Ypsomed Holding AG – Semiannual Report 2014/15...Ypsomed Semannual eport 2 posted strong growth, increasing sales by 20.9 % and seeing sales of goods and services rise to CHF 66.9

Ypsomed Holding AG – Semiannual Report 2014/15

Ypsomed – Semiannual Report

1

Sustained success

Dear Shareholders

In the first half of the 2014/15 financial year, the Ypsomed Group generated consolidated sales to-taling CHF 148.5 million, some CHF 17 million up on the same period of the prior year (CHF 131.5 million). This 13 % increase exceeded expecta-tions, illustrating that Ypsomed is emphatically forging ahead on the path of continued growth. This applies across the whole company, most nota-bly in the Diabetes Direct Business segment, where sales are up by 20.9 %, followed by the Others segment (+12.6 %) and the Delivery Devices seg-ment (+6.6 %). EBIT was up almost threefold year on year, climbing from CHF 4.6 million to CHF 12.9 million. Net profit amounted to CHF 9.1 million. Ypsomed’s EBIT margin thus now stands at 8.7 % (compared to 3.5 % in the same period last year) and its net profit margin at 6.1 % (same period last year: 3.5 %). On the back of this positive result, we are raising our forecasts for the 2014/15 financial year as a whole – of which more at the end of this letter.

Delivery Devices: EBIT doubled

In the first half of the 2014/15 financial year, the Delivery Devices segment increased sales by 6.6 %

overall to CHF 72.9 million, with sales in both the injection pens and pen needles product categories rising by around 10 %. Efficiency and profitability also improved: the move to centralize and optimize needle production in Solothurn in the prior year is bearing fruit, as are the ongoing optimization mea-sures and investments in infrastructure. These ef-forts were rewarded with a virtual doubling of EBIT in this segment from CHF 3.9 million in the same period last year to CHF 7.1 million. And prospects remain good, as demand for our in-jection systems continues unabated: in the past six months, we were able to announce five new contracts with different customers for various injection sys-tems, with further projects under way. We therefore spent a significant amount once again on research and development, investing a total of CHF 12.9 million over the past half-year in further developing our injection system platforms and Ypsomed’s own insulin pump mylife™ YpsoPump®. We also made further investment in production facilities: some CHF 5 million in all for the UnoPen™ injection pen and the YpsoMate® autoinjector.

Diabetes Direct Business: strong growth

In the first half of the 2014/15 financial year, the Diabetes Direct Business segment once again

Ypsomed key figures at a glance

In thousand CHFUnaudited Swiss GAAP FER figures

April 1, 2014 – Sept. 30, 2014

April 1, 2013 – Sept. 30, 2013

Change in %

Sales of goods and services 148 522 131 473 17 049 13.0

thereof Delivery Devices* 72 905 68 415 4 490 6.6

thereof Diabetes Direct Business* 66 908 55 322 11 586 20.9

thereof Others* 8 709 7 736 973 12.6

Gross profit 41 733 30 646 11 087 36.2

Gross profit in % 28.1 % 23.3 %

Operating profit 12 923 4 644 8 279 178.3 %

Operating profit in % 8.7 % 3.5 %

Net profit 9 098 4 600 4 498 97.8 %

Net profit in % 6.1 % 3.5 %

Earnings per share (in CHF) 0.72 0.36 0.36 97.7 %

Research and development expenditures, total 12 922 11 223 1 699 15.1 %

Investments in fixed assets 8 982 10 146 −1 164 −11.5 %

Equity ratio in % 64.9 % 62.9 %

Employee headcount (as of September 30) 1 027 989 38 3.8 %

Employees fulltime equivalents (as of September 30) 989 948 41 4.3 %

* The segment Delivery Devices comprises the product groups pen systems, pen needles, infusion sets and other injection moldings produced by Ypsomed. The business segment Diabetes Direct Business covers the direct trade in a range of diabetes articles. The segment Others contains the business segment Precision turned parts and real estate currently not used for operational purposes.


2

posted strong growth, increasing sales by 20.9 % and seeing sales of goods and services rise to CHF 66.9 million from CHF 55.3 million in the same period last year. One driver of this positive result was the mylife™ Omnipod® tubing-free insulin patch pump, sales of which climbed by over 60 %. How-ever, the blood glucose meter business also grew by just over 10 % in spite of zero growth globally in this area.The increase in sales was accompanied by improved purchasing terms, further boosting profitability in this segment. Overall, the success enjoyed by the whole segment – EBIT of CHF 5.6 million as against CHF 1.2 million in the same period last year – was underpinned by our targeted sales strategy coupled with an in-depth knowledge of the markets in the various countries. A good example of this is the En-glish and Welsh market; see the section on mylife Diabetescare in this report for more information.

Others: trend pointing in the right direction

At Ypsotec (Others segment), the trend is once again pointing in the right direction: sales grew by 12.6 % to CHF 8.7 million in the reporting period. EBIT in this segment amounted to CHF 0.2 million for the first half of the 2014/15 financial year as against CHF −0.5 million in the same period last year. While demand and orders for precision-turned parts have increased, the measures to boost effi-ciency implemented over the past few financial years are now also beginning to bear fruit, helping the segment to return to profitability.

Marketing and financial expenses: using funds prudently and with a clear focus

The strategy to open up additional markets was given a further boost in early 2014 with the estab-lishment of an Ypsomed subsidiary in Italy. Despite this, marketing and sales expenses increased less during the reporting period than they had in the pri-or year. Due to delays, however, the costs budget-ed for the Italy project will have a heftier impact in the second half of the year than in the first, contrary to the original plan. Overall, a focused approach is being taken to investing marketing funds. Financial expenses include value adjustments on the stake in the blood glucose meter manufacturer Bion-ime (CHF 1.2 million) as a result of its falling share price. In the corresponding period of the prior year, the opposite effect contributed to financial income: as Bionime’s share price increased, a value adjust-ment of CHF 1.0 million was reversed at that time. Both these value adjustment effects involve a tax-privileged company and thus have little impact in tax terms. This explains why the tax burden ex-pressed as a percentage is so different in some cases between the past six months and the corre-

sponding period in the prior year. Another reason is the fact that deferred taxes that had previously been set aside were released in the first half of the prior year and recognized in the income statement.

Positive free cash flow and brisk investment activities

In the first half of the 2014/15 financial year, Ypsomed increased cash flow from operating ac-tivities from CHF 20.9 million to an impressive CHF 31.2 million, a rise of CHF 10.3 million year on year.We also invested a total of CHF 16.3 million during the reporting period as against CHF 15.4 million in the same period last year. CHF 5 million of this amount went toward the new production facili-ties for the UnoPen™ and YpsoMate®. CHF 4 mil-lion was spent on tool construction, on additional production facilities for injection systems and the mylife™ YpsoPump®, on operational infrastructure and on IT – Ypsomed is currently switching the entire Group to SAP. We invested CHF 7.3 million in intangible assets, with CHF 6.8 million funding further development of injection systems and the mylife™ YpsoPump® and the remaining CHF 0.5 mil-lion going toward software. During the reporting period, Ypsomed generated a positive free cash flow of CHF 14.9 million net, meeting the target set by the Board of Directors. Future growth, in the form of investments in capac-ity and building up net working capital, is to be en-tirely financed from operating cash flow.As far as the cash flow from financing activities is concerned, it is worth noting that bank loans have been reduced by CHF 10.5 million, as reflected in the increase in the equity ratio to 64.9 %. Treasury shares worth CHF 1.4 million were also sold as the maximum statutory holding period had been reached. Finally, a dividend of CHF 3.8 million was distributed to shareholders from tax-beneficial capital reserves (prior year: CHF 2.5 million) at the annual general meeting. This corresponds to a pay-ment of CHF 0.30 per share.

Net profit doubled

Overall, net profit doubled from CHF 9.1 million in the first half of the 2014/15 financial year compared with the same period last year (CHF 4.6 million). Net profit per average registered share issued amounts to CHF 0.72 (prior year: CHF 0.36).

A solid basis for sustained success

Both the current reporting period and the future give us plenty of cause to be positive. At the moment, the following factors are, among other, key to the success of our continued business development:


3

In-depth market knowledge and lean processes pay off

It is not just the right products, however, but also our sales companies’ detailed knowledge of the heterogeneous European markets that is in-creasingly proving to be a key factor in ensuring Ypsomed’s success. This is particularly evident in the UK market, for example. Ypsomed’s regional managers are extremely well versed in the local public procurement practices for contracts to sup-ply blood glucose meters and pen needles. They have also standardized methods that have proved successful and are continuously improving them. This is paying off, and we are confident that even more commissioners in the UK health system will opt for mylife™ products in the future.

Outlook

On the back of these positive developments, we are raising our forecast for the end of the 2014/15 financial year: we are anticipating sales growth in excess of 10 % and EBIT of some CHF 27 million, boosted not least by the sale of a plot of land.

We wish to thank you, our valued shareholders, for your confidence in us.

Dr. h. c. Willy MichelChairman of the Board of Directors

Simon MichelChief Executive Officer

Establishing a promising position in the rapidly growing glucagon-like-peptide-1 business

Since being rolled out in 2005, glucagon-like-pep-tide-1 (GLP-1) has developed into an important diabetes drug. No fewer than two well-known pharmaceutical partners – GlaxoSmithKline and AstraZeneca – are using injection systems from Ypsomed for their newly launched, improved GLP-1 products. Patients only have to inject these drugs once a week, rather than on a daily basis as was previously the case. Analysts are predicting that worldwide sales of GLP-1 will double by 2018 from the current figure, estimated at around USD 3 billion. We are expecting GLP-1 products that are adminis-tered with an Ypsomed injection system to account for at least one-quarter of these future global sales.

New production platform for disposable pens to attract a large number of new orders

Ypsomed is currently putting the finishing touches to its production facility in Solothurn for the new UnoPen™ disposable injection pen platform. The first batches of this product are to be delivered to our Russian partner Pharmstandard in late 2014. With these efforts, Ypsomed is laying the founda-tions for a production platform that will bring the company numerous new orders together with the corresponding sales and profits for many years to come. Capacity will be in the eight-digit range, while processes and systems have also been de-signed to easily keep up with increasing orders. Seven customers have already been persuaded of the benefits offered by the UnoPen™ and of working together with Ypsomed as a reliable partner, with this figure likely to rise in the near future.

mylife™ OmniPod® remains on course for success, an own-brand insulin pump to follow in 2015

The tubing-free insulin pump mylife™ OmniPod® looks set to continue its impressive growth. This growth is currently evident in Ypsomed’s new Italian market, where mylife™ OmniPod® is enjoying enthusiastic media coverage and keen interest from diabetes specialists and patients alike, generating a considerable “pull” effect. Given the great de-mand in the market that is being driven by patients, we are in no doubt that the mylife™ OmniPod® will gain significant market share within a short pe-riod of time, just like in other European countries. This sales trend is expected to continue in the long term – underpinned not least by sales of Ypsomed’s own insulin pump mylife™ YpsoPump®, which will be launched in the coming financial year.


4

Ypsomed Delivery Systems

Ypsomed Delivery Systems (YDS) enjoying continued prosperity

Our pharmaceutical and biotech customers pur-chase injection systems and associated services via the Ypsomed Delivery Systems (YDS) brand. In doing so, they are dealing with the top suppli-er in the industry, because Ypsomed is the world’s largest independent developer and manufacturer of pens and autoinjectors enabling patients to admin-ister their liquid drugs themselves subcutaneously. Business development at Ypsomed Delivery Sys-tems is still enjoying significant momentum. Once again, the latest reporting period saw a rise in the number of customer inquiries compared to the pre-vious period, with several projects now much clos-er to implementation. It is pleasing to note that our new project partners include not only regional oper-ators but also some of the largest pharmaceutical groups in the world. Our pharmaceutical partners remain particularly keenly interested in the Ypso-Mate® autoinjector and the UnoPen™ disposable pen. In specific terms, Ypsomed has announced the following contracts and partnerships over the past six months:

The British company GlaxoSmithKline markets its GLP-1 product Eperzan® / Tanzeum™ in a LyoTwist™ developed and manufactured by Ypsomed.

AstraZeneca, another UK-based company, also uses a LyoTwist™ developed and manufactured by Ypsomed for the subcutaneous administration of its Bydureon® GLP-1.

Terumo Corporation, the Japanese medtech mul-tinational, plans to expand its range of products and services and to integrate its prefilled polymer syringes PLAJEX™ into Ypsomed’s autoinjector YpsoMate®.

The Russian company Pharmstandard will be Ypsomed’s first customer to use the UnoPen™

as the injection system for its drugs. The com-pany is planning the market launch of its Bio sulin (insulin) and Rastan (human growth hormone) drugs with the Ypsomed disposable pen under the name of БиоматикПен® 2 (BiomatikPen® 2) during the fourth quarter of 2014.

US-based Palatin Technologies, Inc. is per-forming phase 3 clinical trials for its new drug bremelanotide using the YpsoMate® autoinjector.

Recently launched Ypsomed injection systems*

* The launched products on the market may differ from the image.


5

High profile for the LyoTwist™ dual-chamber pen with Bydureon® from AstraZeneca

The British company AstraZeneca, one of the largest biopharmaceutical firms in the world, will be using an Ypsomed injection system for the subcutaneous administration of its diabetes drug Bydureon®. Since September 2014, the gluca-gon-like peptide-1 (GLP-1) receptor agonist ex-enatide has been administered in the USA us-ing the Bydureon® pen, a dual-chamber injection system based on Ypsomed’s LyoTwist™ platform. AstraZeneca was granted the appropriate authori-zation by the US FDA in February 2014. Bydureon® is injected once a week to treat type 2 diabetes. User-friendliness and a simple, sturdy design were key requirements for the injection system, which were convincingly implemented by Ypsomed. The injection system, which consists of only five parts, is manufactured in Switzerland. From 2015, there are plans for Bydureon® to be administered using the Ypsomed injection system outside the USA. A key success factor was Ypsomed’s platform strat-egy for injection systems: the platform product en-ables the customer to see what the end product will look like and how it will operate from an early stage. The time to market and project risks for the pharmaceutical partner are significantly reduced.

40

60

80

100

120

140

Umsatz GeschäftsjahrUmsatz Halbjahr

2011/12 2012/13 2013/14 2014/15

2011/12 2012/13 2013/14 2014/15

in Mio. CHF

180

160

140

120

100

80

60

40

in Mio. CHF


40

60

80

100

120

140


2011/12 2012/13 2013/14 2014/15

2011/12 2012/13 2013/14 2014/15

in Mio. CHF

180

160

140

120

100

80

60

40

in Mio. CHF


Victoza® (Novo Nordisk) Byetta® (AstraZeneca) Lyxumia® (Sanofi) Trulicity™ (Eli Lilly) Bydureon® (AstraZeneca)* Eperzan®, Tanzeum™ (GSK)*

* Products administered with Ypsomed injection systems from 2014 onward

2013 2018

Good prospects in the GLP-1 market

The launch of Bydureon® is casting a spotlight on the market for glucagon-like peptide-1 (GLP-1): since it was first launched in 2005 under the name Byetta®, GLP-1 has grown to be an important drug for the treatment of diabetes. It is used to treat type 2 diabetes by stimulating insulin production in the pancreas, reducing glucagon and preven-ting excessively high blood glucose levels. There are currently almost two million patients, predo-minantly in the USA and Europe, who use GLP-1. Recent years have seen advances in terms of how long the drug lasts in particular: whereas the first GLP-1 initially had to be injected twice a day, the current market leader Victoza® from Novo Nordisk as well as Lyxumia® from Sanofi now only need to be injected once a day. Meanwhile, Bydureon® from AstraZeneca and Eperzan® / Tanzeum™ from GlaxoSmithKline (GSK), which has recently been authorized for use in Europe and the USA, only need to be injected once a week. Ypsomed’s LyoTwist™ pen platform is also used to adminis-ter the GSK product. Eli Lilly is also set to launch Trulicity™, a third GLP-1 product for once-a-week administration, onto the market. Analysts are pre-dicting that worldwide sales of GLP-1 will double by 2018 from the current figure, estimated at around 3 billion US dollars. We are expecting GLP-1 products that are administered with an Ypsomed injection system to account for at least one-quarter of these future global sales.

Source: Medtrack, FierceBiotech

GLP-1 market – today and tomorrow


6

A winning combination: YpsoMate® and Terumo Corporation’s polymer syringe

Although conventional glass syringes cost less, the Japanese market has exhibited a clear preference from an early stage for prefilled polymer syringes for the packaging of liquid drugs in response to the high quality standards set by the local custom-er base. Unlike prefilled syringes made of glass, the prefilled polymer syringes are silicone oil-free and are more resistant to breaking. The Japanese medtech group Terumo Corporation manufactures COP (cyclic olefin polymer) PLAJEX™ syringes of this type. In order to expand its own product range, the multi-billion corporation also plans to offer its customers a compatible autoinjector with integrat-ed PLAJEX™ polymer syringes. The first project for a Japanese pharmaceutical company – a prefilled Terumo syringe with an YpsoMate® autoinjector – is now at an advanced stage and the first devices are due to be delivered shortly for use in a clinical trial. More new customers are set to follow. We are optimistic that, in the medium term, the use of pol-ymer syringes will continue to gain in importance in Japan and internationally.

The y-axis of the above chart illustrates the likelihood of the respective injection systems being launched onto the market.

Original products Generic drugs / biosimilars Clinical trials

Autoinjectors

New areas of application for YpsoMate®

The great interest that the YpsoMate® autoinjector is attracting among pharmaceutical customers is not restricted to Japan, however, as the diagram below illustrates. In this sector, Ypsomed is in-volved in pharmaceutical partners’ projects very early on, namely right from the clinical trial stage. We are currently supporting several clinical trials that could develop into commercial projects in due course. Back in May, we announced an autoinjec-tor for a clinical trial, in this case for Palatin Tech-nologies, Inc. Using the YpsoMate®, the company plans to start phase 3 clinicals for its new drug bremelanotide (BMT) in the USA and Europe in the second half of 2014. BMT is used to treat female sexual dysfunction (also known as hypoactive sex-ual desire disorder – HSDD) – which is a new area of application for Ypsomed’s injection systems.

veryhigh

medium

today medium-term future


7

UnoPen™ platform: industrial production set to start

The industrialization of the new UnoPen™ platform is moving ahead at full speed. The assembly line and injection molding tools are being commis-sioned and validated, while the injection molding process and printing systems are being optimized. Each step is scrutinized in accordance with the criteria of Ypsomed’s efficiency program and opti-mized where possible.With these efforts, Ypsomed is laying the founda-tions for a manufacturing platform that will bring the company numerous new orders together with the corresponding sales and profits for many years to come. Capacity lies in the eight-digit range, while processes and systems have also been de-signed to easily keep up with growing customer requirements. Seven customers have already been persuaded of the benefits offered by the UnoPen™ and of working together with Ypsomed as a relia-ble partner, with this figure likely to rise in the near future. These projects are at different stages. Some of them include supplying pens for clinical trials in an initial phase, with commercialization slated to follow as soon as the drug has been approved. Other projects involve drugs that are already avail-able on the market with reusable pens, with the ad-ministration of these drugs now set to be switched to the UnoPen™ disposable pen. Rapid industriali-zation is a key priority for these projects. The same is true for Pharmstandard, the very first UnoPen™ customer, with the first batches of its version of the pen platform scheduled for delivery in late 2014.

But where has this trend for disposable pens ac-tually come from? When this question is examined in detail, it is clear that easier handling for users – unlike reusable pens, the drug cartridge in a dis-posable pen does not need changing – is just one of many benefits. Disposable pens such as the UnoPen™ also make it easier for pharmaceutical companies to plan their requirements and supply the markets, since the pen and the drug are com-bined right from the outset. What is more, a faulty pen does not need to be replaced; patients simply take a new disposable pen.Our pen’s tried-and-tested operating mechanism also meets users’ needs: every diabetic who uses insulin is familiar with the “dial and dose” princi-ple. Fledgling pharmaceutical companies or those from other sectors that are entering the diabetes market thanks to new developments of biosimilars or generic drugs and the expiry of patents relating to insulin production are turning to familiar operat-ing mechanisms as a simple way of gaining accep-tance and obtaining the relevant authorization with as few obstacles as possible.Ever since the first prototypes in 2009, Ypsomed has used all its extensive experience of disposable pens to continuously refine and optimize the plat-form, meaning that we can now offer a disposable pen that compares well against the relevant bench-marks, as our customer feedback shows. This is also made clear in the usability and handling stud-ies that provide a detailed analysis of the platform’s acceptance among its end users, i. e. the patients themselves.

UnoPen™ production facility


8

mylife™ Diabetescare

Growth of mylife™ Diabetescare continues apace

The mylife™ Diabetescare business sector has en-joyed uninterrupted growth in recent years. The investments made in building up an expert sales force are paying off. Sales in the B2C sector un-der the mylife™ Diabetescare umbrella brand, which includes the OmniPod® products, the Pura® and Unio™ blood glucose meters, infusion sets and own-brand needles, outperformed the rest of the market in a year-on-year comparison. This growth in sales can be attributed both to the sales force’s sound knowledge of the market, as illustrated in the example of England and Wales described below, and to Ypsomed’s innovative and unique product range. Sales of the mylife™ OmniPod® grew by more than 60 % in the first half of the business year, fol-lowing a doubling of sales in each of the previous two business years. Sales of blood glucose meters and pen needles rose by around 10 % year on year. This sales trend is expected to continue in the fu-ture, underpinned not least by sales of our own-brand insulin pump mylife™ YpsoPump®, which will be launched in the coming business year.

Ypsomed Italy: first patients using mylife™

OmniPod® every day

Ypsomed has been represented in Italy through its own subsidiary since December 2013. Follow-ing an intensive development phase and the first mylife™ OmniPod® training sessions in May 2014, a group of patients started the obligatory trial phase for this insulin patch pump, the first product of its kind in Italy. At the end of August, Ypsomed Italy then notched up its first ten regular mylife™ OmniPod® patients.

Overall, the mylife™ OmniPod® is enjoying enthu-siastic media coverage in Italy and keen interest from diabetes specialists and patients alike, gener-ating a considerable “pull” effect. At national level, Ypsomed Italy has already obtained all of the ne-cessary authorization certificates and codes for the mylife™ OmniPod® insulin management system. The focus now is on obtaining authorization at regional level too. This involves applying individually for au-thorization to some 150 local health organizations, with the procedure often varying in each case. Giv-en this decentralized structure of the Italian health system, markets are developed sequentially. Nego-tiations are already at a very advanced stage for the regions of Friuli-Venezia Giulia and Veneto, as well as for the provinces of Brescia, Sondrio and Man-tua, and authorization to prescribe the system is just around the corner. In other regions, the approv-al processes will be initiated in the coming weeks. A few other areas, such as Milan, will remain off limits for the mylife™ OmniPod® for the next twelve months, because the contract for supplying pumps had already been awarded to another supplier following a tender process that was held before Ypsomed’s market launch. Nevertheless, Ypsomed is working hard to obtain special exemptions in these areas. This venture is being supported by pa-tient organizations that want to be able to use the innovative treatment as quickly as possible.Given the great demand on the market that is be-ing driven by patients, we are in no doubt that the mylife™ OmniPod® will gain significant market share within a short period of time, just like in other Euro-pean countries.

Selection of products from the mylife™ Diabetescare product range


9

Ypsomed UK: a perfect understanding of the market and streamlined processes bring success

Our subsidiary in the UK is experiencing great suc-cess in the sales of blood glucose meters and, most recently, pen needles too. This success achieved by our UK sales team can be attributed above all to their rapid and resolute response to a change in market conditions. In 2013, a new procedure for awarding contracts (bidding / tender process) came into force in England and Wales. This transferred decision-making powers to regional committees known as Clinical Commissioning Groups (CCGs) in England and Local Health Boards (LHBs) in Wales. These committees are made up of healthcare pro-fessionals such as doctors, nurses and pharma-cists. Their mandate is to cut costs significantly – in the UK, the healthcare system is under se-vere pressure due to an aging population and the large number of diabetics (approximately 3 million). They have also been asked to take greater account of patients’ needs with regard to the effectiveness and ease of use of a treatment.England and Wales are divided into around 230 regions for tendering purposes, and the bidding process is not always organized in the same way in each one. Put simply, when a region organizes a tendering process for a blood glucose meter, medical technology manufacturers can submit their bids. Although the products must naturally satisfy the tender specifications, such as the precision re-quirements, the key criterion is the product price quoted by the manufacturer. If the manufacturer or its blood glucose meter is chosen in a region, it can

sell the product in this region during the term of the tender, either exclusively or as one of a small group of manufacturers. Only the products autho rized during the tender in this way will be paid for by the health authority. Thanks to forward planning, strict cost management and streamlined processes, Ypsomed is able to supply the test strips for the mylife™ Pura® blood glucose meter at a profit. How-ever, the mylife™ device not only impresses in terms of price: customers are also won over by its excel-lent compliance with new precision stan dards, as well as the modern design and the safe and easy handling that are hallmarks of mylife™ products. Another important factor driving success in this system is the precise knowledge that Ypsomed UK’s regional managers have of the tender and contract process. Employees have documented the necessary processes and paperwork and are constantly optimizing these standardized procedures. This is paying off, with more and more CCGs and LHBs opting for mylife™ products, as shown in the map below.

Ypsomed is a supplier

Tender to begin in the near future

Tender closed for the time being

or not yet planned

Tender structure in England and Wales


10

Consolidated income statement(unaudited Swiss GAAP FER figures) in thousand CHF Notes April 1, 2014 –

Sept. 30, 2014in % April 1, 2013 –

Sept. 30, 2013in %

Sales of goods and services 2 148 522 100.0 % 131 473 100 %

Cost of goods and services sold – 106 789 – 71.9 % – 100 827 – 76.7 %

Gross profit 41 733 28.1 % 30 646 23.3 %

Marketing and sales expenses – 22 054 – 14.8 % – 20 326 – 15.5 %

Administration expenses – 7 757 – 5.2 % – 6 721 – 5.1 %

Other operating income 1 981 1.3 % 2 079 1.6 %

Other operating expenses – 978 – 0.7 % – 1 035 – 0.8 %

Operating profit 2 12 923 8.7 % 4 644 3.5 %

Financial income 3 1 342 0.9 % 1 914 1.5 %

Financial expenses 3 – 2 961 – 2.0 % – 1 529 – 1.2 %

Profit before income taxes 11 305 7.6 % 5 029 3.8 %

Income taxes – 2 207 – 1.5 % – 429 – 0.3 %

Net profit 9 098 6.1 % 4 600 3.5 %

Earnings per share (basic and diluted) in CHF 4 0.72 0.36

Operating profit 12 923 4 644

Depreciation of fixed assets 9 593 9 234

Amortization of intangible assets 2 889 2 632

EBITDA (operating profit before depreciation and amortization) 25 405 17.1 % 16 510 12.6 %


11

Consolidated balance sheet(unaudited Swiss GAAP FER figures) in thousand CHF

Assets Notes Sept. 30, 2014 in % March 31, 2014 in %

Cash and cash equivalents 18 259 5.0 % 16 164 4.6 %

Trade receivables 33 476 9.3 % 35 342 10.0 %

Other current assets 3 913 1.1 % 5 172 1.5 %

Prepayments and accrued income 6 035 1.7 % 5 571 1.6 %

Current income tax assets 55 0.0 % 75 0.0 %

Inventories 57 638 15.9 % 52 231 14.7 %

Customer machinery 106 0.0 % 30 0.0 %

Total current assets 119 483 33.0 % 114 584 32.3 %

Financial assets 8 187 2.3 % 9 376 2.6 %

Deferred income tax assets 8 574 2.4 % 8 835 2.5 %

Fixed assets 158 003 43.7 % 160 437 45.3 %

Intangible assets 67 518 18.7 % 61 296 17.3 %

Total non-current assets 242 283 67.0 % 239 944 67.7 %

Total assets 361 766 100.0 % 354 528 100.0 %

Liabilities and equity Notes Sept. 30, 2014 in % March 31, 2014 in %

Financial liabilities 52 000 14.4 % 62 500 17.6 %

Short-term liabilities to major shareholder 5 000 1.4 % 0 0.0 %

Trade payables 21 587 6.0 % 15 928 4.5 %

Prepayments from customers 3 260 0.9 % 3 442 1.0 %

Current income tax payable 1 187 0.3 % 1 076 0.3 %

Other payables 2 597 0.7 % 2 720 0.8 %

Accrued liabilities and deferred income 21 243 5.9 % 16 306 4.6 %

Provisions 1 287 0.4 % 1 063 0.3 %

Total current liabilities 108 162 29.9 % 103 037 29.0 %

Non-current liabilities to major shareholder 15 000 4.1 % 20 000 5.6 %

Other non-current financial liabilities 774 0.2 % 1 086 0.3 %

Provisions 1 610 0.4 % 1 173 0.3 %

Deferred income tax liabilities 1 431 0.4 % 1 069 0.3 %

Total non-current liabilities 18 815 5.2 % 23 329 6.6 %

Share capital 178 994 49.5 % 178 994 50.5 %

Capital reserves 169 974 47.0 % 173 492 48.9 %

Own shares / Translation exchange differences – 7 478 – 2.1 % – 8 525 – 2.4 %

Goodwill acquired offset – 322 892 – 89.3 % – 322 892 – 91.1 %

Retained earnings 216 191 59.8 % 207 093 58.4 %

Total equity 5 234 789 64.9 % 228 162 64.4 %

Total liabilities and equity 361 766 100.0 % 354 528 100.0 %


12

Consolidated statement of cash flows(unaudited Swiss GAAP FER figures) in thousand CHF Notes April 1, 2014 –

Sept. 30, 2014April 1, 2013 –

Sept. 30, 2013

Net profit 9 098 4 600

Depreciation of fixed and intangible assets 12 481 11 866

Loss from impairment (+) / Reversal of impairment (–) 3 1 190 – 1 033

Change in provisions (incl. deferred income taxes) 1 298 – 196

Other expense / income that does not affect the fund 0 – 34

Gain (–) / loss (+) of fixed and financial assets – 3 – 121

Increase (–) / decrease (+) in trade receivables 1 839 1 392

Increase (–) / decrease (+) in other receivables and prepayments and accrued income

762 – 2 278

Increase (–) / decrease (+) in inventories – 5 437 4 173

Increase (–) / decrease (+) in customer machinery – 77 – 574

Increase (+) / decrease (–) in trade payables 5 623 161

Increase (+) / decrease (–) in prepayments from customers – 182 647

Increase (+) / decrease (–) in other short-term payables and accrued liabilities and deferred income

4 641 2 260

Cash flow from operating activities 31 233 20 863

Purchases of fixed assets – 8 982 – 10 146

Disposals of fixed assets 21 439

Purchases of intangible assets – 7 324 – 5 316

Cash flow from investing activities – 16 285 – 15 023

Proceeds (+) / repayment (–) from borrowings – 10 500 2 000

Disposal of own shares 1 441 0

Distribution of capital reserves 5 – 3 784 – 2 523

Cash flow from financing activities – 12 843 – 523

Effect of foreign currency translation – 9 – 21

Total cash flow 2 095 5 295

Cash and cash equivalents as of April 1 16 164 9 613

Cash and cash equivalents as of September 30 18 259 14 908

Net increase (+) / decrease (–) in cash and cash equivalents 2 095 5 295


13

Consolidated statement of changes in equity

Share capital

Groupreserves

and sharepremium

Treasury shares

Cumulative translation

reserve

Goodwilloffset after

taxes

Retainedearnings

Total

Balance as of March 31, 2014 178 994 173 492 – 2 337 – 6 188 – 322 892 207 093 228 162

Net profit from half year 9 098 9 098

Distribution of dividends fromcapital contribution reserves

– 3 784 – 3 784

Disposal of own shares 1 441 1 441

Gain of disposal of own shares 266 – 266 –

Translation exchange differences – 128 – 128

Balance as of September 30, 2014 178 994 169 974 – 1 162 – 6 316 – 322 892 216 191 234 789

(unaudited Swiss GAAP FER figures) in thousand CHF Share capital

Groupreserves

and sharepremium

Treasury shares

Cumulative translation

reserve

Goodwilloffset after

taxes

Retainedearnings

Total

Balance as of March 31, 2013 178 994 176 015 − 2 337 − 5 891 − 322 892 193 485 217 375

Net profit from half year 4 600 4 600

Distribution of dividends fromcapital contribution reserves

– 2 523 – 2 523

Translation exchange differences 107 107

Balance as of September 30, 2013 178 994 173 492 – 2 337 – 5 784 – 322 892 198 085 219 559


14

Notes to the consolidated interim financial statements

Figures in thousand CHF unless otherwise stated

1. Accounting policies

Basic principles These consolidated interim financial statements include the unaudited consolidated interim financial statements of Ypsomed Holding AG and its subsidiaries for the repor-ting period ending September 30, 2014. The consolidated interim financial statements have been prepared in accordance with Swiss GAAP FER 12 “Interim Reporting”. The accounting policies applied to the preparation of the interim financial statements are in line with the accounting policies which also provide the basis for the consolidated annual financial statements up to March 31, 2014. The consoli-dated interim financial statements were approved for issue

by the Board of Directors on October 27, 2014. Ypsomed is not exposed to significant seasonal or cyclical fluctu-ation in its business activities within the financial year. In order to prepare consolidated interim financial statements, management is obliged to use estimates and assumptions which have an impact on the reported carrying amounts of assets and liabilities, and the income and expenses repor-ted for the relevant accounting period. These estimates and assumptions are based on future expectations, and seem reasonable at the time of preparation of the interim finan-cial statements. The actual results may differ from these assumptions.

2. Segment information

For the purposes of company management, the Ypso-med Group is organized into business sectors according to products and services. The segment “Delivery Devices” comprises the product groups pen systems, pen nee-dles, infusion-sets and other injection moldings produced by Ypsomed. The business segment “Diabetes Direct

Business” covers the direct trade in a range of diabetes articles. “Others” contains the business segment “Preci-sion turned parts” and real estate currently not used for operational purposes. Intersegmental sales are executed at arm’s length.

Half year 2014/15 Delivery Devices Diabetes Direct Business

Others Eliminations Group

Sales of goods and services to third-party customers

72 905 66 908 8 709 148 522

Intersegmental sales 929 −929

Total sales of goods and services 72 905 66 908 9 638 −929 148 522

Operating profit 7 068 5 639 216 12 923

Investments in fixed and intangible assets 14 690 98 1 517 16 306

Depreciation / Amortization / Impairment 10 739 481 1 261 12 481

Half year 2013/14 Delivery Devices Diabetes Direct Business

Others Eliminations Group

Sales of goods and services to third-party customers

68 415 55 322 7 736 131 473

Intersegmental sales 976 – 976

Total sales of goods and services 68 415 55 322 8 712 – 976 131 473

Operating profit 3 941 1 179 – 476 4 644

Investments in fixed and intangible assets 14 875 107 481 15 463

Depreciation / Amortization / Impairment 9 793 567 1 505 11 866


15

3. Financial income

Half year 2014/15 Half year 2013/14

Interest income 6 11

Dividend income 249 112

Reversal of impairment 0 1 033

Foreign exchange gains 1 087 749

Other financial income 0 8

Total financial income 1 342 1 914

Interest expense 469 534

Losses from marketable securities 5 5

Foreign exchange losses 1 267 955

Other financial expense 30 35

Impairment of financial assets 1 190 0

Total financial expense 2 961 1 529

4. Earnings per share

Earnings per share are calculated by dividing net profit through the weighted monthly number of shares outstanding during the period. The average number of shares held by group companies is deducted from the number of shares issued during the period.

Half year 2014/15 Half year 2013/14

Net profit in thousand CHF 9 098 4 600

Number of outstanding shares weighted on a monthly basis 12 617 248 12 614 726

Earnings per share in CHF (basic and diluted) 0.72 0.36

5. Payment to shareholders

On July 10, 2014, the sum of CHF 0.30 per share was paid out to shareholders free of withholding tax from the capital reserves. The total amount paid out came to CHF 3.8 million (previous year CHF 2.5 Mio.).


16

General information

Information policy

Ypsomed Holding AG maintains an open and transparent communication policy towards share-holders, potential investors, financial analysts, the media, customers and other interested people, based on the principle of equality. The com pany uses the following instruments: annual report, semi annual report, presentation of the annual results to the media and financial analysts ahead of the shareholders’ meeting, as well as media brie-fings and company publications that have poten-tial relevance to the share price. Responsibility for communication with investors rests with the Chair-man of the Board of Directors.

The following banks monitor the development of the Ypsomed Group:

BZ-Bank, Wilen (www.bzbank.ch), Holger Blum

Credit Suisse, Zurich (www.credit-suisse.com), Christoph Gretler

Vontobel, Zurich (www.vontobel.com), Carla Bänziger

Zürcher Kantonalbank, Zurich (www.zkb.ch), Sibylle Bischofberger Frick

On our website at www.ypsomed.com (under Me-dia & Investors), any interested person can access up-to-date and potentially market-relevant infor-mation (pull system) without charge. Furthermore, any interested person can subscribe to an e-mail distribution list under www.ypsomed.com/media.html (push system). The official publication organ of Ypsomed Holding AG is the Swiss Official Gazette of Commerce (SOGC). Company publications with potential relevance to the share price are usually communicated at the end of daily trading. Such publications are initially reported to the SIX Swiss Exchange Regulation and thereafter uploaded to the above-mentioned website and simultaneously communicated to a number of national newspa-pers, electronic information systems and to per-sons registered on the e-mail distribution list.

Stock listing

The registered shares of Ypsomed Holding AG are traded at the SIX Swiss Exchange and at the BX Bern eXchange.

Ticker symbols:YPSN (Telekurs)YPSN.S (Reuters)YPSN SW (Bloomberg)Securities number 1939 699ISIN CH 001 939 699 0

Key forthcoming dates

May 28, 2015Press conference and presentation of theannual results 2014/15, Burgdorf

July 1, 2015General Meeting of Shareholders, Bern

Contact

Ypsomed Holding AGBenjamin Overney Head of Investor & Public [email protected]

Telephone +41 34 424 41 59Telefax +41 34 424 41 55

www.ypsomed.com

Editor and Design:Ypsomed Holding AG, Burgdorf

Printing:Stämpfli Publikationen AG, Bern

The Group publishes its semiannual reports in English and German. The German version is legally binding.

Disclaimer

This semiannual report contains certain forward-looking statements. These can be identified by terms such as “should”, “accept”, “expect”, “anticipate”, “intend” or similar terms and phrases. The actual future results may differ materially from the forward-looking statements in this annual report, due to various factors such as legal and regulatory developments, exchange rate fluctuations, changes in market conditions, as well as the activities of competitors, the non-introduction or delayed introduction of new products for various reasons, risks in the development of new products, interruptions to production, the loss of or inability to obtain intellectual property, litigation and administrative proceedings, adverse publicity and news coverage.

Links to third party websites and other references to the information of third parties are offered as a courtesy; we accept no respon-sibility for any third party information.

All product names mentioned in this report are trademarks owned by or licensed to the Ypsomed Group. Third-party trademarks are marked with ® combined with the product name.

Ypsomed Holding AGBrunnmattstrasse 6Postfach3401 BurgdorfSwitzerland

Phone +41 34 424 41 11 Telefax +41 34 424 41 22

[email protected]

Documents

Ypsomed Holding AG – Semiannual Report 2014/15...Ypsomed Semannual eport 2 posted strong growth, increasing sales by 20.9 % and seeing sales of goods and services rise to CHF 66.9