2006 reference document - lanson-bcc.com · portfolio of prestigious houses and brands simplified...

2006 REFERENCE DOCUMENT

��In accordance with the general regulations of the French securities regulator (Autorité des Marchés Financiers, AMF), notably Article 212-13, this reference document was filed with the AMF on May 24th, 2007 under number R. 07-080. This document may only be used in support of a financial transaction if supplemented with a transaction memorandum that has been approved by the AMF. This document has been drawn up by the issuer and is the responsibility of its signatories. The filing, in accordance with the provisions of Article L. 621-8-1-I of the French monetary and financial code (Code Monétaire et Financier), has been carried out after the AMF checked that “the document is complete and understandable, and the information it contains is consistent”. This does not imply the AMF’s authentication of any accounting or financial elements presented. Copies of this reference document are available free of charge from the registered office of BOIZEL CHANOINE CHAMPAGNE, Allée du Vignoble 51,100 Reims, France, and may also be downloaded from the internet sites of BOIZEL CHANOINE CHAMPAGNE (www.boizelchanoine.com) and the AMF (www.amf-france.org).

Contents . Boizel Chanoine Champagne

2 .. 2006 reference document

��

Information on the BOIZEL CHANOINE CHAMPAGNE Group’s business 4 1.1. History 4 1.2. Overview of the Group 5 1.3. Market 11 1.4. Strategy and outlook 18 1.5. Risk factors 30 1.6. Report on HR data 34 1.7. Report on environmental data 38 1.8. Exceptional events and disputes 41

General information on the BOIZEL CHANOINE CHAMPAGNE Group 42 2.1. Statutory information and share buyback program 42 2.2. General information on BOIZEL CHANOINE CHAMPAGNE capital and shares 45 2.3. Real estate and equipment 51 2.4. Intellectual property 53 2.5. BOIZEL CHANOINE CHAMPAGNE Group structure 53 Corporate governance: administrative and management bodies 54 3.1. Management team members 54 3.2. Compensation and benefits for corporate officers 59 3.3. Stock options awarded to corporate officers and the 10 largest non-executive salaried

beneficiaries 60 Financial position and earnings 61 4.1. Consolidated financial statements 61 4.2. Notes to the consolidated financial statements 68 4.3. Pro forma consolidated financial information for the year ended December 31st, 2006 91 4.4. Additional notes 95 4.5. Consolidated financial statements at December 31st, 2005 and 2004 under IFRS and

corporate financial statements at December 31st, 2005 106 4.6. Consolidated financial statements at December 31st, 2004 and 2003 under French GAAP and

corporate financial statements at December 31st, 2004 128 4.7. Corporate financial statements for the holding company 149 4.8. Five-year financial summary 157 4.9. Statutory auditors’ reports on the corporate and consolidated financial statements at December 31st, 2006 158 4.10. Special statutory auditors’ report for the year ended December 31st, 2006 161 4.11. Fees for the statutory auditors and members of their networks covered by the Group 163

1

2

3

4

Contents . Boizel Chanoine Champagne.

2006 reference document 3 .

Ordinary annual general meeting on June 1st, 2007 165 5.1. Agenda 165 5.2. Resolutions 165

Other reports 168 6.1. Chairman of the Board of Directors’ report on conditions for the preparation and organization

of the Board’s work and the internal control procedures put in place by the BOIZEL CHANOINE CHAMPAGNE Group 168

6.2. Statutory auditors’ report on internal control (Article L 225-235 of the French commercial code) 174

6.3. Annual disclosure documents 175 6.4. Special report on transactions carried out in connection with the share buyback program 177 6.5. Special report on transactions carried out as per Articles L 225-197-1 to L 225-197-5 of the

French commercial code concerning the free allocation of shares 178 6.6. Summary of delegations for increasing/reducing the capital 178 6.7. Special report on securities held by executives 178

Person responsible for the reference document and parties responsible for auditing the accounts 181 7.1. Person responsible for the reference document 181 7.2. Statement by the person responsible for the reference document 181 7.3. Parties responsible for auditing the accounts 181 7.4. Person responsible for the information 182 Appendices 183 Detailed contents 184 Correspondence table between the reference document and the Board of Directors’ management report 187 Correspondence table between the reference document and the main sections from the directive applying European Commission regulation 809-2004 of April 29th, 2004 188

5

6

7

1. Information on the business . Boizel Chanoine Champagne


��

1.1. HISTORY 1.1.1. Three centuries of passion and know-how The blending of passion and know-how illustrates the history of the BOIZEL CHANOINE CHAMPAGNE Group. Founded on successive business combinations, the Group, created in 1991, still embodies an exceptional tradition whose roots can be traced back to the 18th century: 1730: Champagne CHANOINE FRERES 1760: Champagne LANSON 1834: Champagne BOIZEL 1837: Champagne DE VENOGE 1843: Champagne BESSERAT DE BELLEFON 1910: Champagne PHILIPPONNAT 1973: Champagne ALEXANDRE BONNET While the centuries have passed, the tradition and love for wine have remained intact. Today, a leading player on the Champagne market, the BOIZEL CHANOINE CHAMPAGNE Group is drawing on its blend of tradition and modernity to offer champagnes that meet the expectations and desires of consumers: a luxury that is both authentic and accessible. 1.1.2. Main stages in the creation of the BOIZEL CHANOINE CHAMPAGNE Group 1991-1992: The small wine company Château de Ludes, with Champagne wine merchant

status, changes its name to CHANOINE FRERES, the oldest Épernay Champagne brand founded in 1730.

At the same time, CGV (Champenoise des Grands Vins), a mass retail brokerage, is acquired by PBI, the company founded by Bruno Paillard and Philippe Baijot, who is appointed the executive manager for both companies.

1994: Business combination with Champagne BOIZEL: acquisition of a 54% stake. 1996: Contribution of the remaining shares by the Roques-Boizel family, which

becomes a shareholder in the Group.

The Group changes its name to BOIZEL CHANOINE CHAMPAGNE.

��

1. Information on the business . Boizel Chanoine Champagne.


December 4th, 1996: Floating on the EURONEXT PARIS Second Marché. 1997: Acquisition of Champagne PHILIPPONNAT. 1998: Acquisition of Champagne DE VENOGE. 1998: Acquisition of the CHARMOY Group (ALEXANDRE BONNET and its major Riceys

vineyard). 2000: Expansion of CHANOINE FRERES buildings, creation of a 27,000 hectoliter

cuverie and a refrigerated cellar. 2003- 2004: Creation of new cuveries at ALEXANDRE BONNET in Les Riceys and at

PHILIPPONNAT in Mareuil sur Aÿ. March 22nd, 2006: Acquisition of the LANSON INTERNATIONAL Group.

1.2. OVERVIEW OF THE GROUP 1.2.1. A leading Champagne player BOIZEL CHANOINE CHAMPAGNE is a leading champagne Group, present at all levels throughout the chain of production, from the vineyard through to sales and marketing, upholding ancestral techniques. BOIZEL CHANOINE CHAMPAGNE has a broad portfolio of Houses, each present on distribution channels that dovetail effectively with one another for both France and export: � Champagne BOIZEL (Épernay), French mail-order market leader, with wines

distributed in the traditional sector for international markets. � Champagne CHANOINE FRERES (Reims), wines intended primarily for the mass retail

market (CHANOINE brand), notably with the prestigious Tsarine range. � Champagne PHILIPPONNAT (Mareuil sur Aÿ), which owns the prestigious Clos des

Goisses, with wines available on selective retail markets. � Champagne DE VENOGE (Épernay), also sold on selective retail markets, with a new

Louis XV vintage launched recently. � Champagne ALEXANDRE BONNET (Les Riceys), owner of a vast vineyard (wine sold in

traditional sectors). And since the end of March 2006:

� Maison BURTIN (Épernay), a mass retail supplier and owner of the BESSERAT de

BELLEFON brand, distributed through traditional networks (restaurants, wine stores). � Champagne LANSON (Reims), the prestigious international brand.

In 2006, close to 21 million bottles of champagne were produced and sold by all of the Group's Houses.



1.2.2. Key figures over the last three years

Dec 31, 06 IFRS

pro forma (2)

Dec 31, 06 (IFRS) (1)

Dec 31, 05 (IFRS)

Dec 31, 04 (IFRS)

Revenues (€’000,000) 350.85 311.31 97.13 88.02

Gross margin (%) 43.00 48.00 26.00 33.00

EBIT (€’000,000) 40.20 37.24 14.89 12.76

Consolidated net profit ( €’000,000) 14.09 14.81 7.94 6.58

Group share (€’000,000) 14.09 14.81 7.94 6.58

Group shareholders’ equity (€’000,000) 96.50 97.22 60.22 53.28

Net debt (€’000,000) 553.60 552.71 104.94 94.96

Book value of inventories (€’000,000) 460.87 460.87 112.78 101.28

Undiluted net earnings per share (Group share) 3.08 3.24 1.76 1.46

Diluted net earnings per share (Group share) 2.87 3.02 1.76 1.46 (1) Including MAISON BURTIN from April 1st, 2006 to December 31st, 2006 over FY 2006 (2) The pro forma factors in the accounts of Maison BURTIN as if the acquisition had been carried out on January 1st,

2006 Net debt: “Borrowings and financial debt” – “marketable securities” – “cash and cash equivalents” The gross margin rate can be defined as follows: (revenues – consumption of raw materials)/revenues 1.2.3. Portfolio of prestigious Houses and Brands Simplified Group structure at December 31st, 2006

SA BOIZEL CHANOINE CHAMPAGNE

SA CHAMPAGNE

BOIZEL (EPERNAY)

SA CHAMPAGNE

CHANOINE FRERES (REIMS)

SAS CHAMPAGNE DE VENOGE (EPERNAY)

SAS GROUPE CHARMOY

(LES RICEYS)

SAS C.G.V

(REIMS)

SAS VIGNOBLES ALEXANDRE

BONNET

SAS MAISON

ALEXANDRE BONNET

SNC LANSON

INTERNATIONAL DIFFUSION

SA CHAMPAGNE PHILIPPONNAT (MAREUIL / AY)

99.94% 99.97% 99.99% 99.98% 99.99% 99.99%

100%

99.59%

100%

99.85%

66.66%

33.33%

100%

SAS CHAMPAGNE

LANSON (REIMS)

LANSON INTERNATIONAL UK

LTD (LONDON)

SA MAISON BURTIN

(EPERNAY)



Presentation of the Houses and Brands History: Since 1834, the BOIZEL Family has dedicated itself with passion to creating exceptional vintages. Distributed in the UK as early as the 19th century, BOIZEL Champagne has built up a wonderful reputation in Great Britain, with its presence gracing the season's elegant events. The BOIZEL world: The UK's main sporting and cultural events, from the Henley Regatta to Chester Races and Glyndebourne Opera. It represents a champagne that is sought after by enthusiasts worldwide, and that families in France have been enjoying as part of their celebrations for generations. Channels: The French mail-order market leader, with wines distributed in the traditional sector for international markets. In 2007: With the launch of the Joyau de France Rosé 2000 vintage, BOIZEL has added to its Joyau de France collection and continued upgrading its range, notably on the Japanese market. In France, direct marketing investments (mailing, internet) are enabling a steady rate of development, while consolidating the House's specific features. www.boizel.com History: Founded in 1730, under the reign of Louis XV, CHANOINE FRERES was the first House to be authorized by the city of Epernay to dig a cellar in Champagne. The second oldest Champagne House, at the dawn of the 21st century, it represents an outstanding House combining modernity and quality. The CHANOINE FRERES world: Tsarine, a champagne with top billing in the cinema world, is the official partner of the Césars, France’s leading movie awards. Channels: CHANOINE FRERES champagnes are primarily present in all leading retail stores, with the classic CHANOINE FRERES range and the prestigious TSARINE range. In 2007: Thanks to efforts to strengthen its sales force in France, CHANOINE FRERES aims to consolidate its national distribution network on supermarkets. Work to ramp up the CHANOINE FRERES production tool – cellar and cuverie – will begin in 2007. This vast project will give CHANOINE FRERES an exceptional storage capacity. A promising new vintage, the “Tsarine Brut Millésimé 2003, Blanc de Blancs, Grand cru”, will be unveiled at the Vinexpo in June 2007, enabling this House to penetrate the coveted rare champagne markets. www.champagnechanoine.com



History: The first PHILIPPONNAT appeared in 1522 in Aÿ, at the heart of the Champagne region. From the Brut Royale Réserve, a genuine ambassador for the House, to the prestigious Cuvée du Clos des Goisses vintage, its wines are full-bodied, structured, with blends dominated by Pinots Noirs, created to be enjoyed by lovers of fine wines. The PHILIPPONNAT world: Le Clos des Goisses was the favorite champagne of “avocato” Gianni Agnelli, while the Royal Reserve is the champagne of the Baur Hotel on Lake Zurich, and the Restaurant Le Cinq (Hotel Georges V, Paris), whose sommelier Enrico Bernardo was voted "the world’s best sommelier” in 2005... Channels: Upscale wines reserved for fine restaurants, wine stores, gourmet food stores and enthusiasts. Its PHILIPPONNAT-Les Domaines Associés subsidiary distributes Domaines Barons de Rothschild (Lafite) wines in France. In 2007: PHILIPPONNAT will continue rolling out its strategy to strengthen its high-end positioning and its international development, thanks to qualitative investments (barrel halls, special bottling) and the launch of Clos des Goisses Rosé. www.champagnephilipponnat.com History: Since 1837, DE VENOGE has been cultivating a policy of quality and innovation in the purest champagne tradition. Recommended by numerous prestigious institutions, DE VENOGE represents one of the most decorated champagnes of its generation. The DE VENOGE world: Everywhere around the world, DE VENOGE has continued to set the standard for champagne through the ages. During his last official visit to the Czech Republic, President Clinton was given one of the 2,000 Magnums from the DE VENOGE millennium vintage by President Klaus. Channels: Both in France and abroad, DE VENOGE has built up a network of excellent professionals from the traditional sector, with around 50 ambassadors throughout France and a number of leading distributors, such as Louis Latour Inc. in the US, ensuring a truly exceptional following among its loyal customers. In 2007: Work will be carried out to consolidate the brand’s image and distribute the two new Louis XV and Extra Brut reserves, which, launched at the end of 2006, have further strengthened the range of specialties, while consolidating the House’s prestige at the finest tables. www.champagnedevenoge.com



History: ALEXANDRE BONNET offers a magnificent range of champagnes, primarily for export, but also for retail clients in France. In Les Riceys, at the heart of the Champagne region's largest plot, ALEXANDRE BONNET, with its magnificent vineyard, provides the Group's various Houses with a major source of grape supplies. The ALEXANDRE BONNET world: Benefiting from the strong level of interest in rosé champagnes, ALEXANDRE BONNET is a recognized specialist for outstanding rosé champagne vintages, with its magnificent and rare Rosé des Riceys. Channels: Wines sold in traditional sectors in France and for export. In 2007: ALEXANDRE BONNET will continue asserting its position as the rosé vintage specialist, notably for export. The acquisition of the Ferdinand BONNET brand in 2006 will make it possible to prevent any risk of confusion linked to the similar name.� www.alexandrebonnet.com

History: Maison BURTIN (formerly LANSON INTERNATIONAL) perpetuates the spirit of its founder Gaston Burtin, a key figure in the history of Champagne, who made his House, founded in 1933, one of the leading Champagne businesses. Drawing on its close ties with the vineyard, this House has been a pioneer on mass retail, developing a highly effective production tool. Fully understanding the importance of brands in the quest for value added, the Group acquired Maison BESSERAT de BELLEFON in 1990, and then Champagne LANSON in 1991. The Maison BURTIN world: Maison BURTIN is one of the top suppliers for the mass retail sector in France and Europe, notably producing and distributing the ALFRED ROTHSCHILD brand under an agreement with the three Rothschild families, which own the main Bordeaux estates. Maison BURTIN, with its subsidiary Champagne LANSON, joined the BOIZEL CHANOINE CHAMPAGNE Group in March 2006. In 2007: Maison BURTIN has renegotiated its agreement with the Rothschild families on a more balanced basis, enabling it to look ahead to the future with more confidence. In addition, it will continue to represent the partner of choice for the European mass retail sector.



History: In 1843, Edmond Besserat, from Hautvillers, founded the BESSERAT House in Aÿ. Then, in 1927, his grandson Edmond married Yvonne de Meric de Bellefon. In the 1930s, as requested by a prestigious Parisian restaurant, the House developed a champagne to ideally accompany an entire meal, with a light sparkle and fine mousse: the Crémant des Moines. This vintage, which has been renamed Cuvée des Moines, is now the jewel in the BESSERAT de BELLEFON crown, alongside its historical Grande Tradition range. The BESSERAT de BELLEFON world: BESSERAT de BELLEFON finds its most beautiful expression in the art of living each day. Cuvée des Moines has a renowned ambassador, the Bernard Loiseau Group, and can be found gracing the finest tables. It is also associated with the cultural world, through Les Molières, the French theater awards, for which it is the official champagne, as well as certain dedicated lifestyle shows and fairs, including the Salon du Chocolat and the Salon des Grands Vins. Channels: With a very strong presence in hotels and fine restaurants in France, BESSERAT de BELLEFON is also available through wine and gourmet food stores, and is continuing to develop in the traditional sector at international level. In 2007: The BESSERAT de BELLEFON Champagne’s packaging will be changed slightly in order to highlight the nobility of the BESSERAT name again, which is currently more in the background, further strengthening the brand’s level of awareness. The Cuvée des Moines range, with a brut, a rosé and a blanc de blancs, will be reinforced with a vintage tête de cuvée. The selective retailing and restaurant presence will also be strengthened. www.besseratdebellefon.com History: Founded in 1760 by François Delamotte, Champagne LANSON adopted the Maltese cross as its emblem when Nicolas Louis Delamotte, the founder's son and a Knight of the Order of Malta, took the helm in 1798. In 1828, he joined forces with Jean-Baptiste Lanson, the first of the name. From the outset, the House has shipped its wines outside of France: to Germany, to the Netherlands and, of course, to England, where Her Majesty Queen Victoria awarded it her first certificate as an Official Supplier for the Court of England in 1860, a title that it still has today. The LANSON world: The quintessence of the LANSON style, the Noble Cuvée embodies the House's excellence. In almost 20 years, only seven vintages have been selected for the Noble Cuvée Brut. This champagne, for which Alain Ducasse, the world-renowned chef has been the ambassador since 1997, offers pure lines and a full mouth. Champagne LANSON is also the partner for numerous events. In 2007, it will be gracing the French Golf Open, the main polo tournaments in Germany, the Deauville Jumping show, the Monaco Yacht Show and the Wimbledon and Monte Carlo tennis tournaments. It will also be present during popular



tournaments such as the Six Nations, the Rugby World Cup, the Tour de France Auto and the Paris Dakar. Channels: LANSON has an excellent level of brand awareness, present on the five continents, with strong positions, notably in the UK. It is distributed across all channels – wine stores, gourmet food stores, restaurants, bars, hotels, supermarkets – in France and abroad. In 2007: The LANSON brand is realigning its positioning, moving back to its long-standing values - history, tradition, know-how and quality. A new label in line with the brand's strong values will be based on the historical symbols on which LANSON Champagne has founded its success, notably the Black Label, Maltese Cross and Royal Warrant. It will deliberately be more simple for greater authenticity and better visibility. Export, on which LANSON generated more than 70% of its sales in 2006, will continue to be a key focus over 2007, with the consolidation of positions on the brand's historical markets, such as the UK, and the development of distribution, notably on mass export (Asia, Australia, etc.). Launched at the end of 2006, efforts to strengthen LANSON’s media presence will be continued in 2007, both in the press and on posters. www.lanson.fr In addition to these Houses, which produce all of the Group's wines, BOIZEL CHANOINE CHAMPAGNE has a pure intermediation company: As a non-producing brokerage and distribution company, CGV represents the intermediary between the main European buyers and Champagne operators, the majority of which are outside of the Group. It is a service company that plays a major advisory role for buyers and provides the Group with in-depth knowledge of these markets.

1.3. MARKET Like perfumes or haute couture, champagne is one of the products that best embodies the French luxury goods industry. And the Champagne houses have successfully created a unique wine and appellation label, with a strong and international image. 1.3.1. Historical landmarks Praised since Roman times, the vineyards of Champagne developed continuously from the 12th century onwards thanks to various large monasteries. In the 17th century, the region was already renowned for its red wines, “clairets” and whites. These whites frequently and unexpectedly bubbled in spring: from the early 18th century onwards, and over 150 years, the Champagne producers experimented, building up unique know-how and “mastering” this mousse, producing vintages with a constant quality, and developing the elements needed to store and sell these wines under the right conditions (corks, pressure-resistant bottles, etc.). At the end of the 18th century, Champagne production was estimated at around two million bottles. Following the scientific progress made in the 19th century, making it possible to understand the role of sugar (J-B François 1837) and ferments (Pasteur 1860), this volume had climbed to 28 million bottles by 1900. This was followed by a long period of stagnation, first due to phylloxera, and then the global conflicts and international problems (prohibition in the US, 1929 crisis, protectionism).



In the 1950s, growth resumed at a strong pace (good economic environment, new inter-professional organization, dynamic development of the main houses), and the volumes followed: from around 30 million bottles in 1950 to over 321 million in 2006, with two interludes in 1974-1975 and 1991-1994, due to excessive grape prices that pushed production prices too high during periods when the global economy was moving into a crisis. 1.3.2. A strong appellation label Champagne’s success has also been made possible thanks to a truly unique organization. The Institut National des Appellations d’Origine Contrôlée (INAO) and the Comité Interprofessionnel du Vin de Champagne (CIVC) are responsible for drawing up and ensuring compliance with regulations governing Champagne’s entire economic sector. In this way, they set extremely strict production criteria, guaranteeing quality at all stages. They also work on a legal level to defend the Champagne appellation label, a shared heritage whose reputation must be protected against usurpation by any outside parties. A stringently defined production area In 1927, Champagne was the first French region to set the boundaries of its appellation area. This is split into various plots, primarily spread over the Marne (68% of the production area) and Aube (20%) departments, with five main regions (Montagne de Reims, Côte des Blancs, Vallée de la Marne, Côte de Sézanne and Côte des Bar), as well as a few districts in Aisne, Haute Marne and Seine et Marne (319 districts in total). The AOC area covers some 33,223 hectares, representing 3.4% of the total winegrowing area in France and 6.6% of the AOC-certified area nationwide. With 31,924 ha in production, it is close to saturation point, with 96% of the area already planted. More than 275,000 plots are cultivated by the winegrowers. (Source: CIVC October 2006) The Champagne area is located at the northern tip of the winegrowing lands, characterized by its chalky subsoil, its hilly landscape and its climate. Although made milder by the ocean’s influence, the climate requires vines to be planted on the hillsides to maximize their exposure to the sun and ensure that the water runs off. Three authorized grape varieties The law of July 22nd, 1927 authorizes three main grape varieties, which have proved their suitability for the land: � Chardonnay: the grape variety for elegance and lightness. Planted on 28% of the

vineyards, it represents the grape variety of choice for the Côte des Blancs and Sézannais. For the blends, it brings its unique finesse and floral notes. On its own, it gives wines with a rare elegance.

� Pinot Noir: the grape variety for intensity and nobility. Primarily grown on the Montagne de Reims and Côte des Bar, Pinot Noir accounts for around 38% of the Champagne vineyards, giving the wine aromas of red berries, a beautiful intensity and a marked structure.

� Pinot Meunier: the grape variety for fruitiness and roundness. Slightly more rustic, and grown above all in the Marne Valley (around 34% of the vineyards), it brings to the wines an intense bouquet, a quicker change and intense fruitiness.

Extremely strict production criteria All the stages are governed by strict regulations that are regularly updated by the “Interprofession” in order to guarantee an increasingly higher level of quality, from planting through to the end product: production area, assortment of vines, density (at least 8,000 vines per hectare), vine size, vine and press yields, manual harvesting, grading of the vintages,



qualitative approval of the presses, slow pressing, fractionation of the must, ageing in cellars, labeling, etc. Yield: each year, the maximum yield per hectare is set before the harvest, factoring in the quantity and quality of the grapes, as well as the economic context (12,000 kilos per hectare in 2004, 11,500 kilos in 2005 and 13,000 kilos in 2006). Qualitative reserve: since 1996, in addition to the maximum yields set for each harvest, certain years, as decided by the INAO, a given part of any surplus may be used to build up a qualitative reserve. This reserve makes it possible to capitalize on an abundant and high-quality harvest from time to time in order to make up for the significant variability of harvests in the Champagne region (from 1 to 6), and may not represent more than half a harvest in total. Stored as clear wine (vin clair), the reserve can be released either in whole or in part in the event of a shortfall with a harvest. The authorized qualitative reserve represented 2,000 kilos per hectare in 2004, 1,500 kilos in 2005, and none in 2006. At December 31st, 2006, the qualitative reserve represented an average of 4,359 kilos per hectare. For five harvests from 2007 onwards, new rules have been put forward by the Interprofession and adopted by the INAO: � Updating of the basic yield (average level of yields set over the last 10 years), raised

from 10,400 kg to 12,400 kg/ha, which now represents the production reference for the Champagne appellation label.

� Increase in the maximum permitted yield to 15,500 kg/ha, allowing an individual reserve to be created.

� Creation of an individual reserve, with the qualitative reserve now individualized and capped at 8,000 kg/ha.

� Dual restrictions on the agronomic load: to prevent excessive yields per plot, the average maximum load is set and the number of grapes per sq.m of vines in production is capped.

Any surplus production must be sent to the distillery. 1.3.3. Champagne production, a complex method Vinification and champagnisation involve complex operations that are decisive for the quality of the end product: low temperature fermentation, blending of wines from different harvests and vintages, bottling, riddling, disgorging, dosage…The Champagne method requires specific tools, know-how and qualitative investments in order to produce outstanding wines. Among the very many operations, the main stages are as follows: � Harvesting: carried out exclusively by hand, to ensure that the bunches remain intact,

they last two to three weeks in September-October. � Pressing: regulated by the Appellation, it ensures a slow extraction of juice from the

pulp in order to preserve the finesse of the aromas. The yield is limited to 25.5 hectoliters of must per 4,000 kg of grapes, including 20.5 hectoliters of vintage, the best juice, only used in the quality vintages.

� Vinification: first of all, the initial alcohol fermentation is carried out at a low temperature in October in thermo-regulated stainless steel tanks, for each grape variety and vintage, transforming the must into wine.

� Blending: this represents the founding stage for each vintage. The head of the House and his oenologist blend the still wines from various vintages and years to perpetuate the constant quality and style of the House.



� Tirage or bottling: sugar and yeast are added to the blend prepared in line with the proportions selected. The bottles are then stored in cool temperature and hygrometry-controlled cellars.

� Prise de mousse: in four to six weeks, thanks to the yeast and the low temperature in the cellars (9 to 11°), the second bottle fermentation phase makes the wine sparkling.

� Lees maturation: the ageing aligns the vintages to develop their specific aromas: this must be at least 15 months after tirage and three years for vintages. These represent the minimum requirements, and these periods are often exceeded by some way for quality vintages.

� Riddling: an ancestral action that makes it possible to gradually draw the yeast sediment down into the neck, from where it can be removed after freezing during the disgorging process. Carried out exclusively by hand for a long time, it is now based primarily on automated systems (gyropalettes).

� Dosage: by adding a small quantity of “dosage liqueur” to the wine, it makes it possible to restore a usual level of sugar for the wines in the cuvee. This level of dosage creates the different Brut, Extra Brut, Sec, Demi-Sec…

� Labeling: embodying the image, it must be compliant with the numerous AOC rules as well as the specific requirements of importing countries in many cases.

1.3.4. Grape supplies The complexity of the Champagne method requires a high level of investment and know-how. Historically, the vine and wine professions in Champagne have been performed by different families: the Houses and the Winegrowers. A total of 15,242 operators – including 214 merchants – are responsible for the vineyards in production, representing 31,924 hectares split into 275,808 plots. The Houses own only 9.9% of the production area, while they account for around 70% of total shipments (90% for export markets): this highlights the importance of close and balanced relationships between the Winegrowers and the Houses in order to guarantee sufficient supplies, enabling new markets to be developed, set against a backdrop of strong demand. �

The Houses source their supplies from the winegrowers or local cooperatives. Since 1996, these relations have been secured under multi-year individual contracts, within the framework of inter-professional agreements negotiated and signed by the Union des Maisons de Champagne (UMC) and the Syndicat Général des Vignerons (SGV). These agreements reflect the entire interprofession’s commitment to organizing these relations in order to limit fluctuations in grape prices, both up and down, and ensure the harmonious development of the entire Champagne economy. The new agreement sealed in 2004 now covers five harvests instead of four, introducing a number of new rules aimed at keeping speculation over prices more effectively in check, securing winegrowers’ payments for grapes, and enabling the market to be transparent. The sales price, previously determined for each vineyard and combined with bonuses, is now set for each region and includes bonuses. For the 2006 harvest, 1 kg of grapes was priced at between 4.50 and 5.50 euros (1.2 kg are required to produce one 75 cl bottle of Champagne). 1.3.5. Development of the market Champagne represents a buoyant market that has developed significantly over the last 50 years. Looking beyond any fluctuations due to economic cycles and situations, the change in sales since 1960 illustrates the strong growth in volumes over the long term and the growing export focus in Champagne shipments.



Change in global Champagne shipments since 1960 (million bottles) Volumes have been able to increase thanks to the increase in the planted area, up from 12,000 hectares in 1960 to 33,000 in 2005, and the regular progress made on growing techniques, enabling higher average yields. Breakdown of Champagne shipments in 2006 With 321.7 million bottles in 2006, the market was up 4.6% in relation to 2005, with the Champagne Houses accounting for 68% of the volumes sold, the winegrowers 22% and the cooperatives 10%. In 2006, domestic consumption levels rose 1.5%, with the French market accounting for 56% of the volumes shipped, representing 181 million bottles. Over the last 15 years, exports have been the strongest growing market, with a very significant increase of +9% in 2006. They account for 44% of shipments, representing some 140.5 million bottles. The strongest growth has been seen on exports to third-party countries (outside of the European Union), climbing +16% to 56.5 million bottles.

FRANCE EUROPEAN UNION OTHER COUNTRIES TOTAL

Bottles Change Bottles Change Bottles Change Bottles Change

Houses 95,625,622 + 1.5% 70,699,466 + 2.9% 51,345,738 + 15.8% 217,670,826 + 5.0%

Winegrowers 68,822,176 +2.3% 4,075,689 + 7.5% 1,637,321 + 6.6% 74,535,186 + 2.6%

Cooperatives 16,568,499 - 1.4% 9,358,154 + 15.8% 3,533,455 + 23.6% 29,460,108 + 6.2%

Total 2006 181,016,297 + 1.5% 84,133,309 + 4.4% 56,516,514 + 16.0% 321,666,120 + 4.6%

Total 2005 178,360,043 - 80,568,155 + 4.3% 48,736,724 + 6.3% 307,664,922 +2.1%

Total 2004 178,358,541 + 2.4% 77,221,912 + 1.5% 45,834,520 + 6.1% 301,414,973 + 2.7%

Total 2003 174,231,485 - 0.4% 76,061,870 + 6.4% 43,211,605 + 5.0% 293,504,960 + 2.0%

Total 2002 175,000,710 + 6.4% 71,510,179 + 9.9% 41,161,532 + 24.3% 287,672,421 + 9.5%

Total 2001 164,522,817 + 9.9% 65,062 535 + 1.4% 33,109,962 - 16.0% 262,695,314 + 3.7%

Source: CIVC/L’Union

10 15 40 30 60

90 85 97 98 113 119 123 129 141 60

90 110 110

149 160 165 175 174 177 178 181

40 55

0

50

100

150

200

250

300

350

1960 1965 1970 1975 1980 1985 1990 1995 2001 2002 2003 2004 2005 2006

Aggregate

50

170

263

293

322

Export France



(million bottles)

1990

1995

2000

2001

2002

2003

2004

2005

2006 2006 growth rate

Country

UK 21.3 17.0 20.4 25.0 31.7 34.5 35.0 36.8 36.8 + 1.13%

US 11.7 12.6 19.2 13.7 18.2 19.0 20.3 20.7 23.2 + 11.96%

Germany 14.2 17.8 14.2 12.8 11.4 12.1 11.5 11.9 12.3 + 2.65%

Belgium 5.9 6.4 7.3 7.4 9.0 9.1 9.3 9.4 9.3 - 0.85%

Italy 9.6 7.4 8.2 7.0 7.9 8.5 8.2 8.8 9.3 + 5.12%

Japan 1.5 1.9 3.2 3.5 4.0 5.0 5.9 5.9 8.0 + 34.85%

Switzerland 8.6 7.4 6.5 6.1 5.8 5.6 5.2 5.1 5.4 + 6.63%

Other countries 12.0 16.2 24.5 22.7 24.6 25.6 27.6 31.1 36.3 + 16.7%

Total export 84.8 86.7 103.5 98.2 112.6 119.4 123.0 129.7 140.6 + 8.7%

Source: CIVC Among the main importing countries, demand has been growing strongest in the US, UK and Japan for more than 15 years now. Competition is strong in the growing global market for sparkling wines. Indeed, sparkling wines are produced in many countries, including the US, Australia, Spain, Germany, South Africa and Italy. Thanks to its quality, the dynamic development of its Houses, the strength of its appellation labels and brands, Champagne stands out on its own with around 15% of the total volume for more than half of the total revenues. 1.3.6. Competitive environment The Champagne sector reflects the impact of its rationalization and modernization over the last 10 years. The main players in this sector are as follows:



2006

revenues (€’000,000)

Number of champagne bottles sold

in 2006 (million bottles)

Comments

LVMH (Moët & Chandon, Dom Pérignon, Krug, Mercier, Veuve Clicquot, Ruinart)

2,994 59.9 Listed group

Wines and spirits revenues

BOIZEL CHANOINE CHAMPAGNE (Boizel, Chanoine Frères, Philipponnat, De Venoge, Alexandre Bonnet, Lanson, Besserat de Bellefon, Alfred Rothschild)

311 21 Listed group

VRANKEN POMMERY (Vranken, Demoiselle-Vranken, Pommery, Heidsieck & Co Monopole, Charles Lafitte)

268 20 Listed group

LAURENT-PERRIER (Laurent-Perrier, de Castellane, Salon Delamotte, Jeanmaire, Oudinot, Beaumet)

208 13 Listed group

Year ended Mar 31

REMY-COINTREAU (Charles Heidsieck, Piper Heidsieck) 122 9.9 Listed group

Champagne revenues

PERNOD-RICARD (G.H. Mumm & Cie, Perrier-Jouët) 6,066 9.6

Listed group Consolidated group

revenues Year ended Jun 30

CENTRE VINICOLE DE LA CHAMPAGNE (Nicolas Feuillatte) 169 9.5 Cooperative

G.H. MARTEL & Co (GH Martel & Co, Charles de Cazanove, Mansard Baillet, E. Rapeneau)

NC 8 Unlisted group

ALLIANCE CHAMPAGNE (Jacquart) 85 7.8 Cooperative

TAITTINGER (Taittinger, Irroy) 97 4.9 Unlisted group

THIENOT (Alain Thiénot, Canard-Duchêne, Marie Stuart, Paul Gobillard, Trouillard, Joseph Perrier, Malard)

NC NC Unlisted group

ROEDERER (Roederer, Deutz) NC NC Unlisted group

Sources: company sites/national trade press/regional daily press



1.3.7. Regulatory environment Champagne production is strictly regulated, governed by French and European laws and regulations. These standards concern production, ageing, quality, the Appellation d’Origine Contrôlée label, indirect taxes and labeling. In addition, the rules applicable for rural law, regulations for the various structures and SAFER set various obligations, notably with regard to land-related transactions and the farming of wine-producing estates. As far as public health is concerned, wine is not like any other product and therefore cannot be communicated about freely. Advertising to promote alcoholic drinks is very strictly regulated, as defined in Articles L 3323-1 to L 3323-6 of the French public health code (Code de la Santé Publique). Indeed, Article L 3323-2 of the public health code sets a principle forbidding any direct or indirect promotion or advertising to promote alcoholic drinks or any sponsoring aimed at or resulting in such promotion or advertising, except for certain exceptional cases. In this way, advertising to promote alcoholic drinks must include a public health message, indicating that alcohol abuse is bad for your health. In addition, Article L 3323-4 of the public health code concerning the content of authorized advertising requires messages to be limited to the following elements: information on the alcohol content, the origin, the name, the makeup of the product, the name and address of the producer, the agents and dealers, the means of production, the conditions for sale and the means of consumption for the product, reference to the production area and any awards obtained, the development of rural areas, the appellation d'origine labels as per Article L 115-1 of the French consumer code (Code de la Consommation), regional information as defined in duly ratified international agreements and treaties, and objective references to the color, olfactory and taste characteristics of the product. The BOIZEL CHANOINE CHAMPAGNE Group complies with the various obligations applicable under the public health code. Specific regulations covering alcohol sales (excise duties) are applicable in most countries. In France, the excise duty (CRD) represents 0.06 euros per 75cl bottle.

1.4. STRATEGY AND OUTLOOK 1.4.1. Highlights of 2006 LANSON: an exceptional opportunity for growth On March 22nd, 2006, BOIZEL CHANOINE CHAMPAGNE acquired the LANSON INTERNATIONAL Group (which became Maison BURTIN), the holding company at the head of the BURTIN/LANSON subgroup. This external growth operation has provided the Group with a major, internationally-renowned brand. Indeed, present in over 80 countries, LANSON represents the multi-channel transversal brand that BOIZEL CHANOINE CHAMPAGNE did not yet have. The Group has immediately focused its efforts on integrating the BURTIN/LANSON subgroup and turning its business around, with the main measures outlined below: � Selling off non-strategic assets (Bordeaux, real estate not linked to operations), � Reducing production costs, � Voluntarily scaling down volumes that are not sufficiently developed, � Capitalizing on the LANSON, BESSERAT de BELLEFON and ALFRED ROTHSCHILD & Cie

brands, by applying a strategy focused on value rather than volume, in line with a policy already implemented at BOIZEL CHANOINE CHAMPAGNE,

� Realigning marketing and communications budgets to focus on the luxury sector, � Strengthening efforts on export.



A significant change in scope Thanks to this acquisition, the Group has taken a major step forward with its development, becoming one of the leading champagne producers and considerably strengthening its positions at international level. In 2006, total sales represented a volume of 20.9 million bottles, compared with seven million in 2005. In this way, BOIZEL CHANOINE CHAMPAGNE has tripled in size, generating 311 million euros in consolidated revenues over 2006, with the BURTIN/LANSON subgroup’s impact on revenues for 2006 coming out at 221 million euros. The percentage of exports increased from 42% in 2005 to 45% in 2006, with the UK representing the largest export market. Strong growth in earnings EBIT came to 37.2 million euros, compared with 14.9 million euros in 2005. The financial result totaled -15.05 million euros, compared with -2.66 million euros, with this change primarily reflecting the following three points:

- The repayment of debt allocated for the acquisition of the Maison BURTIN subgroup, - The cost of financing for the ageing of stock for the Maison BURTIN subgroup, - The increase in benchmark interest rates on the former scope.

Net income after tax totaled 14.8 million euros, compared with 7.9 million euros in 2005, up 86%, representing 4.8% of revenues, compared with 8.2% in 2005. This can be considered as satisfactory in light of the scale of the project undertaken. For reference, net income on the previous BOIZEL CHANOINE CHAMPAGNE scope totaled 8.17 million euros at December 31st, 2006. This figure factors in the 1.58 million euros in financial expenses linked to the acquisition of Maison BURTIN, with restated net income coming out at 9.75 million euros (+23.4%). Furthermore, to respond as effectively as possible to the market's changes and restrictions, the Group owns an AOC stock of 66.6 million bottle equivalents, representing close to three years of sales (excluding the qualitative reserve), with a book value of 454,000,000 euros, including the residual acquisition goodwill allocated to inventories for a total of 17,820,000 euros. For effective management, the Group does not incorporate the financial expenses linked to their ageing into its inventories. With the acquisition of the Maison BURTIN subgroup, the BCC Group has considerably strengthened its grape sourcing base. This significant increase represents one of the key events over 2006. Further information on this subject is given in Sections 1.4.6 and 1.5.1. Additional information Research and development activities The Company has not carried out any research and development activities over the past year. Post-balance sheet events There are no significant changes to report in terms of the Company's financial or commercial position since the end of the last financial year.



Significant contracts There are no significant contracts to report, other than those concluded in connection with the normal course of the Group's business, under which BOIZEL CHANOINE CHAMPAGNE or any of its subsidiaries are a stakeholder for this and the previous two years. 1.4.2. Main investments over 2006

Maison BURTIN

BOIZEL CHANOINE

CHAMPAGNE

Total 2006

Total 2005

€’000 Brands - 600 600 -

Other intangible fixed assets 38 - 38 -

Land and plantation costs 255 478 733 725

Buildings 529 1,072 1,601 446

Technical facilities, plant and equipment 537 921 1,458 1,668

Other tangible fixed assets 50 223 273 109

Long-term financial investments 296 - 296

Total 1,705 3,294 4,999 2,948

Future investments: Amount

€’000

Industrial equipment 5,520

Wine-producing equipment 40

Buildings 6,800

Operating equipment 405

Other tangible fixed assets 460

Total 13,225

Planned investments for 2007 are expected to focus on developing the Group's production capacity, including the creation of a new cuverie at Chanoine in Reims, with this investment to be based on external financing.



1.4.3. Key figures for each subsidiary The following table presents the key figures for all of the Group's subsidiaries at December 31st, 2006:

% interest Shareholders’ equity before 2006 earnings

Revenues Corporate net income

COMPANIES

SUBSIDIARIES CHAMPAGNE BOIZEL CHAMPAGNE CHANOINE FRERES CHAMPAGNE PHILIPPONNAT CHAMPAGNE DE VENOGE CHARMOY (ALEXANDRE BONNET) MAISON BURTIN CGV SUB-SUBSIDIARIES SODISMAR CHAMPAGNE (a) ROGGE (a) ABEL LEPITRE (d) SCEA PHILIPPONNAT (c) PHILIPPONNAT – LES DOMAINES ASSOCIES (c) MAISON ALEXANDRE BONNET (b) VIGNOBLES ALEXANDRE BONNET (b) PRESSOIRS ALEXANDRE BONNET (b) SCI VAL RONCEUX (b) SCI VAUCELLES (b) CHAMPAGNE LANSON (e) ESPACE MARNE ET CHAMPAGNE (e) SCEA DES VINS FRANÇAIS (e) SNC AR (e) LANSON INTERNATIONAL AMERICAS Inc (e) LANSON INTERNATIONAL DIFFUSION (e) LANSON INTERNATIONAL UK Limited (e) LANSON INTERNATIONAL SWITZERLAND (e) M.C.D. Deutschland Gmgh (e)*

99.97 99.94 99.99 99.98 99.99 99.99 99.59

99.98 50.00

100.00 100.00

99.61 99.85

100.00 99.97 99.98 99.90

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

7,097,665 4,699,572

15,088,550 2,769,825

17,278,018 51,604,914

538,450

238,059 61,535

309,290 1,579,459

401,085 1,600,812 1,994,942

847,849 648,000

68,345,171

3,327,210 (7,636,173)

400 66,585

(46,636) 4,227,832

65,220

19,933,390 35,558,283 10,249,343

9,115,227 0

167,538,962 17,573,078

0 73,808

467,807 346,160

4,927,736 20,048,718

4,877,849 551,956

0

94 739,989 151,135

0 47,621,393

745,044 201,666,774

42,259,489 3,125,433

2,385,034 2,095,703 1,243,368

697,343 1,540,717

27,727,902 255,953

(94) (9,152) 18,232

206,287 387,238 818,248

1,390,745 72,848 66,012

5,728,731

227,975 (82,016) 138,091

9,942 1,750,212

990,777 (2,041)

(a) Subsidiaries of BOIZEL (b) subsidiaries of CHARMOY, the “ALEXANDRE BONNET Group” (c) subsidiaries of CHAMPAGNE PHILIPPONNAT (d) subsidiary of CHANOINE FRERES (e) subsidiaries of Maison BURTIN. * dormant company intended to be wound up ROGGE, 50%-owned, is not consolidated since it is not particularly significant (harvest pressing services for the BOIZEL House). 1.4.4. Parent company-subsidiary relations BOIZEL CHANOINE CHAMPAGNE is a holding company for the Group, defining the strategy for its development, as well as its commercial policy. It determines the communications strategies and is more specifically responsible for financial communications. It also manages the production of the corporate and consolidated financial statements for subsidiaries. In this respect, two agreements – one for management fees and the other for cash management – have been concluded between BOIZEL CHANOINE CHAMPAGNE and its subsidiaries with a view to optimizing the Group's financial management and managing risks as effectively as possible. This organization makes it possible to provide accurate and objective information for the directors and more generally the shareholders when reviewing the financial position and accounts. Minority shareholders do not own any significant percentages in the equity of consolidated subsidiaries.



1.4.5. Activity and outlook for Group companies The activities of each subsidiary over the year ended December 31st, 2006 and its outlook for 2007 are presented hereafter:

− CHAMPAGNE BOIZEL Business over the past year: revenues totaled 19,933,000 euros, up 8% on 2005 (18,478,000 euros). Revenues generated in France, representing 55% of the total, increased significantly due to inter-champagne sales, while international business accounted for 45% of revenues. Net accounting income totaled 2,385,000 euros, compared with 1,912,000 euros in 2005. This represents 11.96% of revenues, despite a 39% increase in financial expenses due to the increase in rates. This result reflects growth in business and the improvement in commercial margins. The company acquired capitalized assets representing 23,000 euros. Outlook: the volumes sold directly in France are expected to be up slightly, with the downturn forecast in election years to be offset by further developments on the internet. On export, BOIZEL expects to see a significant increase in its volumes thanks to the dynamic start made by new importers in Scandinavia, Russia and Spain. This good performance is also down to the good outlook for traditional countries such as the UK, Switzerland and above all Japan. In light of these elements, Maison BOIZEL’s profitability should be similar to the previous year.

− CHAMPAGNE CHANOINE FRERES Business over the past year: revenues, restated for rear margins, are down -13.64% from 41,177,000 euros to 35,558,000 euros, with the percentage generated through exports stable at 13% in 2006. A percentage of export sales are generated by CGV With financial expenses up 41% to 1,417,000 euros, primarily linked to the increase in rates, income from ordinary operations is down 20% to 2,953,000 euros, compared with 3,671,000 euros the previous year. Net income totaled 2,096,000 euros, compared with 2,395,000 euros in 2005, representing a drop of 12.49%. The company acquired capitalized assets (primarily: plant, equipment, fixtures and fittings) totaling 680,000 euros. Outlook: CHANOINE FRERES aims to increase its proportion of champagnes sold under the Tsarine and CHANOINE FRERES brands, at the expense of distributor brands. The classic CHANOINE FRERES range is now clearly positioned to challenge the other national brands, while the prestigious Tsarine range is now working all out to establish itself as an international brand, thanks to an ambitious communications program. The position of CHANOINE FRERES and Tsarine on the French mass retail sector is expected to be further strengthened in 2007, notably by improving its referencing at points of sale. Exports to Asia and America, although currently modest, are expected to boost sales on the Tsarine range in the future. CHANOINE FRERES is continuing to roll out its value-driven growth strategy, gradually realigning its brands from mid-range to top-end.



CHAMPAGNE ABEL LEPITRE, the CHANOINE subsidiary with its brand of the same name, was re-launched at the end of 2001 after being dormant for years, and has continued to develop its business with modest revenues of 468,000 euros, generating 18,000 euros in net income. This brand will continue to grow over 2007.

− CHAMPAGNE PHILIPPONNAT Business over the past year: revenues totaled 10,249,000 euros, up 15% in relation to the previous year. EBIT climbed from 1,471,000 euros to 2,155,000 euros, driven by an increase in volumes as well an improvement in margins. Net income for the year totaled 1,243,000 euros. The company acquired capitalized assets (primarily vines and equipment) totaling 816,000 euros. The company has benefited from the upturn in CHAMPAGNE PHILIPPONNAT sales in both volume and value, as well as the Bordeaux en primeurs for the 2003 vintage. Sales on other wines have seen a more modest rate of growth. SCEA PHILIPPONNAT, which operates part of the PHILIPPONNAT vineyards, generated 206,000 euros in earnings, compared with 176,000 euros in 2005.� PHILIPPONNAT – LES DOMAINES ASSOCIES, which is responsible for distributing PHILIPPONNAT champagnes and Domaines Barons de Rothschild (Lafite) wines in France, generated a profit of 387,000 euros, compared with 222,000 euros in 2005. For reference, the economic result for the PHILIPPONNAT Group came to 1,550,000 euros in 2006. Outlook: in 2007, PHILIPPONNAT will continue rolling out its value strategy, with champagne volumes to level off and volumes for other wines to increase slightly. However, the Bordeaux en primeurs wines for the 2004 vintage will be less favorable than the previous year. The company will also continue with its strategy to strengthen the brand’s high-end and international positioning, based on: � Increasing the value of the Royale Réserve Brut, � Focusing on developing vintages and superior vintages, with major efforts to optimize

the value of the Clos des Goisses, for which demand among connoisseurs around the world has increased considerably for the 1996 vintage,

� Continuing to give priority to exports thanks to a more stringent pricing and promotional policy in France and a more dynamic approach on export, with its higher profitability,

� Continuing with investments on the company’s image (press, advertising), targeting opinion leaders and the principal connoisseurs.

This strategy will make it possible to consolidate the company's profitability improvements at a high level.



− CHAMPAGNE DE VENOGE Business over the past year: revenues are down 7% from 9,830,000 euros in 2005 to 9,115,000 euros, with 61.5% generated in France and 38.5% on export, while EBIT dropped 2% from 1,470,000 euros to 1,436,000 euros. In 2006, net income totaled 697,000 euros, compared with 742,000 euros in 2005. Outlook: with the launch of the Louis XV vintage at the end of 2006, DE VENOGE is able to be optimistic for 2007 since, in addition to strengthening the brand's profitability, the Louis XV vintage is creating value and image, helping to sell the other qualities. Despite the increase in financial expenses, DE VENOGE is expected to maintain its level of earnings. The commercial strategy is focused on creating value. The House is working to improve its product mix by creating strong value added, high-end vintages. The new prestigious Louis XV vintage clearly illustrates this approach. Positioned among the most expensive champagnes on the market, it is expected to generate a significant increase in margins, while consolidating the House's image. This strategy, made possible thanks to strong distribution on the French market, is enabling efforts to be ramped up at international level, focusing primarily on new areas for consumption such as Central European countries (Russia, Czech Republic, Latvia, etc.) and Asia (China, Singapore, etc.), where higher quality products are highly sought after.

− The CHARMOY Group (ALEXANDRE BONNET) �

The Group is made up of the following companies: MAISON ALEXANDRE BONNET, VIGNOBLES ALEXANDRE BONNET, PRESSOIRS ALEXANDRE BONNET, SCI VAL RONCEUX (owner of vineyards) and SCI VAUCELLES (owner of building land). Maison ALEXANDRE BONNET Revenues climbed from 19,727,000 euros in 2005 to 20,049,000 euros, representing an increase of 2%. 83% of sales are generated in France, with the majority focused on sourcing for its sister companies CHANOINE FRERES and DE VENOGE. EBIT was down from 1,617,000 euros to 1,450,000 euros, with income from ordinary operations dropping from 1,569,000 euros to 1,244,000 euros, giving 818,000 euros in net income. The company acquired capitalized assets totaling 722,000 euros (primarily the Ferdinand BONNET brand). Vignobles ALEXANDRE BONNET This company operates a 44.8 hectare vineyard, generating 4,878,000 euros in revenues, compared with 3,478,000 euros in 2005. Net income came to 1,391,000 euros, compared with 752,000 euros in 2005. The company acquired capitalized assets totaling 174,000 euros (primarily fixtures, fittings and buildings). Pressoirs ALEXANDRE BONNET This company presses grapes that have been harvested in the ALEXANDRE BONNET vineyards as well as grapes purchased from the many independent winegrowers supplying Maison ALEXANDRE BONNET or other traditional buyers. Revenues totaled 552,000 euros, with 73,000 euros in net income. �

For reference, the CHARMOY Group’s economic result totaled 2,365,000 euros in 2006. Outlook for the CHARMOY Group:



Maison ALEXANDRE BONNET: the outlook is good insofar as several commercial positionings put in place in 2006 will be confirmed over the full year in 2007, pointing to a significant increase in sales. In 2007, rosé champagne stocks will make it possible to meet the requirements of the still very buoyant market both in France and abroad. Vignobles ALEXANDRE BONNET: new plots of vines planted in 2005 will enter into production in 2007, consolidating the house’s draw; a new press will be set up in an existing building; lastly, in line with the Champagne commitment, the controlled growing approach will continue to be rolled out for the vineyard.

− CHAMPENOISE DES GRANDS VINS (CGV) Business over the past year: CGV generated 17,573,000 euros in revenues, compared with 25,165,000 euros in 2005, with 31% in France. EBIT totaled 369,000 euros. Net income came to 256,000 euros. Outlook: the downside with the operating margins for this business is that they are very low, and are expected to remain stable over 2007. However, the signature of new contracts points to a significant increase in revenues for 2007.

− COMPANIES ACQUIRED OVER THE YEAR On March 22nd, 2006, BOIZEL CHANOINE CHAMPAGNE acquired the LANSON INTERNATIONAL Group, made up of two main companies and several sub-subsidiaries. LANSON INTERNATIONAL was previously called Marne et Champagne d’Epernay. It was immediately renamed Maison BURTIN, taking the name of its founder. The main asset is its LANSON Père et Fils subsidiary in Reims. To fully respect its integrity, Champagne LANSON will now be the only entity to use this name. This group was in a delicate financial position, requiring a major restructuring. Following an in-depth economic audit, six major projects have been implemented: Debt restructuring: This action first focused on reducing debt levels by selling off surplus stocks, Bordeaux assets and properties not used for operations. Then, with the banks' support, constructive negotiations made it possible to keep the average cost of financing at under 3.5%, which is also expected to be the case in 2007. Disputes: Two very significant disputes were running: - One concerned the Bordeaux assets, with conflicts between the company’s former shareholders under 23 cases; these disputes were settled in full on June 30th, 2006; - Another concerning a dispute dating back to the 1990s with the tax authorities, with a favorable settlement reached at the end of the year. Tax dispute: further to a ruling by the Council of State (Conseil d’Etat) in 2006, Maison Burtin was reimbursed for 4,115,000 euros. As agreed with our statutory auditors, we allocated part of acquisition goodwill to this sum. In light of the depreciation of the acquisition goodwill allocated in this way, the impact on earnings is cancelled out in full.



Disputes on Bordeaux estates: all of the disputes had been covered by provisions in the corporate financial statements of Maison Burtin. In 2006, a transactional agreement was reached with the farmer, who took over all of the Bordeaux assets. The vineyards and buildings were sold off, debts cleared and the provisions released. All of these accounting operations translated into a profit of 126,000 euros in the group's accounts. These operations were validated by the statutory auditor concerned. Reduction in production costs: This action has been carried out within a calm labor relations climate, with retirements, voluntary departures and a few negotiated redundancies linked to the closure of three sites in Paris and Lyon making it possible, in light of several recruitments for higher-level managers, to achieve a net balance of -55 in terms of staffing levels. At the same time, staff agreed to return to an effective 35 hour week. Lastly, the production tool has been used more effectively thanks to services contracted with several other houses. Sourcing: This naturally represents a strategic point, since no Houses can operate without buying grapes. Over the years, the former LANSON International Group had lost a significant part of the confidence and trust of the vineyard’s partners, resulting in a significant reduction in its surface area under contract. However, since March 2006, this confidence has been built back up again, as shown by the various contracts that have been extended and renewed. ALFRED ROTHSCHILD et Cie: Maison BURTIN produces the ALFRED ROTHSCHILD champagne under an agreement signed in 1991 with representatives from the various Rothschild families. The profitability of this agreement was not satisfactory, and the partners agreed to renegotiate their relationship, with a more balanced long-term contract signed on December 18th, 2006, enabling the House to be better paid for its work. Value strategy: As in all of the BOIZEL CHANOINE CHAMPAGNE Group’s Houses, value has been given priority over volume. Indeed, a volume "strategy" represented a strategy with no way out. However, it was only possible to implement part of these measures in 2006, since most of the commercial commitments for this year had been entered into before March 22nd. This represents the key challenge for 2007.

− MAISON BURTIN Business over the past year: in 2006, revenues under French GAAP totaled 169,539,000 euros, including 164,084,000 euros for the champagne business and 5,455,000 euros primarily for services. In these revenues, duties are included and commercial discounts not deducted. Under IFRS, revenues would have come out at 168,061,000 euros. The BESSERAT DE BELLEFON brand has been withdrawn from the mass retail sector. In traditional channels, it has performed very well in terms of sales. The selective distribution policy rolled out exclusively concerns the Cuvée des Moines. EBIT totaled 20,521,000 euros, compared with 11,889,000 euros in 2005. However, this factors in various non-recurring items linked to the restructuring program. The financial result has improved 29.8%, reflecting the impact of the reduction in debt outlined above and the share in earnings (1.13 million euros) taken into account for LANSON



INTERNATIONAL DIFFUSION, the joint distribution company for Maison BURTIN and CHAMPAGNE LANSON. Income from ordinary operations before tax totaled 14,197,000 euros, compared with 2,881,000 euros for the previous year. Non-recurring items notably factor in the repayment of interest linked to the settlement of the tax disputes mentioned previously (1.5 million euros), capital gains on the disposal of non-strategic real estate assets (1.1 million euros) and a writeback of provisions on the BESSERAT de BELLEFON brand (1.8 million euros). Net profit for the past year totaled 27,728,000 euros, compared with a loss of 22,206,000 euros for the previous year, when -25,046,000 euros in non-recurring expenses had been recorded, notably resulting from the Bordeaux disputes and the depreciation of the BESSERAT de BELLEFON brand. The majority of these earnings will not be reflected in the consolidated earnings since they have been booked under acquisition goodwill. Outlook: efforts will focus on increasing sales prices for the BESSERAT de BELLEFON and ALFRED ROTHSCHILD brands, based on investments in communication. Furthermore, the lower value volumes will not be developed, and their prices will be negotiated up. Debt levels are also expected to be reduced. The objectives for the current year are as follows:

� Adapting the level of stock, which still shows a slight surplus, � Continuing with moves to reduce debt, � Optimizing the load plan, increasing the volume of services for third parties.

− CHAMPAGNE LANSON Business over the past year: over the year ended December 31st, 2006, the House's business was marked by three main elements:

- A good performance on sales in the UK, the leading market, and on other destinations. Several distribution agreements have been renegotiated (Netherlands, Italy), with others to follow shortly (Switzerland);

- A restructuring of stocks, enabling the company to reduce its debt; - A strong focus on communication for the brand.

In this way, revenues under French GAAP totaled 94,740,000 euros over the past year, up +20.6%. In these revenues, duties are included and commercial discounts not deducted. Under IFRS, revenues would have come out at 90,991,000 euros. The export market accounted for 71.6% of Champagne LANSON sales. EBIT for the year totaled 11,048,000 euros, up +70.3% compared with 6,487,000 euros previously. The financial result has improved 25%, reflecting the impact of a reduction in debt and the better financing conditions put in place over 2006. Income from ordinary operations before tax totaled 7,055,000 euros, compared with 1,160,000 euros for the previous year. Net profit for the year totaled 5,728,000 euros, compared with a profit of 2,488,000 euros for the previous year.



Outlook: The objectives for the current year are as follows:

� Increasing sales prices for Champagne LANSON, � Strengthening the media presence of LANSON, both in the press and on posters,

clearly positioning it in the luxury world, � Consolidating LANSON’s positions on its historical markets such as the UK and

developing its distribution on the “mass export” market. 1.4.6. Strategy In a steadily growing Champagne market, the Group's main objective is to increase its value added. In light of the production area’s saturation and the greater need to secure supplies, this ambition is based on:

- One core business: the production and marketing of Champagne wines; - Recognized brands, positioned on distribution channels that dovetail well with one

another; � Quality sourcing, strengthened with the acquisition of Maison BURTIN; � Growth in exports.

One core business: the production and marketing of Champagne From the outset, the BOIZEL CHANOINE CHAMPAGNE Group has had only one core business: the production and marketing of champagne wines, with a constant focus on quality in order to develop outstanding wines. Recognized brands, positioned on distribution channels that dovetail well with one another Each one of the Houses is specialized in its market. They are not competing against one another, since they cover different price segments or distribution channels. In light of its experience on all the distribution channels, the Group is in a position to optimize the multi-channel strategy that needs to be implemented for a cross-sector brand like LANSON.

Mail order Specialized mass retail Selective retail Luxury

BOIZEL (France)

LANSON LANSON Noble Cuvée LANSON

CHANOINE FRERES BESSERAT de BELLEFON Cuvée des Moines BESSERAT de BELLEFON

TSARINE PHILIPPONNAT Clos des Goisses PHILIPPONNAT

ALFRED ROTHSCHILD DE VENOGE Louis XV DE VENOGE

The BOIZEL brand has a leading position on the French mail order market for champagne. CHANOINE FRERES is distributed primarily through supermarkets. PHILIPPONNAT supplies



leading restaurants. BESSERAT DE BELLEFON and De VENOGE are also sold through restaurants and wine stores. ALEXANDRE BONNET represents more of a local brand. And last but not least, LANSON is sold across all channels (restaurants, wine stores, supermarkets, duty free). Indeed, it represents a very well-known brand, with a stronger cross-sector and export focus than the Group's other brands. Quality sourcing further strengthened in 2006 with the acquisition of Maison BURTIN To produce its 21 million bottles, the Group primarily buys grapes at harvest time from independent winegrowers, representing close to 1,600 hectares of vineyards. Historically, the Group's Houses have ensured the sustainability of their grape supplies through multi-year contracts, in the same way as all champagne houses. Over the generations, they have built up close ties with the winegrowers. Since the Group's main shareholders are significantly involved in local life and many winegrowers are also shareholders in BOIZEL CHANOINE CHAMPAGNE, the Houses enjoy close ties that are favorable for the renewal of existing agreements and the conclusion of new contracts. Managing these grape supplies is very important, in light of the division of the various Champagne vineyards. These contracts also considerably spread the supplier risk, offering a good level of security for supplies. In addition, the Houses source supplies on the clear wine market and occasionally on the inter-champagne market for certain wines that are already bottled. In 2006, the sourcing base was significantly strengthened with the acquisition of the BURTIN/LANSON subgroup, thanks to their significant contracts for grape supplies sealed with over 1,000 winegrowers. These contracts were consolidated over 2006, notably with a bank guarantee for all the viticulturists delivering grapes to Maison BURTIN companies. This represents a pioneering move on this market, and is part of a program aimed at restoring and developing confidence and trust among all of the vineyard’s partners with Maison BURTIN and its subsidiary Champagne LANSON. Set against a backdrop of heightened competition, the Group is pursuing its policy to set up long-term grape sourcing contracts. Major potential on exports Out of the 21 million bottles, export sales account for 45%, close to the 44% seen for the sector in general. This situation varies from one House to the next, with 71% for LANSON, 62% for PHILIPPONNAT, 30% for Maison BURTIN and 16% for CHANOINE FRERES. 1.4.7. Outlook The BOIZEL CHANOINE CHAMPAGNE Group’s primary objective is to take its new subsidiaries –LANSON and Maison BURTIN – up to a satisfactory level of profitability, in line with its other subsidiaries. At the same time, the Group is continuing to invest in its production tool and the development of its supplies:



� Acquisitions of further plots of vines, with a view to strengthening partnerships with the various winegrowers supplying grapes;

� A further expansion of the CHANOINE FRERES site (10,000 sq.m), taking it up to 30,000 sq.m and 90,000 hectoliters of cuverie;

� Other smaller investments are underway at Maison BURTIN sites in Epernay and ALEXANDRE BONNET in Les Riceys, with further investments planned for LANSON in Reims.

The Group's sales efforts will continue to focus primarily on exports, aiming over the medium term to reverse the breakdown of France-Export sales. The development of BOIZEL CHANOINE CHAMPAGNE is not based on increasing volumes, but continuing with the qualitative upgrading of the Group's brands, with a more visible focus on the luxury sector and effectively targeted communications campaigns.

1.5. RISK FACTORS 1.5.1. Grape supplies and prices The Group's Houses own approximately 70 hectares of vines. They lease out 21.5 hectares, and themselves lease 18 hectares. Grape sourcing is guaranteed under five to 10 year contracts covering most of the Group's requirements, with the surplus covered by clear wine purchases carried out at the start of the calendar year. BOIZEL CHANOINE CHAMPAGNE believes that the Group is well supplied for grapes, but cannot rule out the risk of a shortfall in the future. Random climatic events can occur in the Champagne region, even if harvests with a clear shortfall are increasingly rare. The industry has set up a qualitative reserve (§1.3.2.) in order to cover this risk. Since its vineyards are spread out, the Group does not believe that it is necessary to take out any specific insurance policies. 1.5.2. Risks linked to international operations and exchange rate fluctuations The BOIZEL CHANOINE CHAMPAGNE Group bills primarily in euros. In the UK, the subsidiary LANSON INTERNATIONAL UK LTD bills in sterling; it was invoiced in euros up until January 31st, 2007; since February 1st, 2007, LANSON INTERNATIONAL UK has been invoiced in sterling. The revenues invoiced in 2006 can be broken down as follows:

- In euros: 275,201,000 euros. - GBP exchange value: 29,620,000 euros - USD exchange value: 2,225,000 euros - JPY exchange value: 1,968,000 euros - AUD exchange value: 1,387,000 euros - CAD exchange value: 908,000 euros - CHF exchange value: 4,000 euros

The Group applies a cautious, non-speculative and centralized management policy for its exchange positions. Within this framework, and when relevant, the Group sets up simple forward hedging facilities that may not exceed 70% of significant and "recurrent" positions. For reference, as of the first few days of January, the Group had 6.5 million pounds in outstanding aggregate hedges, corresponding to end-of-month maturities for Q1 2007.



1.5.3. Risks linked to interest rate fluctuations The Group applies a cautious and non-speculative rate risk management policy. The Group's exposure to rate risks can be evaluated based on the amount of its consolidated gross debt, which represented 568 million euros at December 31st, 2006. In light of the provisions implemented in 2006, net debt at December 31st, 2006 can be broken down as follows: � Variable rate: 233 million euros � Fixed rate: 320 million euros, representing 58% of the total amount outstanding.

The repayment schedule is as follows: � Under one year: 23 million euros; � From one to five years: 214 million euros; � Over five years: 331 million euros.

Thanks to the quality of the Group's bank relations, virtually all of the credit lines were confirmed at December 31st, 2006. At December 31st, 2006, all of the confirmed credit lines totaled 586 million euros, with 568 million euros in gross debt and a utilization rate of 97%. The Group does not have any commitments under restrictive contractual obligations or covenants (see notes to the consolidated financial statements) and more specifically is not required to comply with any ratios for the coverage of financial debt by financial flows for the year. Debt is primarily used for financing the ageing of Champagne wine stocks. The value of inventories on the balance sheet at December 31st, 2006 came to 454 million euros. With 440 million euros in net debt allocated for financing the ageing of this stock, the debt-stock ratio represented 97%. In light of the debt structure at December 31st, 2006, an immediate 1 point increase on the benchmark rate curves would increase financial expenses for the year by 2.2 million euros. This variation can be compared with the negative financial results recorded in 2006 (15.1 million euros). 1.5.4. Legal, regulatory and competitive risks The Group's production and champagne-making activities are subject to a certain number of controls. More specifically, the French department of customs and indirect duties (Direction des Douanes et des Droits Indirects) exercises permanent control over the volumes of wines for each one of the Group's sites. 1.5.5. Risks linked to the economic environment BOIZEL CHANOINE CHAMPAGNE generates virtually all of its revenues in economically developed countries. In terms of structures or sales, the Group is not present in any economically unstable areas. There are therefore not any specific country risks. The Group's business is only slightly subject to changes in the economic environment, even if its sales may be influenced on a limited basis by household consumption trends and changes in purchasing power. BOIZEL CHANOINE CHAMPAGNE generates a higher percentage of its sales over the end of the year (October, November, December). Any event occurring during these periods may, if applicable, have consequences on the Group's earnings.



Within a competitive and fragmented market, the Group works to continuously promote its products in order to build loyalty among its customers. In this way, its actions are focused on the image of its brands, the quality of its products, their prices and the optimization of their distribution. 1.5.6. Risks linked to clients or suppliers The Group's Houses source grapes from their main suppliers under a large number of contracts. Since the vineyards are split up into various plots, none of them are particularly more significant than any others. Other supplies only concern dry materials and do not involve any specific risks. The Group's largest clients are specialized mass retail stores in France, the UK and Switzerland. However, there is no real dependency risk for the Group in relation to its clients that might significantly affect the earnings, assets, liabilities or financial position of BOIZEL CHANOINE CHAMPAGNE. Indeed, the largest client accounts for 9% of the Group's consolidated revenues, with the second-largest representing 5%. All trade receivables (France and export) for Group companies are covered under insurance policies taken out with leading companies. With regard to the assets required for its business, the Group fully owns various plots of land and real estate infrastructures, as well as its production tools and more specifically its cuveries. 1.5.7. Liquidity risks The BOIZEL CHANOINE CHAMPAGNE Group’s liquidity reflects on the one hand the suitability of its financing compared with its requirements, and on the other, the medium-long-term consolidation of a significant percentage of its debt. Indeed, the facilities for financing the ageing of the stock for the BURTIN/LANSON subgroup were renegotiated in 2006 in order to increase their term from three years to five and seven years. Lastly, the quality of its bank relations means that it is able to benefit from confirmed credit lines in virtually all cases from a diversified pool. The Group has concluded a cash management agreement with all of its French subsidiaries enabling it to optimize the management of its resources. In view of these elements, the Group considers that the liquidity risk is effectively managed. 1.5.8. Risks on shares The company has set up a liquidity agreement aimed at regulating the stock price through systematic interventions against market trends. Although the company is authorized to acquire treasury stock under French law, the only purchases made to date have concerned the quantity required for the free allocation of 8,120 shares to the Group's staff, as decided by the Board of Directors on March 24th, 2006. The company does not own any other shares on top of this quantity. 1.5.9. Industrial risks The Group is insured for all its industrial sites and equipment. The Group does not outsource, except for pressing and tirage services. Under the regulations governing listed environmental protection facilities (ICPE), the cuveries are covered by a prefectorial order to operate, the provisions of which are verified by the DRIRE. The various products are blended and produced by the Group’s salaried oenologists. At each stage, analyses are carried out by independent laboratories.



The Group’s Houses are working to reinforce security linked to the traceability of their products. The HACCP (Hazard Analysis Critical Control Point) method is being implemented in order to track the products more effectively, enabling the Group to react more effectively if necessary. 1.5.10. Environmental risks The Group's vineyards are operated in line with a controlled wine-production approach, based on respect for the environment and the regulations. The Group’s Houses are committed to implementing the progress that may be achieved with each operation:

- Upholding the water plan (inter-regional prefectorial order signed on April 21st, 2005), - Reducing their use of fertilizers and pesticides, - Limiting soil erosion by spreading bark, planting grass or sowing cereals, - Following the recommendations of the plant protection service, - Participating in moves to recover empty packaging and any pesticides that may not

be used, - Training up their staff on these aspects.

New facilities are operated and existing tools are brought into line with requirements in accordance with the regulations in force for environmental protection listed facilities. The sites covered by this definition therefore have a prefectorial order authorizing them to operate and a connection agreement for the discharging of wine-production effluents. The DRIRE carries out regular checks to ensure compliance. 1.5.11. IT risks Each one of the Group's Houses has an independent IT system, except for the BURTIN/LANSON subgroup, which operates in a network. In 2005 and 2006, a specialized external company was tasked to carry out in-depth audits: the Group can therefore consider that the risks inherent to operations for extended systems are currently managed in a satisfactory way. 1.5.12. Insurance A full audit was carried out in 2006, making it possible to identify the various risks more effectively and ensure a better level of protection for the people and assets. With the centralized coordination of its insurance policies, the Group has been able to modify several contractual provisions and obtain further coverage. In general, BOIZEL CHANOINE CHAMPAGNE Group companies are insured under “group policies”. More specifically, the nature of the coverage, the cover limits and the deductibles are focused on optimizing costs. They enable the Group to have a risk profile that is on the whole of better quality than the “industry standard”, notably due to the cover for wine stocks. The policies cover the following risks: � Damages to goods (buildings, facilities, stocks, information system, machine

breakage, etc.) This policy covers damage caused to goods based on events, with predefined levels of capital, deductibles and additional operating costs for a 12-month benefit period. Goods are insured in all states and in all locations, with a high contractual cap per site and per claim; The operating loss risk is not covered, but cover has been taken out for additional operating costs following a claim; Other damages have an “everything but” cover, covering liquid losses, damage to the cellars, pollution and decontamination subject to the specific restrictions for each guarantee included under the policies.



� Operating and post-delivery civil liability This policy covers all bodily, material and immaterial damages caused to third parties, resulting from operations and the distribution or sale of products.

� Executive civil liability This policy was set up on January 1st, 2007 for all of the subsidiaries, covering executives on a standard and de facto basis, with extended cover for claims relative to joint and several negligence.

� Comprehensive IT risks This policy covers the IT equipment based on a list that is updated once a year.

� Individual accident This policy covers the Group’s named officers during business trips (assistance, repatriation, death and disability benefits).

� Transported goods This policy covers materials and goods during transport. It currently covers the Maison BURTIN/Champagne LANSON subgroup scope, and will be extended to cover all of the Group's companies over the first half of 2007.

The Group benefits from the services of a specialized broker, with around 10 companies as the principal insurers or co-insurers. The premiums paid to insurance companies for the various policies come to approximately 760,000 euros, representing 0.2% of consolidated revenues.

1.6. REPORT ON HR DATA 1.6.1. Staffing levels On the historical scope, the Group’s headcount has remained stable. However, taking into account the acquisition of the BURTIN/LANSON subgroup, the total headcount has increased by 375 employees. In 2006, the BURTIN/LANSON subgroup’s headcount fell by nearly 14% as a result of voluntary departures and the offices closed down in Paris, Lyon and Switzerland. At December 31st, 2006, the headcount totaled 645 people, representing 514 full-time equivalents. The following tables present a breakdown of the workforce for each category and type of employment contract:

2006 New scope 2005

Sales associates excluding traveling sales reps 84 16

Administrative 109 31

Production 272 70

Total workforce present excluding traveling sales reps 465 117 Traveling sales reps 180 67 Total workforce present at Dec 31 (including traveling sales reps)

645 184

Total workforce in full-time equivalents (including traveling sales reps) 514 139



Permanent contracts Non-permanent contracts

Multi-card traveling sales reps

2006 2005 2006 2005 2006 2005

Workforce present at Dec 31

459 113 6 4 180 67

Full-time equivalents 454 113 17* 18* 43 8

*These figures reflect the high level of recruitment at harvest time. 1.6.2. Organization of work In accordance with the national wage bargaining agreements applicable, the working week is set at 35 hours.

Year when reduced

working week was applied for

first time

Working week

Absenteeism (% of work

time, excluding

paid leave)

Comments

BOIZEL 2001 Effective 35

hours 1.05%

CHANOINE FRERES 2000 Effective 35

hours 2.30%

PHILIPPONNAT 2000 Effective 35

hours 1.00%

PHILIPPONNAT LDA 2000 Effective 35

hours NA

DE VENOGE 2001 Effective 35

hours 0.00%

PRESSOIRS A. BONNET 1999 Effective 35

hours 0.00%

VIGNOBLES A. BONNET 1999 Effective 35

hours 15.06% Maternity leave

MAISON A. BONNET 1999 Effective 35

hours 4.37%

MAISON BURTIN 1997 Effective 35

hours 9.15% Extended sick leave

LANSON 1997 Effective 35

hours 6.54% Extended sick leave

LID 2000 Effective 35

hours 3.62%

CGV 2000 Effective 35

hours 1.06%



1.6.3. Compensation Over the last financial year, wages and payroll taxes totaled 31,541,787 euros, including: WAGES PAYROLL TAXES

2006 2005 * CHANGE 2006 2005* CHANGE

COMPANIES

BOIZEL 446,551 420,907 6.09% 188,023 181,970 3.33%

CHANOINE FRERES 1,168,453 1,159,770 0.75% 536,630 497,033 7.97%

PHILIPPONNAT 989,397 919,300 7.63% 439,380 395,839 11.00%

PHILIPPONNAT LDA 154,603 132,749 16.46% 18,539 17,233 7.58%

DE VENOGE 424,088 391,946 8.20% 165,242 154,535 6.93%

GROUPE CHARMOY (A. BONNET) 1,538,380 1,520,022 1.21% 571,575 535,311 6.77%

MAISON BURTIN 6,682,651 7,329,100 -8.82% 2,999,606 3,288,618 -8.79%

CHAMPAGNE LANSON 5,422 378 5,386,810 0.66% 2,568,038 2,528,569 1.56%

ESPACE MARNE ET CHAMPAGNE 10,643 17,741 -40.01% 3,226 5195 -37.90%

LANSON INTERNATIONAL DIFFUSION 3,299,361 3,783,939 -12.81% 1,407,773 1,584,404 -11.15%

LANSON INTERNATIONAL UK Ltd 912,397 875,502 4.21% 131,234 148,903 -11.87%

LANSON INTERNATIONAL CH 183,515 242,718 -24.39% 20,777 26,032 -20.19%

C.G.V 269,926 273,409 -1.27% 121,337 121,717 -0.31%

BOIZEL CHANOINE CHAMPAGNE 650,000 604,518 7.52% 218,064 239,537 -8.96%

TOTAL 22,152,343 23,058,431 -3.92% 9,389,444 9,724,896 -3.45%

* pro-forma figures

2006 2005 CHANGE

TOTAL WAGES ET PAYROLL TAXES 31,541,787 32,783,327 -3.79%

Gender equality in the workplace is respected for an identical position and experience. 1.6.4. Labor relations Staff representative bodies Labor relations are governed either by the national wage bargaining agreement for Champagne wine merchants, or by the national wage bargaining agreement for vineyards. Maison BURTIN, CHAMPAGNE LANSON and LANSON INTERNATIONAL DIFFUSION have staff representative bodies, which meet as follows: � Single staff delegation: one meeting/month � Group council: one to two meetings/year

Meetings are held on site. Exceptional meetings may also be held. In addition, there are union representatives at Maison BURTIN and CHAMPAGNE LANSON. At CHANOINE FRERES and PHILIPPONNAT, staff representatives have been or are currently being reappointed.



Communication with staff Each company’s management has set up different internal communications tools for staff, including poster boards, press reviews and staff meetings convened by the management team. 1.6.5. Health and safety conditions As required under French law, the health and safety conditions have been covered by an assessment, which has not revealed any significant risks. In accordance with the regulations in force, a document assessing professional risks has been drawn up, and is updated on a regular basis. The breakdown of the year is as follows:

Number of

working days lost

Number of occupational

accidents

Number of accidents

traveling to and from

work

Staff trained up on safety

Safety-related

spending (€)

Number of hours of safety

training

SUBSIDIARIES

BOIZEL 0.5 1 0 3 3,410 63

CHANOINE FRERES 21 8 0 0 6,810 0

PHILIPPONNAT 0 1 0 2 170 7

DE VENOGE 0 0 1 0 0 0

PRESSOIRS ALEXANDRE BONNET 0 0 0 1 202 4

VIGNOBLES ALEXANDRE BONNET 50 8 1 6 1,389 24

MAISON BURTIN 243 10 2 28 43,710 227

CHAMPAGNE LANSON 278 6 0 15 10,262 165

LANSON INTERNATIONAL DIFFUSION 11 1 0 1 0 12

TOTAL 603 35 4 56 65,953 502

1.6.6. Professional training In 2006, investment in training costs excluding wages came to 323,155 euros, with the following breakdown:

Training costs Number of people concerned

Subsidiaries � �

BOIZEL 3,504 3 CHANOINE FRERES 11,890 3 PHILIPPONNAT 6 655 6 DE VENOGE 1,718 2 PRESSOIRS ALEXANDRE BONNET 202 1 VIGNOBLES ALEXANDRE BONNET 8,719 13 MAISON BURTIN 143,966 74 CHAMPAGNE LANSON 89,452 37 LANSON INTERNATIONAL DIFFUSION 52,199 3 CGV 4,850 1 TOTAL 323,155 143



The main training areas have been as follows: � Languages � Safety � Computer use � HACCP regulations, health and hygiene management for food processing,

traceability In addition, Group companies have close ties with training facilities, notably welcoming people on work placements or apprenticeships. In this way, the BURTIN/LANSON subgroup welcomed 13 trainees in 2006, representing a total of 853 days training for the national oenologist diploma, the vine and wine professional masters, business school, microcomputing or postgraduate business administration. 1.6.7. Employment and integration of disabled workers BOIZEL CHANOINE CHAMPAGNE Group companies do not have any staff who are recognized as disabled. 1.6.8. Company welfare and cultural benefits BOIZEL CHANOINE CHAMPAGNE Group employees are covered by a healthcare scheme whose costs are split between the company, the employee and the works’ council, when one exists. Payments made to finance welfare and cultural benefits can be broken down as follows: � CHAMPAGNE LANSON: 141,336 euros � MAISON BURTIN: 156,222 euros � LANSON INTERNATIONAL DIFFUSION: 52,380 euros

In line with the national wage bargaining agreement, CHAMPAGNE LANSON, MAISON BURTIN and LANSON INTERNATIONAL DIFFUSION contributed 4,488 euros, 5,618 euros and 2,002 euros respectively for the financing of holiday allowances. 1.6.9. Level of outsourcing The Group makes limited use of outsourcing for work that is outside of the company’s usual area of expertise. For instance, the maintenance of its premises and garden areas, the management of discount coupons, IT and legal assistance are outsourced. 1.6.10. Key non-financial performance indicators relative to staff issues The indicators for staff absenteeism for the various Group companies and the number of occupational accidents are tracked on a regular basis (cf. Sections 1.6.2 and 1.6.5).

1.7. REPORT ON ENVIRONMENTAL DATA The BOIZEL CHANOINE CHAMPAGNE Group complies with the European standards concerning environmental risks. More specifically, Group production processes do not use any hazardous substances, they do not pollute and they do not result in any toxic substances being discharged. In accordance with Decree 2002-221 of February 20th, 2002 (the new economic regulations or NRE decree), the following sections indicate only the significant impacts with regard to the



business. The level of spending and investment allocated directly for protecting the environment cannot be measured since it is not recorded specifically. 1.7.1. General framework for the environmental policy Fully committed to sustainable development, the Group is working to meet the growing expectations of the community in general and the public authorities on food safety and the management of industrial and environmental risks. Each Group House implements best practices in terms of quality, safety and the environment. The entire industrial tool in place is compliant with all of the regulatory provisions for the protection of the environment. As far as regulations are concerned for listed environmental protection facilities, the cuveries at CHANOINE FRERES, BURTIN and LANSON have been granted a prefectorial order to operate, the provisions of which are verified by the DRIRE. The HACCP (Hazard Analysis of Critical Control Point) standard, guaranteeing food safety for Group products and their production methods, is applied at all of the Group’s sites. More specifically, the sites of Maison BURTIN in Epernay and Champagne LANSON in Reims have had their quality management systems certified. This certification was issued by the BVQI in line with Standard DS 30.27. In time, this approach is intended to develop into ISO 22000 certification, with this international standard attesting to the quality of the food safety management system. Furthermore, the Group’s Houses are constantly working to guarantee a strong level of traceability for their products. At each assembly and production stage, analyses are carried out by independent laboratories. Lastly, Houses operating with the mass retail sector are regularly audited by their clients’ quality engineers. 1.7.2. Winegrowing activity BOIZEL CHANOINE CHAMPAGNE has a conscientious approach to winegrowing, and has been applying a controlled winegrowing policy for several years now, which represents an essential condition for preserving and protecting the vineyards and the soil. In this way, the Group is committed to operating vineyards in a sustainable and environmentally-friendly way, promoting and sharing these best practices with all of its winegrowing partners. To achieve this, this responsible and sustainable approach is based firstly on the legislative and regulatory provisions in force, primarily the production conditions and regional standards required under the Appellation d'Origine Contrôlée system, as well as the additional strict regulations set by the Interprofession (CIVC). This is reflected in a certain number of actions for implementing best practices and developing initiatives making it possible to further strengthen the dynamics of a responsible action. In this way, the main commitments are as follows: � Regularly analyzing the practices implemented, � Developing staff skills through ongoing training on controlled winegrowing, � Protecting the vines and soil, � Adapting equipment to protect the quality of water, soil, air and natural

environments, � Managing wine-production effluents (plot rinsing, onsite washing area at Montagne

de Reims), � Managing waste,



� Preventing environmental risks, � Implementing control procedures.

In addition, BOIZEL CHANOINE CHAMPAGNE constantly encourages its suppliers and partners to act in the same way. 1.7.3. Wine-producing activity In connection with its wine-producing activity, BOIZEL CHANOINE CHAMPAGNE implements a range of actions aimed at protecting the environment. The main objectives are to optimize water and energy consumption, reduce effluents and manage and recycle waste. Energy and water savings Various indicators are tracked for each House, making it possible to target the areas in which consumption levels can be reduced.

2006 2005 * 2004 * 2003 *

Water consumption (m3) 59,054 59,404 59,345 87,835

Electricity consumption (KWH) 9,039,596 9,074,686 8,813,121 9,444,580

Gas consumption (KWH) 3,260,165 4,450,961 4,402,946 4,534,060

*Pro forma

The following data covers the production sites for BOIZEL, CHANOINE FRERES, PHILIPPONNAT, ALEXANDRE BONNET, MAISON BURTIN and LANSON. In 2006, water consumption (washing of tanks, products, equipment and soil) was relatively stable in relation to 2005. For each House, many actions are carried out to optimize water consumption. For example, Maison BURTIN and Champagne LANSON: � Have phased out water condensers in their cooling units to replace them with air

condensers; � Recycle their bottle washing water; � Have set up equipment to save on water consumption, with the installation of sprays

equipped with stop jets. The total quantity of energy used has been reduced significantly. Reduction of waste and discharges The Group’s activities have only a limited impact on water quality. This is primarily due to water discharges from rinsing the presses and cuveries. These discharges are made up of biodegradable and non-toxic organic material from the grapes. To reduce their impact (especially during harvest and winemaking periods), each one of the Group’s Houses applies a range of suitable means. More specifically, the main production units are governed by the regulations for listed environmental protection facilities. They are equipped with a treatment system or covered by a discharge connection agreement for this type of effluent. The DRIRE regularly carries out inspections of the practices applied. In terms of waste, listed environmental protection facility status requires all the waste resulting from production to be reclaimed. In this way, selective sorting is systematically applied at all of the industrial and administrative sites, with waste sorted into three categories:



� Inert waste; � Common industrial waste: non-toxic waste that may be assimilated with domestic

waste on account of their characteristics and how they are processed; � Special industrial waste: hazardous waste due to its toxic nature and concentration of

pollutants. It must be eliminated in specialized processing centers. All of the Group companies pay contributions to ADELPHE, a company certified by the public authorities for the reclamation of household packaging waste, in line with the eco-packaging program. In 2006, these contributions totaled 116,000 euros. They are used to recover cardboard and packaging from clients, which authorizes all of the Group’s Houses to use the green dot label on their products. In-house, the main actions carried out by Group companies include: � Sending all of the sub-products from winemaking (grape marc or press residue, must

deposits and lees) to the distillery for distillation and recovering the wine alcohol, extracting the tartaric salt, essential oil, oil and grape pip meal.

� Recovering all the filtration products (cream of tartar, soil filtration materials) and tank rinsing products (descaling solution, tarter).

� Reclaiming plastic bottle covers through a recycling company. � Recovering wooden pallets. � Recycling dividers, glassware and boxes.

1.8. EXCEPTIONAL EVENTS AND DISPUTES To the best of BOIZEL CHANOINE CHAMPAGNE’s knowledge, there are no further exceptional events or disputes to report that might have or have recently had a significant impact on the activity, earnings, position, assets or liabilities of the company or its subsidiaries. On June 30th, 2006, a global memorandum of understanding made it possible to settle all of the disputes concerning the Bordeaux activities, which represented the main source of risk for the newly acquired BURTIN/LANSON subsidiary. The other previous disputes, on a smaller scale, also concerned this subsidiary and are covered under a one-year liability guarantee signed by the sellers (Moracchini family, counter-guarantee by UBS, Caisse Nationale des Caisses d’Epargne) above a 500,000 euro excess.

2. General information . Boizel Chanoine Champagne


� ��

2.1. STATUTORY INFORMATION AND SHARE BUYBACK PROGRAM 2.1.1. Corporate name and registered office The company's corporate name is “BOIZEL CHANOINE CHAMPAGNE”. Its registered office is located at Allée du Vignoble, 51100 Reims, France. Telephone number: +33(0)3 26 06 45 45. The legislation governing the activities of BOIZEL CHANOINE CHAMPAGNE in France is French legislation, and for each foreign subsidiary the legislation for the country in question: � LANSON INTERNATIONAL UK LTD: British legislation � LANSON INTERNATIONAL AMERICAS INC: American legislation � MCD DEUTSCHLAND GMBH: German legislation � LANSON INTERNATIONAL SWITZERLAND: Swiss legislation

2.1.2. Place where documents or information relative to BOIZEL CHANOINE CHAMPAGNE may be consulted The bylaws, accounts, reports and minutes from general meetings may be consulted at the address indicated above. The abovementioned documents may be consulted as physical copies. The financial information for the previous two years may also be consulted online at www.boizelchanoine.com. 2.1.3. Company incorporation date and term (Clause 5 of the bylaws) The Group was incorporated on December 3rd, 1992 for a 99-year period ending on December 21st, 2091, unless extended or wound up ahead of schedule. 2.1.4. BOIZEL CHANOINE CHAMPAGNE trade and company register Reims trade and company register number: 389 391 434. APE code: 741 J. 2.1.5. Legal form (Clause 1 of the bylaws) BOIZEL CHANOINE CHAMPAGNE is a French limited company (société anonyme) with a Board of Directors, governed by the French commercial code, Decree 67-236 of March 23rd, 1967 and all the legal provisions applicable for commercial companies. 2.1.6. Corporate purpose (Clause 3 of the bylaws) The corporate purpose of BOIZEL CHANOINE CHAMPAGNE is as follows: � Acquisition of interests in any French or foreign commercial, industrial, financial or

service companies;

��

.2. General information . Boizel Chanoine Champagne.


� Provision of services for administrative and financial management, advice for all businesses and notably its subsidiaries, granting of current account advances and loans for its subsidiaries;

And primarily the owning and running of Houses for trading and distributing Champagne wines. And more generally, any industrial, commercial, financial, civil, real estate or asset-related operations that may directly or indirectly be linked to any of the purposes set out above or any similar or related purposes. 2.1.7. Financial year (Clause 21 of the bylaws) From January 1st to December 31st each calendar year . 2.1.8. General meetings (Clause 20 of the bylaws) General meetings are convened and deliberate under the conditions set by French law. The collective decisions of shareholders are taken during ordinary, extraordinary or special general meetings depending on the nature of the decisions to be taken. General meetings are convened by the Board of Directors, the statutory auditors or a court-appointed representative as provided for under French law. Meetings are held at the registered office or at any other location indicated in the notice to attend. All shareholders may take part in meetings, either personally or through their representatives, irrespective of the number of shares held, upon justification of their identity and ownership of their shares, either based on the shares being held on a registered basis in their name, or based on a certificate from the authorized custodian and financial intermediary indicating the unavailability of the shares recorded in the account through to the meeting date. These formalities must be completed at least five days before the meeting. All shareholders may be represented by their spouse or another shareholder; to this end, proxies will be required to give proof of their authorization. All shareholders may vote by correspondence based on a form that has been filled out and sent to the company under the legal conditions and regulations in force; to be taken into consideration, this form must reach the company at least three days before the meeting date. All shareholders are entitled to access the documents required to enable them to take decisions in full knowledge of the facts relative to the Company's management and operations. The nature of these documents and the conditions for sending them out or making them available are determined by French law and the regulations in force. An attendance sheet, duly signed by the shareholders that are present and the proxies, with the powers given to each proxy appended, and any correspondence voting forms are certified as accurate by the meeting office.

Meetings are chaired by the Chairman of the Board of Directors or, in his absence, by a vice-chairman or a director specifically appointed to perform this function by the Board. Failing that, the meeting may appoint its Chairman.



The role of scrutineer is performed by the two present and willing shareholders with the largest number of votes, both through themselves and as proxies.

The office set up in this way appoints a secretary, who may or may not be a shareholder. Minutes are drawn up and copies or extracts from deliberations are issued and certified in accordance with French law. Ordinary and extraordinary general meetings ruling under the quorum and majority conditions required by their respective provisions exercise the powers attributed to them under French law. 2.1.9. Appropriation and distribution of profits (Clause 23 of the bylaws) In accordance with Article 3.1 of the convertible bond issue agreement concluded by the company on March 22nd, 2006, the company is forbidden from modifying the distribution of its profits, unless authorized to do so under Article L.228-103 of the French commercial code subject to taking the measures required to maintain the rights of convertible bond holders under the conditions defined in Article L.228-99 of the French commercial code. 2.1.10. Specific bylaws clauses Double voting right (Clause 12 of the bylaws) At the extraordinary general meeting on October 3rd, 1996, shareholders voted, under the legal conditions in force, to introduce a double voting right for all the fully paid-up shares held on a registered basis for at least two years in the name of the same shareholder. A double voting right is also granted upon issue for registered shares freely awarded to a shareholder relative to former shares for which they were already entitled to this right. Any shares converted over to the bearer system or subject to a transfer of ownership, save for any exceptions provided for under French law, will lose their double voting rights. 2.1.11. Change of system for holding shares To change from holding their shares on a bearer basis to a pure registered basis, shareholders must fill out a form available on the Group’s site (www.boizelchanoine.fr) and ask the financial intermediary managing their “bearer” securities to transfer them to the securities department: CM-CIC Securities (CM-CIC Emetteur-adhérent 25), 6 avenue de Provence, 75441 Paris cedex 09, France. 2.1.12. BOIZEL CHANOINE CHAMPAGNE program to buy back its own securities At the combined general meeting on May 19th, 2006, shareholders authorized the Board of Directors to buy back the Company’s shares under the conditions set by Articles L 225-209 et seq, notably with a view to:

1. Coordinating the stock price through a liquidity agreement with an investment service provider in accordance with the AFEI charter recognized by the AMF,

2. Using the shares with a view to awarding stock options to employees or corporate officers and awarding shares to employees and corporate officers,

3. Keeping the shares purchased and issuing them again subsequently in exchange or as payment for external growth operations,

�� Cancelling all or part of the shares acquired.�



The only purchases carried out in connection with this buyback program have been for the liquidity agreement signed with Wargny This program has not resulted in any shares held in this way being cancelled. This authorization, given for an 18-month period, will end further to the general meeting convened to approve the financial statements for the year ended December 31st, 2007.

2.2. GENERAL INFORMATION ON BOIZEL CHANOINE CHAMPAGNE CAPITAL

AND SHARES 2.2.1. Share capital (Clause 2) At December 31st, 2006, the share capital totaled 22,958,360 euros, split into 4,591,672 shares with a par value of 5 euros. 2.2.2. Stock options At the combined general meeting on May 10th, 2000, shareholders voted to authorize the Board of Directors, in accordance with Articles L 225-177 et seq of the French commercial code (previously Articles 208-1 et seq of the law of July 24th, 1966), to grant options under the legal conditions in force entitling holders to subscribe for shares in the company to salaried members of staff and corporate officers from companies linked to BOIZEL CHANOINE CHAMPAGNE. The total number of shares that all of the stock warrants granted under this authorization may entitle holders to may not exceed 5% of the capital. The subscription price for shares may be no lower than 95% of the average listed prices recorded over the 20 trading days preceding the day on which the options are granted. On September 27th, 2000, the Board of Directors approved a stock warrant scheme covering 25,000 shares. At the end of the exercise period for options, the beneficiaries had subscribed for all of the 20,000 shares that could be subscribed for at a price of 49.78 euros (5,000 options cancelled due to the departure of beneficiaries before 2005). At the combined general meeting on May 19th, 2006, shareholders voted to authorize the Board of Directors, in accordance with Articles L 225-177 et seq of the French commercial code, to grant options under the legal conditions in force entitling holders to subscribe for company shares to be issued or purchase existing shares for corporate officers, as defined by French law, and employees of the company and companies that are linked to it, or a certain number of them. The total number of shares that all of the stock warrants granted under this authorization may entitle holders to may not exceed the limits set by the legal and regulatory provisions in force. The subscription price for shares may be no lower than 80% of the average listed prices recorded over the 20 trading days preceding the day on which the stock options or warrants are granted, or lower than 80% of the average purchase price for shares held by the company under Articles L225-208 and L225-209 of the French commercial code. The authorization given at the general meeting on May 19th, 2006 covers a 38-month period, and will run through to July 2009. On March 15th, 2007, the Board of Directors decided to use this authorization, as granted at the combined general meeting on May 19th, 2006.



2.2.3. Authorized capital not issued Free allocation of shares or other securities entitling holders to access the capital At the combined general meeting on January 30th, 2006, shareholders voted to authorize the Board of Directors, in accordance with Articles L225-197-1 to L 225-197-5 of the French commercial code, to carry out free allocations of existing shares or shares to be issued for corporate officers, as defined by French law, and employees of the company and companies that are linked to it, or a certain number of them. The total number of shares that may be freely allocated may not exceed 0.44% of the share capital on the day of the meeting, i.e. 5,000 shares (20,000 shares since July 3rd, 2006). The authorization given at the combined general meeting on January 30th, 2006 covers a 38-month period. On March 24th, 2006, the Board of Directors implemented this authorization and decided to award 1,895 shares (7,580 shares since July 3rd, 2006) to Group subsidiary employees and executives. The shares awarded in this way will become fully owned by beneficiaries within two years of the Board meeting, and will be inalienable through to March 24th, 2010. Summary of financial authorizations (capital increase/reduction) At the combined general meeting on May 19th, 2006, after reviewing the Board of Directors’ report and the special statutory auditors’ report, shareholders voted to grant several authorizations to the Board of Directors for a 26-month period, notably with a view to: � Increasing the capital through the issue, with preferential subscription rights

maintained, of shares and/or marketable securities entitling holders to access the capital through the incorporation of reserves, premiums or profits; the total nominal amount of shares that may be issued and the various issues that may be carried out under this authorization may not exceed the maximum cap of 20,000,000 euros.

� Increasing the capital through the issue, with preferential subscription rights waived, of shares, warrants and/or marketable securities entitling holders to access the company’s capital; the total nominal amount of shares and the various issues that may be issued under this authorization may not exceed the maximum cap of 20,000,000 euros.

� Using these authorizations during a public takeover bid or exchange period concerning the company’s securities, provided that the decision to issue the marketable securities has been taken before the offer was filed. This authorization is valid through to the date of the ordinary annual general meeting convened to approve the financial statements for the year ending December 31st, 2007.

At the combined general meeting on May 19th, 2006, shareholders also delegated the authorization for the Board of Directors to: � Increase the share capital through share issues reserved for members of a company

savings scheme and/or voluntary employee partner savings scheme created in accordance with Article L 443-1 et seq of the French labor code and with a view to freely awarding them shares or other securities entitling holders to access the capital. The meeting’s authorization has been given for a five-year period, capping the maximum nominal amount of the increase or increases that may be carried out under this authorization at 4% of the amount of the share capital at the time of the Board of Directors’ decision to perform this increase;

� Get the company to buy back its own shares as provided for under Article L 225-209 of the French commercial code, with this authorization given for an 18-month period;



� Cancel shares bought back by the company as provided for under Article L 225-209 of the French commercial code, with this authorization given for a 24-month period. The maximum amount of the capital reduction authorized represented 1,147,918 euros. The general meeting set the validity of this authorization for 24 months as of the date of this meeting, i.e. through to May 14th, 2006.

These authorizations had not been implemented by the Board of Directors at December 31st, 2006. 2.2.4. Convertible bond issue At the combined general meeting on January 30th, 2006, shareholders delegated to the Board of Directors the powers required, over a 26-month period, to issue up to 312,027 registered marketable securities at a price of 72.75 euros each, entitling holders to the allocation of up to 107,596 of the Company’s capital securities, to be subscribed for at par (i.e. 430,385 after the four-for-one stock split on July 3rd, 2006). Under the general delegation of powers, the Board of Directors is authorized to waive the preferential shareholders’ rights of CAISSE NATIONALE DES CAISSES D’EPARGNE ET DE PREVOYANCE (CNCEP), a French limited company with management and supervisory boards and a share capital of 6,905,865,632 euros, headquartered at 5, rue Masseran in Paris (75007) and registered with the Paris trade and company register under number 383 680 220 and CAISSE D’EPARGNE ET DE PREVOYANCE DE CHAMPAGNE-ARDENNES (CEPCA), a French limited company with management and supervisory boards and a share capital of 75,046,380 euros, headquartered at 12-14 rue Carnot in Reims (51100) and registered with the Reims trade and company register under number 383 118 213. This authorization was implemented by the Board of Directors on March 22nd, 2006. Issue characteristics Nature and number of marketable securities: 312,027 convertible bonds. Par value of marketable securities: 72.75 euros Subscribers: � CAISSE NATIONALE DES CAISSES D’EPARGNE ET DE PREVOYANCE (CNCEP) � CAISSE D’EPARGNE ET DE PREVOYANCE DE CHAMPAGNE-ARDENNES (CEPCA)

Interest rates and period The convertible bonds will bear interest at the following annual rates: (a) 0% for the period from their issue date through to December 31st, 2006; (b) 0% for the period from January 1st, 2007 through to December 31st, 2007; (c) 1% per annum for the period from January 1st, 2008 through to December 31st, 2008;

and (d) 1% per annum for the period from January 1st, 2009 through to December 31st, 2009. Interest will be calculated based on the actual number of days that has elapsed and a year of 360 days. Interest due relative to the last two periods indicated above will be payable on December 31st, 2008 and December 31st, 2009 respectively.



Term: subject to the various cases for early redemption, the bonds will mature on December 31st, 2009, when the convertible bonds will be redeemed in full. Redemption ratio: the redemption ratio set under the convertible bond issue contract and approved by the Board of Directors on March 22nd, 2006 was 0.34483 new shares, with a par value of 10 euros, for one convertible bond. Further to the changes to the share par value as decided at the combined general meeting on May 19th, 2006, the Board of Directors adjusted the redemption ratio on June 27th, 2006, in accordance with Clause 3.2 of the convertible bond issue contract. At December 31st, 2006, the redemption ratio was 1.37932 new shares, with a par value of 5 euros, for one convertible bond. 2.2.5. Change in the capital

Nature of the operation Capital increase

Issue or contribution

premium

Number of shares

created

Capital after

operation Date

Dec 3, 92 Creation of company through contribution

FRF 500,000 - 5,000 FRF 500,000

Aug 29, 94 Cash capital increase with issue of 2,143 preferred shares (“P”)

FRF 214,300 FRF 24,785,938 2,143 “P” FRF 714,300

Incorporation of issue premium and awarding of 34 free shares for 1 old FRF 24,286,200 - 242,862

FRF 25,000,500

Jun 25, 96 Capital increase through contribution of BOIZEL shares and units in real estate trusts

FRF 6,957,200 FRF 20,866,800 69,572 FRF 31,957,700

Oct 3, 96 Transformation of “P” shares into ordinary shares - - -

FRF 31,957,700

Raising of par value to FRF 150 FRF 15,978,850 - - FRF

47,936,550

Reduction of par value to FRF 50 - - 958,731 FRF

47,936,550

Dec 4, 96 Cash capital increase: guaranteed subscription for 169,187 shares (3 new for 17 old)

FRF 8,459,350

Issue premium based on 1st listed

price at time of initial public

offering

169,187 FRF

56,395,900

Mar 29, 99 Incorporation of issue premiums. Conversion of capital into euros. Raising of share’s par value to 10 euros

FRF 17,590,670.75 - - EUR 11,279,180

Jan 2, 06 Capital increase further to exercising of stock warrants

EUR 90,000 EUR 358,020 9,000 EUR 11,369,180

Mar 24, 06 Capital increase further to exercising of stock warrants EUR 110,000 EUR 437,580 11,000

EUR 11,479,180

May 19, 06 Capital increase through incorporation of reserves. Raising of par value for existing shares to 20 euros

EUR 11,479,180 - - EUR 22,958,360

Jul 1, 06 Stock split - - 4,591,672 EUR

22,958,360



2.2.6. Breakdown of the capital and voting rights

At Dec 31, 2006 At Dec 31, 2005 At Dec 31, 2004

Number of

shares % of

capital

% of voting rights

Number of shares

% of capital

% of voting rights

Number of shares

% of capital

% of voting rights

SHAREHOLDERS

Bruno Paillard family 892,728 19.44 20.87 221,482 19.48 21.10 222,392 19.72 21.30

Roques-Boizel family 823,620 17.94 19.28 205,846 18.11 19.49 204,346 18.12 19.75

S.A.S. Champagne Bruno Paillard 1,132,440 24.66 26.59 283,292 24.92 26.96 283,387 25.12 26.29

Philippe Baijot family 1,020,188 22.22 23.93 255,047 22.43 24.19 256,547 22.75 24.75

PUBLIC 722,696 15.74 9.33 171,251 15.06 8.27 161,246 14.29 7.91

Number of shares: 4,591,672 at December 31st, 2006, including 3,913,603 with double voting rights. Number of votes: � At December 31st, 2006: 8,490,875 � At December 31st, 2005: 2,099,848 � At December 31st, 2004: 2,064,470

Since BOIZEL CHANOINE CHAMPAGNE does not have any employees, none of its capital is held by staff. 2.2.7 Summary of operations carried out on the company’s securities by executives, assimilated persons and their relatives (Article L 621-18-2 of the monetary and financial code and Article 222-15-3 of the AMF’s general regulations) These operations are detailed in Section 6.7. 2.2.8. Changes to the capital since the initial public offering Since the initial public offering, there have not been any significant changes to the breakdown of the Group’s capital and voting rights. 2.2.9. Shareholders’ agreement In accordance with Article 787 B of the general French tax code, certain BOIZEL CHANOINE CHAMPAGNE shareholders, including Bruno Paillard, Marie Paillard, Philippe Baijot, Evelyne Roques Boizel and Christophe Roques, members of the Board of Directors, signed a collective agreement on December 20th, 2006 to retain a total of 1,701,334 shares, representing 37.05% of the share capital on the day on which the agreement was signed. This collective undertaking has been concluded for a two-year period as of its filing, automatically extended thereafter for six-month periods unless terminated by any of the signatories. In accordance with Article 885 I ii of the general French tax code, certain BOIZEL CHANOINE CHAMPAGNE shareholders, including Bruno Paillard, Marie Paillard, Philippe Baijot, Michel Shapira, Evelyne Roques Boizel and Christophe Roques, members of the Board of Directors, signed a collective agreement on December 20th, 2006 to retain a total of 1,384,810 shares, representing 30.16% of the share capital on the day on which the agreement was signed. This collective undertaking has been concluded for a six-year period as of its filing, automatically extended thereafter for 12-month periods unless terminated by any of the signatories.



A majority agreement has been signed between Bruno Paillard, Philippe Baijot and Mr. and Mrs. Christophe Roques-Boizel. This 10-year agreement running through to 2006 covered 50.1% of BOIZEL CHANOINE CHAMPAGNE shares. These shares may not be sold off without the unanimous approval of the members for this agreement. However, they may transfer shares within the agreement. A new majority agreement with the same objective was signed on March 16th, 2007. 2.2.10 Concerted action There has been a concerted action between Bruno Paillard, SAS CHAMPAGNE BRUNO PAILLARD, Philippe Baijot and Mr. and Mrs. Christophe Roques-Boizel since the initial public offering, which has continued in connection with the shareholders’ agreement, as published by the AMF on March 29th, 2007 under notice 207C0576. The abovementioned signatories jointly own 3,868,976 BOIZEL CHANOINE CHAMPAGNE shares, entitling them to 7,704,816 voting rights, representing 84.26% of the company’s capital and 91.29% of its voting rights. 2.2.11. Collateral and guarantees 351,200 BOIZEL CHANOINE CHAMPAGNE securities, representing the outstanding balance on the guarantee given at the time of the CHARMOY Group’s acquisition, were still pledged at March 6th, 2007. The collateral will be removed on June 30th, 2007. 2.2.12. BOIZEL CHANOINE CHAMPAGNE share: market and price trends BOIZEL CHANOINE CHAMPAGNE is listed on Euronext Paris Eurolist Compartment B, with the change in the share price over 18 months presented below:

2.2.13. Dividend policy and appropriation of earnings On March 15th, 2007, the Board of Directors decided to submit a proposal at the ordinary annual general meeting on June 1st, 2007 for the following appropriation and distribution of earnings for the year: Profit for the year: 4,783,378.57 euros



Legal reserve: 1,158,918.00 euros Dividends for shareholders: 1,512,572.16 euros Representing 0.33 euros per share (excluding the 8,120 treasury shares, including 7,580 free shares awarded to staff) Balance: 2,111,888.41 euros In full to “other reserves”, which in this way totals: 8,598,906.70 euros. BOIZEL CHANOINE CHAMPAGNE would like to remind readers that the company paid out the following dividends over the last three years:

Total payout Dividend per share* Allowance Avoir fiscal tax

credit

Year

Dec 31, 03 1,127,918.00

euros 0.25 euros (1) - YES

Dec 31, 04 1,466,293.00

euros 0.325 euros (1) 50% -

Dec 31, 05 1,489,829.90

euros 0.325 euros (2) 40% -

(1) Calculated based on 1,136,918 shares (2) Calculated based on 1,146,023 shares * After the stock split on July 1st, 2006. Non-tax deductible spending In accordance with the provisions of Articles 223 iv and 223 v of the general French tax code, BOIZEL CHANOINE CHAMPAGNE would like to specify that the accounts for the past year do not factor in any spending that may not be included under deductible expenses as per Articles 39-4 and 39-5 of the general French tax code.

2.3. REAL ESTATE AND EQUIPMENT Through its subsidiaries in the Marne and Aube regions, BOIZEL CHANOINE CHAMPAGNE owns several properties, technical facilities, production units and wine-production units. At December 31st, 2006, BOIZEL CHANOINE CHAMPAGNE fully-owned, through its subsidiaries, the following office and production facilities:

District Region Activities

COMPANY

BOIZEL Epernay Marne Offices/production/cuveries/cellars

CHANOINE FRERES Reims Marne Offices/production/cuveries/cellars

PHILIPPONNAT Mareuil sur Aÿ Marne Offices/production/cuverie/cellars/presses

DE VENOGE Epernay Marne Offices

CHARMOY (BONNET)(1) Les Riceys Aube Offices/production/cuveries/cellars/presses

MAISON BURTIN Epernay Marne Offices/production/cuveries/cellars

LANSON Reims Marne Offices/production/cuveries/cellars/cellar visits

(1) The press companies ALEXANDRE BONNET, Vignoble ALEXANDRE BONNET and Maison ALEXANDRE BONNET form the “CHARMOY Group”. The BOIZEL CHANOINE CHAMPAGNE Group also owns various technical facilities required for its activity: it is constantly looking to improve productivity through investments to replace and modernize its facilities.



The most important facilities concern: Presses: The presses for the Group's Houses are located in the Marne and Aube regions. These pressing centers represent a significant anchoring for the Group’s Houses in the Champagne vineyard and, more than the service they provide, they make it possible to develop a policy for close ties with winegrowing partners. The main sites are:

� In Mareuil sur Aÿ, PHILIPPONNAT � In Passy Grigny, BOIZEL through its 50%-owned subsidiary Pressoirs Rogge. � In Les Riceys, ALEXANDRE BONNET � In Verzenay, Dizy, Avize, Trépail and Loches sur Ource, LANSON

The Group’s total pressing capacity represents 176,000 kg per round. Cuveries The Group’s Houses have major cuverie facilities, representing a total of 361,000 hectoliters (thermo-regulated stainless steel fermentation tanks and glass cement tanks), spread over four main sites (CHANOINE FRERES, ALEXANDRE BONNET, Maison BURTIN and LANSON). “Tirage” lines The Group’s Houses own several “tirage” lines at the main production sites, in Reims, Epernay and Les Riceys. Storage The Group’s Houses have a storage capacity of nearly 80 million bottles spread over several sites, primarily in Epernay (41 million), Reims (35 million) and Les Riceys (3.5 million). The Group’s Houses also own a stock of metal pallet crates for all of their bottled stocks, including 75,000 Tirage-Storage-Riddling crates, with each one able to store 504 bottles from tirage through to riddling. Riddling Riddling is automated (gyropalettes) and spread over the Reims, Epernay and Les Riceys sites, with an annual capacity of 33 million bottles. Disgorging and labeling The Group has a series of disgorging and labeling lines at the various production sites of CHANOINE FRERES, Maison BURTIN, LANSON and ALEXANDRE BONNET:

� Six high-speed production lines for standard 75 cl bottles, � Seven slower speed production lines, designed for special bottles and other formats

(halves, magnums, quarts). Storage of labeled bottles Champagne sales are highly seasonal: to cope with the strong level of demand over the end of the year, the Group’s Houses have storage sites in Reims and Epernay for completed bottles in cases before they are shipped out. BOIZEL, DE VENOGE and PHILIPPONNAT outsource the storage of their finished products based on a transport firm's logistics platform. The tank, bottle, tirage, riddling and disgorging storage capacities are higher than the Group's current requirements, making it possible to provide services for third parties. To date, such services are carried out for five houses.



2.4. INTELLECTUAL PROPERTY �

�

The Group’s Houses produce and market a very wide range of Champagne wine brands. Guaranteeing a consistent level of quality in the eyes of the public, these various brands represent a capital to be protected. In this way, each brand has been registered and filed with the French national intellectual property institute (Institut national de la propriété intellectuellle) in accordance with the legislative and regulatory provisions in force. In addition, a system has been set up within each House to carefully track the filings made.

2.5. BOIZEL CHANOINE CHAMPAGNE GROUP STRUCTURE

SA BOIZEL CHANOINE CHAMPAGNE

SA CHAMPAGNE

BOIZEL (EPERNAY)

SA CHAMPAGNE

CHANOINE FRERES (REIMS)

SAS CHAMPAGNE DE VENOGE (EPERNAY)

SAS GROUPE

CHARMOY (LES RICEYS)

SA MAISON BURTIN

(EPERNAY)

SAS

C.G.V (REIMS)

SAS VIGNOBLES ALEXANDRE

BONNET

SAS MAISON

ALEXANDRE BONNET

SNC LANSON

INTERNATIONAL DIFFUSION

SA CHAMPAGNE PHILIPPONNAT (MAREUIL / AY)

99.94% 99.97% 99.99% 99.98% 99.99% 99.99%

100%

99.59%

99.85%

33.34%

LANSON

INTERNATIONAL UK LIMITED

SARL

ROGGE

SAS

SODISMAR CHAMPAGNE

SAS ABEL

LEPITRE

SCEA

PHILIPPONNAT

SA PHILIPPONNAT LES DOMAINES

ASSOCIES

SARL PRESSOIRS

ALEXANDRE BONNET

S.C.I.

VAL RONCEUX

S.C.I. DES

VAUCELLES

MCD DEUTSCHLAND

GMgh

LANSON

INTERNATIONAL AMERICAS Inc

SNC AR

SNC ESPACE

MARNE ET CHAMPAGNE

SCEA DES VINS

FRANCAIS

SAS CHAMPAGNE

LANSON (REIMS)

99.97%

99.90%

99.98%

100%

66.66% 100% 99.75% 99%

1%

100%

0.25% 100% 100%

100%

99.98% 50% 100% 99.61%

LANSON INTERNATIONAL

SUISSE (Geneva)

100%

3. Corporate governance . Boizel Chanoine Champagne


�� !�"� � # � � �� # �� # ��

3.1. MANAGEMENT TEAM MEMBERS 3.1.1. Makeup of the Board of Directors BOIZEL CHANOINE CHAMPAGNE is a French limited company (société anonyme) with a Board of Directors. The Chairman also serves as the Chief Executive Officer, in accordance with the Board’s decision on May 31st, 2002 to not separate the functions for the Chairman of the Board of Directors and the Chief Executive Officer. On May 31st, 2002, the company’s bylaws were brought into line with the provisions of Law 2001-420 of May 15th, 2001 (the “NRE” or new economic regulations law). In accordance with Clause 13 of the bylaws, each director must own at least one share. In 2006, the Board of Directors was made up of eight members, all French nationals, including two independent directors (based on the criteria defined and retained by the Bouton Report). The Board members did not include any directors elected by staff and no auditor had been appointed. Four of the Board members perform a management function within the Group or in a Group company. There are family ties between certain members of the Board of Directors. They are indicated in the summary table presenting Board members. Lastly, to the best of BOIZEL CHANOINE CHAMPAGNE’s knowledge, none of the members of the Board of Directors or any of the Group’s main managers:

� Have been associated as a manager with a bankruptcy, sequestration or liquidation over the last five years;

� Have been incriminated or officially sanctioned by statutory or regulatory authorities, or prevented by a court from serving as a member of an administrative, management or supervisory body or from managing or conducting the business of an issuer over the last five years.

At December 31st, 2006, the Board of Directors comprised:

��

.3. Corporate governance . Boizel Chanoine Champagne.


Date first

appointed or reappointed

Term of office ending

Offices within the

Group Other offices outside of the Group

MEMBERS

Bruno Paillard Chairman and Chief Executive Officer Director Professional address: CHAMPAGNE BRUNO PAILLARD Avenue de Champagne 51100 Reims, France Husband of Marie Paillard

May 19, 2006 Dec 31, 2011 cf. table

presenting list of offices

Chairman of SAS BRUNO PAILLARD, Chairman of SAS DE NAUROY, Chairman of SAS DOMAINE RENE JARDIN, Manager of SCI MOISSONS CHAMPAGNE, Manager of SCI MOISSONS MARITAIN, Manager of SCEV DE LA PIERRE VAUDON, Manager of SCEV DOMAINE DES SARRINS, Manager of SCI MIDOUIN, Manager of SCI DU CLOS SAINT ROCH

Marie Bourrellis Paillard Director Wife of Bruno Paillard

May 19, 2006 Dec 31, 2011 cf. table


Manager of SCI MOISSONS CHAMPAGNE Manager of SCI MOISSONS MARITAIN

Philippe Baijot Deputy Chief Executive Officer Professional address: Maison BURTIN 66 Avenue de Courlancy 51100 Reims, France

May 19, 2006 Dec 31, 2011 cf. table


NA

Evelyne Roques-Boizel Deputy Chief Executive Officer Professional address: CHAMPAGNE BOIZEL 46 Avenue de Champagne 51200 Epernay, France Wife of Christophe Roques

Mar 14, 2002 Dec 31, 2007 cf. table


Manager of SCI VAL BOIZEL Manager of SCI VAL DE L'EURE

Christophe Roques Deputy Chief Executive Officer Professional address: CHAMPAGNE BOIZEL 46 Avenue de Champagne 51200 Epernay, France Husband of Evelyne Roques-Boizel

Mar 14, 2002 Dec 31, 2007 cf. table


NA

Serge Bonnet Director

May 19, 2006 Dec 31, 2011 cf. table


Manager of GFA DES VIGNERONS

Michel Shapira Director

May 20, 2005 Dec 31, 2010 cf. table


Manager of SCI DE LA JUSTICE

Franck-Eric Puissochet Director Professional address: Caisse d'Epargne Champagne Ardennes 7 Rue Noël 51100 Reims, France

Sep 26, 2006 Dec 31, 2011 cf. table


Permanent representative of CECA on the Cos of IRPAC and Champagne Ardennes Permanent representative of CECA on the Board of Directors of SAEM Reims Développement Permanent representative of CECA on the Board of Directors of MAR SAS Permanent representative of CECA on the Board of Directors of SAS Patrimoniale de la Marne Chief Executive Officer of CECAFINANCE



3.1.2. Board of Directors’ role and operations Role

In accordance with the role of the Board of Directors defined in the VIENOT Report and Article L 225-35 of the French commercial code, the Board “defines the company strategy, appoints the corporate officers responsible for managing the company in accordance with this strategy, supervises the management and ensures the quality of the information provided to shareholders and the markets through the accounts or at the time of very significant operations. It reviews all matters concerning the company's effective operations and rules through such deliberations. It determines the directions for the company's business and ensures that they are implemented”. Operating principles

The company's Board met 11 times during the year ended December 31st, 2006. Any individuals that agree to serve as a director or a permanent representative for a legal entity that is a company director, undertake to regularly attend Board meetings. The Board of Directors’ decisions are adopted based on a simple majority and are collegial. Each member of the Board of Directors acts in the interests of and on behalf of all the shareholders. Board bylaws To date, it has not been deemed useful to put bylaws in place within the Board of Directors, since its meetings run smoothly. Nevertheless, the BOIZEL CHANOINE CHAMPAGNE Group intends to comply with the provisions and recommendations set out in the Bouton Report for improving corporate governance. As such, the Board cannot rule out the possibility of putting such bylaws in place if this proves to be necessary in order to improve the directors' work and/or the Board's operations. 3.1.3. Group Management Committee This committee has been set up within the BOIZEL CHANOINE CHAMPAGNE Group to discuss the Group's main strategies with a view to further developing the activities and brands that are owned by Group companies. During its meetings, actions are defined and procedures approved, with their results analyzed in the following sessions. The Committee meets once a month at the Group's registered office and whenever necessary. It is made up of 10 members, selected based on their skills and their knowledge of the Champagne wine sector.

.3. Corporate governance . Boizel Chanoine Champagne.


To date, the members are as follows:

Main functions Companies

Members

Bruno Paillard Chairman and Chief Executive Officer BOIZEL CHANOINE CHAMPAGNE

Philippe Baijot Chairman and Chief Executive Officer CHANOINE FRERES

Chairman and Chief Executive Officer MAISON BURTIN

Deputy Chief Executive Officer BOIZEL CHANOINE CHAMPAGNE

Chairman CHAMPAGNE LANSON

Chairman LANSON INTERNATIONAL DIFFUSION

Chairman ESPACE MARNE ET CHAMPAGNE

Chairman CHARMOY

Chairman VIGNOBLES ALEXANDRE BONNET

Chairman MAISON ALEXANDRE BONNET

Evelyne Roques-Boizel Chairman and Chief Executive Officer CHAMPAGNE BOIZEL

Deputy Chief Executive Officer BOIZEL CHANOINE CHAMPAGNE

Christophe Roques Deputy Chief Executive Officer BOIZEL CHANOINE CHAMPAGNE

Deputy Chief Executive Officer CHAMPAGNE BOIZEL

Chief Executive Officer DE VENOGE

Charles Philipponnat Chairman and Chief Executive Officer CHAMPAGNE PHILIPPONNAT

Chairman and Chief Executive Officer PHILIPPONNAT- LES DOMAINES ASSOCIES

Manager SCEA PHILIPPONNAT

Gilles Morisson de la Bassetière Chairman DE VENOGE

François Lange Chief Executive Officer MAISON ALEXANDRE BONNET

Chief Executive Officer VIGNOBLES ALEXANDRE BONNET

Fabien Henry Deputy Chief Executive Officer CHANOINE FRERES

Chief Executive Officer C.G.V

Michel Shapira Director BOIZEL CHANOINE CHAMPAGNE

Director MAISON BURTIN

Nicolas Roulleaux Dugage Chief Administrative and Financial Officer

MAISON BURTIN/CHAMPAGNE LANSON

Company Secretary BOIZEL CHANOINE CHAMPAGNE



3.1.4. List of corporate offices in Group companies at December 31st, 2006

OFF

ICER

S

Bruno Paillard

Philippe Baijot

Christophe Roques

Evelyne Roques Boizel

Marie Paillard

Bourrellis

Serge Bonnet

Michel Shapira

Franck-Eric Puissochet

BOIZEL CHANOINE

CHAMPAGNE

COMPANIES

BOIZEL CHANOINE CHAMPAGNE Chairman and CEO Director

Deputy CEO

Director

Deputy CEO

Director

Deputy CEO

Director Director Director Director Director

CHAMPAGNE BOIZEL Director Director Deputy

CEO Director

Chairman and CEO Director

Permanent representat

ive Director (MP)

CHAMPAGNE CHANOINE FRERES Director Chairman and CEO Director

Director Permanent representat

ive Director (MP)

CHAMPAGNE ABEL LEPITRE Chairman

CHAMPAGNE PHILIPPONNAT Director Director Director Director

PHILIPPONNAT LES DOMAINES ASSOCIES Director Director

CHAMPAGNE DE VENOGE Director Director CEO

Director Director

CHARMOY Director Chairman Director

MAISON ALEXANDRE BONNET Chairman Director Director

VIGNOBLES ALEXANDRE BONNET Chairman Director

PRESSOIRS ALEXANDRE BONNET Manager

MAISON BURTIN Director Chairman and CEO Director

Director Director Director Director

CHAMPAGNE LANSON Chairman

LANSON INTERNATIONAL DIFFUSION

Permanent

representative

ESPACE MARNE ET CHAMPAGNE Chairman

CGV Director Director Director Permanent representat

ive Director (MP)

SODISMAR CHAMPAGNE Chairman

VAL RONCEUX Manager

DES VAUCELLES Manager

SCEA DES VINS Français Manager

Permanent representative = permanent representative of BOIZEL CHANOINE CHAMPAGNE, MP = Marie Paillard 3.1.5. Appointment and renewal of management and supervisory bodies Appointment of directors and renewal of terms of office None of the directors' terms of office are due to end further to the ordinary general meeting convened to approve the financial statements for the year ended December 31st, 2006. On March 15th, 2007, the Board of Directors submitted a proposal to shareholders for the appointment of Pierre Lanson, residing at 92 Rue Perronet, 92200 Neuilly sur Seine, France, as a company Director. Reappointment of the statutory auditors Since the terms of office of the statutory auditors, namely PHILIPPE VENET & ASSOCIES SA (incumbent) and Geneviève Morel (deputy), are due to end further to the general meeting, BOIZEL CHANOINE CHAMPAGNE proposes to reappoint them for a further six-year period, i.e.

3. Corporate governance . Boizel Chanoine Champagne.


through to the meeting to be held in 2013 to approve the financial statements for the year ending December 31st, 2012. 3.1.6. Potential conflicts of interest and corporate governance Champagne Bruno Paillard, which owns 1,132,440 shares and 24.66% of the capital, carries out a similar activity to the BOIZEL CHANOINE CHAMPAGNE Group Houses, producing and distributing Champagne wines. Three quarters of its sales are generated on exports, and they are only distributed through selective retail channels. Its production, representing around 500,000 bottles, limits the risks of competition with the Group’s Houses. SCI MIDOUIN and SCI DU CLOS SAINT ROCH, owned by Domaine René Jardin, the wine subsidiaries of SAS Champagne Bruno Paillard, have provided BOIZEL CHANOINE CHAMPAGNE subsidiaries with cellars for storage. This agreement was concluded under normal market conditions and approved by the companies' boards of directors on June 30th, 2005. MIDOUIN invoiced Champagne CHANOINE 7,470 euros (net of tax) for wine storage relative to the first half of the year and 8,007 euros (net of tax) for the second half. DU CLOS SAINT ROCH invoiced18,000 euros to SAS MAISON ALEXANDRE BONNET for 2006. Lastly, regular operations to buy and sell wine under normal market conditions have been carried out between SAS DE NAUROY, a subsidiary of Champagne BRUNO PAILLARD, and the BOIZEL CHANOINE CHAMPAGNE Group’s companies. These exchanges represented 964,795 euros in sales and 531,318 euros of purchases.

3.2. COMPENSATION AND BENEFITS FOR CORPORATE OFFICERS The compensation and the amount of any bonuses for corporate officers have been set by the Board of Directors. The variable compensation package is strictly linked to a general improvement in the Group's performance. It increases at a more modest rate. No corporate officers receive any benefits in kind. Bruno Paillard

� Fixed compensation paid in 2005: 120,000 euros as decided by the Board of Directors on March 10th, 2005;

� Variable compensation relative to 2005, paid in 2006: 80,000 euros � Fixed compensation paid in 2006: 120,000 euros as decided by the Board of Directors

on March 10th, 2005; � Variable compensation relative to 2006, paid in 2007: 80,000 euros

Philippe Baijot



on March 10th, 2005; � Variable compensation relative to 2006, paid in 2007: 130,000 euros

Christophe Roques


� Variable compensation relative to 2005, paid in 2006: 80,000 euros




� Variable compensation relative to 2006, paid in 2007: 80,000 euros Evelyne Roques-Boizel

� Fixed compensation paid in 2005: 84,000 euros as decided by the Board of Directors on December 22nd, 1999;


on December 22nd, 1999; � Variable compensation relative to 2006, paid in 2007: 50,000 euros

Michel Shapira

� Attendance allowances: 15,000 euros The other corporate officers did not receive any compensation over the year ended December 31st, 2006. The total amount of attendance allowances proposed by the Board of Directors at the meeting for the current year is set at twenty two thousand euros (22,000 euros). In accordance with IAS 24.16, none of the following categories are included in the compensation packages for the main executives:

- Short-term benefits: NA - Post-employment benefits: NA - Other long-term benefits: NA - End of employment contract benefits: NA - Share-based payments: NA

3.3. STOCK OPTIONS AWARDED TO CORPORATE OFFICERS AND THE 10 LARGEST

NON-EXECUTIVE OPTION-HOLDERS NA

4. Financial position . Boizel Chanoine Champagne.


$ ��! � �� # ��

4.1. CONSOLIDATED FINANCIAL STATEMENTS 4.1.1. Consolidated financial statements at December 31st, 2006 Consolidated balance sheet €’000� Dec 31, 06 Dec 31, 05

Assets � �

Acquisition goodwill 46,666 5,127

Intangible fixed assets 71,760 3,279

Tangible fixed assets 101,826 48,997

Non-current financial assets 813 96

Deferred tax assets 5,626 912

Non-current assets 226,691 58,412

Inventories and work-in-progress 460,868 112,778

Trade receivables 138,569 37,509

Other current assets 18,338 6,336

Cash and cash equivalents 14,909 774

Current assets 632,684 157,398 Total assets 859,376 215,810 After restatement with the allocation of valuation goodwill to the balance sheet items concerned.

��

4. Financial position . Boizel Chanoine Champagne


€’000 Dec 31, 06 Dec 31, 05 Liabilities Capital 22,958 11,369

Issue premiums 2,546 2,109

Consolidated reserves 56,913 38,803

Earnings 14,805 7,938 Shareholders’ equity (Group share) 97,223 60,219 Minority interests 10 8

Consolidated shareholders’ equity 97,233 60,227 Long-term provisions for contingencies and charges 1,833 1,854

Long-term financial debt allocated to inventories 439,934 79,334

Long-term financial debt allocated to investments 105,334 8,069

Deferred tax liabilities 19,530 3,417

Employee benefits 8,285 657

Other liabilities -

Non-current liabilities 574,917 93,331 Short-term financial debt 22,353 18,309

Trade payables 145,467 34,662

Tax and social security liabilities 6,614 4,513

Other current liabilities 12,792 4,768

Current liabilities 187,226 62,252 Total liabilities 859,376 215,810 Comments on the consolidated balance sheet At December 31st, 2006, the Group’s consolidated balance sheet totaled 859,376,000 euros, compared with 215,810,000 euros in 2005. This strong growth reflects the integration of the Maison BURTIN subgroup. Non-current assets came to 226,691,000 euros, compared with 58,412,000 euros at the end of 2005, representing 26% of the balance sheet total, compared with 27% one year earlier. Acquisition goodwill is up from 5,823,000 euros to 53,076,000 euros in light of the amount allocated for the acquisition of the Maison BURTIN subgroup. Other intangible fixed assets totaled 65,350,000 euros, compared with 2,583,000 euros, notably factoring in the BESSERAT de BELLEFON and LANSON brands. Tangible fixed assets represent 85,111,000 euros, compared with 32,243,000 euros further to the integration of the Maison BURTIN subgroup and the acquisitions carried out over the year for a total of 4,066,000 euros. Non-current financial assets came to 813,000 euros, primarily including loans. Deferred tax represents 5,626,000 euros, compared with 912,000 euros in 2005.



Inventories represent a total of 460,868,000 euros, compared with 112,778,000 euros at the end of 2005, primarily due to the integration of stock for the Maison BURTIN subgroup. Cash totaled 14,909,000 euros, compared with 774,000 euros in 2005. Shareholders’ equity (Group share) before the appropriation of earnings shows a significant increase, up to 97,223,000 euros, thanks to the 86% increase in net income and the integration of a 22,700,000 euro convertible bond issue. After incorporating minority interests, shareholders’ equity came to 97,233,000 euros, representing 11% of the balance sheet total, compared with 28% one year earlier. Non-current liabilities totaled 574,917,000 euros, including 545,268,000 euros in financial debt. The relative percentage of non-current liabilities in the balance sheet total has increased significantly, representing 67%, compared with 43% in 2005. The increase in debt factors in the 100,000,000 euros in acquisition debt as well as the lines for financing Maison BURTIN subgroup inventories. Current liabilities came to 187,226,000 euros, compared with 62,252,000 euros one year earlier, representing 22% of the balance sheet total. Within these current liabilities, bank borrowings represent 16,766,000 euros, with 5,587,000 euros in financing due in under one year.



Consolidated income statement

Dec 31, 06 Dec 31, 05

€’000

Revenues 311,313 97,128

Other operating income

Purchases consumed (162,706) (1,888)

Payroll taxes (26,738) (7,669)

External expenses (27,615) (10,845)

Tax (5,569) (1,728)

Depreciation (6,889) (1,870)

Provisions (1,519) (65)

Change in inventories of work-in-progress and finished products (48,437) 11,259

Other operating income and expenses 1,259 550

Income from ordinary operations 33,099 14,872

Other income and expenses from operations 4,146 20

EBIT 37,245 14,892

Income from cash and cash equivalents 411 19

Cost of gross financial debt (15,466) (2,680)

Cost of net financial debt (15,055) (2,661)

Other financial income and expenses

Tax expense (7,380) (4,289)

Share in net income from equity affiliates

Net income from consolidated companies 14,809 7,942

Group share 14,805 7,938

Minority interests 4 3

Earnings per share (€):

Undiluted net income (Group share) per share before stock split 12.95 7.05

Number of shares retained for calculation 1,143,417 1,126,110

Undiluted net income (Group share) per share after stock split 3.24 1.76


Diluted net income (Group share) per share before stock split 12.07 7.05


Diluted net income (Group share) per share after stock split 3.02 1.76


Comments on the consolidated income statement In 2006, the Group's revenues totaled 311,313,000 euros, compared with 97,128,000 euros in 2005. This strong growth in revenues reflects the acquisition of LANSON International – recently renamed MAISON BURTIN – for 122,715,000 euros in cash on March 22nd, 2006. For better visibility, pro forma accounts have been drawn up for 2006 over a full year. They show 350,846,000 euros in revenues and 14,087,000 euros in income, some 4.88% lower than net income from consolidated companies (14,809,000 euros) due to the depreciation of acquisition goodwill allocated to inventories on the bottles sold in Q1 2006 and the recording of an extra quarter of financial expenses.



The net assets acquired and acquisition goodwill are analyzed in Notes B.1 to B.5. The BURTIN subgroup’s “Bordeaux” activities were sold off on June 30th, 2006. The related disputes have been resolved. The impact on EBIT is not significant due to the provisions for contingencies recorded previously. Excluding tax effects, in light of the change in scope, the Group’s EBIT totaled 37,245,000 euros, compared with 14,892,000 euros in 2005, reflecting the impact of the following restatements:

- The recording of part of valuation goodwill allocated to inventories for 15,852,000 euros.

� The recording of valuation goodwill allocated to the BESSERAT de BELLEFON brand for 1,828,000 euros.

The cost of net financial debt for the year came to -15,055,000 euros, compared with -2,661,000 euros in 2005, with this change reflecting the following three points:

- Repayments for the debt allocated for the acquisition of the Maison BURTIN subgroup, - Cost of financing for the ageing of stock for the Maison BURTIN subgroup, - Increase in reference interest rates on the former scope.

After factoring in the income tax expense, representing 7,380,000 euros, compared with 4,289,000 euros in 2005, net income comes out at 14,809,000 euros, compared with 7,942,000 euros in 2005. This net income is up 86% in relation to 2005, representing 4.76% of revenues, compared with 8.18% in 2005. This result can be considered to be satisfactory in light of the scale of the project implemented. The minority interest in income has remained stable at 4,000 euros, compared with 3,000 euros in 2005. Diluted earnings per share are up from 1.76 euros in 2005 to 3.02 euros in 2006, reflecting the conversion of convertible bonds in December 2009 and the four-for-one stock split carried out in July 2006.



Statement of change in consolidated shareholders’ equity

Capital Capital-related reserves

Consolidated earnings and

reserves

Total Group share

Minorities Total

€’000

Shareholders’ equity at year-end 2004 11,279 1,751 34,270 47,300 6 47,306

Change of accounting methods 5,984 5,984 5,984

Shareholders’ equity at year-end 2004 (corrected) 11,279 1,751 40,254 53,284 6 53,290

Operations on capital 90 358 448 448

Operations on treasury stock -147 -147 -147

Dividends -1,468 -1,468 -1,468

Net income 7,938 7,938 7,938

Market price valuation of blocked wines 164 164 164

Impact of employee benefits 0 2 2


Operations on capital 11,589 437 -11,480 546 546

Convertible bonds 22,700 22,700 22,700

Dividends -1,490 -1,490 -1,490

Net income 14,805 14,805 14,805

Translation gains or losses 158 158 158

Impact of first application of IAS 39 39 39 39

Fair value of Sarl Rogge equity interest 35 35 35

Impact of employee benefits 211 211 2 213




Consolidated cash flow statement

Dec 31, 06 Dec 31, 05 Dec 31, 04

€’000

Consolidated net income (including minority interests) 14,809 7,942 6,582

Net depreciation and provisions (excluding current assets) 6,990 1,870 1,733

Unrealized gains and losses linked to changes in fair value

Income and expenses calculated linked to stock options and related

Other income and expenses calculated

Capital gains and losses on disposals -2,137 -19 30

Dilution profits and losses

Share in earnings linked to equity affiliates

Dividends (non-consolidated securities)

Cash flow from operations after cost of net financial debt and tax 19,663 9,792 8,345

Cost of net financial debt 15,055 2,661 2,531

Tax expense (including deferred tax)

Cash flow from operations before cost of net financial debt and tax (A) 34,718 12,453 10,876

Tax paid (B)

Change in working capital linked to operations (C) -24,605 -15,289 -10,038

Net cash flow from operating activities (D) = (A+B+C) 10,113 -2,835 838

Cash outflow on acquisitions of tangible and intangible fixed assets -4,088 -3,487 -3,574

Cash inflow on disposals of tangible and intangible fixed assets 14,231 29 3

Cash outflow on acquisitions of long-term financial investments

Cash inflow on disposals of long-term financial investments

Impact of changes in scope -116,727 0 -129

Dividends received (non-consolidated securities)

Change in loans and advances granted

Investment subsidies received

Other flows linked to investment activities

Net cash flow from investment activities (E) -106,584 -3,458 -3,700

Capital increase 548 448 0

Treasury stock buybacks and sales

Dividends paid to parent company shareholders -1,490 -1,466 -1,128

Dividends paid to minority shareholders in consolidated companies -4 -1 -2

Cash inflow on new borrowings 108,351 11,500 13,287

Repayment of borrowings -7,374 -4,194 -11,310

Net financial interest paid (including financial leases) -15,055 -2,661 -2,531

Other flows linked to financing activities 22,700 0 0

Net cash flow from financing activities (F) 107,675 3,626 -1,685

Impact of changes in exchange rates (G)

Change in net cash position (D + E + F + G) 11,205 -2,668 -4,547

Closing cash position -1,857 -13,061 -10,394

Closing cash position for the Maison BURTIN subgroup 14,094



Comments on the change in consolidated cash flow The table presenting the change in consolidated cash flow details the main financial flows for 2006. Cash flow from operations before the cost of net debt came to 34,718,000 euros, compared with 12,453,000 euros one year earlier, with this sharp increase reflecting the change in scope. The increase in working capital, up to 24,605,000 euros, has absorbed part of the cash flow from operations. The business generated a positive net cash flow of 10,113,000 euros. The Group's operational investments, including the acquisition of fixed assets for the Maison BURTIN subgroup, net of disposals, show a need for 106,584,000 euros in financing. In 2006, BOIZEL CHANOINE CHAMPAGNE paid out 1,490,000 euros in dividends. Shareholders’ equity increased by 0.55 million euros further to the exercising of a stock option program approved at the combined ordinary general meeting on May 10th, 2000. Shareholders’ equity has also improved further to the 22,700,000 euro convertible bond issue. To finance the acquisition of the Maison BURTIN subgroup, in addition to the convertible bond issue, conventional financing facilities were put in place for a total of 100,000,000 euros. The other operations linked to financing are reflected in a significant increase in debt, up by 1,000,000 euros. Financing activities generated a flow of 107,675,000 euros. Further to operating, investment and financing activities, the net cash position has improved by 11,205,000 euros. Following the operations carried out over 2006, the net cash position came out at –1,857,000 euros, compared with –13,061,000 euros at December 31st, 2005. 4.1.2 Highlights On March 22nd, 2006, the Group acquired LANSON INTERNATIONAL for 122.7 million euros. Now called Maison BURTIN, this company notably owns the BESSERAT de BELLEFON brand and CHAMPAGNE LANSON.

4.2. Notes to the consolidated financial statements at December 31st, 2006 The amounts are expressed in thousands of euros unless indicated otherwise. General information: The BOIZEL CHANOINE CHAMPAGNE Group produces and sells Champagne wines. The main brands marketed by the Group are “BOIZEL”, “CHANOINE FRERES”, “TSARINE”, “PHILIPPONNAT”, “CLOS DES GOISSES”, “ABEL LEPITRE”, “DE VENOGE”, “ALEXANDRE BONNET”, “LANSON”, “BESSERAT DE BELLEFON” and “ALFRED ROTHSCHILD”, as well as various counter-brands and distributor brands. BOIZEL CHANOINE CHAMPAGNE is a French limited company (société anonyme) whose registered office is located at Allée du Vignoble, Reims, France.



The company's shares are listed on the Paris stock exchange on the Euronext Eurolist Compartment B. The Group's financial statements for the year ended December 31st, 2006 were approved by the Board of Directors on March 15th, 2007 and will be submitted for approval at the general meeting on June 1st, 2007. A- ACCOUNTING PRINCIPLES A.1. Accounting standards In accordance with European Council Regulation 1606/2002 adopted on July 19th, 2002, the consolidated financial statements for 2006 have been drawn up in accordance with international accounting standards (IAS/IFRS), as adopted within the European Union and applicable on March 15th, 2007, the date when the accounts were approved by the Board of Directors. The Group adopted IFRS for the first time on January 1st, 2005. The financial statements for 2004 and the opening balance sheet for 2004 have been restated in accordance with IFRS 1. The main restatements concerned:

� The redefinition of revenues (deduction of rear margins), � The revaluation of the vineyard (IAS 16), � The market valuation of production for the vineyards (IAS 41).

IAS 32 and IAS 39 have been applied for the first time as of January 1st, 2006. The impact of this change in method was recorded under shareholders’ equity at January 1st, 2006. The application of these two standards has not had any significant impact. The following new standards, adopted and entering into force on January 1st, 2006, have not had any significant impact on the accounts at December 31st, 2006. This primarily concerns: • IFRS 4 (revised) – “Insurance Contracts — Financial Guarantee Contracts”, • IAS 39 (revised) – “Fair Value Option” and “Cash Flow Hedge Accounting of Forecast Intra-group Transactions” and “Financial Instruments: Recognition and Measurement – Financial Guarantee Contracts” • IAS 19 – “Actuarial Gains and Losses, Group Plans and Disclosures”. • IAS 21 – “Effects of Changes in Foreign Exchange Rates” The Group opted against the early application of the following standards: IFRS 7 “Financial Instruments: Disclosures”, IAS 1 (revised) “Amendments Relative to Capital Disclosures”. IFRS 8 “Operating Segments”, not yet approved by the European Union, has not been applied ahead of schedule. The Group does not expect the adoption of these standards to have any significant impact on its financial statements. The IFRIC interpretations applicable at January 1st, 2006 have not had any impact on the Group's accounts. A.2. Use of estimates To draw up its financial statements, the BOIZEL CHANOINE CHAMPAGNE Group’s management is required to use estimates and make assumptions that have an impact on the amounts of assets and liabilities, as well as the information provided on contingent assets and liabilities on the date for drawing up this financial information, in addition to the amounts presented for income and expenses over the year. The Group regularly reviews its estimates and assessments based on past experience and other factors that are deemed to be reasonable, which constitute the basis for its book valuations of assets and liabilities. The actual values of the assets and liabilities may subsequently prove to be different from the estimates made.



The main items that require estimates to be drawn up on the closing date based on assumptions and estimates, and for which there is a significant risk of a material change in their value as recorded on the balance sheet on the closing date, primarily concern the following:

- Valuation of brands, - Pension and personal protection benefits (IAS 19), - Impairment tests for unallocated acquisition goodwill, - Valuation of benefits with share-based payments, - Valuation of financial instruments.

A.3. Consolidation methods Subsidiaries over which the Group directly or indirectly has exclusive control, in principle or in practice, are fully consolidated. Subsidiaries are fully consolidated as of the date on which control was transferred to the Group. Only one jointly controlled company (SARL ROGGE) is not consolidated due to its non-significant nature. A.4. Conversion of financial statements for foreign subsidiaries The consolidated financial statements are drawn up in euros. The accounts of subsidiaries using different currencies are converted into euros.

� At the closing rates for items on the balance sheet, � At the average rates over the period for items on the income statement.

Any translation gains or losses resulting from the application of these rates are booked against shareholders’ equity under “exchange gains or losses”. A.5. Foreign currency transactions and exchange rate hedging Foreign currency transactions carried out by consolidated companies are converted into their functional currency at the exchange rates in force on the transaction dates. Receivables and payables expressed in foreign currencies are converted at the exchange rates in force for these currencies on the closing date. Any unrealized exchange gains or losses resulting from such conversions are recorded under:

� The gross margin for commercial transactions, � The financial result for financial transactions.

Any exchange gains or losses resulting from the conversion of inter-company transactions, receivables or payables in foreign currencies, or their elimination, are recorded on the income statement, unless they result from long-term inter-company financing operations that can be considered as capital operations: in this case, they are booked against shareholders’ equity under “exchange gains or losses”. When derivative instruments are allocated for hedging commercial operations in foreign currencies, they are recorded on the balance sheet at the market value on the closing date. Any change in the market value of such derivative instruments is recorded under:

� The gross margin for the effective portion of hedging for receivables and payables recorded on the balance sheet on the closing date,

� Shareholders’ equity, under revaluation reserves, for the effective portion of hedging for future cash flows, with this amount transferred over to the gross margin when the hedged receivables and payables are recognized,

� The financial result for the ineffective portion of the hedging; any changes in value linked to the term points of futures contracts and the time value in connection with options contracts are systematically considered as the ineffective portion.



When derivative instruments are allocated for hedging net positions in foreign currencies for consolidated subsidiaries, any change in their market value is booked against shareholders’ equity, under exchange gains or losses, for the effective portion, and under the financial result for the ineffective portion. The Group uses financial derivatives (futures) to hedge its exchange-rate risk in pounds sterling. There are valued at their fair value. Any change in the fair value of such financial derivatives is booked against the income statement. At December 31st, 2006, all the futures contracts had reached maturity. A.6. Brands and other intangible fixed assets Only brands that may be recognized individually and that have a recognized reputation are recorded as assets, based on the value determined when they are acquired. The costs incurred to create a new brand or develop an existing brand are recorded under expenses, in addition to any brand filing costs. Since all of the Group's brands have an indefinite lifespan, they are not depreciated, but their valuation is reviewed at the end of each year based on an impairment test. When their recoverable value, based on various criteria defined at the time of acquisition, is lower than their net book value, a provision for impairment is recorded (cf. A.9). A.7. Business combinations Business combinations are recorded in accordance with IFRS 3. Any assets and liabilities that may be identified for the acquired business are recorded at their fair value. The difference between the acquisition cost and the share acquired in the fair value of the assets and liabilities on the acquisition date is recorded under “acquisition goodwill”, which is not depreciated and is subject to an impairment test carried out when any signs of impairment in value are identified, and at least once a year. In this way, the application of this standard for the acquisition of the Maison BURTIN subgroup gives the following breakdown:

� Inventories: 33,672,000 euros � Brands: 7,541,000 euros � Tax relief and tax on losses: +13,911,000 euros � Unrealized tax on inventories and brands: -12,222,000 euros � Unallocated goodwill: 39,058,000 euros

A.8. Tangible fixed assets The gross value of tangible fixed assets, with the exception of vine plots, is based on their acquisition cost. No financial costs are incorporated into the acquisition cost for fixed assets. Vine plots were recorded at their market value for the changeover to IFRS. Since vine plots do not see any significant changes in their value, the Group has chosen to use the maximum timeframe applicable under IAS 16, i.e. five years, between two accounting revaluations. However, if a significant change is seen within this five-year period, a book revaluation will be carried out. The market value is based on official data published on recent transactions in the same region, or on independent appraisals. The difference between the historical acquisition cost and the market value is booked against shareholders’ equity. If the market value falls below the acquisition cost, an impairment is booked against earnings for the amount of the difference. The vines or vineyards for the Champagnes produced by the Group represent biological assets as per IAS 41 Agriculture. Since their market value is not particularly different from their historical value, these assets are not revalued.



Financial leased assets are capitalized when these contracts transfer virtually all of the risks and benefits inherent to ownership of such assets over to the Group. Tangible fixed assets are depreciated on a straight-line basis over their estimated useful lives: - Buildings, fixtures and fittings: 10 to 50 years, - Technical facilities, plant and equipment: 3 to 30 years, - Vineyards: 25 years. The depreciable basis for tangible fixed assets comprises the acquisition cost, less the estimated residual value if applicable. Upkeep and repair costs are booked under expenses when the operations are carried out. A.9. Impairment tests for fixed assets Impairment tests are carried out for tangible and intangible fixed assets as soon as there are any signs of a potential impairment in value, and at least once a year for intangible assets with an indefinite lifespan, primarily brands and acquisition goodwill. When the net book value of such assets falls below the higher of their going concern or market value, an impairment is recorded for the amount of the difference. This impairment, booked in priority against acquisition goodwill, is recorded under “other income and expenses from operations”. The going concern value is based on the discounted future cash flow that will be generated by such assets. The market value of the asset is determined with reference to similar transactions carried out recently or valuations by independent appraisers if they are to be sold off. Brands are valued in line with the margin differential method, which is only applicable when it is possible to measure the difference in revenues generated by a brand in relation to a product without a brand. The coefficient applied to the margin differential to determine its value is six. The data used in connection with the discounted cash flow method are taken from the annual budgets and multi-year plans drawn up by the management team. These plans comprise five-year forecasts. A terminal value is also factored in corresponding to the capitalization ad infinitum of the cash flow from, in most cases, the last year of the plan. When several provisional scenarios are retained, a probability of occurrence is attributed to each one of them. The discount rate for projected cash flow incorporates the rate of return expected by an investor in the field concerned and the specific risk premium for this activity. The impairment tests carried out on cash generating units including goodwill (Maison BURTIN subgroup, CHARMOY, BOIZEL, De VENOGE) have not revealed any impairment in value to be recorded in the accounts. The main rate assumptions used are as follows:

� Rate of annual sales growth beyond five-year forecasts: 3% � Discount rate: weighted average cost of capital at December 31st, 2006: 6.2%

A.10. Non-consolidated equity securities and other financial assets Financial assets are presented under long-term financial investments (non-current assets) or short-term financial investments (current assets) depending on their characteristics and the estimated timeframe for which they will be held. Long-term financial investments primarily comprise strategic and non-strategic equity interests. Short-term financial investments include temporary investments in equities and units in mutual or other funds. Short and long-term financial investments are recorded at the closing price for listed assets and based on their estimated realizable value for unlisted assets. Any changes in value – positive or negative – are booked against shareholders’ equity under “revaluation reserves”. In the event of any impairment in value that is deemed to be definitive, a provision for impairment is recorded for this amount under the financial result; for



short and long-term investments in equities, the provision for depreciation is only written back to earnings at the time of their sale. A.11. Non-current assets held for sale Non-current assets are recorded as “assets held for sale” if:

� The sale is highly probable within a reasonable timeframe, � Or the asset is available for immediate sale in its current state and a plan to sell off the

asset has been committed to by management. Non-current assets held for sale are recorded on a specific line on the consolidated balance sheet. In accordance with IFRS 5 Non-current assets held for sale and discontinued operations, such assets are valued at the lower of their book value or their market value, less any costs required for their sale. The Group did not own any significant assets or activities intended to be sold off at the end of the financial year. A.12. Inventories and work-in-progress With the exception of grapes harvested by the Group from its own vines, inventories are recorded at cost, net of financial expenses. The cost price comprises the production cost (end products) or the purchase price plus any related costs (raw materials, goods), and may not exceed the net realizable value. Inventories of wine produced using grapes harvested by the Group are valued at the market value for the corresponding harvest, as if the grapes harvested had been acquired from third parties. On account of the ageing process required for Champagne, these inventories are often held for more than one year. These inventories continue to be recorded under current assets in line with industry standards. A provision for impairment is recorded when the inventory value is lower than the book value. The margins generated on transactions between consolidated companies are eliminated (with the exception of those reflecting the market value of grapes). A.13. Trade and operating receivables Receivables are recorded at their nominal value. Provisions for the depreciation of bad debt are recorded when it becomes likely that the receivable will not be collected and it is possible to reasonably estimate the amount of the loss. A.14. Deferred tax Deferred taxes are recorded for timing differences between the consolidation values of assets and liabilities and those resulting from the application of the tax regulations in force. The rate of tax retained for calculating deferred tax is the rate known on the closing date, i.e. 34.43% at December 31st, 2006. Tax savings resulting from deferrable tax losses are recorded as deferred tax assets and depreciated if relevant, with only the amounts likely to be used kept as assets on the balance sheet. Deferred tax assets and liabilities are not discounted. Future tax savings resulting from deferrable tax losses were not recognized in the consolidated financial statements of the former Maison BURTIN group. These deferred tax assets have been allocated to acquisition goodwill for 9,796,342 euros. At December 31st, 2006, 9,434,256 euros of these deferred taxes had been used.



A.15. Cash and cash equivalents Cash and cash equivalents include cash at hand as well as monetary investments that are immediately available and whose value is not significantly subject to any changes in stock prices. Bank overdrafts are recorded as current liabilities on the balance sheet under “short-term financial debt”. Monetary investments are valued at their market value and at the exchange rate in force on the closing date, with any changes in value recorded under the financial result. A.16. BOIZEL CHANOINE CHAMPAGNE treasury stock The BOIZEL CHANOINE CHAMPAGNE shares held by the Group are recorded at their acquisition cost and deducted against consolidated shareholders’ equity, irrespective of the reason for which they are held. If such shares are sold subsequently, any income from the sale is recorded directly under shareholders’ equity for the amount net of tax. A.17. Stock option and warrant schemes The stock option scheme approved on September 27th, 2002 ended on September 28th, 2006. A capital increase was recorded in this respect. A second scheme was decided on at the general shareholders’ meeting on May 19th, 2006. The Board of Directors has not yet given its opinion on the conditions for exercising this scheme. As such, it has not been recorded in the accounts. A.18. Pension commitments and other employee benefits When retirement, pension, medical and other benefits are subject to contributions paid by the Group to external organizations that cover the commitment corresponding to the payment of benefits or the reimbursement of medical costs, such contributions are recorded under expenses for the year in which they are due, with no liabilities retained on the balance sheet. When retirement, pension, medical and other benefits are covered directly by the Group, the amount of the corresponding actuarial commitment gives rise to a provision on the balance sheet, with any changes in this commitment recorded under income from ordinary operations for the year, including the financial discounting effect. When this commitment is covered, either in part or in full, by funds paid by the Group to financial organizations, the amount of such dedicated investments is deducted against the actuarial commitment on the balance sheet. The actuarial commitment is calculated based on specific valuations for each Group company, notably factoring in wage growth, inflation, staff turnover, life expectancy and profitability assumptions for the dedicated investments. After the Maison BURTIN subgroup was incorporated into the basis for consolidation, the Group called on an actuary to review all of the corporate liabilities (IAS19). Furthermore, the reestimation of end-of-career benefits led to a 211,000 euro increase in equity. The main actuarial assumptions used are as follows:

� Discount rate: 3.98% � Expected rate of return on assets: 3.78% � Wage growth rate: 3% � Turnover:

� Under 40 years: 7% � From 40 to 50 years: 4% � Over 50 years: 2%

� Current value of non-financed commitments: 3,782,000 euros



� Current value of commitments covered by assets: 103,000 euros � Amount of personal protection commitments: 4,503,000 euros � Total corporate liabilities: 8,285,000 euros

A.19. Provisions for contingencies and charges The Group records a provision when there is an obligation in relation to a third party at the close of accounts that will result in a probable disbursement for the Group without any counterparty, whose amount can be determined on a reliable basis. If this liability is neither likely nor may be valued on a reliable basis, but is still possible, the Group records a contingent liability in its off-balance sheet commitments. A.20. Financial debt

• Long-term financial debt on investments All financial debt on investments bearing interest is recorded for the nominal value of the amount received, less issue costs on the liability entry date. Such interest-bearing borrowings are valued at their amortized cost based on the effective interest rate method. No assumptions for the early repayment of borrowings are taken into consideration. The initial effective interest rates have been determined based on an assumption for rate curve forecasts for each loan.

• Long-term financial debt on inventories Issue costs for financial debt on ageing credit facilities are not restated, since these costs are not significant. At the close of accounts, these borrowings are valued based on the nominal rate for each contract. Furthermore, the calculations carried out for existing loans show that the impact of depreciation at the effective interest rate is not significant and is not reliable in light of the nature of this type of borrowing facility (credit line without any regular drawdown); as such, no restatements have been carried out on current borrowings. The portion of borrowings on investments due in under one year is recorded under current liabilities. Ageing credit facilities are recorded under non-current liabilities. A.21. Compound financial instruments The Group has issued convertible bonds. Except for any exceptional events, the compound instruments do not include any contractual obligation to pay out cash. Such instruments are therefore recorded under shareholders’ equity. A.22. Dividends Dividend payments to the company's shareholders are recorded as liabilities on the Group’s financial statements in the period during which dividends are approved by the company's shareholders. A.23. Financial instruments and derivatives The Group uses financial derivatives (futures contracts) to hedge its exchange-rate risk in pound sterling. They are valued at their fair value. Any change in the fair value of such financial derivatives is booked against the income statement. At December 31st, 2006, all the futures contracts had reached maturity. A.24. Recognition of revenues Revenues include sales of goods to distributors and agents on a wholesale basis, as well as retail sales.



Sales are presented net of any discounts, and more specifically the sums corresponding to any commercial participation agreements with the distributor and all duties on wine and alcohol. A.25. Earnings per share Earnings per share are calculated based on the weighted average number of shares outstanding over the year, less any BOIZEL CHANOINE CHAMPAGNE treasury shares deducted against shareholders’ equity. Diluted earnings per share are calculated based on the weighted average number of shares before dilution, in addition to the number of shares that would result from the convertible bonds being exercised. A.26. Interim balances on the income statement The Group's business is the production and sale of Champagne. Income from ordinary operations is generated by these activities, on recurrent or non-recurrent and principle or secondary operations. Other income and expenses from operations include the various elements comprising the earnings, which, due to their nature, amount or frequency, cannot be considered as being part of the Group’s activities and income from ordinary operations. More specifically, this concerns the impact of changes in scope and depreciations of brands and acquisition goodwill. If significant, this may also concern capital gains or losses on the disposal of fixed assets, costs relating to disputes, or any other non-current income or expenses likely to affect the comparability of income from ordinary operations from one period to another. The depreciation of acquisition goodwill allocated to inventories, totaling 15.5 million euros, has been recorded under changes in inventories. A.27. Cash flow statements The consolidated cash flow statement is prepared in line with the indirect method: this presents the statement for reconciling net income with cash from operations over the year. The opening and closing cash positions are based on cash and cash equivalents and other investment instruments, after deducting any bank overdrafts. A.28. Segment information A segment represents a group of assets and operations involved in the provision of products or services and with different risks and profitability from the risks and profitability for other segments. The Group is present on only one segment: the production and sale of Champagne. B. NOTES ON THE BALANCE SHEET AND INCOME STATEMENT B.1. Acquisition goodwill

Dec 31, 05 Change in

scope (gross values)

Change in scope

(depreciation) Acquisitions Reversals Dec 31, 06

€’000 Net acquisition goodwill

5,127 5,861 3,380 39,058 46,666

Total 5,127 5,861 3,380 39,058 0 46,666



The impairment tests carried out on cash generating units including goodwill (Maison BURTIN subgroup, CHARMOY, BOIZEL, DE VENOGE) have not revealed any impairment in value to be recorded in the accounts. The main rate assumptions used are as follows:

� Rate of annual sales growth beyond five-year forecasts: 3% � Discount rate: weighted average cost of capital at December 31st, 2006: 6.2%

Net acquisition goodwill for each company: � 2006 2005

€’000 CHARMOY GROUP 4,023 4,023

BOIZEL 291 291

PHILIPPONNAT 234 234

DE VENOGE 356 356

PHILIPPONNAT Les Domaines Associés 223 223

Maison BURTIN 41,539

Total unallocated goodwill 46,666 5,127

B.2. Brands and other fixed assets The change in intangible fixed assets for each category of fixed assets can be broken down as follows: Brands are considered to have an indefinite lifespan and, in the same way as acquisition goodwill, are subject to an impairment test. No significant impairments were recorded in this respect over the year. The provision reversal concerns the BESSERAT de BELLEFON brand. The “brands” heading concerns the companies from the former Group scope, with the BESSERAT de BELLEFON and LANSON brands included under business goodwill.

Gross values at Jan 1, 06

Change in scope Acquisitions Disposals Other

movements

Gross values at

Dec 31, 06

Gross values €’000

Brands 2,940 72,904 8,141 1,828 82,157

Other 625 4,396 38 686 4,373

Total 3,565 77,300 8,179 686 1,828 86,530


Change in scope Acquisitions Depreciation

on disposal Other

movements

Gross values at

Dec 31, 06 Depreciation €’000

Brands 14,550 -1,828 12,722

Other 286 1,795 397 428 2,048

Total 286 16,344 397 428 -1,828 14,770

Net value 3,279 60,955 71,760

Net value of brands: LANSON brand: 54,759,000 euros BESSERAT de BELLEFON brand: 11,106,000 euros



The Ferdinand BONNET brand was acquired during the year for 600,000 euros. B.3. TANGIBLE FIXED ASSETS B.3.1. The fixed assets recorded on the balance sheet can be broken down as follows:

Gross

values at Jan 1, 06

Change in scope Acquisitions Disposals Other

movements

Gross values at

Dec 31, 06

Gross values (€’000)

Land 9,329 12,620 278 10,847 6 11,386

Vineyards 27,822 2,606 455 21 30,862

Buildings 13,383 49,854 1,336 10,149 54,424

Buildings, fixtures and fittings 2,903 265 12 3,156

Facilities, plant and equipment 8,776 67,200 1,458 3,069 4 74,369

General facilities 529 14 543

Transport equipment 258 24 8 275

Office furniture 568 73 21 0 619

Fixed assets under construction 839 500 49 1,011 376

Other fixed assets 7,299 114 848 0 6,566

Total 64,407 140,079 4,066 25,986 10 182,575

Financial leases 2,608 1,974 634

Gross total 67,015 140,079 4,066 27,961 10 183,209

Vine plot revaluations were recorded in the accounts for the first time in 2004, estimating the price per hectare of vines at between 500,000 and 600,000 euros depending on the vintages. This estimate corresponds to the lower bracket for the market. When the Group does not own plantations, a 70,000 euro reduction is recorded per hectare. These revaluations have been booked against shareholders’ equity under revaluation gains or losses for their amount net of tax, and will be readjusted every five years. Disposals primarily concern the Bordeaux assets and non-strategic real estate assets. Depreciation can be broken down as follows:

Depreciation and amortization

Amount at Jan 1, 06

Change in scope Charges Reversal

s Other

movements Amount at Dec 31, 06

€’000

Land 0 1,126 19 1,098 48

Vineyards 1,243 107 1,350

Buildings 5,281 21,053 1,532 7,357 -1 20,509

Buildings, fixtures and fittings 1,740 241 12 1,969 Facilities, plant and equipment

6,183 44,014 2,959 2,781 -10 50,364

General facilities 485 6,012 179 825 2 5,853

Transport equipment 211 20 4 228

Office furniture 417 53 5 2 467

Total 15,561 72,206 5,110 12,082 -8 80,787

Financial leases 2,459 112 1,974 596

Net values 48,996 67,873 101,826



B.3.2. Detailed breakdown of financial leases:


Depreciation at Jan 1, 06

Financial leases

settled at Jan 1, 06

Depreciation financial

leases settled at Jan 1, 06

Gross values at Dec 31, 06

Allocation Total depreciation

Net book value at Dec 31,

06

€’000

Maison Alexandre BONNET 44 41 44 44 0 3 0 0

Vignobles Alexandre BONNET 119 119 119 119 0 0 0 0

Pressoirs Alexandre BONNET 313 309 313 313 0 3 0 0

Champagne CHANOINE 1,990 1,878 1,471 1,471 520 89 496 24

Champagne BOIZEL 28 25 28 28 0 3 0 0

Champagne PHILIPPONNAT 114 87 0 114 14 101 14

Total 2,608 2,459 1,974 1,974 634 112 597 37

B.4. Non-current financial assets The Group has a 50% stake in SARL ROGGE: 2006 2005 €’000 Gross 51 15 Depreciation 0 0 Net 51 15

The SARL ROGGE securities have been valued for the first time based on their fair value, with the impact on shareholders’ equity coming out at 36,000 euros. 2006 2005 Gross Depreciation Net Net €’000 Other equity securities 66 26 40 34

Capitalized securities 4 0 4 4

Loans 1,317 915 402 9

Other 317 1 316 34 Net 1,704 942 762 81

Loans primarily correspond to loans granted to wine-growing partners, and are covered by guarantees. B.5. Deferred tax assets 2006 2005 €’000 Tax on elimination of margins on inventories 1,888 503 Tax on employee benefits 2,899 227 Other tax 839 182 Net total 5,626 912



B.6. Inventories 2006 2005

Gross Allocation

for valuation goodwill

Depreciation Net Net

€’000 Finished products and goods 389,882 1,495 388,387 110,646 Burtin stock valuation goodwill 33,672 15,852 17,820 Raw materials and work-in-progress 55,361 700 54,661 2,133 Total 478,915 15,852 2,195 460,868 112,778

The Group has a stock of 66.6 million bottle equivalents. The cost price for the stock factors in the impact of the market valuation of grapes from the Group’ vineyards. 2006 2005 €’000 Market valuation 3,002 2,310

Impact on earnings 691 608

Unrealized tax - 232 -212

Net impact on earnings 459 395

B.7 Trade receivables and related 2006 2005 €’000 Receivables (nominal value) 139,614 37,894 Provision for depreciation 1,045 385 Total 138,569 37,509

Bills of exchange forwarded for discount and held to maturity have been allocated to trade receivables. There is no credit risk concentration relative to trade receivables due to their high number. The entire credit risk is insured with credit insurance companies. B.8. Other current assets

Dec 31, 06 Dec 31, 05

€’000 Tax receivables excluding income tax 9,889 2,042 Suppliers: advances and deposits 6,045 1,475

Prepaid expenses 2,165 1,244

Other receivables 239 1,575 Total 18,338 6,336

Tax receivables primarily represent deductible VAT for 9,151,000 euros. Prepaid expenses primarily represent expenses on “qualitative reserve” wines, which are therefore not legally available for sale, in addition to pre-booked interest on borrowings.



B.9. Shareholders’ equity Dec 31, 06 Dec 31, 05

Total number of shares 4,591,672 1,136,918 Number of shares issued and fully paid-up (after stock split) 44,000 0 Number of shares issued and not fully paid-up 0 0 Share par value 5 euros 10 euros Share capital 22,958,360 11,369,180 Group treasury stock 8,120 2,030

After the four-for-one stock split on July 3rd, 2006, the number of shares was multiplied by four. In 2005, the Group acquired 2,030 BOIZEL CHANOINE CHAMPAGNE shares, which were deducted against shareholders’ equity.

Dec 31, 06 Dec 31, 05

€’000 Shareholders’ equity at year-start 60,219 53,285 Capital increase 548 448 Cancellation of BOIZEL CHANOINE CHAMPAGNE securities 0 -147 Convertible bonds 22,700 0 Revaluation of inventories 161 Revaluation of other equity interests 36 IAS 39 - impact of effective interest rate 39 Translation gains or losses 158 Adjustment for end-of-career benefits at Jan 1, 06 209 Dividends paid -1,490 -1,466 Earnings for the year 14,805 7,938 Shareholders’ equity at year-end 97,223 60,219

Minority interests:

Dec 31, 06 Dec 31, 05

€’000 Minority interests at year-start 8 5 Dividends paid 0 0 Changes in scope 0 0 Earnings at year-end 3 3 Minority interests at year-end 10 8

Earnings per share: � Dec 31, 06 Dec 31, 05 Dec 31, 06 Dec 31, 05 � Undiluted Undiluted Diluted Diluted [€] Pre-tax earnings 4.85 10.86 4.52 10.86 Net earnings (Group share) 3.24 7.05 3.02 7.05



Average number of shares (‘000): 2006 2005 (1) 2005 (2)

Net income, Group share (€’000) 14,805 7,938 7,938 Average number of shares outstanding 4,582 4,513 1,128 Average number of treasury shares 8 8 2 Average number of shares factored in for the undiluted calculation 4,574 4,504 1,126 Undiluted net earnings per share (Group share, €) 3.24 1.76 7.05 Average number of shares factored in for the undiluted calculation 4,574 4,504 1,126 Impact of dilution for convertible bonds 336 0 0 Average diluted number of shares outstanding 4,910 4,504 1,126 Diluted net earnings per share (Group share, €) 3.02 1.76 7.05

(1) After stock split (2) Before stock split Dividend per share: 2006 2005 2004 2003 € Dividend 0.33 0.325 0.325 0.25

This historical information factors in the stock split on July 3rd, 2006.



Shareholders’ equity and earnings for each company:

Shareholders’ equity before earnings at Dec 31, 06

Earnings (Group share)

for 2006 % control % interest

€’000

Champagne BOIZEL 7,098 2,335 99.97 99.97

Champagne CHANOINE FRERES 4,700 1,926 99.94 99.94

Champagne PHILIPPONNAT 15,089 1,243 99.99 99.99

Champagne DE VENOGE 2,770 694 99.98 99.98

Champenoise des Grands Vins 538 247 99.59 99.59

Sodismar Champagne 238 (0) 99.98 99.95

Champagne Abel Lepitre 309 18 100.00 99.94

Scea PHILIPPONNAT 1,579 312 100.00 99.99

PHILIPPONNAT Les Domaines Associés 401 385 99.61 99.60

Charmoy 17,278 42 99.99 99.99

Maison Alexandre BONNET 1,601 690 99.85 99.84

Vignobles Alexandre BONNET 1,995 1,649 100.00 99.99

Pressoirs Alexandre BONNET 848 22 99.97 99.81

Maison BURTIN 51,605 (919) 99.99 99.99

Champagne LANSON 68,345 4,184 100.00 99.99

Espace Marne et Champagne 3,327 230 100.00 99.99

LANSON International Diffusion ( 47) 2,362 100.00 99.99

LANSON International UK 4,228 967 100.00 99.99

LANSON International USA 67 ( 21) 100.00 99.99

SNC AR 0.40 20 100.00 99.99

LANSON International Switzerland 65 19 100.00 99.99

Scea des Vins Français (7,636) (31) 100.00 99.99

Sci Val Ronceux 648 66 99.98 99.79

Sci Des Vaucelles 17 (3) 99.90 99.71

B.10. Debt and cash Net financial debt:

Dec 31, 06 Dec 31, 05

€’000 Long-term financial debt 545,269 87,403 Short-term financial debt 22,353 18,309

Gross financial debt 567,621 105,713

Cash and cash equivalents 14,909 774

Net financial debt 552,712 104,938



The various categories of gross financial debt can be broken down as follows:

Dec 31, 06 Dec 31, 05

€’000 Borrowings with credit institutions (investment credit) 105,334 8,069 Borrowings with credit institutions (operating credit) 439,934 79,334 Financial leases 0 Long-term gross financial debt 545,268 87,403 Borrowings with credit institutions (investment credit) 4,226 4,304 Borrowings with credit institutions (operating credit) 0 Financial leases 37 150 Bank overdrafts 16,766 13,836 Accrued interest 1,324 20 Short-term gross financial debt 22,353 18,309

Borrowings can be broken down as follows:

Dec 31, 06 Dec 31, 05

€’000 Variable rate 229,495 91,707 Capped variable rate 0 0 Fixed rate 320,000 0 Total 549,495 91,707

Virtually all of the borrowings are combined with real sureties, primarily based on collateral, joint and several sureties, mortgage promises or warrants for credit facilities used to finance inventories (see B.13). Repayment schedule for borrowings: Amount €’000 Under one year 4,226 One to five years 214,094 Over five years 331,175 Total 549,495

Detailed breakdown of cash and cash equivalents: 2006 2005 €’000 Marketable securities 8,393 - Cash and cash equivalents 6,516 774 Subtotal 14,909 774 Bank borrowings 16,766 13,836 Total net cash position at year-end -1,857 -13,062



B.11. Deferred tax liabilities Dec 31, 06 Dec 31, 05

€’000 Tax on revaluation of vine plots 2,615 2,615

Tax on market valuation of harvests 1,034 802

Tax on regulated provisions 5,871 Tax on lease reversals 2,057 Tax on net differential allocated to inventories 6,135

Other tax 1,817

Total 19,530 3,417

B.12. COMMITMENTS B.12.1 Employee benefits

Opening balance

Change in scope Allocations Other

movements Dec 31, 06

€’000

Employee benefits 657 4,110 21 3,496 8,285

Subtotal 657 4,110 21 3,496 8,285

Detailed breakdown of end-of-career benefits Actuarial debt (€’000) Amount Actuarial debt at year-start 756 Change in scope 3,481

Cost of past services 353

Benefits paid -385

Actuarial gain -320

Actuarial debt at year-end 3,885

Hedging of commitments (€’000) Amount Value of hedging assets at year-start 99

Return on scheme assets 4

Value of hedging assets at year-end 103

Cost of past services (€’000) Amount Annual cost of services 180 Financial cost 173 Cost of past services 353

Reconciliation of the pension provision between December 31st, 2005 and December 31st, 2006: 2006 2005 €’000 Actuarial debt 3,885 756

Hedging assets 104 99

Financial position 3,781 657



Detailed breakdown of the mutual provision Reconciliation of the mutual provision: Amount €’000 Financial position at year-start 0 Change in scope 4,449 Cost of past services 176 Benefits paid -122 Actuarial gain 0 Financial position at year-end 4,503

Cost of past services: Amount €’000 Cost of services provided 42 Financial cost 134 Expense for the year 176

The main actuarial assumptions used are as follows:

� Discount rate: 3.98% � Expected rate of return on assets: 3.78% � Wage growth rate: 3% � Mutual contribution: a long-term rate of 2.5% has been retained. For Maison BURTIN, a

specific agreement makes it possible to limit this growth to 2%. The retirement age has been set at 63 for all current staff. This age factors in the consequences of the provisions introduced by the Fillon Law, which are going to be applied between 2008 and 2012.

� Retirement: the retirement age has been estimated at 65 for managers, 62 for supervisors, 60 for technicians, employees and operatives, and 65 for traveling sales reps. These ages factor in the impacts of the Fillon Law’s provisions.

� Turnover: � Under 40 years: 7% � From 40 to 50 years: 4% � Over 50 years: 2%

Other commitments

Opening balance

Change in scope Allocations Reversals Dec 31, 06

€’000 Financial risks - - 101 - 101 Other provisions 1,854 14,015 564 14,701 1,732 Subtotal 1,854 14,015 665 14,701 1,833

Dec 31, 06 Dec 31, 05 €’000 Bills of exchange not due 6,985 4,878 Total 6,985 4,878



Borrowings guaranteed with real sureties: Dec 31, 06 Dec 31, 05 €’000 Pledging of securities 102,750 5,500 Pledging of brands 575 Pledging of equipment 1,561 1,616 Warrants and guarantees with dispossession on inventories

438,634 78,034

Real estate mortgage 3,758 4,763 Total 547,278 89,914

Guarantees given on the acquisition of the Maison BURTIN subgroup: 1) Pledging of 15,130,125 ordinary SA Maison BURTIN shares with a par value of one euro given by BOIZEL CHANOINE Champagne to Caisse Nationale des Caisses d’Epargne et de Prévoyance to guarantee a 50 million euro loan. 2) Senior pledging of 12,330,990 ordinary SA Maison BURTIN shares with a par value of one euro given by BOIZEL CHANOINE CHAMPAGNE to a banking pool comprising Caisse Régionale du Crédit Agricole Mutuel du Nord Est, LCL and SNVB to guarantee a 50 million euro loan. 3) Transfer to the banking pool, as a guarantee in accordance with the Dailly Law, of the asset and liability guarantee granted by the sellers, SA Société des Champagne Giesler, SAS Groupe Marne et Champagne and Caisse Nationale des Caisses d’Epargne et de Prévoyance, in addition to bank guarantees issued by UBS France SA for SAS Groupe Marne and SA Société des Champagne Giesler as a counter-guarantee for their asset and liability guarantee. B.13. Other commitments Certain subsidiaries have made contractual commitments to various suppliers for the purchasing of a significant percentage of their grape supplies. These commitments are based on surface areas. In this way, due to any differences that may be seen from one year to the next on both yields and prices, the value of such commitments may only be quantified based on a reasonable approximation. These commitments represent essential assets for a Champagne House’s business. In its cellars, the Group has wines that have been blocked from harvests before 2006. These wines belong to the wine-growers and cooperatives, and represent a qualitative reserve for the Group. Further to the acquisition of the Maison BURTIN subgroup, the company has made certain commitments in relation to various banks notably in terms of:

� Hedging its debt against the rate risk for at least three years and at least 50% of the loan,

� Maintaining a 65% stake in the capital and voting rights of Maison BURTIN; � Not granting any sureties on the 9.25% of Maison BURTIN securities not put forward to

guarantee the acquisition credit facilities. � Not taking out any financial debt or granting any guarantees or deposits other than

the financial debt taken out by the Group within the limit of the aggregate total of 700 million euros outstanding at any time and for all the Group's members.

� Not pay out any dividends, premiums, interim dividends or reserves for any reason whatsoever, except for the payment of an annual dividend with a combined total of up to 20% of the borrower's profits.



B.14. Liability accruals

Dec 31, 06 Dec 31, 05

€’000 Invoices receivable 23,935 6,981 Trade payables and bills payable 121,533 27,681 Subtotal 145,467 34,662 Tax and social security liabilities 6,614 4,513 Total 152,081 39,175

INCOME STATEMENT B.15. Revenues Sums paid in connection with advertising participation agreements with the distributor, recorded under expenses in the French GAAP accounts, are now deducted against revenues. The Group performs only one activity, namely the production and trading of Champagne wines: as such, it does not provide any segment information for each sector. Breakdown of revenues by kind and region: Revenues by kind:

Dec 31, 06 Dec 31, 05

€’000 Sales of goods 49,507 58,111 Production sold: goods 258,827 37,994 Provision of services 2,978 1,022 Consolidated total 311,313 97,128

Revenues by region:

Dec 31, 06 Dec 31, 05

€’000 France 207,498 57,320 Export 103,815 39,808 Consolidated total 311,313 97,128

B.16. Staff costs Staff costs include salaries, payroll and related taxes, employee profit-sharing, mutual provisions and end-of-career benefits. Only retirement benefits for French companies are covered by a provision in the accounts.



2006 2005

Managers and related 154 180

Employees and operatives 311 334

Traveling sales reps 180 184 Total headcount at Dec 31 (including traveling sales reps) 645 698

Total full-time equivalents 514 572

Detailed breakdown of staff costs: 2006 2005 €’000 Salaries 18,789 5,423 Payroll taxes 7,788 2,129 Profit-sharing 140 - End-of-career benefit provisions 426 117 Maison BURTIN mutual provision 176 - Reversal of Maison BURTIN end-of-career benefit provisions -459 - Reversal of Maison BURTIN mutual provision -122 - Total 26,738 7,669

B.17. Other operating income and expenses Other operating income and expenses primarily comprise: 2006 2005 €’000 Operating subsidies 22 -

Reversal of depreciation, provisions, transferred expenses 9,207 471

Other operating income 261 222 Other operating expenses -8,230 -143 Total 1,259 550

B.18. Other income and expenses from operations 2006 2005 €’000 Income from asset disposals 14,226 29 Income from management operations 2,360 9 Depreciation of goodwill allocated to tax receivables -1,368 Reversal of provisions 15,577 3 Subtotal: income 30,795 41 2006 2005 €’000 Net value of asset disposals 13,104 17 Expenses on management operations 13,545 5 Subtotal: expenses 26,649 21 Total 4,146 20



B.19. Company income tax Income tax: 2006 2005 €’000 Income tax -1,319 4,115

Deferred tax 8,700 175 7,380 4,289

Tax proof: €’000 2006 €’000 Consolidated net income (Group share) 14,809

Consolidated tax expense 7,380 Pre-tax consolidated income 22,189

Theoretical rate 33.43%

Theoretical tax expense 7,418

Permanent accounting and tax differences 326

Tax rate difference -364

Effective tax expense 7,380 All the companies are consolidated for tax purposes, with the exception of PHILIPPONNAT-Les Domaines Associés and the Maison BURTIN subgroup. Under the consolidation agreement, each consolidated subsidiary records its tax as if it was not consolidated. In 2006, the company income tax rate represented 34.43% of net income before tax and the depreciation of acquisition goodwill, compared with 34.96% in 2005. Restated timing differences primarily concern the following:

� Social solidarity contribution (national fund for the independent organization of old-age insurance for non-salaried industrial and commercial workers, ORGANIC),

� Paid leave provision for certain companies (former scheme), � Elimination of margins on inventories, � Employee benefits, � Depreciation of goodwill allocated to brands and inventories, � Market valuation of house inventories.

Losses: 2006 2005 €’000 Losses 1,217 557 1,217 557

These losses concern:

� PHILIPPONNAT Les Domaines Associés for 165,000 euros � The Maison BURTIN subgroup for 1,052,000 euros



4.3. PRO FORMA CONSOLIDATED FINANCIAL INFORMATION FOR THE YEAR ENDED

DECEMBER 31ST, 2006 Introduction: Further to the acquisition of the Maison BURTIN subgroup during the year, it has been necessary to draw up pro forma financial statements in accordance with the AMF’s regulations. The first consolidation date for the Maison BURTIN subgroup in BOIZEL CHANOINE CHAMPAGNE (on April 1st, 2006) is one quarter later than the opening date for BOIZEL CHANOINE CHAMPAGNE’s accounts (January 1st, 2006). As a result of this closing lag, the Maison BURTIN activities concerned are only taken into consideration in the consolidated income statement over three quarters. Pro forma accounts have therefore been drawn up in light of these circumstances. Within this context, BOIZEL CHANOINE CHAMPAGNE’s pro forma accounts covering the period from January 1st, 2006 to December 31st, 2006 have been drawn up in order to illustrate the consequences that this operation could have had on the Group's consolidated income statement and balance sheet at December 31st, 2006 if this acquisition had taken place on January 1st, 2006. On account of their very nature, these pro forma consolidated financial statements present a hypothetical situation and are not necessarily representative of the financial position or performances that could have been seen if this operation had taken place earlier than their actual or planned occurrence. These pro forma consolidated financial statements are presented in line with the same consolidation methods as the Group's historical consolidated financial statements. They are drawn up based on BOIZEL CHANOINE CHAMPAGNE’s consolidated financial statements by carrying out the restatements made necessary by the following assumptions that tend to indicate the situation that would have prevailed if the aforementioned operation had taken place on January 1st, 2006 under the same conditions. Information used to draw up the pro forma accounts: The pro forma accounts have been drawn up based on the following elements: - The BOIZEL CHANOINE CHAMPAGNE Group’s consolidated financial statements for the year ended December 31st, 2006, prepared in accordance with IFRS. - The Maison BURTIN subgroup’s consolidated financial statements for Q1 2006, prepared in accordance with IFRS. Accounting principles The pro forma accounts have been drawn up in accordance with IFRS. When drawing them up, all of the operations relating to the acquisition of the Maison BURTIN subgroup and the allocation of the acquisition price were deemed to have been carried out at January 1st, 2006.



Allocation of the acquisition price: The main items on the BOIZEL CHANOINE CHAMPAGNE Group’s consolidated balance sheet concerned by the allocation of the acquisition cost for the Maison BURTIN subgroup’s identifiable assets and liabilities are as follows:

� Brands, � Inventories, � Deferred tax assets.

Cost of financing for the acquisition of the Maison BURTIN subgroup: The pro forma accounts include the financial expense on debt intended to finance the acquisition, net of tax for a full year. Tax: All the restatements for 2006 are taxed at a rate of 34.43%. Inter-company operations: The inter-company operations for Q1 2006 have been eliminated. Pro forma balance sheet: assets

Note Historical

data Dec 31, 06

Tax on financial expenses

Depreciation of goodwill

allocated to inventories and

tax

Allocation of acquisition

goodwill under

inventories

Restatements of acquisition

goodwill

Pro forma Dec 06

€’000

Acquisition goodwill 5 53,076 -124 52,952

Intangible fixed assets 65,350 65,350

Tangible acquisition goodwill 16,715 16,715

Tangible fixed assets 85,111 85,111

Non-current financial assets 813 813

Deferred tax assets 3 5,626 315 236 6,177

Non-current assets 226,691 315 236 -124 227,118

Inventories and work-in-progress 6 460,868 -684 684 460,868

Trade receivables 138,569 138,569

Other current assets 18,338 18,338

Cash and cash equivalents 14,909 14,909

Current assets 632,684 0 -684 684 0 632,684

Total assets 859,376 315 -448 684 -124 859,803



Pro forma balance sheet: liabilities

€’000 Note Historical

data Dec 31, 06

Burtin earnings for Q1

2006

Financial expenses

Tax on financial expenses


Tax on goodwill

and deprecia

tion of goodwill

Pro forma Dec 06

€’000

Capital 22,958 22,958

Issue premiums 2,546 2,546

Consolidated reserves 56,913 56,913

Earnings 4 14,805 325 -915 315 -684 236 14,082 Shareholders’ equity (Group share) 97,223 325 -915 315 -684 236 96,500

Minority interests 10 10

Consolidated shareholders’ equity 97,233 325 -915 315 -684 236 96,510

Long-term provisions for contingencies and charges

1,833 1,833

Long-term financial debt/inventories

439,934 439,934

Long-term financial debt/investments

2 105,334 915 106,249

Deferred tax liabilities 7 19,530 236 19,766

Employee benefits 8,285 8,285

Non-current liabilities 574,917 0 915 0 0 236 576,068

Short-term financial debt 22,353 22,353

Trade payables 145,467 145,467

Tax and social security liabilities 6,614 6,614

Other current liabilities 12,792 12,792

Current liabilities 187,226 0 0 0 0 0 187,226

Total liabilities 859,376 325 0 315 -684 472 859,803



Pro forma income statement

Note Historical data Dec 31, 06

Inter-company

elimination Q1 2006


and tax

Financial expense and tax

Q1 2006 Maison BURTIN

Pro forma Dec 06

€’000

Revenues 311,313 -631 40,164 350,846

Other operating income 0

Purchases consumed -162,706 631 -39,137 -201,212

Payroll taxes -26,738 -6,360 -33,098

External expenses -27,615 -8,196 -35,811

Tax -5,569 -1,957 -7,526

Depreciation -6,889 -1,313 -8,202

Provisions -1,519 -520 -2,039

Change in inventories of work-in-progress and finished products 1 -48,437 -684 19,395 -29,726

Other operating income and expenses 1,259 1,262

Income from ordinary operations 33,099 0 -684 0 3,338 35,753

Other income and expenses from operations

4,146 286 4,432

EBIT 37,245 0 -684 0 3,624 40,185

Income from cash and cash equivalents 411 208 619

Cost of gross financial debt 2 -15,466 -915 -3,730 -20,111

Cost of net financial debt -15,055 0 0 -915 -3,522 -19,492

Other financial income and expenses

Tax expense 3 -7,380 236 315 223 -6,606

Share in net income from equity affiliates

Net income before income from discontinued activities or activities currently being sold off

Net income after tax from discontinued activities or activities currently being sold off

Net income from consolidated companies 14,809 0 -448 -600 325 14,087

The pro forma accounts have been drawn up based on the BOIZEL CHANOINE CHAMPAGNE Group’s annual consolidated financial statements, adjusted as follows: Note 1: The acquisition goodwill allocated to inventories and the corresponding depreciation have been restated over 12 months. The impact on the pro forma accounts for 2006 is as follows:

� Supplementary acquisition goodwill allocated to inventories: 684,000 euros � Supplementary depreciation of acquisition goodwill: 684,000 euros

Note 2: the financial cost has been restated in order to factor in this acquisition at January 1st, 2006.

� Financial expenses for Q1 2006: 915,000 euros Note 3: The company tax saving generated by the restatement of the amortization of acquisition goodwill and financial expenses totaled 551,000 euros.

� Tax saving on the amortization of goodwill: 236,000 euros � Tax saving on financial expenses: 315,000 euros



Note 4: The net expense generated by these restatements totaled 1,048,000 euros, with the following breakdown:

� Inventories: 448,000 euros � Interest: 600,000 euros

The impact on pro forma earnings came out at –724,000 euros in light of the 325,000 euros in earnings for the Maison BURTIN subgroup over Q1 2006. Note 5: The following have been recognized:

� Acquisition goodwill at January 1st, 2006 based on the same acquisition cost as at March 22nd, 2006, representing 122,715,000 euros,

� Share in the consolidated net position of Maison BURTIN at January 1st, 2006, representing 325,000 euros,

� Reduction in unallocated goodwill for a net total of 449,000 euros, corresponding to its allocation to inventories,

� In this way, acquisition goodwill would come out at 52,952,000 euros. Note 6: Allocation of the additional pro forma goodwill to inventories for Q1 2006 There is no impact on the pro forma due to the amortization of goodwill for the same amount (cf. Note 1). Note 7: The allocation of goodwill to inventories generates a 236,000 euro tax liability.

4.4. ADDITIONAL NOTES These additional notes:

� Are not covered by the statutory auditors' report for 2006, � Were not part of the accounts approved by the Board, � Have been added as requested by the AMF.



Supplementary note 1: comparison of cash-flow statements for 2004 under French GAAP and IFRS. IFRS French

GAAP Significant changes

€’000 Dec 31, 04 Dec 31, 04

Consolidated net income (including minority interests) 6,582 5,597 985 (1)

Net depreciation and provisions (excluding current assets) 1,733 2,208 -475 (2)

Unrealized gains and losses linked to changes in fair value

Income and expenses calculated linked to stock options and related

Other income and expenses calculated

Capital gains and losses on disposals 30 30

Dilution profits and losses

Share in earnings linked to equity affiliates

Dividends (non-consolidated securities)

Cash flow from operations after cost of net financial debt and tax 8,345 7,835 510

Cost of net financial debt 2,531 2,531

Tax expense (including deferred tax)

Cash flow from operations before cost of net financial debt and tax (A) 10,876 10,366 510

Tax paid (B)

Change in working capital linked to operations (C) -10,038 -5,595 -4,443 (3)

Net cash flow from operating activities (D) = (A+B+C) 838 4,771

Cash outflow on acquisitions of tangible and intangible fixed assets -3,574 -3,574

Cash inflow on disposals of tangible and intangible fixed assets 3 3

Cash outflow on acquisitions of long-term financial investments

Cash inflow on disposals of long-term financial investments

Impact of changes in scope -129 -129

Dividends received (non-consolidated securities)

Change in loans and advances granted

Investment subsidies received

Other flows linked to investment activities

Net cash flow from investment activities (E) -3,700 -3,700

Capital increase 0 0

Treasury stock buybacks and sales

Dividends paid to parent company shareholders -1,128 -1,128

Dividends paid to minority shareholders in consolidated companies -2 -2

Cash inflow on new borrowings 13,287 13,287

Repayment of borrowings -11,310 -11,310

Net financial interest paid (including financial leases) -2,531 -2,531

Other flows linked to financing activities 0 0

Net cash flow from financing activities (F) -1,685 -1,685

Impact of changes in exchange rates (G)

Change in net cash position (D + E + F + G) -4,547 -616

Cash position at end of period -10,394 -3,574 -6,820 (4)

(1) Market valuation of inventories and reversal of depreciation on unallocated acquisition goodwill (2) Reversal of depreciation for unallocated acquisition goodwill (3) Market valuation of inventories and bills of exchange not due reallocated under trade receivables (4) Bills of exchange not due reallocated under trade receivables



Supplementary note 2: impacts of restatements on the accounts for 2005 in order to make them comparable with the accounts for 2006. Assets Dec 31, 05 Reallocation Dec 31, 05 € Non-current assets Acquisition goodwill 5,126,711 5,126,711 Intangible fixed assets 2,583,197 696,692 3,279,889 Intangible acquisition goodwill 5,823,403 -5,823,403 0 Tangible fixed assets 32,243,214 16,753,512 48,996,726 Tangible acquisition goodwill 16,753,512 -16,753,512 0 Non-current financial assets 96,470 96,470 Deferred tax assets 912,442 912,442 TOTAL NON-CURRENT ASSETS 57,499,796 912,442 58,412,238 Current assets Inventories 112,778,403 112,778,403 Trade receivables 37,508,919 37,508,919 Other current assets 7,248,722 -912,442 6,336,280 Cash and cash equivalents 774,256 774,256 TOTAL CURRENT ASSETS 158,310,300 -912,442 157,397,858

Liabilities SHAREHOLDERS’ EQUITY AND LIABILITIES Dec 31, 05 Reallocation Dec 31, 05

€

Shareholders’ equity

Subscribed capital 11,369,180 11,369,180

Issue premiums 2,108,622 2,108,622

Consolidated reserves 46,740,997 -7,938,165 38,802,832

Earnings 7,938,165 7,938,165

TOTAL SHAREHOLDERS’ EQUITY 60,218,799 60,218,799

MINORITY INTERESTS 8,136 8,136

Non-current liabilities

Long-term provisions for contingencies and charges 1,853,923 1,853,923

Borrowings for longer than one year 60,958,565 -60,958,565 0

Long-term financial debt allocated to inventories 79,334,200 79,334,200

Long-term financial debt allocated to investments 8,069,097 8,069,097

Deferred tax 2,615,303 801,750 3,417,053


TOTAL NON-CURRENT LIABILITIES 64,231,090 29,100 405 93,331,495

Current liabilities

Short-term financial debt 18,309,223 18,309,223

Trade payables 34,661,598 0 34,661,598

Borrowings under one year 44,753,955 -44,753,955 0

Other payables 10,082,595 -10,082,595 0

Tax and social security liabilities 4,512,840 4,512,840

Other current liabilities 4,768,005 4,768,005

Other provisions 1,853,923 -1,853,923 0

TOTAL CURRENT LIABILITIES 91,352,071 -29,100 405 62,251,666



Assets: “To comply with IFRS, the identifiable elements comprising tangible and intangible acquisition goodwill have been reclassified under the appropriate sections on the balance sheet”. Deferred tax assets have been reclassified under non-current assets. Liabilities: Financial debt has been reclassified, factoring in the nature of the assets financed and the contractual term when the financing contracts were initially taken out, with this reclassification making it possible to build a clearer picture of the lasting nature of the financing and improve the accounting information on this point. 1) Intangible fixed assets

Dec 31, 04 Disposal or decommissioning Acquisition Depreciation

Allocation of goodwill on

brands Dec 31, 05

€

Brands 696,692 696,692

Business goodwill 641,499 641,499

Start-up costs 0 0 Other intangible fixed assets

2,217,969 -1,067 10,355 2,227,257

Depreciation -248,603 1,067 -38,023 -285,559 Depreciation of start-up costs

0 0

TOTAL 2,610,865 0 10,355 -38,023 696,692 3,279,889

2) Acquisition goodwill 2-0 Intangible acquisition goodwill

Dec 31, 04 Allocated goodwill Dec 31, 05

€

Net unallocated acquisition goodwill 5,126,711 5,126,711

Goodwill allocated to brands 696,692 -696,692

TOTAL 5,823,403 -696,692 5,126,711

3 - Tangible fixed assets The fixed assets recorded on the balance sheet can be broken down as follows: - Gross values



Dec 31, 04 Acquisitions IFRS revaluation

Disposals, transfers

and decommissi

oning

Allocation of goodwill Dec 31, 05

€

- Pure fixed assets:

Land and plantation costs 12,504,973 725,302 7,647,086 16,273,933 37,151,294

Buildings 12,398,271 239,123 517,691 13,155,085

Buildings, fixtures and fittings 2,695,060 207,509 0 2,902,569 Facilities, plant and equipment

7,413,507 1,668,281 -306,051 8,775,737

General facilities 529,374 1,550 -1,677 529,247

Transport equipment 255,257 33,500 -30,392 258,365

Office furniture 566,156 73,882 -71,968 568,069 Fixed assets under construction

324,401 815,146 -301,035 838,512

36,686,999 3,764,293 7,647,086 -711,123 16,791,624 64,178,879

- Restated financial and other leases(1)

3,482,791 0 -874,470 2,608,321

Gross total 40,169,790 3,764,293 7,647,086 -1,585,593 16,791,624 66,787,200

Depreciation can be broken down as follows:

Dec 31, 04 Dec 31, 05 Reversals Allocation of depreciation on goodwill

Dec 31, 05

€

- Pure fixed assets

Land and plantation costs 1,161,953 88,575 -7,594 1,242,934

Buildings 4,416,670 597,662 38,112 5,052,444

Buildings, fixtures and fittings 1,507,598 231,907 0 1,739,505

Facilities, plant and equipment 5,914,565 570,546 -302,425 6,182,686



Office furniture 436,568 48,675 -67,936 417,307

14,119,899 1,574,217 -400,573 15,331,655

- Restated financial and other leases

3,114,070 219,152 -874,400 2,458,822

Total depreciation 17,233,969 1,793,369 -1,274,973 17,790,477 Net balance sheet values 22,935,821 48,996,723



Supplementary note 3: impacts of restatements on the accounts for 2004 in order to make them comparable with the accounts for 2005. Assets Dec 31, 04 Reallocations Dec 31, 04

€

Non-current assets

Acquisition goodwill 5,126,711 5,126,711

Intangible fixed assets 2,610,866 696,692 3,307,558

Intangible acquisition goodwill 5,823,403 -5,823,403 0

Tangible fixed assets 30,582,909 16,791,625 47,374,534

Tangible acquisition goodwill 16,791,625 -16,791,625 0

Non-current financial assets 83,519 83,519

TOTAL NON-CURRENT ASSETS 55,892,322 0 55,892,322

Current assets

Inventories 101,283,990 101,283,990

Trade receivables 33,159,836 33,159,836

Other current assets 6,540,297 6,540,297

Cash and cash equivalents 1,271,524 1,271,524

TOTAL CURRENT ASSETS 142,255,647 0 142,255,647

Liabilities SHAREHOLDERS’ EQUITY AND LIABILITIES Dec 31, 04 Reallocations Dec 31, 04

€



Issue premiums 1,750,602 1,750,602

Consolidated reserves 40,254,320 -6,580,514 33,673,806

Earnings 6,580,514 6,580,514

TOTAL SHAREHOLDERS’ EQUITY 53,284,102 53,284,102

MINORITY INTERESTS 5,780 5,780

Non-current liabilities

Long-term provisions for contingencies and charges 1,899,903 1,899,903

Borrowings for longer than one year 56,836,399 -56,836,399 0

Long-term financial debt allocated to inventories 70,353,905 70,353,905

Long-term financial debt allocated to investments 9,967,277 9,967,277

Deferred tax 2,615,303 503,408 3,118,711


TOTAL NON-CURRENT LIABILITIES 59,921,104 25,888,094 85,809,198

Current liabilities

Short-term financial debt 15,914,563 15,914,563

Trade payables 36,815,204 36,815,204

Borrowings under one year 39,399,345 -39,399,345 0

Other payables 6,822,531 -6,822,531 0

Tax and social security liabilities 3,946,374 3,946,374

Other current liabilities 2,372,749 2,372,749

Other provisions 1,899,903 -1,899,903 0

TOTAL CURRENT LIABILITIES 84,936,983 -25,888,093 59,048,890



Assets: “To comply with IFRS, the identifiable elements comprising tangible and intangible acquisition goodwill have been reclassified under the appropriate sections on the balance sheet”. Deferred tax assets have been reclassified under non-current assets. Liabilities: Financial debt has been reclassified, factoring in the nature of the assets financed and the contractual term when the financing contracts were initially taken out, with this reclassification making it possible to build a clearer picture of the lasting nature of the financing and improve the accounting information on this point. 1) Intangible fixed assets

Dec 31, 03 Disposal or decommissioning Acquisition Depreciation Allocation of

goodwill Dec 31, 04

€

Brands 696,692 696,692


Start-up costs 0 0 Other intangible fixed assets

2,226,520 -25,397 16,846 2,217,969

Depreciation -222,073 25,397 -51,927 -248,603 Depreciation of start-up costs

0 0

TOTAL 2,645,946 0 16,846 -51,927 696,692 3,307,558

2) Acquisition goodwill 2-0 Intangible acquisition goodwill

Dec 31, 03 Acquisition ** Depreciation Allocation of goodwill Dec 31, 04

€ Net unallocated acquisition goodwill

5,434,339 129,000 -436,628 5,126,711

Goodwill allocated to brands 696,692 -696,692 0

TOTAL 6,131,031 129,000 -436,628 -696,692 5,126,711

2-01 Tangible acquisition goodwill 3 - Tangible fixed assets The fixed assets recorded on the balance sheet can be broken down as follows: - Gross values



Dec 31, 03 Acquisitions Disposals,

transfers and decommissioning

Allocation of goodwill

IFRS revaluation Dec 31, 04

€


Land and plantation costs 12,212,323 292,650 0 16,273,933 7,647,086 36,425,992

Buildings 11,190,165 1,320,884 -112,778 555,803 12,398,271 Buildings, fixtures and fittings

2,351,178 354,770 -10,888 2,695,060

Facilities, plant and equipment

6,080,977 1,387,528 -54,999 7,413,507


Transport equipment 228,508 26,749 0 255,257

Office furniture 554,604 68,846 -57,294 566,156 Fixed assets under instruction

176,575 1,665,946 -1,518,120 324,401

33,447,727 5,124,000 -1,884,729 16,829,736 7,647,086 60,608,017 - Restated financial and other leases

3,539,130 0 -56,339 3,482,791

Gross total 36,986,857 5,124,000 -1,941,068 16,829,736 7,647,086 64,646,611

Depreciation can be broken down as follows:

Dec 31, 03 Allocations Reversals Allocated goodwill

depreciation Dec 31, 04

€

- Pure fixed assets

Land and plantation costs 1,084,459 77,494 1,161,953

Buildings 3,955,347 543,130 -81,807 38,112 4,454,782

Buildings, fixtures and fittings 1,307,129 211,357 -10,888 1,507,598



Transport equipment 194,863 17,918 0 212,781


13,187,049 1,266,474 -333,625 38,112 14,158,010

- Restated financial and other leases 2,758,305 412,115 -56,350 3,114,070

Total depreciation 15,945,354 1,678,589 -389,975 38,112 17,272,080 Net balance sheet values 21,041,503 47,374,534



Supplementary note 4: other income and expenses from operations B.18. Other income and expenses from operations 2006 2005 €’000 Income from asset disposals 14,226 29

Income from management operations 2,360 9 Depreciation of goodwill allocated to tax receivables -1,368 Reversal of provisions 15,577 3 Subtotal: income 30,795 41 2006 2005 €’000 Net value of asset disposals 13,104 17

Expenses on management operations 13,545 5 Subtotal: expenses 26,649 21 Total 4,146 20 Income from asset disposals and net value of asset disposals. On the one hand, these items concern the sale of the Bordeaux assets and vineyards to the farmer who was in a dispute with Maison BURTIN, and on the other, the sale of a real estate complex on Avenue de Champagne in Epernay, not allocated for operations. Reversal of provisions: These reversals of provisions concern the Bordeaux disputes with the farmer. Expenses on management operations: These expenses on management operations primarily correspond to the transaction compensation and debt write-off granted to the farmer following the end of the Bordeaux disputes. Income from management operations: This income primarily corresponds to the reimbursement of late payment interest and penalties on a tax claim. Depreciation of goodwill allocated to tax receivables: The depreciation of goodwill allocated to the tax receivables corresponds to the portion of late-payment interest linked to the tax dispute. Supplementary note 5: IFRS 3 Factors making it possible to determine the recording of goodwill further to the acquisition of Maison BURTIN:

Goodwill allocated further to the acquisition of Maison BURTIN has been determined in light of the following factors: - The prospect of improved profitability in the future following the restructuring of

Maison BURTIN - The renegotiation of financing contracts - The strategic repositioning of products - The sourcing contracts with the vineyard.



Supplementary note 6: regional breakdown of 2006 and 2005 revenues 2006 2005 €’000 Region France 207,498 57,320 Europe (excluding France) 88,927 36,938 America 4,064 1,451 Asia-Oceania 7,398 1,259 Other regions 3,426 161 TOTAL 311,313 97,128 Note 7: description of accounting options linked to the first adoption of IFRS The IFRS financial information has been drawn up in accordance with the first application provisions applicable under IFRS 1. The retrospective application of the IFRS accounting principles retained for drawing up the opening balance sheet at January 1st, 2004 represents the general principle for treatments. The impacts of the application of these standards as if the Group has always used them are booked directly against shareholders’ equity. However, the Group has retained certain optional exceptions, as explicitly provided for under IFRS 1, in relation to this principle for retroactive restatements. The Group has chosen to not restate business combinations prior to January 1st, 2004 The other options available under IFRS 1 have not been retained or were not applicable within the Group, notably the options concerning unrecognized actuarial gains or losses on pension commitments or aggregate exchange gains or losses (with actuarial gains or losses recorded under earnings as and when they were recognized, while the Group does not have any aggregate exchange gains or losses under shareholders’ equity on the conversion of foreign subsidiary accounts into euros). Fixed assets have been kept at their historical cost, with the exception of vine plots, which have been valued at their fair value. In light of the late adoption of IAS 32 and 39, the Group has opted for the application of IAS 32 and 39 to be put back to January 1st, 2006. The impacts of the application of these two standards will be incorporated into the opening figure for shareholders’ equity on the balance sheet for 2006. - Note 8: justification for the recording of inventories as current assets Inventories are recorded as current assets. Indeed, although the turnover period is higher than one year, this is justified by the existence of an active inter-champagne market, and all stored products, irrespective of their status, may be sold. - Note 9: further information concerning the valuation of biological assets There is no separate market for biological assets. The vines cannot be dissociated from the land on which they are grown. For vines to be eligible for the Champagne appellation label, they must be planted on a plot of land that is eligible for this label. Plantation costs incorporate the vines and are depreciated on a straight-line basis over 25 years. These plantations are intended to be dug up at the end of the depreciation period, and replaced with new plantations. The ageing of plantations generates a decreasing yield.



- Note 10: further information concerning the revaluation methodology for vines IAS 16 was applied for the first time for the IFRS changeover at year-end 2005. The IFRS pro forma accounts for 2004 factor in this revaluation. The Group has not called in an independent valuer, but has based its calculations on the knowledge of each subsidiary's manager of the land market. The consistency of these valuations was then validated by the Group's managers and the statutory auditors. These valuations are reconciled with the transactions published by the SAFER organization. The impact of this revaluation, presented in the notes to the accounts for 2005, totaled 7,647,086 euros, improving equity by 5,031,783 euros and generating 2,615,303 euros in deferred tax liabilities.



4.5. CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31ST, 2005 AND 2004

UNDER IFRS AND CORPORATE FINANCIAL STATEMENTS AT DECEMBER 31ST, 2005

I. Consolidated balance sheet at December 31st, 2005. ASSETS

Year ended Dec 31, 05


€’000

Non-current assets

Intangible fixed assets 2,583,197 2,610,866

Intangible acquisition goodwill 5,823,403 5,823,403

Tangible fixed assets 32,243,214 30,582,909

Tangible acquisition goodwill 16,753,512 16,791,625

Other financial assets 96,470 83,519

Equity-consolidated securities

TOTAL NON-CURRENT ASSETS 57,499,796 55,892,322

Current assets

Inventories 112,778,403 101,283,990

Trade receivables 37,508,919 33,159,836

Other receivables 7,248,722 6,540,297

Cash and cash equivalents 774,256 1,271,524

TOTAL CURRENT ASSETS 158,310,300 142,255,647 TOTAL ASSETS 215,810,096 198,147,969

SHAREHOLDERS’ EQUITY AND LIABILITIES



€’000



Issue premiums 2,108,622 1,750,602

Consolidated reserves 46,740,997 40,254,320

TOTAL SHAREHOLDERS’ EQUITY 60,218,799 53,284,102 MINORITY INTERESTS 8,136 5,780 Non-current liabilities

Borrowings for longer than one year 60,958,565 56,836,399

Deferred tax 2,615,303 2,615,303

Pension commitments 657,222 469,402

Other liabilities

TOTAL NON-CURRENT LIABILITIES 64,231,090 59,921,104 Current liabilities

Trade payables 34,661,598 36,815,204

Borrowings under one year 44,753,955 39,399,345

Other payables 10,082,595 6,822,531

Other provisions 1,853,923 1,899,903

TOTAL CURRENT LIABILITIES 91,352,071 84,936,983 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 215,810,096 198,147,969



CONSOLIDATED INCOME STATEMENT. (classification of income and expenses by kind)



€’000 REVENUES 97,127,770 88,018,227

Other operating income 734,329 996,726

Stored and capitalized production 11,258,793 4123273

Consumption of raw materials and goods 71,887,662 58,998,259

Other external expenses 10,845,077 10,013,347

Payroll taxes 7,668,920 7,187,792

Depreciation and amortization 1,896,507 1,840,252

Depreciation and amortization of acquisition goodwill 38,112 38,112

Other operating expenses 1,892,445 2,300,296 OPERATING INCOME 14,892,169 12,760,168 Net financial expenses 2,661,279 2,531,117

Share in earnings of equity affiliates 0 0 EARNINGS BEFORE TAX 12,230,890 10,229,051 Company income tax 4,289,231 3,647,056 EARNINGS AFTER TAX 7,941,659 6,581,995 NET INCOME (GROUP SHARE) 7,938,165 6,580,514 Earnings per share

Undiluted 7.04 5.83

Diluted 6.98 5.83

Notes to the consolidated financial statements. Presentation of the BCC Group The BCC Group performs its activity in the Champagne sector. The main brands marketed by the Group are “Champagne Boizel”, “Champagne Chanoine Frères”, “Tsarine”, “Philipponnat”, “Clos des Goisses”, “De Venoge” and “Alexandre Bonnet”, as well as various counter-brands and distributor brands. Boizel Chanoine Champagne is a French limited company (société anonyme) whose registered office is located at Allée du Vignoble, Reims, France. I. Accounting standards applied. As of January 1st, 2005, the financial statements of Boizel Chanoine Champagne have been drawn up in accordance with international financial reporting standards (IFRS - European regulation 1606/2002, Article 4). The accounts for the previous year had been restated under IFRS, including inventories (IAS 16) as well as rear margins booked against revenues. A table reconciling shareholders’ equity and earnings with the previous standards is appended.



II. Information on accounting methods. A) Consolidation methods. The accounts of companies placed directly or indirectly under the exclusive control of Boizel Chanoine Champagne have been fully consolidated. Only one 50%-controled company that could have been consolidated on a proportionate basis has been excluded from the basis for consolidation since it is not significant. All transactions between consolidated companies are eliminated. Stored profits on internal transactions within the Group are eliminated. Acquisition and valuation goodwill: this is based on the difference between the acquisition cost for newly consolidated companies and the share in the net assets of the companies acquired. Such goodwill may also be generated at the time of increases in the percentage of stakes held in consolidated companies. First consolidation goodwill is allocated to the assets identified, with unidentified goodwill allocated to intangible fixed assets. Under IFRS, the latter cannot be amortized, but is subject to depreciation in the event of any impairment in value. Conditions for the depreciation of acquisition goodwill. Identified “valuation” goodwill: this is depreciated over an accounting period with the asset that it is identified with. If it is allocated to a "brand”, it cannot be depreciated. Closing date for consolidated companies: all the companies included in the basis for consolidation close their annual financial statements at December 31st. As such, it has not been necessary to make any restatements to ensure that the results for certain consolidated companies are consistent. B) Valuation methods. Research and development costs: there are no research and development costs within the BCC Group. Fixed assets 1) Intangible fixed assets: - Software are in principle 100% depreciated on a prorata temporis basis. - Business goodwill is not depreciated. 2) Tangible fixed assets: fixed assets are recorded at their acquisition cost, their cost price for fixed assets produced by the companies, or their accounting contribution value. They are depreciated on a diminishing balance basis when the tax regulations allow, save for any exceptional cases, with the diminishing balance not waived.

Under IAS 16, the revaluation of vines has resulted in a 7,647,086 euro increase in fixed assets, a 5,031,783 euro improvement in equity, and the recording of 2,615,303 euros in unrealized tax liabilities. Land other than vine plots has not been revalued. The depreciation schedules previously retained by the BCC Group are consistent with the real useful lives for the various assets. We have therefore not made any changes to our depreciation method.



The depreciation schedules are as follows:

Land Non-depreciable Plantation costs 25 years Buildings 20 years Fixtures and fittings 10 years Technical facilities, plant and equipment 4 to 10 years Other fixed assets 3 to 5 years

The depreciation schedules applied within the Group through to December 31st, 2004 were considered to be consistent with their economic depreciation. No restatements have therefore been made for this point. Fixed assets, component method: after reviewing the various items for fixed assets, management found that it was not necessary to have different breakdowns from those retained to date, or to apply different depreciation rates. 3) Financial and other leases: all of the financial leases have been restated as of January 1st, 2000.

These materials are depreciated over the term of the financial lease from three to five years, and on a diminishing balance basis in most cases. 4) Long-term financial investments: the equity securities of non-consolidated companies are recorded on the balance sheet at their cost price. When the inventory value of an equity interest is lower than its cost price, a provision for impairment is recorded for the amount of the difference. The inventory value of an equity interest corresponds to the going concern value. 5) Inventories: inventories primarily comprise wine in tanks and bottles of champagne wines that are under production. Inventories are valued at their direct cost price. Each year’s production is subject to a specific cost price. Only direct expenses are incorporated into wines in tanks or drawn bottles. Withdrawals from inventories of bottles are identified for each production and are recorded in the accounts at their effective cost. Although the turnover period for inventories is longer than one year, no financial expenses are incorporated into their valuation. In light of the makeup of our inventories, there are virtually zero provisions for depreciation. Indeed, they would only be justified if inventories were recorded in the accounts for an amount higher than their sale value less any sales and marketing costs. Under IAS 41, the house harvest is valued at the market price, and no longer at its cost price, unlike the Group's initial plans as indicated in the 2004 activity report. This new decision factors in a specific response from the French society of statutory auditors (Compagnie nationale des experts comptables) on the scope for applying this standard, and more specifically the champagne sector.



The impact of the changeover to IAS 41 is as follows:

Jan 1, 04 Dec 31, 04 Dec 31, 05

€ On inventories 620,728 1,454,938 2,310,459 On consolidated reserves 403,164 403,164 1,113,417 On deferred tax liabilities 217,564 503,408 801,750 On earnings 548,366 395,292

6) Provisions for losses and expenses: when a risk or expense has been identified, it is subject to a provision. 7) Pension commitment: pension commitments are recorded under provisions for losses and charges for the portion exceeding the “end-of-career benefit” insurance cover. The assumptions retained for calculating this provision are as follows: — All of the BBC Group’s permanent workforce. — Retirement at 60 years old. — Champagne national wage bargaining agreements applied. — Rate of inflation retained of 2% — Discount rate retained of 1%. 8) Deferred tax: deferred taxes are recorded by Group companies in order to offset the impact of any timing differences between the recording of certain expenses or income items and them being taken into consideration in taxable earnings. Deferred taxes are calculated at the known tax rate on the date when the consolidated financial statements are drawn up in line with the accrual method.

Tax losses and deferred depreciation for tax purposes only result in the recording of deferred tax assets when they are certain to be booked against future taxable profits. The deferred tax assets and liabilities recorded at December 31st, 2005 have been calculated in line with the tax system for company profits as provided for under the 2005 French finance law. Deferred tax liabilities on valuation goodwill allocated to non-depreciable assets are not recognized. Indeed, these differences primarily concern vine plots or vineyards. BCC does not intend to sell off its vine plots or vineyards. Moreover, if a sale was to take place, the tax system would encourage BCC more to sell off the shares in companies owning such deeds, which would not result in any deferred tax. 9) Stock options: the only options provided for within the BCC Group are equity warrants. As such, they will not generate any expenses in the future. In September 2000, the Board of Directors awarded stock options to staff from BCC subsidiaries representing 20,000 shares. The equity warrants were exercised over a 12-month period as of September 27th, 2005. 9,000 out of the 20,000 shares had been subscribed for at December 31st, 2005. On February 22nd, 2006, the remaining 11,000 shares were subscribed for in full. 10) Conditions for calculating earnings per share: BCC has had 1136,918 shares since December 23rd, 2005, the date of the capital increase linked to the exercising of equity warrants for 9,000 shares.



11) Free share allocation: in 2005, Boizel Chanoine Champagne bought back 2,030 Boizel Chanoine Champagne shares with a view to allocating free shares to Group staff in 2006. III. Basis for consolidation 1. Change in scope — the basis for consolidation has not changed in relation to the previous year, with all the consolidated companies owned at close to 100%. 2. Waiver. — there are no dispensations for consolidation, and only SARL Pressoir Rogge, which is indirectly 50% owned, could have been consolidated on a proportionate basis. Its relatively insignificant nature justifies this dispensation. 3. Acquisition of Lanson International — the Lanson International Group is currently being acquired (Q1 2006). No impact on the basis for consolidation was reported at December 31st, 2005. List of fully consolidated companies:


before earnings December 31st, 2005

Earnings (Group share) 2005

Percentage interest

€

Champagne BOIZEL 6,987,057 1,860,242 99.99

CHANOINE FRERES 4,294,956 2,379,537 99.95

CGV 480,469 252,227 99.6

PHILIPPONNAT SA 15,035,769 914,824 100

PHILIPPONNAT SCEA 1,551,698 126,458 100

DE VENOGE 2,527,853 733,445 99.98

CHARMOY 17,230,569 26,746 100

Maison Alexandre BONNET 1,377,856 1,010,747 100

Vignobles Alexandre BONNET 1,943,228 924,011 100

Pressoirs Alexandre BONNET 749,585 55,363 100

SCI VAL RONCEUX 648,000 58,345 100

SCI DES VAUCELLES 16,784 -2,098 100

SODISMAR CHAMPAGNE 238,749 -689 99.98

ABEL LEPITRE 281,405 27,882 100

PHILIPPONNAT LES DOMAINES ASSOCIES 178,992 222,648 99.62

IV. Comparability. BCC’s accounts were closed at December 31st, 2005 under IFRS. There has not been any change in scope. The accounts at December 31st, 2004 have been restated on a pro forma basis in order to ensure their perfect compatibility.



V. Change in accounts for fixed assets. Intangible fixed assets:

Dec 31, 04 Disposal or decommissioning Acquisition Depreciation Dec 31, 05

€


Start-up costs 0 0

Other intangible fixed assets 2,217,969 -1,067 10,355 2,227,257

Depreciation -248,603 1,067 -38,023 -285,559

Depreciation of start-up costs 0 0

TOTAL 2,610,865 0 10,355 -38,023 2,583,197

2) Acquisition goodwill. 2. 0. Intangible acquisition goodwill: Dec 31, 04 Acquisition Depreciation Reversal Dec 31, 05

€

Net unallocated acquisition goodwill 5,126,711 5,126,711

Goodwill allocated to brands* 696,692 696,692

TOTAL 5,823,403 0 0 0 5,823,403

*This only concerns the BOIZEL brand 2.01. Tangible acquisition goodwill: Dec 31, 04 Dec 31, 05 Reversal Dec 31, 05

€

Acquisition goodwill allocated to vineyards and land* 16,273,933 16,273,933

Goodwill allocated to buildings (net) 517,691 -38,112 479,579

Goodwill allocated to materials 0 0 0

TOTAL 16,791,624 -38,112 0 16,753,512

*This concerns the vineyards and vine plots of Philipponnat and Vignobles Alexandre Bonnet. On account of the change in the market value of vines and vine plots, this goodwill must not be subject to any exceptional depreciation.



3. Tangible fixed assets. The fixed assets recorded on the balance sheet can be broken down as follows:

- Gross values:

Dec 31, 04 Acquisitions IFRS revaluation

Disposals, transfers and

decommissioning Dec 31, 05

€


Land and plantation costs 12,504,973 725,302 7,647,086 20,877,361

Buildings 12,398,271 239,123 12,637,394


Facilities, plant and equipment 7,413,507 1,668,281 -306,051 8,775,737




Fixed assets under construction 324,401 815,146 -301,035 838,512

TOTAL 36,686,999 3,764,293 7,647,086 -711,123 47,387,255

- Restated financial and other leases(1)

3,482,791

0

-874,470

2,608,321

GROSS TOTAL 40,169,790 3,764,293 7,647,086 -1,585,593 49,995,576

Vine plot revaluations have been recorded in the accounts by estimating the price per hectare of vines at between 500,000 and 600,000 euros depending on the vintages. This estimate corresponds to the lower bracket for the market. When the Group does not own plantations, a 70,000 euro reduction is recorded per hectare. Depreciation can be broken down as follows: Dec 31, 04 Dec 31, 05 Reversal Dec 31, 05

€

- Pure fixed assets

Land and plantation costs 1,161,953 88,575 -7,594 1,242,934

Buildings 4,416,670 597,662 5,014,332






14,119,899 1,574,217 -400,573 15,293,543

- Restated financial and other leases(1) 3,114,070 219,152 -874,400 2,458,822

Total depreciation 17,233,969 1,793,369 -1,274,973 17,752,365 Net balance sheet values 22,935,821 32,243,211

(1) cf. details hereafter



4) Financial and other leases for equipment:

Gross

values at Jan 1, 05

Deprec at Jan 1,

05

Financial leases taken out in 2005

Financial and

other leases

settled at Jan 1, 05

Deprec on

financial and

other leases settled

at Jan 1, 05

Gross values at Dec 31,

05

Sundry differences

Allocation for year

Total deprec

Net book

value at Dec 31,

05

€

Vignobles A. BONNET 152,450 149,886 33,174 33,174 119,276 30 2,534 119,276 0

Pressoirs A. BONNET 336,269 316,181 23,519 23,519 312,750 16,662 309,324 3,426

CHANOINE 2,363,966 2,087,546 373,684 373,684 1,990,282 164,124 1,877,986 112,296

BOIZEL 196,243 185,839 168,543 168,543 27,700 7,378 24,674 3,026

PHILIPPONNAT 213,262 164,232 99,092 99,092 114,170 39 21,671 86,850 27,320

DE VENOGE 152,066 152,066 152,066 152,066 0 0 0 0

Maison A. BONNET 68,535 58,320 24,392 24,392 44,143 6,783 40,711 3,432

TOTAL 3,482,791 3,114,070 0 874,470 874,470 2,608,321 69 219,152 2,458,822 149,500

Shareholders’ equity The share capital is made up of 1,136,918 shares with a par value of 10 euros, representing a total of 11,369,180 euros. The change in shareholders’ equity can be broken down as follows: Dec 31, 05 Dec 31, 04

€’000

Shareholders’ equity at year-start 53,285 42,834

Capital increase 448

Cancellation of BCC securities -147

IFRS revaluation of vineyards 0 5,032

IFRS revaluation of inventories 161 952

Dividends paid -1,466 -1,129

Earnings for the year 7,938 5,595

Shareholders’ equity at year-end 60,219 53,284

Minority interests:

Dec 31, 05 Dec 31, 04

€’000

Minority interests at year-start 5 4

Dividends paid 0 0

Change in scope 0 0

Earnings at year-end 3 1

Minority interests at year-end 8 5

Provisions for contingencies and charges:

Dec 31, 04 Allocation Reversal for use

Reversal without

use Dec 31, 05

€’000 Provision for contingencies and charges 1,829,352 48,000 -3,429 -20,000 1,853,923

Provision for end-of-career benefits 539,953 117,269 657,222

TOTAL 2,369,305 165,269 -3,429 -20,000 2,511,145



The provision for contingencies and charges primarily covers the risks linked to the company Bricout filing for bankruptcy for 1,752,710.74 euros. This risk was fully provisioned for its total amount in 2003. Borrowings and financial debt:

Dec 31, 05 Dec 31, 04

€

Borrowings linked to financing for investments 12,393,183 13,847,839

Cash credits financing inventories 79,334,200 70,353,905

Borrowings from the restatement of financial and other leases 149,500 368,722

Other cash credits 13,835,637 11,665,278

TOTAL 105,712,520 96,235,744

The borrowings are based on variable rates and indexed on the three-month Euribor. The company has a price hedging policy for around two thirds of its average outstanding financial debt. Virtually all of the borrowings are combined with real sureties, primarily based on collateral, joint and several sureties, mortgage promises or warrants for credit facilities used to finance inventories.

< 1 year 1 to 5 years > 5 years Total

€

Borrowings linked to investments 4,324,086 6,619,961 1,449,136 12,393,183

Cash credits for inventories 26,444,732 52,889,468 79,334,200

Borrowings linked to financial and other leases 149,500 149,500


TOTAL 44,753,955 59,509,429 1,449,136 105,712,520

Long-term financial investments (not fully consolidated): Dec 31, 05 Dec 31, 04

Equity interest over 50%

Equity interest from 20 to 50% 15,245 15,245

Equity interest under 20%

TOTAL 15,245 15,245

Trade receivables: Dec 31, 05 Dec 31, 04

€

Trade receivables net of depreciation 37,508,919 33,159,836

Solely comprising receivables due in under one year

Bills of exchange forwarded for discount and held to maturity have been allocated to trade receivables.



Other receivables and prepaid expenses: Dec 31, 05 Dec 31, 04

€

Other receivables (including deferred company income tax) 6,004,636 4,089,238

Prepaid expenses 1,244,086 1,108,261

TOTAL 7,248,722 5,197,499

Other receivables primarily represents receivables from the French treasury: - Deductible VAT: 2,041,597 euros. Prepaid expenses primarily represent expenses on “qualitative reserve” wines, which are therefore not legally available for sale, in addition to pre-booked interest.

Dec 31, 05 Dec 31, 04

€

Receivables for deferred company income tax 912,442 874,530

This amount primarily concerns company income tax on restated stored profits and on end-of-career benefits, representing 730,044 euros. Liability accruals: Dec 31, 05 Dec 31, 04 € Invoices to be received 6,989,049 9,995,494 Other payables 5,761,805 2,491,069 TOTAL 12,750,854 12,486,563 Dec 31, 05 Dec 31, 04 € Trade payables and bills payable 27,680,736 26,904,436

Trade payables are all due in under one year. Deferred tax liabilities Dec 31, 05 Dec 31, 04 € Non-current* 2,615,303 2,615,303 Current** 801,750 503,408

* Tax linked to the revaluation of vineyards. ** Tax linked to IAS 41. Non-recurring income and expenses (IFRS not applicable). Company income tax: Dec 31, 05 Dec 31, 04 € Company income tax 4,114,643 3,484,653 Deferred income tax 174,588 162,403 TOTAL 4,289,231 3,647,056

All the companies are consolidated for tax purposes, with the exception of Philipponnat Les Domaines Associés.



Under the consolidation agreement, each consolidated subsidiary records its tax as if it was not consolidated. In 2005, the company income tax rate represented 34.96% of net income before tax and the depreciation of acquisition goodwill, compared with 35.52% in 2004. Restated timing differences primarily concern the following: — Social solidarity contribution (national fund for the independent organization of old-age insurance for non-salaried industrial and commercial workers, ORGANIC); — Paid leave provision for certain companies (former scheme). Tax losses and deferred depreciation for tax purposes Dec 31, 05 Dec 31, 04 € TOTAL 469,080 695,034

Workforce: Dec 31, 05 Dec 31, 04

Managers and related 31 31 Traveling sales reps (full-time equivalents)

8 8

Operatives and employees 99 100 Total headcount 138 139

Commitments given: Dec 31, 05 Dec 31, 04 € Bills of exchange not due 4,877,724 4,690,510 TOTAL 4,877,724 4,690,510

Commitments relating to end-of-career benefits are recorded as provisions. Financial leases have been recorded under borrowings since January 1st, 2000. There are therefore no longer any commitments for these two items. For information on financial leases, refer to the section on borrowings and financial debt. Other commitments given. Borrowings guaranteed with real sureties: Dec 31, 05 Dec 31, 04 € Pledging of securities 5,500,000 8,250,000 Pledging of equipment 1,616,005 438,077 Stock warrants 78,034,200 67,774,200 Real estate mortgage 4,763,492 6,226,037 TOTAL 89,913,697 82,688,314



Segment information: Dec 31, 05 Dec 31, 04 € Sales of goods 58,111,196 53,575,119 Sold production of goods 37,994,468 33,264,509 Provision of services 1,022,105 1,178,599 TOTAL 97,127,769 88,018,227 Dec 31, 05 Dec 31, 04 € France revenues 57,319,988 52,140,297 Intra-community and export revenues 39,807,781 35,877,930 TOTAL 97,127,769 88,018,227

The rear margins allocated for mass retail are now deducted from revenues in accordance with IFRS. The impact at December 31st, 2005 represented 5,786,317 euros. The 2004 financial year has been restated on a pro forma basis, with the impact representing a 3,219,879 euro reduction in revenues. Funds flow statement: Dec 31, 05 Dec 31, 04 € LASTING RESOURCES Cash flow from operations excluding non-Group interests 9,788,635 7,833,607 Earnings allocated to non-Group interests 3,493 1,481 Capital increase (minority interests) 448,020 Increase in financial debt 11,499,981 13,286,510 Change in financial debt linked to financial leases Change in financial debt linked to acquisitions Income from disposal of fixed assets 28,619 3,236 Reduction in other long-term financial investments 48,699 Increase in consolidated reserves/inventory valuation (IAS 41) 14,804 Increase in consolidated reserves/vineyard revaluation Sundry 179 -2,677 TOTAL 21,783,731 21,170,856 STABLE USE BCC dividends 1,466,293 1,127,918 Acquisition of fixed assets 3,473,613 3,622,726 Increase in other long-term financial investments 12,948 Acquisition of equipment under financial leases Repayment of borrowings and debt with credit institutions 3,974,342 10,897,907 IFRS vineyard revaluation 0 Repayment of borrowings for fixed assets under financial leases 219,222 412,103 Dividends for non-Group interests 1,318 2,486 Reduction in non-Group interests linked to the buyback of Philipponnat SA shares

Increase in acquisition goodwill for Philipponnat Les Domaines Associés 129,000 TOTAL 9,147,736 16,192,140 Change in net working capital Net resources 12,635,995 4,978,716 Net use



Dec 31, 05 Dec 31, 04 € CHANGES ON OPERATIONS:

Inventories and work-in-progress B 11,494,413 B 2,899,018

Trade receivables B 4,349,082 B 5,400,086

Other receivables B 708,426 D -764,920

Trade payables B 2,153,606 B 388,412

Tax and social security liabilities D -864,808 D -1,063,736

Other liabilities (including prov) D -2,537,096 D -1,263,869

WORKING CAPITAL FOR THE YEAR

Requirements or releases B 15,303,623 B 5,594,991 Change in working capital B 15,303,623 B 5,594,991 CHANGES IN CASH

Change in cash and cash equivalents D -497,268 D -513,416

Change in bank borrowings and credit bank balances D -2,170,360 D -102,859

Negative cash position for Philipponnat Les Domaines Associés CHANGES IN CASH D -2,667,628 D -616,275 USE OF CHANGE IN TOTAL NET WORKING CAPITAL

NET RESOURCES B 12,635,995 B 4,978,716

Cash-flow statements: 31,12,2005 €

Cash flow from operating activities

Total net income from consolidated companies 7,941,659

Elimination of depreciation and provisions 1,869,503

Elimination of the change in deferred tax 0

Elimination of capital gains and losses on disposals -19,034

Elimination of the share in earnings for equity affiliates

Dividends received from equity affiliates 0

Impact of changes in working capital linked to operations -15,303,623

Net cash flow from (allocated to) operating activities A -5,511,495

Acquisition of fixed assets -3,486,561

Deferred expenses 0

Disposal of fixed assets 28,619

Impact of changes in scope 0

Net cash flow from (allocated to) investment activities B -3,457,942

Dividends paid by the parent company -1,466,293

Dividends paid to minorities -1,318

Capital increase (reduction) 448,020

Investment subsidies 0

Issuing of borrowings 11,499,981

Repayment of borrowings -4,193,564

Sundry 179

Net cash flow from (allocated to) financing activities C 6,287,005

Opening cash position -10,393,753

Impact of the change in exchange rates D 0

Impact of the change in accounting principles E 0

IAS 16 vineyard revaluation E

Increase in consolidated reserves/vineyard revaluation E

Increase in consolidated reserves/IAS 41 inventory valuation E 14,804

Change in the cash position A+B+C+D+E -2,667,628

Cash position at end of period -13,061,381

Cash position at end of period according to the table for changes in operations and cash -13,061,381



Reconciliation of shareholders’ equity between previous standards and IFRS Jan 1, 04 Dec 31, 04 € SHAREHOLDERS’ EQUITY AT DEC 31, 03 42,835,122 42,835,122 EARNINGS CAPITAL INCREASE IMPACT OF CHANGE IN ACCOUNTING PRINCIPLES NET VINEYARD REVALUATION 5,031,783 5,031,783 MARKET VALUATION OF INVENTORIES (IAS 41) FOR PHILIPPONNAT 133,979 133,979 TAX/VALUATION OF INVENTORIES FOR PHILIPPONNAT -46,959 -46,959 MARKET VALUATION OF INVENTORIES (IAS 41) FOR VIGNOBLES ALEXANDRE BONNET 486,749 486,749 TAX/VALUATION OF INVENTORIES FOR VIGNOBLES ALEXANDRE BONNET -170,605 -170,605 REVERSAL OF 2004 DEPRECIATION UNALLOCATED GOODWILL -436,628 DIVIDENDS PAID -4,370,755 DIVIDENDS RECEIVED 3,240,902 EARNINGS 6,580,514 IFRS SHAREHOLDERS’ EQUITY 48,270,069 53,284,102 Reconciliation of earnings between previous standards and IFRS Dec 31, 04 € NET INCOME (GROUP SHARE) UNDER PREVIOUS STANDARDS 5,595,521 IMPACT OF CHANGE IN ACCOUNTING PRINCIPLES MARKET VALUATION OF INVENTORIES (IAS 41) FOR PHILIPPONNAT AT DEC 31, 03 -133,979 MARKET VALUATION OF INVENTORIES (IAS 41) FOR PHILIPPONNAT AT JUN 30, 04 483,810 TAX/VALUATION OF INVENTORIES FOR PHILIPPONNAT AT DEC 31, 003 46,959 TAX/VALUATION OF INVENTORIES FOR PHILIPPONNAT AT JUN 30, 04 -167,398 MARKET VALUATION OF INVENTORIES (IAS 41) FOR VIGNOBLES ALEXANDRE BONNET AT DEC 31, 03 -486,749 MARKET VALUATION OF INVENTORIES (IAS 41) FOR VIGNOBLES ALEXANDRE BONNET AT JUN 30, 04 971,128 TAX/VALUATION OF INVENTORIES FOR VIGNOBLES ALEXANDRE BONNET AT DEC 31, 03 170,605 TAX/VALUATION OF INVENTORIES FOR VIGNOBLES ALEXANDRE BONNET AT JUN 30, 04 -336,010 REVERSAL OF 2004 DEPRECIATION UNALLOCATED GOODWILL 436,627 IFRS NET INCOME (GROUP SHARE) 6,580,514



B. Corporate financial statements at December 31st, 2005. I. — Balance sheet. Assets € € Dec 31, 05 Dec 31, 04 Gross Depreciation Net Net € Equity interests 43,363,235 43,363,235 43,363,235 Other tangible fixed assets 4,161 3,922 239 403 Fixed assets 43,367,396 3,922 43,363,474 43,363,638 Advances on orders Trade receivables and related Other receivables 7,494,928 7,494,928 3,534,635 Cash and cash equivalents 588,863 588,863 57,391 Current assets 8,083,791 8,083,791 3,592,026 Prepaid expenses 29,901 29,901 40,706 Total assets 51,481,088 3,922 51,477,166 46,996,370 Liabilities € € Dec 31, 05 Dec 31, 04 € Share capital 11,369,180 11,279,180 Issue premium 2,108,622 1,750,602 Legal reserve 1,127,918 1,127,918 Statutory reserve 15,886,049 14,220 496 Earnings 3,578,979 3,131,847 Shareholders’ equity 34,070,748 31,510,043 Borrowings and debt with credit institutions 5,500,000 8,278,831 Sundry borrowings and financial debt 10,083,862 5,643,083 Trade payables and related 694,629 56,579 Tax and social security liabilities 1,106,559 1,496,257 Other liabilities 21,368 11,577 Total debt 17,406,418 15,486,327 Total liabilities 51,477,166 46,996,370 Total year with cents 51,477,165.90 46,996,369.80



II. — Income statement. Year ended Year ended Dec 31, 05 Dec 31, 04 France Export Total € Production sold: services 1,160,000 1,160,000 1,240,000 Net revenues 1,160,000 1,240,000 Reversal of depreciation/transferred expenses 731 Other income 9,880 2 Total operating income 1,169,880 1,240,733 Other expenses and external expenses 868,231 173,225

Tax and related payments 11,766 7,720

Salaries and wages 604,518 563,314 Payroll taxes 239,537 219,439 Depreciation 164 164 Other expenses 15,013 6 Total operating expenses 1,739,229 963,868 EBIT -569,349 276,865 Financial income from equity interests 4,235,892 3,241,804 Other interest and related income 57,567 145,477

Net income on disposal of marketable securities

Total financial income 4,293,459 3,387,281 Interest and related expenses 362,740 465,326 Total financial expenses 362,740 465,326 Financial result 3,930,719 2,921,955 Income from ordinary operations before tax 3,361,370 3,198,820 Non-recurring income on management operations Non-recurring income on capital operations Total non-recurring income 0 0 Non-recurring expenses on management operations Non-recurring expenses on capital operations Total non-recurring expenses 0 0 Non-recurring income/loss 0 0 Company income tax -217,609 66,973 Total income 5,463,339 4,628,014 Total expenses 1,884,360 1,496,167 NET INCOME 3,578,979 3,131,847



I. Presentation of the business. — Boizel Chanoine Champagne is a holding company. Given that the Group’s three managers have been paid by the holding company since October 1st, 1996, it oversees all of the subsidiaries specialized in producing and marketing champagnes. II. Accounting principles. - The corporate financial statements are drawn up in accordance with the legal and regulatory provisions in force in France (Articles 9 and 11) of the French commercial code – Decree 83-1020 of November 29th, 1983. 2.1. General principles. Generally accepted accounting principles have been applied in accordance with the principle of conservatism and the following basic assumptions: — Continuous operations; — Consistent methods; — Independent financial years, And in accordance with the rules for presenting annual financial statements. The basic method retained for valuing the various elements recorded in the accounts is the historical cost method. Acquisition costs for tangible and intangible fixed assets are recorded under expenses in the same way as any financial expenses. 2.2. Main methods used: — Long-term financial investments: long-term financial investments are valued at their acquisition cost or contribution value. When the inventory value of an equity interest is lower than its cost price, a provision for impairment is recorded for the amount of the difference. The inventory value of an equity interest corresponds to its going concern value, which is determined based on the net position, corrected net accounting assets, yield value and the general outlook for development. — Receivables and payables: accounts receivable and payable have been valued at their nominal value. A provision for impairment is recorded when the inventory value is lower than the book value. — Non-recurring income and expenses: non-recurring income and expenses factor in not only elements that are not linked to the company’s normal activity, but also those of an exceptional nature in terms of their amount. — Note on the comparability of accounts: the presentation of the annual financial statements and the valuation methods retained for this year are the same as the previous year. III. Notes on the corporate balance sheet 3.1. Intangible fixed assets: No changes.



3.2. Tangible fixed assets (€)

Gross value Acquisition Gross value Dec 31, 04 or contribution Dec 31, 05

4,161 0 4,161 Depreciation Allocation Depreciation

3,758 164 3,922 The depreciation schedules previously retained are consistent with the real useful lives for the various assets. We have therefore not made any changes to our depreciation method. 3.3. Long-term financial investments. Long-term financial investments can be broken down as follows: € € Equity securities Dec 31, 04 Acquisition Reduction Dec 31, 05

or contribution

€ SA Boizel shares 5,762,020 5,762,020 SA Chanoine Frères shares 2,200 420 2,200 420 SA Philipponnat shares 9,477,783 9,477,783 SAS De Venoge shares 1,251,664 1,251,664 SAS Charmoy shares 24,153,056 24,153,056 SAS CGV shares 518,292 518,292 TOTAL 43,363,235 43,363,235 No provisions have been recorded on equity securities at December 31st, 2005. The equity interest in the holding company SAS Charmoy represents an indirect 100% interest in the following companies: – SAS Maison Alexandre Bonnet, champagne merchant; – SAS Vignobles Alexandre Bonnet, company operating a champagne vineyard; – SARL Pressoirs Alexandre Bonnet, pressing company; – Société civile du Val Ronceux, AOC vineyard owner; – Société civile des Vaucelles, owner of building land.



The financial information and results for the subsidiaries and sub-subsidiaries are presented below: % Capital Shareholders' interest equity before

earnings for 2005

€ € Subsidiaries Champagne Boizel 99.98 6,468,000 6,987,057 Chanoine Frères 99.95 3,060,000 4,294,956 Champagne Philipponnat 100.00 12,430,460 15,035,769 de Venoge 99.98 1,000,000 2,527,853 * Charmoy 100.00 16,500,000 17,230,569 CGV 99.60 300,000 480,469 Sub-subsidiaries Sodismar Champagne 99.98 234,675 238,749 Rogge 50.00 10,000 41,752 Abel Lepitre 100.00 250,000 281,405 SCEA Philipponnat 100.00 1,440,000 1,551,698 Philipponnat Les Domaines Associés 99.62 460,000 178,992 *Maison Alexandre Bonnet 100.00 1,000,000 1,377,856 * Vignobles Alexandre Bonnet 100.00 1,600,000 1,943,228 *Pressoirs Alexandre Bonnet 100.00 79,888 749,585 SCI Val Ronceux 100.00 648,000 648,000 SCI DES Vaucelles 100.00 16,784 16,784 Revenues Earnings Current Dec 31, 05 Dec 31, 05 accounts € € € Subsidiaries SA Boizel 18,478,500 1,912,408 -1,725,217 Credit SA Chanoine Frères 41,177,069 2,394,698 3,369,010 Debit SA Philipponnat 8,914,126 860,761 -2,845,261 Credit SAS de Venoge 9,830,398 741,971 -1,851,137 Credit *SAS Charmoy 0 1,125,456 989,681 Debit SAS CGV 25,165,470 252,980 171,196 Debit Sub-subsidiaries SAS Sodismar Champagne 0 -689 -366 Credit SARL Rogge 82,827 21,718 SAS Abel Lepitre 511,749 27,885 16,148 Debit SA Philipponnat Les Domaines Associés 4,069,453 222,093 288 Debit SCEA Philipponnat 311,765 176,260 * SAS Maison A. Bonnet 19,727,062 1,022,956 -999,553 Credit * SAS Vignobles A. Bonnet 3,477,674 751,714 375,875 Debit * SARL Pressoirs A. Bonnet 645,568 98,265 30,039 Debit SCI Val Ronceux 0 52,834 SCI DES Vaucelles 0 -2,096 In order to facilitate the consolidation operations for the BCC Group under IFRS, CHANOINE and CGV booked rear margin is granted to clients against revenues in 2005: Impact for CHANOINE: 4,897,368 euros



Impact for CGV: 888,949 euros Guarantees on affiliated companies - Guarantee on an ageing credit facility for De Venoge totaling 2,700,000 euros. - Joint and several guarantee on a construction financing loan and on an ageing credit facility for Chanoine Frères totaling 1,153,474 euros. - Guarantee on an equipment loan for Vignobles Alexandre Bonnet totaling 341,429 euros. 3.4. Other receivables: Other receivables can be broken down as follows: Dec 31, 05 Dec 31, 04 € State: company income tax 0 0 State: VAT 10,115 1,033 Subsidiary current accounts 7,428,828 3,388,125 Revenue accruals 55,985 145,477 Sundry 0 0 7,494,928 3,534,635 3.5. Shareholders’ equity. - The share capital is made up of 1,136,918 shares with a par value of 10 euros, representing a total of 11,369,180 euros. Changes in shareholders’ equity over the year are presented below. Amount Allocation 2005 Capital Amount

Dec 31, 04 2005 OGM* earnings increase Dec 31, 05

€ Capital 11,279,180 90,000 11,369,180 Issue premium 1,750,602 358,020 2,108,622 Legal reserve 1,127,918 1,127,918 Contractual reserve 14,220 496 1,665,553 15,886,049 Earnings 3,131,847 -3,131,847 3,578,979 3,578,979 31,510,043 -1,466,294 3,578,979 34,070,748 OGM: ordinary general meeting 3.6. Borrowings and financial debt.

Amount < 1 year > 1 year > 5 years

Dec 31, 05 < 5 years € Borrowings and financial debt 5,500,000 2,750,000 2,750,000 0

Accrued interest 0 0 Overdrafts 0 0 5,500,000 2,750,000 2,750,000 0 Financial debt is guaranteed with collateral: - 1,078,005 SAS Charmoy shares for 5,500,000 euros. The 10,083,862 euros in sundry financial debt corresponds to subsidiaries’ current payables as well as interest on subsidiaries’ current payables. 3.7. Tax and social security liabilities. These liabilities primarily correspond to bonuses to be paid, social security contributions for Q4 2005, tax on wages for the year and the company income tax balance.



IV. Notes on the income statement. 4.1. Revenues: Revenues are exclusively generated through the provision of services for subsidiaries.

Year ended Year ended Dec 31, 05 Dec 31, 04 1,160,000 1,240,000

4.2. Financial income:

Year

ended Year

ended Dec 31, 05 Dec 31, 04 € BOIZEL dividends 1,385,640 808,290 CHANOINE dividends 1,146,863 458,745 PHILIPPONNAT dividends 528,286 870,118 CHARMOY dividends 1,078,000 970,200 CGV dividends 97,104 134,451 Interest invoiced to subsidiaries 55,985 145,477 Sundry financial income 1,583 4,293,460 3,387,281 4.3. Non-recurring income and expenses. NA. 4.4. Company income tax. The balance corresponds to tax linked to BCC’s taxable profit. Under the consolidation agreement, each subsidiary records its tax as if it was not consolidated. The parent company records the tax credit linked to the losses of certain consolidated subsidiaries. At December 31st, 2005, all the consolidated subsidiaries recorded profits, except for SAS Sodismar Champagne, with company income tax calculated at a rate of 34.72%, factoring in the 1.5% contribution on profits and the 3.3% social security contribution. V. Other elements given. 5.1. Increase and reduction of future tax liabilities. NA (no tax losses to be carried forward). 5.2. Executive compensation: Executive compensation information is not disclosed because this would indirectly equate to divulging individual compensation data. 5.3. Headcount: The headcount at December 31st, 2005 was three. 5.4. Commitments given. Pledging of Charmoy shares for guarantee 5,500,000 euros Guarantee on behalf of De Venoge 2,700,000 euros Guarantee on behalf of Chanoine Frères 1,153,474 euros Guarantee on behalf of Vignobles Alexandre Bonnet 341,429 euros 9,694,903 euros



4.6. CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31ST, 2004 AND 2003

UNDER FRENCH GAAP AND CORPORATE FINANCIAL STATEMENTS AT DECEMBER 31ST, 2004 A.- Consolidated financial statements. I.- Consolidated balance sheet at December 31st, 2004 (€) ASSETS



€

Fixed assets

Intangible acquisition goodwill 5,823,404 6,131,031

Intangible fixed assets 2,610,866 2,645,946

Tangible fixed assets 22,935,823 21,041,503

Tangible acquisition goodwill 16,791,625 16,829,736

Long-term financial investments 83,519 132,232

Equity-consolidated securities Total fixed assets 48,245,237 46,780,448

Current assets

Inventories and work-in-progress 99,829,052 96,930,034

Trade receivables and related 26,340,213 20,940,127

Other receivables and accruals 6,540,297 7,305,217

Marketable securities 2,747

Cash and cash equivalents 3,397,890 3,914,053 Total current assets 136,110,199 129,089,431 Total assets 184,355,436 175,869,879

LIABILITIES



€ Shareholders’ equity (Group share)

Capital (1) 11,279,180 11,279,180

Premiums (1) 1,750,602 1,750,602

Consolidated earnings and reserves (2) 34,271,008 29,805,340

Other

47,300,790 42,835,122

Minority interests 5,780 4,445

Provision for contingencies and charges 2,369,305 2,248,384 Debt

Borrowings and financial debt 91,545,234 89,465,875

Trade payables and related 36,815,204 37,194,396

Other liabilities and accruals 6,319,123 4,121,657

134,679,561 130,781,928 Total liabilities 184,355,436 175,869,879



(1) For the consolidating parent company (2) Including net income for the year II.— Consolidated income statement (classification of income and expenses by kind) (€)



€

Revenues 91,238,106 79,707,593 Other operating income 3,826,215 8,965,220

Purchases consumed 58,998,258 57,521,805

Payroll taxes 7,187,792 6,268,962

Other operating expenses 13,459,925 10,954,693

Tax 1,616,991 1,736,503 Earnings before interest, tax, depreciation and amortization (EBITDA) 13,801,355 12,190,850

Depreciation and provisions 1,878,364 2,105,998 Earnings before interest and tax (EBIT) 11,922,991 10,084,852 Financial income and expenses 2,531,117 3,164,955 Income from ordinary operations for consolidated companies 9,391,874 6,919,897 Non-recurring income and expenses 41,080 -705,203

Income tax 3,361,212 2,243,639 Net income for consolidated companies 6,071,742 3,971,055

Share in earnings of equity affiliates

Depreciation of acquisition goodwill 474,740 417,066 Consolidated net income 5,597,002 3,553,989 Minority interests 1,481 -2,173 Net income (Group share) 5,595,521 3,556,162 Earnings per share 4.96 3.15

Diluted earnings per share 4.96 3.15

III.- Notes to the consolidated financial statements. Presentation of the BCC Group. The BCC Group performs its activity in the Champagne sector. The main brands marketed by the Group are “Champagne Boizel”, “Champagne Chanoine Frères”, “Tsarine”, “Philipponnat”, “Clos des Goisses”, “Abel Lepitre”, “De Venoge” and “Alexandre Bonnet”, as well as various counter-brands and distributor brands. Boizel Chanoine Champagne is a French limited company (société anonyme) whose registered office is located at Allée du Vignoble, Reims, France.



I. – Accounting standards applied. The financial statements of Boizel Chanoine Champagne have been drawn up in accordance with the rules and principles in force in France (Law of January 3rd, 1985 and the implementing order of February 17th, 1986), and pursuant to French accounting regulations board (Comité de la réglementation comptable, CRC) regulation 99-02. II. – Information on accounting methods. A. – Consolidation methods. The accounts of companies placed directly or indirectly under the exclusive control of Boizel Chanoine Champagne have been fully consolidated. Only one 50%-controled company that could have been consolidated on a proportionate basis has been excluded from the basis for consolidation since it is not significant. All significant transactions between consolidated companies are eliminated. Stored profits on internal transactions within the Group are eliminated. Acquisition and valuation goodwill: this is based on the difference between the acquisition cost for newly consolidated companies and the share in the net assets of the companies acquired. Such goodwill may also be generated at the time of increases in the percentage of stakes held in consolidated companies. First consolidation goodwill is allocated to the assets identified, with unidentified goodwill allocated to depreciable intangible fixed assets. Conditions for the depreciation of acquisition goodwill: — Identified “valuation” goodwill: this is depreciated over an accounting period with the asset that it is identified with. If it is allocated to a "brand”, it cannot be depreciated. — Unallocated acquisition goodwill: this is depreciated on a straight-line basis over 20 years. On an exceptional basis, it may be depreciated more quickly on any non-significant amounts of goodwill. It may be subject to exceptional depreciation if required by the financial position of the consolidated company. As such, the goodwill linked to Philipponnat Les Domaines Associés has been depreciated over five years on a prorata temporis basis. The depreciation charges for goodwill are processed on an exceptional basis. Closing date for consolidated companies. -- All the companies included in the basis for consolidation closed their annual financial statements at December 31st, 2004. As such, it has not been necessary to make any restatements to ensure that the results for certain consolidated companies are consistent. B. – Valuation methods. Research and development costs: There are no research and development costs within the BCC Group. Fixed assets: 1. Intangible fixed assets — Software are in principle 100% depreciated on a prorata temporis basis;



— Business goodwill is not depreciated. 2. Tangible fixed assets: fixed assets are recorded at their acquisition cost, their cost price for fixed assets produced by the companies, or their accounting contribution value. They are depreciated on a diminishing balance basis when the tax regulations allow, save for any exceptional cases, with the diminishing balance not waived. The depreciation schedules are as follows: Land Non-depreciable Plantation costs 25 years Buildings 20 years Fixtures and fittings 10 years Technical facilities, plant and equipment 4 to 6 years Other fixed assets 3 to 5 years 3. Financial and other leases: all of the financial leases have been restated as of January 1st, 2000. These materials are depreciated over the term of the financial lease from three to five years, and on a diminishing balance basis in most cases. 4. Long-term financial investments: the equity securities of non-consolidated companies are recorded on the balance sheet at their cost price. When the inventory value of an equity interest is lower than its cost price, a provision for impairment is recorded for the amount of the difference. The inventory value of an equity interest corresponds to the going concern value. 5. Inventories: inventories primarily comprise wines in tanks and bottles of champagne wines that are under production. Inventories are valued at their direct cost price. Each year’s production is subject to a specific cost price. Only direct expenses are incorporated into wines in tanks or drawn bottles. Withdrawals from inventories of bottles are identified for each production and are recorded in the accounts at their effective cost. Although the turnover period for inventories is longer than one year, no financial expenses are incorporated into their valuation. In light of the makeup of our inventories, the provisions for depreciation are not particularly significant. Indeed, they would only be justified if inventories were recorded in the accounts for an amount higher than their sale value less any sales and marketing costs. 6. Provisions for losses and expenses: when a risk or expense has been identified, it is subject to a current or exceptional provision. 7. Pension commitment: pension commitments are recorded under provisions for losses and charges for the portion exceeding the “end-of-career benefit” insurance cover. The assumptions retained for calculating this provision are as follows: — All of the BBC Group’s permanent workforce. — Retirement at 60 years old. — Champagne national wage bargaining agreements applied. — Rate of inflation retained of 2% — Discount rate retained of 1%. 8. Deferred tax: deferred taxes are recorded by Group companies in order to offset the impact of any timing differences between the recording of certain expenses or income items and them being taken into consideration in taxable earnings. Deferred taxes are calculated at the known tax rate on the date when the consolidated financial statements are drawn up in line with the accrual method.



Tax losses and deferred depreciation for tax purposes only result in the recording of deferred tax assets when they are certain to be booked against future taxable profits. The deferred tax assets and liabilities recorded at December 31st, 2004 have been calculated in line with the tax system for company profits as provided for under the 2004 French finance law. Deferred tax liabilities on valuation goodwill allocated to non-depreciable assets are not recognized. Indeed, these differences primarily concern vine plots or vineyards. BCC does not intend to sell off its vine plots or vineyards. Moreover, if a sale was to take place, the regulations would encourage BCC to sell off the shares in companies owning such deeds, which would not result in any deferred tax. 9. Stock options: the only options provided for within the BCC Group are equity warrants. As such, they will not generate any expenses in the future. 10. Non-recurring income and expenses: non-recurring expenses primarily correspond to depreciation charges on acquisition goodwill, as well as a loss linked to the reduction in the liability guarantee for SA Philipponnat Les Domaines Associés. Non-recurring income primarily comprises the additional acquisition goodwill recorded for SA Philipponnat Les Domaines Associés. 11. Conditions for calculating earnings per share: since the number of BCC shares remained unchanged over 2004, there have not been any specific difficulties calculating the level of earnings per share. III. – Basis for consolidation. 1. Change in scope. – The basis for consolidation has not changed in relation to the previous year, with all the consolidated companies owned at close to 100%. 2. Waiver. - There are no dispensations for consolidation, and only SARL Rogge, which is indirectly 50% owned, could have been consolidated on a proportionate basis. Its relatively insignificant nature justifies this dispensation. List of fully consolidated companies:


before earnings Earnings (Group share) Percentage interest

€

Champagne BOIZEL 6,869,353 1,503,556 100.00

Champagne CHANOINE FRERES 3,696,845 1,745,463 100.00

Champagne PHILIPPONNAT SA 15,022,777 541,232 100.00

DE VENOGE 1,943,099 584,639 100.00

CHARMOY 17,104,425 1,204,150 100.00

CGV 437,511 139,915 100.00

SODISMAR CHAMPAGNE 238,648 101 100.00

Champagne ABEL LEPITRE 279,016 2,389 100.00

PHILIPPONNAT LES DOMAINES ASSOCIES 240,737 -61,489 99.62

PHILIPPONNAT SCEA 1,522,073 178,118 100.00

Vignobles Alexandre BONNET 1,842,868 500,360 100.00

Pressoirs Alexandre BONNET 702,566 131,899 100.00

Maison Alexandre BONNET 1,213,530 864,326 100.00

SCI VAL RONCEUX 648,000 54,614 100.00

SCI DES VAUCELLES 16,784 -1,774 100.00

TOTAL 51,778,232 7,387,499



IV.- Comparability. BCC’s accounts were closed at December 31st, 2004 in line with the same methods as those applied previously. There has not been any change in scope. There is nothing to prevent comparison from one financial year to the next. V. – Change in accounts for fixed assets. 1. Intangible fixed assets:

Dec 31, 03 Disposal or

decommissioning

Acquisition Depreciation Dec 31, 04

€


Start-up costs 0 0

Other intangible fixed assets 2,226,520 -25,397 16,846 2,217,969

Depreciation -222,073 25,397 -51,927 -248,603

Depreciation of start-up costs 0 0

Total 2,645,946 0 16,846 -51,927 2,610,865 2. Acquisition goodwill: 2.0. Intangible acquisition goodwill:

Dec 31, 03 Acquisition ** Depreciation Reversal Dec 31, 04

€

Net unallocated acquisition goodwill 5,434,339 129,000 -436,628 5,126,711

Goodwill allocated to brands* 696,692 696,692

Total 6,131,031 129,000 -436,628 0 5,823,403

(*)This only concerns the Boizel brand. (**) This increase is further to the adjustment in acquisition goodwill linked to the securities of Philipponnat Les Domaines Associés. 2.01. Tangible acquisition goodwill:

Dec 31, 03 Dec 31, 04 Reversal Dec 31, 04

€

* Acquisition goodwill allocated to vineyards and land 16,273,933 16,273,933

Goodwill allocated to buildings (net) 555,803 -38,112 517,691

Goodwill allocated to materials 0 0 0

Total 16,829,736 -38,112 0 16,791,624

(*)This concerns the vineyards and vine plots of Philipponnat and Vignobles Alexandre Bonnet. On account of the change in the market value of vines and vine plots, this goodwill must not be subject to any exceptional depreciation. 3. Tangible fixed assets. The fixed assets recorded on the balance sheet can be broken down as follows: - Gross values:



Dec 31, 03 Acquisitions Disposals,

transfers and decommissioning

Dec 31, 04

€ - Pure fixed assets: Land and plantation costs 12,212,323 292,650 0 12,504,973 Buildings 11,190,165 1,320,884 -112,778 12,398,271 Buildings, fixtures and fittings 2,351,178 354,770 -10,888 2,695,060 Facilities, plant and equipment 6,080,977 1,387,528 -54,999 7,413,507 General facilities 653,397 6,628 -130,651 529,374 Transport equipment 228,508 26,749 0 255,257 Office furniture 554,604 68,846 -57,294 566,156 Fixed assets under construction 176,575 1,665,946 -1,518,120 324,401 33,447,727 5,124,000 -1,884,729 36,686,998 - Restated financial and other leases(1) 3,539,130 0 -56,339 3,482,791 Gross total 36,986,857 5,124,000 -1,941,068 40,169,789

Depreciation can be broken down as follows: Dec 31, 03 Allocation Reversal Dec 31, 04

€ - Pure fixed assets Land and plantation costs 1,084,459 77,494 1,161,953 Buildings 3,955,347 543,130 -81,807 4,416,670 Buildings, fixtures and fittings 1,307,129 211,357 -10,888 1,507,598 Facilities, plant and equipment 5,615,743 353,376 -54,554 5,914,565 General facilities 581,535 18,880 -130,651 469,764 Transport equipment 194,863 17,918 0 212,781 Office furniture 447,973 44,320 -55,726 436,568

13,187,049 1,266,474 -333,625 14,119,898 - Restated financial and other leases(1) 2,758,305 412,115 -56,350 3,114,070 Total depreciation 15,945,354 1,678,589 -389,975 17,233,968 Net balance sheet values 21,041,503 22,935,821

(1) Cf. details hereafter. 4. Financial and other leases:

Gross

values at Jan 1, 04

Deprec at Jan 1,

04

Financial leases

taken out in 2004

Financial and other


Deprec on financial and other


Gross values at Dec 31,

04

€

Champagne BOIZEL equipment 236,255 207,954 40,012 40,012 196,243 Champagne CHANOINE FRERES equipment

2,380,293 1,819,705 16,327 16,327 2,363,966

Champagne PHILIPPONNAT equipment 213,262 128,267 213,262

DE VENOGE equipment 152,066 144,176 152,066

Vignobles A. BONNET equipment 152,450 136,499 152,450

Pressoirs A. BONNET equipment 336,269 277,484 336,269

Maison A.BONNET equipment 68,535 44,219 68,535

TOTAL 3,539,130 2,758,304 0 56,339 56,339 3,482,791



Gross values at Dec 31, 04

Sundry differences

Allocation for year

Total deprec

Net book value at Dec 31, 04

€

Champagne BOIZEL equipment 196,243 17,897 185,839 10,404 Champagne CHANOINE FRERES equipment

2,363,966 172 283,996 2,087,546 276,420

Champagne PHILIPPONNAT equipment 213,262 35,965 164,232 49,030

DE VENOGE equipment 152,066 7,890 152,066 0

Vignobles A. BONNET equipment 152,450 3 13,384 149,886 2,564

Pressoirs A. BONNET equipment 336,269 -186 38,883 316,181 20,088

Maison A.BONNET equipment 68,535 14,101 58,320 10,215

TOTAL 3,482,791 -11 412,115 3,114,069 368,722

Shareholders’ equity. The share capital has remained unchanged, made up of 1,127,918 shares with a par value of 10 euros, representing a total of 11,279,180 euros. The change in shareholders’ equity can be broken down as follows: Dec 31, 04 Dec 31, 03

€’000

Shareholders’ equity at year-start 42,835 40,069

Dividends paid -1,129 -790

Earnings for the year 5,595 3,556

Shareholders’ equity at year-end 47,301 42,835

MINORITY INTERESTS. Dec 31, 04 Dec 31, 03

€’000

Minority interests at year-start 4 348

Dividends paid 0 -13

Change in scope 0 -332

Earnings at year-end 1 1

Minority interests at year-end 5 4

PROVISION FOR CONTINGENCIES AND CHARGES. Dec 31, 04 Dec 31, 03 € Provision for contingencies and charges 1,829,352 1,820,375 Provision for end-of-career benefits 539,953 428,009 TOTAL 2,369,305 2,248,384 The provision for contingencies and charges primarily covers the risks linked to the company Bricout filing for bankruptcy for 1,752,710.74 euros. This risk was fully provisioned for its total amount in 2003.



BORROWINGS AND FINANCIAL DEBT. Dec 31, 04 Dec 31, 03

€

Borrowings linked to financing for investments 13,847,839 16,321,296

Cash credits financing inventories 70,353,905 65,491,845

Borrowings from the restatement of financial and other leases 368,722 780,825


TOTAL 91,545,233 89,465,875

The borrowings are based on variable rates and indexed on the three-month Euribor. The company has a price hedging policy for around 50% of its average outstanding financial debt. Virtually all of the borrowings are combined with real sureties, based on collateral, joint and several sureties, mortgage promises or warrants for credit facilities used to finance inventories.

< 1 year 1 to 5 years > 5 years Total

€

Borrowings linked to investments 4,030,103 8,785,401 1,032,335 13,847,839

Cash credits for inventories 23,484,783 46,869,122 0 70,353,905

Borrowings linked to financial and other leases 219,182 149,541 368,722


TOTAL 34,708,835 55,804,064 1,032,335 91,545,233

LONG-TERM FINANCIAL INVESTMENTS (not fully consolidated). Dec 31, 04 Dec 31, 03 Equity interest over 50% Equity interest from 20 to 50% 15,245 15,245 Equity interest under 20% TOTAL 15,245 15,245 TRADE RECEIVABLES. Dec 31, 04 Dec 31, 03 € Trade receivables net of depreciation 26,340,213 20,940,127 Solely comprising receivables due in under one year Other receivables and prepaid expenses. Dec 31, 04 Dec 31, 03 € Other receivables (including deferred company income tax) 4,089,238 5,949,187 Prepaid expenses 1,108,261 1,003,470 TOTAL 5,197,499 6,952,657 - Other receivables primarily represents receivables from the French treasury:



Deductible VAT: 1,623,608 euros - Prepaid expenses primarily represent expenses on blocked wines, in addition to pre-booked interest;

Dec 31, 04 Dec 31, 03

€

Receivables for deferred company income tax 874,530 751,432 This amount primarily concerns company income tax on restated stored profits, representing 517,452 euros LIABILITY ACCRUALS. Dec 31, 04 Dec 31, 03 € Invoices to be received 9,995,494 5,671,791 Other payables 2,491,069 2,261,013 TOTAL 12,486,563 7,932,804 Dec 31, 04 Dec 31, 03 € Trade payables and bills payable 26,904,436 31,531,825 Trade payables are all due in under one year. NON-RECURRING INCOME AND EXPENSES. Dec 31, 04 Dec 31, 03 € Non-recurring income on management operations 202,644 152,701 Non-recurring income on capital operations 253,236 1,026,166 Reversal of provisions and transferred expenses 3,694 Non-recurring expenses on management operations -135,509 -42,383 Non-recurring expenses on capital operations -282,985 -88,976 Exceptional provisions 0 -1,752,711 Exceptional depreciation -474,740 -417,065 Reversal of provisions and depreciation TOTAL -433,660 -1,122,268 The exceptional depreciation corresponds to the allocations for acquisition goodwill. COMPANY INCOME TAX. Dec 31, 04 Dec 31, 03 € Tax on income from ordinary operations 3,484,653 2,661,529 Tax on non-recurring and deferred income -123,440 -417,890 TOTAL 3,361,213 2,243,639



All the companies are consolidated for tax purposes, with the exception of Philipponnat Les Domaines Associés. Under the consolidation agreement, each consolidated subsidiary records its tax as if it was not consolidated. In 2004, the company income tax rate represented 35.18% of net income before tax and the depreciation of acquisition goodwill, compared with 35.05% in 2003. Restated timing differences primarily concern the following: - Social solidarity contribution; - Paid leave provision for certain companies. Dec 31, 04 Dec 31, 03 € Tax losses and deferred depreciation for tax purposes

695,034 643,000

WORKFORCE Dec 31, 04 Dec 31, 03

Managers and related 31 29 Operatives and employees 100 86 Headcount excluding traveling sales reps 131 115

Traveling sales reps 8 8 Total headcount 139 123 COMMITMENTS GIVEN Dec 31, 04 Dec 31, 03 € Bills of exchange not due 4,690,510 807,088 TOTAL 4,690,510 807,088 Commitments relating to end-of-career benefits are recorded as provisions. Financial leases have been recorded under borrowings since January 1st, 2000. There are therefore no longer any commitments for these two items. For information on financial leases, refer to the section on borrowings and financial debt. OTHER COMMITMENTS GIVEN. Borrowings guaranteed with real sureties: Dec 31, 04 Dec 31, 03 € Pledging of securities 8,250,000 11,000,000 Pledging of equipment 438,077 1,943,043 Stock warrants 67,774,200 65,491,844 Mortgage and mortgage promise 5,226,037 3,334,851 TOTAL 81,688,314 81,769,738



SEGMENT INFORMATION Dec 31, 04 Dec 31, 03 € Sales of goods 56,794,998 42,635,462 Production sold: goods 33,264,509 35,707,177 Provision of services 1,178,599 1,364,954 TOTAL 91,238,106 79,707,593 Dec 31, 04 Dec 31, 03 € France revenues 55,360,176 50,176,968 Intra-community and export revenues 35,877,930 29,530,625 TOTAL 91,238,106 79,707,593 Impacts of IFRS on the presentation of the consolidated financial statements for 2004. Our company will be presenting its consolidated financial statements for 2005 under IFRS. The significant impacts for these standards on the balance sheet and income statement are presented below: - In terms of fixed assets and shareholders’ equity, the revaluation of vineyards (net of tax) is expected to result in an increase of around 5,030,000 euros. As such, our shareholders’ equity under IFRS would come to 52,330,000 euros, compared with 47,300,000 euros under current standards. Fixed assets, which totaled 48,245,000 euros, would represent 53,275,000 euros under IFRS; - Vineyard revaluations will be recorded by estimating the price per hectare of vines at between 500,000 and 600,000 euros depending on the vintages. This estimate corresponds to the lower bracket for the market. When the Group does not own plantations, a 70,000 euro reduction has been recorded per hectare. The revaluation has been corrected for unrealized tax at a rate of 34.2%; - Earnings under IFRS must no longer incorporate depreciation for unallocated acquisition goodwill. In this way, net income (Group share) under IFRS would come out at 6,031,000 euros, compared with 5,595,000 euros under current standards. There are no other significant modifications to report in terms of IFRS, and more specifically the grapes harvested from our own sites are valued at our cost price and not at the market price.



FUNDS FLOW STATEMENT Dec 31, 04 Dec 31, 03

€

LASTING RESOURCES

Cash flow from operations excluding non-Group interests 7,833,607 4,937,104

Earnings allocated to non-Group interests 1,481 -2,173

Capital increase (minority interests) 2,247

Increase in financial debt 13,286,510 8,156,527

Change in financial debt linked to financial leases 111,197

Change in financial debt linked to acquisitions

Income from disposal of fixed assets 3,236 1,026,166

Reduction in other long-term financial investments 48,699 Reversal of unallocated acquisition goodwill for SA Philipponnat

112,200

Sundry -2,677 7,146

21,170,856 14,350,414

STABLE RESOURCES

BCC dividends 1,127,918 789,543

Acquisition of fixed assets 3,622,726 1,527,760 Acquisition of fixed assets Philipponnat Les Domaines Associés (gross)

3,422

Acquisition of equipment under financial leases 111,197

Repayment of borrowings and debt with credit institutions 10,897,907 7,439,460

New acquisition goodwill

Repayment of borrowings for fixed assets under financial leases 412,103 657,168

Dividends for non-Group interests 2,486 12,514

Reduction in non-Group interests linked to the buyback of actions SA PHILIPPONNAT

331,000

Increase in acquisition goodwill for Philipponnat Les Domaines Associés

129,000

16,192,140 10,872,064

Change in net working capital

NET RESOURCES 4,978,716 3,478,350



CASH-FLOW STATEMENT Dec 31, 04 Dec 31, 03

€

CHANGES ON OPERATIONS

Inventories and work-in-progress 2,899,018 8,873,235

Trade receivables 5,400,086 560,250

Other receivables -764,920 2,620,982

Trade payables 388,412 -5,039,603

Tax and social security liabilities -1,063,736 -1,096,164

Other liabilities (including provisions) -1,263,869 -2,691,686 WORKING CAPITAL FOR THE YEAR

Requirements 5,594,991 3,227,014 Change in working capital 5,594,991 3,227,014

CHANGES IN CASH

Change in cash and cash equivalents -513,416 584,906

Change in bank borrowings and credit bank balances -102,859 -333,570

CHANGES IN CASH -616,275 251,336

USE OF CHANGE IN TOTAL NET WORKING CAPITAL

NET RESOURCES 4,978,716 3,478,350



B. Corporate financial statements. I.- Balance sheet at December 31st, 2004 (€) Assets Dec 31, 04 Dec 31, 03 Gross Depreciation Net Net

€

Equity interests 43,363,235 43,363,235 43,363,235

Other tangible fixed assets 4,161 3,758 403 567

Fixed assets 43,367,396 3,758 43,363,638 43,363,802

Advances on orders

Trade receivables and related

Other receivables 3,534,635 3,534,635 5,129,067

Cash and cash equivalents 57,391 57,391 147,150

Current assets 3,592,026 3,592,026 5,276,217

Prepaid expenses 40,706 40,706 56,129

Total assets 47,000,128 3,758 46,996,370 48,696,148

Liabilities Dec 31, 04 Dec 31, 03 € Share capital 11,279,180 11,279,180 Issue premium 1,750,602 1,750,602 Legal reserve 1,127,918 958,496 Statutory reserve 14,220 496 12,743,677 Earnings 3,131,847 2,774,159 Shareholders’ equity 31,510,043 29,506,114 Borrowings and debt with credit institutions 8,278,831 11,001,380 Sundry borrowings and financial debt 5,643,083 7,266,871 Trade payables and related 56,579 36,582 Tax and social security liabilities 1,496,257 883,570 Other liabilities 11,577 1,631 Total debt 15,486,327 19,190,034 Total liabilities 46,996,370 48,696,148 Total year with cents 46,996,369.80 48,696,147.88



II. - Income statement. Year ended Year ended

Dec 31, 04 Dec 31, 03

France Export Total

€

Production sold: services 1,240,000 1,240,000 1,340,000

Net revenues 1,240,000 1,340,000

Reversal of depreciation/transferred expenses 731 195,142

Other income 2 1

Total operating income 1,240,733 1,535,143

Other expenses and external expenses 173,225 380,183

Tax and related payments 7,720 9,635

Salaries and wages 563,314 427,271

Payroll taxes 219,439 165,169

Depreciation 164 164

Other expenses 6 168

Total operating expenses 963,868 982,590

EBIT 276,865 552,553

Financial income from equity interests 3,241,804 2,809,713

Other interest and related income 145,477 276,422

Net income on disposal of marketable securities

Total financial income 3,387,281 3,086,135 Interest and related expenses 465,326 807,560

Total financial expenses 465,326 807,560

Financial result 2,921,955 2,278,575 Income from ordinary operations before tax 3,198,820 2,831,128

Non-recurring income on management operations

Non-recurring income on capital operations

Total non-recurring income 0 0 Non-recurring expenses on management operations

Non-recurring expenses on capital operations

Total non-recurring expenses 0 0 Non-recurring income/loss 0 0

Company income tax 66,973 56,969

Total income 4,628,014 4,621,278 Total expenses 1,496,167 1,847,119 NET INCOME 3,131,847 2,774,159



III. – Notes to the corporate financial statements. I. – Presentation of the business. Boizel Chanoine Champagne is a holding company. Given that the Group’s three managers have been paid by the holding company since October 1st, 1996, it oversees all of the subsidiaries specialized in producing and marketing champagnes. II. – Accounting principles. The corporate financial statements are drawn up in accordance with the legal and regulatory provisions in force in France (Articles 9 and 11) of the French commercial code – Decree 83-1020 of November 29th,1983). 2.1. General principles. Generally accepted accounting principles have been applied in accordance with the principle of conservatism and the following basic assumptions: — Continuous operations; — Consistent methods; — Independent financial years, And in accordance with the rules for presenting annual financial statements. The basic method retained for valuing the various elements recorded in the accounts is the historical cost method. 2.2. Main methods used: — Long-term financial investments: long-term financial investments are valued at their acquisition cost or contribution value. When the inventory value of an equity interest is lower than its cost price, a provision for impairment is recorded for the amount of the difference. The inventory value of an equity interest corresponds to its going concern value, which is determined based on the net position, corrected net accounting assets, yield value and the general outlook for development. — Receivables and payables: accounts receivable and payable have been valued at their nominal value. A provision for impairment is recorded when the inventory value is lower than the book value. — Non-recurring income and expenses: non-recurring income and expenses factor in not only elements that are not linked to the company’s normal activity, but also those of an exceptional nature in terms of their amount. — Note on the comparability of accounts: the presentation of the annual financial statements and the valuation methods retained for this year are the same as the previous year. III. – Notes on the corporate balance sheet. 3.1. Intangible fixed assets. No changes. 3.2. Tangible fixed assets (€):

Gross value Acquisition Gross value

Dec 31, 03 or contribution Dec 31, 04

4,161 0 4,161

Depreciation Allocation Depreciation 3,594 164 3,758



3.3. Long-term financial investments: - Long-term financial investments can be broken down as follows: Equity securities Dec 31, 03 Acquisition Reduction Dec 31, 04

or contribution

€ SA Boizel shares 5,762,020 5,762,020 SA Chanoine Frères shares 2,200,420 2,200,420 SA Philipponnat shares 9,477,783 9,477,783 SAS De Venoge shares 1,251,664 1,251,664 SAS Charmoy shares 24,153,056 24,153,056 SAS CGV shares 518,292 518,292 43,363,235 43,363,235 No provisions have been recorded on equity securities at December 31st, 2004. The equity interest in the holding company SAS Charmoy represents an indirect 100% interest in the following companies: – SAS Maison Alexandre Bonnet, champagne merchant; – SAS Vignobles Alexandre Bonnet, company operating a champagne vineyard; – SARL Pressoirs Alexandre Bonnet, pressing company; – Société civile du Val Ronceux, AOC vineyard owner; – Société civile des Vaucelles, owner of building land. The financial information and results for the subsidiaries and sub-subsidiaries are presented below: % Shareholders'

Equity

interests Capital equity before

earnings for 2004

€ Subsidiaries Champagne Boizel 99.98 6,468,000 6,869,353 Chanoine Frères 99.95 3,060,000 3,696,845 Champagne Philipponnat 100.00 12,430 460 15,022,777 De Venoge 99.98 1,000,000 1,943,099 * Charmoy 100.00 16,500,000 17,104,425 CGV 99.60 300,000 437,511 Sub-subsidiaries Sodismar Champagne 99.98 234,675 238,648 Rogge 50.00 10,000 23,391 Abel Lepitre 100.00 250,000 279,016 SCEA Philipponnat 100.00 1,440,000 1,522,073 Philipponnat Les Domaines Associés

99.62 460,000 240,737

*Maison Alexandre Bonnet 100.00 1,000,000 1,213,530 * Vignobles Alexandre Bonnet 100.00 1,600,000 1,842,868 *Pressoirs Alexandre Bonnet 100.00 79,888 702,566 SCI Val Ronceux 100.00 648,000 648,000 SCI DES Vaucelles 100.00 16,784 16,784



Revenues Earnings Current Dec 31, 04 Dec 31, 04 accounts € Subsidiaries SA Boizel 15,214,968 1,503,703 674,719 Cr SA Chanoine Frères 44,029,281 1,746,332 911,344 Dr SA Philipponnat 8,391,744 541,286 1,219,637 Cr SAS de Venoge 8,520,795 584,755 1,352,459 Cr *SAS Charmoy 0 1,204,150 13,845 Dr SAS CGV 15,756,636 140,458 81,478 Dr Sub-subsidiaries SAS Sodismar Champagne 0 101 0 Dr SARL Rogge 87,553 18,360 SAS Abel Lepitre 506,974 2,389 1,297 Dr SA Philipponnat Les Domaines Associés 4,171,299 -61,745 238 Dr SCEA Philipponnat 297,183 178,126 * SAS Maison A. Bonnet 16,325,865 864,326 162,783 Cr * SAS Vignobles A. Bonnet 3,121,093 500,360 273,675 Dr * SARL Pressoirs A. Bonnet 679,393 131,899 87,627 Dr SCI Val Ronceux 0 54,614 SCI DES Vaucelles 0 -1,774 – Guarantees on affiliated companies: Guarantee on an ageing credit facility for De Venoge totaling 2,700,000 euros. Joint and several guarantee on a construction financing loan and on an ageing credit facility for Chanoine Frères totaling 1,797,236 euros. Guarantee on an equipment loan for Vignobles Alexandre Bonnet totaling 406,110 euros. 3.4. Other receivables. Other receivables can be broken down as follows: Dec 31, 04 Dec 31, 03 € State: company income tax 0 0 State: VAT 1,033 2,717 Subsidiary current accounts 3,388,125 4,849,928 Revenue accruals 145,477 276,422 Sundry 0 0 3,534,635 5,129,067 3.5. Shareholders’ equity. The share capital is made up of 1,127,918 shares with a par value of 10 euros, representing a total of 11,279,180 euros.



Changes in shareholders’ equity over the year are presented below: Amount Allocation 2004 Capital Amount Dec 31, 03 2004 OGM* Earnings increase Dec 31, 04 € Capital 11,279,180 11,279,180 Issue premium 1,750,602 1,750,602 Legal reserve 958,496 169,422 1,127,918 Contractual reserve 12,743,677 1,476,818 14,220,495 Earnings 2,774,159 -2,774,159 3,131,847 3,131,847 29,506,114 -1,127,919 3,131,847 31,510,042 * OGM: ordinary general meeting 3.6. Borrowings and financial debt: Amount < 1 year > 1 year > 5 years Dec 31, 04 < 5 years € Borrowings and financial debt 8,250,000 2,750,000 5,500,000 0 Accrued interest 0 0 Overdrafts 28,831 28,831 8,278,831 2,778,831 5,500,000 0 Financial debt is guaranteed with collateral: 1,078,005 SAS Charmoy shares for 8,250,000 euros. The 5,643,083 euros in sundry financial debt corresponds to subsidiaries’ current payables as well as interest on subsidiaries’ current payables. 3.7. Tax and social security liabilities. These liabilities primarily correspond to bonuses to be paid, social security contributions for Q4 2004, tax on wages for the year and the company income tax balance. IV. – Notes on the income statement. 4.1. Revenues. Revenues are exclusively generated through the provision of services for subsidiaries.

Year ended Year ended Dec 31, 04 Dec 31, 03 1,240,000 1,340,000

4.2. Financial income:

Year

ended Year

ended Dec 31, 04 Dec 31, 03 € BOIZEL dividends 808,290 461,880 CHANOINE dividends 458,745 688,118 PHILIPPONNAT dividends 870,118 511,502 CHARMOY dividends 970,200 1,078,000 CGV dividends 134,451 70,213 Interest invoiced to subsidiaries 145,477 276,422 3,387,281 3,086,135



4.3. Non-recurring income and expenses. NA. 4.4. Company income tax. The balance corresponds to tax linked to BCC’s taxable profit. Under the consolidation agreement, each subsidiary records its tax as if it was not consolidated. The parent company records the tax credit linked to the losses of certain consolidated subsidiaries. At December 31st, 2004, all the consolidated subsidiaries recorded profits, with company income tax calculated at a rate of 35.18%, factoring in the 3% contribution on profits and the 3.3% social security contribution. V. – Other elements given. 5.1. Increase and reduction of future tax liabilities. NA (no tax losses to be carried forward). 5.2. Executive compensation. Executive compensation information is not disclosed because this would indirectly equate to divulging individual compensation data. 5.3. Headcount. The headcount at December 31st, 2004 was three. 5.4. Commitments given: Pledging of Charmoy shares for guarantee 8,250,000 euros Guarantee on behalf of De Venoge 2,700,000 euros Guarantee on behalf of Chanoine Frères 1,797,236 euros Guarantee on behalf of Vignobles Alexandre Bonnet 406,110 euros 13,153,346 euros



4.7. CORPORATE FINANCIAL STATEMENTS FOR THE HOLDING COMPANY 4.7.1. Corporate financial statements at December 31st, 2006 and 2005 Balance sheet: assets Dec 31, 06 Dec 31, 05 Gross Depreciation Net Net € Other tangible fixed assets 4,161 4,086 75 239 Equity interests 166,078,226 166,078,226 43,363,235 Fixed assets 166,082,387 4,086 166,078,301 43,363,473 Trade receivables and related Other receivables 10,503,977 10,503,977 7,494,928 Cash and cash equivalents 714,029 714,029 588,863 Current assets 11,218,006 0 11,218,006 8,083,791 Prepaid expenses 23,919 23,919 29,902 Total assets 177,324,312 4,086 177,320,225 51,477,166 Balance sheet: liabilities Dec 31, 06 Dec 31, 05 € Share capital 22,958,360 11,369,180 Issue premium 2,546,202 2,108,622 Legal reserve 1,136,918 1,127,918 Statutory reserves 6,487,018 15,886,049 Earnings 4,783,379 3,578,979 Shareholders’ equity 37,911,877 34,070,748 Convertible bonds 22,700,000

Borrowings and debt with credit institutions 103,164,900 5,500,000

Sundry borrowings and financial debt 12,780,295 10,083,862 Trade payables and related 130,741 694,629 Tax and social security liabilities 608,186 1,106,559 Other liabilities 24,227 21,368 Total debt 139,408,349 17,406,418 Total liabilities 177,320,225 51,477,166 Total year with cents 177,320,225.10 51,477,165.90



Income statement Dec 31, 06 Dec 31, 05 France Export Total € Production sold: services 2,118,159 2,118,159 1,160,000 Net revenues 2,118,159 1,160,000 Reversal of depreciation/transferred expenses Other income 14 9,880 Total operating income 2,118,173 1,169,880 Other expenses and external expenses 446,365 868,231

Tax and related payments 20,330 11,766 Salaries and wages 650,000 604,518 Payroll taxes 218,064 239,537 Depreciation 164 164 Other expenses 22,544 15,013 Total operating expenses 1,357,467 1,739,229

EBIT 760,706 -569,349

Financial income from equity interests 6,369,331 4,235,892 Other interest and related income 193,841 57,567

Net income on disposal of marketable securities Total financial income 6,563,172 4,293,459

Interest and related expenses 3,206,838 362,740 Total financial expenses 3,206,838 362,740

Financial result 3,356,334 3,930,719

Income from ordinary operations before tax 4,117,040 3,361,370

Non-recurring income on management operations Non-recurring income on capital operations Total non-recurring income. 0 0

Non-recurring expenses on management operations 771 Non-recurring expenses on capital operations Total non-recurring expenses 771 0

Non-recurring income/loss -771 0

Company income tax -667,110 -217,609

Total income 8,681,345 5,463,339 Total expenses 3,897,966 1,884,360

NET INCOME 4,783,379 3,578,979



4.7.2. Notes to the corporate financial statements at December 31st, 2006 A/ Presentation of the business BOIZEL CHANOINE CHAMPAGNE is a holding company. The Group’s three managers have been paid by the holding company since October 1st, 1996. It oversees all of the subsidiaries specialized in producing and marketing champagnes. B/ Accounting principles The corporate financial statements are drawn up in accordance with the legal and regulatory provisions in force in France (Articles 9 and 11) of the French commercial code – Decree 83-1020 of November 29th, 1983. B-1- General principles. Generally accepted accounting principles have been applied in accordance with the principle of conservatism and the following basic assumptions:

− Continuous operations − Consistent methods − Independent financial years − And in accordance with the rules for presenting annual financial statements.

The basic method retained for valuing the various elements recorded in the accounts is the historical cost method. Acquisition costs for tangible and intangible fixed assets are recorded under expenses in the same way as any financial expenses. B-2 - Main methods used: Long-term financial investments: long-term financial investments are valued at their acquisition cost or contribution value. When the inventory value of an equity interest is lower than its cost price, a provision for impairment is recorded for the amount of the difference. The inventory value of an equity interest corresponds to its going concern value, which is determined based on the net position, corrected net accounting assets, yield value and the general outlook for development. Receivables and payables: accounts receivable and payable have been valued at their nominal value. A provision for impairment is recorded when the inventory value is lower than the book value. Non-recurring income and expenses: non-recurring income and expenses factor in not only elements that are not linked to the company’s normal activity, but also those of an exceptional nature in terms of their amount. Note on the comparability of accounts: the presentation of the annual financial statements and the valuation methods retained for this year are the same as the previous year. C/ Notes on the corporate balance sheet C-1- Intangible fixed assets: no changes



C-2- Tangible fixed assets €’000

Gross value Acquisition Gross value Dec 31, 05 or contribution Dec 31, 06

4,161 0 4,161

Depreciation Allocation Depreciation

3922 164 4086 The depreciation schedules previously retained are consistent with the real useful lives for the various assets. The Group has therefore not made any changes to its depreciation method. C-3- Long-term financial investments Long-term financial investments (€)can be broken down as follows:

Equity securities Dec 31, 05 Acquisition or contribution Reduction Dec 31, 06

[€’000] SA BOIZEL shares 5,762 5,762 SA CHANOINE FRERES shares 2,200 2,200 SA PHILIPPONNAT shares 9,478 9,478 SAS DE VENOGE shares 1,252 1,252 SAS CHARMOY shares 24,153 24,153 SAS CGV shares 518 518 SA LANSON International shares 122,715 122,715 Total 43,363 122,715 166,078

No provisions have been recorded on equity securities at December 31st, 2006. The equity interest in the holding company SAS CHARMOY represents an indirect 100% interest in the following companies: - SAS Maison ALEXANDRE BONNET, champagne merchant, - SAS Vignobles ALEXANDRE BONNET, company operating a champagne vineyard, - SARL Pressoirs ALEXANDRE BONNET, pressing company, - Société civile du VAL RONCEUX, AOC vineyard owner, - Société civile DES VAUCELLES, owner of building land. The equity interest in SA Maison BURTIN (formerly LANSON International), a champagne wine merchant and holding company, represents an indirect 100% interest in the following companies: - SA Champagne LANSON, champagne wine merchant. - Société Espace Marne et Champagne - SNC ALFRED ROTHSCHILD - SA LANSON International Diffusion - LANSON International America Inc - LANSON International UK Limited - M.C.D. Deutchland Gmgh - LANSON International Switzerland And a 99.00% interest in: -Scea des Vins Français



The financial information and results for the subsidiaries and sub-subsidiaries are presented below: Shareholders' % Capital equity before

earnings for 2006

(€) Subsidiaries BOIZEL 99.97 6,468,000 euros 7,097,665 CHANOINE FRERES 99.94 3,060,000 euros 4,699,572 PHILIPPONNAT 99.99 12,430 460 euros 15,088,550 DE VENOGE 99.98 2,000,000 euros 2,769,825 CHARMOY 99.99 16,500,000 euros 17,278,018 CGV 99.59 300,000 euros 538,450 Maison BURTIN 99.99 30,260,250 euros 51,604,914 Sub-subsidiaries Sodismar Champagne (a) 99.98 234,675 euros 238,059 Rogge (a) 50.00 10,000 euros 61,535 Abel Lepitre (d) 100.00 250,000 euros 309,290 SCEA PHILIPPONNAT (c) 100.00 1,440,000 euros 1,579,459 PHILIPPONNAT Les Domaines Associés (c) 99.61 460,000 euros 401,085 Maison Alexandre BONNET (b) 99.85 1,500,000 euros 1,600,812 Vignobles Alexandre BONNET (b) 100.00 1,600,000 euros 1,994,942 Pressoirs Alexandre BONNET (b) 99.97 79,888 euros 847,849 Champagne LANSON (e) 100.00 59,000,000 euros 68,345,171 Espace Marne et Champagne (e) 100.00 3,400,000 euros 3,327,210 LANSON International Diffusion (e) 100.00 4,500 euros -46,636 LANSON International UK Limited (e) 100.00 100,000 GBP 4,227,832 LANSON International America Inc(e) 100.00 1 USD 66,585 SNC AR(e) 100.00 400 euros 400 LANSON International Switzerland (e) 100.00 700,000 CHF 65,220 Scea des Vins Français (e) 100.00 1,500 euros -7,636,173 SCI Val Ronceux(b) 99.98 648,000 648,000 SCI DES Vaucelles (b) 99.90 16,784 16,784

(a) Subsidiaries of BOIZEL (b) Subsidiaries of CHARMOY, the “ALEXANDRE BONNET Group” (c) Subsidiaries of CHAMPAGNE PHILIPPONNAT (d) Subsidiary of CHANOINE FRERES (e) Subsidiaries of Maison BURTIN.



Revenues Earnings Current Dec 31, 06 Dec 31, 06 accounts € Subsidiaries SA BOIZEL 19,933,390 2,385,034 -1,928,709 SA CHANOINE FRERES 35,558,283 2,095,703 4,491,072 SA PHILIPPONNAT 10,249,343 1,243,368 -3,114,109 SAS DE VENOGE 9,115,227 697,343 -2,002,621 SAS CHARMOY 0 1,540,717 1,810,470 SAS CGV 17,573,078 255,953 -475,275 Maison BURTIN 169,538,962 27,727,902 313,092 Sub-subsidiaries SAS Sodismar Champagne (a) 0 -94 -414 SARL Rogge (a) 73,808 -9,152 SAS Abel Lepitre (d) 467,807 18,232 -33,028 SA PHILIPPONNAT Les Domaines Associés (c) 4,927,736 387,238 0 SCEA PHILIPPONNAT (c) 346,160 206,287 SAS Maison A. BONNET(b) 20,048,718 818,248 -1,960,208 SAS Vignobles A. BONNET (b) 4,877,849 1,390,745 680,340 SARL Pressoirs A. BONNET (b) 551,956 72,848 15,369 Champagne LANSON(e) 94,739,989 5,728,731 74,970 Espace Marne et Champagne (e) 151,135 227,975 LANSON International Diffusion (e) 201,666,774 1,750,212 LANSON International UK Limited (e) 42,259,489 990,777 LANSON International America Inc (e) 745,044 9,942 SNC AR (e) 47,621,393 138,091 LANSON International Switzerland (e) 3,125,433 -2,041 Scea des Vins Français (e) 0 -82,016 SCI Val Ronceux(b) 0 66,012 SCI DES Vaucelles (b) 0 -5,331

Guarantees on affiliated companies - Guarantee on an ageing credit facility for

DE VENOGE totaling 1,800,000

euros

- Joint and several guarantee on a construction financing loan and on an ageing credit facility for CHANOINE FRERES totaling

682,329 euros

- Guarantee on an equipment loan for Vignobles Alexandre BONNET totaling

272,949 euros



C-4- Other receivables: they can be broken down as follows: Dec 31, 06 Dec 31, 05 € State: company income tax 0 0 State: VAT 2,047 10,115 Subsidiary current accounts 10,308,261 7,428,828 Revenue accruals 193,669 55,985 Sundry 0 0 10,503,977 7,494,928

C-5- Shareholders’ equity The share capital represents 22,958,360 euros, made up of 4,591,672 shares with a par value of 5 euros. The changes in shareholders’ equity over the year are presented below.

Amount Allocation 2006 Capital Amount

Dec 31, 05 2006 OGM* earnings increase Dec 31, 06 € Capital 11,369,180 11,589,180 22,958,360 Issue premium 2,108,622 437,580 2,546,202 Legal reserve 1,127,918 9,000 1,136,918 Contractual reserve 15,886,049 2,080,149 -11,479,180 6,487,018 Earnings 3,578,979 -3,578,979 4,783,379 4,783,379 34,070,748 -1,489,830 4,783,379 547,580 37,911,877

* OGM: ordinary general meeting C-6- Borrowings and financial debt Amount < 1 year Dec 31, 06

< 1 year > 5 years

> 5 years

€ Convertible bonds 22,700,000 22,700,000

22,700,000 22,700,000

Borrowings and financial debt 102,750,000 2,750,000 40,178,571 59,821,429

Accrued interest 408,332 408,332 Overdrafts 6,567 6,567

103,164,900 3,164,899 40,178,571 59,821,429 Financial debt is guaranteed with collateral based on: - 1,078,005 SAS CHARMOY shares for 2,750,000 euros - 15,130,125 SA Maison BURTIN shares for 50,000,000 euros - 12,330,990 SA Maison BURTIN shares for 50,000,000 euros The 12,780,295 euros in sundry financial debt corresponds to subsidiaries’ current payables as well as interest on subsidiaries’ current payables.



C-7- Tax and social security liabilities These liabilities primarily correspond to premiums to be paid, social security contributions for Q4 2006, taxes based on wages for the year and the company income tax balance. D/ Notes on the income statement D-1- Revenues: revenues are exclusively made up of services provided for subsidiaries.

Year ended Year ended Dec 31, 06 Dec 31, 05

€ 2,118,159 1,160,000

D-2- Financial income Year ended Year ended Dec 31, 06 Dec 31, 05 €

BOIZEL dividends 1,801,332 1,385,640 CHANOINE dividends 1,987,895 1,146,863 PHILIPPONNAT dividends 807,967 528,286 CHARMOY dividends 1,078,000 1,078,000 CGV dividends 194,207 97,104 DE VENOGE dividends 499,930 Interest invoiced to subsidiaries 193,665 55,985 Sundry financial income 176 1,583 Total 6,563,172 4,293,460

D-3- Non-recurring income and expenses NA. D-4- Company income tax The balance corresponds to tax linked to the taxable profits of BOIZEL CHANOINE CHAMPAGNE. Under the consolidation agreement, each subsidiary records its tax as if it was not consolidated. The parent company records the tax credit linked to the losses of certain consolidated subsidiaries. At December 31st, 2006, all the consolidated subsidiaries recorded profits, except for SAS Sodismar Champagne. Company income tax is calculated at the rate of 34.43%, factoring in the 3.3% social security contribution. E/ Other elements given E-1- Increase and reduction of future tax liabilities: NA (no tax losses to be carried forward). E-2- Headcount: the headcount at December 31st, 2006 was three.



E-3- Commitments given € Pledging of SA Maison BURTIN shares for guarantee 100,000,000 Pledging of CHARMOY shares for guarantee 2,750,000 Guarantee on behalf of DE VENOGE 1,800,000 Guarantee on behalf of CHANOINE FRERES 682,329 Guarantee on behalf of Vignobles Alexandre BONNET 272,949 105,505,278

4.8. FIVE-YEAR FINANCIAL SUMMARY

2006 2005 2004 2003 2002

Breakdown

I. Capital at year-end Share capital………………………. Number of ordinary shares existing…… Number of priority dividend shares (without voting rights) existing… Maximum number of future shares to be created .through conversion of bonds………. .through exercising of subscription rights………. II. Operations and earnings for the year Revenues (net of tax)………………. Earnings before tax, employee profit-sharing, depreciation and provisions………. Company income tax……………. Earnings after tax, employee profit-sharing, depreciation and provisions………. Distributed earnings ………………….. III. Earnings per share Earnings after tax and employee profit-sharing, but before depreciation and provisions………. Earnings after tax, employee profit-sharing, depreciation and provisions……….. Dividend per share IV. Staff Average salaried headcount over the year ………………….. Amount of payroll for the year…………………… Amount of sums paid for employee benefits for the year (social security, benefits, etc.)……………………

22,958,360 4,591,672

-

430,385

ND

2,118,159

4,116,433 - 667,110

4,783,379 1,512,572

1.04

1.04 0.33(1)

3

650,000

218,064

11,369,180 1,136,918

-

-

25,000

1,160,000

3,361,534 - 217,609

3,578,979 1,489,830

3.15

3.15 1.30

3

604,518

239,537

11,279,180 1,127,918

-

-

25,000

1,240,000

3,198,984 66,973

3,131,847 1,466,293

2.78

2.78 1.30

3

563,314

219,438

11,279,180 1,127,918

-

-

25,000

1,340,000

2,831,292 56,969

2,774,159 1,127,918

2.46

2.45 1.00

3

427,271

165,169

11,279,180 1,127,918

-

-

25,000

1,500,000

4,201,535 55,884

4,145,487 789,542

3.68

3.68 0.70

3

365,936

136,750

(1) Dividend proposed by the Board of Directors, with 0.33 euros per share, representing 1.32 euros before the stock

split on July 1st, 2006



4.9. STATUTORY AUDITORS’ REPORTS ON THE CORPORATE AND CONSOLIDATED

FINANCIAL STATEMENTS AT DECEMBER 31ST, 2006 This is a free translation into English of the statutory auditors’ reports signed and issued in French and is provided solely for the convenience of English speaking users. The statutory auditors’ report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the opinion on the statutory financial statements and includes an explanatory paragraph discussing the auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the statutory financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France 4.9.1. Statutory auditors’ report on the corporate financial statements for the year ended December 31st, 2006 To the Shareholders, Following our appointment as statutory auditor by your Shareholders’ meeting, we present our report, in respect of the year ended December 31st, 2006 on: - statutory audit of the annual financial statements of Boizel Chanoine Champagne, drawn up in euros, as attached to the present report, - justification of assessments, - specific verifications and information as required by law. The annual financial statements have been approved by the Board of Directors. Our role is to express an opinion on these financial statements based on our audit. I - OPINION ON THE ANNUAL FINANCIAL STATEMENTS We conducted our audit in accordance with the professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the annual financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements s. An audit also includes an assessment of the accounting principles and significant estimates made in the preparation of the financial statements, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for the opinion as expressed hereafter. In our opinion the annual financial statements give, a true and fair view of the company’ financial position and its assets and liabilities as at 31 December 2007 and of the results of its operation for the year then ended in accordance with generally accepted accounting principles in France. II – JUSTIFICATION OF OUR ASSESSMENTS In accordance with the provision of the Article L.823-9 of the French commercial law (code de commerce) relating to the justification of our assessments , we would like to draw your attention to the following points:

� Note B.2 relative to “long-term financial investments”, presenting the accounting rules and principles for the valuation of equity securities and related debt. In connection with our assessment of the accounting rules and



principles applied by the company, we have verified the abovementioned accounting methods and the information provided in the notes.

These assessments were made in the context of our audit of the annual financial statements taken as a whole and therefore contributed to the opinion we formed, which is expressed in the first part of our report. III – SPECIFIC VERIFICATIONS AND INFORMATION In accordance with professional standards applicable in France, we have also carried out specific verification required by law We have no matters to report regarding: - The fair presentation and consistency with the annual financial statements of the information provided within g the Board of Directors’ management report and documents addressed to the shareholders s. - The accuracy of the information given in the management report relative to compensation and benefits paid to corporate officers and the commitments made to them when they take up, finish or change functions or subsequently. - As required under French law, we have ensured that the various items of information relative to equity interests, control and the identity of holders of the capital and voting rights have been provided for you in the management report.

Reims, April 26th, 2007

The Statutory Auditors

For SA Philippe Venet et Associés For Grant Thornton French member of Grant Thornton International

Philippe Venet Guy Flochlay 4.9.2. Statutory auditors’ report on the consolidated financial statements for the year ended December 31st, 2006 To the Shareholders, Following our appointment as statutory auditors by our your Shareholders’ meeting we have audited the accompanying consolidated financial statements of BOIZEL CHANOINE CHAMPAGNE for the year ended December 31st, 2006. The consolidated financial statements have been approved by the Board of Directors. Our role is to express an opinion on these accounts based on our audit. 1 Opinion on the consolidated financial statements We conducted our audit in accordance with the professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance that the consolidated financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in



the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management; as well evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for the opinion expressed hereafter. In our opinion, the consolidated financial statements give a true and fair view at the assets and liabilities and of the financial position at the Group as at 31 December 2006 and of the results of its operation for the year then ended, in accordance with IFRS as adopted by the European Union. 2 Justification of our assessments In accordance with the requirements of Article L.823-9 of the French commercial Law (code de commerce) relating to the justification of our assessments, we bring to your attention the following points: As described in Notes A.9. and B.1. to the consolidated financial statements, the Boizel Chanoine Champagne Group carries out impairment tests as soon as there are any signs of a potential impairment in value, and at least once a year for intangible assets with an indefinite lifespan. We have reviewed the conditions for carrying out such impairment tests, the assumptions retained and the appropriate nature of the information given in the said financial statements. Note B3.1. to the consolidated financial statements presents the conditions retained for the revaluation of vineyards based on the market price per hectare. We have verified the suitable nature of the accounting methods indicated and their correct application. We have also checked the resulting estimates to ensure that they are reasonable. The assessments were made in the context of our audit of the consolidated financial statements taken as a whole and therefore contributed to the opinion expressed in the first part of this report. 3 Specific verifications In accordance with the professional standards applicable in France, we have also verified the information given in the Group management report. We have no matters to report as to its fair presentation and its constituency with the consolidated financial statements.

Reims, April 26th, 2007 The Statutory Auditors

Grant Thornton French member of Grant Thornton International Philippe Venet & Associés Guy Flochlay Philippe Venet Partner Partner 4.9.3. Review of pro forma information by the statutory auditors For the attention of: Mr. Bruno Paillard, Chairman and Chief Executive Officer In our capacity as statutory auditors, and in accordance with the provisions of the AMF’s general regulations, we have drawn up this report on Boizel Chanoine Champagne’s pro



forma information for the year ended December 31st, 2006, as included in Section 4.3. of its reference document for the year ended December 31st, 2006. This pro forma information has been prepared solely with a view to illustrating the impact that the operation to acquire Maison Burtin securities on March 22nd, 2006 could have had on the balance sheet and income statement of Boizel Chanoine Champagne at December 31st, 2006 if the operation was effective on January 1st, 2006. On account of its very nature, this information describes a hypothetical situation and is not necessarily representative of the financial position or performances that could have been seen if the operation or event had occurred on a date prior to its actual occurrence. This pro forma information has been drawn up under your responsibility in accordance with the provisions of EC regulation 809/2004 relative to pro forma information. It is our responsibility, under the terms required by Appendix II Point 7 in EC regulation 809/200, to express our findings on the suitable nature of the pro forma information drawn up. We have carried out our review in accordance with the professional standards applicable in France. This did not involve reviewing the underlying financial information used to draw up the pro forma information, but consisted primarily of verifying that the bases from which such pro information forma has been drawn up are consistent with the source documents as presented in the notes to the pro forma financial statements, examining the supporting elements justifying any pro forma restatements, and consulting with Boizel Chanoine Champagne’s management in order to collect the information and explanations that we deemed necessary. In our opinion: � The pro forma information has been drawn up in a suitable manner on the basis

indicated; � This basis is consistent with the issuer's accounting methods.

This report is issued solely with a view to the filing of the reference document in France, and may not be used in any other context.


Grant Thornton French member of Grant Thornton International Philippe Venet & Associés Guy Flochlay Philippe Venet Partner Partner

4.10. SPECIAL STATUTORY AUDITORS’ REPORT FOR THE YEAR ENDED DECEMBER 31ST, 2006 Dear Shareholders, In our capacity as your company’s statutory auditors, please find hereafter our report on regulated agreements.



Agreements and undertakings authorized during the year In accordance with Article L. 225-40 of the French commercial code, we have been informed of the various agreements and undertakings that have been authorized beforehand by your Board of Directors. We are not required to ascertain whether any other agreements or undertakings exist, but rather, to inform you, on the basis of the information provided to us, of the main terms and conditions of those that have been brought to our attention, without commenting on their validity or relevance. It is your responsibility, under the terms of Article 225-31 of the French commercial code, to evaluate the benefits of concluding such agreements or undertakings with a view to their approval. We conducted our audit in accordance with the professional standards applicable in France. These standards require that we plan and perform the audit to ensure that the data provided to us are consistent with the basic documents from which they have been taken. On September 26th, 2006, your Board of Directors authorized the following agreements: - Extension of the tax consolidation agreement to include Maison BURTIN and Champagne LANSON, and renewal of the previous agreement concluded with the other Group companies. This will apply for its new scope as of January 1st, 2007. - Extension of cash-flow hedging to include Maison BURTIN, Champagne LANSON, Scea des Vins Français, AR, Lanson International Diffusion, effective as of April 1st, 2006. This agreement provides for payments on advances at a rate that is as close as possible to the market rate. In this respect, the rate applicable in 2006 was 3.55%. These conditions have applied for the Group's other companies since January 1st, 2006.

� Administrative, financial, commercial, technical and legal assistance and management agreement.

The agreement defines your company's areas for intervention. The services provided are subject to payments calculated based on 0.9% of IFRS revenues, net of tax, inter-company disposals of materials and semi-finished products, and any destocking operations. This charge is applicable as of April 1st, 2006. It applies to all of the Group's companies, and notably for the first time to Maison BURTIN and Champagne LANSON, which have respectively been invoiced for the following amounts:

Maison BURTIN 489,105 euros Champagne LANSON 725,913 euros

These agreements concern Messrs Baijot and Paillard. Agreements and undertakings approved during previous years that continued to apply over the past year Furthermore, in accordance with the French commercial code, we were informed that the execution of the following agreements, which were approved in previous financial years, continued during the last financial year.



� Invoicing of holding costs to subsidiaries, with the following breakdown for 2006:

CHAMPAGNE BOIZEL 187,407 euros CHANOINE FRERES 360,633 euros CGV 40,000 euros CHAMPAGNE PHILIPPONNAT 117,802 euros DE VENOGE 81,683 euros MAISON ALEXANDRE BONNET 65,613 euros VIGNOBLES ALEXANDRE BONNET 50,000 euros

- Financial operations within the Group have been subject to interest at a rate of 3.55% per annum.

Reims, April 21st, 2007 The Statutory Auditors

For SA Philippe Venet et Associés For Grant Thornton French member of Grant Thornton International Philippe Venet Guy Flochlay

4.11. GROUP FEES FOR THE STATUTORY AUDITORS AND MEMBERS OF THEIR NETWORKS

Philippe Venet et associés

Grant Thornton COFIDAC Cogetec/Pierre Roux

Dec 31, 06 Dec 31, 05 Dec 31, 06 Dec 31, 05 Dec 31, 06 Dec 31, 05

€

BOIZEL CHANOINE CHAMPAGNE 35,000 15,600 35,000 15,600

Champagne Abel Lepitre 2,850 2,847

Champagne CHANOINE FRERES 10,630 10,627

Champenoise des Grands Vins 7,710 7,707

Champagne BOIZEL 10,600 10,327

Champagne DE VENOGE 7,150 6,997

Charmoy 2,800 2,197

Maison Alexandre BONNET 8,000 7,887

Vignobles Alexandre BONNET 5,000 4,997

Sodismar 960 1,002

Maison BURTIN 72,600

Champagne LANSON 60,000 72,000

LANSON International Diffusion 35,000 42,000

Espace Marne et Champagne 5,000 7,500

LANSON International UK

LANSON International Switzerland

SNC A.R

Champagne PHILIPPONNAT 12,337 9,267

PHILIPPONNAT Les Domaines Associés 6,535 6,517

Auditing subtotal 93,772 15,600 50,800 85,972 100,000 194,100

Other services

Total statutory auditor fees 93,772 15,600 50,800 85,972 100,000 194,100



KPMG THOMAS BDO

Dec 31, 06 Dec 31, 05 Dec 31, 06 Dec 31, 05 Dec 31, 06 Dec 31, 05

€

BOIZEL CHANOINE CHAMPAGNE

Champagne Abel Lepitre

Champagne CHANOINE FRERES

Champenoise des Grands Vins

Champagne BOIZEL

Champagne DE VENOGE

Charmoy

Maison Alexandre BONNET

Vignobles Alexandre BONNET

Sodismar

Maison BURTIN 95,000 80,900

Champagne LANSON

LANSON International Diffusion

Espace Marne et Champagne

LANSON International UK 38,407 32,902

LANSON International Switzerland

SNC A.R 5,800

Champagne PHILIPPONNAT PHILIPPONNAT Les Domaines Associés

Auditing subtotal 95,000 80,900 0 5,800 38,407 32,902

Other services 20,768

Total statutory auditor fees 95,000 80,900 0 5,800 59,175 32,902

5. Ordinary general meeting on June 1st, 2007 Boizel Chanoine Champagne


� # �� % � �� &� ��'��(�)* * +�

5.1. AGENDA The Board of Directors decided to convene the ordinary annual general meeting for 10 am on June 1st, 2007 at the registered office of Champagne LANSON, 66 rue de Courlancy, Reims 51100, France, with a view to deliberating on the following agenda: - Management report drawn up by the Board of Directors, - Group management report, - Statutory auditors’ report on the financial statements for the year and the consolidated financial statements, - Special Chairman of the Board of Directors’ report on internal control procedures as provided for under Article L. 225-37 of the French commercial code, - Special statutory auditors’ report with their observations on the Chairman’s report, - Special Board of Directors’ report on operations to subscribe for or purchase shares, - Approval of the financial statements for the year ended December 31st, 2006, the consolidated financial statements and the discharges for directors, - Appropriation of earnings for the year, - Special statutory auditors’ report on the agreements covered under Articles L. 225-38 et seq of the French commercial code and approval of such agreements, - Appointment of a new director, - Reappointment of the statutory auditors, - Setting of attendance allowances for the Board of Directors, - Powers to perform formalities.

5.2. Resolutions �

FIRST RESOLUTION The general meeting, after reviewing the Board of Directors’ management report, the Chairman of the Board of Directors’ report as per Article L. 225-37 of the French commercial code and the statutory auditors’ reports, approves the annual financial statements, namely the balance sheet, the income statement and the notes for the year ended December 31st, 2006, as presented, as well as the operations reflected in these accounts and summarized in these reports. It acknowledges that the accounts for the past year do not include any spending that may not be considered as deductible expenses under Articles 39-4 and 39-5 of the general French tax code. As such, it gives all of the directors discharge in respect of their management for the year ended December 31st, 2006.

��



SECOND RESOLUTION The general meeting, after reviewing the Group's management report and the statutory auditors’ report, approves the consolidated financial statements, as presented. THIRD RESOLUTION The general meeting approves the proposal put forward by the Board of Directors for the following appropriation of the 4,783,378.57 euros in profit for the year: Profit for the year: 4,783,378.57 euros Legal reserve: 1,158,918.00 euros Dividends for shareholders: 1,512,572.16 euros Representing 0.33 euros per share (excluding the 8,120 treasury shares, with 7,580 free shares awarded to staff) Balance: 2,111,888.41 euros In full to “other reserves”, which in this way represents 8,598,906.70 euros. Dividends will be paid out as of June 11th, 2007. As provided for under French law, the general meeting acknowledges that dividends paid out over the last three financial years were as follows:

Total payout Dividend per share* Allowance Avoir fiscal tax

credit Year ended

Dec 31, 03 1,127,918.00

euros 0.25 euros (1) - YES

Dec 31, 04 1,466,293.00

euros 0.325 euros (1) 50% -

Dec 31, 05 1,489,829.90

euros 0.325 euros (2) 40% -

(1) Calculated based on 1,136,918 shares (2) Calculated based on 1,146,023 shares * After the stock split on July 1st, 2006. FOURTH RESOLUTION The general meeting, after reviewing the special statutory auditors’ report on the agreements covered under Article L. 225-38 of the French commercial code and ruling on this report, successively approves each one of the said agreements. The general meeting acknowledges that the agreements concluded and authorized during previous years have continued to apply over the past year. FIFTH RESOLUTION The general meeting decides to appoint Mr. Pierre Lanson, residing at 92 Rue Perronet, Neuilly sur Seine 92200, France, as a new director, in addition to the current members of the Board of Directors, for a six-year period ending further to the ordinary general shareholders' meeting



convened in 2013 to approve the financial statements for the year ending December 31st, 2012. SIXTH RESOLUTION With the offices of Philippe VENET ET ASSOCIES, the incumbent statutory auditor, and Mrs. Geneviève Venet-Morel, the deputy statutory auditor, due to end further to this meeting, the general meeting decides to reappoint them for a further six-year period, i.e. through to the ordinary general meeting convened to approve the financial statements for the year ending December 31st, 2012. SEVENTH RESOLUTION The general meeting sets the total annual amount of attendance allowances for the Board of Directors at twenty two thousand euros (22,000 euros). This decision applies for the current year. EIGHTH RESOLUTION The general meeting gives full powers to bearers of copies of or extracts from these minutes to perform all legal formalities.

6. Other reports Boizel Chanoine Champagne


� ��

6.1. CHAIRMAN OF THE BOARD OF DIRECTORS’ REPORT ON CONDITIONS FOR THE

PREPARATION AND ORGANIZATION OF THE BOARD’S WORK AND THE INTERNAL CONTROL PROCEDURES PUT IN PLACE BY BOIZEL CHANOINE CHAMPAGNE Dear Shareholders, In addition to the management report drawn up by our Board of Directors, please find hereafter our special report on the conditions for the preparation and organization of the Board’s work and the internal control procedures put in place by the Company, in addition to any restrictions set by the Board of Directors on the Chief Executive Officer’s powers. I- PREPARATION AND ORGANIZATION OF THE BOARD'S WORK. 1.1. Board structure. Your Board of Directors is currently made up of eight members, all individuals, appointed for six-year terms of office:

• Bruno Paillard • Philippe Baijot • Evelyne Roques-Boizel • Christophe Roques • Marie Paillard • Serge Bonnet • Michel Shapira • Franck-Eric Puissochet

The members are selected for their expertise, their integrity, and their determination to factor in the interests of all shareholders. All the members have recognized experience and knowledge in the key fields for the company. Out of the eight members comprising your Board of Directors, four held paid positions in Group companies at December 31st, 2006. The Board has the following breakdown: � Independent directors: 2 � Directors appointed by staff: NA � Directors with a management function within the company or Group: 4 � Directors with a specific link with the company (family ties, economic ties): 2

In Sections 3.1.1 and 3.1.4, you will be able to find further details on the following: � List of directors at December 31st, 2006, with information on positions held in other

Group companies or outside of the Group; � End dates for the terms of office.

��



1.2. Organization of the Board's work. The Chairman organizes the work of the Board, whose operations are not governed by a set of bylaws on account of the fact that its meetings run smoothly. Nevertheless, the Board of Directors cannot rule out the possibility of putting such bylaws in place if this proves to be necessary in order to improve the directors' work and/or the Board's operations. In accordance with Article L. 225-238 of the French commercial code, the statutory auditors are invited to all of the Board meetings convened to review or approve the annual or interim financial statements. 1.3. Convening, frequency and participation for Board meetings. Under Clause 13 of the bylaws, the Board of Directors meets as convened by its Chairman, while directors representing at least one third of the Board's members may ask the Chairman to convene a session on a given agenda if the Board has not met for more than two months. Over the past year, our Board met 11 times. The following procedures are applied:

� Meetings convened in writing or orally for the directors (no works’ council). It is important to note that meetings may be convened orally and immediately if all the directors agree.

� Meetings convened in writing for the statutory auditors, � Attendance register signed at each meeting, � Minutes drawn up further to the Board session and approved at the following Board

meeting, � Participation rate of between 57 and 100%, averaging out at 84.82% over the year

ended December 31st, 2006. 1.4. Information for directors. In accordance with Article L 225-35 Section 3 of the French commercial code, the directors receive, insofar as possible before each meeting, all the documents and information required to actively participate in the decisions. They are also provided with all the important information concerning the Company on a regular basis. 1.5. Meetings held and decisions adopted. The Board’s meetings are held at Allée du Vignoble, Reims 51100, and chaired by the Chairman of the Board of Directors. The agendas for Board meetings have been as follows: January 2nd, 2006 - Management of the stock warrants exercised in 2005 January 11th, 2006 - Authorization to acquire an equity interest March 3rd, 2006 - Authorizations to take out loans March 9th, 2006 - Settlement of debt March 22nd, 2006 - Convertible bond issue



March 24th, 2006 - Review and approval of the corporate and consolidated financial statements at December 31st, 2005 � Appointment of a Deputy Chief Executive Officer

May 19th, 2006 - Distribution of attendance allowances June 27th, 2006 - Authorization to acquire securities - Adjustment to the redemption ratio September 26th, 2006 - Review of the company's position in H1 2006 October 25th, 2006 - Setting up of a liquidity agreement December 5th, 2006 - Awarding of bonuses to the managers 1.6. Assessment of the Board's operations Over the past year, the Board of Directors’ operations have not been subject to a formalized assessment since its meetings run smoothly. II- INTERNAL CONTROL PROCEDURES PUT IN PLACE BY THE COMPANY BOIZEL CHANOINE CHAMPAGNE is a holding company for the Group, defining the strategy for its development, as well as its commercial policy. It determines the communications strategies and is more specifically responsible for financial communications. It also manages the production of the corporate and consolidated financial statements for subsidiaries. In this respect, two agreements – one for management fees and the other for cash management – have been concluded between BOIZEL CHANOINE CHAMPAGNE and its subsidiaries with a view to optimizing the Group's financial management and managing risks as effectively as possible. This organization makes it possible to provide accurate and objective information for the directors and more generally the shareholders when reviewing the financial position and accounts. The internal control procedures in force within the Group are designed to:

- Ensure that management and operations are in line with the framework defined by the strategy and directions given for the Group’s activities by the general management team.

- Verify that the accounting, financial and management information provided to the company's corporate bodies faithfully reflects the Group's situation and activity.

The main objective for internal control is to prevent and effectively manage the risks resulting from the activities of the Group's operational subsidiaries, as well as the risks of errors or fraud, notably in terms of accounting and financial aspects. However, in the same way as any control system, it cannot provide any absolute guarantee that these risks will be entirely eliminated. The company and its subsidiaries have: � A general accounting system, � Budgetary forecasts, � Regular reports on accounting positions,



� A monthly dashboard, � Fire, civil liability, theft and credit insurance cover (France, Intra-community and Export).

Only one of the subsidiaries has taken out end-of-career benefit insurance. III- SPECIFIC HOLDING FUNCTIONS The holding company coordinates the Group's activity and ensures that its financial resources are in line with requirements. Drawing up corporate documents – balance sheet, income statement, notes This is partly outsourced to an accounting firm, which ensures the consistency and reliability of the accounting and financial information. The accounting records are reconciled with the payroll journals, payroll tax filings, VAT filings, documents for the public authorities and contracts. Tax filings and all legal affairs for the tax-consolidated Group are also outsourced. Drawing up of consolidated documents The consolidated financial statements are drawn up by an accounting firm, which ensures that the accounting treatments are exhaustive and that the corporate financial statements are consistent with the consolidated financial statements. Throughout the consolidation process, the statutory auditors are informed about the main accounting treatments, notably those related to IFRS. The statement presenting the change in consolidated shareholders’ equity makes it possible to determine the consistency and reliability of any consolidation-related restatements. The accounting firm checks the compliance of accounting rules with legal accounting requirements and the correct application of IFRS for the consolidated financial statements. When drawing up the accounts for 2006, an independent actuary was tasked to calculate the amount of provisions for end-of-career and mutual personal protection benefits, and a specialist in financial instruments was called on to ensure that our financial assets and liabilities were recorded correctly in accordance with IAS 32 and IAS 39. Control over subsidiaries BOIZEL CHANOINE CHAMPAGNE ensures that it obtains the general information and various reporting charts. It also ensures compliance with the various internal control rules in its subsidiaries. IV- MAIN PROCEDURES IN SUBSIDIARIES Sales The brand positioning and development policy is defined by the general management team, working closely with the subsidiaries' managers at all times. Each month, the company has various sales statistics for each subsidiary and each Champagne range. The sales are regularly reconciled with the mandatory cellar registers in order to ensure the exhaustive nature of the operations reported, compared with the budgetary forecasts each month.



Purchases, grapes and wine

Sourcing from the vineyard makes it possible to guarantee the replacement of outflows and the development of the various brands.

A percentage of the supplies come from vineyards run by the Group's subsidiaries (70 hectares). The supply contracts are signed by the subsidiaries' managers, and the general management team is provided with regular updates on the procurement policy. The impact of the price per kilo of grapes is factored in to budgetary forecasts in order to measure its consequences in terms of economic profitability for the various Houses. During regular inventory reviews, accounting operations are reconciled with the registers for products arriving in the cellars.

Inventory management This represents one of the essential assets for the company's operations. At their book value, inventories represent 54% of the total balance sheet. On a regular basis, the cellar managers or oenologists carry out stocktakings in order to ensure the accuracy of the inventories. Any sources of differences are analyzed by the subsidiaries' managers. In connection with the auditing of our annual financial statements, our statutory auditors regularly take part in stocktaking operations carried out within the Group. The accounting departments check the overall consistency of the inventories in order to validate the stocktaking in view of the movements recorded in the accounts (wine purchases, sales, reintegration, sugar melt, etc.). Inventories are not securitized, but warranted. Cash The functions for recording operations in the accounts and their payment are separated. Only the subsidiaries' managers have financial signatory authority. In certain subsidiaries, a dual signature system has been put in place. Each subsidiary manager puts their financing facilities in place, primarily linked to their working capital requirements, in line with their levels of stocks. The Group's management team ensures that the financing facilities put in place are in line with requirements and that financing costs are relevant. V- PERSONNEL Staff in French subsidiaries are primarily governed by the tripartite champagne wage bargaining agreement. A decentralized department oversees payroll and social security filings, which are partly outsourced. The company may call on legal advisors specializing in labor relations issues in order to look into specific points. In line with seasonal requirements, the company uses staff on temporary or fixed-term contracts, notably during harvest periods.



VI- EXCHANGE AND INTEREST RATE RISKS The majority of the BOIZEL CHANOINE CHAMPAGNE Group’s invoices are in euros, with the exception of the MAISON BURTIN subsidiary LANSON INTERNATIONAL UK LTD. The Group applies a cautious centralized, non-speculative management policy for its exchange positions. Within this framework, when it deems appropriate, the Group sets up simple forward hedging facilities that may not exceed 70% of its significant and "recurrent” positions. At the end of the financial year, there were no rate hedging financial instruments in place. VII- ACCOUNTING PROCEDURES AND INFORMATION SYSTEM Each subsidiary of a certain size has an independent IT system, suitable for managing the accounting system and handling commercial management aspects. These independent systems have been covered by an external IT audit, with satisfactory results. The various items are only recorded once the existence of the corresponding purchases or services has been verified. Clients and suppliers are monitored in additional accounting systems that are regularly checked, with client reminders sent out on a regular basis and disputes handled by a collection firm. At June 30th and at the end of the year, the financial statements are drawn up with the support of an accounting firm and are submitted to our statutory auditors for limited reviews and audits. VIII- MANAGEMENT Our forecasts are formalized in documents that are revised throughout the year. Revenues, sales volumes and average sales prices are compared against the budget each month for each one of our subsidiaries. IX- RESTRICTIONS SET BY THE BOARD OF DIRECTORS ON THE POWERS OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF BOIZEL CHANOINE CHAMPAGNE OR THE CHAIRMEN OF SUBSIDIARIES There are no specific restrictions on the powers of the various chairmen. However, it is important to note that certain undertakings, such as deposits on behalf of subsidiaries, mortgages and collateral-based loans are decided on by the Boards of Directors, and most of the simplified joint stock companies that are subsidiaries of BOIZEL CHANOINE CHAMPAGNE have a Board of Directors under their respective bylaws. X- AUDITING In 2006, the company called in external firms in order to audit:

� The IT system for the BURTIN/ LANSON subgroup � The insurance policies � The liabilities resulting from employee benefits � The correct application of financial instruments and their compliance with IAS

32 and IAS 39



XI- RESTRICTIONS ON THE POWERS OF THE CHIEF EXECUTIVE OFFICER Lastly, the Board of Directors has not set any specific restrictions on the powers of the Chief Executive Officer.

Reims March 15th, 2007 The Chairman of the Board of Directors�

6.2. STATUTORY AUDITORS’ REPORT ON INTERNAL CONTROL (ARTICLE L 225-235 OF

THE FRENCH COMMERCIAL CODE) Dear Shareholders, In our capacity as statutory auditors for Boizel Chanoine Champagne, and in accordance with the provisions of the last paragraph of Article L. 225 – 235 of the French commercial code, please find hereafter our report on the report drawn up by the Chairman of your company pursuant to the provisions of Article L. 225 – 37 of the French commercial code for the year ended December 31st, 2006. Under the responsibility of the Board of Directors, the management team is responsible for defining and implementing suitable and effective internal control procedures. The Chairman is responsible for drawing up a report notably on the conditions for preparing and organizing the Board of Directors’ work and the internal control procedures implemented within the company. Our responsibility is to give you our observations on the information and statements contained in the Chairman’s report concerning the internal control procedures relative to the production and processing of accounting and financial information. We conducted our audit in accordance with the professional standards applicable in France. These standards require that we plan and perform the audit to obtain reasonable assurance that the information given in the Chairman’s report is free from any material misstatements with regard to the internal control procedures applied when drawing up and processing accounting and financial information, notably: - Reviewing the objectives and general structure for internal control, as well as the internal control procedures relative to the drawing up and processing of accounting and financial information, as presented in the Chairman’s report, - Reviewing evidence supporting the information contained in the report on the Group’s management. On the basis of our work, we have no matters to report concerning the information given on the company’s internal control procedures relative to the production and processing of the accounting and financial information contained in the Chairman of the Board of Directors’ report, drawn up pursuant to the provisions of the last paragraph of Article L. 225 – 37 of the French commercial code.


For SA Philippe Venet et Associés For Grant Thornton French member of Grant Thornton International Philippe Venet Guy Flochlay



6.3. ANNUAL DISCLOSURE DOCUMENTS 1. Regular and one-off disclosures available on the internet site of the AMF at www.amf-france.org and/or the Group site at boizelchanoine.com - Jan 30, 2006 Report on the annual general meeting on January 30th, 2006 - Apr 18, 2006 Earnings for 2005 - Jun 30, 2006 Four-for-one stock split - Oct 23, 2006 Earnings for H1 2006 - Oct 29, 2006 Presentation of the share buyback program - Oct 29, 2006 Signature of a liquidity agreement - Oct 31, 2006 Report on internal control and corporate governance - Nov 13, 2006 Revenues for Q3 2006 - Jan 15, 2007 Half-year review of the liquidity agreement - Feb 1, 2007 Statement on the total number of voting rights and shares - Feb 13, 2007 Revenues for 2006 - Feb 26, 2007 Statement on the total number of voting rights and shares 2. Information released in the financial press over 2006 - Jan 30, 2006 Report on the annual general meeting on January 30th, 2006 - Jan 20, 2006 BOIZEL CHANOINE Champagne finalizes its agreement to acquire

LANSON International - Mar 23, 2006 BOIZEL CHANOINE Champagne gets green light from French

competition authorities (DGCCRF) for acquisition of LANSON International

- Apr 19, 2006 Sound foundations for favorable integration of LANSON International - Jun 30, 2006 Four-for-one stock split - Oct 24, 2006 Earnings for H1 2006 - Oct 30, 2006 Signature of a liquidity agreement - Nov 11, 2006 Revenues for Q3 2006 3. Financial disclosures over 2006 - Apr 19, 2006 Sound foundations for favorable integration of LANSON International - Jul 1, 2006 Four-for-one stock split - Oct 24, 2006 Earnings for H1 2006 4. Information published in the French official gazette (BALO) available online at

http://balo.journal-officiel.gouv.fr./ - Jan 11, 2006 Convening of the general meeting for January 30th, 2006 - Feb 15, 2006 Voting rights for the general meeting on January 30th, 2006 - Feb 15, 2006 Revenues for 2005 - Apr 21, 2006 Convening of the general meeting for May 19th, 2006 - Apr 24, 2006 Accounts for 2006 - May 12, 2006 Revenues for Q1 2006 - Jun 5, 2006 Voting rights for the general meeting on May 19th, 2006 - Jun 5, 2006 Statutory auditors’ certificates - Aug 9, 2006 Revenues for H1 2006 - Aug 9, 2006 Designation of the custodian for registered securities - Oct 23, 2006 Accounts for H1 2006



- Oct 27, 2006 Appointment of the representative for bondholders - Nov 15, 2006 Revenues for Q3 2006 - Feb 14, 2007 Revenues for 2006 - Feb 23, 2007 Designation of the custodian for registered securities 5. Information filed with the Reims trade court clerk’s office - Feb 15, 2006 Minutes from the Board of Directors’ meeting on January 2nd, 2006

(acknowledgment of BOIZEL CHANOINE CHAMPAGNE equity warrants exercised and resulting amendments to the bylaws)

- Apr 6, 2006 Minutes from the combined general meeting on January 30th, 2006 (appointment of a new director)

- Jul 31, 2006 Minutes from the combined general meeting on May 19th, 2006 (amendments to the bylaws and appointment of the Deputy Chief Executive Officer)

- Dec 5, 2006 Minutes from the Board of Directors’ meeting on September 26th, 2006 (resignation and coopting of a director)

6. Information made available to shareholders prior to the general meeting on June 1st, 2007. BOIZEL CHANOINE CHAMPAGNE bylaws Notice to attend published in the French official gazette Notice to attend published in MATOT BRAINE Notices to attend for the statutory auditors Notices to attend for the registered shareholders Attendance sheet Voting form Publication of accounts in the French official gazette Prospectus for the share buyback program, approved by the AMF Documents to be sent out to shareholders: - Agenda for the general meeting on June 1st, 2007 - Inventory of marketable securities - Corporate financial statements for the year ended December 31st, 2006 - Consolidated financial statements for the year ended December 31st, 2006 - Earnings for the last five financial years - General statutory auditors’ reports on the corporate and consolidated financial

statements - Special statutory auditors’ report - List of current agreements concluded under normal conditions - Chairman of the Board of Directors’ report on the Board of Directors’ operations and

internal control - Statutory auditors’ report on internal control - Resolutions put forward at the general meeting - Proxy or correspondence voting form - Document request form For information Financial department Nicolas Roulleaux Dugage



66 Rue de Courlancy, 51100 Reims, France Tel: +33 (0)3 26 78 52 15 – Fax: +33 (0)3 26 78 53 88 Email: [email protected]/[email protected] Shareholder relations Evelyne Roques Boizel 46 Avenue de Champagne, 51200 Epernay, France Tel: +33 (0)3 26 55 21 51 – Fax: +33 (0)3 26 54 61 38 Email: [email protected]

6.4. SPECIAL REPORT ON TRANSACTIONS CARRIED OUT IN CONNECTION WITH THE

SHARE BUYBACK PROGRAM Dear Shareholders, As provided for under Article L. 225-184 of the French commercial code, please find hereafter our report on the transactions carried out in accordance with the provisions of Articles L. 225-177 to L. 225-186 of the French commercial code concerning equity warrants and stock options. At the general meeting on May 19th, 2006, the Board of Directors was authorized to grant options entitling holders to subscribe for company shares to be issued or purchase existing shares for corporate officers, as defined by French law, and employees of the company and companies that are linked to it, or a certain number of them. This authorization was given for a 38-month period as of the meeting date. To date, the Board of Directors has not made use of this authorization.

Reims March 15th, 2007 The Board of Directors

6.5. SPECIAL REPORT ON TRANSACTIONS CARRIED OUT AS PER ARTICLES L 225-197-1 TO L 225-197-5 OF THE FRENCH COMMERCIAL CODE CONCERNING THE FREE ALLOCATION OF SHARES �

�

Dear Shareholders, As provided for under Article L. 225-184 of the French commercial code, please find hereafter our report on the transactions carried out in accordance with the provisions of Articles L 225-197-1 to L 225-197-5 of the French commercial code concerning the free allocation of shares as approved at the extraordinary general meeting on January 30th, 2006. On March 24th, 2006, the Board of Directors set the conditions and the number of shares to be awarded for 2006 at 7,580 shares Please find hereafter a summary of such allocations for 2006: - Beneficiaries: Group company employees and managers



- Number and nature of securities awarded: 7,580 ordinary free shares - Possession date: March 24th, 2008 - Company concerned BOIZEL CHANOINE CHAMPAGNE - Functions held: staff including certain directors.

Reims March 15th, 2007 The Board of Directors

6.6. SUMMARY OF DELEGATIONS FOR INCREASING/REDUCING THE CAPITAL At the extraordinary general meeting on May 19th, 2006, powers were delegated to the Board of Directors with a view to: - Getting the company to buy back its own shares as provided for under Article L 225-209 of the French commercial code. - Increasing the capital, either through the issue, with preferential subscription rights maintained, of shares and/or marketable securities entitling holders to access the capital, or through the incorporation of reserves, premiums and profits. - Increasing the capital through the issue, with preferential subscription rights waived, of shares and/or marketable securities entitling holders to access the company’s capital. - Using such authorizations during a public takeover bid or exchange period concerning the company’s securities, provided that the decision to issue the marketable securities has been taken before the offer was filed. - Increasing the share capital through share issues reserved for members of a company savings scheme and/or voluntary employee partner savings scheme created in accordance with Article L 443-1 et seq of the French labor code and with a view to freely awarding them shares or other securities entitling holders to access the capital. - Canceling shares bought back by the company as provided for under Article L 225-209 of the French commercial code. Section 2.2.3 on Page 46 presents the amounts linked to these authorizations On October 25th, 2006, the Board of Directors decided to implement the delegation of power approved at the combined general meeting on May 19th, 2006 in accordance with Articles L 225-109 et seq of the French commercial code in order to enable a liquidity agreement to be set up.

6.7. SPECIAL REPORT ON SECURITIES HELD BY EXECUTIVES The operations carried out by executives, assimilated persons and their close relatives over the past year on the company’s securities are as follows: Person’s name and function: Evelyne Roques Boizel, Deputy Chief Executive Officer Name of the issuer concerned: BOIZEL CHANOINE CHAMPAGNE



On May 25th, 2006, cash purchase of 9 shares for 1,182.70 euros On August 29th, 2006, cash purchase of 100 shares for 3,753.10 euros Person’s name and function: Christophe Roques, Deputy Chief Executive Officer Name of the issuer concerned: BOIZEL CHANOINE CHAMPAGNE On August 29th, 2006, cash purchase of 100 shares for 3,753.10 euros Person’s name and function: SCI MOISSONS MARITAIN, managed by Bruno Paillard Name of the issuer concerned: BOIZEL CHANOINE CHAMPAGNE On June 16th, 2006, cash purchase of 33 shares for 4,844.32 euros On July 13th, 2006, cash purchase of 200 shares for 7,263.36 euros On July 13th, 2006, cash purchase of 200 shares for 7,263.36 euros On July 14th, 2006, cash purchase of 44 shares for 1,597.94 euros On July 17th, 2006, cash purchase of 156 shares for 5,665.42 euros On July 17th, 2006, cash purchase of 97 shares for 3,522.73 euros On July 18th, 2006, cash purchase of 103 shares for 3,693.87 euros On July 18th, 2006, cash purchase of 200 shares for 7,172.57 euros On July 18th, 2006, cash purchase of 92 shares for 3,341.15 euros On July 18th, 2006, cash purchase of 200 shares for 7,172.57 euros On July 18th, 2006, cash purchase of 200 shares for 7,172.57 euros On July 19th, 2006, cash purchase of 108 shares for 3,922.21 euros On July 19th, 2006, cash purchase of 200 shares for 7,263.36 euros On July 19th, 2006, cash purchase of 200 shares for 7,263.36 euros On July 24th, 2006, cash purchase of 11 shares for 404.78 euros On August 10th, 2006, cash purchase of 200 shares for 7,364.24 euros On August 10th, 2006, cash purchase of 200 shares for 7,364.24 euros On August 10th, 2006, cash purchase of 200 shares for 7,364.24 euros On August 10th, 2006, cash purchase of 101 shares for 3,718.94 euros On August 10th, 2006, cash purchase of 200 shares for 7,364.24 euros On August 10th, 2006, cash purchase of 200 shares for 7,364.24 euros On August 10th, 2006, cash purchase of 200 shares for 7,364.24 euros On August 10th, 2006, cash purchase of 200 shares for 7,364.24 euros On August 31st, 2006, cash purchase of 160 shares for 5,938.20 euros On September 1st, 2006, cash purchase of 40 shares for 1,484.55 euros On September 6th, 2006, cash purchase of 200 shares for 7,418.72 euros On September 7th, 2006, cash purchase of 200 shares for 7,364.24 euros On September 7th, 2006, cash purchase of 200 shares for 7,364.24 euros On September 7th, 2006, cash purchase of 200 shares for 7,364.24 euros On September 7th, 2006, cash purchase of 200 shares for 7,364.24 euros On September 7th, 2006, cash purchase of 200 shares for 7,364.24 euros On September 7th, 2006, cash purchase of 200 shares for 7,364.24 euros On October 30th, 2006, cash purchase of 200 shares for 8,584.89 euros On November 3rd, 2006, cash purchase of 200 shares for 8,574.80 euros On November 3rd, 2006, cash purchase of 200 shares for 8,574.80 euros On November 6th, 2006, cash purchase of 200 shares for 8,473.92 euros On November 7th, 2006, cash purchase of 200 shares for 8,407.34 euros On November 7th, 2006, cash purchase of 200 shares for 8,393.22 euros On November 8th, 2006, cash purchase of 35 shares for 1,454.28 euros On November 9th, 2006, cash purchase of 200 shares for 8,272.16 euros On November 9th, 2006, cash purchase of 200 shares for 8,272.16 euros On November 9th, 2006, cash purchase of 165 shares for 6,836.80 euros On October 3rd, 2006, cash sale of 100 shares for 4,569.43 euros On October 3rd, 2006, cash sale of 100 shares for 4,569.43 euros



On October 3rd, 2006, cash sale of 44 shares for 1,918.96 euros Person’s name and function: SAS Bruno Paillard, managed by Bruno Paillard Name of the issuer concerned: BOIZEL CHANOINE CHAMPAGNE On January 4th, 2006, cash sale of 100 shares for 8,165.00 euros On January 4th, 2006, cash sale of 100 shares for 8,165.00 euros On January 4th, 2006, cash sale of 50 shares for 4,082.50 euros On January 5th, 2006, cash sale of 250 shares for 22,225.00 euros On January 5th, 2006, cash sale of 100 shares for 8,980.00 euros On February 20th, 2006, cash sale of 200 shares for 21,400.00 euros On February 23rd, 2006, cash sale of 300 shares for 32,700.00 euros On May 11th, 2006, cash purchase of one share for 130.00 euros On May 11th, 2006, cash purchase of 100 shares for 13,200.00 euros On May 12th, 2006, cash purchase of 100 shares for 13,380.00 euros On May 15th, 2006, cash purchase of 100 shares for 13,370.00 euros On May 16th, 2006, cash purchase of 100 shares for 13,180.00 euros On May 17th, 2006, cash purchase of 77 shares for 10,010.00 euros On May 18th, 2006, cash purchase of 150 shares for 18,750.00 euros On May 19th, 2006, cash purchase of 150 shares for 19,800.00 euros On May 22nd, 2006, cash purchase of 150 shares for 20,100.00 euros

7. Parties responsible . Boizel Chanoine Champagne.


�� !��# �!� � �� # � � � � �� # � �� !!��

7.1. PERSON RESPONSIBLE FOR THE REFERENCE DOCUMENT Bruno Paillard, the Chairman and Chief Executive Officer

7.2. STATEMENT BY THE PERSON RESPONSIBLE FOR THE REFERENCE DOCUMENT “I certify that, having taken all reasonable measures to this effect, the information contained in the present reference document is, to the best of my knowledge, fair and accurate in all material respects and free from any omissions that could alter its substance. I have received a completion letter from the statutory auditors in which they indicate that they have, in accordance with industry standards, verified the information relating to the financial position and financial statements given in this reference document and that they have reviewed the entire document. The historical financial information presented in this reference document has been reported on by the statutory auditors’ as presented in Section 4.9 of this reference document”. Reims, May 24th, 2007 Bruno Paillard – Chairman and Chief Executive Officer

7.3. PARTIES RESPONSIBLE FOR AUDITING THE ACCOUNTS Incumbent statutory auditors: PHILIPPE VENET & ASSOCIES SA Represented by Philippe Venet 12 rue des Elus 51100 Reims, France First appointed: May 10th, 2000 (as deputy statutory auditor) and on May 12th, 2001 (as incumbent statutory auditor). Term of office ending: ordinary general meeting convened to approve the financial statements for the year ended December 31st, 2006.

��

7. Parties responsible . Boizel Chanoine Champagne


GRANT THORNTON Represented by Guy Flochlay 95, boulevard du Général Leclerc 51100 Reims, France First appointed: May 19th, 2006 Term of office ending: ordinary general meeting convened to approve the financial statements for the year ending December 31st, 2011. Deputy statutory auditors: Mrs. Geneviève Morel 12, rue des Elus 51100 Reims, France First appointed: May 12th, 2001 Term of office ending: ordinary general meeting convened to approve the financial statements for the year ended December 31st, 2006. Société Anonyme IGEC 3 rue Léon Jost 75017 Paris, France First appointed: May 19th, 2006 Term of office ending: ordinary general meeting convened to approve the financial statements for the year ending December 31st, 2011.

7.4. PERSON RESPONSIBLE FOR THE INFORMATION Nicolas Roulleaux Dugage, BOIZEL CHANOINE CHAMPAGNE Group Company Secretary Chief Administrative and Financial Officer MAISON BURTIN-CHAMPAGNE LANSON 66 Rue de Courlancy 51100 Reims, France Tel: +33 (0)3 26 78 52 15 Fax: +33 (0)3 26 78 53 88 [email protected] [email protected]

Appendices . Boizel Chanoine Champagne.


�� # !�� Detailed contents. Correspondence table between the reference document and the Board of Directors’ management report. Correspondence table between the reference document and the main sections from the directive applying European Commission regulation 809-2004 of April 29th, 2004.

Appendices . Boizel Chanoine Champagne


, �� # �!�� 1 Information on the BOIZEL CHANOINE CHAMPAGNE Group’s business p.4 1.1. History p.4

1.1.1. Three centuries of passion and know-how p.4 1.1.2. Main stages in the creation of the BOIZEL CHANOINE CHAMPAGNE Group p.4

1.2. Overview of the Group p.5 1.2.1. A leading Champagne player p.5 1.2.2. Key figures over the last three years p.6 1.2.3. Portfolio of prestigious Houses and Brands p.6

1.3. Market p.11 1.3.1. Historical landmarks p.11 1.3.2. A strong appellation label p.12 1.3.3. Champagne production, a complex method p.13 1.3.4. Grape supplies p.14 1.3.5. Development of the market p.15 1.3.6. Competitive environment p.17 1.3.7. Regulatory environment p.18

1.4. Strategy and outlook p.18 1.4.1. Highlights of 2006 p.18 1.4.2. Main investments over 2006 p.20 1.4.3. Key figures for each subsidiary p.21 1.4.4. Parent company-subsidiary relations p.21 1.4.5. Activity and outlook for Group companies p.22 1.4.6. Strategy p.28 1.4.7. Outlook p.39

1.5. Risk factors p.30 1.5.1. Grape supplies and prices p.30 1.5.2. Risks linked to international operations and exchange rate fluctuations p.30 1.5.3. Risks linked to interest rate fluctuations p.31 1.5.4. Legal, regulatory and competitive risks p.31 1.5.5. Risks linked to the economic environment p.31 1.5.6. Risks linked to clients or suppliers p.32 1.5.7. Liquidity risks p.32 1.5.8. Risks on shares p.32 1.5.9. Industrial risks p.32 1.5.10. Environmental risks p.33 1.5.11. IT risks p.33 1.5.12. Insurance p.33

1.6. Report on HR data p.34 1.6.1. Staffing levels p.34 1.6.2. Organization of work p.35 1.6.3. Compensation p.36 1.6.4. Labor relations p.36 1.6.5. Health and safety conditions p.37 1.6.6. Professional training p.37 1.6.7. Employment and integration of disabled workers p.38 1.6.8. Company welfare and cultural benefits p.38 1.6.9. Level of outsourcing p.38 1.6.10. Key non-financial performance indicators relative to staff issues p.38

1.7. Report on environmental data p.38 1.7.1. General framework for the environmental policy p.39 1.7.2. Winegrowing activity p.39 1.7.3. Wine-producing activity p.40

1.8. Exceptional events and disputes p.41



2 General information on BOIZEL CHANOINE CHAMPAGNE p.42 2.1. Statutory information and share buyback program p.42

2.1.1. Corporate name and registered office p.42 2.1.2. Place where documents or information relative to BOIZEL CHANOINE CHAMPAGNE may

be consulted p.42 2.1.3. Company incorporation date and term (Clause 5 of the bylaws) p.42 2.1.4. BOIZEL CHANOINE CHAMPAGNE trade and company register p.42 2.1.5. Legal form (Clause 1 of the bylaws) p.42 2.1.6. Corporate purpose (Clause 3 of the bylaws) p.42 2.1.7. Financial year (Clause 21 of the bylaws) p.43 2.1.8. General meetings (Clause 20 of the bylaws) p.43 2.1.9. Appropriation and distribution of profits (Clause 23 of the bylaws) p.44 2.1.10. Specific bylaws clauses p.44 2.1.11. Change of system for holding shares p.44 2.1.12. BOIZEL CHANOINE CHAMPAGNE program to buy back its own securities p.44

2.2. General information on BOIZEL CHANOINE CHAMPAGNE capital and shares p.45 2.2.1. Share capital (Clause 2) p.45 2.2.2. Stock options p.45 2.2.3. Authorized capital not issued p.46 2.2.4. Convertible bond issue p.47 2.2.5. Change in the capital p.48 2.2.6. Breakdown of the capital and voting rights p.49 2.2.7 Summary of operations carried out on the company’s securities by executives, assimilated persons and their relatives (Article L 621-18-2 of the monetary and financial code and Article 222-15-3 of the AMF’s general regulations) P.49 2.2.8. Changes to the capital since the initial public offering p.49 2.2.9. Shareholders’ agreement p.49 2.2.10 Concerted action p.50 2.2.11. Collateral and guarantees p.50 2.2.12. BOIZEL CHANOINE CHAMPAGNE share: market and price trends p.50 2.2.13. Dividend policy and appropriation of earnings p.50

2.3. Real estate and equipment p.51 2.4. Intellectual property p.52 2.5. BOIZEL CHANOINE CHAMPAGNE Group structure p.53 3 Corporate governance: administrative and management bodies p.54 3.1. Management team members p.54

3.1.1. Makeup of the Board of Directors p.54 3.1.2. Board of Directors’ role and operations p.56 3.1.3. Group Management Committee p.56 3.1.4. List of offices in Group companies at December 31st, 2006 p.58 3.1.5. Appointment and renewal of management and supervisory bodies p.58 3.1.6. Potential conflicts of interest and corporate governance p.59

3.2. Compensation and benefits for corporate officers p.59 3.3. Stock options awarded to corporate officers and the 10 largest non-executive option-holders p.60 4 Financial position and earnings p.61 4.1. Consolidated financial statements p.61

4.1.1. Consolidated financial statements at December 31st, 2006 p.61 4.1.2. Highlights p.68

4.2. Notes to the consolidated financial statements at December 31st, 2006 p.68 4.3. Pro forma consolidated financial information for the year ended December 31st, 2006 p.91 4.4. Additional notes p.95 4.5. Consolidated financial statements at December 31st, 2005 and 2004 under IFRS and corporate

financial statements at December 31st, 2005 p.106



4.6. Consolidated financial statements at December 31st, 2004 and 2003 under French GAAP and corporate financial statements at December 31st, 2004 p.128 4.7. Corporate financial statements for the holding company p.149

4.7.1. Corporate financial statements at December 31st, 2006 and 2005 p.149 4.7.2. Notes to the corporate financial statements at December 31st, 2006 p.151

4.8. Five-year financial summary p.157 4.9. Statutory auditors’ reports on the corporate and consolidated financial statements at December 31st, 2006 p.158

4.9.1. Statutory auditors’ report on the corporate financial statements for the year ended December 31st, 2006 p.158 4.9.2. Statutory auditors’ report on the consolidated financial statements for the year ended December 31st, 2006 p.159 4.9.3. Review of pro forma information by the statutory auditors p.160

4.10. Special statutory auditors’ report for the year ended December 31st, 2006 p.161 4.11. Group fees for the statutory auditors and members of their networks p.163 5 Ordinary annual general meeting on June 1st, 2007 p.165 5.1. Agenda p.165 5.2. Resolutions p.165 6. Other reports p.168 6.1. Chairman of the Board of Directors’ report on conditions for the preparation and organization of

the Board’s work and the internal control procedures put in place by BOIZEL CHANOINE CHAMPAGNE p.168

6.2. Statutory auditors’ report on internal control (Article L 225-235 of the French commercial code) p.174

6.3. Annual disclosure documents p.175 6.4. Special report on transactions carried out in connection with the share buyback program p.177 6.5. Special report on transactions carried out as per Articles L 225-197-1 to L 225-197-5 of the French commercial code concerning the free allocation of shares p.177 6.6. Summary of delegations for increasing/reducing the capital p.178 6.7. Special report on securities held by executives p.178 7 Person responsible for the reference document and parties responsible for

auditing the accounts p.181 7.1. Person responsible for the reference document p.181 7.2. Statement by the person responsible for the reference document p.181 7.3. Parties responsible for auditing the accounts p.181 7.4. Person responsible for the information p.182 Appendices p.183 Detailed contents P.184 Correspondence table between the reference document and the Board of Directors’ management report P.187 Correspondence table between the reference document and the main sections from the directive applying European Commission regulation 809-2004 of April 29th, 2004 p.188



�� #��!�� - �� !��# �!� � �� # � �� # �� , �!�� Economic information Company's situation and activity over the past year 1.4.1 Presentation of earnings 1.4.1 Likely change in the company's situation and outlook for the future 1.4.6 Events that have occurred since the financial year-end 1.4.1 Research and development activity 1.4.1 Information on corporate officers List of functions and offices 3.1.1, 3.1.3, 3.1.4 Option selected for the performance of general management 3.1.1 Appointment of directors and renewal of offices 3.1.4 Information on subsidiaries and equity interests Activity and earnings of subsidiaries 1.4.2, 1.4.4 Likely change in the situation for subsidiaries and the outlook 1.4.4 Acquisition of equity interests and control 1.4.1 Employee shareholding Employee’s interests in the company’s capital 2.2.6 Stock warrants awarded to the staff of Group subsidiaries and managers 2.2.2 Free allocation of shares to the staff of Group subsidiaries and managers 2.2.3 Tax and accounting information Sumptuary spending and non-tax-deductible expenses 2.2.12 Dividends 2.2.12 Changes made to the presentation of the accounts and valuation methods 4.2 Earnings over the last five years 4.4 Specific information for public listed companies Information on capital interests 2.2.6 Compensation for corporate officers 3.2 Transactions carried out by managers 2.2.7 Transactions carried out by the company on treasury shares 2.1.12 Risk factors 1.5 Report on HR data 1.6 Report on environmental data and prevention 1.7



�� #��!�� - �� !��# �!� � �� # � �� !� �� # �!� �� % �� .* /0)* * 1 �� )/ ��(�)* * 1 ��

� Information 1 – Responsibility for this document p.181 2 – Statutory auditors p.181 3 – Selected financial information p.4 3.1 Historical information p.4 3.2 Interim information p.5 4 – Risk factors p.30 and following 5 – Information on the issuer p.42 and following 5.1 Company’s history and development p.42 and following 5.2 Investments p.20 6 – Overview of activities p.28 6.1 Main activities p.28 6.2 Main markets p.11 and following 7 – Organization 7.1 Overview p.6 and following 7.2 List of significant subsidiaries p.21 and following 8 – Property, plant and equipment p.51 and following 9 – Review of the financial position and earnings p.61 and following 10 – Cash and capital p.68 11 – Research and development, patents and licenses n/a 12 – Information on trends p.30 13 – Profit estimates or forecasts p.30 14 – Administrative, management and supervisory bodies and the general management team 14.1 Administrative and management bodies p.54 and following 14.2 Conflicts of interest for the administrative and management bodies p.59 and following 15 – Compensation and benefits p.59 and following 16 – Administrative and management body operations p.54 and following 17 – Workforce 17.1 Headcount p.34 17.2 Equity interests and stock options p.45 and following 17.3 Agreement for employees’ equity interests in the issuer’s capital p.46 and following



18 – Main shareholders p.49 and following 18.1 Shareholders with over 5% of the share capital and voting rights p.49 and following 18.2 Existence of different voting rights p.44 18.3 Issuer’s control n/a 18.4 Agreements known by the issuer whose implementation could, at a

subsequent date, result in a change of its control n/a 19 – Operations with related parties n/a 20 – Financial information concerning the issuer’s assets, liabilities, financial

position and earnings p.61 and following 21 – Additional information 21.1 Share capital p.45 and following 21.2 Articles of incorporation and bylaws p.42 and following 22 – Significant contracts p.19 23 – Information from third parties, statements by experts and declarations of interests n/a 24 – Public documents p.42 25 – Information on equity interests p.21