<br>amount | Depreciation<br>and provisions | 2023<br>Net amount | 2022<br>Net amount |
|------------------------------------------------|-------|-----------------|--------------------------------|--------------------|--------------------|
| Concessions, patents, licenses and brands      |       | 53,742          | 43,845                         | 9,897              | 8,469              |
| Other intangible assets                        |       | 90,910          | 60,120                         | 30,790             | 26,968             |
| Intangible assets                              | B1    | 144,652         | 103,965                        | 40,687             | 35,437             |
| Land                                           |       | 8,247           | —                              | 8,247              | 1,496              |
| Buildings                                      |       | 123,103         | 82,031                         | 41,072             | 38,848             |
| Technical facilities, materials and industrial |       | 133,139         | 87,964                         | 45,175             | 42,115             |
| Other tangible assets                          |       | 7,136           | 5,399                          | 1,737              | 1,685              |
| Prepayments on assets and assets in progress   |       | 20,169          | 499                            | 19,670             | 15,019             |
| Tangible assets                                | B2    | 291,794         | 175,893                        | 115,901            | 99,163             |
| Shares in companies and other receivables      |       | 500,822         | 117,306                        | 383,516            | 383,735            |
| Other long-term securities                     |       | —               | —                              | —                  | —                  |
| Loans                                          |       | 78,636          | —                              | 78,636             | 101,819            |
| Other financial assets                         |       | 18,119          | —                              | 18,119             | 562                |
| Financial assets                               | B3    | 597,577         | 117,306                        | 480,271            | 486,116            |
| Total fixed assets                             |       | 1,034,023       | 397,164                        | 636,859            | 620,716            |
| Raw materials                                  |       | 50,996          | 1,801                          | 49,195             | 46,473             |
| Work in progress                               |       | 28,518          | 1,290                          | 27,228             | 23,975             |
| Semi-finished and finished goods               |       | 17,981          | 1,418                          | 16,563             | 21,214             |
| Inventories and work in progress               | B4    | 97,495          | 4,509                          | 92,986             | 91,662             |
| Trade receivables and related accounts         |       | 108,676         | 335                            | 108,341            | 90,529             |
| Employee-related receivables                   |       | 25              | —                              | 25                 | 36                 |
| Income tax receivables                         |       | 19,758          | —                              | 19,758             | 7,151              |
| Other social and state receivables             |       | 12,420          | —                              | 12,420             | 10,821             |
| Other receivables                              |       | 75,672          | —                              | 75,672             | 84,646             |
| Current receivables                            | B5    | 216,551         | 335                            | 216,216            | 193,183            |
| Advances and prepayment on orders              |       | 324             | —                              | 324                | 251                |
| Marketable securities                          | B6    | 6,740           | —                              | 6,740              | 4,388              |
| Available funds                                | B7    | 22,511          | —                              | 22,511             | 640                |
| Cash and cash equivalents                      |       | 29,575          | —                              | 29,575             | 5,279              |
| Prepaid expenses                               |       | 6,086           | —                              | 6,086              | 6,151              |
| Deferred charges                               |       | 379             | —                              | 379                | 412                |
| Unrealised foreign exchange losses             |       | 10,534          | —                              | 10,534             | 13,715             |
| Accruals and other assets                      | B8    | 16,999          | —                              | 16,999             | 20,278             |
| Total assets                                   |       | 1,394,643       | 402,008                        | 992,635            | 931,118            |

{224}------------------------------------------------

### **Balance sheet - Liabilities**

| in € thousand                                                | Notes    | 2023     | 2022     |           |
|--------------------------------------------------------------|----------|----------|----------|-----------|
| Share capital                                                |          | 10,573   | 10,573   |           |
| Share premium and paid-in capital                            |          | 6,534    | 6,534    |           |
| Legal reserve                                                |          | 1,089    | 1,089    |           |
| Regulated reserves                                           |          | 36,287   | 36,287   |           |
| Other reserves                                               |          | 36,396   | 36,396   |           |
| Retained earnings                                            |          | 577,283  | 590,730  |           |
| Result for the period                                        |          | 61,292   | -2,302   |           |
| Investment grants                                            |          | 1,449    | 1,606    |           |
| Regulated provisions                                         |          | 32,061   | 28,480   |           |
| Equity                                                       | B9       | 762,964  | 709,393  |           |
| Conditional advances                                         |          | —        | —        |           |
| Other equity                                                 |          | —        | —        |           |
| Provisions for contingencies                                 |          | 11,728   | 9,673    |           |
| Provisions for foreign exchange losses                       |          | 14,515   | 10,525   |           |
| Provisions for litigations                                   |          | —        | —        |           |
| Provisions for liabilities and charges                       | B10      | 26,243   | 20,198   |           |
| Bonds                                                        |          | —        | —        |           |
| Bank borrowings                                              |          | 18,736   | 20,694   |           |
| Bank overdrafts - current                                    |          | 2,214    | 411      |           |
| Bank overdrafts - other                                      |          | —        | —        |           |
| Other borrowings and financial liabilities                   |          | 16,472   | 11,570   |           |
| Related borrowings and financial liabilities                 |          | 51,912   | 38,524   |           |
| Financial liabilities                                        | B5 & B11 | 89,334   | 71,199   |           |
| Trade payables and related accounts                          |          | 75,249   | 87,382   |           |
| Employee-related payables                                    |          | 21,121   | 20,284   |           |
| Social payables                                              |          | 10,620   | 9,976    |           |
| Income tax payables                                          |          | —        | —        |           |
| Value added tax                                              |          | 43       | 142      |           |
| Other social and state payables                              |          | 3,871    | 3,599    |           |
| Payables to fixed assets suppliers and related accounts      |          | —        | —        |           |
| Other payables                                               |          | 1,669    | 2,073    |           |
| Current liabilities                                          | B5       | 112,573  | 123,456  |           |
| Prepaid income                                               |          | 89       | 331      |           |
| Unrealised foreign exchange gains                            |          | 1,432    | 6,541    |           |
| Accruals and other liabilities                               | B12      | 1,521    | 6,872    |           |
| Total liabilities                                            |          | 992,635  | 931,118  |           |
| in € thousand                                                | Notes    | 2023     | 2022     | Variation |
| Sales of goods                                               |          | 104,103  | 103,411  |           |
| Production sold: goods and services                          |          | 274,425  | 307,416  |           |
| Net sales                                                    | R1       | 378,528  | 410,827  | -7.9%     |
| Production transferred to inventory                          |          | -703     | 14,701   |           |
| Capitalization of expenses                                   |          | 4,480    | 4,272    |           |
| Government grants                                            |          | 60       | 54       |           |
| Reversals of provisions and depreciations, expense transfers |          | 5,492    | 6,346    |           |
| Other operating income                                       |          | 4,994    | 13,519   |           |
| Operating income                                             | R2       | 14,323   | 38,892   | -63.2%    |
| Purchases of goods                                           |          | -61,517  | -70,002  |           |
| Purchases of raw materials and other supplies                |          | -63,637  | -80,132  |           |
| Change in inventories (raw materials and supplies)           |          | 2,843    | 8,663    |           |
| Other purchases and external expenses                        |          | -124,428 | -127,933 |           |
| Taxes and other contributions                                |          | -6,868   | -7,614   |           |
| Wages and salaries                                           |          | -73,129  | -67,249  |           |
| Social contributions                                         |          | -34,006  | -33,239  |           |
| Depreciations and provisions of fixed assets                 |          | -18,759  | -17,399  |           |
| Provisions for current assets                                |          | -4,730   | -3,895   |           |
| Provisions for risks and charges                             |          | -5,247   | -1,104   |           |
| Other operating expenses                                     |          | -10,037  | -13,932  |           |
| Operating expenses                                           | R2       | -399,515 | -413,836 | -3.5%     |
| Net operating income                                         |          | -6,664   | 35,883   | -118.6%   |
| Dividends received                                           |          | 66,037   | 57,124   |           |
| Other interest receivable and similar income                 |          | 12,398   | 11,496   |           |
| Reversals of provisions and expense transfers                |          | 8,574    | 9,446    |           |
| Foreign exchange gains                                       |          | 10,736   | 16,643   |           |
| Net income on the disposals of marketable securities         |          | 1        | 3        |           |
| Financial income                                             | R3       | 97,746   | 94,712   | 3.2%      |
| Depreciations and provisions                                 |          | -19,009  | -102,423 |           |
| Other interest paid and similar expenses                     |          | -2,332   | -1,211   |           |
| Foreign exchange losses                                      |          | -13,637  | -19,574  |           |
| Net expenses on the disposals of marketable securities       |          | —        | -17      |           |
| Financial expenses                                           | R3       | -34,978  | -123,225 | -71.6%    |
| Net financial income                                         |          | 62,768   | -28,513  | -320.1%   |
| Profit before tax                                            |          | 56,104   | 7,370    | 661.2%    |
| Non-recurring income from operations                         |          | 461      | 250      |           |
| Non-recurring income from capital transactions               |          | 372      | 671      |           |
| Reversals of provisions and expense transfers                |          | 5,059    | 11,005   |           |
| Non-recurring income                                         | R4       | 5,892    | 11,926   | -50.6%    |
| Non-recurring expenses from operations                       |          | -417     | -465     |           |
| Non-recurring expenses from capital transactions             |          | -1,810   | -3,901   |           |
| Depreciations and provisions                                 |          | -7,600   | -9,410   |           |
| Non-recurring expenses                                       | R4       | -9,827   | -13,776  | -28.7%    |
| Net non-recurring income                                     |          | -3,935   | -1,850   | 112.7%    |
| Employee profit-sharing                                      |          | -3,780   | -5,175   |           |
| Income tax                                                   | R5       | 12,903   | -2,647   |           |
| Result for the period                                        |          | 61,292   | -2,302   | -2762.6%  |

{225}------------------------------------------------

### **Income statement**

{226}------------------------------------------------

### **Cash flow statement**

| in € thousand                                          | 2023    | 2022    |
|--------------------------------------------------------|---------|---------|
| Result for the period                                  | 61,292  | -2,302  |
| Elimination of depreciations and provisions            | 36,406  | 108,970 |
| Elimination of gains and losses on disposals           | 1,718   | 617     |
| Other income and expenses with no cash impact          | -53     | -117    |
| Cash flow                                              | 99,363  | 107,168 |
| Effect of net change in inventories                    | -1,324  | -23,039 |
| Effect of net change in trade receivables              | -17,812 | -357    |
| Effect of net change in trade payables                 | -12,496 | 20,313  |
| Effect of net change in other receivables and payables | 12,449  | -53,198 |
| Effect of change in working capital requirements       | -19,183 | -56,281 |
| Net cash flow generated by operating activities        | 80,180  | 50,887  |
| Acquisitions of intangible assets                      | -13,685 | -12,325 |
| Acquisitions of tangible assets                        | -27,937 | -24,016 |
| Acquisitions of financial assets                       | -31,651 | -47,391 |
| Disposals of intangible and tangible assets            | 28,472  | 34,712  |
| Net flow allocated to investing activities             | -44,801 | -49,020 |
| Dividends paid to the owners of the parent company     | -11,145 | -10,562 |
| Increase/decrease in capital                           | -       | -       |
| Merger premium                                         | -       | -       |
| Other increases related to merger                      | -       | -       |
| Investment grants                                      | -123    | 1,023   |
| Other equity                                           | -       | -       |
| Issuance/repayments of debt                            | -1,964  | -17,686 |
| Net cash from financing activities                     | -13,232 | -27,225 |
| Change in cash position                                | 22,147  | -25,358 |

### **Statement of change in cash position**

| in € thousand                              | 2023          | 2022           |
|--------------------------------------------|---------------|----------------|
| Marketables securities                     | 2,113         | -2,845         |
| Available funds                            | 21,871        | -22,608        |
| <b>Change in cash position assets</b>      | <b>23,984</b> | <b>-25,453</b> |
| Bank overdrafts - current                  | -1,837        | 95             |
| <b>Change in cash position liabilities</b> | <b>-1,837</b> | <b>95</b>      |
| Net change in cash position                | 22,147        | -25,358        |

{227}------------------------------------------------

### **APPENDICES TO THE STATUTORY ACCOUNTS**

### **Significant events over the period**

### **Cyberattack**

Virbac was the subject of a cyberattack on the night of June 19 to 20, 2023, on several of its sites around the world. Exceptional measures were immediately taken as soon as we became aware of this attack, and a crisis unit, including experts dedicated to cyber security, was set up in order to assess the impacts on our systems and quickly organize the corrective measures necessary to ensure business continuity.

This attack resulted in a slowdown or temporary interruption of some of our services, which was however contained thanks to the responsiveness and mobilization of our teams. Indeed, we have been able to rely on the integrity of our information systems and our data (not corrupted) till June 19, and on reinforced measures of internal control implemented from June 20, on.

Remediation continued throughout the summer and by August, we were operating almost normally again on all of our functions. We have also since strengthened all of our IT infrastructures.

Although the impact of the cyberattack on the financial statements for the year was limited, its remediation nevertheless generated some additional costs and the major impacts have been related to the vaccine production in Carros.

### **Inflation**

Cost increases continued in 2023, as expected and in smaller proportions compared to 2022. Their impacts were, however, limited by price increases for some of our products as well as the negotiation over several years of certain contracts and supplies.

### **Vaccines**

The year 2023 has been impacted by limitations in the production capacity of dog and cat vaccines, which were more significant than expected.

This has weighed on our absorption of fixed costs as well as on our sales, given the low level of our vaccine inventories.

### **Acquisition of GS Partners on May 2, 2023**

On May 2, 2023, we completed the acquisition of 100% of the shares of GS Partners, our long-standing distributor in the Czech Republic and Slovakia and also one of our oldest distributors in Central Europe.

This acquisition, which represents several years of successful partnership between our teams and GS Partners, fully aligns with our external growth strategy. It will enable us to become more autonomous in fast-growing markets and to secure and further develop our business in these two countries while strengthening our presence in Central Europe, where our products for animal health are already accessible through our presence in Hungary and Poland.

### **Virbac launches a share buyback program**

Following the decision of the board of directors on June 19, 2023 and its approval by the shareholder's meeting, we contemplate to buy back 100,000 of our own shares (less than 1.25% of the capital). The main objective is to decrease the company's share capital by canceling treasury shares purchased.

The limits of the program as set by the shareholder's meeting are the following:

- nature of shares: ordinary shares;
- maximum of the company's share capital: 10%;

• maximum number of shares: 845,800. It should be noted that in the event of a capital increase through incorporation of reserves and allocation of performance-related stock grants, a share split or reverse shares split, this amount will be adjusted by a multiplier equal to the ratio between the number of shares in the share capital prior to the transaction and the number after the transaction;

• maximum purchase price per share: €1,000.

To implement this program with a view to reducing capital by canceling shares, Virbac's board of directors has appointed an investment services provider, with a mandate expiry date on September 30, 2024. The terms of the mandate will relate to a maximum volume of 100,000 Virbac shares (representing less than 1.25% of the company's capital as of December 31, 2023) for a unit purchase price not exceeding €270 and a total volume of buyback therefore not exceeding €27,000,000. Shares redeemed under this mandate will be fully canceled by our company.

As of December 31, 2023, the number of shares repurchased in this context is 67,343 shares for a total amount of €17.5 million (see note A14 in the appendix to the consolidated accounts).

{228}------------------------------------------------

### **Events subsequent to the financial year-end**

### **Acquisition of Sasaeah in Japan**

On March 6, 2024, Virbac signed a definitive agreement with ORIX Corporation for the acquisition of its animal health subsidiary Sasaeah for an enterprise value of approximately €280 million.

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 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.

Upon completion, this strategic acquisition will bring to 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. Virbac will benefit from Sasaeah's local 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 across Asia.

Completion of the transaction is not subject to any regulatory approval; it was closed April 1, 2024.

### **Accounting rules and methods**

The accounts for the financial year ended December 31, 2023 have been prepared and presented in accordance with the accounting rules, in compliance with the principles provided for by articles 120-1 *et seq.* of the 2014 General accounting plan (GAP). The basic method used for the evaluation of the items recorded in the accounts is the historic costs method. The accounting conventions have been applied in compliance with the provisions of the French commercial code, the accounts decree of November 29, 1983 and the French accounting standards authority (*ANC*) regulation 2014-03 pertaining to the rewriting of the 2014 General accounting plan applicable to the financial year-end, amended by *ANC* regulation 2015-06 of November 23, 2015. Regulation 2015-05 of July 2, 2015 which supplements *ANC* regulation 2014-03 was applied from the 2017 financial year. *ANC* regulation 2018-01 concerning changes in methods, estimates and correction of errors is applicable to financial years beginning October 9, 2018.

### **Intangible assets**

This section includes the business goodwill, marketing authorizations, patents, licenses acquired by the company and the costs of filling external trademarks which are registered and appear under assets in the balance sheet for their original value as long as these trademarks are exploited. These fixed assets are valued at the historic acquisition cost, which corresponds to the acquisition price and the acquisition costs or at the actual production cost in the case of assets produced internally. The loan costs associated with the acquisition or the production of the assets are not capitalized. The patents, licenses and concessions are depreciated on a straight-line basis over their economic useful lives when they can be estimated.

The potential impairment of intangible assets not being depreciated is examined at least once a year. An impairment test is carried out irrespective of any indication of a loss in value. It combines a fair market value approach (estimate of fair value) and a future cash flow approach (estimate of value in use). Those are calculated on the basis of five-year estimates. The discount rate used for these calculations is based on the weighted average cost of the Group's capital. This is a post-tax rate applied to post-tax cash flows. For the 2023 fiscal year, the discount rate used for France is 9.8%.

The other intangible assets include, in particular, computer software:

- standard office software is amortized on a straight-line basis, as soon as it is capitalized, over four years, which corresponds to its economic useful life;
- expenditure items relating to information technology projects that, in addition to license acquisition costs, include significant consultancy expenditures are recorded as assets as and when they are incurred. These information technology projects are depreciated on a straight-line basis, starting as soon as the information system is operational.

{229}------------------------------------------------

Research and development costs are fully booked as expenses.

| Depreciation period of intangible assets |                         |
|------------------------------------------|-------------------------|
| Trademarks                               | non-depreciable         |
| Patents, licenses and know-how           | between 10 and 15 years |
| Marketing authorizations                 | between 10 and 15 years |
| Distribution rights                      | contract duration       |
| Softwares                                | 4 years                 |
| Movex ERP software                       | between 7 and 14 years  |
| Other intangible assets                  | between 4 and 10 years  |

### **Tangible assets**

Tangible assets are recorded at cost and include incidental costs. The loan costs associated with the acquisition or the production of the assets are not capitalized.

We proceed as follows:

- breakdown by components (buildings and fittings);
- breakdown by components of the industrial equipment with a gross value over €50,000;
- definition of depreciation schedules according to useful lives.

The depreciation periods applied correspond to the economic useful lives summarized in the table below. Furthermore, we continue to use the useful lives defined by the tax authorities and, where possible, apply the declining balance depreciation method. The differences resulting from the application of specific fiscal depreciation methods and periods, including the declining balance, are recorded as non-recurring depreciations.

|                       | Depreciation period of tangible assets |
|-----------------------|----------------------------------------|
| Buildings             | between 10 and 40 years                |
| Facilities            | between 10 and 20 years                |
| Equipments            | between 5 and 20 years                 |
| Other tangible assets | between 4 and 10 years                 |

### **Financial assets**

#### **Shares in company**

Shares in company basically correspond to capital investments in the subsidiaries and are recorded at cost, excluding incidental expenses. Incidental acquisition costs booked as expenses in the financial year are fiscally restated and their deduction is spread over five years.

At the end of each financial year, a provision may be made to reflect the impairment of the value of a subsidiary's securities. To do so, we perform an impairment test. The method used is to compare the gross value of the securities held in our accounts with the net position of our subsidiaries.

If the value of the securities is less than the net position, no provision is recorded. On the other hand, if the net situation is less than the value of the securities on the balance sheet, two scenarios arise:

- for subsidiaries on which an impairment test is carried out, we justify, where appropriate, the economic surplus value using the result of this test;
- for subsidiaries where no test is carried out, a five-year business plan is prepared to justify, where appropriate, the non-recognition of the impairment. This business plan is created in the same way and with the same assumptions as those used for impairment tests.

#### **Other financial assets**

The loans to subsidiaries are recorded at historic cost. A provision for impairment is recorded when there is an objective indication of loss of value, resulting from an event occurring after the asset's initial recognition.

### **Operating assets**

Inventories of raw materials are stated at the weighted average cost, the acquisition cost including all incidental acquisition costs. A provision for impairment is made when the products have expired or become unusable or if there is a probability that these products will not be usable before their use-by date.

The manufacturing work in progress and the finished products are valued at their actual manufacturing cost, including direct and indirect production costs. A provision for impairment of finished products is applied when the 

{230}------------------------------------------------

realizable value or the prospects for sale of these products - assessed according to the market - appear lower than the gross inventory value.

An inventory of spare parts (included in the balance sheet in the "Raw materials" line) is also valued at the closure of the financial year. An impairment loss may be recognized on the equipment according to the age of the parts and the probability of use.

### **Receivables and payables**

Receivables and payables are valued at their nominal value. Where applicable, receivables are entered at a loss in value by means of a provision to reflect any difficulties in recovering outstanding amounts.

Sales are recorded at the time of transfer of ownership, which normally occurs at the time of delivery of the asset. Trade receivables assigned through the factoring program are classified on the balance sheet as a reduction of trade receivables by the counterparty of a dedicated miscellaneous receivables account. This account is settled at the time of collection of the financing, after deduction of the fees and the holdback classified as a financial asset. When the invoices come due, the funds are transferred to the factoring company via a specific bank account. The customer accounts and factoring customer accounts are then settled.

### **Marketable securities**

Marketable securities are recorded at their acquisition cost. The unrealized gains on portfolio securities are not recognized in the financial year's accounting results. A provision for impairment of the securities is recorded, where applicable, if their realizable value falls below their acquisition cost.

As regards Undertakings for collective investment in transferable securities (UCITS), the realizable value corresponds to the market value at the closing date. Treasury shares are valued at acquisition cost. As regards plans for the allocation of performance-related stock grants, a provision is made over the vesting period.

### **Available funds**

Foreign currency liquidity is converted into euros based on the latest exchange rate, and these foreign exchange gains and losses are included in the profit for the financial year.

### **Unrealized foreign exchange gains and losses**

Unrealized foreign exchange gains and losses are a result of the recognition of payables and receivables in currencies outside the Euro zone at closing date.

Unrealized losses result in a provision for foreign exchange losses when the exchange rate has not been definitively hedged by forward transactions or by *de facto* hedges. Unrealized gains do not contribute to the profit of the financial year.

### **Derivative financial instruments**

As a result of our activity and our international presence, we are exposed to exchange rate variations.

Hedging instruments are negotiated to cover transactions recorded on the balance sheet, as well as highly probable future transactions. These hedges are held with the sole aim of reducing exposure to rate and exchange risks. Unrealized gains and losses on derivative financial instruments linked to exchange rate changes are recorded on the balance sheet as a translation difference so as to comply with the principle of symmetry with the hedged item. Gains and losses obtained from hedging derivatives are recorded in profit in the same section as the hedged item. In accordance with article 628-11 of *ANC* regulation 2015-05, the effects of hedging are classified in operating profit in respect of the operational flows (account 656100 for foreign exchange losses, account 756100 for foreign exchange gains) and in financial result in respect of financial flows (account 666100 for foreign exchange losses, account 766100 for foreign exchange gains). The gains and losses made on hedging derivatives on highly probable forward transactions are recognized in profit only when the hedged item itself impacts on the profit. The premium for an option comprises the hedging cost. It is recorded in the financial result or in the starting value on the balance sheet of the hedged item, only at the end of the hedge.

The swap point comprises the hedging cost, for forward transactions; it is recorded on a symmetrical basis with the hedged item. It is not spread in the income statement if the hedge reduces almost all of the risk.

### **Provisions**

They are intended to cover known costs and litigation (foreign exchange risks, supplementary retirement plans for managers, end-of-career allowances for staff, commercial disputes) as well as general economic risks that are based on an assessment (regulatory or fiscal product risks, potential litigations).

### **Employee benefits**

### ■ **Defined contribution retirement plans**

The benefits associated with defined contribution retirement plans are recorded in expenses as incurred.

### **Operating income**

Sales are recorded as follows:

- sales of assets are recorded at the delivery of the assets and the transfer of the property title;
- transactions involving service provisions are recorded over the period during which the services were provided.

{231}------------------------------------------------

### **Financial income and expenses**

Financial income is generated mainly by dividends received from subsidiaries and investment income from available cash flow. The unrealized gains on monetary investments in UCITS are not recorded in the accounting results of the financial year, but only upon sale of the securities. A provision for impairment of the securities may be recognized when justified by the subsidiary's financial position (see note B3).

### **Income tax**

As regards income taxes, Virbac and all of its French subsidiaries (Virbac France, Alfamed, Interlab, Virbac Nutrition, Virbac Diagnostics) come under the tax integration system instituted by article 68 of the December 30, 1987 law. Each company records the tax as if it were taxed separately and retains the right to use possible deficits in the future.

As the sole company liable for taxes, Virbac records the debt or receivable *vis-à-vis* the Tax office for the taxconsolidated.

{232}------------------------------------------------

### **NOTES TO THE STATUTORY ACCOUNTS**

### **B1. Intangible assets**

| in € thousand                                                        | 2022    | Increases | Decreases | Transfers | 2023     |
|----------------------------------------------------------------------|---------|-----------|-----------|-----------|----------|
| Trademarks and filing fees for<br>trademarks                         | 5,438   | —         | -150      | —         | 5,288    |
| Patents and licenses                                                 | 15,454  | 1,294     | -851      | 1,351     | 17,248   |
| Marketing authorizations (MA)                                        | 28,374  | —         | —         | —         | 28,374   |
| Domain names                                                         | 4       | —         | -1        | —         | 3        |
| Distribution rights                                                  | 1,998   | 932       | -142      | —         | 2,788    |
| Goodwill                                                             | 837     | —         | —         | —         | 837      |
| Other intangible assets                                              | 40      | —         | —         | —         | 40       |
| Softwares                                                            | 69,535  | 1,377     | —         | 1,854     | 72,766   |
| Advances, prepayments on intangible<br>assets and assets in progress | 12,816  | 10,082    | -727      | -3,205    | 18,966   |
| Gross value                                                          | 134,496 | 13,685    | -1,871    | —         | 146,310  |
| Depreciation                                                         | -94,355 | -6,240    | 309       | —         | -100,286 |
| Provisions                                                           | -4,704  | —         | 1,025     | —         | -3,679   |
| Depreciation and provisions                                          | -99,059 | -6,240    | 1,334     | —         | -103,965 |
| Net value                                                            | 35,437  | 7,445     | -537      | —         | 42,345   |

The main patents, licenses, Marketing authorizations and distribution rights are as follows (gross values):

- the Alpha Laval patent at €2,479 thousand;
- the FeLV patent at €2,628 thousand;
- the Alizine patent at €2,592 thousand;
- the Antigenics patent at €3,394 thousand;
- the Doxycycline 50% Marketing authorization at €690 thousand (net value after impairment and depreciation: zero);
- the Schering-Plough Marketing authorization at €18,334 thousand;
- the Virbamec, Equimax and Eraquell Marketing authorizations at €4,000 thousand;
- the Cyclosporin Marketing authorization at €1,500 thousand;
- the Suramox and Stabox Marketing authorizations at €463 thousand;
- the Cyclosporin cat Marketing authorization at €195 thousand;
- the Halofuginone Marketing authorization at €1,000 thousand;
- the Tramadol Marketing authorization at €453 thousand;
- the Tilapia Marketing authorization at €451 thousand;
- the license Vetbiobank at €750 thousand;
- the QBiotics distribution rights at €1,110 thousand;
- the Kibow distribution rights at €932 thousand;
- the Vibalogics seed stock at €501 thousand.

A provision of €3,167 thousand for impairment of MAs and brands relating to Schering Plough products was set up.

With regard to computer programs, changes were made to various systems, including the commissioning of the "Move to cloud" project (migration of certain applications to a cloud environment) for €266 thousand, the development of the R&D studies database for €332 thousand and the Web ordering B2B solution (construction of a new B2B customer system) for €407 thousand.

Various ongoing IT projects were recognized during the year, including the next step of the Odyssey project with planned production startup in April 2024 for €6,332 thousand.

The staff costs that have been capitalized on IT projects amounted to €4,032 thousand for the financial year.

{233}------------------------------------------------

### **B2. Tangible assets**

| in € thousand                      | 2021     | Increases | Decreases | Transfers | 2022     |
|------------------------------------|----------|-----------|-----------|-----------|----------|
| Land                               | 1,496    | 6,751     | —         | —         | 8,247    |
| Buildings                          | 115,893  | 4,183     | -109      | 3,136     | 123,103  |
| Equipment and tools                | 124,499  | 4,375     | -1,141    | 5,406     | 133,139  |
| Other tangible assets              | 6,647    | 472       | —         | 17        | 7,136    |
| Tangible assets in progress        | 6,934    | 5,393     | -105      | -4,865    | 7,357    |
| Pending invoices for fixed assets  | 7,258    | 5,117     | —         | -2,958    | 9,417    |
| Advances and prepayment orders     | 827      | 1,645     | —         | -736      | 1,736    |
| <b>Gross value</b>                 | 263,554  | 27,936    | -1,355    | —         | 290,135  |
| Land                               | —        | —         | —         | —         | —        |
| Buildings                          | -77,046  | -5,049    | 64        | —         | -82,031  |
| Equipment and tools                | -82,384  | -6,948    | 1,369     | —         | -87,963  |
| Other tangible assets              | -4,961   | -937      | —         | —         | -5,898   |
| Tangible assets in progress        | —        | —         | —         | —         | —        |
| Pending invoices for fixed assets  | —        | —         | —         | —         | —        |
| Advances and prepayment orders     | —        | —         | —         | —         | —        |
| <b>Depreciation and provisions</b> | -164,391 | -12,934   | 1,433     | —         | -175,892 |
| Land                               | —        | —         | —         | —         | —        |
| Buildings                          | 38,847   | -866      | -45       | 3,136     | 41,072   |
| Equipment and tools                | 42,115   | -2,573    | 228       | 5,406     | 45,176   |
| Other tangible assets              | 1,686    | -465      | —         | 17        | 1,238    |
| Tangible assets in progress        | 6,934    | 5,393     | -105      | -4,865    | 7,357    |
| Pending invoices for fixed assets  | 7,258    | 5,117     | —         | -2,958    | 9,417    |
| Advances and prepayment orders     | 827      | 1,645     | —         | -736      | 1,736    |
| <b>Net value</b>                   | 99,163   | 15,002    | 78        | —         | 114,243  |

Investments were made and implemented at various sites during the 2023 financial year, including renovation or improvement work at:

- VB1 for €632 thousand for the revamping of the industrial water treatment plant;
- VB4 and VB6 for €452 thousand for the restructuring of the changing rooms with the creation of a staircase;
- VB4 and VB6 for €350 thousand for compliance with the fire standard;
- VB8 for €286 thousand for the layout for the boiler;
- VB7 for €245 thousand for the connection of the air treatment plant.

Investments ongoing at the end of 2023 were completed:

- new building in Vauvert for €652 thousand;
- new molds for syringe packaging for €350 thousand;
- industrial technical studies for the construction of a new production unit for €670 thousand.

Equipment was purchased or commissioned, such as, for example:

- a blister machine at VB1 for a value of €708 thousand;
- an isolator at BIO4 for a value of €563 thousand;
- an industrial water treatment plant at VB1 for a value of €430 thousand;
- a steam generator for BIO4 for a value of €423 thousand;
- a tube-filling machine for VB6 pour VB6 for a value of €370 thousand;
- a robot for BIO3 for a value of €230 thousand;
- equipment for the VB8 vaccine line for a value of €1,601 thousand.

The shutdown of production of the leishmaniosis vaccine in 2020 resulted in a provision for the impairment of equipment that is no longer used, up to its net book value, *i.e.*, €1,781 thousand as of 31 December 2023. A portion of this equipment had been decommissioned in prior financial years and as of December 31, 2022, had already been written down for a value of €2,055 thousand.

{234}------------------------------------------------

### **B3. Financial assets**

| in € thousand                        | 2022     | Increases | Decreases | Transfers | 2023     |
|--------------------------------------|----------|-----------|-----------|-----------|----------|
| Long-term investments                | 490,130  | 10,693    | —         | —         | 500,823  |
| Related account receivable           | 1,850    | —         | -1,850    | —         | —        |
| Other equity securities              | —        | —         | —         | —         | —        |
| Loans and other financial assets     | 102,380  | 3,417     | -26,584   | —         | 79,213   |
| Other miscellaneous financial assets | —        | 17,541    | —         | —         | 17,541   |
| Gross value                          | 594,360  | 31,651    | -28,434   | —         | 597,577  |
| Impairment of financial assets       | -108,244 | -9,767    | 705       | —         | -117,300 |
| Provisions                           | -108,244 | -9,767    | 705       | —         | -117,306 |
| Net value                            | 486,116  | 21,884    | -27,729   | —         | 480,272  |

### **Equity investments**

In March 2023, Virbac acquired a new company in the Czech Republic for an amount €10,693 thousand.

Following 2023 impairment tests, Virbac Diagnostics, Virbac Philippines, Interlab and Virbac Shanghai were the subject of an impairment provision for the values of €1,388 thousand, €753 thousand, €4,776 thousand and €2,850 thousand respectively.

A provision reversal of €705 thousand was made for Alfamed securities.

| in € thousand                                             | 2023   |
|-----------------------------------------------------------|--------|
| Virbac Czech Republic                                     | 10,693 |
| Capital increases, acquisitions, mergers and<br>start-ups | 10,693 |

| in € thousand                      | 2023 |
|------------------------------------|------|
| Nil                                | —    |
| Disposals, redemptions and mergers | —    |

### **Other financial assets**

The ordinary shareholders' meeting of June 20, 2023 authorized Virbac company to buy back treasury shares in accordance with article L225-209 of the French commercial code. Given the objectives set in the buyback program, the treasury shares have been classified as marketable securities except those corresponding to treasury share buybacks in order to reduce the company's capital by canceling all or parts of the securities purchased, classified as "Other miscellaneous financial assets".

The line item "Loans and other financial assets" includes mainly loans to subsidiaries and sub-subsidiaries, *i.e.*:

- €54,144 thousand to Virbac Chile (52,950 million Chilean pesos);
- €3,184 thousand to Virbac Vietnam (2.8 million US dollars and 0.65 million euros);
- €21,308 thousand to Virbac Taiwan (723 million Taiwan dollars).

The Virbac Taiwan loan increased over the financial year for a value of 109 million Taiwanese dollars, that of Virbac Chile was repaid of 18,870 million Chilean pesos .

The Virbac Vietnam loan in American dollars is covered by foreign currency hedges in his entirety. The Virbac Taiwan loan is partially hedged for an amount of 653 million of Taiwanese dollars out of a total amount of 723 million Taiwanese dollars. The loan to Virbac Chile is no longer hedged.

{235}------------------------------------------------

### **B4. Inventories and work in progress**

| in € thousand                    | 2023<br>Gross | 2022<br>Gross | Change in inventories of<br>raw materials and other<br>supplies | Change in<br>inventories of work-<br>in-progress and<br>finished products |
|----------------------------------|---------------|---------------|-----------------------------------------------------------------|---------------------------------------------------------------------------|
| Raw materials and supplies       | 50,995        | 48,153        | -2,842                                                          | —                                                                         |
| Work-in-progress                 | 28,518        | 24,703        | —                                                               | 3,815                                                                     |
| Finished goods                   | 17,982        | 22,499        | —                                                               | -4,517                                                                    |
| Inventories and work-in-progress | 97,495        | 95,355        | -2,842                                                          | -702                                                                      |

As of December 31, 2023, provisions for inventory depreciation amounted to:

- raw materials: €1,801 thousand;
- manufacturing work-in-progress: €1,290 thousand;
- finished goods: €1,419 thousand.

The company has not recognized impairment for the inventory of spare parts.

### **B5. Receivables and payables**

| in € thousand                                              | 2023<br>Gross amounts | Due in less than<br>one year | Due from 1 to 5<br>years | Due in more than<br>5 years |
|------------------------------------------------------------|-----------------------|------------------------------|--------------------------|-----------------------------|
| Receivable related to long-term investments                | —                     | —                            | —                        | —                           |
| Loans                                                      | 78,636                | 433                          | 24,059                   | 54,144                      |
| Other financial assets                                     | 578                   | —                            | 578                      | —                           |
| Total fixed assets                                         | 79,214                | 433                          | 24,637                   | 54,144                      |
| Accounts receivable and related accounts                   | 108,676               | 108,676                      | —                        | —                           |
| Other receivables                                          | 107,875               | 107,875                      | —                        | —                           |
| Prepaid expenses                                           | 6,086                 | 6,086                        | —                        | —                           |
| Current assets                                             | 222,637               | 222,637                      | —                        | —                           |
| Total receivables                                          | 301,851               | 223,070                      | 24,637                   | 54,144                      |
| Bank loans                                                 | 18,736                | 2,463                        | 14,086                   | 2,187                       |
| Current bank overdrafts                                    | 2,214                 | 2,214                        | —                        | —                           |
| Bank overdraft                                             | —                     | —                            | —                        | —                           |
| Loans and miscellaneous financial debts                    | 16,472                | 16,307                       | 165                      | —                           |
| Owed to subsidiaries (current accounts)                    | 51,912                | 51,912                       | —                        | —                           |
| Borrowings                                                 | 89,334                | 72,896                       | 14,251                   | 2,187                       |
| Accounts payable and related accounts                      | 76,014                | 76,014                       | —                        | —                           |
| Tax and social payables                                    | 35,654                | 35,654                       | —                        | —                           |
| Payables to fixed assets suppliers and<br>related accounts | —                     | —                            | —                        | —                           |
| Other payables                                             | 903                   | 903                          | —                        | —                           |
| Prepaid income                                             | 89                    | 89                           | —                        | —                           |
| Operating liabilities                                      | 112,660               | 112,660                      | —                        | —                           |
| Total payables                                             | 201,994               | 185,556                      | 14,251                   | 2,187                       |

The amount of receivables assigned under the factoring agreement amounted to €1,018 thousand as of December 31, 2023, and ongoing financing amounts to €993 thousand.

A provision for the impairment of trade receivables was recorded in December of 2023 in the amount of €335 thousand, that of December 2022 amounted to €235 thousand. We did not recognize any loss on bad debt during the financial year.

{236}------------------------------------------------

### **B6. Marketable securities**

As of December 31, 2023, this item includes SICAV for €918 thousand, the treasury shares of the 2021 performance plans for an amount of €2,227 thousand, treasury shares attributed to the 2022 performance plan for an amount of €63 thousand, as well as those of the liquidity contract for €3,532 thousand.

| in € thousand                             | 2022  | Increases | Decreases | Transfers | 2023  |
|-------------------------------------------|-------|-----------|-----------|-----------|-------|
| SICAV                                     | 687   | 231       | —         | —         | 918   |
| Treasury shares (liquidity contract)      | 3,762 | —         | -230      | —         | 3,532 |
| Performance-related stock grants          | 178   | 2,112     | —         | —         | 2,290 |
| Treasury shares pending (cancelled plans) | —     | —         | —         | —         | —     |
| Marketable securities                     | 4,627 | 2,343     | -230      | —         | 6,740 |

As of December 31, 2023, Virbac is recording an insignificant unrealized capital gain on SICAV (€31 thousand). Concerning treasury shares, an unrealized capital gain of €1,694 thousand was achieved on the liquidity contract. Our liquidity contract was suspended from February 1, 2023 until June 30, 2024.

The probable cost resulting from the allocation of performance-related stock grants is taken into account and spread over the period of acquisition of the rights, in the form of a provision (see note B10).

### **B7. Available funds**

As of December 31, 2023, available funds consisted only of the credit balances in the bank account which amounted to €12,606 thousand invested mainly in euro-denominated interest-bearing accounts, and to financial instruments in the amount of -€95 thousand following revaluations of receivables and liabilities at the hedging price at the end of the financial year and term deposit accounts in the amount of €10,000 thousand at December 31, 2023.

### **B8. Accruals and deferred expenses**

### **Prepaid expenses**

They are mainly made up of various external expenses and the purchase of inventoried goods relating to the 2024 financial year.

### **Deferred charges**

The deferred charges consist of the loan issuance fees spread over the redemption term of the loans.

### **Conversion losses**

They correspond to unrealized foreign exchange losses in the amount of €10,534 thousand compensated for the portion covered by unrealized gains obtained on financial derivatives, enabling the principle of symmetry to be complied with and recorded in liabilities (section "Accruals and deferred income") in the amount of €1,004 thousand in account 478700. A provision for the amount of the unhedged financial risk was booked for a value of €9,242 thousand as of December 31, 2023. This is linked in the main to a loan in foreign currency made to a subsidiary.

| in € thousand                                                       | Trade receivables<br>and payables | Financial receivables<br>and payables | Financial<br>derivatives | Total  |
|---------------------------------------------------------------------|-----------------------------------|---------------------------------------|--------------------------|--------|
| Unrealized foreign exchange losses                                  | 765                               | 3,318                                 | 6,451                    | 10,534 |
| Change in value of financial instruments<br>Others hedges (natural) | -297                              | -707                                  | —                        | -1,004 |
| Provision for foreign exchange losses                               | 468                               | 8,774                                 | —                        | 9,242  |

Provisions for foreign exchange losses are detailed in note B10.

{237}------------------------------------------------

### **B9. Equity**

### **Share capital**

As of December 31, 2023, the €10,572,500 in share capital consisted of 8,458,000 shares with a nominal value of €1.25.

### **Statement of change in equity**

As of December 31, 2023, we held 88,281 treasury shares acquired on the market for a total of €23,363 thousand excluding fees, for an average price of €264.64 per share. During the financial year, we bought 77,434 treasury shares including 4,091 shares as part of the market-making contract, 67,343 shares under the share buyback program aimed at canceling all or part of these shares in order to reduce the company's capital as well as 6,000 shares under plans for performance-related stock grants. Regarding the market-making contract, 5,005 treasury shares were sold over the financial year. The ordinary shareholders' meeting of June 20, 2023 decided to pay a dividends of €11,165 thousand.

|                                             | Prior to<br>appropriation<br>of results | 2022<br>allocation of<br>net income | After<br>allocation of<br>net income | Increases | Decreases | 2023      |
|---------------------------------------------|-----------------------------------------|-------------------------------------|--------------------------------------|-----------|-----------|-----------|
| Number of shares as of December<br>31, 2023 | 8,458,000                               | —                                   | 8,458,000                            | —         | —         | 8,458,000 |
| Number of dividend-bearing shares           | 8,458,000                               | —                                   | 8,458,000                            | —         | —         | 8,458,000 |

| in € thousand             | Prior to<br>appropriation<br>of results | 2022<br>allocation of<br>net income | After<br>allocation of<br>net income | Increases | Decreases | 2023    |
|---------------------------|-----------------------------------------|-------------------------------------|--------------------------------------|-----------|-----------|---------|
| Share capital             | 10,573                                  | —                                   | 10,573                               | —         | —         | 10,573  |
| Share and merger premiums | 6,534                                   | —                                   | 6,534                                | —         | —         | 6,534   |
| Financial year results    | -2,302                                  | 2,302                               | —                                    | 61,292    | —         | 61,292  |
| Legal reserve             | 1,089                                   | —                                   | 1,089                                | —         | —         | 1,089   |
| Regulated reserves        | 36,287                                  | —                                   | 36,287                               | —         | —         | 36,287  |
| Other reserves            | 36,396                                  | —                                   | 36,396                               | —         | —         | 36,396  |
| Amount carried forward    | 590,730                                 | -13,447                             | 577,283                              | —         | —         | 577,283 |
| Distribution of dividends | —                                       | 11,145                              | 11,145                               | —         | -11,145   | —       |
| Investment grants         | 1,605                                   | —                                   | 1,605                                | 123       | -279      | 1,449   |
| Regulated provisions      | 28,480                                  | —                                   | 28,480                               | 6,990     | -3,409    | 32,061  |
| Equity                    | 709,392                                 | —                                   | 709,392                              | 68,405    | -14,833   | 762,964 |

### **Regulated provisions**

This line item consists only of exceptional depreciation arising from different tax depreciation lengths and methods.

### **B10. Provisions**

The entries recognized in this line item are as follows:

| in € thousand                                 | 2022           | Allowances    | Reversals of<br>amounts<br>used | Reversals of<br>amounts<br>not used | 2023           |
|-----------------------------------------------|----------------|---------------|---------------------------------|-------------------------------------|----------------|
| Retirement and severance pay allowances       | 7,869          | 1,748         | -267                            | —                                   | 9,350          |
| Provisions for supplementary pensions schemes | —              | —             | —                               | —                                   | —              |
| Provisions for foreign exchange losses        | 7,630          | 9,242         | -7,630                          | —                                   | 9,242          |
| Provisions for stock grants                   | 1,406          | 2,948         | —                               | —                                   | 4,354          |
| Provisions for risks and charges              | 3,293          | 666           | -662                            | —                                   | 3,297          |
| <b>Provisions for risks and charges</b>       | <b>20,198</b>  | <b>14,604</b> | <b>-8,559</b>                   | —                                   | <b>26,243</b>  |
| Impairment of fixed assets                    | 115,004        | 10,266        | -2,005                          | —                                   | 123,265        |
| Impairment of current assets                  | 3,926          | 4,730         | -3,812                          | —                                   | 4,844          |
| <b>Provisions for impairment</b>              | <b>118,930</b> | <b>14,996</b> | <b>-5,817</b>                   | —                                   | <b>128,109</b> |
| Provisions                                    | 139,128        | 29,600        | -14,376                         | —                                   | 154,352        |

{238}------------------------------------------------

During the financial year, we recognized a provision reversal for end-of-career compensation required by law and the collective agreement equal to €1,748 thousand for the financial year.

The calculation of the allowances factors in remuneration, the employees' years of service and the following criteria: • vesting:

- executive personnel: 12% per year of service;
- non-executive personnel: 12% per year of service;
- discount rate: 3.15%;
- rate of social contributions: 47.0%;
- employee turnover rate: determined based on the employees' category, age and years of service;
- life expectancy: determined based on the *Insee* TD-TV 17-19 mortality table.

Other criteria:

Retirement age: legal scale with quarter.

|                        | Executive personnel | Non-executive personnel |
|------------------------|---------------------|-------------------------|
| Salary adjustment rate | 2.5%                | 2.5%                    |

2023 economic and social environment was impacted by the pension reform that was promulgated on April 14, 2023. This reform provides for a gradual change in the retirement age from 62 to 64 years and accelerates the increase in the contribution period required to obtain the full rate up to 43 years. We have therefore assessed the effect of this reform on our end-of-career commitments. The calculated impact constitutes a charge of €254 thousand recorded over the financial year. The allowances are calculated based on a retrospective actuarial method. Actuarial differences are recognized in profit.

The amount of charges for defined-contribution pension schemes recorded was €6,318 thousand in the financial year 2023.

We are also making a staggered provision for the probable cost of allocating performance-related stock grants to certain employees and managers. We created one new plan for 2023, the vesting period is set at December 31, 2025, which includes 4,800 shares. The provision amounted globally for this new plan to €442 thousand, of which €60 thousand was an employer contribution over the year.

When shares in performance plans have already been acquired on the market, the provision is based on the acquisition value of the securities on the balance sheet, otherwise, we retain the share price at the end of the financial year.

| Performance-related stock grants                                                            | 2021  | 2022 n°1 | 2022 n°2 | 2023  |
|---------------------------------------------------------------------------------------------|-------|----------|----------|-------|
| Number of shares planned for distribution                                                   | 6,225 | 4,000    | 5,000    | 4,800 |
| Number of shares allocated during the financial year                                        | —     | —        | —        | 4,800 |
| Number of shares allocated during the previous financial<br>year                            | 6,225 | 4,000    | 5,000    | —     |
| Number of shares allocated accumulated since the plan's<br>allocation date                  | 6,225 | 4,000    | 5,000    | 4,800 |
| Number of share rights cancelled or awaiting cancellation<br>since the creation of the plan | —     | —        | —        | —     |
| Total number of shares allocated since date of allocation of<br>the plan                    | —     | —        | —        | —     |

Regarding other provisions for risks and charges on December 31, 2023, we also noted in the accounts a provision for labor disputes amounting to €482 thousand, a provision for disputes following the reimbursement of the *Schuldschein* contract for €266 thousand, a provision for general risks of €1,357 thousand in part related to tax disputes as well as a provision of €435 thousand related to the transfer of the intramammary production activity from the Carros site. We decided to gradually close this workshop and to outsource production. The costs related to this production transfer were the subject of a provision for the 2018 financial year and resulted in partial reversals of this provision in 2019, 2020, 2021, 2022 and 2023 for the respective amounts of €1,207 thousand, €781 thousand, €698 thousand, €477 thousand and €302 thousand.

Following the judgments of the Court of Appeals of September 13, 2023 on the right of employees on sick leave to acquire paid leave during their leave, a provision was made over the period to cover the risk, in the amount of €384 thousand.

Following the impairment tests carried out at the end of 2023 on financial assets, this year we recorded a provision for impairment of securities Virbac Diagnostics, Virbac Philippines, Interlab and Virbac Shanghai for the respective amounts of €1,388 thousand, €753 thousand, €4,776 thousand and €2,850 thousand.

{239}------------------------------------------------

The provision for tangible assets impairment involves unused or decommissioned equipment for €1,781 thousand at the end of 2023 following the shutdown of the leishmaniosis vaccine production (see note B2) as well as the impairment of trademarks and MAs in the amount of €3,167 thousand following impairment tests (see note B1). Impaired current assets correspond to inventories and work in progress in the amount of €4,510 thousand and to accounts receivable for €335 thousand.

### **B11. Financial liabilities**

In 2023, our pool of banks unanimously agreed to extend the maturity of our syndicated loan by one year, with a new maturity date of October 18, 2028. This credit agreement signed in October 2021, is accompanied by an "accordion" provision which can increase financing by €150 million, which would bring the total commitment to €350 million.

Furthermore, this new line of credit includes commitments related to our CSR policy, reflecting our commitment over the past several years to protecting the environment and respecting animal ethics. Negotiating these clauses ensures that we have access to controlled financial conditions and support for our needs as we evolve. 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.

Thus, in order to ensure our liquidity, we have:

- this €200 million syndicated loan, the features of which we have described above;
- market-based contracts (*Schuldschein*) for a total of €6 million, with maturities in April 2025, at a fixed rate;
- financing contracts with Bpifrance, for €12.6 million, amortizable and maturing in July 2027 and June 2032.

As of December 31, 2023, our financing position is as follows:

- market-based contracts amounted to €6 million;
- Bpifrance financing amounts to €12.6 million;
- the syndicated contract's line of credit is not mobilized.

These financing instruments include a financial covenant compliance clause that requires us to adhere to the annual financial ratio based on the annual consolidated accounts and reflecting consolidated net debt<sup>1</sup> on the consolidated Ebitda<sup>2</sup> .

As of December 31, 2023, we are in compliance with the financial ratio clauses, as it is at -0.24, thus placing it below the contractual financial covenant limit of 3.75.

1 for the purpose of calculating the covenant, consolidated net debt refers to the sum of other current and noncurrent financial liabilities, namely the following accounting items: loans, bank loans, accrued interest liabilities, liabilities related to finance leases, profit-sharing, interest rate and foreign exchange derivatives, and others; minus the amount of the following items: cash and cash equivalents, term deposits, and foreign exchange and interest rate asset derivatives as shown in the annual consolidated accounts

2 consolidated Ebitda refers to, based on the annual consolidated accounts, the operating profit for the accounting year in question within the meaning of the accounting principles applicable to the consolidated accounts, plus allowances for depreciation, amortization and provisions, net of reversals, and dividends received from nonconsolidated subsidiaries.

Our financing capacity is sufficient to fund our cash requirements

### **B12. Accruals and deferred income**

### **Deferred income**

As of December 31, 2023, deferred income was recognized for €89 thousand, corresponding to 2024 sales.

### **Conversion gains**

These correspond to unrealized foreign exchange gains following the revaluation at the closing rate of receivables and payables labelled in foreign currencies and derivatives for €1,432 thousand.

These gains are offset by unrealized exchange losses in the amount of €6,451 thousand generated by financial derivatives, enabling the principle of symmetry to be complied with and recorded in the assets (section "Accruals and deferred expenses") in account 478600.

| in € thousand                            | Trade receivables<br>and payables | Financial receivables<br>and payables | Financial<br>derivatives | Total  |
|------------------------------------------|-----------------------------------|---------------------------------------|--------------------------|--------|
| Unrealized foreign exchange gains        | 185                               | 243                                   | 1,004                    | 1,432  |
| Change in value of financial instruments | -224                              | -6,227                                | —                        | -6,451 |
| Unrealized exchange gains or losses      | -39                               | -5,984                                | —                        | -6,023 |

{240}------------------------------------------------

### **R1. Sales**

### **Breakdown of revenue between France and export**

| in € thousand | 2023    | 2022    |
|---------------|---------|---------|
| France        | 72,116  | 73,500  |
| Export        | 306,412 | 337,327 |
| Sales         | 378,528 | 410,827 |

### **Breakdown of revenue by type**

| in € thousand                           | 2023    | 2022    |
|-----------------------------------------|---------|---------|
| Sales of finished goods and merchandise | 360,805 | 393,094 |
| Services                                | 17,733  | 17,733  |
| Sales                                   | 378,538 | 410,827 |

### **R2. Operating income and expenses**

### **Research and development costs**

Research and development costs are booked as expenses during the financial year. As of December 31, 2023, subcontracted research and development costs amounted to €21,947 thousand.

### **Foreign exchange differences**

In accordance with the *ANC* 2015-05 regulation, the impacts of hedging have been recognized in operating profit for the operational flows and in financial result for the financial flows. The impact of the balance of foreign exchange differences in operations during 2023 financial year amounts to €3,290 thousand:

- foreign exchange gains in the amount of €3,214 thousand booked in accounts 756;
- foreign exchange losses in the amount of €6,504 thousand booked in accounts 656.

### **Pensions plans provisions**

As of the 2023 financial year, provisions for post-employment benefits are recorded in operating expenses and income and no longer in non-recurring expenses and income. This year, we noted an allowance of operating expenses of €1.7 million against a provision reversal for the 2022 financial year of €1 million in non-recurring income.

### **R3. Financial income and expenses**

The financial result at the end of December 2023 amounted to € 62.7 million, *i.e*, an increase of €91.3 million compared to 2022. This variation is mainly explained by the €84 million decrease in the provision for impairment of equity securities, which amounts to €9.8 million in 2023 compared to €94 million in 2022. In addition, overall income on equity interests increased by €9 million, and receivables income increased by €900 thousand for the financial year. With regard to foreign exchange transactions, the overall net impact is an expense of €3.4 million compared to 2022. Interest expense on loans also shows an increase of €1.3 million over the financial year.

{241}------------------------------------------------

### **Financial expenses**

| in € thousand                                      | 2023    | 2022     |
|----------------------------------------------------|---------|----------|
| Provisions for foreign exchange losses             | -9,242  | -7,630   |
| Provisions for subsidiaries shares depreciations   | -9,767  | -94,554  |
| Provisions for impairment of marketable securities | —       | -239     |
| Allowances for depreciations and provisions        | -19,009 | -102,423 |
| Interest, loans and credit lines                   | -622    | -903     |
| Other financial charges                            | -1,710  | -325     |
| Foreign exchange losses                            | -13,637 | -19,574  |
| Other interest paid and similar expenses           | -15,969 | -20,802  |
| Financial expenses                                 | -34,978 | -123,225 |

### **Financial income**

| in € thousand                                  | 2023   | 2022   |
|------------------------------------------------|--------|--------|
| Income from investments                        | 66,038 | 57,124 |
| Reversal of provisions                         | 8,574  | 9,446  |
| Foreign exchange gains                         | 10,736 | 16,643 |
| Net income from sales of marketable securities | —      | —      |
| Income from various receivables                | 12,399 | 11,500 |
| Financial income                               | 97,747 | 94,713 |

### **R4. Non-recurring expenses and income**

Non-recurring income for 2023 amounts to -€3.9 million, *i.e*. a decrease in result of €2 million compared to the 2022 financial year. This change is mainly explained by the allowance of a provision for impairment of tangible assets for an amount of €0.5 million compared to €4 million in 2022 on intangible assets and the increase in accelerated tax depreciation following the commissioning of the new vaccine line as well as the recognition in 2022 of a provision reversal for contingencies in the amount of €2.9 million. End-of-career compensation is provisioned from the 2023 financial year in operating expenses (€1,748 thousand) and operating income and no longer in nonrecurring expenses and income (see note R2), as in 2022 when a provision reversal of €1,073 thousand had been recorded.

### **Non-recurring expenses**

| in € thousand                                   | 2023   | 2022    |
|-------------------------------------------------|--------|---------|
| Net values of fixed asset disposals             | -1,810 | -3,901  |
| Tax penalties                                   | —      | —       |
| Other non-recurring expenses                    | -417   | -465    |
| Allowances for regulated provisions             | -6,990 | -3,551  |
| Allowances for provisions for risks and charges | -110   | -1,793  |
| Allowances for other provisions                 | -499   | -4,066  |
| Non-recurring expenses                          | -9,826 | -13,776 |

{242}------------------------------------------------

### **Non-recurring income**

| in € thousand                                         | 2023  | 2022   |
|-------------------------------------------------------|-------|--------|
| Income from disposal of fixed assets                  | 38    | 39     |
| Reversals of regulated provisions                     | 3,409 | 3,496  |
| Reversals of provisions for risks and charges         | 350   | 5,847  |
| Reversals of provisions for extraordinary impairments | 1,300 | 403    |
| Transfers of extraordinary expenses                   | -     | 1,258  |
| Miscellaneous income                                  | 794   | 883    |
| Non-recurring income                                  | 5,891 | 11,926 |

### **R5. Income tax**

As of December 31, 2023, the tax savings realized by Virbac as a result of tax losses incurred by consolidated subsidiaries amounted to €64 thousand. Such tax savings may reverse if the concerned subsidiaries become profitable again. As of December 31, 2023, a €11,760 thousand research tax credit and a €15 thousand corporate sponsorship tax credit were recognized as well as tax credits related to the share of costs and expenses on dividends for a value of €58 thousand and on the collection of interest from foreign sources for €475 thousand. If Virbac had been taxed separately, it would have recognized no tax expense, only tax income corresponding to tax credits of €12,309 thousand in total. As a result of Group tax consolidation, Virbac this year recognized tax income equal to €1,164 thousand.

### **Increases and decreases of the future tax liability**

Tax relief and tax increases are calculated based on a rate of 25.83%.

| in € thousand                                 | 2023   | 2022   |
|-----------------------------------------------|--------|--------|
| Tax rate                                      | 25.83% | 25.83% |
| Accelerated tax depreciation                  | 8,281  | 7,356  |
| Unrealized foreign exchange losses            | —      | —      |
| Increases related to timing differences       | 8,281  | 7,356  |
| Solidarity contribution                       | 145    | 157    |
| Unrealized gains on investments of cash       | 8      | —      |
| Unrealized foreign exchange gains             | 36     | 118    |
| Retirement obligations                        | 2,415  | 2,032  |
| Corporate sponsorship tax credit              | 15     | 30     |
| Other provisions                              | 608    | 541    |
| Total decreases related to timing differences | 3,227  | 2,878  |
| Tax carry forwards                            | -1,143 | -230   |
| Items to be charged to the tax                | -1,143 | -230   |

### **Exceptional tax evaluations and profit**

### **Tax rate 25.83%**

| in € thousand                                         | Gross | Taxes 2022 | Net    |
|-------------------------------------------------------|-------|------------|--------|
| Financial year results                                | 346   | -2,648     | -2,302 |
| Accelerated tax depreciation                          | 55    | -14        | 41     |
| Other regulated provisions                            | —     | —          | —      |
| Exceptional evaluations (allowances and<br>reversals) | 55    | -14        | 41     |
| Net income excluding exceptional tax<br>evaluations   | 401   | -2,662     | -2,261 |

{243}------------------------------------------------

### **Tax rate 25.83%**

| in € thousand                                         | Gross  | Taxes 2023 | Net    |
|-------------------------------------------------------|--------|------------|--------|
| Financial year results                                | 48,389 | 12,903     | 61,292 |
| Accelerated tax depreciation                          | 3,581  | -925       | 2,656  |
| Other regulated provisions                            | —      | —          | —      |
| Exceptional evaluations (allowances and<br>reversals) | 3,581  | -925       | 2,656  |
| Net income excluding exceptional tax<br>evaluations   | 51,970 | 11,978     | 63,948 |

### **Breakdown of the 2023 income tax**

| in € thousand                             | Profit before<br>taxes | Tax owed | Net income<br>after taxes |
|-------------------------------------------|------------------------|----------|---------------------------|
| Operating profit from ordinary activities | 52,324                 | -396     | 51,928                    |
| Non-recurring result                      | -3,935                 | 990      | -2,945                    |
| Miscellaneous tax credits                 | —                      | 12,309   | 12,309                    |
| Net income for accounting purposes        | 48,389                 | 12,903   | 61,292                    |

### **A1. Financial lease and operating lease transactions**

### **Operating lease agreements**

Virbac signed operating lease agreements for computers. As of December 31, 2023, the commitment in terms of capital amounted to €1,930 thousand.

### **A2. Off-balance sheet commitments**

| in € thousand                                           | 2023    | 2022    |
|---------------------------------------------------------|---------|---------|
| Securities, deposits, letters of comfort and guarantees | 65,799  | 41,403  |
| of which were used                                      | 46,017  | 3,709   |
| of which extended to related companies                  | 65,799  | 41,403  |
| Commitments given                                       | 65,799  | 41,403  |
| Forward exchange contracts                              | 159,835 | 158,344 |
| OTC options exchange                                    | 61,534  | 44,542  |
| Swap rate                                               | —       | —       |
| Interest rate options                                   | —       | —       |
| Cross currency swap                                     | 7,833   | 7,833   |
| Reciprocal commitments                                  | 229,202 | 210,719 |
| Real estate finance leases                              | —       | —       |
| Finance leases                                          | 1,930   | 1,963   |
| Others commitments                                      | 1,930   | 1,963   |

### **Contingent liabilities**

At times, Virbac is involved in litigation or other legal proceedings, generally involving disputes related to intellectual property rights, disputes involving competition law and tax matters. A risk provision is recognized where appropriate. No provision is made when the company considers the likelihood of a significant outflow of resources is low.

The same applies to tax disputes where the company deems that an adjustment proposal is unwarranted and feels that its case is sufficiently strong.

{244}------------------------------------------------

### **A3. Exposure to market risks and derivative financial instruments**

The Group holds derivative financial instruments only for the purpose of reducing its exposure to rate or exchange risks on balance sheet items on its firm or highly probable commitments.

### **Credit risk**

The following statements show the breakdown of third-party trade receivables (excluding pending invoices and credit notes) as well as the maturity dates concerning Group loans as of December 31, 2023:

| in € thousand                 | Trade<br>receivables<br>due | Receivables overdue for |           |           |           | Trade<br>receivables<br>Impaired | Total |
|-------------------------------|-----------------------------|-------------------------|-----------|-----------|-----------|----------------------------------|-------|
|                               |                             | < 30 days               | < 60 days | < 90 days | > 90 days |                                  |       |
| Third-party trade receivables | 4,110                       | 78                      | 287       | 43        | 362       | 335                              | 4,880 |

|               | Receivables due in |      |        |       |      | Beyond 5 years | Total         |
|---------------|--------------------|------|--------|-------|------|----------------|---------------|
| in € thousand | 2024               | 2025 | 2026   | 2027  | 2028 |                |               |
| Group Loans   | 433                | 217  | 15,439 | 8,403 | —    | 54,144         | <b>78,636</b> |

As of December 31, 2023, our maximum exposure to credit risk corresponds to the trade receivables item for €108,677 thousand and the Group loans item for €78,636 thousand in the accounts. Although there were no contractual deadlines, we took into account the fact that some loans would not be repaid for ten years due to the nature of the loans. The €103,796 thousand risk on trade receivables across Group companies is not material because we ensure that our subsidiaries have the necessary financial structure to honor their liabilities. Concerning receivables with third parties, we consider that we are not exposed to a significant credit risk given the implementation of a customer credit insurance program to prevent risk and the regular monitoring of counterparty ratings. This program concerns a large portion of the export portfolio. In addition to this program, there is regular monitoring of overdue amounts to address risk prevention, as it maximizes the ability to recover amounts due. This monitoring of overdue receivables enables to limit the amount of doubtful receivables.

Our factoring contract consists in transferring trade receivables on a monthly basis. As of December 31, 2023, the amount of receivables transferred amounted to €1,018 thousand (classified as a reduction of trade receivables) and current funding was €993 thousand.

### **Risk factors**

The credit risk may arise when the Group grants credit to customers on payment terms. The risk of insolvency, or even default by some of them, may result in non-payment and thus negatively impact the Group's profit and net cash position.

### **Risk management mechanisms**

We limit the negative consequences of this type of risk thanks to the very high fragmentation and dispersal of our customers throughout all of the countries in which we operate. Our Treasury department recommends maximum payment terms in accordance with the regulations in force, customary uses, the rating, the limits imposed by credit insurance, maximum settlement times and sets the customer credit limits to be applied by operating entities. Our Treasury and Financing department manages and controls these credit aspects for the French entities for which it is directly responsible, and recommends the same practices via guidelines and best practices for the Group. In addition, there is a master credit group insurance contract that benefits or can benefit any subsidiary for which this type of risk has been identified.

### **Counter-party risk**

### **Risk factors**

We are exposed to counterparty risk within the contracts and financial instruments that we take out, in the event that the debtor refuses to honor all or part of its commitment or finds itself *in fine* unable to do so.

### **Risk management mechanisms**

We pay particular attention to the selection of banking institution we operate with, even more critical when it comes to investing available cash.

However, we consider that we have limited exposure to counterparty risk given the quality of our major counterparties. In fact, investments are only made with first-class banking entities.

### **Liquidity risk**

### **Risk factors**

Liquidity is defined as our capacity to meet our financial payment deadlines as part of our current business and to find new funding sources as needed, so as to maintain a continual balance between our income and expenditures. As part of our operations, our program of recurring investments and active policy of external growth, we are thus exposed to the risk of not being sufficiently liquid to fund our growth and development.

{245}------------------------------------------------

### **Risk management mechanisms**

Our policy of pooling surplus cash positions and funding needs in all areas helps to refine our positions and to optimize the management of investments and funding requirements, thus ensuring our ability to meet our financial commitments and maintain an optimal level of availability commensurate with our size and needs.

In respect of our specific review of the liquidity risk, we regularly carry out a detailed review of our outstanding amounts, thus ensuring compliance with our financial covenant (liabilities covenant).

With regard to our prospects, our cash position and financial resources are sufficient to fund our cash position requirements.

### **Fraud risks**

### ■ **Risk factors**

We are exposed to cases of internal or external fraud that could result in financial losses and affect our reputation.

### ■ **Risk management mechanisms**

We are committed to strengthening internal control and give particular importance to making our teams aware of these issues. Our head office teams regularly provide strong guidance and guidelines on this subject. Segregation of duties, as well as a central, regional and local management control mechanism and the appointment of regional controllers help strengthen control and reduce the probability of such practices occurring. Upon acquiring new companies, we integrate them into these mechanisms for the prevention of unethical practices.

We have proceeded with training and the rollout of best practices that, among other things, are intended to prevent the risk of fraud.

We have implemented a tool to check the consistency of the bank details/company tax ID number pair to increase our payment chain security through automation of the control process, as well as to protect us from the risk of wire fraud.

Virbac's code of conduct underscores our commitment to pursue our activities in accordance with the law and ethics, and also defines the nature of the relationships we wish to have with our partners.

### **Market risk**

### **Exchange rate risk**

### ■ **Risk factors**

The currency risk arises from the impact of fluctuations in exchange rates on the Group's financial flows when carrying out its activities. Due to its strong international presence, the Group is exposed to the foreign exchange risk on transactions, and the foreign exchange risk on the conversion of the financial statements of its foreign subsidiaries.

### ■ **Risk management mechanisms**

The risk management policy consists of hedging the operational transaction currency risk using derivatives. We apply a centralized foreign exchange risk management policy for currency trading transactions by the most exposed subsidiaries in the Group having no local regulatory restrictions. On the basis of the annual currency budgets reported by the subsidiaries, the Group cash position covers the net exposure and provides internal exchange guarantees to each centralized entity. We use future, firm or optional purchase and sale hedging derivatives.

| in € thousand (market value)          | 2023 | 2022   |
|---------------------------------------|------|--------|
| Fair value hedges                     | 681  | -4,666 |
| Cash flow hedges                      | -107 | 862    |
| Net investment hedges                 | —    | —      |
| Derivatives not qualifying for hedges | -275 | -173   |
| Exchange derivatives                  | 299  | -3,977 |

### **Interest rate risk**

### ■ **Risk factors**

The Group's income statement may be impacted by the interest rate risk. Indeed, unfavorable rate changes can thus have a negative impact on the Group's financing costs and future cash flows. The exposure to interest rate risk arises from the fact that the main Group's credit lines are at variable rates, the cost of debt can therefore increase if interest rates rise.

### ■ **Risk management mechanisms**

To manage these risks and optimize the cost of its debt, the Group monitors developments and market rate expectations and limits its exposure by establishing interest rate hedges, with instruments available on the market such as caps or swaps of interest rates (fixed rate) not exceeding the duration and value of its actual commitments. Following the announcement by the FCA (Financial conduct authority) of its intention to no longer require banks to contribute to Libor rates, our financing contracts and interest rate hedging contracts are now indexed on Risk-free rates (RFR) recommended by the International swaps and derivatives association (ISDA) and adjusted in certain cases by a spread set according to their methodology, in order to make the transition as economically neutral as possible.

{246}------------------------------------------------

| in € thousand (market value)          | 2023 | 2022 |
|---------------------------------------|------|------|
| Fair value hedges                     | —    | —    |
| Cash flow hedges                      | 43   | 89   |
| Net investment hedges                 | —    | —    |
| Derivatives not qualifying for hedges | —    | —    |
| Rate derivatives                      | 43   | 89   |

### **Specific impacts from hedging exchange and interest rate risks**

The exchange rate derivatives used for cash flow hedging generally mature within a year. The derivative financial interest rate instruments are used to hedge the credit lines or loans and therefore have a maturity beyond several years, compatible with the hedged cash flows. All of the derivative instruments that we hold at December 31, 2023 are qualified as hedges.

| in € thousand                    | Nominal<br>2023 | Nominal<br>2022 | Positive<br>fair value<br>2023 | Positive<br>fair value<br>2022 | Negative<br>fair value<br>2023 | Negative<br>fair value<br>2022 |
|----------------------------------|-----------------|-----------------|--------------------------------|--------------------------------|--------------------------------|--------------------------------|
| Forward exchange contracts       | 159,835         | 158,344         | 2,255                          | 2,166                          | 1,648                          | 6,045                          |
| OTC options exchange             | 61,534          | 44,542          | 240                            | 322                            | 549                            | 420                            |
| Exchange instruments             | 221,369         | 202,886         | 2,495                          | 2,488                          | 2,197                          | 6,465                          |
| Swap rate                        | -               | -               | -                              | -                              | -                              | -                              |
| Interest rate options            | -               | -               | -                              | -                              | -                              | -                              |
| Cross currency Swaps             | 7,833           | 7,833           | 43                             | 89                             | -                              | -                              |
| Interest rate instruments        | 7,833           | 7,833           | 43                             | 89                             | -                              | -                              |
| Derivative financial instruments | 229,202         | 210,719         | 2,538                          | 2,577                          | 2,197                          | 6,465                          |

We may deal with hedges with asymmetrical vanilla tunnel optimization. These derivatives are traded with a floor rate and a cap rate that allows us to profit from market changes between these two limits; they are always backed by foreign currency trade transactions recognized in the balance sheet or future transactions of a highly probable nature.

### **Supply risks**

The raw materials and certain active ingredients used to manufacture Virbac's products are supplied by third parties. In certain cases, the Group also uses contract manufacturing organizations who have expertise in or master particular technologies. As far as possible, we diversify our sources of supply by approving several suppliers, while ensuring that these various sources embody the characteristics of sufficient quality and reliability. Nevertheless, there are, for certain supplies or certain technologies, situations where diversification is practically impossible, which can result in a disruption to the supply or pressure on prices.

To limit these risks, we take a broad approach to identifying as many suppliers as possible, and may in certain cases secure our supply chain by acquiring the technologies and capacities we lack and that create too high a dependency. An example of this was the company's acquisition of the industrial property rights and industrial facilities to produce the protein used to make the leading cat vaccine.

### **A4. Average workforce**

|                             | 2023  | 2022  |
|-----------------------------|-------|-------|
| Managers                    | 618   | 555   |
| Supervisors and technicians | 446   | 403   |
| Workers                     | 166   | 166   |
| Employees                   | 34    | 33    |
| Apprentices                 | 47    | 39    |
| Workforce                   | 1,311 | 1,196 |

### **A5. Information relating to the professional training account**

The management of the professional training account (*Compte professionnel de formation*) system is outsourced to the deposits and consignments fund (*Caisse des dépôts et consignations*).

{247}------------------------------------------------

### **A6. Breakdown of accrued expenses and income**

### **Breakdown of accrued expenses**

| in € thousand                                             | 2023          | 2022          |
|-----------------------------------------------------------|---------------|---------------|
| Accrued interest on employee profit-sharing               | 6             | 4             |
| Accrued interest on credit line                           | 171           | 178           |
| <b>Loans and financial debts</b>                          | <b>177</b>    | <b>187</b>    |
| Provisions for pending invoices                           | 39,656        | 37,470        |
| Provisions for representation offices                     | 23            | 71            |
| Unrealized exchange differences                           | 765           | 1,128         |
| <b>Accounts payable and related accounts</b>              | <b>40,444</b> | <b>38,669</b> |
| Third-party discounts, rebates and refunds to be obtained | 96            | 18            |
| Group discounts, rebates and refunds to be invoiced       | 1             | 8             |
| <b>Discounts, rebates and refunds to be invoiced</b>      | <b>97</b>     | <b>26</b>     |
| Provision for paid holidays (including social charges)    | 9,987         | 8,926         |
| Provision for various bonuses (including social charges)  | 11,944        | 10,644        |
| Provision for profit-sharing bonus                        | 5,712         | 6,587         |
| Provision for other accrued social charges                | 35            | 503           |
| Provision for various accrued tax charges                 | 1,747         | 1,599         |
| Provision for professional training                       | —             | —             |
| Provision for the construction effort                     | 317           | 295           |
| Provision for the apprenticeship tax                      | 99            | 90            |
| Provision for the payroll taxes                           | 9             | -16           |
| Provision for the business added value assessment (CVAE)  | —             | 31            |
| Provision for the business property tax (CFE)             | —             | —             |
| Provision for taxes and various duties                    | 319           | 245           |
| Provision for the solidarity contribution                 | 562           | 610           |
| <b>Tax and social payables</b>                            | <b>30,731</b> | <b>29,514</b> |
| Provision for various accrued charges                     | 247           | 198           |
| Bank overdrafts and accrued interest not yet matured      | 31            | 65            |
| <b>Other payables</b>                                     | <b>278</b>    | <b>263</b>    |
| <b>Accrued expenses</b>                                   | <b>71,727</b> | <b>68,654</b> |

### **Breakdown of accrued income**

| in € thousand                               | 2023  | 2022  |
|---------------------------------------------|-------|-------|
| Provision for interest accrued on loans     | —     | 308   |
| Other financial assets                      | —     | 308   |
| Pending third-party receivable invoices     | 56    | 728   |
| Pending Group receivable invoices           | 491   | 353   |
| Unrealized third-party exchange differences | 184   | 87    |
| Accounts receivable and related accounts    | 731   | 1,168 |
| Miscellaneous accrued income                | 113   | —     |
| Pending supplier credit note invoices       | —     | —     |
| Accrued interest                            | 188   | 423   |
| Other receivables                           | 301   | 423   |
| Accrued income                              | 1,032 | 1,899 |

{248}------------------------------------------------

### **A7. Related parties**

### **Compensation of corporate officers**

The expense recognized by the company during the 2023 financial year and related to the compensation of members of the board of directors and of the non-voting advisor amounting to €323,000. That which concerned the total compensation of the members of the general management amounted to €1,301,181 this year.

### **Other benefits**

The members of the general management receive the following benefits:

### **Company vehicle**

The chief executive officer as well as the deputy chief executives officers receive a company vehicle in accordance with the policy defined by the compensation and appointment committee.

### **Health insurance plan, maternity benefits, pension and retirement**

The chief executive officer and the deputy chief executives officers are covered by the health, maternity, provident and pension insurance plans available to all the company's executives, under the same conditions of contributions and benefits as those defined for the company's other executives.

### **Unemployment insurance plan**

The chief executive officer is covered by a unemployment insurance for company's chief executive officers, which is based on the rule of 70 over one year, the amount of annual contributions not exceeding €15,000.

The deputy chief executives officers are covered by the unemployment insurance plan for company employees.

### **Forced retirement severance pay**

The board of directors may decide to grant compensation in the event of the termination of the duties of a corporate officer.

The compensation that Sébastien Huron, chief executive officer, could receive is determined on the basis of the following objectives:

- if the Group's operating profit from ordinary activities to net revenue ratio is lower than 4% on average over the last four financial half-years ended (for example: for a departure in May in year N: the period taken into account to calculate the ratio is from January 1 of year N-2 to December 31 of year N-1), no compensation will be due;
- if the Group's operating profit from ordinary activities to net revenue ratio is higher than or equal to 4% on average for the last four financial half-years ended (for example: for a departure in May in year N: the period taken into account to calculate the ratio is from January 1 of year N-2 to December 31 of year N-1), the compensation due will be equal to €550,000;
- however, if the Group's operating profit from ordinary activities to net revenue ratio is higher than or equal to 7% on average for the last two financial half-years ended (for example: for a departure in August in year N: the period taken into account to calculate the ratio is from July 1 of year N-1 to June 30 of year N), the compensation due will be equal to €700,000.

Severance pay will only be paid out in the event of a forced departure initiated by the company. It will not be owed in the event of resignation, full pension retirement, retirement once the age limit for being a chief executive officer is reached or in the event of dismissal for gross misconduct.

Deputy chief executives officers do not receive any extra-legal severance pay, but may be entitled to severance pay under their employment contract.

### **Non-competition payments**

Sébastien Huron agreed to a non-competition commitment in the event he leaves office, in consideration of which a non-competition payment is provided for.

In consideration of the non-competition obligation, Sébastien Huron will receive each month, during the entire noncompetition period, a payment in an amount equal to 80% of his fixed gross monthly compensation received for the company's last financial year ended (including directors' fees and any other compensation related to his functions within the Virbac group). This payment will be limited to a maximum gross amount of €500,000 for this 18-month period.

Deputy chief executives officers are not subject to any non-competition commitments in connection with their mandate or their employment contract and are therefore not entitled to receive any non-competition payments.

### **Performance-related stock grants**

In accordance with the authorization of the shareholders' meeting, certain employees and managers of Virbac and its subsidiaries have received long-term compensation in the form of performance-related stock grants since 2006. The performance conditions to be met for the acquisition of performance-related stock grants are measured against the internal objectives of the Group's consolidated operating profit and consolidated net debt at the close of the second full financial year following the plan's start date. These elements therefore take into account the Group's performance over more than two financial years.

{249}------------------------------------------------

### **A8. Subsidiaries and investments as of December 31, 2023**

The company is the parent company of the consolidated Group and as such publishes the consolidated accounts in accordance with IFRS, as adopted by the European Union.

|                      |                                                    |                   |                         |                                                                               |                                      |                                 |                                    |            | Gross<br>value<br>of the<br>shares<br>held | Net value<br>of the<br>shares<br>held | Number<br>of shares<br>held | Total<br>number of<br>shares | IFRS sales for<br>the financial<br>year | Financial<br>year<br>results | Dividends<br>received<br>by<br>Virbac | 2023<br>currency-to-EUR<br>foreign exchange<br>rate |
|----------------------|----------------------------------------------------|-------------------|-------------------------|-------------------------------------------------------------------------------|--------------------------------------|---------------------------------|------------------------------------|------------|--------------------------------------------|---------------------------------------|-----------------------------|------------------------------|-----------------------------------------|------------------------------|---------------------------------------|-----------------------------------------------------|
|                      | Company name                                       | Country           | Share<br>capital        | Reserves and<br>retained<br>earnings before<br>appropriation<br>of net income | Loans<br>and<br>advances<br>extended | Endorsements<br>and<br>deposits | Share of<br>the<br>capital<br>held | € thousand | € thousand                                 |                                       |                             | in thousand<br>currency      | in thousand<br>currency                 | € thousand                   | closing                               | average                                             |
|                      |                                                    |                   | in thousand<br>currency | in thousand<br>currency                                                       | €<br>thousand                        | €<br>thousand                   | %                                  | 276,785    | 170,057                                    | 1,512,910                             | 1,512,910                   | — KEUR                       | -4,776 KEUR                             | —                            | —                                     | —                                                   |
| French subsidiaries  | Interlab                                           | France            | 63,463 kEUR             | 111,369 kEUR                                                                  | —                                    | —                               | 100.00%                            | 40,761     | 40,761                                     | 10,434                                | 10,439                      | 86,031 KEUR                  | 4,008 KEUR                              | 4,967                        | —                                     | —                                                   |
|                      | Virbac France                                      | France            | 240 kEUR                | 44 kEUR                                                                       | —                                    | —                               | 99.95%                             | 2,933      | 2,933                                      | 68,349                                | 68,354                      | 97,259 KEUR                  | 16,395 KEUR                             | 11,278                       | —                                     | —                                                   |
|                      | Virbac Nutrition                                   | France            | 547 kEUR                | 785 kEUR                                                                      | —                                    | —                               | 99.99%                             | 17,601     | 13,075                                     | 30,939                                | 30,939                      | 6,073 KEUR                   | -67 KEUR                                | —                            | —                                     | —                                                   |
|                      | Virbac Diagnostics                                 | France            | 200 kEUR                | 350 kEUR                                                                      | —                                    | —                               | 100.00%                            | 3,391      | 1,246                                      | 1,004                                 | 1,008                       | 12,541 KEUR                  | 506 KEUR                                | —                            | —                                     | —                                                   |
|                      | Alfamed                                            | France            | 69 kEUR                 | 472 kEUR                                                                      | —                                    | —                               | 100.00%                            | 10,443     | 10,443                                     | 89                                    | 89                          | 33,946 KEUR                  | 5,082 KEUR                              | 3,560                        | —                                     | —                                                   |
| Foreign subsidiaries | Virbac Nederland BV                                | Netherlands       | 50 kEUR                 | 1,798 kEUR                                                                    | —                                    | —                               | 100.00%                            | 115        | 115                                        | 2,000                                 | 2,000                       | 21,167 kCHF                  | 1,749 kCHF                              | 457                          | 0.926                                 | 0.971                                               |
|                      | Virbac (Switzerland) AG                            | Switzerland       | 200 kCHF                | 4,639 kCHF                                                                    | —                                    | —                               | 100.00%                            | 3          | 3                                          | 2,000                                 | 2,000                       | 46,284 KGBP                  | 4,195 kGBP                              | 3,478                        | 0.869                                 | 0.869                                               |
|                      | Virbac Ltd                                         | United<br>Kingdom | 2 kGBP                  | 5,856 kGBP                                                                    | —                                    | —                               | 100.00%                            | 5,046      | 5,046                                      | 179,900                               | 179,900                     | 36,505 KEUR                  | 1,017 KEUR                              | 1,200                        | —                                     | —                                                   |
|                      | Virbac SRL                                         | Italy             | 1,601 kEUR              | 496 kEUR                                                                      | —                                    | —                               | 100.00%                            | 11,390     | 11,390                                     | 22,032,352                            | 22,032,353                  | 306,060 kBRL                 | 34,263 kBRL                             | —                            | 5.362                                 | 5.409                                               |
|                      | Virbac do Brasil Industria e<br>Comercio Ltda      | Brazil            | 22,032 kBRL             | 99,231 kBRL                                                                   | —                                    | —                               | 100.00%                            | 5,350      | 5,350                                      | 500                                   | 500                         | 142,294 kDKK                 | 12,018 kDKK                             | 804                          | 7.453                                 | 7.451                                               |
|                      | Virbac Danmark A/S                                 | Denmark           | 498 kDKK                | 12,375 kDKK                                                                   | —                                    | —                               | 100.00%                            | 4,215      | 4,215                                      | 6,171,776                             | 6,196,830                   | 1,636,564 kMXN               | 84,486 kMXN                             | 1,537                        | 18.723                                | 19.158                                              |
|                      | Virbac Mexico SA de CV                             | Mexico            | 10,197 kMXN             | 644,230 kMXN                                                                  | —                                    | —                               | 99.60%                             | 71         | 71                                         | 2,000                                 | 2,000                       | — KEUR                       | -3 KEUR                                 | —                            | —                                     | —                                                   |
|                      | Virbac Pharma Handelsgesellshaft<br>mbH            | Germany           | 102 kEUR                | 9 kEUR                                                                        | —                                    | —                               | 100.00%                            | 1,593      | 1,593                                      | 861,200                               | 861,200                     | 63,066 KEUR                  | 4,590 KEUR                              | 3,570                        | —                                     | —                                                   |
|                      | Virbac Tierarzneimittel GmbH                       | Germany           | 440 kEUR                | 2,414 kEUR                                                                    | —                                    | —                               | 100.00%                            | 1          | 1                                          | 100                                   | 100                         | 69,867 KPLN                  | 3,086 KPLN                              | 577                          | 4.340                                 | 4.523                                               |
|                      | Virbac Sp. z o.o.                                  | Poland            | 5 kPLN                  | 335 kPLN                                                                      | —                                    | —                               | 100.00%                            | 10         | 10                                         | 1                                     | 1                           | 449,098 KHUF                 | 16,328 KHUF                             | —                            | 382.800                               | 382.967                                             |
|                      | Virbac Hungary Kft                                 | Hungary           | 3,000 kHUF              | 85,429 kHUF                                                                   | —                                    | —                               | 100.00%                            | 14,581     | 14,581                                     | 99,175                                | 100,000                     | 21,729 kUS\$                 | 1,886 kUS\$                             | 869                          | 1.105                                 | 1.081                                               |
|                      | Virbac Uruguay S.A.                                | Uruguay           | 2,173 kUS\$             | 35,605 kUS\$                                                                  | —                                    | —                               | 99.18%                             | 2,850      | —                                          | 100                                   | 100                         | 153,483 KCNY                 | -27,890 KCNY                            | —                            | 7.851                                 | 7.686                                               |
|                      | Virbac Trading (Shanghai) Co. Ltd                  | China             | 22,454 kCNY             | 2,214 kCNY                                                                    | —                                    | —                               | 100.00%                            | 13,279     | 13,279                                     | 517,355                               | 517,355                     | 388 kHKD                     | -697 kHKD                               | —                            | 8.631                                 | 8.448                                               |
|                      | Virbac HK Trading Co Ltd                           | Hong Kong         | 517 kHKD                | 74,167 kHKD                                                                   | —                                    | —                               | 100.00%                            | 1,766      | 1,766                                      | 3                                     | 3                           | — kHKD                       | 3,682 kHKD                              | 458                          | 8.631                                 | 8.448                                               |
|                      | Asia Pharma Ltd                                    | Hong Kong         | 16,055 kHKD             | -2,412 kHKD                                                                   | —                                    | —                               | 100.00%                            | 1,415      | 1,415                                      | 100,000                               | 100,000                     | 8,390 KEUR                   | 478 KEUR                                | 450                          | —                                     | —                                                   |
|                      | Virbac Hellas SA                                   | Greece            | 396 kEUR                | 1,558 kEUR                                                                    | —                                    | —                               | 100.00%                            | 912        | 912                                        | 99,999                                | 100,000                     | 38,940 KEUR                  | 1,190 KEUR                              | 500                          | —                                     | —                                                   |
|                      | Virbac Espana SA                                   | Spain             | 601 kEUR                | 2,192 kEUR                                                                    | —                                    | —                               | 100.00%                            | 18         | 18                                         | 18,170                                | 36,340                      | 8,193 KEUR                   | 517 KEUR                                | 75                           | —                                     | —                                                   |
|                      | Virbac Osterreich GmbH                             | Austria           | 36 kEUR                 | 721 kEUR                                                                      | —                                    | —                               | 50.00%                             | 1,329      | 1,329                                      | 320,000                               | 320,000                     | 12,686,900 KKRW              | -20,486 KKRW                            | —                            | 1,433.660                             | 1,417.626                                           |
|                      | Virbac Korea Co. Ltd                               | South<br>Korea    | 1,600,000 kKRW          | 2,246,549 kKRW                                                                | —                                    | —                               | 100.00%                            | 2,894      | 2,894                                      | 999,998                               | 1,000,000                   | 393,663 KTHB                 | 35,226 KTHB                             | 1,138                        | 37.973                                | 37.574                                              |
|                      | Virbac (Thailand) Co. Ltd                          | Thailand          | 100,000 kTHB            | 25,879 kTHB                                                                   | —                                    | —                               | 100.00%                            | 11,015     | 11,015                                     | 1,800,000                             | 1,800,000                   | 447,368 kTWD                 | -50,385 kTWD                            | —                            | 33.921                                | 33.767                                              |
|                      | Virbac (Taiwan) Co. Ltd (ex SBC<br>Virbac Biotech) | Taiwan            | 398,015 kTWD            | -361,962 kTWD                                                                 | 21,308                               | —                               | 100.00%                            | 3,408      | 3,408                                      | 5,659                                 | 5,660                       | 81,015,478 KCOP              | 11,271,531 KCOP                         | 1,225                        | 4,291.230                             | 4,634.638                                           |
|                      | Virbac Colombia Ltda                               | Colombia          | 7,404,486 kCOP          | 27,715,643 kCOP                                                               | —                                    | —                               | 100.00%                            | 1,156      | 99                                         | 37,999,997                            | 38,000,000                  | 144,739 KPHP                 | -43,989 kPHP                            | —                            | 61.283                                | 60.333                                              |
|                      | Virbac Philippines Inc.                            | Philippines       | 48,500 kPHP             | 1,553 kPHP                                                                    | —                                    | 250                             | 100.00%                            | 2,834      | 2,834                                      | 6,400                                 | 6,400                       | 2,290,805 KJPY               | 130,155 kJPY                            | —                            | 156.330                               | 152.919                                             |
|                      | Virbac Japan Co. Ltd                               | Japan             | 130,000 kJPY            | 740,467 kJPY                                                                  | —                                    | 1,151                           | 100.00%                            | 432        | 432                                        | 420,658                               | 420,658                     | 4,297,379 KCRC               | 755,560 kCRC                            | 499                          | 575.572                               | 584.971                                             |
|                      | Laboratorios Virbac Costa Rica SA                  | Costa Rica        | 178,750 kCRC            | 908,151 kCRC                                                                  | —                                    | —                               | 100.00%                            | 209        | 209                                        | 99,998                                | 100,000                     | 128,776 KTHB                 | 8,029 KTHB                              | 348                          | 37.973                                | 37.574                                              |
|                      | Virbac Asia Pacific Co. Ltd                        | Thailand          | 10,000 kTHB             | 5,085 kTHB                                                                    | —                                    | —                               | 100.00%                            | 5          | 5                                          | 380                                   | 400                         | 8,416 KEUR                   | 490 KEUR                                | —                            | —                                     | —                                                   |
|                      | Virbac de Portugal Laboratorios Lda                | Portugal          | 5 kEUR                  | 1,261 kEUR                                                                    | —                                    | —                               | 95.00%                             | 2,977      | 2,977                                      | 1,000                                 | 1,000                       | 542,967,792 kVND             | 90,121,494 kVND                         | —                            | 26,883.880                            | 25,822.560                                          |
|                      | Virbac Vietnam Co. Ltd                             | Vietnam           | 22,606,324 kVND         | 275,034,233 kVND                                                              | 3,184                                | —                               | 100.00%                            | 5,305      | 5,305                                      | 56,684                                | 56,684                      | 592,004 KZAR                 | 50,805 KZAR                             | 972                          | 20.348                                | 19.954                                              |
|                      | Virbac RSA (Proprietary) Ltd                       | South<br>Africa   | 54 kZAR                 | 176,348 kZAR                                                                  | —                                    | —                               | 100.00%                            | 66         | 66                                         | 383,899                               | 383,900                     | 10,993,227 KINR              | 3,140,158 KINR                          | —                            | 91.905                                | 89.229                                              |
|                      | Virbac Animal Health India Private<br>Limited      | India             | 3,839 kINR              | 11,845,874 kINR                                                               | —                                    | —                               | 100.00%                            | 4,946      | 4,946                                      | 100                                   | 100                         | 8,605 kUS\$                  | 696 kUS\$                               | —                            | 1.105                                 | 1.081                                               |
|                      | PP Manufacturing Corporation                       | United<br>States  | — kUS\$                 | 6,093 kUS\$                                                                   | —                                    | 2,546                           | 100.00%                            | 4,346      | 4,346                                      | 2,499,997                             | 2,500,000                   | 169,109 KAUD                 | 36,448 KAUD                             | 21,473                       | 1.626                                 | 1.623                                               |
|                      | Virbac (Australia) Pty Ltd                         | Australia         | 2,500 kAUD              | 66,422 kAUD                                                                   | —                                    | —                               | 100.00%                            | 3,872      | 3,872                                      | 2,290,000                             | 2,290,000                   | 44,045 kNZD                  | 10,148 kNZD                             | 2,828                        | 1.750                                 | 1.761                                               |
|                      | Virbac New Zealand Ltd                             | New<br>Zealand    | 2,290 kNZD              | 41,843 kNZD                                                                   | —                                    | —                               | 100.00%                            | 30,002     | 30,002                                     | 1,000                                 | 1,000                       | — kCLP                       | -687,267 kCLP                           | —                            | 977.940                               | 913.432                                             |
|                      | Virbac Chile SpA                                   | Chile             | 25,811,200 kCLP         | 11,497,056 kCLP                                                               | 54,144                               | —                               | 100.00%                            | —          | —                                          | 1                                     | 100                         | — kCLP                       | 2,442,106 kCLP                          | —                            | 977.940                               | 913.432                                             |
|                      | Virbac Patagonia Ltda                              | Chile             | 71,337,809 kCLP         | -4,439,089 kCLP                                                               | —                                    | —                               | 1.00%                              | 1          | 1                                          | 1,000                                 | 1,000                       | 859,188 KCLP                 | 46,151 KCLP                             | —                            | 977.940                               | 913.432                                             |
|                      | Virbac Latam Spa                                   | Chile             | 1,000 kCLP              | 393,325 kCLP                                                                  | —                                    | —                               | 100.00%                            | 802        | 802                                        | 100                                   | 100                         | 187,063 KTRY                 | 37,174 KTRY                             | —                            | 32.653                                | 26.014                                              |
|                      | Virbac Hayvan Sagligi Limited Sirketi              | Turkey            | 4,990 kTRY              | 5,443 kTRY                                                                    | —                                    | 107                             | 100.00%                            | —          | —                                          | 100                                   | 100                         | 3,149 KEUR                   | 264 KEUR                                | —                            | —                                     | —                                                   |
|                      | Virbac Ireland Ltd                                 | Ireland           | — kEUR                  | -39 kEUR                                                                      | —                                    | —                               | 100.00%                            | 10,693     | 10,693                                     | 1                                     | 1                           | 96,944 kCZK                  | 5,849 kCZK                              | 3,973                        | 24.724                                | 24.172                                              |
|                      | Virbac Czech Republic s.r.o.                       | Czech<br>Republic | 1,000 kCZK              | 48,061 kCZK                                                                   | —                                    | —                               | 100.00%                            |            |                                            |                                       |                             |                              |                                         |                              |                                       |                                                     |

{250}------------------------------------------------

{251}------------------------------------------------

## Statutory auditors' report on the financial statements

For the year ended December 31, 2023

*This is a translation into English of the statutory auditors' report on the financial statements of the company issued in French and it is provided solely for the convenience of English-speaking users.*

*This statutory auditors' report includes information required by French law, such as information about the appointment of the statutory auditors or verification of the management report and other documents provided to shareholders.*

*This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.*

To Virbac shareholders' meeting,

### **OPINION**

in compliance with the engagement entrusted to us by your shareholder's meeting, we have audited the accompanying financial statements of Virbac for the year ended December 31, 2023.

In our opinion, the financial statements give a true and fair view of the assets and liabilities, and of the financial position of the company as of December 31, 2023 and of the results of its operations for the year then ended in accordance with French accounting principles.

The audit opinion expressed above is consistent with our report to the audit committee.

### **BASIS FOR OPINION**

### **Audit framework**

We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the "Statutory auditors' responsibilities for the audit of the financial statements" section of our report.

### **Independence**

We conducted our audit engagement in compliance with independence requirements of the French commercial code (*Code de commerce*) and the French code of ethics (*Code de déontologie*) for statutory auditors for the period from January 1, 2023 to the date of our report, and specifically we did not provide any prohibited non-audit services referred to in article 5(1) of regulation (EU) n<sup>o</sup> 537/2014.

### **JUSTIFICATION OF ASSESSMENTS - KEY AUDIT MATTERS**

In accordance with the requirements of articles L821-53 and R821-180 of the French commercial code relating to the justification of our assessments, we bring your attention to the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in the audit of the financial statements of the current period, as well as our responses to those risks.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the financial statements.

### **Key audit matter: measurement of equity investments**

As of December 31, 2023, equity investments have a gross value of € 500,8 million and a net carrying amount of € 383,5 million including an impairment loss of € 117,3 million. They are recognized at acquisition cost, excluding incidental expenses, on entry into the accounts.

{252}------------------------------------------------

If the value in use of equity investments is lower than their net carrying amount, a provision for impairment is recognized for the amount of the difference as disclosed in the "Equity investments" section of the "Accounting principles and methods" note to the financial statements.

The impairment test performed by management to calculate the value in use of equity investments, when the net carrying amount is higher than the share in equity, requires management to make significant judgments and assumptions, notably concerning:

- discount rates applied to cash flows;
- the long-term growth rate applied to assess the terminal value.

Accordingly, a change in these assumptions may modify the value in use of equity investments. In this context, we considered the correct measurement of equity investments to be a key audit matter due to the importance of management judgment and the material amount of equity investments in the balance sheet.

### **Our response**

To assess the reasonableness of the estimated value in use of equity investments, our work mainly consisted in verifying that the estimated values, as determined by the management, are based on an appropriate justification of the valuation method and the figures used.

We:

- verified that the equity, including the share of equity used, agrees with the entity accounts audited;
- assessed the quantified data used for the determination of values in use, with a specific attention to the subsidiary Interlab, which holds the entire capital of the American subsidiary (Virbac Corporation);
- assessed the discount rates adopted by management, comparing it with our own estimated rates, prepared with the assistance of our valuation specialists;
- assessed the reasonableness of the long-term growth rate used to determine the terminal value;
- sample tested the arithmetical accuracy of the impairment tests performed by the company;
- assessed the appropriateness of disclosures presented in the "Equity investments" section of the "Accounting principles and methods" note and note B3 "Financial assets" and A8 "Subsidiaries and affiliates as of December 31, 2023" to the financial statements.

### **SPECIFIC VERIFICATIONS**

We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations.

### **Information given in the management report and other documents addressed to shareholders with respect to the financial position and the financial statements**

We have no comments to make on the fair presentation and consistency with the financial statements of the information given in the board directors' management report and in the documents addressed to shareholders with respect to the financial position and the financial statements.

We attest the fair presentation and consistency with the financial statements of the information relating to payment deadlines mentioned in article D441-6 of the French commercial code.

### **Report on corporate governance**

We attest that the board of directors' report on corporate governance contains the information required by article L225-37-4, L22-10-10 and L22-10-09 the French commercial code.

Concerning the information given in accordance with the requirements of article L22-10-9 of the French commercial code relating to remunerations and benefits received by or awarded to the directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your Company from controlled enterprises included in the scope of consolidation. Based on these procedures, we attest the accuracy and fair presentation of this information.

With respect to the information relating to items that your company considered likely to have an impact in the event of a takeover bid or exchange offer, provided pursuant to article L22-10-11 of the French commercial code, we have agreed this information to the source documents communicated to us. Based on these procedures, we have no observations to make on this information.

### **Other information**

In accordance with French law, we have verified that the required information concerning the identity of the shareholders and holders of the voting rights has been properly disclosed in the management report.

{253}------------------------------------------------

### **OTHER LEGAL AND REGULATORY VERIFICATIONS OR INFORMATION**

### **Format of presentation of the financial statements intended to be included in the annual financial report**

We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by the statutory auditor relating to the annual and consolidated financial statements presented in the European single electronic format, that the presentation of the financial statements included in the annual financial report mentioned in article L451-1-2, I of the French monetary and financial code (*Code monétaire et financier*), prepared under the responsibility of chief executive officer, complies with the single electronic format defined in the European delegated regulation n°2019/815 of December 17, 2018.

Based on the work we have performed, we conclude that the presentation of the financial statements intended to be included in the annual financial report complies, in all material respects, with the European single electronic format.

We have no responsibility to verify that the financial statements that will ultimately be included by your company in the annual financial report filed with the *AMF* are in agreement with those on which we have performed our work.

### **Appointment of the statutory auditors**

We were appointed as statutory auditors of Virbac by your shareholders' meeting on June 29, 1998 for Novances David & Associés and June 29, 2004 for Deloitte & Associés.

As at December 31, 2023, Novances David & Associés was in the twenty-six consecutive year of mandate without interruption and Deloitte & Associés was in twentieth consecutive year of mandate without interruption.

### **RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS**

Management is responsible for the preparation and fair presentation of the financial statements in accordance with French accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the company or to cease operations.

The audit committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risks management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.

The financial statements were approved by the board of directors.

### **STATUTORY AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS**

### **Objective and audit approach**

Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As specified in article L821-55 of the French commercial code, our statutory audit does not include assurance on the viability of the company or the quality of management of the affairs of the company.

As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises professional judgment throughout the audit and furthermore:

• identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material 

{254}------------------------------------------------

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

- obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
- evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the financial statements;
- assesses the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the company to cease to continue as a going concern. If the statutory auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein;
- evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.

### **Report to the audit committee**

We submit a report to the audit committee which includes in particular a description of the scope of the audit and the audit program implemented, as well as significant audit findings. We also report, if any, significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified.

Our report to the audit committee includes the risks of material misstatement that, in our professional judgment, were of most significance in the audit of the financial statements of the current period and which are therefore the key audit matters that we are required to describe in this report.

We also provide the audit committee with the declaration referred to in article 6 of regulation (EU) n°537/2014, confirming our independence pursuant to rules applicable in France as defined in particular by articles L821-27 to L821-34 of the French commercial code and in the French code of ethics for statutory auditors. Where appropriate, we discuss with the audit committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.

Nice and Marseille, April 11, 2024

The statutory auditors

French original signed by

**Novances-David & Associés Deloitte & Associés**

Jean-Pierre GIRAUD Hugues Desgranges Jérémie PERROCHON

{255}------------------------------------------------

## Statutory auditors' special report on regulated agreements

*This is a free translation into English of the statutory auditors' special report on regulated agreements and commitments that is issued in the French language and is provided solely for the convenience of English speaking readers. This report on regulated agreements and commitments should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. It should be understood that the agreements and commitments reported on are only those provided by the French commercial code and that the report does not apply to those related party transactions described in IAS 24 or other equivalent accounting standards.*

Shareholders' meeting held to approve the financial statements for the year ended December 31, 2023.

To the shareholders' meeting,

in our capacity as statutory auditors of your company, we hereby report to you on regulated agreements.

The terms of our engagement require us to communicate to you, based on information provided to us, the principal terms and conditions of those agreements brought to our attention or which we may have discovered during the course of our audit, as well as the reasons justifying that such agreements are in the company's interest, without expressing an opinion on their usefulness and appropriateness or identifying other such agreements, if any. It is your responsibility, pursuant to article R225-31 of the French commercial code (*Code de commerce*), to assess the interest involved in respect of the conclusion of these agreements for the purpose of approving them.

Our role is also to provide you with the information stipulated in article R.225-31 of the French commercial code relating to the implementation during the past year of agreements previously approved by the shareholders' meeting, if any.

We conducted the procedures we deemed necessary in accordance with the professional guidelines of the French national institute of statutory auditors (*Compagnie Nationale des Commissaires aux Comptes*) relating to this engagement.

### **AGREEMENTS SUBMITTED TO THE APPROVAL OF THE SHAREHOLDERS' MEETING**

We hereby inform you that we have not been advised of any agreement authorized and entered into during the year to be submitted to the approval of the shareholders' meeting pursuant to article L225-38 of the French commercial code.

### **AGREEMENTS PREVIOUSLY APPROVED BY THE SHAREHOLDERS' MEETING**

We inform you that we have not been advised of any agreement previously approved by the shareholders' meetings that remained in force during the year.

Nice and Marseille, April 11, 2024

The statutory auditors

French original signed by

**Novances-David & Associés Deloitte & Associés**

Jean-Pierre GIRAUD Hugues Desgranges Jérémie PERROCHON

{256}------------------------------------------------

## Statement of responsibility for the annual financial report

I certify, to my knowledge, that the financial statements are prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position, and result of the company and all companies included in the consolidation, and that the management report presents an accurate picture of the evolution of the business, result, and financial position of the company and all companies included in the consolidation as well as a description of the main risks and uncertainties to which they are exposed.

Carros, March 25, 2024

Sébastien Huron, chief executive officer, Virbac group

{257}------------------------------------------------

## Combined ordinary and extraordinary shareholders' meeting of June 21, 2024

## Explanatory statement and draft resolutions

### **ORDINARY BUSINESS**

### **1. Approval of the accounts of the financial year 2023**

### **Statement**

### **Resolutions 1, 2 and 3: approval of the annual accounts (parent company and consolidated), allocation of profit from the 2023 financial year and determination of dividends**

The ordinary shareholders' meeting is convened to approve:

- the statutory accounts as detailed and explained pages 224 to 251 along with an income statement that shows a net profit of €61,291,760.66 in 2023;
- the consolidated accounts from the 2023 financial year, with details and explanations appearing on pages 160 to 219;
- allocation of profit.

The distribution of a dividend will be proposed to the shareholders' meeting in the amount of €1.32 per share, *i.e.* a total amount of €11,164,560.

### **Resolutions**

### **First resolution: approval of the statutory accounts for the 2023 financial year**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, after having heard the reports from the board of directors and the statutory auditors, approves, as they were presented, the statutory accounts for the financial year ending December 31, 2023 showing a net profit of €61,291,760.66, as well as the transactions reflected in these accounts or summarized in said reports.

The shareholders' meeting also approves the expenditures incurred during the past financial year related to the transactions that fall within the scope of article 39-4 of the French general tax code, representing a total of €516,188. As a consequence, the shareholders' meeting grants the board of directors full and unreserved discharge of their duties for the aforementioned financial year.

### **Second resolution: approval of the 2023 consolidated accounts**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholder's meeting, after having heard the reports from the board of directors and the statutory auditors for the financial year ending December 31, 2023, approves, as they were presented, the consolidated accounts for that financial year, showing a net profit of €121,297,650 attributable to the owners of the parent company.

The shareholders' meeting also approves the transactions reflected in these accounts or summarized in said reports.

{258}------------------------------------------------

### **Third resolution: allocation of profit**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, elects to allocate the profit for the financial year as follows:

| in €                              | 2023 financial year |
|-----------------------------------|---------------------|
| Net result for the period         | 61,291,760.66       |
| Retained earnings carried forward | 577,282,899.56      |
| Distributable result              | 638,574,660.22      |
| Distribution of dividend          | 11,164,560.00       |
| Retained earnings for the period  | 50,127,200.66       |

The dividend distributed for each share with the nominal value of €1.25 amounts to €1.32. The dividend to be distributed will be detached from the share on June 25, 2024 and will be payable on June 27, 2024.

The shareholders' meeting decides that, in accordance with the provisions of article L225-210 of the French commercial code, the amount of the dividend corresponding to the treasury shares on the date of payment will be allocated to the retained earnings account, which will therefore be increased by this amount.

The shareholders' meeting acknowledges that the shareholders have been informed:

- that since January 1, 2018, the distributed income is subject to a single flat-rate deduction ("flat tax") of 30%, *i.e.* 12.8% for income tax and 17.2% for social security deductions;
- that the mandatory lump sum deduction not discharging the income tax is maintained but its rate is aligned with that of the flat tax (12.8% - article 117 *quater* of the French general tax code);
- that natural persons belonging to a tax household whose reference tax income for the previous year is less than €50,000 (single, divorced or widowed taxpayers) or €75,000 (taxpayers subject to joint taxation) may request to be exempted from the flat-rate non-discharging deduction of 12.8% in respect of income tax; the exemption request must be made, under the responsibility of the shareholder, no later than November 30 of the year preceding the payment of the dividend;
- that the option for taxation of the dividend on the progressive scale remains possible and must be indicated on the tax return; in this case, the flat-rate non-discharging deduction of 12.8% will be deducted from the tax due. The 40% reduction will be maintained, but social security contributions will be based on the amount before reduction.

It is specified that the amount of income distributed for the year ended December 31, 2023 eligible for the 40% reduction provided for in article 158, 3-2° of the French general tax code amounts to €11,164,560, *i.e.* all dividends distributed.

The shareholders were also reminded that, in accordance with the provisions of article L136-7 of the French social security code, social security contributions on dividends paid to natural persons domiciled for tax purposes in France are subject to the same rules as the deduction mentioned in article 117 *quater* of the French general tax code, *i.e.* debited at source by the paying institution, when the latter is established in France, and paid to the Treasury within the first fifteen days of the month following the payment of dividends.

Pursuant to article 243 *bis* of the French general tax code, it is recalled that distributions made for the three previous financial years were as follows:

| in €               | Dividend per share | Global distribution |
|--------------------|--------------------|---------------------|
| In respect of 2020 | 0.75               | 6,331,890.75        |
| In respect of 2021 | 1.25               | 10,572,500.00       |
| In respect of 2022 | 1.32               | 11,164,560.00       |

### **2. Regulated agreements**

### **Statement**

### **Resolution 4: agreements and commitments known as "regulated", pursuant to article L225-38** *et seq.* **of the French commercial code**

No agreements or commitments subject to the provisions of article L225-38 of the French commercial code were entered into or renewed in the 2023 financial year, and there is no agreement or commitment already approved by the shareholders' meeting that would continue during the past financial year.

{259}------------------------------------------------

However, a resolution will be presented at the shareholders' meeting to acknowledge the absence of regulated agreements and commitments.

### **Resolution**

### **Fourth resolution: regulated agreements and commitments referred to in article L225-38 of the French commercial code**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, having acquainted itself with the special report of the statutory auditors noting the absence of agreements and commitments subject to the provisions of article L225-38 of the French commercial code, shall simply take note of them.

### **3. Board of directors – renewal of the mandate of the terms of office of directors and ratification of the appointment by co-optation of a director**

### **Statement**

### **Resolutions 5 and 6 : renewal of the terms of office of Marie-Hélène Dick-Madelpuech and Solène Madelpuech as directors**

Marie-Hélène Dick-Madelpuech's term of office and Solène Madelpuech's term of office expire at the end of this shareholders' meeting. It will be proposed to the shareholders' meeting to renew their terms of office for a period of three years.

Marie-Hélène Dick-Madelpuech has been a member of Virbac's supervisory board since 1998 and was appointed director, in 2020, at the time of the change in Virbac's mode of administration and management. She has served as chairwoman of the board of directors and the appointments and compensation committee since 2020. Marie-Hélène Dick-Madelpuech, daughter of Virbac's founder, is a very involved director. During the past three years of her term of office, she attended 100% of the meetings of the board of directors and of the appointments and compensation committee. She brings her extensive knowledge of the pharmaceutical industry and a strategic vision for the Group to the board of directors.

Solène Madelpuech, a third-generation member of the majority shareholder family, has been a member of the supervisory board since 2017 and was appointed director on the board of directors in 2020. A graduate of the Warwick Business School and the London Business School, she carries out her duties with great dedication. Over the three years of her term as director, she attended 100% of the meetings of the board of directors.

### Accordingly:

• we propose that you renew Marie-Hélène Dick-Madelpuech's term of office as a member of the board of directors for a period of three years, until the end of the shareholders' meeting convened to approve the financial statements ended December 31, 2026 (resolution 5);

• we propose that you renew Solène Madelpuech's term of office as a member of the board of directors for a period of three years, until the end of the shareholders' meeting convened to approve the financial statements ended on December 31, 2026 (resolution 6).

Information regarding the above-mentioned members of the board of directors appears in the Corporate governance report on pages 111 and 115.

### **Resolutions**

### **Fifth resolution: renewal of the term of office of Marie-Hélène Dick-Madelpuech as a director**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, elects to renew Marie-Hélène Dick-Madelpuech's term of office as a director for a period of three years that will expire at the close of the shareholders' meeting convened to approve the accounts for the financial year ending December 31, 2026.

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### **Sixth resolution: renewal of the term of office of Solène Madelpuech as a director**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, elects to renew the term of office of Solène Madelpuech as a director for a period of three years that will expire at the close of the shareholders' meeting convened to approve the accounts for the financial year ending December 31, 2026.

### **Statement**

### **Resolution 7: ratification of the appointment by co-optation of Olivier Charmeil as a director**

In accordance with the recommendations of the *Afep-Medef* Code providing for the loss of independent director status on the twelve-year anniversary of the term of office, and to ensure a balance in the composition of the board, OJB Conseil, represented by Olivier Bohuon, resigned from his duties as director and member of the appointments and compensation committee. At the recommendation of the appointments and compensation committee, the December 21, 2023 board of directors' meeting decided to appoint by co-optation Olivier Charmeil as director, replacing OJB Conseil. With regard to the independence criteria set out by the *Afep-Medef* Code and adopted by the board of directors, Olivier Charmeil will be considered an independent director. One third of the board of directors will thus be composed of independent directors (the director representing the employees not being taken into account for the calculation of independence, in accordance with the legal provisions in force and the *Afep-Medef* Code). Olivier Charmeil is a long-standing recognized and experienced leader at Sanofi, a global leader in the pharmaceutical industry. Olivier Charmeil has extensive experience in France and internationally. More specifically, his skills in strategy and acquisitions, his biology expertise and knowledge, his international experience, particularly in emerging markets or in digital, which are strategic development axes for Virbac, will be valuable for the Group (information concerning Olivier Charmeil appears in the report on corporate governance on page 114). We propose that you ratify Olivier Charmeil's appointment by co-optation for the remaining term of OJB Conseil's term of office, *i.e*. until the end of the shareholders' meeting which, in 2026, will approve the accounts for the financial year ended December 31, 2025.

### **Resolution**

### **Seventh resolution: ratification of the appointment by co-optation of Olivier Charmeil as a director**

The shareholder's meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, approves the appointment by co-optation, in accordance with article L225-24 of the French commercial code, of Olivier Charmeil as director, decided provisionally by the board of directors at its meeting on December 21, 2023, replacing the company OJB Conseil, represented by Olivier Bohuon, which resigned.

Olivier Charmeil will hold his office for the remainder of his predecessor's term of office, *i.e.* until the end of the shareholders' meeting convened to approve the accounts for the financial year ending December 31, 2025.

### **4. Non-voting advisor – renewal of one non-voting advisor term**

### **Statement**

### **Resolution 8: renewal of the term of office of Rodolphe Durand as a non-voting advisor**

The shareholders' meeting of June 20, 2023:

- renewed the term of office of the company Xavier Yon Consulting Unipessoal Lda, represented by Xavier Yon, as a non-voting advisor until the close of this shareholders' meeting;
- renewed the term of office of Rodolphe Durand, as a non-voting advisor, until the end of this shareholders' meeting.

We propose to renew the terms of office of Rodolphe Durand, as a non-voting advisor for a period of one year, or until the end of the shareholders' meeting convened to approve the accounts for the 2024 financial year. Information regarding the non-voting advisor appears in the Corporate governance report on page 126.

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### **Resolution**

### **Eighth resolution: renewal of the term of office of Rodolphe Durand as a nonvoting advisor**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, renews the term of office of Rodolphe Durand, as a non-voting advisor.

Rodolphe Durand's term of office will end at the close of the shareholders' meeting convened to approve the accounts for the financial year ending December 31, 2024.

### **5. Appointment of a statutory auditor responsible for certifying sustainability information**

### **Statement**

### **Resolution 9: appointment of a statutory auditor responsible for certifying sustainability information**

Ordinance n°2023-1142 of December 6, 2023 aimed at expanding companies' transparency obligations in order to provide detailed information on the sustainability of companies, thus transposing the European directive of December 14, 2022 with regard to the publication of sustainability information by companies (CSRD), made it mandatory to appoint a statutory auditor or an independent third-party body (article L821-41 of the French commercial code) responsible for certifying sustainability information from the financial year 2024 (reporting in 2025 on the 2024 financial year). The duration of such a term of office is six financial years (article L821-44 of the French commercial code). However, by way of derogation, and in accordance with article 38 of ordinance n° 2023-1142 of December 6, 2023, the duration of this term of office may be equivalent to the remaining term of office in respect of the statutory audit or three financial years.

We propose that you appoint the firm Groupe Y Nexia, for a period of three financial years, *i.e*. until the meeting that will approve the accounts for the financial year to be closed on December 31, 2026.

### **Resolution**

### **Ninth resolution: appointment of a statutory auditor responsible for certifying sustainability information**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, decided, pursuant to articles L821-40 *et seq*. of the French commercial code and article 38 of the ordinance of December 6, 2023 n°2023-1142, to appoint Group Y Nexia, having its registered office located at 2 and 4, rue Louis David, 75016 Paris (970 200 580 Paris Trade and companies register), as statutory auditor in charge of certifying sustainability information for a period of three years, or until the end of the shareholders' meeting called to approve the accounts for the financial year to be closed on December 31, 2026.

### **6. Compensation**

### **Statement**

### **Resolutions 10 to 15: approval of the information mentioned in article L22-10-9 I. of the French commercial code**

The information referred to in article L22-10-9 of the French commercial code, which is contained in the Corporate governance report and concerns the compensation of the company officers, is subject to resolutions submitted at the shareholders' meeting.

The elements comprising total compensation and other benefits paid during the 2023 financial year or assigned under the same financial year to the chairwoman of the board of directors, the chief executive officer and the deputy chief executive officers, are subject to the approval of the shareholders' meeting as they appear in the Corporate governance report (pages 132 to 151).

In accordance with the provisions of article L22-10-34 of the French commercial code, payment of the variable portion of compensation for 2023 to the chief executive officer and the deputy chief executive officers is subject to approval during the June 21, 2024 general meeting of shareholders.

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The elements comprising the compensation policy of the chairwoman of the board of directors, the directors, the chief executive officer and the deputy chief executive officers are the subject of resolutions submitted to the general meeting of shareholders, as they appear in the Corporate governance report (pages 133 to 144).

### **Resolutions**

### **Tenth resolution: approval of the information mentioned in article L22-10-9 I. of the French commercial code relating to the compensation of members of the board of directors**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, pursuant to the provisions of article L22-10-34 I. of the French commercial code, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, approves the information involving members of the board of directors, referred to in article L22-10-9 I. of the French commercial code, as presented in the Corporate governance report (pages 144 and 146).

### **Eleventh resolution: approval of the information mentioned in article L22-10-9 I. of the French commercial code relating to the compensation of chief executive officer and deputy chief executive officers**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, pursuant to the provisions of article L22-10-34 I. of the French commercial code, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, approves the information involving chief executive officer and deputy chief executive officers, referred to in article L22-10-9 I. of the French commercial code, as presented in the Corporate governance report (pages 146-152 and 155-156).

### **Twelfth resolution: approval of the elements comprising compensation and benefits of any nature paid or awarded in the 2023 financial year to Marie-Hélène Dick-Madelpuech, chairwoman of the board of directors**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, approves, pursuant to article L22-10-34 II. of the French commercial code, the elements comprising compensation and other benefits paid in the 2023 financial year or awarded under the same financial year to Marie-Hélène Dick-Madelpuech, chairwoman of the board of directors, as presented in the Corporate governance report (pages 145-146 and 155-156).

### **Thirteenth resolution: approval of the elements comprising compensation and benefits of any nature paid or awarded during the 2023 financial year to Sébastien Huron, chief executive officer**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, approves, pursuant to article L22-10-34 II. of the French commercial code, the elements comprising compensation and other benefits paid in the 2022 financial year or awarded under the same financial year to Sébastien Huron, chief executive officer, as presented in the Corporate governance report (pages 146-148 and 155-156).

### **Fourteenth resolution: approval of the elements comprising compensation and benefits of any nature paid or awarded during the 2023 financial year to Habib Ramdani, deputy chief executive officer**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, approves, pursuant to article L22-10-34 II. of the French commercial code, the elements comprising compensation and other benefits paid in the 2023 financial year or awarded under the same financial year to Habib Ramdani, deputy chief executive officer, as presented in the Corporate governance report (pages 148-149 and 155-156).

### **Fifteenth resolution: approval of the elements comprising compensation and benefits of any nature paid or awarded during the 2023 financial year to Marc Bistuer, deputy chief executive officer**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, approves, pursuant to article L22-10-34 II. of the French commercial code, the elements comprising compensation and other benefits paid in the 2023 financial year or awarded under the same financial 

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year to Marc Bistuer, deputy chief executive officer, as presented in the Corporate governance report (pages 150-151 and 155-156).

### **Statement**

### **Resolutions 16 to 20: approval of the compensation policy for members of the board of directors, the chief executive officer and the deputy chief executive officers for the 2024 financial year**

Pursuant to article L225-37 of the French commercial code, the board of directors submits the Corporate governance report, which describes the elements of the company officers' compensation policy, for approval by the shareholders' meeting. Pursuant to article L22-10-8 of the French commercial code, this report submits for approval by the shareholders' meeting the principles and criteria applicable to the determination, distribution and allocation of the fixed, variable and extraordinary elements comprising total compensation and benefits of any nature attributable to members of the board of directors, the chief executive officer and the deputy chief executive officers, due to the exercise of their term of office for the 2024 financial year, and for the period until the shareholders' meeting that will be convened to approve again this policy, in accordance with the law and constituting the compensation policy as applicable to them.

These principles and criteria adopted by the board of directors on the recommendation of the appointments and compensation committee are presented in the report provided by the aforementioned article and appearing in the Corporate governance report on pages 132 to 144. They will apply up to the next shareholders' meeting, which will be convened to approve this policy, in accordance with the law.

### **Resolutions**

### **Sixteenth resolution: approval of the compensation policy of the chairwoman of the board of directors for the 2024 financial year**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, describing the elements of the compensation policy for company officers, approves, pursuant to article L22-10-8 of the French commercial code, the compensation policy for the chairwoman of the board of directors for the 2024 financial year, as presented in the Corporate governance report (pages 132 and 133).

### **Seventeenth resolution: approval of the compensation policy of the members of the board of directors for the 2024 financial year**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, describing the elements of the compensation policy for company officers, approves, pursuant to article L22-10-8 of the French commercial code, the compensation policy for the members of the board of directors for the 2024 financial year, as presented in the Corporate governance report (pages 132 and 133).

### **Eighteenth resolution: approval of the compensation policy of Sébastien Huron, chief executive officer, for the 2024 financial year**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, describing the elements of the compensation policy for company officers, approves, pursuant to article L22-10-8 of the French commercial code, the compensation policy for Sébastien Huron, chief executive officer, for the 2024 financial year, as presented in the Corporate governance report (pages 134 to 138).

### **Nineteenth resolution: approval of the compensation policy of Habib Ramdani, deputy chief executive officer, for the 2024 financial year**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L225-37 of the French commercial code, describing the elements of the compensation policy for company officers, approves, pursuant to article L.22-10-8 of the French commercial code, the compensation policy for Habib Ramdani, deputy chief executive officer, for the 2024 financial year, as presented in the Corporate governance report (pages 138 to 142).

### **Twentieth resolution: approval of the compensation policy of Marc Bistuer, deputy chief executive officer, for the 2024 financial year**

The shareholders' meeting, under conditions of *quorum* and majority required for ordinary shareholders' meetings, having acquainted itself with the Corporate governance report referred to in article L.225-37 of the French commercial code, describing the elements of the compensation policy for company officers, approves, pursuant to article L.22-10-8 of the French commercial code, the compensation policy for Marc Bistuer, deputy chief executive 

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officer, for the 2024 financial year, as presented in the Corporate governance report (pages 138 to 140 and 142 to 144).

### **Statement**

### **Resolution 21: setting of the compensation allocated to the directors and the nonvoting advisors**

At the general meeting of shareholders, a proposal will be made to allocate the sum of €230,000 to the board of directors for the purposes of compensating its members and the non-voting advisor for the current financial year. It is specified that the amount allocated in 2023 to the members of the board of directors and the non-voting advisors was €220,000. The board of directors will determine the distribution of this sum among its members and the nonvoting advisors.

### **Resolution**

### **Twenty-first resolution: setting the amount of compensation allocated to the directors and the non-voting advisors**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, elects to grant the sum of €230,000 for the purposes of compensating its members for the 2024 financial year; said sum is to be distributed among its members and the non-voting advisors by the board of directors.

### **7. Authorization to be granted to the board of directors to buy back shares of the company**

### **Statement**

### **Resolution 22: authorization to be granted to the board of directors to buy back shares of the company**

The ordinary shareholders' meeting of June 20, 2023 authorized the Virbac company to buy back treasury shares in accordance with articles L22-10-62 of the French commercial code and in line with the terms of the buyback plan set out in the prospectus published by our professional distributor and on the company's website.

On December 31, 2023, Virbac held a total of 88,281 treasury shares, acquired on the market for a total of €23,363,081 excluding fees, for an average price of €264.64 per share. During the 2023 financial year, we bought 77,434 treasury shares (with an average price of €267.23) including 4,091 treasury shares (with an average price of €254.02) as part of the market-making contract, 67,343 shares under the share buyback program aimed at canceling all or part of these shares in order to reduce the company's share capital (with an average price of €260.47) as well as 6,000 shares under performance-related stock grant plans (with an average price of €352.03). In addition, 5,005 treasury shares were sold under the market-making contract during the 2023 financial year.

As of December 31, 2023, treasury shares accounted for 1% of Virbac's capital. They are earmarked in part for market-making and performance-related stock grants, as well as for possible capital reduction, in accordance with the authorization that was given by the shareholders' meeting of June 20, 2023 in the twenty-second resolution.

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

- ensure liquidity or supporting the market price via an independent investment services provider pursuant to a liquidity agreement in accordance with a code of ethics recognized by the French financial markets authority (*AMF*);
- allocate performance-related stock grants;
- allow the company's capital to be reduced by cancelling all or part of the shares purchased, within the framework of the authorization that was given by the shareholders' meeting of June 20, 2023 in the twentysecond resolution.

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.

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### **Resolution**

### **Twenty-second resolution: authorization to be granted to the board of directors to buy back shares of the company**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, after having heard the report from the board of directors, authorizes the board of directors, with the option of sub-delegation, in accordance with the provisions of articles L22-10-62 *et seq.* of the French commercial code, to buy back shares representing up to a maximum of 10% of the company's share capital on the date of this meeting, in order to:

- ensure liquidity or support the market price via an independent investment services provider pursuant to a liquidity agreement in accordance with a code of ethics recognized by the French financial markets authority;
- proceed with the allocation of performance-related stock grants under the provisions of articles L225-197-1 *et seq.* of the French commercial code;
- reduce the company's share capital by cancelling all or part of the shares purchased, within the framework of the authorization that was given by the shareholders' meeting of June 20, 2023 in the twenty-second resolution.

The maximum unit purchase price may not exceed €1,000 per share.

The maximum transaction amount that could be carried out pursuant to this resolution, taking into account the 88,281 shares already held as of February 29, 2024, is thus set at €757,519,000.

In the event of a capital increase through incorporation of reserves and allocation of performance-related stock grants, a share split or reverse shares split, this amount will be adjusted by a multiplier equal to the ratio between the number of shares in the share capital prior to the transaction and the number after the transaction.

This authorization, which cancels and supersedes any previous authorization of the same nature, in particular the one granted by the shareholders' meeting of June 20, 2023 in its twenty first resolution, is granted for a period of eighteen months from the date of this meeting.

All powers are conferred to the board of directors, with the power of delegation, to place all orders, enter into all agreements, carry out all formalities and declarations with any organization, in particular the French financial markets authority and, more generally, to do what will be necessary for the purposes of carrying out transactions performed in accordance with this authorization.

### **EXTRAORDINARY BUSINESS**

### **8. Authorization to be granted to the board of directors to carry out the free allocation of performance-related stock grants**

### **Statement**

### **Resolution 23: authorization to be granted to the board of directors to carry out the free allocation of performance-related stock grants**

The shareholders' meeting of June 21, 2021 adopted a resolution to renew for a new period of 38 months the ability to allocate the company's performance-related stock grants, under the conditions of articles L225-197-1 *et seq*. of the French commercial code.

This resolution allows for performance-related stock grants to be awarded to managers or comparable employees, or certain categories thereof, as well as to the corporate officers referred to in article L225-197-1 of the French commercial code, both for Virbac and the companies that are either directly or indirectly associated with it, in accordance with article L225-197-2 of the French commercial code.

The total number of performance-related stock grants awarded may not represent over 1.0% of Virbac's capital. The allocation is made with no dilution, the company purchasing the number of required shares on the market.

Similar to the prior authorization, the bonus performance-related stock grants will only be definitive at the end of a vesting period of at least two years, with the shares thus held also having to be retained for at least two years from the end of the vesting period. The board of directors will determine the identity of the beneficiaries as well as the terms and grant criteria for the shares that will be linked to the improvement in the Group's performance levels.

As the authorization's term expires at the end of the next shareholders' meeting, we are submitting a new resolution that will cancel and replace the previous authorization. For more details, see page 154.

The executive board members have undertaken not to resort to hedging transactions for their risk of performancerelated stock grants, until the end of the share lock-in period set by the board of directors.

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### **Resolution**

### **Twenty-second resolution: authorization to be granted to the board of directors to proceed with free allocations of performance-related stock grants**

The shareholders' meeting, in accordance with *quorum* and majority requirements for extraordinary shareholders' meetings, having acquainted itself with the board of directors' report and the statutory auditors' special report, and in accordance with articles L225-197-1 *et seq.* of the French commercial code:

• authorizes the board of directors to carry out, on one or more occasions, the free allocation of performancerelated stock grants of existing Virbac shares to managers or comparable employees, or certain categories thereof, as well as to the corporate officers referred to in article L225-197-1 of the French commercial code, both from Virbac and the companies that are either directly or indirectly associated with it, in accordance with article L225-197-2 of the French commercial code;

• resolves that the total number of performance-related stock grants that may be allocated under this authorization, may not exceed 1% of Virbac's share capital as valued on the day of the adoption of the allocation resolution by the board of directors, subject to the regulatory adjustments necessary to protect the rights of the beneficiaries of the shares;

• resolves that, within the aforementioned set limit, the number of performance-related stock grants allocated to the chief executive officer and the deputy chief executive officers during the term of this authorization may not exceed 0.5% of the capital as of the day of award;

• resolves that the final allocation of existing performance-related stock grants shall be contingent upon fulfillment of individual and collective performance criteria to be defined by the board of directors;

• resolves that the allocating of performance-related stock grants to beneficiaries shall be determined at the end of a minimum vesting period of two years;

• resolves that the minimum holding period for performance-related stock grants by the beneficiaries shall be two years;

• vests all powers in the board of directors, with the option of sub-delegation, to implement this authorization and to:

– determine the identity or class(es) of the beneficiaries of the free allocation of performance-related stock grants, among the personnel and the corporate officers of the company or the aforementioned companies and the number of shares allocated to each of them;

– determine the duration of the vesting period;

– determine whether the performance criteria according to which the shares would be allocated were satisfied, and adding, where applicable, all the conditions and criteria that it deems relevant;

– set the conditions and, where applicable, the criteria for the free allocation of performance-related stock grants, specifying that for shares awarded to corporate officers, the board of directors shall resolve either that the performance-related stock grants awarded may not be transferred by the parties concerned prior to leaving the company, or shall set the quantity of performance-related stock grants awarded that they must keep as registered shares until they leave the company;

– have the ability to temporarily suspend the allocation rights;

– set final awarding dates and the dates as from which the shares may be freely transferred, taking legal restrictions into account;

– record the allocated performance-related stock grants as registered shares in the name of their holder, noting the holding period and the term of such holding period and lifting the holding period for the shares for any circumstance for which applicable regulations allow the lifting of the holding period;

• authorizes the board of directors to provide for, where appropriate, the permanent allocation of the shares before the end of the vesting period and the elimination of the holding period in the event of the disability of the beneficiary corresponding to classification in the second or third categories provided in article L341-4 of the French social security code, as well as in the event of the death of the beneficiary;

• authorizes the board of directors, where appropriate, to adjust the number of allocated performance-related stock grants related to any transactions involving Virbac's company share capital;

• delegates all powers to the board of directors, with the power of sub-delegation within legal limits, to implement this authorization, to perform all acts, formalities and declarations, and generally do whatever is necessary.

The shareholder's meeting acknowledges the fact that, if the board of directors uses this authorization, it shall inform the shareholders' meeting each year of the transactions carried out under the provisions of articles L225-197-1 to L225-197-3 of the French commercial code under the conditions provided for in article L225-197-4 of said code.

This authorization is granted for a period of 38 months as from the day of this meeting and cancels and replaces the unused portion of the twenty-fifth resolution of the joint shareholders' meeting of June 21, 2021.

### **9. Amendment of the articles of association**

### **Statement**

**Resolution 24: deletion of the provisions of article 15.2.2 of the articles of association**

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European Regulation 2019/6 has established a new European regulation on medicines for veterinary use. As of January 28, 2022, the Member States of the European Union have had to comply with all the rules of this regulation. Thus, article L5142-1 of the French public health code was amended by removing the concepts of "responsible pharmacist" and "responsible veterinarian" as well as the obligation to appoint a "responsible pharmacist" or "responsible veterinarian" as a corporate officer. At present, a "qualified person" should be appointed when the company has a veterinary medicine manufacturing activity, and a "responsible person" when the company has a veterinary medicine distribution activity. Since the "qualified person" and/or "responsible person" no longer need be associated with general management, their appointment may fall within the powers and duties of the chief executive officer rather than those of the board of directors. Therefore, article 15.2.2 of Virbac's articles of association stipulating that "*the board of directors appoints a deputy chief executive officer with the diplomas required by the legislation in force, responsible for performing the duties of "responsible pharmacist or veterinarian," in accordance with the provisions of articles L5142-1 et seq. of the French public health code*" became irrelevant and should be amended.

### **Resolution**

### **Twenty-fourth resolution: deletion of the provisions of article 15.2.2 of the articles of association**

The shareholders' meeting, in accordance with *quorum* and majority requirements for extraordinary shareholders' meetings, having read the board of directors' report, decide to delete the provisions of article 15.2.2 of the company's articles of association, which have become irrelevant, in order to remove the obligation to appoint a "responsible pharmacist or veterinarian" as a deputy chief executive officer, in accordance with article L5142-1 of the French public health code, which came into force on March 25, 2022.

### **10. Powers for formalities**

### **Statement**

### **Resolution 25: powers**

This resolution is intended to confer the necessary powers to carry out the formalities subsequent to the shareholders' meeting.

### **Resolution**

### **Twenty-fifth resolution: powers for formalities**

The shareholders' meeting, in accordance with *quorum* and majority requirements for ordinary shareholders' meetings, confers all powers to the bearer of an original, an extract or a copy of this meeting minutes in order to carry out all formalities stipulated by law.

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## Products glossary

The product names stated in the annual report and listed below are subject to protection in particular in respect of trademarks. **Virbac and/or its subsidiaries are the owners or have exclusive use of them**. All medicines or products mentioned in this document can be not authorized or not marketed in all the countries including France.

### **Afilaria**

long-acting injectable suspension for the preventive treatment of heartworm disease in dogs

### **Agrimin Forte**

food supplement for farm animals

### **Allerderm foam**

micellar water-based no-rinse foam cleanser for both dogs and cats

### **Cortotic**

antimicrobial-free solution recommended as a first line treatment of acute erythemato-ceruminous otitis externa in dogs

### **Dexoryl**

oily suspension ear drops indicated in the treatment of ear infections in dogs and cats

**Evicto** selamectin-based endectocide for dogs and cats

**Multimin** injectable mineral supplement for farm animals

**Nutri-plus gel**  food supplement for dogs in oral paste form

**Suigen HC**  classical swine fever vaccine

**Suigen PCV2**  porcine circovirus type 2 vaccine

**Suigen Rota Coli** 

vaccine against neonatal piglet diarrhea caused by rotavirus or colibacilli

**Tulissin** 

tulathromycin antibiotic injectable solution for farm animals

**Veterinary HPM**  specialized petfood for dogs and cats

**Zoletil**  multi-species general anesthetic

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## WE ARE AT YOUR SERVICE **ON 5 CONTINENTS**

**CORPORATE.VIRBAC.COM**

**Virbac group**

13e rue LID - BP 27 06511 Carros cedex - France Tél. : +33 4 92 08 71 00 - contact@virbac.com

Investor relations finances@virbac.com Corporate Communications communication@virbac.com

Public limited company with a capital of 10 572 500 € 1ère avenue 2065 m LID - 06511 Carros cedex - France - 417 350 311 RCS Grasse

Image /page/269/Picture/8 description: The image contains the text "Shaping the future of animal health" in white font on a brown background.

Image /page/269/Picture/9 description: The image shows the Virbac logo. The word "Virbac" is written in white letters with a red dot above the "i". Underneath the word is a red line. The background is blue.