2017-11-16 Independent Expert Report E

KPMG Advisory Tel.
+32 (0)2 708 43 00

Deal Advisory Fax +32 (0)2 708 43 99
Bourgetlaan - Avenue du Bourget 40 www.kpmg.be
1130 Brussel - Bruxelles
Belgium
Jetma SPRL, represented by its permanent Our ref JDN/SG/SM

representative Jean-Marie Limpens
Lumeur SCS, represented by its permanent
representative Luc Meurrens
Delvero SPRL, represented by its
permanent representative Véronique
Delens
Committee of independent directors

PCB SA
Rond-point Robert Schuman 6, box 5
1040 Brussels
9 August 2017
Dear committee of independent directors
Report of the Independent Expert
In accordance with our engagement letter dated 8 August 2016, please find
hereby our report as independent expert assisting PCB SA’s committee of
independent directors in the context of a voluntary application of a procedure
substantially similar to the procedure set out in Article 524 of the Belgian
Companies Code related to the proposed contribution in kind of McKesson
Belgium Holdings SPRL in PCB SA by OCP S.A.S.
This report sets out the conclusions of KPMG Deal Advisory, a division of KPMG
Advisory civil CVBA as to our evaluation, from a financial point of view, of the
valuation proposed by PCB SA and Celesio AG in respect of the proposed
contribution. We understand this report will be attached to the report by the
committee of independent directors. We refer to Sections 1 and 2 of our report
for details on our scope and limitations.
Should you wish to discuss the contents of this draft report, or if we can be of
any further assistance, please do not hesitate to contact us.
Yours faithfully
KPMG Deal Advisory
KPMG Advisory CVBA/SCRL

Burgerlijke vennootschap met
handelsvorm met beperkte
Maatschappelijke zetel - Siège
Deal Advisory is a business unit of KPMG Advisory. aansprakelijkheid - Société civile à
social:
KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG Bourgetlaan - Avenue du Bourget forme commerciale et à
network of independent member firms affiliated with KPMG International 40 responsabilité limitée
Cooperative ("KPMG International"), a Swiss entity. 1130 Brussel - Bruxelles BTW - TVA BE 0439.819.279
België - Belgique RPR Brussel - RPM Bruxelles
9 August 2017
Report of the independent expert in the context of a voluntary application

of a procedure substantially similar to the procedure set out in Article
524 of the Belgian Companies Code related to the contribution in kind of
McKesson Belgium Holdings SPRL in PCB SA
1 Introduction
On 15 December 2015, Celesio Holdings Deutschland GmbH & Co. KGaA
entered into a share purchase agreement with the French Cooperative Welcoop,
with the purpose of acquiring all of the shares in Belmedis SA, Alphar Partners
SA, Cophana SA, Espafarmed SLU and a stake of 54.26% in Sofiadis CVBA.
Concurrently, Celesio Holdings Deutschland GmbH & Co. KGaA also entered
into an asset purchase agreement for the European export business of Sofarex
BVBA (together “Medibel”).
For the purpose of acquiring Medibel, a new company was incorporated by
Celesio Holdings Deutschland GmbH & Co. KGaA, i.e. McKesson Belgium
Holdings SPRL (hereafter “McKBH”), a Belgian private limited liability company.
Following the incorporation, all shares except one were transferred to OCP SAS.
The remaining share was transferred to Admenta Deutschland GmbH.
After fulfilment of the conditions precedent, including the approval of the
competition authorities, the acquisition was closed on 2 May 2017.
KPMG Deal Advisory, a division of KPMG Advisory Civil CVBA, (hereafter
“KPMG Deal Advisory” or “KMPG” or “we/our”) was engaged by the committee
of independent directors of PCB SA, made up by Jetma SPRL, represented by
its permanent representative Jean-Marie Limpens, Lumeur SCS, represented by
its permanent representative Luc Meurrens and Delvero SPRL, represented by
its permanent representative Véronique Delens as the independent directors
(hereafter “the Independent Directors”) of PCB SA (hereafter “PCB” or “the
Company”) to assist in the context of the proposed contribution in kind by OCP
SAS, the majority shareholder of the Company, of McKBH 1 into the Company
(hereafter “the Proposed Contribution”).
Although not legally required, the Board of the Company decided to voluntarily
apply a procedure substantially similar to the procedure set out in Article 524 of
the Belgian Companies Code. Accordingly, the Board requested a committee of
three independent directors to review the Proposed Transaction in accordance
with principles substantially similar to the requirements of Article 524 of the
Companies Code.
1
We understand that prior to the contribution in kind, McKesson Belgium Holdings will divest Alphar Partners
to another Celesio Group entity. We note that the proceeds of the sale of Alphar Partners will remain in
McKesson Belgium Holdings and will be part of the contribution.
© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 2

9 August 2017
The Independent Directors appointed KPMG Deal Advisory as independent

expert to assist them in their review of the Proposed Contribution, more
specifically to assist the Independent Directors in evaluating, from a financial
point of view, the valuation proposed by the Company in respect of the Proposed
Contribution.
In this respect, KPMG Deal Advisory has prepared this report (hereafter “the
Report”), which is merely a summary of a detailed supporting analysis KPMG
Deal Advisory has made in order to come to its conclusions, containing the below
elements:
- A description of the scope and tasks performed;
- A statement of independence;
- An analysis of the valuation performed and proposed by the Company and
the contributing shareholder;
- A valuation analysis regarding the company and McKBH, including an
overview of the valuation methodologies applied;
- A description of the main factual information used and assumptions applied;
- The sources of information;
- Our conclusions
A glossary is attached as Appendix II.
2 Scope, scope limitations and independence
Scope and scope limitations
KPMG Deal Advisory’s role has been to assist the Independent Directors in
evaluating, from a financial point of view, the relative valuation proposed by the
Company for the Proposed Contribution. This relative valuation will form the
basis for determining the number of new shares in the Company to be issued
and the subscription price per new share in the Company.
This Report summarises the conclusions of our analysis, undertaken in the
period between 8 August 2016 and 4 July 2017 by KPMG Deal Advisory. Our
analysis, established in good faith and on the basis of market practices, has
been prepared for the exclusive benefit of the Independent Directors.
Our analysis is based on information made available to us until 4 July 2017. We
will not automatically update our Report for any events or circumstances which
may occur after this date.
Our opinion on the stand-alone value of PCB and Medibel is based on prevailing
market, economic and other conditions as at 30 April 2017. Conditions can
change over relatively short periods of time. Any subsequent changes in these
conditions could impact upon the value, either positively or negatively. In
addition, the forecasts and projections as supplied to us are based upon
assumptions about events and circumstances which have not yet transpired. We
do not make any statement in this Report as to whether any forecasts or
projections included in this Report will be achieved, or whether the assumptions
and data underlying any prospective financial information are accurate,

9 August 2017
complete or reasonable. We do not warrant or guarantee the achievement of

any such forecasts or projections.
We have prepared our Report on the basis of information provided to us by
management of Celesio AG and of the Company. We have relied upon the truth,
accuracy and completeness of any information provided or made available to us
in connection with our services without independently verifying it. We do not
accept responsibility for such information which remains the responsibility of
management. Details of our principal sources of information are set out in
Appendix I.
KPMG Deal Advisory has not performed an independent verification of these
information elements and can therefore not be held responsible for errors or
inaccuracies which might result therefrom.
We note that KPMG Deal Advisory did not have any direct interaction with the
management of Medibel and that the information regarding Medibel has been
mainly based on the draft due diligence report dated 6 November 2015 by
Deloitte and on further, more recent financial information, provided by the
Company’s and Celesio AG’s management. We understand that for any of our
questions that could not be answered by management of Celesio or PCB, the
Financial Director of the Medibel entities was consulted by Celesio’s M&A team.
Management of Celesio and PCB have been responsible for ensuring that
information provided by it or its representatives is accurate, fair in its portrayal
and complete and forms a reliable basis for our report. Notwithstanding the
aforementioned, at the moment of preparation of this report there was missing
information, including, but not limited to, the consolidated statements of McKBH
(please refer to sections 6.2.1. and 6.2.2).
KPMG Deal Advisory has not provided, obtained or reviewed any specialist
advice, including but not limited to, legal, accounting, actuarial, environmental,
information technology or tax advice.
The services provided under our engagement letter have not been undertaken
in accordance with any auditing, review or assurance standards. Any reference
to ‘audit’ and ‘review’, throughout this Report, is not intended to convey that the
services have been conducted in accordance with any auditing, review or
assurance standards. As our scope of work does not constitute an audit or
review in accordance with any auditing, review or assurance standards, our work
will not necessarily disclose all significant matters about PCB or Medibel or
reveal errors and irregularities, if any, in the underlying information.
This Report should not be regarded as suitable for use by any parties or persons
other than the Independent Directors. It is being provided solely for the benefit
of the Independent Directors in connection with, and for the purposes of, their
review of the proposed contribution in kind in accordance with principles
substantially similar to the requirements of Article 524 of the Companies Code.
It may not be used or relied upon for any purpose by any person other than the
Independent Directors.
A party, other than the Independent Directors, may only rely on our Report if it
has executed a formal letter of reliance with KPMG Advisory civil cvba (of which
KPMG Deal Advisory is a division) (“KPMG Deal Advisory”). If you have not
9 August 2017
executed a formal letter of reliance with KPMG Deal Advisory, KPMG Deal
Advisory:
— owes you no duty (whether in contract or in tort or under statute or otherwise)
with respect to or in connection with the Report or any part thereof;
— will have no liability to you for any loss or damage suffered or costs incurred
by you or any other person arising out of or in connection with the provision
to you of the Report or any part thereof, however the loss or damage is
caused, including, but not limited to, as a result of negligence.
If you have not executed a formal letter of reliance with KPMG Deal Advisory
and you wish to rely upon this Report or any part thereof you will do so entirely
at your own risk.
We note that this Report is issued in the English language. If any translations of
this Report are delivered, the English version shall prevail in case of divergence
between the language versions.
Independence
In the context of this engagement, KPMG Deal Advisory has acted
independently from the Company and McKBH. In particular, as at the date of this
Report:
— no audit mandate is being exercised or has been exercised over the last two
years for the Company, McKBH or Celesio AG by KPMG Deal Advisory,
KPMG Advisory or a member firm of the KPMG network;
— neither KPMG Deal Advisory, nor KPMG Advisory, nor a member firm of the
KPMG network is remunerated by the Company, McKBH or Celesio AG in
the context of the envisaged Contribution except for the assignment
described in this Report;
KPMG network has a pecuniary interest, other than the remuneration for
KPMG Deal Advisory in the context of the Report, in the (success of the)
envisaged Contribution. No success fee is being paid related to the
execution of the envisaged Contribution;
KPMG network is remunerated by the Company, McKBH or Celesio AG in
the context of the acquisition of Medibel by McKBH;
— KPMG Deal Advisory has not executed any assignments for the Company or
Celesio AG over the last two years preceding the date of our Report. Over
the course of the last two years preceding the date of our Report KPMG
Advisory civil CVBA has performed some assignments, i.e. related to internal
audit, management consulting or IT advisory for Celesio AG or the company;
however none of these could be considered material and having an impact
on the independence of KPMG Deal Advisory in the context of this Report.
Tasks performed
In connection with this engagement, we have, amongst others:

9 August 2017
— Confirmed our understanding of the Proposed Transaction;

— Reviewed the following historical business and financial information, relating
to the Company and to McKBH and their subsidiaries:
o audited consolidated financial statements of the Company for the
years ending 31 December 2015 and 31 March 2016; unaudited
consolidated financial statements for the years ending 31 March
2015 (comparative financials following year-end change) and 31
March 2017 (draft financials);
o unaudited, unconsolidated balance sheet (US GAAP) for McKBH
as at 31 May 2017, including the projected impact of the transfer
of the shares in Alphar Partners to another Celesio entity;
o draft unaudited closing accounts for Medibel entities (excluding
Sofarex assets) as at 30 April 2017;
o aggregated balance sheet for the years ending 31 December
2015 and 31 December 2016 for Medibel entities (excl. Sofarex).
We note the aggregated balance sheet is unaudited, however we
understand that the 31 December 2015 statutory financial
statements of each of the entities have been audited;
o draft financial due diligence report on Medibel as prepared by
Deloitte, dated 6 November 2015.
— Reviewed the share purchase agreement and overview of the purchase
consideration related to the acquisition by McKBH of all the shares in
Belmedis SA, Alphar Partners SA, Cophana SA, Espafarmed SLU and a
stake of 54.26% in Sofiadis CVBA;
— Reviewed the financial terms and conditions set forth in the draft Contribution
and Subscription Agreement dated 16 June 2017;
— Sought to understand the current market environment and competitive
landscape in the sector of the wholesale distribution of pharmaceuticals;
— Reviewed the DCF valuations by the Company and Celesio of the Company
and of Medibel and other information provided (see Appendix I for an
overview);
— Held discussions with members of the senior management of the Company
and of Celesio with respect to the businesses and financial information
(historical as well as prospective) of the Company and of Medibel in order to
assess the assumptions taken in the business plan, and to understand the
basis for their valuation in general (including but not limited to selected
approach, adopted assumptions and the resulting proposed values). We
note we have relied on management’s confirmation that any related party
transactions are included in the business plans at arm’s length rates;
— Reviewed historical prices and trading volumes of the shares in the
Company;
— Reviewed peer group and transaction multiples involving broadly
comparable companies;
9 August 2017
— Performed our own analysis with regard to the stand-alone market value of
the Company and of McKBH, by selecting appropriate valuation
methodologies, applying the selected methodologies and considering the
valuation results;
— Conducted other financial analyses as we deemed appropriate;
— Formed a conclusion on the reasonableness of the relative valuation
proposed to be used in the Proposed Contribution, by comparing it to our
resulting valuation ranges and relative valuations.
The findings from our analysis have been summarised in the following sections.
3 Our understanding of the proposed contribution perimeter
PCB is a Belgian listed company, headquartered in Brussels and active as a
pharmaceutical wholesale distributor serving retail clients (pharmacies) in
Belgium, through its operational subsidiary Pharma Belgium SA.
It is proposed that all the shares (1,240,371) in McKBH will be contributed into
PCB. McKBH is a holding company specifically set up for the acquisition of
Medibel. As at the date of this Report, McKBH does not have any activities on
its own and is almost entirely equity financed.
We understand that prior to the contribution in kind, McKB will divest Alphar
Partners SA to another Celesio Group entity. We note that the proceeds of the
sale of Alphar Partners will remain in McKB and will be part of the Proposed
Contribution. The subsidiaries of McKBH at the date of the Proposed
Contribution will be the following:
— Belmedis (100%): wholesale distributor of pharmaceutical products to
pharmacies, laboratories and hospitals in Belgium. Belmedis is the second
largest wholesale distributor in Belgium, after Febelco. The company owns
six warehouses of which 5 are fully automated. It also holds a financial
interest in one pharmacy;
— Sofiadis (54.26%): a buying cooperation of Belgian pharmacists (ca. 430
independent pharmacists which hold a 45.74% stake). Sofiadis sources the
products for its members and sells them to Medibel with a 5.0% margin.
Medibel then organises delivery and logistical services. Occasionally
Sofiadis sources from Belmedis.
— Cophana (100%): a logistics company (pre-wholesaler) offering services in
warehousing, preparation of orders, delivery to pharmacists and distributors
and invoicing and debt collection for laboratories. Cophana leases a 6,000m²
temperature controlled warehouse;
— Espafarmed (100%): Spanish agent sourcing Spanish products;
— Sofarmex (100%): an entity established with the specific purpose of acquiring
selected Sofarex assets related to the European Economic Area activities of
Sofarex (mainly exporting Spanish products to the EU).
OCP SAS, McKBH, PCB form part of a group of companies controlled by Celesio
AG and ultimately controlled by US based company McKesson Corporation.

9 August 2017
4 Basis of valuation and generally accepted valuation

methodologies
4.1.1 Basis of valuation
Our analysis, and as we understand also the analysis by PCB and Celesio, has
been prepared on the basis of “Market Value” and value a 100% equity stake in
PCB and a 100% equity stake in McKesson Belgium Holdings as at 30 April
2017. The generally accepted definition of “Market Value” is the value as applied
between a hypothetical willing vendor and a hypothetical willing prudent buyer
in an open market and with access to all relevant information.
Market value excludes the premium over and above market value that a specific
buyer, who can achieve synergistic or other benefits from the acquisition, may
be prepared to pay. As such, we have considered the value on a stand-alone
basis and have not taken into account potential synergies which could potentially
be realized through a merger of the two companies.
4.1.2 Valuation methodologies for mature companies
When valuing mature companies, “Market Value” is commonly derived by
applying one or more of the following valuation approaches:
— An income approach, generally a discounted cash flow (“DCF”).
Under a DCF approach, forecasted cash flows are discounted back to the
present date, generating a net present value for the cash flow stream of the
business. A terminal value at the end of the explicit forecast period is then
determined and that value is also discounted back to the valuation date to
give an overall value for the business.
The rate at which the future cash flows are discounted (“the discount rate”)
should reflect not only the time value of money, but also the risk associated
with the business’ future operations. This means that in order for a DCF to
produce a sensible valuation figure, the importance of the quality of the
underlying cash flow forecasts is fundamental. The discount rate most
generally employed is the Weighted Average Cost of Capital (“WACC”),
reflecting an optimal as opposed to actual financing structure, which is
applied to unleveraged cash flows and results in an value for the business
(“Enterprise Value” or “EV”, see 4.1.3).
— A market approach, typically capitalised earnings, with reference to
comparable companies (“CoCo”) or comparable transactions (“CoTrans”).
An earnings based approach estimates a sustainable level of future earnings

for a business (“maintainable earnings”) and applies an appropriate multiple
to those earnings, capitalising them into a value for the business. The
earnings bases to which a multiple is commonly applied include Revenues,
EBITDA, EBIT and Profit After Tax. While the first three earnings bases lead
to an EV, the latter would lead directly to an equity value.
A second type of market approach can be adopted if the company is listed.
In that case, one should also consider whether the share price is a

9 August 2017
reasonable proxy for market value. This is generally done via a volume
weighted average price (“VWAP”) analysis.
— A cost approach, generally (corrected) net assets. Under a net assets
approach, total value is based on the sum of net asset value plus, if
appropriate, a premium to reflect the value of intangible assets not recorded
on the balance sheet. A net asset value is equivalent for an equity value.
Net asset value is determined by marking every asset and liability on (and
off) the company’s balance sheet to current market values.
A net asset methodology is most applicable for businesses where the value
lies in the underlying assets and not the ongoing operations of the business
(e.g. real estate holding companies), or where the rate of return on the assets
is considered low.
4.1.3 Enterprise or equity value
Depending on the valuation methodology selected, and the treatment of the
business’ existing debt position, the valuation range calculated will result in
either an enterprise value (EV) or an equity value.
An EV reflects the value of the whole of the business (i.e. the total assets of the
business including fixed assets, working capital and goodwill/intangibles) which
accrues to the providers of both debt and equity.
An equity value reflects the value that accrues to the equity holders.
To compare an EV to an equity value, the level of net debt must be deducted
from the enterprise value.
5 Valuation proposed by the Company and Celesio
5.1 Selected valuation methods
5.1.1 McKBH
PCB and Celesio have adopted a (corrected) net assets approach to determine
the equity value of McKBH, whereby the value of the shareholding in Medibel is
included based on two methodologies:
— Based on the cost of the recent transaction;
— Using a DCF approach.
As a cross-check for the value of the activities (EV) of McKBH, PCB and Celesio
have also performed a capitalised earnings analysis, based on CoCos and
CoTrans.
5.1.2 PCB
In determining the equity value of PCB, PCB and Celesio have selected the DCF
approach as the primary valuation method.
In addition, the following methods have been applied as a cross-check:
— Net assets approach
— Share price based analysis

9 August 2017
We understand that the capitalised earnings method (CoTrans/CoCos) has not

been retained as a cross-check due to the current low profitability of PCB.
5.2 Application of the selected valuation methods
5.2.1 McKBH
5.2.1.1 Corrected net assets based on purchase consideration
PCB and Celesio have argued that, since Medibel has recently been acquired
by Celesio and the transaction consideration was the result of negotiations
between two unrelated parties, the book value of the financial assets (i.e. the
equity investment in the Medibel entities) on McKBH’s balance sheet are a
reasonable proxy for their market value.
Further, it is argued that the market values of the other assets on McKBH’s
balance sheet are equal to their book value. These assets mainly comprise of
intercompany receivables on the Medibel entities (replacing the intercompany
receivables/payables that were in place with Welcoop entities pre transaction).
In addition, PCB and Celesio have assumed that:
— Alphar Partners will be sold at book value to another Celesio entity (cash in
exchange for shares and an intercompany receivable);
— A capital increase will be done prior to the Proposed Contribution in order to
finance the payment of the final part of the purchase consideration, estimated
at €6.4m.
Based on the (unaudited) balance sheet as at 31 May 2017 and the draft
closing accounts as at 30 April 2017, the book value of net assets is €60.2m.
Adding to this the future capital increase of €6.4m, the equity value of McKBH
is estimated at €66.6m using the net assets approach.
5.2.1.2 Corrected net assets based on DCF valuation of Medibel
This approach is largely the same as the one described in the previous section,
however in this case the book value of the shareholdings in the Medibel entities
is replaced by the DCF based equity value.
The DCF valuation has been based on financial projections for Belmedis,
Cophana, Sofiadis and Espafarmed. We understand that the basis for and the
main assumptions in this business plan, which covers the period FY18 (31 March
2018) to FY32 are as follows:
— The business plan is on a stand-alone basis (i.e. no potential synergies are
taken into account). In 2015, a business plan for Medibel was made by
Celesio in the context of the acquisition and more specifically to support
pricing. The plan was updated in May 2017 based on pre-closing 30 April
2017 financials, which were in line with the projections included in the earlier
plan.
— The business plan has been established on gross margin level, with the
financials for the year ending 31 December 2016 serving as a basis. Celesio
management expects Medibel’s turnover to grow at a yearly rate of 1.5%

9 August 2017
between FY19 and FY26 reaching its long term growth rate of 1.0% as of
FY27.
— Gross profit as % of turnover is expected to remain constant over the
business plan forecast period at 5.9%, which is in line with historical
performance. Medibel’s EBITDA margin is expected to slowly increase
during the first couple of years of the forecast period from 1.1% to 1.3%
(FY18-FY25) as a result of turnover growth and slightly lower operating
expenses (as % of turnover). The other operating expenses, which are
expected to grow at a 1.0% rate, mainly include salary costs.
— Working capital takes into account a one-off investment in working capital at
the start of the projection period, due to a shortfall of working capital at
closing date, and for subsequent years working capital is estimated at 6.0%
of turnover.
— Yearly capex ranges between €0.5m and €0.8m.
— For the terminal value (after FY32), a yearly sales growth of 1%, a gross
margin of 5.9% and an EBITDA margin of 1.3% has been adopted.
The EV of the abovementioned entities has been calculated by discounting the
Free Cash Flows to the Firm (“FCFF”) at a Weighted Average Cost of Capital
(“WACC”) of 7.0%. The cost of equity component of the WACC has been
estimated based on the generally accepted Capital Asset Pricing Model
(“CAPM”). This has resulted in a base case DCF value of €71.8m.
PCB and Celesio have also performed a sensitivity analysis, using a WACC
ranging from 6.5% to 7.5% with the terminal growth rate of 1%. The resulting
range is €66.1m to €78.6m.
In order to arrive at an equity value for Medibel, PCB and Celesio have taken
the following steps:
— Deducted the value attributable to the minority shareholders of Sofiadis;
— Deducted the net debt of Belmedis, Cophana, Sofiadis and Espafarmed;
— Added the book value of the investment in Janus SA since its cash flows are
not included in the business plan;
— Added the equity value of Sofarmex.
In McKBH’s balance sheet, the book value of the shares in the Medibel entities
is then is then replaced by the calculated market value of the shares, amounting
to €49.3m in the base case, resulting in a corrected net assets value of €76.4m.
5.2.1.3 Cross-check using multiples
In line with general market practice, PCB and Celesio have performed a cross-
check of the EV resulting from the DCF approach. Based on the financial
information available for a selection of comparable listed companies and of
comparable transactions, an EV range has been calculated based on EBITDA
multiples. PCB and Celesio have concluded that:
— the base case DCF value of €76.4m falls within the EV range based on the
CoTrans but is higher than the high end of the EV range based on CoCos;
9 August 2017
— the value based on the net assets approach (cost of the acquisition) falls
within both these ranges.
5.2.2 PCB
5.2.2.1 DCF valuation
PCB’s DCF valuation with valuation date 30 April 2017 has been based on the
business plan as developed by management of PCB, together with Celesio. The
financials for the year ending 31 March 2017 have been used as a basis for this
stand-alone plan, which is built on the key assumption that PCB will be able to
gain back market share and restore profitability to levels comparable to Medibel,
after which a similar growth pattern is followed.
We understand that the basis for and the main assumptions in PCB’s business
plan covering the period FY18 (31 March 2018) to FY32 are as follows:
— Turnover growth is expected to top 3.7% in FY18 and gradually decline to
1.0% as of FY23. Management believes this growth is achievable as it aims
to win back some of the market share lost following the fire in Evere in 2012.
— Gross margin is expected to remain stable around 5.7% over the business
plan forecast period.
— Staff costs are forecasted to decrease by 0.5% in FY18 resulting from
efficiencies achieved through the move to the new Eppegem warehouse.
Between FY19 and FY22, an annual increase of 0.5% is estimated
(compared to the forecast inflation of 1.5%). Management believes that
additional operational efficiencies can be achieved through a gradual
reduction in the frequency of daily deliveries towards two deliveries a day
(compared to the current three deliveries). A similar trend is observed in the
market.
— The business plan includes an operating lease expense of €0.6m related to
the renting of Laboratoria Flandria NV’s “fonds de commerce”, which
includes Flandria’s customers and its brand name. The rental agreement was
started on 1 April 2010 and amended in 2013 when it was agreed that the
annual lease cost would not be below €0.6m or above €0.8m and would
further be reviewed annually and revised based on PCB’s evolution of EBIT
generated through Flandria’s client base (including realised synergies). In
the business plan it is assumed that PCB will pay a yearly lease of €600k to
Flandria’s owner Pharma Partners NV (no increases foreseen). In FY21 it is
assumed that PCB will acquire the brand name and client portfolio of
Laboratoria Flandria for a consideration of €4.2m.
— The EBITDA margin is expected to increase from 0.5% in FY18 to its long
term EBITDA margin of 1.2% in FY22. The margin improvement is due to the
sales growth forecasted between FY18 and FY22 (turnaround phase) and
expected operational efficiencies resulting in an increase of the EBITDA
margin.
— The business plan of PCB as forecasted by PCB/Celesio assumes an annual
net working capital level of approximately 6.85% of sales. This percentage is
in line with historical net working capital levels (i.e. 6.86% for FY17).

9 August 2017
— FY18 and FY19 capex include additional investment expenses related to the
implementation of an ERP system. The estimated costs amount to €1.2m
and €0.3m for FY18 and FY19 respectively. Furthermore, management
believes an annual capex investment of €0.6m to be a sustainable level for
PCB.
— For the terminal value (after FY32), a yearly sales growth of 1%, a gross
margin of 5.7% and an EBITDA margin of 1.2% has been adopted.
The EV of PCB has been calculated by discounting the FCFF at a WACC of
7.0%. The cost of equity component of the WACC has been estimated based
on the generally accepted Capital Asset Pricing Model (“CAPM”). This has
resulted in a base case DCF value of €48.7m.
PCB and Celesio have also performed a sensitivity analysis, using a WACC
ranging from 6.5% to 7.5% with the terminal growth rate of 1%. The resulting
range is €44.2m to €54.1m.
In order to arrive at an equity value for PCB, PCB and Celesio have deducted
net debt amounting to €24.6m, resulting in an equity value for PCB of €24.1m or
€4.31 per share.
5.2.2.2 Net assets
PCB and Celesio has also considered the book value of net assets to be a
reasonable proxy for the market value of equity. The book value of the net assets
of PCB amounts to €21.9m or €3.91 per share. This is based on the draft
unaudited balance sheet as at 31 March 2017.
5.2.2.3 Share price analysis
PCB and Celesio have also considered the market capitalisation of PCB, which
is equal to the number of shares (5,596,520) times the share price. The
valuation range that has been put forward by PCB and Celesio is the following:
— Low end of €26.6m, based on the closing price on the day prior to the
announcement of the transaction (i.e. 24 May 2016);
— High end of €29.4m, based on the average market capitalisation of the
Company during 24 months up to 31 March 2017.
5.3 Proposed values and relative valuation
The following equity values have been retained and proposed by Celesio and
PCB:
— McKBH: €66.6m, which is the value resulting from the net assets approach,
i.e. taking into account Medibel at the cost of acquisition. This value is lower
than the low end of PCB’s and Celesio’s equity value range for McKBH based
on the DCF approach.
— PCB: €24.1m (€4.31 per share), based on the base case of the DCF
valuation. The valuation of the net assets approach has not been retained as
it is generally seen as a floor to the value of a company and does not take
into account the company’s future growth potential.
Further, the results of the share price analysis have not been retained as

9 August 2017
Management believes that the share price is not a reasonable indicator for
the equity value of the Company for the following reasons:
- The limited number of publicly available shares of the Company and the
low level of trading activity strongly suggest that the market for the
shares of the Company is illiquid. The price is therefore determined
based on small volumes and infrequent trades;
- In addition to the above, the price has not been driven by a broad
investor base since three shareholders have acquired a major part of
the shares.
Based on a contribution value of McKBH €66.6m and a market value per share
of PCB of €4.31, approximately 15.46m of new shares in PCB would be issued.
As part of our evaluation of the relative valuation that has been proposed, we
have performed our own valuation analysis of PCB and McKBH. This is
discussed in the following section.
6 Valuation analysis by KPMG
6.1 Selected methodologies
6.1.1 McKBH
As mentioned above, Celesio proposes to contribute in kind McKBH (excluding
Alphar Partners) into PCB. As McKBH was specifically set up for the acquisition
of Medibel, has no activities of its own and, besides the shares in the Medibel
related companies has only limited balance sheet items, currently all the
operational value resides in Medibel. On this basis, we have valued the equity
of McKBH as the sum of the EV of Medibel (value of activities) minus the pro
forma consolidated net financial debt position.
In determining the appropriate valuation methodology to be adopted in the
valuation of Medibel, we have considered the following:
— Medibel has recently been acquired by Celesio. The transaction
consideration was the result of negotiations between two unrelated parties.
Hence this transaction would meet the definition of market value (cf. infra).
— Celesio management has argued that the purchase consideration does not
include the value of any potential synergies that could be realised through a
merger with PCB.
— Between the announcement of the acquisition on 15 December 2015 and the
closing of the transaction on 2 May 2017, Medibel has performed in line with
expectations and in line with the assumptions used by Celesio during the
negotiations of the consideration to be paid.
Based on the above, we have considered the purchase consideration to be an
appropriate point of reference. We believe it is also appropriate to adopt a DCF
approach so as to confirm that the purchase consideration is a reasonable proxy
for the market value of Medibel on a stand-alone basis.

9 August 2017
We have also performed a cross-check by comparing the implied multiples

resulting from these two primary valuation methods to CoCos and CoTrans
multiples.
The equity value of McKBH is derived by deducting the pro forma consolidated
net financial debt position from the estimated EV of Medibel. We note that, by
lack of a consolidated balance sheet for McKBH, the pro forma consolidated net
financial debt position has been based on the unconsolidated balance sheet of
McKBH as at 31 May 2017 and the draft closing accounts for the Medibel entities
(as at 30 April 2017).
6.1.2 PCB
In determining the appropriate valuation methodology to be adopted in the
valuation of PCB, we have considered the following:
— PCB is currently in a situation whereby, after a number of years of low (or
even negative) profitability, the company seems to be gaining back market
share while at the same time improving its margins.
— Although current profitability is still below historical levels, management
expects this to improve in the coming years.
On this basis, we have considered a DCF approach to be the most appropriate
method to value PCB on a stand-alone basis, as it enables one to take into
account market circumstances as at the valuation date, the future cash
generating potential and expected increase in profitability, risk, and the time
value of money.
We do not consider a capitalised earnings approach to be appropriate, given
PCB’s earnings are currently below what is believed to be an achievable
sustainable level.
Therefore, as a cross-check to the DCF approach and given PCB’s lower
profitability in recent years, we have also selected a net assets approach.
In addition, given that PCB is a publicly listed company, we have also considered
the relevance of PCB’s share price in the context of our valuation.
6.2 McKesson Belgium Holdings SPRL
6.2.1 Consideration paid
Our first valuation method for McKBH is in essence the same as the net assets
approach adopted by PCB and Celesio (see 5.2.1.1). In calculating the equity
value based on the consideration paid for the Medibel entities, we arrive at the
same value, i.e. €66.6m.
We consider this to be one of the primary valuation methods to estimate the
value of the equity in McKBH, on the basis that the value for Medibel is based
on a transaction between two unrelated parties and hence is assumed to reflect
market value.
We have calculated the implied EV for Medibel (excluding Alphar Partners) to
be approximately €62.6m, by deducting the pro-forma consolidated net financial
debt (€4.0m) and the pro-forma consolidated cash-like and debt-like items

9 August 2017
(€0.1m) 2. With FY17 EBITDA at €6.2m, the implied LTM multiple for this
transaction is then approximately 10.1x.
We note that at the time of issuing this Report we have not been provided with
consolidated financial statements of McKBH and as such the valuation analysis
for McKBH is based on unconsolidated statements. However, based on further
interactions with management, including discussions on the pro forma
unconsolidated statements providing additional comfort, we have no indication
that receiving the (pro forma) consolidated financials would have a material
impact on our analysis.
6.2.2 Discounted cash flow method
Our DCF valuation, with valuation date 30 April 2017 has been based on the
business plan received from PCB and Celesio. As discussed above, the
discounting at a WACC of the free operational cash flows from the business plan
results in an EV for the activities of the abovementioned companies.
Based on an analysis of the information received from Celesio and our
professional judgement, we have made a number of adjustments to these cash
flows, driven by accounting, tax or other considerations.
Based on the information received from management, our understanding of
company specific factors (e.g. size, forecast risk) and our professional
judgement, we have adopted a weighted average cost of capital (“WACC”) of
7.4%, whereby the cost of equity has been developed using the Capital Asset
Pricing Model.
The resulting EV (base case) amounts to €65.6m, which corresponds to the
value of the activities of Belmedis, Sofiadis, Cophana and Espafarmed, and to
be compared to the base case value of €71.8m resulting from the DCF analysis
by PCB and Celesio.
With a WACC varying between 7.2% and 7.6% and a terminal growth rate
varying between 0.75% and 1.25%, the adjusted EV 3 for Medibel ranges
between €62.0m and €68.2m. With a pro forma consolidated net financial debt
being positive at approximately €4.0m (i.e. net cash), the equity value for
McKBH, based on our DCF analysis, would range between €65.9m and €72.1m.
McKBH Adjusted EV sensitivity McKBH Equity value sensitivity
€'000 64 866 7,20% 7,40% 7,60% €'000 0 7,20% 7,40% 7,60%

Terminal 0,75% 65 572 63 723 61 951 Terminal 0,75% 69 510 67 661 65 889
growth 1,00% 66 816 64 866 63 002 growth 1,00% 70 754 68 804 66 940
rate 1,25% 68 164 66 102 64 136 rate 1,25% 72 102 70 041 68 074
We refer to the last paragraph of the previous section (6.2.1) regarding the
consolidated financial statements.
2 May not add up due to roundings

3
Adjusted for minority interest in Sofiadis, EV of Sofarex and equity value of Janus (the latter two being
subsidiaries for which cash flows have not been included in the financial projections)

9 August 2017
6.2.3 Capitalised earnings multiples

A capitalisation of earnings approach is commonly applied to the following
earnings bases: Sales, EBITDA, EBIT and Earnings (i.e. Net Income). Of these
bases, we consider EBITDA to be the most appropriate earnings line given that
EBITDA is less sensitive to differences in funding structures, depreciation
policies and tax treatments.
In regards to the other earnings bases:
— Sales: Sales multiples (EV/Sales) often display a positive correlation with
companies’ profitability (e.g. EBITDA margin). Therefore, for the companies
in the peer group, we have performed a regression analysis of the EBITDA
margin vs. EV/Sales multiple and have applied the resulting regression
formula to Medibel’s data.
— EBIT: We consider that applying an EBIT multiple to Medibel’s current EBIT
levels is not appropriate, given that the current depreciation amount does not
seem to be on a recurring level. The business plan foresees a significant
decrease in depreciation levels in the coming years, from €2.5m in FY17 and
to €1.7m in FY22 and further down to €0.6m in the last forecast year.
— Earnings (Net Income): of all the above mentioned measures, this measure
is impacted the most by different funding structures, depreciation policies,
tax treatments and exceptional items.
On this basis, our most important metric for the earnings base is EBITDA.
Based on an analysis of EV/EBITDA multiples of comparable companies (last
twelve months and next twelve months) Medibel’s adjusted EV ranges from
€52.1m (8.5 times NTM EBITDA) to € 65.4m (10.7 times LTM EBITDA).
Source: Capital IQ; KPMG analysis
After taking into account the net financial debt, the equity value for McKBH
ranges between €56.1m and €69.3m.
In addition to the comparable companies analysis, we have also identified a
number of transactions involving broadly comparable companies during the
period September 2012 and November 2016. Based on the CoTrans analysis,
Medibel’s adjusted EV ranges from €52.3m to € 66.8m (8.6 to 10.9 times LTM
EBITDA). After taking into account the net financial debt, the equity value for
McKBH ranges between €56.2m and €70.7m.

9 August 2017
CoTrans - Medibel enterprise value based on EBITDA multiple

LTM LTM LTM
25% quartile Median 75% Quartile
EBITDA 6 182 6 182 6 182
EBITDA multiple 8,6x 9,6x 10,9x
Enterprise value 52 982 59 435 67 461
Adjusted enterprise value 52 288 58 740 66 767
Source: S&P Capital IQ;Mergermarket; KPMG analysis
We have also performed a regression analysis of the peer group companies’

sales multiple vs. their respective EBITDA margin 4. The explanatory factor (R²)
is 0.7. Applying the regression equation to Medibel’s FY17 EBITDA margin,
which amounts to 1.1%, results in an implied sales multiple of 0.12x. Applying
the implied sales multiple to Medibel’s FY17 sales figure results in an adjusted
EV of €67.4m and an equity value of €71.3m.
A more detailed overview of the capitalised earnings analysis is provided in
Appendix III.
6.2.4 Conclusion on McKBH
In Figure 1 below, the results of our valuation analysis for McKBH are
summarised. We have adopted two primary valuation methods and have cross-
checked the outcomes of these methods using the capitalised earnings method
(from three different angles).
The adjusted EV:
— includes the equity value of companies for which the cash flows are not
included in Medibel’s financials, being Sofarmex and Janus
— excludes the third party ownership in Sofiadis.
The adjusted EV based on the transaction consideration is in line with our base
case DCF valuation outcome.
We have also performed a cross-check using several multiple valuation
approaches. The valuation range resulting from the primary approaches falls
within the range based on EV/EBITDA or EV/Sales multiples, albeit rather at the
higher end. We note that a capitalisation of earnings analysis is inherently less
accurate than the two primary approaches. McKBH’s equity value is estimated
based on a pro forma consolidated net cash level of €4.0m and a net pro forma
consolidated debt-like position of €0.1m. Based on our analysis, we consider a
range of €66.0m to €72.0m to be reasonable for McKBH.
4 Sales multiples (EV/Sales) often display a positive correlation with companies’ profitability (e.g.
EBITDA margin). Applying a sales multiple without verifying the underlying profitability is often
not appropriate. The purpose of the regression analysis is to estimate the EV/sales multiple as a
(linear) function of a company’s profitability.

9 August 2017
Figure 1: Overview of valuation results of McKBH
Equity value proposed

by Celesio for McKBH
KPMG retained value

ranges
The equity value of McKBH as proposed by Celesio and PCB is at the low end
of this range.
6.3 PCB
6.3.1 Discounted cash flow method
Our DCF valuation, with valuation date 30 April 2017 has been based on the
business plan received from PCB and Celesio
Based on discussions with management of PCB and an analysis of the
information received from PCB and Celesio, we have made a number of
adjustments to these cash flows, driven by accounting, tax or other
considerations. The impact of these adjustments is insignificant.
Based on the information received from management, our understanding of
company specific factors (e.g. size, forecast risk) and our professional
judgement, we consider a WACC of 7.4% also to be reasonable for PCB.
Discounting the free cash flows to the firm at this WACC, results in a DCF base
case enterprise value of €47.3m.
With a WACC varying between 7.2% and 7.6% and a terminal growth rate
varying between 0.75% and 1.25%, the EV for PCB based on our DCF ranges

9 August 2017
between €44.7 and €50.3m. With a net financial debt position of €24.7m, the
equity value ranges between €20.0m and €25.6m.
PCB EV sensitivity Implied FY17 EV/EBITDA multiple
WACC WACC
€000 47 332 7,20% 7,40% 7,60% 7,20% 7,40% 7,60%
Terminal 0,75% 48 054 46 335 44 690 Terminal 0,75% 27,8x 26,8x 25,9x
growth 1,00% 49 139 47 332 45 606 growth 1,00% 28,5x 27,4x 26,4x
rate 1,25% 50 315 48 409 46 593 rate 1,25% 29,2x 28,1x 27,0x
PCB Equity value sensitivity PCB Equity value per share sensitivity
WACC WACC
€000 0 7,20% 7,40% 7,60% € 0 7,20% 7,40% 7,60%
Terminal 0,75% 23 353 21 634 19 989 Terminal 0,75% 4,17 3,87 3,57
growth 1,00% 24 438 22 631 20 904 growth 1,00% 4,37 4,04 3,74
rate 1,25% 25 614 23 708 21 892 rate 1,25% 4,58 4,24 3,91
With 5,596,520 of PCB shares outstanding, the estimated equity value per share
ranges between €3.57 and €4.58 by combining the WACC and terminal growth
rate ranges described above.
6.3.2 Net assets
We have adopted the net asset approach (on a going concern basis) as a cross-
check to the conclusions reached under the DCF approach. Under a net assets
approach, the value of equity is calculated as the sum (net) of the market values
of all assets and liabilities.
We understand from management that no major value corrections should be
performed on the balance sheet items. Hence, the book value of the equity of
€21.9m as at 31 March 2017, could be considered as an indication of PCB’s
market value of equity, albeit probably an indication of the lower end of a range.
6.3.3 Volume weighted average price analysis
6.3.3.1 PCB share price evolution
PCB shares have traded on Euronext Brussels since the early ’90s. Due to low
liquidity, shares in PCB are traded under the “double call auction”, i.e. a price is
generated once or twice a day (if accumulated orders allow to set a price).
The graph below shows the evolution of the PCB share price (and volumes
traded) in the 5 years preceding the announcement date of the proposed
contribution in kind, being 25 May 2016.

9 August 2017
Figure 2: PCB share price evolution (June 2011 - June 2016)
Some of the dates and evolutions worth highlighting are the following:
1. 29 August 2012: the Board of Pharma Belgium approved the acquisition of
Sambria and Oostende Pharma. Pharma Belgium had entered into a
business lease agreement with both entities in September 2002. The
acquisition of Sambria and Oostende Pharma puts an end to the rental
agreement.
2. 13 December 2012: Pharma Belgium’s management revised the 2012 sales
estimate downwards following the fire that occurred at Evere warehouse on
the 30th of November 2012. In addition, a rent agreement was contracted on
the 12th of December for a temporary replacement warehouse in Zaventem.
3. Between the beginning of 2013 and February 2014, the PCB share price
increased from approximately €3.0 to €8.0, with higher volumes especially in
October and November 2013. At first sight, there seems to be no immediate
explanation for this increase. The announcement by McKesson Corporation
on 24 October 2013 of its intention to acquire the majority of the shares in
Celesio AG might be relevant in this regard.
4. 27 February 2014: PCB released a (provisional) statement indicating the
relatively poor 2013 results compared to 2012 (sales decrease of 6.0%)
mainly caused by a strong market competitiveness and the fire at the Evere
warehouse. PCB share price dropped by 6.3%.
5. 17 March 2015: PCB published its provisional 2014 results. The decreases
in sales (by 3.95%) and gross margin (by 6.54%) compared to 2013 are
primarily due to the government saving initiatives and the loss in market
share caused by the fire at the Evere warehouse. In light of these results,
PCB decided not to distribute a dividend for 2014.
6. 15 December 2015: An agreement has been reached on the acquisition of
Belmedis by Celesio.
The following graph provides more detail on the evolution of the share price
during the past two years (last pricing date: 9 June 2017).

9 August 2017
Figure 3: PCB share price evolution (June 2014 - June 2017)
As indicated above, PCB’s warehouse located in Evere was hit by a fire in

November 2012 leading to a loss of market share and increased costs. The
resulting decrease in sales and profitability combined with the government
savings measures resulted in the company not being able to distribute a dividend
over FY14
On 25 May 2016, PCB’s share price increased by approximately 10% and
continued gaining momentum over the following weeks. Trading volumes
however remained relatively low.
PCB’s share price has increased by approximately 40.3% between the
announcement of the potential contribution in kind and 4 July 2017. At a share
price as at that date of €6.68, the market capitalisation of PCB is approximately
€37.4m. We consider this price might reflect some of the value expected to be
generated through the proposed combination of PCB and Medibel and hence
might not be a reasonable indicator for the stand-alone market value of PCB.
6.3.3.2 VWAP and liquidity of PCB shares
The table below provides an overview of the following:
— VWAP analysis for the period up to 12 months prior to the announcement of
the potential contribution in kind;
— Cumulative volume of PCB shares traded in a given period;
— Number of days during which any trades in the PCB share took place.

9 August 2017
PCB share - VWAP analysis
Days on % of PCB
which PCB trade days vs
Price low Price high VWAP Cumul. Value Cumul. % of issued share was total trading
Period (€) (€) (€) (€k) Vol. capital traded days
1 day 4.76 4.76 4.76 4.76 1.00 0.02% 1 100%
1 week 4.76 4.76 4.76 4.76 1.00 0.02% 1 20%
1 month 4.76 5.04 4.82 6.17 1.28 0.02% 3 14%
3 months 4.76 5.60 5.21 59.70 11.46 0.20% 17 27%
6 months 3.81 5.60 4.80 146.79 30.60 0.55% 42 32%
12 months 3.80 5.60 4.37 288.14 66.01 1.18% 84 32%
Note: The percentage of non-trading days is estimated based on the number of days on which trades have taken place and the number of
weekdays in the period
Source: S&P Capital IQ
The PCB share price as at 24 May 2016 was €4.76. According to the information
available on S&P Capital IQ, 1,000 shares were traded that day.
The VWAP for the period of 1 month preceding the announcement date amounts
to €4.82 and for the three months prior, VWAP is €5.21. The VWAP based on
the prices and volumes 12 months preceding the announcement is €4.37.
Looking at the period prior to the announcement of the potential contribution in
kind, approximately 66,000 PCB shares were traded in the 12 months preceding
25 May 2016, representing only 1.18% of the total outstanding shares
(5,596,520 shares outstanding). This trading level is very low compared to the
peer group over the same period (average of 81.7% and median of 32.0%).
The number of days during which PCB shares were traded during the 12 months
prior to the announcement of the Medibel transaction on 25 May 2016 was also
limited. Trades were taking place in only 1 out of 3 trading days during the year
prior to the announcement date, meaning that the double call auction
mechanism often cannot generate a price.
The limited number of PCB shares held by the public and the low level of trading
activity observed indicate that the market for PCB shares is rather illiquid.
6.3.3.3 PCB investors
The table below provides an estimate of the publicly traded shares acquired by
three specific minority shareholders, each time in the period between the dates
of the Annual General Meetings (AGMs).

9 August 2017
Figure 4: Analysis of shares acquired between AGMs
The percentages have been calculated as the increase in the shareholding net
position of each minority shareholder (1, 2 and 3) divided by the total number of
shares traded between the dates.
We note that these percentages are indicative only as the number of shares held
has to be communicated to the Company a certain time before the annual
general meeting taking place, however we consider these numbers to be a
reasonable proxy.
Over the three periods reported, the number of PCB shares acquired by the
three main shareholders exceeded 60% of total traded shares reaching 84%
during the period May 2013 to May 2014. In 2016, out of the 103,720 shares
traded, it seems that 70,646 shares were acquired by the same three
shareholders.
Based on the above, it seems that in the recent past, the market in PCB shares
has been driven mainly by three minority shareholders increasing their position.
Based on the limited information that we have available, this seems to have
happened at prices that do not seem to have attracted a broader range of
investors.
6.3.3.4 Implied EV / LTM EBITDA multiples evolution
The graph below shows the evolution of the low, high and median EV/LTM
EBITDA multiples of the peer group companies for each quarter since December
2009. The information has been sourced from the S&P Capital IQ database. We
note we have excluded Salus as an outlier at the low end for the entire period.
Further we have also excluded the implied multiple for Oriola in Q3 2011 and for
Amerisource Bergen from Q2 2012 to Q1 2013 as outliers at the high end.

9 August 2017
Figure 5: Evolution of EV/LTM EBITDA multiples
Historically PCB’s implied LTM EBITDA multiple was trading slightly above the
low observed for the peer group. The loss of market share and decrease in sales
caused by the fire in November 2012 combined with the impact of continued
government savings measures resulted in a high volatility of multiples for PCB.
Since end 2015, the implied LTM multiples have traded (well) above the
maximum range observed for the peers. This could be – among others –
indicative for the market’s anticipation of future improvements in profitability (on
a stand-alone basis) and, since May 2016, of potential synergies from a
transaction with Medibel.
6.3.3.5 Conclusion on share price analysis
Based on the above analysis, we do not consider PCB’s market capto be
representative of its stand-alone market value, given the following:
— Low liquidity of PCB shares and (very) limited free float. The share price is
thus determined based on infrequent trades of small parcels of shares.
— Majority of shares traded have been acquired by three shareholders.
Therefore the demand for shares and pricing does not seem to be driven by
a broad investor base.
— Immediately following the announcement of a potential merger with Medibel,
the share price increased by 10%. Hence the current share price might
already reflect the expectation of future potential synergies.
— Implied EV / LTM EBITDA multiples have been well above the peer group
maximum for approximately 18 months now.
6.3.4 Conclusion
In Figure 6 below, the results of our valuation analysis for PCB are summarised.
We have adopted a DCF approach as a primary valuation method and have
cross-checked the outcome of this method using a corrected net assets
approach and a VWAP analysis.

9 August 2017
Figure 6: Overview of valuation results of PCB
Equity value proposed

by Celesio for PCB
KPMG retained value

ranges
— The EV based on the (corrected) net assets approach seems to be in line

with the midpoint estimate based on our DCF approach.
— We do not consider the share price just prior to the announcement of the
proposed transaction nor the VWAP analysis covering the months preceding
the announcement date to be entirely reliable indicators for the market value
of PCB, mainly due to the low liquidity of PCB shares and the very limited
free float, whereby the majority of shares traded have ended up in the hands
of a small number (3) of investors. Nevertheless, the lower end of the range
resulting from the share price analysis overlaps with the higher end of our
DCF valuation range.
— Also, since immediately following the announcement of a potential merger
with Medibel, the share price increased by 10% and since then has shown a
further increase, we consider that the share price as at the current date might
already reflect the expected realisation of future potential synergies and
hence not reflect PCB’s stand-alone market value.
On this basis, we consider our DCF valuation range of €20.0m to €25.6m, with
a midpoint of €22.6m (€4.04 per share) slightly above the (corrected) net asset
value, as our best estimate for the stand-alone market value of equity of PCB.

9 August 2017
The equity value of PCB as proposed by Celesio and PCB (€24.1m or €4.31 per
share) falls within our range, more specifically slightly above our midpoint.
7 Conclusion
The purpose of our engagement as independent expert, was to assist the
Independent Directors in evaluating, from a financial point of view, the proposed
relative valuation in respect of the Proposed Contribution.
To this end, we have sought to understand the basis for the valuations of PCB
and McKBH as proposed by PCB and Celesio, and have performed our own
valuation analysis, by estimating a range for the market value of the equity in
each company on a stand-alone basis. The valuations proposed by PCB and
Celesio for PCB and McKBH fall within our respective ranges, more specifically
the proposed value for PCB is slightly above the midpoint value of our range
while the proposed value for McKBH is at the low end of our range.
In the table below, we have calculated the relative valuation of the two
companies, i.e. the value per share of McKBH divided by the value per share of
PCB. We have also calculated the number of new PCB shares that would be
issued in the context of the Proposed Contribution, assuming that all 1,240,371
shares in McKBH will be contributed.
We note we have calculated the relative valuation range and the resulting
number of shares to be issued by combining the low end of the valuation range
for PCB with the low end of the valuation range for McKBH and similarly for the
respective midpoints and high ends of the valuation ranges. This results in a
range between 15.75 million and 18.45 million shares to be issued. The number
of shares that is proposed to be issued, based on the valuations proposed by
Celesio and PCB, is approximately 15.46m. This is only slightly below the low
end of this calculated range (1.9% below). We note that one could make other
combinations, this could lead to a slightly different number of shares to be issued
and to a different range.
Relative valuation and shares to be issued
PCB Low Midpoint High
McKBH Low Midpoint High
Pre transaction
PCB equity value (100%) (€) 19 988 963 22 630 615 25 614 186
McKBH equity value (100%) (€) 65 888 703 68 804 483 72 101 886
PCB - shares outstanding 5 596 520 5 596 520 5 596 520

Market value / share (€) 3,57 4,04 4,58
McKBH - shares outstanding 1 240 371 1 240 371 1 240 371

Market value / share (€) 53,12 55,47 58,13
Relative share valuation (McKBH / PCB) 14,87 13,72 12,70

Number of McKBH shares contributed 1 240 371 1 240 371 1 240 371
Number of PCB shares to be issued 18 447 552 17 015 254 15 753 757
Based on, and subject to the foregoing, we consider that the relative valuation
is reasonable, from a financial point of view, to the Company for the Proposed
Contribution.

9 August 2017
8 Appendices
Appendix I – Sources of information:
— Overview of PCB and Medibel valuation as proposed by PCB and Celesio,
contained in the document ‘Project Nestor – Valuation update, dated 28 June
2017’
— Medibel historical financials as prepared by Deloitte
— Information on Medibel's bad debt allowance.
— General information on Alphar Partners
— Medibel closing financials as prepared by Deloitte
— Draft financial due diligence report on Medibel as prepared by Deloitte dated
6 November 2015
— Valuation of Medibel as proposed by Celesio (document
170628_Medibel_base_case_PP67.0_TV1%_incl.remedies_7.0%WACC.xl
sx)
— Overview of the consideration paid for the acquisition of Medibel
— PCB's draft balance sheet as at 31 March 2017
— Overview of the Flandria business lease expenses
— Overview of PCB shareholder base as prepared by Linklaters
— Proces verbal de la reunion du comite des administrateurs independants du
5 Mars 2010
— PCB Proces verbal de la reunion du conseil d'administration tenue le 18 Mars
2010
— Pharma Belgium Proces verbal de la reunion de du conseil d'administration
tenue le 18 Mars 2010
— Historical P&L financials of Laboratoria Flandria
— General information on Sofarex
— Sofarex consideration split
— Valuation of PCB as proposed by Celesio (document
170623_PCB_1%TV_7.0%WACC_LTPFY18_adjusted)
— Schedule of acquisition payments for Flandria
— Agreed purchase price adjustment for Flandria
— Contrat de location de fonds de commerce dated 31 March 2010
— Rapport du comité d'administrateurs independants de PCB SA assiste d'un
expert independant dated 29 August 2012
— Avenant du contrat de location de fonds de commerce dated 6 December
2013

9 August 2017
— Annual reports of PCB for the years 2014 to 2016

— Notulen van de gewone algemene vergadering dd. 21 September 2016
— Notulen van de gewone algemene vergadering na uitstel dd. 25 June 2015
— Notulen van de gewone algemene vergadering dd. 21 May 2015
— Share purchase agreement for the acquisition of Flandria
— Flandria business lease analysis and estimate of customer base purchase
price
— Balance sheet McKBH as at 31 May 2017 (USGAAP)
— Description of balance sheet McKBH
— Medibel schedules (calculation method of closing net debt)
— Medibel share purchase agreement dated 15 December 2015
— Medibel acquisition structure
— Draft Capital Increase Contribution and Subscription Agreement
— Rapport de l'expert independant sur les operations projetees par la societe
SA Pharma Belgium
— Presentation entitled "Rapprochement de Pharma Belgium, Sambria et
Ostend Pharma"
— Annual rapport 2012 Ostend Pharma
— Annual rapport 2012 Sambria
— IMS market prognosis 2017-2021
— IMS market prognosis 2014-2018
Missing information:
— Consolidated balance sheet of McKBH

9 August 2017
Appendix II – Glossary:
— AG Aktiengesellschaft
— AGM Annual general meetings
— CAPM Capital asset pricing model
— CoCo Comparable companies
— CoTrans Comparable transactions
— CVBA Coöperatieve vennootschap met beperkte aansprakelijkheid
— DCF Discounted cash flow
— EBIT Earnings before interest and taxes
— EBITDA Earnings before interest, taxes, depreciation and amortization
— EV Enterprise value
— FCFF Free cash flows to the firm
— FY Financial year
— LTM Last twelve months
— m Million
— McKBH McKesson Belgium Holdings SPRL
— NTM Next twelve months
— SA Société anonyme
— SPRL Société privée à responsabilité limitée
— US GAAP United States generally accepted accounting principles
— VWAP Volume weighted average price
— WACC Weighted average cost of capital

9 August 2017
Appendix III – Capitalised earnings analysis

Comparable companies
We have identified a number of listed companies with activities of a similar
nature to those of Medibel. These are listed below. A description of their
activities is provided further in this Appendix.
Comparable companies - Financial data
Latest annual Market cap Enterprise value
Company name Country report date €m €m
AmerisourceBergen Corporation United States 30/09/2016 16,362 18,830
Australian Pharmaceutical Industries Australia 31/08/2016 749 789
Cardinal Health, Inc. United States 30/06/2016 21,016 24,425
Celesio AG Germany 31/03/2016 5,254 6,705
McKesson Corporation United States 31/03/2016 26,914 34,404
Medika d.d. Croatia 31/12/2016 62 118
NEUCA SA Poland 31/12/2016 406 429
Oriola Oyj Finland 31/12/2016 706 807
Owens & Minor, Inc. United States 31/12/2016 1,943 2,291
Pelion S.A. Poland 31/12/2016 141 268
Profarma Distribuidora de Produtos Farmacêuticos Brazil 31/12/2016 241 357
SALUS, Ljubljana, d. d. Slovenia 31/12/2016 45 34
Sigma Healthcare Limited Australia 31/01/2017 849 856
Source: S&P Capital IQ; KPMG Analysis; Data as at 30 April 2017
In assessing the comparable company information, it should be noted that:

- Due to the lack of truly comparable listed companies in Belgium, we have
considered listed companies (globally) for which the wholesale distribution
of pharmaceuticals is an important activity.
- Whilst the selected companies have similarities to Medibel in terms of their
core operations and core markets, there are significant differences
compared to Medibel in terms of size, operations, product diversification
and growth profile.
- Trading multiples of publicly listed companies reflect the investment
expectations of portfolio investors and therefore do not include any
premium for control.
The table below provides an overview of the EV/EBITDA multiples of the
comparable companies (LTM: last twelve months; NTM: next twelve months)

9 August 2017
Comparable companies - Financial data
EBITDA EBITDA EBITDA EBITDA

multiple multiple margin margin
Company name Country LTM NTM LTM NTM
AmerisourceBergen Corporation United States 9.2x 9.0x 1.5% 1.4%
Australian Pharmaceutical Industries Australia 10.4x 9.2x 2.7% 3.0%
Cardinal Health, Inc. United States 8.4x 8.5x 2.5% 2.3%
Celesio AG Germany 14.9x n/a 2.1% n/a
McKesson Corporation United States 7.9x 9.2x 2.4% 2.0%
Medika d.d. Croatia 10.7x n/a 3.1% n/a
NEUCA SA Poland 10.5x 10.8x 2.4% 2.2%
Oriola Oyj Finland 9.9x 8.8x 5.0% 5.4%
Owens & Minor, Inc. United States 8.9x 9.9x 2.9% 2.6%
Pelion S.A. Poland 8.8x 7.1x 1.4% 1.7%
Profarma Distribuidora de Produtos Farmacêuticos Brazil 14.0x 8.1x 2.2% 3.5%
SALUS, Ljubljana, d. d. Slovenia 5.7x n/a 2.7% n/a
Sigma Healthcare Limited Australia 11.4x 10.6x 2.5% 2.6%
Low 5.7x 7.1x 1.4% 1.4%
High 14.9x 10.8x 5.0% 5.4%
Mean 10.1x 9.1x 2.6% 2.7%
Median 9.9x 9.1x 2.5% 2.5%
In addition to the EV/EBITDA multiple analysis, we have also performed a

regression analysis of the peer group companies’ sales multiple vs. their
respective EBITDA margin, as depicted in the graph below. The explanatory
factor (R²) is 0.7.
Applying the regression equation to Medibel’s FY17 EBITDA margin, which
amounts to 1.1%, results in an implied sales multiple of 0.12x. Applying the
implied sales multiple on Medibel’s FY17 sales figure results in an adjusted
enterprise value of €67.4m.
Sales multiple vs EBITDA margin

0,60x
0,50x y = 9,16x + 0,02
0,40x
Sales multiple
0,30x
0,20x
Medibel
0,10x
-
0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0%
EBITDA margin
Source: S&P Capital IQ; KPMG analysis

9 August 2017
Peer group description
Company Country Short business description

AmerisourceBergen Corporation sources and distributes pharmaceutical products in the United States and internationally. Its Pharmaceutical
AmerisourceBergen Corporation United States
Distribution segment distributes brand-name and generic pharmaceuticals, over-the-counter healthcare products, etc.
Australian Pharmaceutical Australian Pharmaceutical Industries Limited primarily engages in the wholesale distribution of pharmaceutical, medical, health, beauty, and
Australia
Industries Limited lifestyle products to pharmacies. It operates in two segments, Australia and New Zealand.
Cardinal Health, Inc. operates as a healthcare services and products company worldwide. The company’s Pharmaceutical segment
Cardinal Health, Inc. United States distributes branded and generic pharmaceutical, over-the-counter healthcare, specialty pharmaceutical, and consumer products to retailers,
hospitals, and other healthcare providers.
Celesio AG provides logistics and services to the pharmaceutical and healthcare sectors worldwide. The company operates through two
divisions, Consumer Solutions and Pharmacy Solutions. The Consumer Solutions division operates approximately 1,913 retail pharmacies
Celesio AG Germany
and approximately 4,500 participants in its brand partnership schemes. The Pharmacy Solutions division engages in the wholesale of
pharmaceutical products.
McKesson Corporation United States McKesson Corporation provides pharmaceuticals and medical supplies in the United States and internationally.
NEUCA SA engages in the wholesale distribution of pharmaceuticals to pharmacies and hospitals in Poland. It operates through
NEUCA SA Poland
Pharmaceutical Wholesale, Own Brands, Marketing Services, IT Services, and Outpatient Care Clinics segments.
Oriola Oyj operates in pharmaceutical distribution and retail markets in Sweden, Finland, Estonia, Latvia, and Lithuania. The company
Oriola Oyj Finland
markets health and wellbeing products, OTC and traded goods, vitamins, dietary supplements, etc.
Owens & Minor, Inc., together with its subsidiaries, operates as a healthcare services company in the United States, the United Kingdom,
Ireland, France, Germany, and other European countries. The company operates through three segments: Domestic, International, and
Owens & Minor, Inc. United States
Clinical & Procedural Solutions. It offers supply chain assistance to the providers of healthcare services; and the manufacturers of healthcare
products, supplies, and devices.
Profarma Distribuidora de Profarma Distribuidora de Produtos Farmacêuticos S.A., together with its subsidiaries, engages in the distribution and retail sale of
Brazil
Produtos Farmacêuticos S.A. pharmaceutical and hospital products in Brazil.
SALUS, Ljubljana, d. d. Slovenia SALUS, Ljubljana, d. d. engages in the wholesale of pharmaceutical, medical, and related products in Slovenia.
Sigma Healthcare Limited, together with its subsidiaries, engages in the wholesale and distribution of pharmaceutical products to hospitals
Sigma Healthcare Limited Australia
and retail pharmacies in Australia and New Zealand.
Sopharma Trading AD supplies pharmaceutical products in Bulgaria. The company is headquartered in Sofia, Bulgaria. Sopharma Trading
Sopharma Trading AD Bulgaria
AD is a subsidiary of Sopharma AD.

9 August 2017
Comparable transactions
In addition to the comparable companies analysis, we have also identified a
number of transactions involving broadly comparable companies during the
period September 2012 and November 2016, an overview of which is provided
in the table below. Due to the lack of truly comparable transactions in Belgium,
we have considered global transactions within the wholesale distribution of
pharmaceuticals industry.
Comparable transactions
Announcement Target Bidder Seller Deal Value Enterprise Revenue Revenue EBITDA EBIT
date Company Company Company (€m) Value (€m) (€m) Multiple Multiple Multiple
Georgia Enrico Beridze
21/11/2016 ABC Pharmacia LTD
Healthcare and Mikheil 19 34 67 0.49x 7.70x 9.75x
Group Plc Abramidze
18/08/2014 Alloga UK Limited Walgreens Boo UDG Healthcare 82 164 60 2.62x 9.44x 10.5892
(50% Stake) Alliance, Inc. Plc
MASTA Limited;
United Drug Suppl
Chain Services; McKesson UDG Healthcare
18/09/2015 Temperature 408 408 1,363 0.30x 13.58x na
Corporation Plc
Controlled
Phamaceuticals Lt
23/10/2014 Imres B.V. (70% Imperial

Stake) Holdings Limite na 46 46 60 1.10x 9.61x 9.83x
Franz Haniel &

Celesio AG (75.93 McKesson Cie GmbH; Ellio
23/01/2014 Stake) Corporation Management 4,989 6,138 21,408 0.29x 11.52x 15.08x
Corporation
McKesson Franz Haniel &

24/10/2013 Celesio AG Corporation Cie GmbH
5,598 5,598 22,270 0.25x 10.31x 15.13x
Penta
Investments
8/08/2013 ACP Pharma S.A Limited; Neuca Mediq NV 103 103 386 0.27x na na
SA
Advent
24/09/2012 Mediq NV International na 1,077 1,077 2,658 0.41x 7.23x 9.70x
Corporation
Mentha Capital
27/04/2011 PBG Group BV Mediq NV B.V. 40 40 61 0.66x na na
Average 0.71x 9.91x 11.68x

Median 0.41x 9.61x 10.21x
Source: Mergermarket
The CoTrans EBITDA multiples range between 8.6x and 10.9x (25% and 75%
quartiles). The implied multiple for Medibel falls within this range.
CoTrans - Medibel enterprise value based on EBITDA multiple
LTM LTM LTM
25% quartile Median 75% Quartile
EBITDA 6,182 6,182 6,182
EBITDA multiple 8.6x 9.6x 10.9x
Enterprise value 52,982 59,435 67,461
Adjusted enterprise value 52,288 58,740 66,767
Source: S&P Capital IQ;Mergermarket; KPMG analysis

9 August 2017
©2017 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.

2017-11-16 Independent Expert Report E

Uploaded by

Copyright:

Available Formats

2017-11-16 Independent Expert Report E

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2017-11-16 Independent Expert Report E

Uploaded by

Copyright:

Available Formats

KPMG Advisory Tel.

+32 (0)2 708 43 00

Jetma SPRL, represented by its permanent Our ref JDN/SG/SM

Committee of independent directors

Dear committee of independent directors

Report of the Independent Expert

KPMG Deal Advisory

KPMG Advisory CVBA/SCRL

Report of the independent expert in the context of a voluntary application

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 2

The Independent Directors appointed KPMG Deal Advisory as independent

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 3

complete or reasonable. We do not warrant or guarantee the achievement of

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 5

— Confirmed our understanding of the Proposed Transaction;

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 7

4 Basis of valuation and generally accepted valuation

An earnings based approach estimates a sustainable level of future earnings

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 8

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 9

We understand that the capitalised earnings method (CoTrans/CoCos) has not

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 10

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 12

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 13

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 14

We have also performed a cross-check by comparing the implied multiples

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 15

€'000 64 866 7,20% 7,40% 7,60% €'000 0 7,20% 7,40% 7,60%

2 May not add up due to roundings

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 16

6.2.3 Capitalised earnings multiples

Source: Capital IQ; KPMG analysis

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 17

CoTrans - Medibel enterprise value based on EBITDA multiple

We have also performed a regression analysis of the peer group companies’

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 18

Figure 1: Overview of valuation results of McKBH

Equity value proposed

KPMG retained value

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 19

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 20

Figure 2: PCB share price evolution (June 2011 - June 2016)

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 21

Figure 3: PCB share price evolution (June 2014 - June 2017)

As indicated above, PCB’s warehouse located in Evere was hit by a fire in

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 22

PCB share - VWAP analysis

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 23

Figure 4: Analysis of shares acquired between AGMs

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 24

Figure 5: Evolution of EV/LTM EBITDA multiples

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 25

Figure 6: Overview of valuation results of PCB

Equity value proposed

KPMG retained value

— The EV based on the (corrected) net assets approach seems to be in line

© 2017 KPMG Advisory CVBA/SCRL. All rights reserved. 26

PCB - shares outstanding 5 596 520 5 596 520 5 596 520

McKBH - shares outstanding 1 240 371 1 240 371 1 240 371

Relative share valuation (McKBH / PCB) 14,87 13,72 12,70