Ypsomed Holding AG – Semi-annual Report 2014/15

Ypsomed Holding AG – Semiannual Report 2014/15

Ypsomed – Semiannual Report

Sustained success In the first half of the 2014/15 financial year, the ­Ypsomed Group generated consolidated sales totaling 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 expectations, illustrating that Ypsomed is emphatically forging ahead on the path of continued growth.

This applies across the whole company, most notably in the Diabetes Direct Business segment, where sales are up by 20.9 %, followed by the Others segment (+12.6 %) and the Delivery Devices segment (+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.

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 measures and investments in infrastructure. These efforts 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 injection systems continues unabated: in the past six months, we were able to announce five new contracts with different customers for various injection systems, 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.

Delivery Devices: EBIT doubled

Diabetes Direct Business: strong growth

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

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

Dear Shareholders

Ypsomed key figures at a glance In thousand CHF Unaudited 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

8 709

7 736

973

12.6

Gross profit

thereof Others*

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 %

8.7 %

3.5 % 4 498

97.8 %

Operating profit in % Net profit

9 098

4 600

Net profit in %

6.1 %

3.5 %

Earnings per share (in CHF) Research and development expenditures, total Investments in fixed assets Equity ratio in % Employee headcount (as of September 30) Employees fulltime equivalents (as of September 30)

0.72

0.36

0.36

97.7 %

12 922

11 223

1 699

15.1 %

−1 164

−11.5 %

8 982

10 146

64.9 %

62.9 %

1 027

989

38

3.8 %

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.

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Ypsomed – Semiannual Report

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 %. However, 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 English 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 efficiency 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 establishment of an Ypsomed subsidiary in Italy. Despite this, marketing and sales expenses increased less during the reporting period than they had in the prior year. Due to delays, however, the costs budgeted 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 Bionime (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 adjustment 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 expressed as a percentage is so different in some cases between the past six months and the corre2

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 activities 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 facilities for the UnoPen™ and YpsoMate®. CHF 4 million 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 million 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 capacity and building up net working capital, is to be entirely 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 payment 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:

Ypsomed – Semiannual Report

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

In-depth market knowledge and lean processes pay off

Since being rolled out in 2005, glucagon-like-peptide-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 administered with an Ypsomed injection system to account for at least one-quarter of these future global sales.

It is not just the right products, however, but also our sales companies’ detailed knowledge of the heterogeneous European markets that is increasingly 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 supply 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.

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

Outlook

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 foundations 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 designed 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.

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.

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 demand 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 period 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.

Dr. h. c. Willy Michel Chairman of the Board of Directors

Simon Michel Chief Executive Officer

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Ypsomed – Semiannual Report

Ypsomed Delivery Systems Ypsomed Delivery Systems (YDS) enjoying continued prosperity Our pharmaceutical and biotech customers purchase injection systems and associated services via the Ypsomed Delivery Systems (YDS) brand.

In doing so, they are dealing with the top supplier in the industry, because Ypsomed is the world’s largest independent developer and manufacturer of pens and autoinjectors enabling patients to administer their liquid drugs themselves subcutaneously.

Business development at Ypsomed Delivery Systems is still enjoying significant momentum. Once again, the latest reporting period saw a rise in the number of customer inquiries compared to the previous period, with several projects now much closer to implementation. It is pleasing to note that our new project partners include not only regional operators but also some of the largest pharmaceutical groups in the world. Our pharmaceutical partners remain particularly keenly interested in the YpsoMate® 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 multinational, 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 company is planning the market launch of its Bio­sulin (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 performing 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.

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Ypsomed – Semiannual Report

Good prospects in the GLP-1 market

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 glucagon-like peptide-1 (GLP-1) receptor agonist exenatide has been administered in the USA using the Bydureon® pen, a dual-chamber injection system based on Ypsomed’s LyoTwist™ platform.

AstraZeneca was granted the appropriate authorization 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 strategy for injection systems: the platform product enables 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.

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 administer 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 predicting 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.

GLP-1 market – today and tomorrow 2013

2018 Victoza® (Novo Nordisk)

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

* Products administered with Ypsomed injection systems from 2014 onward

140

in Mio. CHF

120

Source: Medtrack, FierceBiotech 100 80 140 60

in Mio. CHF

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Ypsomed – Semiannual Report

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 customer 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 integrated 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 polymer syringes will continue to gain in importance in Japan and internationally.

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 involved 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 autoinjector for a clinical trial, in this case for Palatin Technologies, 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 sexual desire disorder – HSDD) – which is a new area of application for Ypsomed’s injection systems.

Autoinjectors very high

medium today

medium-term future

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

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Ypsomed – Semiannual Report

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 commissioned 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 optimized where possible.

With these efforts, Ypsomed is laying the foundations 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 designed 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 reliable 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 available on the market with reusable pens, with the administration of these drugs now set to be switched to the UnoPen™ disposable pen. Rapid industrialization 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 actually 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 disposable 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 combined 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” principle. 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 operating 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 platform, meaning that we can now offer a disposable pen that compares well against the relevant benchmarks, as our customer feedback shows. This is also made clear in the usability and handling studies that provide a detailed analysis of the platform’s acceptance among its end users, i. e. the patients themselves.

UnoPen™ production facility

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Ypsomed – Semiannual Report

mylife™ Diabetescare Growth of mylife™ Diabetescare continues apace The mylife™ Diabetescare business sector has enjoyed uninterrupted growth in recent years. The investments made in building up an expert sales force are paying off. Sales in the B2C sector under 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, following 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 future, underpinned not least by sales of our ownbrand 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. Following 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 enthusiastic media coverage in Italy and keen interest from diabetes specialists and patients alike, generating 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 authorization to some 150 local health organizations, with the procedure often varying in each case. Given this decentralized structure of the Italian health system, markets are developed sequentially. Negotiations 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 Mantua, and authorization to prescribe the system is just around the corner. In other regions, the approval 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 patient organizations that want to be able to use the innovative treatment as quickly as possible.

Given the great demand on 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 period of time, just like in other European countries.

Selection of products from the mylife™ Diabetescare product range

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Ypsomed – Semiannual Report

Ypsomed UK: a perfect understanding of the market and streamlined processes bring success Our subsidiary in the UK is experiencing great success 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 professionals such as doctors, nurses and pharmacists. Their mandate is to cut costs significantly – in the UK, the healthcare system is under severe 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 requirements, 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 autho­rized 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. However, the mylife™ device not only impresses in terms of price: customers are also won over by its excellent compliance with new precision stan­dards, 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.

Tender structure in England and Wales

Ypsomed is a supplier Tender to begin in the near future Tender closed for the time being or not yet planned

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Ypsomed – Semiannual Report

Consolidated income statement (unaudited Swiss GAAP FER figures) in thousand CHF

Sales of goods and services

Notes

2

Cost of goods and services sold Gross profit

Marketing and sales expenses Administration expenses Other operating income Other operating expenses

in %

April 1, 2013 – Sept. 30, 2013

in %

148 522

100.0 %

131 473

100 %

– 106 789

– 71.9 %

– 100 827

– 76.7 %

41 733

28.1 %

30 646

23.3 %

– 22 054

– 14.8 %

– 20 326

– 15.5 %

– 7 757

– 5.2 %

– 6 721

– 5.1 %

1 981

1.3 %

2 079

1.6 %

– 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 %

9 098

6.1 %

4 600

3.5 %

Net profit

Earnings per share (basic and diluted) in CHF

Operating profit Depreciation of fixed assets Amortization of intangible assets EBITDA (operating profit before depreciation and amortization)

10

April 1, 2014 – Sept. 30, 2014

4

0.72

0.36

12 923

4 644

9 593

9 234

2 889 25 405

2 632 17.1 %

16 510

12.6 %

Ypsomed – Semiannual Report

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

Notes

Sept. 30, 2014

in %

March 31, 2014

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 %

55

0.0 %

75

0.0 %

57 638

15.9 %

52 231

14.7 %

106

0.0 %

30

0.0 %

119 483

33.0 %

114 584

32.3 %

8 187

2.3 %

9 376

2.6 %

Current income tax assets Inventories Customer machinery Total current assets

Financial assets Deferred income tax assets

in %

8 574

2.4 %

8 835

2.5 %

158 003

43.7 %

160 437

45.3 %

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 %

Sept. 30, 2014

in %

March 31, 2014

in %

52 000

14.4 %

62 500

17.6 %

5 000

1.4 %

0

0.0 %

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 %

21 243

5.9 %

16 306

4.6 %

1 287

0.4 %

1 063

0.3 %

108 162

29.9 %

103 037

29.0 %

15 000

4.1 %

20 000

5.6 %

774

0.2 %

1 086

0.3 %

1 610

0.4 %

1 173

0.3 %

Fixed assets Intangible assets

Liabilities and equity

Notes

Financial liabilities Short-term liabilities to major shareholder Trade payables

Accrued liabilities and deferred income Provisions Total current liabilities

Non-current liabilities to major shareholder Other non-current financial liabilities Provisions Deferred income tax liabilities

1 431

0.4 %

1 069

0.3 %

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 %

Total non-current liabilities

Own shares / Translation exchange differences Goodwill acquired offset Retained earnings Total equity

Total liabilities and equity

5

– 7 478

– 2.1 %

– 8 525

– 2.4 %

– 322 892

– 89.3 %

– 322 892

– 91.1 %

216 191

59.8 %

207 093

58.4 %

234 789

64.9 %

228 162

64.4 %

361 766

100.0 %

354 528

100.0 %

11

Ypsomed – Semiannual Report

Consolidated statement of cash flows (unaudited Swiss GAAP FER figures) in thousand CHF

Notes

Net profit Depreciation of fixed and intangible assets Loss from impairment (+) / Reversal of impairment (–)

3

Change in provisions (incl. deferred income taxes) Other expense / income that does not affect the fund

April 1, 2013 – Sept. 30, 2013

9 098

4 600

12 481

11 866

1 190

– 1 033

1 298

– 196

0

– 34

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

– 3

– 121

Increase (–) / decrease (+) in trade receivables

1 839

1 392

762

– 2 278

– 5 437

4 173

– 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

21

439

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

Disposals of fixed assets 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

– 3 784

– 2 523

– 12 843

– 523

– 9

– 21

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

2 095

5 295

Distribution of capital reserves Cash flow from financing activities

Effect of foreign currency translation

Total cash flow

Net increase (+) / decrease (–) in cash and cash equivalents

12

April 1, 2014 – Sept. 30, 2014

5

Ypsomed – Semiannual Report

Consolidated statement of changes in equity (unaudited Swiss GAAP FER figures) in thousand CHF

Balance as of March 31, 2013

Share capital

Group reserves and share premium

Treasury shares

Cumulative translation reserve

Goodwill offset after taxes

Retained earnings

Total

178 994

176 015

− 2 337

− 5 891

− 322 892

193 485

217 375

Net profit from half year

4 600

Distribution of dividends from capital contribution reserves

– 2 523

Translation exchange differences

Balance as of September 30, 2013

Balance as of March 31, 2014

107

107

178 994

173 492

– 2 337

– 5 784

– 322 892

198 085

219 559

Share capital

Group reserves and share premium

Treasury shares

Cumulative translation reserve

Goodwill offset after taxes

Retained earnings

Total

178 994

173 492

– 2 337

– 6 188

– 322 892

207 093

228 162

9 098

9 098

Net profit from half year Distribution of dividends from capital contribution reserves

– 3 784

Disposal of own shares Gain of disposal of own shares

266

– 3 784 1 441

1 441

– 266

–

Translation exchange differences

Balance as of September 30, 2014

4 600 – 2 523

– 128

178 994

169 974

– 1 162

– 6 316

– 128

– 322 892

216 191

234 789

13

Ypsomed – Semiannual Report

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 reporting 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 fluctuation 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 reported 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 financial statements. The actual results may differ from these assumptions.

2. Segment information For the purposes of company management, the Ypsomed 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

Half year 2013/14

Sales of goods and services to third-party customers

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

Delivery Devices

Diabetes Direct Business

Others

68 415

55 322

7 736

Intersegmental sales Total sales of goods and services

Group

131 473

976

– 976 – 976

68 415

55 322

8 712

3 941

1 179

– 476

4 644

14 875

107

481

15 463

9 793

567

1 505

11 866

Delivery Devices

Diabetes Direct Business

Others

72 905

66 908

8 709 929

−929

72 905

66 908

9 638

−929

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

Operating profit

Investments in fixed and intangible assets Depreciation / Amortization / Impairment

Half year 2014/15

Sales of goods and services to third-party customers Intersegmental sales Total sales of goods and services

Operating profit

14

Eliminations

Eliminations

131 473

Group

148 522

148 522

Ypsomed – Semiannual Report

3. Financial income Half year 2014/15

Interest income Dividend income Reversal of impairment Foreign exchange gains Other financial income Total financial income

Interest expense Losses from marketable securities Foreign exchange losses Other financial expense

Half year 2013/14

6

11

249

112

0

1 033

1 087

749

0

8

1 342

1 914

469

534

5

5

1 267

955

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.

Net profit in thousand CHF Number of outstanding shares weighted on a monthly basis Earnings per share in CHF (basic and diluted)

Half year 2014/15

Half year 2013/14

9 098

4 600

12 617 248

12 614 726

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.).

15

Ypsomed – Semiannual Report

General information Information policy

Stock listing

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 com­pany uses the following instruments: annual report, semi­annual report, presentation of the annual results to the media and financial analysts ahead of the shareholders’ meeting, as well as media briefings and company publications that have potential relevance to the share price. Responsibility for communication with investors rests with the Chairman of the Board of Directors.

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

The following banks monitor the development of the Ypsomed Group:

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

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

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

July 1, 2015 General Meeting of Shareholders, Bern

Credit Suisse, Zurich (www.credit-suisse.com), Christoph Gretler Contact Vontobel, Zurich (www.vontobel.com), Carla Bänziger Zürcher Kantonalbank, Zurich (www.zkb.ch), Sibylle Bischofberger Frick On our website at www.ypsomed.com (under Media & Investors), any interested person can access up-to-date and potentially market-relevant information (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 newspapers, electronic information systems and to persons registered on the e-mail distribution list.

16

Ypsomed Holding AG Benjamin Overney Head of Investor & Public Relations benjamin.overney@ypsomed.com Telephone +41 34 424 41 59 Telefax +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 responsibility 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 AG Brunnmattstrasse 6 Postfach 3401 Burgdorf Switzerland Phone +41 34 424 41 11 Telefax +41 34 424 41 22 www.ypsomed.com info@ypsomed.com