Ypsomed Holding AG – Annual Report 2014 / 15

Ypsomed Holding AG – Annual Report 2014 / 15

3

Ypsomed Holding AG

Annual Report 2014 / 15

4

Ypsomed – Annual Report

5

Contents

6 Keyfigures

8 Letter to shareholders

11 How the unpegging of the Swiss Franc from the Euro impacts the results

12 mylife™ Diabetescare 14 mylife™ Diabetescare

14 mylife™ Clickfine® DiamondTip pen needles 15 mylife™ YpsoPump®

16 Ypsomed subsidiaries

20 YDS Ypsomed Delivery Systems 22 New customers, new projects 23 Strong growth 24 Dynamic expansion in Solothurn 27 Ypsomed in the Far East

28 Sustainability Report

30 Sustainability and social responsibility 30 Employees in professional training 31 HR policy 32 Employee survey 2014 33 Operational safety 34 Corporate social responsibility 35 Sustainable use of resources

36 Financial Report 38 EBIT increased by over 80 % 40 Consolidated income statement 41 Consolidated balance sheet 42 Consolidatedstatementofcashflows 43 Consolidated statement of changes in equity 44 Basisfortheconsolidatedfinancialstatements 49 Notestotheconsolidatedfinancialstatements 64 Statutory closing of Ypsomed Holding AG 71 Five-year overview

72 Corporate Governance 74 Corporate Governance 76 Capital structure 78 Shareholder structure 80 Board of Directors 88 Executive Management 91 Compensation, participations and loans 92 Shareholders’ rights of participation 93 Change of control and blocking mechanisms 93 Auditors 94 Information policy

95 Compensation Report

102 Glossary


6

Sales of goods and services

EBIT

Netprofit,freecashflow&dividendpayment

Ypsomed

Group

Segment Delivery Devices

Segment DDB

Segment Others

Ypsomed

Group

Segment Delivery Devices

Segment DDB

Segment Others

EBIT margin Group

Netprofit

Freecashflow

Dividend payment

KeyfiguresIn

mill

ion

CH

FIn

mill

ion

CH

FIn

mill

ion

CH

F

306.6

151.7

137.7

17.2

276.3

141.9

118.4

16.0

244.6

137.8

91.4

15.3

248.6

153.4

78.2

17.0

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

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

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

5.1

13.8

– 9.0

0.4

2.1 %

4.8

9.5

–2.9–1.7

2.0 %

15.6

28.5

13.4 13.0

2.1

9.3

6.3

0.1

5.7 %

9.3 %

8.5

2.5 1.6 2.5

13.6

3.8

19.4

7.6

11.3

– 11.1

11.1

15.1


7

Investments

Development of YPSN

Balance sheet structure

Infixedassets

R&Dexpenditures

Depreciation / amortisationoffixedandintangible assets

Total assets

Equity

Equity ratio

In m

illio

n C

HF

Ave

rage

(rat

ed o

n a

scal

e of

100

)

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

Identification:Ifeelastrongsenseofidentification with this company

7.5

15.9

18.517.2

25.223.7 23.5

27.927.7

25.6 25.0

28.866.6 %

63.6 % 64.4 %66.6 %

327.3341.8

354.6

218.0 217.4228.2

240.7

361.2

IdentificationofemployeesEmployee headcount

Em

plo

yee

he

adco

un

t

Switzerland International Total

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

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

241

1 026 1 015 9991 050

251 287312

785 764712 738

66

7379 81

In C

HF

April 2014 March 2015

85.0

80.0

75.0

In m

illio

n C

HF

2008 2010 2012 2014

91.1

8

Growth trajectory continuesOutstanding business year 2014/15

In business year 2014 / 15, the Ypsomed Group posted consolidated sales of CHF 306.6 million, which represents an increase of 11 % year on year. The operating result (EBIT) rose by more than 80 % to CHF 28.5 million in comparison with the previous year (CHF 15.6 million). Net profit came to CHF19.4million.At theEBIT level,Ypsomed’sprofita-bility now lies at 9.3 % (prior year: 5.7 %) and at the netprofitlevelat6.3%(prioryear:4.9%).Theriseinprofitability isprimarilyduetoaconsistentandongoing cost and process optimisation process.

Brokendownbysegments,theresultcanbepresentedasfollows:

In Diabetes Direct Business, sales increased by 16.3 % from CHF 118.4 million to CHF 137.6 mil-lion. In addition, following the turnaround in 2013 / 14 (EBIT CHF 6.3 million) the operating re-sult more than doubled, with CHF 13.0 million being posted for 2014 / 15, showing that the in-vestments of the previous years are paying off in a most impressive manner.

The Delivery Devices segment posted an in-crease in sales of 6.9 % from CHF 141.9 million to CHF 151.7 million for 2014 / 15, which con-firms that thegrowth trajectorystarted in2012still continues. In addition, there was a marked improvement in the EBIT segment. This rose from CHF 9.3 million in the previous year to CHF 13.4 million.

The segment Others – this contains the preci-sion mechanics supplier Ypsotec and the non-operationally-used properties – posted a slight increase in sales from CHF 16.0 million to CHF 17.2 million and an improvement in EBIT from CHF 0.1 million to CHF 2.1 million. The sale oflandattheSolothurnsiteresultedinaprofitofCHF 1.5 million.

Excellentresultdespitenegative currency effects

The result is all the more impressive given the background of the unpegging of the Swiss Franc from the Euro by the Swiss National Bank on 15 January 2015. Although admittedly only the last 2.5 months of the reporting year were affected by this challenging situation for all export-oriented Swiss companies, there is no doubt that the results would have been even better if the Euro exchange rate of CHF 1.20 had been retained. In this case, sales would have been CHF 311.2 million and EBIT CHF 30.3 million. In view of the structural problems in the eurozone, Ypsomed now faces the challenge of adjusting to a strong Swiss Franc both for the busi-ness year 2015 / 16 and for the longer term. Howev-er, it was not as a reaction to the thunderbolt in January that our company put in place appropriate measures. It has been doing this for a long time as part of an ongoing process. We try to ensure that the costs and sales of a business and / or business segment are always incurred in the same currency wherever possible. In addition, we carry out invest-ments in property, plant and equipment with sup-pliers in the eurozone. In this respect, the “Swift” programme for process optimisation is extremely important. A detailed account of the effects of ex-change rate fluctuations on Ypsomed’s businesscan be found on page 11.


9

mylife™ Diabetescare

Under the mylife™ Diabetescare brand, Ypsomed has successfully built up its direct business with products and services for people with diabetes mel-litus. The product with the highest turnover in the mylife™ portfolio is the tubeless mylife™ OmniPod® insulin patch pump, sales of which have risen by around 50 % in comparison with the previous year. But sales with blood glucose monitoring systems also increased in this area by 8.5 %, despite zero global growth, in particular due to good results in the tendering business.

mylife™ launchesnewproducts:

Since the end of February 2015, Ypsomed’s new needles for its mylife™ Clickfine® DiamondTip in-jection pen have been on the market in Germany, Austria and Switzerland. Our new pen needles feature some amazingly innovative characteris-tics: A 6-bevel precision needle tip improves the smoothness and glide of the needle, the result being a noticeably more pleasant and reliable in-jection. This was confirmed in an independentuser study carried out in Germany with more than 100 participants. The prospects are highly promising, since 91 % of the users questioned said they would switch to the DiamondTip in the future or would consider doing so. The mylife™

Clickfine® DiamondTip will gradually replace the former3-bevelClickfineneedleinallourmarketsin business year 2015 / 16. Find out more on page 14.

With the mylife™ YpsoPump®, we are introducing a new insulin pump in business year 2015 / 16: This is the result of more than 30 years of expe-rienceinthefieldofdiabetologycombinedwiththe latest technology and tailored to current cus-tomer needs. The launch will mark the culmina-tion of an intensive development phase, where-by not only the central pump unit, but all the components of the whole insulin pump system had to be redesigned and fully coordinated with each other: insulin pump, infusion set, compati-ble inserter, optional fillableorpre-filled insulincartridges as well as treatment management software.Forthefirsttimeinthehistoryofinsu-lin pump treatment, it is possible to identify a

clear segmentation of the market. On the one hand, patients increasingly opt for the freedom of the patch pump mylife™ OmniPod®. On the other hand, a growing trend towards even great-er metabolic control by means of the complex functions and algorithms of standard, tube-con-nected insulin pumps can be observed. Between these two extremes, there is a broad market for easy-to-use, easy-to-understand, potentially more cost-efficient, “pure” insulin pumps. Themylife™ YpsoPump® was developed with this market segment in mind. As the only insulin pump manufacturer, Ypsomed is also in the hap-py position of being able to offer the ideal solu-tion for two of the three segments and is thus unique with its offering. Find out more about mylife™ YpsoPump® on page 15.

Ypsomed Delivery Systems

Our pharmaceutical and biotech customers obtain injection systems and associated services from the YDS brand – Ypsomed Delivery Systems. YDS has enjoyed an intensive and successful year and thewell-filledprojectpipelinemeanswecan looktothefuturewithfullconfidence.Thefollowingde-scribes a selection of our current major projects:

The long-standing partnership between the FrenchpharmaceuticalcompanySanofiandYp-somed has been further strengthened by a major new project: From the end of 2016, components for injection systems will be manufactured on an additional production line at the Solothurn site.

Inthefirstquarterof2015,operationsbeganatthe Solothurn site on the automated production of the UnoPen™ injection pen. The special fea-ture of the UnoPen™systemisitsflexibility.Itispossible to produce a wide variety of UnoPen™

styles, which means that all the different cus-tomer requirements can be taken into account. It


10

is remarkable that the development and com-missioning of this complex plant took less than two years. The Russian company Pharmstand-ardwillbethefirstofYpsomed’scustomerstouse the UnoPen™ as the injection system for its medication. In general, disposable injection sys-tems are a strong future market. Find out more about the importance and the development of the UnoPen™ and its production site on page 24.

The market for glucagon-like peptide-1 (GLP-1), a drug that is becoming increasingly important in the treatment of type 2 diabetes, is growing fast. In the reporting year, two Ypsomed pens based on GLP-1 products for our pharmaceutical part-ners GlaxoSmithKline and AstraZeneca were successfully brought to market.

Lupin, one of the largest pharmaceutical compa-nies in India, is now using the YpsoPen® from Ypsomed to market its insulin preparation named Lupisulin. This project is an excellent example of a whole raft of projects with pharma-ceutical partners from the newly industrialising countries. They are particularly responsive to solutions for price-sensitive markets and Ypsomed has precisely the right offering.

The globally active Japanese medical technolo-gy company Terumo Corporation has integrated the autoinjector YpsoMate® from Ypsomed into its pre-fillable polymer syringe systems. In thereporting year, Terumo has gained two pharma-ceutical customers with this combination. The list of further promising autoinjector projects with prominent pharmaceutical partners is long.

Forecast

In the coming business year 2015 / 16, the expens-es for the launch of the mylife™ YpsoPump® and the opening up of new markets will have an impact on results. We anticipate growth in sales of around 10 % and an operating result (EBIT) of around 35 million, depending on the currency trend. It is worth stating that, if the Euro exchange rate had remained at CHF 1.20 the result would be around CHF 9.0 million higher.

We wish to thank you, our valued shareholders, for yourconfidenceinus.

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

Simon MichelChiefExecutiveOfficer


11

The unpegging of the Swiss Franc from the Euro had only a limited impact on the business year 2014 / 15, since only two and a half months were affected by the lower Euro / Franc rate. The im-pact will be felt in full in the business year 2015 / 16. Details of this are set out in the over-view below:

In the reporting year, the negative currency effect on the result and the operating result amounted to CHF 4.6 million and CHF 1.7 million, respec-tively. In the business year 2015 / 16, the negative currency effect will account for around CHF 22.0 million and CHF 9.0 million, respectively.

makes every effort to ensure that sales and costs are incurred in the same currency. In the graphic entitled “Currency impact on Ypsomed product categories”, the sales and manufacturing and / or purchase costs are broken down into the relevant currencies. The greatest currency impact can be seen with the pen needles, where the majority of sales are made in Euros but the manufacturing costs are primarily incurred in Swiss Francs. In the pump business with the mylife™ OmniPod®, the ex-change rate trend between the Euro and the US dollar is decisive and in future the Euro rate will have an even greater impact on the result with the growth of the mylife™ YpsoPump®. In the other business and / or production categories the result can be almost completely hedged.

Currency impact on Ypsomed product categories

How the unpegging of the Swiss Franc from the Euro impacts the results

The unpegging of the Swiss Franc from the Euro by the Swiss National Bank on 15 January 2015 took the Ypsomed Group by surprise and pre-sented us with some significant challenges: Ypsomed sells its products worldwide, primarily in the eurozone. Ypsomed is keen to minimise the impactofexchangeratefluctuationsonthebusi-ness result by means of a natural hedge and

YDS mylife™ Diabetescare

Injectionsystems

Pen needles YpsoPump® Infusion sets Blood glucosemonitoring

OmniPod® DiaExpert

Sales CHF EUR / USD EUR / other EUR / other EUR / other EUR / other EUR

Manufacturing /purchase costs

CHF CHF CHF USD EUR USD EUR

Sales structure Cost structure

*EUR=CHF1.18;**constantexchangerate:EUR=CHF1.20;***Budget rate of EUR = CHF 1.07

Currency effect EBIT margin

in C

HF

mill

ion

43.3

Sales EBIT

2014 / 15 2015 / 16

Other currencies

3 %

USD5 %

GBP7 %

CHF25 %

EUR60 %

Other currencies

2 %

USD15 %

GBP 2 %

CHF41 %

EUR40 %

307*

337***

311**

359**

2014 / 15 2015 / 16

2930

9.3 %9.6 %

12.1 %

10.3 %

35

43

Yorkshire Dales – United Kingdom

Dia

bet

es C

are

Strong mylife™ distribution network in 12 countries

Under the brand mylife™ Diabetescare, Ypsomed successfully deals in direct business with products and services for people with diabetes mellitus. The product portfolio includes:

Insulin pumps Infusion sets Pen needles Blood glucose monitoring systems

Pat

ient

bas

e

2011 / 12 2012 / 13 2013 / 14 2014 / 15 2015 / 16

Business year

mylife™ OmniPod® – continued growth

Source: IDF Diabetes Atlas, 2014

Diabetes – pandemic growth over the next 20 years

2014 2035

387 million people (8.3 % of the global population)

592 million people

According to estimates of the International Diabetes Federation, by 2035 592 million people will be suffering from diabetes – an increase of over one-third.

Undiagnosed diabetes cases worldwide

46 %

Ypsomed – Diabetes Care

14

Under the brand mylife™ Diabetescare, Ypsomed successfully deals in direct business with products and services for people with diabetes mellitus. The product portfolio includes:

mylife™ Clickfine®andPenfine® Classic pen nee-dles, manufactured by Ypsomed at its Solothurn site.

The blood glucose monitoring systems mylife™

Unio™ and mylife™ Pura®, manufactured by the Tai-wanese company Bionime according to Ypsomed

specifications anddistributedbyYpsomed salescompanies.

The tubeless insulin patch pump mylife™ Omni-Pod®, manufactured by the American company Insulet, for which Ypsomed holds global distribu-tion rights (excluding the USA, Canada and Israel).

Soon to be launched: insulin pump mylife™

YpsoPump® with the infusion sets mylife™ Orbit®

soft and Orbit® micro, which have been com-pletely redesigned by Ypsomed.

mylife™ DiabetescareSuccessful in patient service

Since the end of February 2015, Ypsomed’s new needles for its mylife™ Clickfine® DiamondTip injec-tion pen have been on the market in Germany, Aus-tria and Switzerland. Our new pen needles feature some very innovative characteristics: A 6-bevel precision needle tip improves the smoothness and glide of the needle, the result being a more com-fortableandreliable injection.Thiswasconfirmedin an independent user study carried out in Germa-ny with more than 100 participants.

Highly promising prospects

As well as maximum injection comfort, the new needlefeaturestried-and-testedClickfine® thin wall technologyforanoptimum,fasterflowofmedica-tion. The prospects are highly promising, since 91 % of the users questioned said they would switch to the DiamondTip in the future or would consider doing so. The mylife™ Clickfine® Diamond-Tip will gradually replace the former 3-bevel Click-fine needle in all our markets in business year2015/16.

mylife™ Clickfine® DiamondTip pen needles6-bevel needle tip receives best marks in user study

User questionnaire on pain perception

mylife™ Clickfine® DiamondTip in three lengths

Felt a lot less pain

Felt less pain

Didn’t notice any difference

Felt more pain

1 %

34 %

44.6 %

20.4 %


Dia

bet

es C

are

15

Ypsomed is launching the new mylife™ YpsoPump® insulin pump in the autumn of 2015. This is the re-sultofmorethan30yearsofexperienceinthefieldof diabetology, combined with the latest technolo-gy and tailored to current customer needs. The launch marks the culmination of an intensive devel-opment phase, whereby not only the central pump unit, but all the components of the insulin pump system were redesigned and fully tailored to each other: insulin pump, infusion set, appropriate pierc-ing head, optional fillable or pre-filled insulin car-tridges as well as diabetes management software.

Simple for doctors and patients

The needs of patients take centre stage. Due to this, many meticulous tests were carried out with pump users and medical specialists during the de-velopment phase. The result is an insulin pump that focuses on the essential functions. The new insulin pump system is easy to learn and leaves doctors and patients with more time for treatment manage-ment. The symbol-based menu and state-of-the-art touch screen of the mylife™ YpsoPump® mean that its operation is simple, intuitive and fast. Thanks to theoptionof insertingpre-filled insulinreservoirs into the mylife™ YpsoPump®, there is no longerthenecessitytospendprecioustimefillingthe cartridges. In addition, the light and discreet design of the YpsoPump® means that it is an unob-trusive companion in all everyday situations. This is a particularly important point in user tests and al-ways generates very positive feedback.

An“excellent”insulinpump

The good impression is not simply a spontaneous reaction,butisalsoverifiedbyin-depthstudies.Inthe case of the central user study on mylife™ Yp-soPump®, in which 30 patients and carers had to complete numerous tasks after a short training ses-sion, the mylife™ YpsoPump® clearly came out on top: 88 % of patients and 87 % of carers rated the pump as “excellent”.

Ypsomed covers several segments

For the first time in the 30 year history of insulinpump treatment, it is possible to identify a clear segmentation of the market. On the one hand, pa-tients are increasingly opting for the freedom of the patch pump mylife™ OmniPod®, with the corre-sponding positive effects on mylife™ market share and turnover. This latest segment in the pump mar-kethasbecomefirmlyestablishedovertimewithamarket share of up to 20 % in some countries. On the other hand, a growing trend towards even greater metabolic control by means of the complex functions and algorithms of standard, tube-con-nected insulin pumps can be observed. Between these two extremes there is a broad market for easy-to-use, easy-to-understand, potentially more cost-efficient, “pure” insulin pumps. The mylife™ YpsoPump® was developed with this market seg-ment in mind. Ypsomed is the only insulin pump company and manufacturer in the unique market position of being able to offer the ideal solution for two of the three segments.

mylife™ YpsoPump®

Simple to learn, simple to use, beautifully discreet


16

It is not just the ground-breaking products that are crucial for the great success of mylife™ Diabetes-care, but also the know-how and prestige of our sales organisation. Via a close network currently comprising twelve subsidiaries and dozens of dis-tributors, we are able to reach a constantly growing customer base. The way the sales organisations operate strategically and tactically differs from country to country because there are highly differ-ent,market-specific“rules”ineachofthespecificcountries and regions. These are described in the following brief portraits of our subsidiaries.

This contribution is illustrated with photos of the global Ypsomed campaign for World Diabetes Day (WDD) on 14 November, 2014. WDD was set up by the International Diabetes Federation (IDF) with the aim of raising awareness about diabetes and its consequences and in order to increase the public perception of this disease, which is the fast-est-growing worldwide.

Germany

Ypsomed GmbH in Liederbach near Frankfurt a. M. is responsible for the German market with its around one million insulin-dependent diabetics. The subsidiary, which was formed from a subsidi-ary of Disetronic in 2003, currently employs 87 members of staff headed up by General Manager (GM) Dirk Scherff. Scherff also serves as GM for Switzerland and Austria, which means that the syn-ergies in the DACH area can be exploited as fully as possible. The sale of mylife™ products is carried out via doctors, pharmacies, the mail-order business of the Ypsomed subsidiary, DiaExpert, as well as via our own web shop mylife-shop.de, which went live in the autumn of 2014.

The German healthcare system is primarily based on public sector health insurance schemes, which reimburse the costs for insulin treatment in full, with just a minimal deductible. There are tangi-ble trends towards the consolidation of the health insurancesystemandtowardsaflat-rateinsurancemodel.

The reporting year marked the kick-off of the re-structuring of Ypsomed activities in Germany, start-ing with the complete separation of the two com-panies Ypsomed and DiaExpert. In addition, the focus on the support of doctors’ practices relevant for insulin pumps has been strengthened, resulting in an extra 2 600 patients being acquired for the mylife™ OmniPod® insulin patch pump solution. This increase in pump patients is around two and a half times greater than in the three preceding years and corresponds to an increase in market share from around 8 % in 2013 to around 12 % today.

Switzerland

Ypsomed has been active on the Swiss market since 2003. Switzerland has approximately 60 000 insulin-dependent diabetics. We currently service this market with 12 employees. In Switzerland, our sales force focusses on doctors, wholesale distrib-utors and pharmacies. The private health insurance system reimburses the treatment costs in full, less a deductible. As in Germany, Ypsomed Switzerland sells mylife™ products directly to end users via a web shop. mylife™ OmniPod® has established itself as a force to be reckoned with in the Swiss insulin pump market, with a market share of around 22 % and, as of the reporting year, it is represented in all relevant diabetes centres.

Austria

Ypsomed has been active on the Austrian market, which has some 80 000 insulin-dependent patients, since 2011, currently with a workforce of six. In Austria, the public social insurance for the federal states and professional groups conclude contracts directly with the manufacturers, whereby pharma-cies and the wholesale trade are largely circum-vented. The patient is reimbursed in full, but has little freedom of choice. In the past business year, by focusing on the relevant doctors and patients for insulin pump treatment, Ypsomed Austria was able to achieve a market share of approximately 15 % with the mylife™ OmniPod®. The high quality of the product and the associated patient satisfaction had a very positive effect on the success of the treat-ment. One of the targets in the new business year is to make the health insurers even more aware of this fact. In addition, there has been a switch to in-ternal logistics processes and central delivery from the Ypsomed Central Warehouse in Rheinfelden.

Ypsomed subsidiariesThe organisation and the people behind mylife™ success


Dia

bet

es C

are

17

Netherlands

The Netherlands, with its approximately 120 000 in-sulin-dependent diabetics, has been an important Ypsomed subsidiary for many years. The Dutch branch was set up in 2003, based on the former Disetronic subsidiary. Dave Herkelmann heads up the 10-strong team, having taken over from the long-standing GM Bram van Bergen in 2014. The health system in the Netherlands is based on pri-vate health insurance and full reimbursement of costs, but currently finds itself in themiddle of atransformation to a market determined by the health insurers, including the introduction of a ten-dering process for care contracts. Therefore, de-spite its good position with more than 20 % market share in the pump business, Ypsomed Netherlands is facing challenges in this traditionally strong pump market. The effectiveness of pump treatment must be proven once again as far as the health in-surers are concerned. Price pressure is clearly in-creasing, in particular in the market for blood glu-cose monitoring systems. Ypsomed Netherlands is therefore in intensive negotiations with the health insurers and is positioning itself as the partner for insulin pump treatment. Our branch hopes to rein-force this claim by continuing the growth of the mylife™ OmniPod® and by increasing its pump port-folio via the unique and newly developed mylife™

YpsoPump®. The Netherlands is a pilot market for this new product and the team is determined to help mylife™ YpsoPump® break into the market and lay the foundations for further expansion.

France

Ypsomed has been active in France since 2003 and currently has 23 employees led by the GM, Jean-François Flamant. France is a large diabetes market with approximately of 440 000 insulin-de-pendent patients. The Health system is based on a public health insurance scheme that guarantees the full refund of costs. Sales from the manufactur-er to the patient are made exclusively via pharma-cies and direct selling is actually forbidden. The system is subject to huge economic pressure and Ypsomed France is reacting to this by adjusting its product range and prices. mylife™ Unio™ and mylife™

Pura® blood glucose monitoring systems and mylife™ Clickfine® pen needles are primarily sold. In particular with regard to the blood glucose monitor-ing systems, continued further development in col-laboration with pharmacies is essential – a factor that Ypsomed France will continue to pay special attention to in the coming business year. The mylife™ Clickfine® DiamondTip pen needles that are abouttobelaunchedwillalsobenefitfromthis.

Switzerland,France,GermanyandItaly


18

Italy

The latest addition to the Ypsomed group of sub-sidiaries is Ypsomed Italy, which was founded in 2013. The potential here is huge: around 470 000 people are insulin dependent, which makes Italy the third largest diabetes market in Europe. Driven by the massive interest in the patch pump mylife™

OmniPod®, Peter Haag, the GM, quickly found his team had expanded to 10 employees. After an in-tensive development phase, Ypsomed Italy launched the mylife™ OmniPod®,itsfirstproduct,inAugust 2014, and is growing fast. The environment is challenging: It is true that national insurance cov-ers all the costs incurred by patients, but the Italian health system is severely fragmented and the sometimes extremely different approval procedures generate high costs. Some regions solve their care problems through tender processes and the distri-bution system is organised differently depending on the region. Further savings rounds will place the health system under even more pressure. Despite this, Ypsomed Italy is optimistic for the future and in the coming business year it will build up a sec-ond mainstay in its portfolio with the introduction of the mylife™ Clickfine® pen needles.

United Kingdom

Together with his 20 employees, the GM, Gary Davies, serves another important diabetes market. Around 390 000 people in the UK require subcuta-neous insulin because of their diabetes. They are cared for by the centralised National Health Ser-vice, which has been subject to major restructuring and cost reduction pressures for a long time now. Budget responsibility is now held by regional pro-curement committees, which sometimes means that the full costs cannot always be taken on every-where in the country. Supply contracts with manu-facturers are awarded regionally in tendering pro-cesses, which means that pharmacies and wholesalers are sometimes circumvented. Yp-somed UK, which was founded in 2010, had an eventful year: In the area of pen needles, it won 27 new supply contracts for mylife™Penfine® Classic, exceeding the budget significantly. In the pumpbusiness, the market share was increased by more than 11 % and an important supply contract was won in the Central Manchester region. In the area of blood glucose monitoring systems, the focus is currently on winning further market share within the existing supply contracts. In addition, in the com-ing business year, it is anticipated that Scotland and Ireland will be included in mylife™ OmniPod® supply.

(India (top/bottom) and the Netherlands (middle)


Dia

bet

es C

are

19

Scandinavia

Since 2003, Ypsomed has also been represented in the Scandinavian countries of Norway, Denmark, Sweden and Finland. Around 180 000 people in this area are insulin dependent. Ypsomed Nordics serves this massive region with a team of 11 em-ployees. The health system functions in all four countries with national social insurance schemes and more or less full cost coverage. The Scandina-vian countries are at the top of the table for a mar-ket determined by the health insurers with regard to the development of their health systems. Accord-ingly, many regions and even whole countries (Sweden and Finland), have adopted a system with tendering processes and supply contracts between manufacturers and the social insurance system. The cost pressure on Ypsomed Nordics is high. In view of this challenge, our subsidiary focuses on excellentcustomerserviceinordertofirmlyestab-lish Ypsomed and the mylife™ products with pa-tients, diabetes counsellors and doctors for the long term. In the past business year, the 10 % share in the Norwegian and Swedish pump market was exceeded and in Norway the 15 % mark is even within range. In the coming business year, Ypsomed Nordic hopes to really boost the sales of pen needles and blood glucose monitoring sys-tems and to optimally prepare the introduction of mylife™ OmniPod® in Finland and Denmark as well as mylife™ YpsoPump® in all Nordic countries.

India

As can be seen from the market portraits above, the markets in Europe already function extremely heterogeneously. It is one of Ypsomed’s greatest strengths that, thanks to a high level of flexibilityand in-depth market knowledge, its sales organisa-tions are able to optimally adapt to the local situa-tion. This competence is being particularly tested in the market in India. It is estimated that there are around 8.5 million insulin-dependent diabetics in India. Although this market is immense, its ex-ploitation faces the challenges of a turbulently de-veloping emerging market, high bureaucratic hur-dles and immense price sensitivity. Since 2008, Ypsomed India and its GM, Sanjay Rajpal, together with his nine employees, has been wrestling with this task. This subsidiary concentrates on major customers in the economy and national institu-tions. In the past business year, for example, mylife™ pen needles and blood glucose monitoring systems were successfully introduced into all the administrative regions of the Indian army and in two further large regions of the Indian railway company.

Ypsomed India has introduced additional services such as the “mylife™ Academy” diabetes training programme for medical specialists to counter the increased price sensitivity of its customers. In the coming year, Ypsomed India hopes to further ex-pand its market share with new, innovative meth-ods to consolidate a strongly growing market.

Active salesGermany, United Kingdom, the Netherlands, Switzerland, Austria, Norway, Sweden and Italy

Sales as of business year 2015/16 Finland, Denmark, Luxembourg and Ireland

Sales of mylife™ OmniPod®

Panorama landscape in Bavaria – Germany

Del

iver

y S

yste

ms

12 – 13 %0 – 2 %1 – 3 %

12 – 13 % 1 – 2 %

Ypsomed expands production

Our pharmaceutical and biotech customers obtain injection sys-tems and associated services from the YDS brand – Ypsomed Delivery Systems. Ypsomed is the recognised industry leader in this field, since it is the largest global developer and manufac-turer of pens with which patients can inject themselves subcu-taneously with their liquid medication.

Global growth in pharmaceutical market in %

Source: IMS Health, 2014

Investments in production capacities for injection systems in million CHF

New products – product launches and studies

2012 / 13 2013 / 14 2014 / 15 2015 / 16

Studies Product launches

Solothurn Burgdorf

2.3

4.25.9

9.8

2013 / 14 2014 / 15

Ypsomed – Delivery Systems

22

Our pharmaceutical and biotech customers obtain injection systems and associated services from the YDS brand – Ypsomed Delivery Systems. Ypsomed istherecognisedindustryleaderinthisfield,sinceit is the largest global developer and manufacturer of pens with which patients can inject themselves subcutaneously with their liquid medication.

Thisgoodresultisalsoconfirmedwhenyoulookat the project portfolio. In the reporting year, Ypsomed announced the following new contracts and cooperation agreements:

The long-standing partnership between the French pharmaceutical company Sanofi and Ypsomed has been further strengthened by a new major project: From the end of 2016, components for injection systems will be manufactured on an additional production line. The line will be able to manufacture several different types of compo-nents for injection systems. The new production line will be of a similar complexity and size as the one already in place.

Since July 2014, the British company GlaxoSmith-Kline has been selling its GLP-1 product Eper-zan® / Tanzeum™ in a LyoTwist™ device from Yp-somed.

The British company AstraZeneca uses a LyoTwist™ device from Ypsomed for the subcu-taneous administration of its GLP-1 product Bydureon®. The product has been available in the USA since September 2014 and it will be available on the market in Europe this year.

The globally active Japanese medical technology company Terumo Corporation has integrated the autoinjector YpsoMate® from Ypsomed into its PLAJEX™pre-fillablepolymersyringesystemstocomplement its product and service offering. In the reporting year, Terumo has gained two phar-maceutical customers with this combination.

Lupin, one of the largest pharmaceutical compa-nies in India, is now using the YpsoPen® from Yp-somed to market its insulin preparation named Lupisulin. Thus our pharmaceutical partner has found the ideal pen solution for the price-sensi-tive Indian market.

The Russian company Pharmstandard will be the first of Ypsomed’s customers to use the Uno-Pen™ as the injection system for its drugs. The company will bring to market its two medications Biosulin (insulin) and Rastan (growth hormone) using the Ypsomed disposable pen under the name БиоматикПен® 2 (BiomatikPen® 2).

The American company Palatin Technologies, Inc. has started the third clinical phase for its new medication Bremelanotide using the autoin-jector YpsoMate®.

From now on, Ypsomed will be supplying the Swiss company Finox with a disposable injection system for the administration of FSH biosimilars (fertility hormone).

Newcustomers,newprojectsPipeline remains well stocked

Injection systems and components* manufactured by Ypsomed

*Thefinalproductsonthemarketmaydifferfromthisillustration.

Del

iver

y S

yste

ms


23

2015 / 16 2016 / 17 2017 / 18 2018 / 19 2019 / 20

Strong growth Future market – disposable injection systems

If we look at the near and medium-term future, the picture is equally promising, as the graphic show-ing the anticipated volume of sales in the different segments of YDS illustrates.

Simple and user-friendly for patients

It is noticeable that the anticipated strong growth rates of sometimes up to 35 % per business year are mainly driven by disposable injection systems. This segment includes pens such as UnoPen™ and a new custom platform version, the FixPen™. Pens are used in treatments where patients more fre-quently administer the medication themselves and often in different doses. The largest number of units is used in the insulin treatment of diabetics. How-ever, autoinjectors are also included in the dispos-able product segment. These are used for a num-ber of innovative medications that have to be administered subcutaneously. They enable patients – as the name already implies – to administer an almost fully automatic injection. The injection is triggered by placing the autoinjector on the skin and needle shielding ensures that the needle is never visible and the patient is fully protected from needle-stick injuries after injection. Therefore, with YpsoMate® and VarioJect™ Ypsomed is able to offer two extremely user-friendly and innovative prod-ucts. This has generated several promising pro-jects.

Simple and user-friendly for pharmaceutical partners

Disposable devices are not just simple and safe to use for patients, but symbolically also for the corre-sponding pharmaceutical partners, who face the challenge of meeting the increasingly stringent reg-ulatory requirements. For example, they must pro-vide comprehensive complaint handling and prod-uct support services. It has been shown that the useofdisposabledeviceshassignificantlysimpli-fiedsuchprocesses,makingthemmorecosteffec-tive because no separate logistics are required as in the case of reusable pens. The medication and the injection system form a single unit. Disposable devices are also the mainstay of Ypsomed’s con-tract manufacturing business. The disposable seg-ment is also related to the contract manufacturing segment. Every year, Ypsomed manufactures hun-dreds of millions of pen components, which are as-sembled into disposable injection systems, for mainly large pharma customers.

Stable market for reusable pens

Nonetheless, we anticipate that the growth in sales volumes in the reusable pen segment will continue. These products are important for markets where the concept of something being “reusable” is his-toricallyfirmlyentrenchedandwherecultural fac-tors mean that “disposable” is only tentatively ac-cepted or there is a very high level of price sensitivity. Thanks to the ServoPen® and the Yp-soPen®, Ypsomed has two modern platforms with which both the premium segment and the price-sensitive segment can be well served.

Planned growth in sales volume for YDS – average growth > 25 %

Disposable injection systems Reusable injection systems Contract manufacturing


24

In the first quarter of 2015, operations began inBuilding 24 on the Solothurn site for the automated production of the UnoPen™ injection pen. The nec-essary plastic components are produced on 12 ultra -modern injection moulding machines. The new assembly plant covers an impressive 180 m2 and is particularly quiet thanks to special sound insulation. At a total of 59 stations, the individual assembly steps can be monitored and controlled in real time. The special feature of the UnoPen™ system is its flexibility.ItispossibletoproduceawidevarietyofUnoPen™ styles, which means that all the different customer requirements can be taken into account on a single line.

Considering assembly at the design stage

It is remarkable that the development and commis-sioning of this complex plant took less than two years. This was partly due to the fact that the pro-cess engineers at Ypsomed were heavily involved at the early product development stage and were invited to provide important input regarding subse-quent process controls. This meant that the individ-ual parts could be constructed in such a way that they could be optimally assembled. In addition, our maintenance mechanics were involved during the plant development phase with suppliers and so were able to directly influence the individual pro-cess steps within the plant. Production employees could also get to know the plant and familiarise themselves with it at the same time as it was being completed.

NextroundofpencomponentsforSanofi

And even whilst we were completing the plant for our own product, UnoPen™, we also started on the next round, this time as a contract manufacturer. Thanks to a new major project with our long-term partnerSanofi,wewillcreateafurthermanufactur-ing and assembly site for injection system compo-nents.

Decisive tenths of a millimetre

Yet how does Ypsomed plan and build such highly complexproductioninfrastructure?Thedifficultyofsuch a task becomes all the clearer when you real-ise that just minuscule changes and irregularities in the pen components can bring a whole assembly line to a grinding halt. Sometimes a production-re-lated imperfection of just a few tenths of a millime-tre caused by the injection moulding process can prevent a part from being grabbed at precisely this point by a vacuum lifting tool with the knock-on consequences for the following stations. A differ-ence in volume of equally small proportions can also mean that parts can suddenly no longer be conveyed or assembled. Naturally, it is important to use tried-and-tested processes and suppliers when designing the individual stations. In addition, our more than 20 years of experience in manufacturing pens stands us in very good stead.

Experiencemakesthedifference

In view of the challenges described above, the suc-cessful construction of such a production site is only possible thanks to the many years of in-depth experience of our employees in the areas of tech-nology and production. These employees include numerous people who seem to have a “sixth sense” for technical plants and, thanks to their experience, intuitionandfinelyhonedskillsofobservation,theyidentify things that others would not notice and that cannot always be pinpointed even with technical tools. It is necessary to be able to “feel” the plant and to think yourself into its very core. In practice, this often means observing and listening to a ma-chine for minutes at a time until a certain anomaly strikes you and provides you with the possible path to a solution. In many cases, high-speed cameras are used in this.

2010 2011 2012 2013 2014 2015 2016 2017

DynamicexpansioninSolothurnA complete manufacturing plant in less than two years

It took more than seven years from the innovation of the Un-oPen™ to the start of mass pro-duction. With the new assembly plant, it will be possible to pro-duce pens for a broad range of customer products.

From innovation to mass production

Innovation,researchanddevelopmentphasesfortheUnoPen™ injection platform

Developmentoffirstcustomer-specificUnoPen™

Del

iver

y S

yste

ms


25

Squaring the plant

In a further, parallel project area, it is important to findtheoptimumspatiallayoutfortheplant,toin-corporate this into the existing rooms and to under-take structural modifications if necessary. In thiscontext, “optimum” means a great deal:

Observance of Ypsomed’s zoning concept in or-der to ensure compliance with the indispensable cleanliness and hygiene provisions for the manu-facture of medicinal products.

If necessary, the removal of any contaminated parts of the existing building – in the case of the UnoPen™ production rooms in the former Ascom building in Solothurn, we had to replace the com-pletely outdated ventilation system, for example.

To facilitate production with short pathways and as few temporary storage areas for parts and semi-finishedproductsaspossiblethatarealso

ideally placed so that “just-in-time” injection pens can be manufactured. We use the princi-ples of lean production here and, in particular, the Kanban Method.

Tried-and-tested partners

Up until now, Ypsomed has always been keen to make use of existing buildings for its construction projects. This has the advantage that the projects can be realised more quickly than with a new build, where approval processes can often cause serious delays to the start of the building work. The build-ing projects are generally carried out using the same architects and construction companies. Thanks to well-practised processes, it can be guar-anteed that everything is ready when a complete assembly system is delivered, installed and put into service a few weeks later.

2010 2011 2012 2013 2014 2015 2016 2017

UnoPen™ manufacturing plant

From innovation to mass production

Start of highly automated mass production

Structuralexpansionmeasures

Procurement,commissioningandindustrialisationoftheassembly plant

Developmentoffirstcustomer-specificUnoPen™ Customer-specificUnoPen™

Customer-specificUnoPen™

Customer-specificUnoPen™


26

Size: 16.9 cm, weight (without cartridge): 24 g, spe-cial features: disposable product for the administra-tion of liquid medication (e.g. insulin), suitable for mass production.

Mandate: In compliance with established control concepts and benchmarks, to offer the patient a simple and safe injection and to facilitate the fast approval of the medication for the pharmaceutical partner involving as few hurdles as possible.

Concept: Simplified use of the UnoPen™ for the user. Unlike reusable pens, it is not necessary to re-place the drug cartridge, which is just one of its ad-vantages. The UnoPen™ alsosimplifiesrequirementplanning for the pharmaceutical companies and marketsupply,sincethepensandthedrugarefirm-lyfixedtogetherfromtheoutsetandaredistributedtogether. Even in the case of defective pens, there is no need for a replacement pen process as a new disposable pen can simply be taken from the pack. Thetried-and-testedadministrationfulfilstheneedsof both the users and the pharmaceutical partners: The principle of “dial and dose” is well known to every diabetic. New pharmaceutical companies, or those which previously had not dealt with diabetes and which are now entering the market due to the importance of insulin manufacture with regard to patient trends and the development of biosimilars and generics, adopt tried-and-tested administration concepts in order to win acceptance and approval as easily as possible.

Development: From the very start of development, it was clear that the UnoPen™ platform would have to be not only reliable, simple and proven, but at the sametimeithadtobesoflexiblethat itwouldbepossible to develop and industrialise different ver-sions quickly and simply, not simply from the point of view of design, but also from a technical per-spective. The competitive patent landscape was a particular challenge in this. Risks had to be mini-mised and Ypsomed was able to achieve this in a highly effective manner thanks to the innovative strength of its product development organisation. All our experience with disposable pens was ex-ploitedinrefiningandoptimisingtheplatformonanongoing basis. This was illustrated clearly in the us-ability and handling studies, in which the accept-ance of the platform amongst end users was metic-ulously tested.

UnoPen™ – a portrait

Customers: We have already convinced seven customers of the advantages of the UnoPen™

and three more are on the brink of signing con-tracts. The prospects that there will soon be more are highly promising in view of the fact that we are currently negotiating with a raft of other interested parties. These projects are all at differ-ent phases of development and include, for ex-ample as a first step, the provision of pens forclinical studies, whereby commercialisation will follow as soon as the medication has been ap-proved. In other projects, the medication involved is already on the market in the form of reusable pens and is now to be switched to the disposable UnoPen™, whereby swift industrialisation is of the highest importance.

Del

iver

y S

yste

ms


27

More people live inside this circle than in the rest of the world outside it.

Ypsomed in the far eastNew group company founded

It may seem banal, but when it is presented as clearly as in the illustration below, it is in fact strik-ing: More than half of the entire human population lives in Asia – primarily in India and China. Ypsomed has been present in India since 2008 with its own subsidiary. We have been doing business in China for more than 10 years, primarily through our phar-maceutical partner Dongbao, and in the last busi-ness year a subsidiary was set up in Beijing.

The fastest growing number of diabetics world-wide can be found in China – according to the In-ternational Diabetes Federation almost 100 million people in China are affected by diabetes, whereby the number of diabetics who (actually) require insulin is estimated at some 15 million (estimate: Ypsomed).

90 % of Chinese insured

At the same time, the Chinese healthcare system is improving on an ongoing basis: More than 90 % of the population has (partial) insurance. Insulin is paid for by the health insurance or the state. The local pharmaceutical companies supply the mas-sive domestic market on the one hand, but they are also major exporters of numerous active substanc-es. So whichever way you look at it, the Chinese pharmaceutical companies have a substantial need for innovative, high quality injection devices. In a nutshell: The potential in China is huge. Tonghua Dongbao Pharmaceutical Co., Ltd. became Yp-somed’sfirstpharmaceuticalpartnerinChinaand

we enjoy a very close relationship. The fruits of this collaboration were the Dongbao Pen in 2002 and, from 2010, the ServoPen®-based Gansulin Pen. In 2013, the Sulin Pen was added to the range, an attractively priced reusable pen which is based on the YpsoPen™ platform and produced by a local contract manufacturer in China. The outlook for these pens is extremely promising.

New Group company in Beijing

For this reason, and also because interest in Ypsomed is increasing on an ongoing basis in Chi-na in general, setting up a subsidiary company of our own here really made sense. This subsidiary, which is based in Beijing, will initially concentrate onsupportingexistingcustomersandalsoonfind-ing further pharmaceutical partners for pens and autoinjectors. It will employ local Chinese staff since personal relationships are an important suc-cess factor in Chinese business culture. A close relationship with the Swiss parent company is equally important in order to ensure that our col-leagues in China have the necessary know-how and that they can represent Ypsomed’s values and competences professionally. Ypsomed Medical De-vices Co., Ltd.is located in the Lufthansa OfficeBuilding in Chaoyang District, Beijing.

The importance of the Asian economic region

Windmills and canal in Kinderdijk – Netherlands

Sus

tain

abili

ty R

epo

rt

29

31

23

6 11

Up to 29 years 30 – 39 years 40 – 49 years 50 – 59 years 60 years and more

Sustainability and social responsibility

Ypsomed follows a long-term and entrepreneurial approach when it comes to implementing its corporate objectives. In this, we are guided by the needs of patients and customers, such as pharmaceutical companies, doctors and medical specialists. In addition, Ypsomed takes its responsibility to its employees, society and the environment extremely seriously and therefore always takes economic, ecological and social aspects into ac-count in its decisions.

Recycling mylife™ OmniPod®

2014 / 15

985 000 recycled Pods

2013 / 14 985 000 recycled Pods

Expenses for staff training

2014 / 15

CHF 462 in thousands

2013 / 14 CHF 437 in thousands

Age structure of Ypsomed employees in %

Ypsomed – Sustainability Report

30

Sustainability and social responsibility

Ypsomed follows a long-term and entrepreneurial approach when it comes to implementing its cor-porate objectives. In this, we are guided by the needs of patients and customers, such as pharma-ceutical companies, doctors and medical special-ists. In addition, Ypsomed takes its responsibility to its employees, society and the environment ex-tremely seriously and therefore always takes eco-nomic, ecological and social aspects into account in its decisions. How we actively implement these principles is described in detail in the following sus-tainability report.

Employee structure

As per 31 March 2015, the Ypsomed Group em-ployed a total of 1 050 employees, of which 736 are

Employee structure as per 31 March 2015

in Switzerland and 314 abroad. In the previous year, this figure was 999 employees, i.e. 712 inSwitzerland and 287 abroad.

Employees in professional training13 new professionals trained

In total, Ypsomed employs 36 apprentices in six different professional areas. In July 2014, a further 13 young men and women concluded their profes-sional training with Ypsomed in a successfully completedqualificationprocess.Withmarksaver-aging almost 5.0, it is no exaggeration to consider this a very satisfactory result. In addition, several Ypsomed apprentices achieved extremely good in-terim results, in particular with regard to their indi-vidualpracticalwork.Inaddition,fiveapprenticespassed the professional Matura examination.

Second basic training required

In the late summer, 11 new apprentices started their professional basic training. This meant that in August 2014 the number of apprentices with Yp-somed came to a total of 36, spread over six pro-fessional fields: design, multi-discipline engineer-ing, plastics technology, logistics, IT and salesman/saleswoman. The continued trend for young pro-

fessional people to carry out a second apprentice-ship or for high-school graduates to carry out an apprenticeship can also be seen in our company. However, the plastics technology and IT appren-ticeshipscouldnotbefilledduetoalackofappro-priate applicants. This last fact is extremely surpris-ing, since IT is supposed to be one of the most popular professions next to the role of a salesman/saleswoman for prospective apprentices. Unfortu-nately, we repeatedly come to the conclusion that the skills and knowledge required for the success-ful completion of apprenticeships in precisely these professionalfieldsareoftenlacking.

Schools still seem to be too unaware of the fact that they could link their apprenticeships with a rel-evant professional Matura. In our opinion, this is because the advantages of this option are not ex-plained in nearly enough detail during the career choice phase.

Ypsomed Burgdorf

471 employees

Ypsomed Solothurn

181 employees

Abroad

312 employees

Ypsotec Grenchen

86 employees


Sus

tain

abili

ty R

epo

rt

31

HR policy

Internal further training and development

The ongoing training and development of our em-ployees is essential for a medical technology com-pany like Ypsomed. Employees are given training in importantfieldssuchasqualitymanagement,safe-ty, IT and leadership within the framework of nu-merous internal and external training courses. In the past business year, the following internal semi-nars were carried out with a total of 29 participants:

Leadership skills for shift supervisors

Managing without a line manger function – working on projects

In addition, Ypsomed offers its employees the op-portunity to participate in English and French courses. Around 70 employees are currently taking advantage of this offer.

Staff development

Within the framework of staff development, the three Ypsomed career models continue to be suc-cessful, with a choice between management, pro-ject leader and specialist. In the business year 2014/15, 37 people, i.e. 5.8 % of the total work-force, trained for a new function within the frame-work of this career model. Of these, 24 people opt-ed for the specialist career, 10 for management and 3 for the project leader option.

Absence management

In order to be successful as a company, we are de-pendent upon the full work complement of every individual employee. If someone is missing, there is a gap. Clear roles and codes of conduct prevent unnecessaryabsencesandincreaseourefficiency.Dealingwithabsencesefficientlyisamanagementtask and is part of the management system. The immediate impact: In 2006, before the introduction of the current absence management system, Yp-somed employees were absent on average 12.2 days per year due to accident or illness. Since then, the absence figures have continued to fall on anongoing basis and since 2006 have dropped by a totalofaround42%.Infigures:In2014Ypsomedemployees were absent on average just 7.1 days per year.

Improvement management

Constant further development and improvement is essential for a company like Ypsomed in order for it to be successful. Every individual employee can make an important contribution to the success of Ypsomed by contributing his/her ideas. Thanks to its improvement management system, Ypsomed has a clear process, which is used intensively. For example, in the business year 2014/15 a total of 34 suggestions for improvements were submitted. Of these, 19 were implemented, two are currently un-der review and 13 are not being pursued any further for different reasons. The evaluation and introduc-tion of software for ideas management is anticipat-ed to give the improvement management system an added boost in the coming business year.

Sustainable retention of specialist staff

In the business year 2014/15, the HR Project+ was started. This is a holistic programme for the sus-tainable retention of specialist staff and includes the development and implementation of the follow-ing topics:

Expand professional training and development: Create further apprenticeships and establish ad-ditional apprenticeship occupations

Promote catch-up education: Support motivat-ed employees who do not have a professional qualificationtoacquirethequalificationlateron

Promote dual study: Create part-time positions and incentives to motivate qualified graduateapprentices to take up a course of study and thus to stay with Ypsomed for the long term

Establish the option of gradual retirement before retirement age: Promote relevant alternative job options for managers before they reach normal retirement age

Flexible retirement: Offer the option of reducing the workload from the age of 60 on a gradual basis


32

6367 66

74 7570

66

73

79 81

8682 82

86 86

2006 2008 2010 2012 2014

Employee survey 2014High level of participation, positive results

It is part of our corporate culture to carry out sur-veys of our employees on a regular and systematic basis. Participation in our employee survey, which is carried out at two-year intervals, has continued toincreasesinceitfirststartedin2004.Thisshowsthat the survey is seen to be valuable by employees and managers alike. In effect, it is a tool with which it is possible to symbolically feel the pulse of the company as well as to work on topics for which there is a need for action. Changes in the last sur-veys as well as a comparison with around 140 other companies in Switzerland (as part of the Swiss Em-ployer Award) provide us with a valuable strategic stocktaking tool.

Targetexceeded

At the end of 2014, the seventh employee survey was carried out. A total of 866 people took part and gave their opinion on topics such as their work-place, team, teamwork, managers, satisfaction, etc. With a participation rate of 84 % we exceeded our target. The average participation rate according to the Swiss Employer Award is 71 %

Not just the participation rate, but also the re-sults are satisfactory. In comparison with previous surveys, it was possible to identify improvements in alotofareas.Thisisillustratedinthefieldsmarked“Satisfaction”,“Identification”and“Connection”inthe graphic.

Ave

rage

(rat

ed o

n a

scal

e of

100

)

Satisfaction: All in all, I am sat-isfiedwithmyworksituation

Identification: I feel a strong senseofidentificationwiththiscompany

Connection: The future of this company is important to me

Personal attitudes at Ypsomed AG


Sus

tain

abili

ty R

epo

rt

33

In spring 2014, there was a serious and unusual ac-cident at the Ypsomed Solothurn site: A 3.5 tonne fork lift truck fell three metres down a lift shaft, bur-ying the driver beneath it. Fortunately, after an hour-and-a-half-long recovery operation, the man was taken to hospital with only minor injuries. He remained in hospital until the evening of the follow-ing day, when he was discharged. This incident, which also caused quite a sensation in the local media, was a serious test of our emergency servic-es and required the full rescue chain: Ypsomed in-househealthandsafetyofficers,evacuationhelp-ers, Ypsomed security officers, police, rescueservices,firebrigade,REGAandthehospital.Thesubsequentinvestigationsandclarificationsinvolv-ing the examining magistrate, the work inspector-

ate, SUVA and the media were an enormous chal-lenge. Finally, it was established that our in-house, well-trained emergency services play a huge part in the positive outcome of such an accident. Internal prevention measures were implemented as quickly as possible. In addition, the Swiss Association for CareersinLogistics(SVBL)modifieditstrainingoflogistics specialists based on this accident.

Fewer accidents overall

Apart from the above-mentioned serious accident, the absolute number of accidents within Ypsomed in 2014 continued to fall: 21 occupational accidents were reported, of which 11 were of minor impor-tance and 10 accidents caused absence from work. For the purpose of better comparability, the acci-dentfigurehasnowbeenstandardisedat1000em-ployees.Asatisfactorytrendcanbeidentifiedheretoo: 29 professional accidents is a clear improve-ment on 42 accidents in 2013.

Occupational health and safety

Ypsomed is excellently organised and offers its em-ployees and visitors the highest possible level of safety.Ourhealthandsafetyofficersformthecoreof our emergency services. 17 part-time company medicalofficersattheBurgdorfandSolothurnsitesaretrainedtoprovidefirstaidintheeventofacci-dents. Their basic training takes nine days. In addi-tion,allofourhealthandsafetyofficersmusttakea refresher course every year.

2010 2011 2012 2013 2014

28

35

47

42

29

Operational safetyEmergency services come up to the mark

Occupational accidents per 1 000 employees


34

Corporate social responsibilityHolistic promotion for employees and society

In the business year 2014/15, our Ypsomed was once again heavily committed in the area of corpo-rate social responsibility.

Family-friendly corporate culture

Ypsomed is strongly committed to the long-term, sustainable employment of its staff and, in particu-lar,ofparents.Thisisillustratedinitsflexiblework-ing hours model, part-time work opportunities and parentalleave,forexample.Thehomeofficeregu-lation that was approved in the past business year also aims in the same direction. As a supplement to working at the office, Ypsomed employees alsohave the option of working from home for one day a week. The Ypsomed-subsidised nursery places at a day nursery (KITA) in Burgdorf also help to make it easier for Ypsomed’s employees to achieve a better work-life balance.

Promotion in many areas

In addition, Ypsomed is involved in the following areas and projects:

Innovation promotion: Through the Ypsomed In-novationFund,Ypsomedmakesfinancialcontri-butions to support innovative companies in Es-pace Mittelland.

Occupational training and development: In 2014, Ypsomed once again supported the National Youth Day (Nationaler Zukunftstag). This enables girls and boys in classes 5 – 7 to get an insight into their parent’s or guardian’s world of work.

Health promotion: We actively promote the health of our employees through a strong focus on the ergonomics of the workplace, free entry to a sports centre and swimming pool, preventa-

tive flu injections and free occupational socialcounselling.

Ergonomics at the workplace: In the past busi-nessyear,ourofficeworkers,inparticular,weresensitised to the issue of ergonomics in the workplace. In the subsequent checks, it was possible to identify better set-out workplaces in many areas. This initiative proactively helps to prevent occupational illnesses.

Staff restaurant: The staff restaurant “Schloss-blick”at theBurgdorfheadofficeoperatesac-cording to the “One Two We” principle, a sus-tainability programme of the supplier, SV Group.

Sport: Ypsomed supports its employees finan-cially and organisationally when taking part in specific sporting events. For example, in May2014, 35 Ypsomed employees took part in the Grand Prix von Bern, the largest fun run in Ger-man-speaking Switzerland. Ypsomed paid the entry fee for the runners and also provided them with shirts bearing the Ypsomed logo.

Mobility: Ypsomed promotes the use of public transportandfinanceshalf-faretravelcardsforall its employees from the fees levied on the company-owned parking spaces.

“Bike to work” initiative: This annual initiative to promote the use of the bicycle has become in-creasingly popular amongst Ypsomed employ-ees. In 2014, a total of 14 teams took part. On an average of 85 % of the working days in June, a total of 56 participants used their bikes and cy-cled a total of 9 959 kilometres.

Onyourmarks:allYpsomedparticipantsintheGrandPrixvonBern2014


Sus

tain

abili

ty R

epo

rt

35

Ypsomed’s diabetes direct sales has a blockbuster of a product with the insulin patch pump mylife™

OmniPod®. This has resulted in highly satisfactory salesfiguresandalsoinveryhighunitnumbersforthe disposable components in the system, the pod. Users can wear the pod for a maximum of three days, after which it has to be disposed of and re-placed by a fresh pod. Of course, after a time this gives rise to a considerable number of used pods, but from day one Ypsomed offered a comprehen-sive recycling programme for its products to every customer and for every individual pod.

This is because the used pod is not simply refuse but contains valuable components such as batter-ies and platinum which can be re-used and recy-cled if professionally processed. The mylife™ Omni-Pod® recycling programme is:

Environmentally-friendly as reusable materials are recycled and not simply thrown away

Fair, because every customer can take part. The costs of recycling and return are borne by Ypsomed.

Simple: Every customer automatically receives a postage-paid recycling box from us. Participants collect their used pods in the recycling box for three months. Full boxes can be sent to Ypsomedfreeofchargeviathepostoffice.

A special plant has been built in Switzerland for the recycling of the mylife™ OmniPod®. Here the differ-ent components such as plastic, metal and batter-ies are separated and recycled. Currently 52 % of the materials used in the pod are recyclable.

Energy consumption and business travel

Ypsomed’s energy consumption remains at a con-stant level. It will rise slightly in the future due to an increase in manufacturing. The consumption of natural gas in the past year was very low due to the

exceptionally mild winter in 2013 / 14. Heating oil is now used at all locations merely as a back-up for gas. In 2014, 1 800 litres of oil were consumed. This wasdue to thefirstcoldsnap inDecember2014which led to a temporary shortage in natural gas and meant that heating had to be supplemented with oil.

In order to gain a holistic view of business travel, Ypsomed’s employees’ rail kilometres have been taken into account for the first time. Journeys incompany cars have risen slightly, but this is due to external customer orders. The sudden increase in air kilometres is striking, but this is primarily due to the growing importance of our markets in the Far East and, in particular, to the setting-up of our Yp-somed subsidiary in Beijing, China.

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

Sustainable use of resourcesComprehensive recycling programme for mylife™ OmniPod®

* Companies in Switzerland

Natural gas Heating oil Electricity Company cars

Cars employees / management

Rail kilometres

Air travel

Energy in thousand megawatt hours (MWh)* Business travel in thousand kilometres*

8.5

2.6 2.82.9 2.3

0.30.2

16.4 1321

493

185

17.4 1233

338

140

17.0 1607

437

114

18.0 963

333

121

17.7 1276

166

282

134

0.1

%

%%% %

%%

%

%

%%%%

%

%

%

%%% %

%%

%

%

%%%%

%

%%

%

%% % %

%

%

%

%%

%%%

%

%

%

%% % %

%

%

%

%%

%%%

%

%

%%% %

%%

%

%

%%%%

%

%%

%%% %

%%

%

%

%%%%

%

%%

%%% % %

%

%

%

%%%%

%%

%

%%% %

%%

%

%

%%%%

%

%

%

%%% %

%%

%

%

%%%%

%

%%

%

%% % %

%

%

%

%%

%%%

%

%

%%% %

%%

%

%

%%%%

%

%

%

%%% %

%%

%

%

%%%%

%

%%

%

%% % %

%

%

%

%%

%%%

%

%

%

%% % %

%

%

%

%%

%%%

%

% %%

%

%

%%

%%%

%

%

%

%% % %

%%

%

%

%%%%

%

%

%

%%

% %%

%

%

%%

%%%

%

%

%

%%

% %%%

%

%

%%%%

%

%

%

%%

% %

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

% %

%

%

%%

%

%%

%

%

%%

%

%

% %

%

%

%%

%

%

%%

%

%

%%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%%%%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%%%

%

%

%%%%

%

%

%

%%%%

%

%

%

%

%

%%%

%

%

%

%

%

%

%

%

%%%%

%%

%

%%

%%%

%

%

%%%%

%

%

%

%%%

%%%

%

%

%%%%

%

%

%

%%%% %

%

%

%

%%%%

%%

%

%%%

% %%

%

%

%%%%

%%

%

%%%

% %

%

%

%

%

%

%%

%

%

%

%

%

%

%

%

%

%

%

%

%

%%

%

%

%

%

%

%% %

%

%

%

%

%

%%

%

%

%

%

%

%

% %

%

%

%

%

%

%%

%

%

%

%

%

%

Fishing village – Norway

%

%%% %

%%

%

%

%%%%

%

%

%

%%% %

%%

%

%

%%%%

%

%%

%

%% % %

%

%

%

%%

%%%

%

%

%

%% % %

%

%

%

%%

%%%

%

%

%%% %

%%

%

%

%%%%

%

%%

%%% %

%%

%

%

%%%%

%

%%

%%% % %

%

%

%

%%%%

%%

%

%%% %

%%

%

%

%%%%

%

%

%

%%% %

%%

%

%

%%%%

%

%%

%

%% % %

%

%

%

%%

%%%

%

%

%%% %

%%

%

%

%%%%

%

%

%

%%% %

%%

%

%

%%%%

%

%%

%

%% % %

%

%

%

%%

%%%

%

%

%

%% % %

%

%

%

%%

%%%

%

% %%

%

%

%%

%%%

%

%

%

%% % %

%%

%

%

%%%%

%

%

%

%%

% %%

%

%

%%

%%%

%

%

%

%%

% %%%

%

%

%%%%

%

%

%

%%

% %

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

% %

%

%

%%

%

%%

%

%

%%

%

%

% %

%

%

%%

%

%

%%

%

%

%%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%%%%

%

%

%

%%

%

%

%

%

%

%%

%

%

%

%

%

%%%

%

%

%%%%

%

%

%

%%%%

%

%

%

%

%

%%%

%

%

%

%

%

%

%

%

%%%%

%%

%

%%

%%%

%

%

%%%%

%

%

%

%%%

%%%

%

%

%%%%

%

%

%

%%%% %

%

%

%

%%%%

%%

%

%%%

% %%

%

%

%%%%

%%

%

%%%

% %

%

%

%

%

%

%%

%

%

%

%

%

%

%

%

%

%

%

%

%

%%

%

%

%

%

%

%% %

%

%

%

%

%

%%

%

%

%

%

%

%

% %

%

%

%

%

%

%%

%

%

%

%

%

%

Fina

ncia

l Rep

ort

EBIT increased by over 80 %

In the business year 2014/15, the Ypsomed Group posted consol-idated sales of CHF 306.6 million, which represents an increase of around 11 % year on year. The operating result (EBIT) rose by more than 80 % to CHF 28.5 million in comparison with the previ-ous year (CHF 15.6 million). This means that Ypsomed’s profita-bility at EBIT level is now 9.3 %

2014 / 15

CHF 0.60 from the capital reserves (proposal to the General Meeting of Shareholders)

2013 / 14 CHF 0.30 from the capital reserves

Sales in CHF million

EBIT trend in CHF million

Dividends

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

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

5.1 4.8

15.6

28.5

306.6

276.3

244.6248.6

Ypsomed – Financial Report

38

In the business year 2014 / 15, the Ypsomed Group posted consolidated sales of CHF 306.6 million, which represents an increase of around 11 % year on year. The operating result (EBIT) rose by more than 80 % to CHF 28.5 million in comparison with the previous year (CHF 15.6 million). This means that Ypsomed’s profitability at EBIT level is now9.3 %. This is primarily due to consistent and con-tinuous cost and process optimisation.

Excellentresultdespitenegativecurrencyeffects

This outstanding result is all the more impressive given the background of the unpegging of the Swiss Franc from the Euro by the Swiss National Bank on 15 January 2015. Although admittedly only the last two and a half months of the reporting year were affected by this challenging situation for all export-oriented Swiss companies, there is no doubt that the results would have been even better if the Euro exchange rate of CHF 1.20 had been retained. In this case, sales would have been CHF 311.2 million and EBIT CHF 30.3 million. A detailed accountoftheeffectsofexchangeratefluctuationson Ypsomed’s business can be found on page 11.

DeliveryDevices:Growth trajectory fuelled by GLP-1

In 2014 / 15, the Delivery Devices segment posted growth in sales of 6.9 % to CHF 151.7 million and thus continued its growth trajectory that began in 2012. The main drivers for this are:

The market for glucagon-like peptide-1 (GLP-1), a drug that is becoming increasingly important in the treatment of type 2 diabetes, is growing fast. In the reporting year, two of the Ypsomed pens based on GLP-1 products of our pharmaceutical partners GlaxoSmithKline and AstraZeneca were successfully brought to market.

The disposable platform UnoPen™, for which we began automated production in Solothurn in Q1 2015,generateditsfirstsaleswithapenforourRussian pharmaceutical partner Pharmstandard.

Business with pen needles also posted impres-sive growth, in particular thanks to the clever dealings of our sales companies in various ten-der deals. In addition, it was possible to exploit opportunities in the supply processes for our major customers. However, price pressure on our needle products remains challenging.

Conversely, we have improved our efficiencyandprofitability: The centralisation andoptimi-sation of our needle production in Solothurn in the previous year and the continuous process optimisation are bearing fruit, particularly as we have better exploited our existing infrastructure.

The lower sales in the contract manufacturing of pen components had a dampening effect on the segment result. The extraordinarily high order vol-umesofthepreviousyearduetoSanofireturnedtomore normal levels. A further factor can be seen in the impairment of CHF 1.5 million for injection moulding tools that became obsolete during the course of process optimisation work and of CHF 1.2 million for pen platforms for which deve lopment was stopped. The end effect was a marked im-provement in the EBIT for the Delivery Devices seg-ment, which rose from CHF 9.3 million in the previ-ous year to CHF 13.4 million.

DiabetesDirectBusiness:sharpclimbfollowingturnaround

In the reporting year 2014 / 15, we once again post-ed strong growth in the Diabetes Direct Business segment. Sales rose from CHF 118.4 million in the previous year to CHF 137.6 million, which repre-sents an increase of 16.3 %. The driver for this growth was once again the tubeless mylife™ Omni-Pod® insulin patch pump, sales of which rose by around 50 % in comparison with the previous year. But sales with blood glucose monitoring systems also increased in this segment by 8.5 %, despite zero global growth, in particular due to good results in the tendering business.

Provisions of CHF 0.7 million are recorded for possible legal costs in connection with our interna-tional distribution network that could occur based on historic receivables.

Overall, we can see a massive increase in the profitability of the Diabetes Direct Business seg-ment. Following the turnaround in 2013 / 14 (EBIT CHF 6.3 million), the operating result in the report-ing year has already more than doubled and is re-corded at CHF 13.0 million. Thus the investments in the previous years are more than paying off.

Others:Successfullocationpolicy

The Others segment also posted positive results. Our subsidiary Ypsotec posted slightly increased sales at CHF 17.2 million. The EBIT for the suppli-ers of mechanical precision components rose from CHF 0.1 million in the previous year to currently CHF 0.5 million. Ypsotec is facing the massive challenge posed by the strong Swiss Franc as of the beginning of 2015, but it is well positioned with its second production site in Tábor in the Czech

EBIT increased by over 80 %


Fina

ncia

l Rep

ort

39

Republic. The sale of land at the Solothurn site has also had a positive impact on the Others segment. Part of the Ypsomed site that was no longer opera-tional was sold for housing redevelopment, which resultedinaprofitofCHF1.5million.TheEBITforthe whole segment is CHF 2.1 million in compari-son with CHF 0.1 million in the previous year.

Intensive investment activity

In the business year 2014 / 15, Ypsomed maintained cashflowfromoperatingactivitiesatCHF41.4mil-lion,afigurecomparablewith theexcellentprevi-ous year’s level.

In addition, in the reporting year we invested a total of CHF 30.5 million in property, plant and equipment and intangible assets, which is compa-rable with the previous year’s level. Of this, around CHF 6.0 million was invested in the Solothurn and Burgdorf sites for assembly lines and injection moulding tools for UnoPen™ and autoinjector pro-duction, respectively. A further CHF 7.4 million was invested in the ongoing development and industri-alisation of the new insulin pump, the mylife™

YpsoPump®. The rest was used on the ongoing up-dating and maintenance of infrastructure, IT and buildings.

Currencylossesdepressfinancialresult

Asfarasthefinancial result isconcerned, the im-pact of the unpegging of the Swiss Franc from the Euro had palpable repercussions for Ypsomed. In thereportingyear,financialincomeofCHF3.2mil-lionisoffsetbyfinancialexpensesofCHF8.0mil-lion, which represents a loss of CHF 4.8 million. In theprevious year, the financial losswas justCHF0.4 million. This result was mainly caused by curren-cy losses amounting to a net total of CHF 2.4 mil-lion, but also by the impairment to Ypsomed’s par-ticipation in the Taiwanese manufacturer of blood glucose monitoring systems, Bionime, which ac-counted for CHF 1.7 million. In the previous year, thereversalofsuchaimpairmentgeneratedaprofitof CHF 1.1 million. On the other hand, the participa-tion in Bionime earned a dividend of CHF 0.3 mil-lion.ThefinaltaxburdenofCHF4.3millionfortheresults is clearly higher than that of the previous year (CHF 1.6 million). The higher tax is partly ex-plained by the resolution of additional tax claims in the previous year, which was recognised through profitandloss,andbytheaccrualandliquidationofimpairment to the participation in Bionime, which were apportioned to a tax-privileged company.

Netprofitincreasesbyover40%

After the deduction of tax, Ypsomed posted net profit of CHF 19.4 million for the business year2014 / 15, a clear increase compared to the CHF 13.6 million of the previous year. The result corre-sponds to earnings per share of CHF 1.54.

Robust balance sheet preserves company’s autonomy

Ypsomed’s balance sheet has been very healthy for many years and currently boasts a high equity ratio of 66.6 %. Once again, major shareholder Willy Michel made a key contribution in this regard with his current shareholder loan. In the reporting year, this was reduced from CHF 20 million to CHF 15 million. In the coming year, Willy Michel will again waive his annual repayment. This arrangement en-sures that the Ypsomed Group can continue to be managed entrepreneurially and independently in the future.

Dividend payment from capital reserves

Inthepastfinancialyear,atotalofCHF3.8millionwas paid out to shareholders. The Ypsomed Board of Directors will propose to the General Meeting of Shareholders that the dividend be increased by 100 %. A payout of CHF 0.60 per registered share is tobemade toshareholders from tax-beneficialcapitalreservesforthe2014/15financialyear.TheGeneral Meeting of Shareholders of Ypsomed Holding AG will take place on Wednesday, 1 July 2015, in Berne.


40

(AuditedSwissGAAPFERfigures)inthousandCHF Notes 1 April 2014 –31 March 2015

in % 1 April 2013 –31 March 2014

in %

Sales of goods and services 19 306 632 100.0 % 276 257 100.0 %

Cost of goods and services sold – 220 782 – 72.0 % – 205 731 – 74.5 %

Grossprofit 85 850 28.0 % 70 526 25.5 %

Marketingandsalesexpenses – 44 679 – 14.6 % – 41 529 – 15.0 %

Administrationexpenses – 15 530 – 5.1 % – 13 884 – 5.0 %

Other operating income 5 717 1.9 % 4 065 1.5 %

Otheroperatingexpenses – 2 812 – 0.9 % – 3 534 – 1.3 %

Operatingprofit 19 28 546 9.3 % 15 645 5.7 %

Financial income 16 3 180 1.0 % 2 299 0.8 %

Financialexpenses 17 – 7 993 – 2.6 % – 2 702 – 1.0 %

Profitbeforeincometaxes 23 733 7.7 % 15 243 5.5 %

Incometaxes 18 – 4 339 – 1.4 % – 1 635 – 0.6 %

Netprofit 19 395 6.3 % 13 608 4.9 %

Earnings per share (basic and diluted) in CHF 23 1.54 1.08

Operatingprofit 28 546 15 645

Depreciationoffixedassets 21 308 18 931

Amortisation of intangible assets 7 514 6 139

EBITDA (operatingprofitbeforedepreciationandamortisation) 57 369 18.7 % 40 715 14.7 %

Consolidated income statement


Fina

ncia

l Rep

ort

41

Consolidated balance sheet(AuditedSwissGAAPFERfigures)inthousandCHF

Assets Notes 31 March 2015 in % 31 March 2014 in %

Cash and cash equivalents 3 16 243 4.5 % 16 164 4.6 %

Trade receivables 4 45 343 12.6 % 35 342 10.0 %

Other current assets 5 600 1.6 % 5 172 1.5 %

Prepayments and accrued income 4 428 1.2 % 5 571 1.6 %

Currentincometaxassets 93 0.0 % 75 0.0 %

Inventories 5 51 781 14.3 % 52 231 14.7 %

Customer machinery 10 0.0 % 30 0.0 %

Total current assets 123 498 34.2 % 114 584 32.3 %

Financial assets 6 8 591 2.4 % 9 376 2.6 %

Deferredincometaxassets 18 9 169 2.5 % 8 835 2.5 %

Fixedassets 7 150 946 41.8 % 160 437 45.3 %

Intangible assets 8 69 007 19.1 % 61 296 17.3 %

Total non-current assets 237 713 65.8 % 239 944 67.7 %

Total assets 361 211 100.0 % 354 528 100.0 %

Liabilities and equity Notes 31 March 2015 in % 31 March 2014 in %

Financial liabilities 56 000 15.5 % 62 500 17.6 %

Trade payables 15 484 4.3 % 15 928 4.5 %

Prepayments from customers 2 189 0.6 % 3 442 1.0 %

Currentincometaxpayable 1 854 0.5 % 1 076 0.3 %

Other payables 3 336 0.9 % 2 720 0.8 %

Accrued liabilities and deferred income 20 243 5.6 % 16 306 4.6 %

Provisions 11 1 521 0.4 % 1 063 0.3 %

Total current liabilities 100 628 27.9 % 103 037 29.0 %

Non-current liabilities to major shareholder 10 15 000 4.2 % 20 000 5.6 %

Othernon-currentfinancialliabilities 470 0.1 % 1 086 0.3 %

Provisions 11 2 710 0.8 % 1 173 0.3 %

Deferredincometaxliabilities 11 1 766 0.5 % 1 069 0.3 %

Total non-current liabilities 19 946 5.5 % 23 329 6.6 %

Share capital 12 178 994 49.6 % 178 994 50.5 %

Capital reserves 170 114 47.1 % 173 492 48.9 %

Ownshares/Translationexchangedifferences – 12 067 –3.3 % –8 525 –2.4 %

Goodwill acquired offset – 322 892 –89.4 % –322 892 –91.1 %

Retained earnings 226 488 62.7 % 207 093 58.4 %

Total equity 240 637 66.6 % 228 162 64.4 %

Total liabilities and equity 361 211 100.0 % 354 528 100.0 %


42

Consolidatedstatementofcashflows(AuditedSwissGAAPFERfigures)inthousandCHF Notes 1 April 2014 –

31 March 20151 April 2013 –

31 March 2014

Netprofit 19 395 13 608

Depreciationoffixedandintangibleassets 26 076 24 530

Loss from impairment (+) / Reversal of impairment (–) 7/8/16/17 4 482 – 592

Changeinprovisions(incl.deferredincometaxes) 2 231 450

Otherexpenses/incomethatdononotaffectthefund1 1 858 0

Gain(–)/loss(+)offixedandfinancialassets – 1 601 – 113

Increase (–) / decrease (+) in trade receivables – 12 999 – 4 199

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

769 – 38

Increase (–) / decrease (+) in inventories – 2 176 4 321

Increase (–) / decrease (+) in customer machinery 20 555

Increase (+) / decrease (–) in trade payables – 699 – 685

Increase (+) / decrease (–) in prepayments from customers – 1 253 1 392

Increase (+) / decrease (–) in other payables and accr. liabilities and deferred income

5 277 1 978

Cashflowfromoperatingactivities 41 381 41 206

Purchasesoffinancialassets – 956 0

Disposalsoffinancialassets 0 14

Purchasesoffixedassets 7 – 17 212 – 18 530

Disposalsoffixedassets 7 5 218 562

Purchases of intangible assets 8 – 13 282 – 12 107

Cashflowfrominvestingactivities – 26 232 – 30 062

Repaymentoffinancialliabilitiestomajorshareholder 10 – 5 000 0

Proceeds (+) / repayment (–) from borrowings – 6 500 – 2 000

Purchase (–) / disposals (+) of own shares 12 1118 0

Distribution of capital reserves – 3 784 – 2 523

Cashflowfromfinancingactivities – 14 167 – 4 523

Effect of foreign currency translation – 902 – 71

Totalcashflow 80 6 551

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

Cash and cash equivalents as of 31 March 16 243 16 164

Net increase (+) / decrease (–) in cash and cash equivalents 80 6 551

1 Includes foreign currency effects on transactions between Group companies and on long-term intercompany loans with equity characteristics (equity-like loans).


Fina

ncia

l Rep

ort

43

Consolidated statement of changes in equity

Sharecapital

Group reserves

and sharepremium

Treasuryshares

Cumulativetranslation

reserve

Goodwill offset

Retainedearnings

Total

Balance as of 1 April 2014 178 994 173 492 – 2 337 – 6 188 – 322 892 207 093 228 162

Netprofit 19 395 19 395

Distribution of dividends from capital contribution reserves

– 3 784 – 3 784

Disposal of own shares 406 1 621 2 027

Purchase of own shares – 919 – 919

Translation exchange differences – 4 244 – 4 244

Balance as of 31 March 2015 178 994 170 114 – 1 635 – 10 432 – 322 892 226 488 240 637

(AuditedSwissGAAPFERfigures)inthousandCHF Sharecapital

Group reserves

and sharepremium

Treasuryshares

Cumulativetranslation

reserve

Goodwill offset

Retainedearnings

Total

Balance as of 1 April 2013 178 994 176 015 – 2 337 – 5 891 – 322 892 193 485 217 375

Netprofit 13 608 13 608

Distribution of dividends from capital contribution reserves

– 2 523 – 2 523

Translation exchange differences – 297 – 297

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


44

Basisfortheconsolidatedfinancialstatements

1. General information

Ypsomed Holding AG is a limited company (Ak-tiengesellschaft) established on 29 December 2003 underSwisslawwithregisteredofficesinBurgdorf(canton of Berne, Switzerland).

Operatinginthefieldofmedicaltechnology,theYpsomed Group is a leading independent manu-facturer of injection pens for pharmaceutical and biotech companies, as well as a supplier of pen needles. Ypsomed’s core manufacturing business consists of developing and marketing products and services allowing patients to administer their own medication. The Group operates production sites in Burgdorf, Solothurn, Grenchen (all CH) and Tábor (CZ) and has a sales and distribution network across Europe. The shares of Ypsomed Holding AG have been traded on SIX Swiss Exchange since 2004 and since 2007 on the BX Berne eXchange.

The company was created as a result of the split-up of the Disetronic Group in 2003. Disetronic had been founded in 1984 to develop, manufacture and sell infusion pumps and had expanded into the injection systems business in 1986.

Theconsolidatedfinancialstatementswereap-proved for issue by the Board of Directors on 20 May 2015 and recommended for acceptance to the General Meeting of Shareholders of 1 July 2015.

2. Fundamental accounting and assessment methods

BasicsThe consolidated financial statements have beenprepared in accordance with the Swiss accounting and reporting recommendations of Swiss GAAP FER according to the principle of “true and fair view”.Theyarebasedonthefinancialstatementsof the company prepared for the same reporting period using consistent accounting policies. The Group’s reporting currency is the Swiss Franc (CHF). The period under review comprises twelve months and ends 31 March.

Theaccompanyingconsolidatedfinancialstate-ments are published in German and English. The German version is legally binding.

Allfiguresincludedinthesefinancialstatementsandnotestothefinancialstatementsareroundedto the nearest CHF 1 000 except where otherwise indicated.

Consolidation SubsidiariesSubsidiaries are all entities over which the Group hasthepowertogovernthefinancialandoperatingpolicies, generally accompanying a shareholding of more than half of the voting rights. The existence and effect of potential voting rights that are current-ly exercisable or tradable can also determine

whether the Group controls another entity. Subsid-iaries are fully consolidated from the date on which control is obtained. They are de-consolidated from the date that control ceases.

Subsidiaries are recognised using the purchase method. The consideration encompasses the com-pensation transferred in exchange for obtaining control over the identifiable assets, liabilities andcontingent liabilities of the company acquired. The compensation encompasses cash payments as well as the fair market value of both the transferred assets, the incurred or assumed liabilities and, in addition, the equity instruments as of the trade date that have been issued by the Group. The net assetsacquired,comprisingidentifiableassets,lia-bilities and contingent liabilities, are recognised at their fair value. Goodwill is recognised as of the ac-quisition date and is measured as the excess of the consideration transferred as described over and abovethefairvalueofthe identifiednetassets. Ifthe Group does not acquire 100 % of the shares of a company, the minority interest in equity is to be disclosed separately under the equity.

Transactions, balances and gains on transac-tions between subsidiaries are eliminated. Losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

AssociatesAssociates are those companies that are signifi-cantlyinfluencedbutnotcontrolledbytheGroup.This normally applies to investments in which the Group owns between 20 % and 50 %. Investments in associates are accounted for using the equity method. The Group’s investment in associates in-cludesgoodwillidentifiedonacquisition.Ypsomeddoes not currently have any investments in associ-ates.

Foreign currency translationForeign currency transactions are translated to the functional currency using the exchange rate pre-vailing at the date of the transaction. Foreign ex-change gains and losses resulting from the settle-ment of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive in-comeasfinancialincomeorexpenses.

In the consolidated financial statement, assetsand liabilities of foreign subsidiaries are converted into Swiss francs at year-end exchange rates. Equi-ty is converted with historical exchange rates. The statement of comprehensive income and the state-mentofcashflowsaretranslatedatannualaverageexchange rates. The effects of this conversion as well as foreign exchange gains and losses arising from the translation of non-currency congruent financed equity-like corporate loansdenominatedin foreign currencies are to be recognised in the eq-uity, with no effect on the income statement.


Fina

ncia

l Rep

ort

45

CashCash and cash equivalents comprise cash on hand, demand deposits and time deposits with a residual term to maturity from the balance sheet date of 90 days at the most. They form the basis of the con-solidatedstatementofcashflows.

Trade receivables / other receivablesTrade receivables and other receivables are valued at par value less impairment, if any. An allowance is set aside if objective indications show that receiva-bles cannot be collected. Allowances are based on individual valuations.

InventoriesRaw materials and merchandise purchased are recognised at cost, semi-finished and finishedgoods at their cost of conversion. Discounts are recognised as a reduction in the purchase price. Manufacturing costs include the associated direct production costs and production overheads. If the acquisition or manufacturing costs are higher than the net market value, an impairment loss is record-ed on the income statement in the current period to write the inventories down to the net market value (lower of cost or market principle). Net market value is equivalent to the current market price less the usual sales deductions, marketing costs and ad-ministrative costs yet to be incurred. Inventories that cannot be sold are written off in full. The costs of inventories are determined by using the FIFO method.

Customer machinery / prepayments from customersYpsomed receives prepayments from pharma part-ners in order to acquire production machinery for these pharma partners. Ypsomed coordinates the manufacturing of the machinery with suppliers and makes contractual advance payments to the sup-pliers. After installation and successful test runs, the machinery is accepted by Ypsomed. From a le-gal and commercial viewpoint, once the machinery has been accepted by Ypsomed the title is trans-ferred to the pharma partners. The advance and finalpaymentsmadebyYpsomedtosuppliersaredisclosed in the consolidated balance sheet as cur-rent assets until acceptance of the machinery. The prepayments from customers are recognised in current liabilities. Once the machinery is accepted, theadvanceandfinalpaymentsfromYpsomedaresettled with the prepayments from the customer.

FixedassetsFixed assets are carried at historical acquisition or manufacturing cost, with depreciation calculated using the straight-line method based on the follow-ing estimated useful lives:

Buildings 20 to 40 years Technical assets 6 to 20 years Machinery and company facilities 3 to 12 years Fixtures,fittingsandvehicles 3to8years Otherfixedassets 2to10years

Depreciation is included in the following income statement categories: manufacturing costs of goods sold, marketing and distribution costs, ad-ministration costs and other operating expenses. Should an asset be impaired as a result of impair-ment testing, the corresponding impairment charge is included in depreciation and reported separately as an impairment loss.

Value-enhancing expenditures are capitalised if the market value or the value in use increases as a result.

Long-term leasing contracts, which are, in sub-stance, equivalent to the purchase of assets with long-term financing (financial leasing), are recog-nised at the beginning of the lease as an asset and measured at net market value / acquisition cost or, if lower, at the present cost of the leasing payments. The asset is depreciated in line with its useful eco-nomic life.

Investment properties are reported at cost of ac-quirement minus depreciation. The period of de-preciation is calculated according to the category of asset.

Intangible assetsGoodwillNet assets taken over in an acquisition are to be valued at actual values and any surplus of acquisi-tion cost over the newly valued net assets is to be designated as goodwill (purchase price allocation). The goodwill is to be offset at the date of acquisi-tion. The effects of a theoretical capitalisation are to be disclosed in the notes.

Development costsDevelopment costs are capitalised if an intangible assetcanbeidentified,finished,marketedorusedinternally, if it is controlled by the Ypsomed Group, if it is expected to provide the Ypsomed Group with an economic benefit over several years and if itscosts can be reliably determined.

Capitalised development costs are amortised straight-line over their useful economic lives after the beginning of marketing. The amortisation is in-cluded in the manufacturing costs of products and services sold. Costs accrued for development pro-jects are tested for impairment on an annual basis.


46

Other intangible assetsPatents are carried at acquisition cost and amor-tised over their estimated useful lives of 15 to 20 years. Amortisation is included in the costs of re-search and development that are integrated in the manufacturing costs of products and services sold.Software is capitalised on the basis of the costs in-curred to acquire the software and bring the soft-ware to use. These costs are amortised over the estimated useful life of three to four years using the straight-line method. Amortisation is mainly includ-ed in administration expenses. Intangible assets, such as brand names or customer relationships that were acquired through a business combination and can be identified separately, are reported iftheyfulfilthedefinitionofanintangibleasset.Theacquisition costs of such intangible assets corre-spond to their fair value at the time of acquisition. The value thereafter is measured at acquisition cost minus accumulated amortisation and depreciation. The useful life is estimated at five to eight years.Amortisation is included in marketing and distribu-tion costs.

Financial assets Financial assets are recognised at acquisition cost less impairment, if any. Impairment is recorded in profitorlossforthecurrentperiod.

Impairment of assetsAll assets are reviewed as of each balance sheet date for indications of impairment. If there are indi-cations that an asset may be impaired, the recover-able amount of the asset is determined and the impairment loss is estimated. Should the estimated recoverable amount of the asset, which is equiva-lent to the higher of net market value and the useful value of the asset, be lower than the asset’s book value, an adjustment is made to the income state-ment to reduce the book value of the asset to the estimated recoverable amount in the same period in which the impairment was discovered. Net mar-ket value is the price obtainable between inde-pendent third parties less the associated selling expenses. Useful value is based on the estimated futurecashflowsresultingfromtheuseoftheas-set,includinganypossiblecashflowattheendofthe useful life, discounted using an appropriate long-term interest rate.

Long-termfinancialliabilitiestoshareholdersThe loan to the major shareholder is measured at its nominal amount.

ProvisionsProvisions are established when a legal or de facto obligation arising from previous events exists that willlikelyresultinacashoutflowandthiscashout-flowcanbereliablyestimated.Theprovisionses-tablished represent the best possible estimate of thefinal obligation. Long-termprovisionsaredis-

counted to their present values, provided that the impact is material. The subdivision into short-term and long-term provisions is based on whether utili-sation is assumed to be probable within one year or at a later time.

Possible obligations whose existence requires confirmationbyfutureevents,orobligationswhoseamount cannot be reliably estimated, are disclosed in thenotes to thefinancialstatementsascontin-gent liabilities.

PensionbenefitobligationsThepensionbenefitobligationsoftheGroupcom-panies in respect of old age, death and disability comply with the statutory provisions and regula-tions in the respective countries. The employees of the Swiss companies have a legally independent pension fund for retirement, death and disability. Thepension fundsare financedby employer andemployeecontributions(definedcontributionplan).The actual economic impact of pension plans on the company is calculated as of the balance sheet date.Aneconomicbenefitiscapitalisedprovideditwill be available to reduce the company’s future pension expenses. An economic obligation is rec-ognised as a liability if the conditions for establish-ing a provision are met. Any unconditionally availa-ble employer contribution reserves are recognised as assets. The economic impacts of surpluses or deficitsinthepensionfundsontheGroup,aswellas a change in any employer contribution reserves, are recognised as profit or loss and reported aspersonnel expenses in addition to the contributions deferred to the reporting period.

CurrentincometaxesIncome taxes are calculated based on reported profitsandinconformitywiththetaxlawsprevail-ing in the individual countries and recognised in profitorlossofthecurrentperiod.

Deferred taxes are taken into account on tempo-rary differences between tax bases and the carry-ing amounts in the consolidated financial state-ments and are calculated using the liability method based on effective or expected effective local tax rates. Deferred tax assets are recognised for loss carry-forwards where it is highly probable that they can be offset against future taxable income. The changes in deferred tax assets and liabilities are recognised in the consolidated income statement. Taxes on transactions that are reported in equity are also recognised in equity.


Fina

ncia

l Rep

ort

47

Net sales and sales recognitionNet salesSales consists of all sales proceeds attained from the delivery of goods and the provision of services to third parties after deducting discounts, rebates, cash discounts and value-added taxes. Sales pro-ceeds are always included in the income statement as soon as the delivery of the goods has taken placeandbenefitandriskhavebeentransferredtothe buyer or the service has been rendered. Net sales also comprises income from the provision of research, development, industrialisation and mar-keting services.

Other operating incomeOther operating income primarily includes rental in-come arising from the leasing of properties owned by the Ypsomed Group, licencing income arising from the use of Ypsomed assets by external third parties and proceeds from the disposal of property, plant and equipment.

Long-term contractsDevelopment and industrialisation projects are ac-counted for according to the percentage-of-com-pletion method (PoCM). Services and costs are correspondingly considered according to the de-gree of completion (cost-to-cost method) so that anyprofitistakenintoconsiderationproportionally.The degree of completion for the services provided is calculated by determining the difference between the costs incurred and the costs expected for the whole order.

Long-term contracts are accounted for under in-ventories, customer machinery and prepayments from customers.

Research and development costsResearch costs are routinely included in the manu-facturing costs of the products and services sold.

Development costs are capitalised if an intangi-ble asset can be identified, finished,marketed orused internally, if it is controlled by the Ypsomed Group, if it is expected to provide the Ypsomed Groupwithaneconomicbenefitoverseveralyearsand if its costs can be reliably determined.

Capitalised development costs are amortised straight-line over their useful economic lives. The amortisation is included in the manufacturing costs of products and services sold. Costs accrued for development projects are tested for impairment on an annual basis.

Borrowing costsBorrowing costs in connection with the construc-tion of property, plant and equipment are capital-ised under certain conditions. All other borrowing costs are charged directly to the income statement.

3. Risk assessment

The management of the Ypsomed Group carries out a comprehensive risk assessment at least once a year. This standardised process is based on a risk inventory that encompasses the relevant risk cate-gories such as strategic risks, management risks, general risks in the operating business, legal risks, systemic risks, financial risks (including market,credit and liquidity risks) and event risks (including political, regulatory, fiscal andexternal risks).Thefundamental risks are assessed with regard to probability of occurrence and impact and both management and the Board of Directors decide on measures to be taken and monitor their implemen-tation according to predetermined criteria.

4. Legal risks

The Ypsomed Group develops, manufactures and sells innovative medical technical devices based on technical expertise and technologies protected by intellectual property rights. The Group is either owner of the required rights or licence holder of the property rights of a third party. In the medical de-vices market, disputes over patent rights and pat-ent infringements occur fairly frequently and can involve costly and time-intensive patent infringe-ment suits.

The development, manufacture and sale of med-tech products involve product liability risks and can lead to product recalls. There is no guarantee that thepresentliabilityinsuranceissufficienttocoverall damage cases connected with the development, manufacture and sale of medical products and that the insurance companies will still be prepared in fu-ture to insure Ypsomed Group business activities against liability risks at viable conditions.

The risk of patent infringement or product liabili-ty claims by a third party, risks in connection with the recall of products and negative developments in the reimbursement of costs of Ypsomed prod-ucts through state-prescribed cost-saving meas-ures in the area of healthcare or by health insurance schemes as well as problems with authorisation and upholding of authorisation of drugs used to-gether with Ypsomed products can also result in lasting detrimental effects, not only on the business performance of the Ypsomed Group, but also on its financial situation and competitive position in themarketplace.


48

5. Key estimates and assumptions

Thepreparationoftheconsolidatedfinancialstate-ments in accordance with generally accepted ac-counting principles assumes that management makes certain estimates and assumptions which have an impact on the reported carrying amounts of assets and liabilities shown in the balance sheet on the balance sheet date and income and expens-es accounted for in the period under review. These estimates and assumptions are based on future ex-pectations and are held reasonable at the time of preparationofthefinancialstatements.Theactualamounts can deviate from these assumptions. The most important influential factors on positionsbased on estimates and assumptions are ex-pressed as follows:

CapitaliseddevelopmentexpensesThe development expenses are capitalised when the requirements for the capitalisation are met. Yp-somed’sestimationoffutureeconomicbenefits isbased on management’s assumptions with regard to the economic baseline conditions, expected prospective cash flows, the discount rates to beapplied and the expected period of time in which economicbenefitsaretargeted.Capitaliseddevel-opment expenses amount to CHF 65.2 million as of 31 March 2015 (prior year: CHF 58.7 million).

Provisions for warrantiesWhen determining the provisions for warranties, management takes into account currently market-ed own products and sets the provisions necessary to cover all callable claims based on the maturity and characteristics of the products as well as expe-rience. Provisions for warranties as of 31 March 2015 amount to CHF 1.3 million (prior year: CHF 0.9 million).

IncometaxesWhen accruals for income taxes are made for a pe-riod,uncertaintiesregardingfinaltaxpaymentsre-main. Estimates that vary from the definitive taxamount have an impact on current and deferred income taxes. In particular, with the capitalisation of deferred tax assets from losses carried forward, the value of these tax loss carry-forwards and the tax rates to be applied must be estimated. Deferred income tax assets related to tax loss carry-for-wards as of 31 March 2015 amount to CHF 7.2 mil-lion (prior year: CHF 6.9 million).


Fina

ncia

l Rep

ort

49

In thousand CHF, unless otherwise stated

Subsequent events

From the balance sheet date until the consolidated financialstatementswereapprovedbytheBoardofDirectors on 20 May 2015, no major events oc-curred which could adversely affect the validity of the annual financial statements for 2014/15 orwhich would have to be disclosed.

Notestotheconsolidatedfinancialstatements

1. Consolidation scope Interest held capital/

votes

Share capital Research & Development

Production Marketing and Sales

Financing and Services

YpsomedHoldingAG,CH-Burgdorf CHF 178 993 807

Ypsomed AG, CH-Burgdorf 100 % CHF 10 000 000

Ypsomed Distribution AG, CH-Burgdorf

100 % CHF 6 000 000

TecPharma Licensing AG, CH-Burgdorf

100 % CHF 100 000

Ypsotec AG, CH-Grenchen 100 % CHF 1 000 000

Ypsotec s.r.o., CZ-Tábor 100 % CZK 33 200 000

Ypsomed GmbH, DE-Liederbach 100 % EUR 100 000

DiaExpert GmbH, DE-Liederbach 100 % EUR 50 000

Feelfree GmbH, DE-Liederbach 100 % EUR 25 000

Ypsomed AB, SE-Bromma 100 % SEK 10 000 000

Ypsomed S.A.S., FR-Paris 100 % EUR 1 000 000

Ypsomed BV, NL-Vianen 100 % EUR 50 000

Ypsomed India Private Ltd., IN-New Delhi

100 % INR 62 801 470

Ypsomed Limited, GB-Escrick 100 % GBP 300 000

Ypsomed GmbH, A-Wien 100 % EUR 35 000

Ypsomed S.r.l., IT-Varese 100 % EUR 50 000

Ypsomed Medical Devices Co., Ltd., CN-Peking1

100 % CHF 500 000

2. Foreign currenciesBalance sheet year-end rates Income statement average rates

31 March 2015 31 March 2014 2014/15 2013/14

Euro (EUR) 1.05 1.22 1.18 1.23

US dollar (USD) 0.97 0.88 0.93 0.92

Swedish krona (100 SEK) 11.25 13.63 12.77 14.07

Norwegian krone (100 NOK) 12.01 14.76 13.97 15.33

Danish krone (100 DKK) 13.99 16.31 15.81 16.48

Czech koruna (100 CZK) 3.80 4.44 4.27 4.66

Indian rupee (100 INR) 1.56 1.47 1.52 1.53

British pound (GBP) 1.44 1.47 1.50 1.46

Chinese yuan renminbi (100 CNY) 15.69 – 15.12 –

1 The formal capital contribution has not been made by the reference date. Based on the provisions of the Articles of Association, this constitutes full control.


50

4. Trade receivables

31 March 2015 31 March 2014

Trade receivables 45 566 35 644

Provision for bad and doubtful debts – 223 – 303

Total 45 343 35 342

Provision for bad and doubtful debts 2014/15 2013/14

At 1 April 303 666

Addition 66 63

Use – 127 – 399

Reversal 9 – 26

Currency translation differences 27 0

At 31 March 223 303

5. Inventories

31 March 2015 31 March 2014

Raw materials and supplies 3 958 4 720

Goods in process 12 291 16 144

Finished products 37 930 34 514

Gross inventories 54 179 55 377

Valuation allowance – 2 398 – 3 146

Total 51 781 52 231

6. Financial assets

31 March 2015 31 March 2014

Bionime Corp. Taiwan and Insulet Corp. USA 8 499 9 329

Otherfinancialassets 92 47

Total 8 591 9 376

3. Cash and cash equivalents

31 March 2015 31 March 2014

Cash 227 422

Postal accounts 1 979 1 651

Bank accounts 14 038 14 090

Total 16 243 16 164


Fina

ncia

l Rep

ort

51

7.Fixedassets

Cost

Land and buildings

Machinery and equipment

Otherfixedassets

Assets under construction

Buildings for investment

purposes

Total

At 1 April 2013 77 723 219 218 12 835 13 154 20 509 343 439

Additions 92 3 668 631 14 139 18 530

Disposals – 33 – 11 561 – 769 – 12 363

Transfers 1 256 9 783 101 – 10 993 147

Currency translation differences – 105 – 144 – 18 – 26 – 293

At 31 March 2014 78 933 220 964 12 780 16 274 20 509 349 460

Accumulated depreciation

At 1 April 2013 – 29 896 – 138 070 – 10 319 0 – 3 468 – 181 753

Depreciation – 2 607 – 14 463 – 1 152 – 709 – 18 931

Disposals 37 11 174 703 11 914

Transfers 28 – 325 – 33 – 330

Currency translation differences 3 68 6 76

At 31 March 2014 – 32 435 – 141 616 – 10 795 0 – 4 178 – 189 023

Net book value at 1 April 2013 47 827 81 149 2 516 13 154 17 041 161 686

Net book value at 31 March 2014 46 498 79 348 1 985 16 274 16 332 160 437

Cost

At 1 April 2014 78 933 220 964 12 780 16 274 20 509 349 460

Additions 563 4 498 1 451 10 613 1 395 18 521

Disposals – 3 860 – 251 – 4004 – 8 115

Transfers 196 10 852 520 – 14 241 539 – 2 134

Currency translation differences – 328 – 688 – 340 – 30 – 1 386

At 31 March 2015 79 363 231 767 14 160 12 616 18 439 356 346

Accumulated depreciation

At 1 April 2014 – 32 435 – 141 616 –10 795 0 – 4 178 – 189 023

Depreciation – 2 551 – 15 008 – 1 446 – 755 – 19 759

Impairment – 1 549 – 1 549

Disposals 3 860 239 4 098

Transfers 150 12 161

Currency translation differences 30 384 258 672

At 31 March 2015 – 34 955 – 153 779 – 11 733 0 – 4 932 – 205 400

Net book value at 1 April 2014 46 498 79 348 1 985 16 274 16 332 160 437

Net book value at 31 March 2015 44 408 77 988 2 427 12 616 13 507 150 946

Therearenofixedassetspledgedtosecureloansandtherearenolong-termleasingagreements(fi-nancial leasing). The fire insurance value of fixedassets at 31 March 2015 amounted to CHF 498 mil-lion (prior year: CHF 512.0 million).

Gainsfromthesaleoffixedassetsinthe2014/15business year amounted to CHF 1.6 million (prior year:CHF0.1million).Gainsfromthesaleoffixedassets are included in the income statement under other operating income.


52

8. Intangible assets

Cost Development costs Patents Software Client base Total

At 1 April 2013 60 338 660 13 647 12 523 87 167

Additions 11 442 665 12 107

Disposals – 93 – 125 – 218

Transfers 242 – 60 181

Currency translation differences – 2 – 4 – 7

At 31 March 2014 71 687 660 14 426 12 459 99 231

Accumulated amortisation

At 1 April 2013 – 8 855 – 132 – 12 028 – 11 011 – 32 026

Amortisation – 3 672 – 132 – 1 080 – 714 – 5 599

Impairment – 540 – 540

Disposals 93 124 217

Currency translation differences 2 10 12

At 31 March 2014 – 12 974 – 264 – 12 982 – 11 716 – 37 936

Net book value at 1 April 2013 51 482 528 1 618 1 512 55 141

Net book value at 31 March 2014 58 712 396 1 444 743 61 296

Cost

At 1 April 2014 71 687 660 14 426 12 459 99 231

Additions 12 075 1 207 13 282

Disposals

Transfers 2 001 2 001

Currency translation differences – 134 – 720 – 854

At 31 March 2015 83 761 660 17 500 11 739 113 660


At 1 April 2014 – 12 974 – 264 – 12 982 – 11 716 – 37 936

Amortisation – 4 363 – 132 – 1 245 – 577 – 6 317

Impairment – 1 197 – 1 197

Disposals

Currency translation differences 116 680 796

At 31 March 2015 – 18 534 – 396 – 14 111 – 11 613 – 44 653

Net book value at 1 April 2014 58 712 396 1 444 743 61 296

Net book value at 31 March 2015 65 227 264 3 390 126 69 007

Due to a development project being shelved, CHF 1.2 million was impaired. Development costs capi-talised include CHF 39.5 million (prior year: CHF 32.2 million) for products in the development phase, CHF 3.1 million (prior year: CHF 4.2 million)

for products in the industrialisation phase and CHF 22.6 million (prior year: CHF 22.3 million) for prod-ucts in the phase of commercialisation.


Fina

ncia

l Rep

ort

53

9. Goodwill not reported in the balance sheet Acquired goodwill – the difference between acqui-sition costs and the recalculated current value of all net assets acquired – is offset directly against equi-ty at the time of acquisition of a participation or

Cost 2014/15 2013/14

At 1 April 325 126 325 048

Additions before taxes 0 0

Accumulated currency translation differences – 1 414 78

At 31 March 323 712 325 126


At 1 April – 317 283 – 313 700

Amortisation, scheduled amortisation over 5 years – 3 551 – 3 530

Change in accumulated currency translation differences 1 425 – 52

At 31 March – 319 409 – 317 283

Net book value at 1 April 7 843 11 348

Net book value at 31 March 4 303 7 843

Netprofitandequitywouldchangeasfollows:

Netprofit 19 395 13 608

Scheduled amortisation over 5 years – 3 551 – 3 530

Taxeffects 767 788

Netprofit/netlossonreportinggoodwill 16 611 10 865

Equity at 31 March

Equity at 31 March 240 637 228 162

Effect of reporting goodwill in the balance sheet 4 303 7 843

FX effects on goodwill – 12 – 26

Equity on reporting goodwill at 31 March 244 929 235 979

business. Theoretical capitalisation of goodwill and amortisationoverfiveyearswouldproducethefol-lowing stated values under assets and scheduled amortisation of goodwill in the income statement:


54

31 March 2015 31 March 2014

LoanfromTechpharmaManagementAG,Burgdorf

Current 0 0

Non-current 15 000 20 000

10. Financial liabilities to major shareholder

Since 1 April 2010 the interest has been based on the CHF 12-month LIBOR rate as published by the Swiss National Bank plus a margin of 0.5 %, but at least 0.7%. At any time, Ypsomed Holding AG is eligible to amortise the loan in full or part. Tech-pharma Management AG for its part may call for an amortisation of CHF 5.0 million per annum by ap-plying a term of notice of three months. In the

2015/16 business year, Techpharma Management AG will waive repayment of CHF 5.0 million. The loan is due for repayment on 31 March 2017. Tech-pharma Management AG is controlled by Willy Michel.

In the 2014/15 business year, interest amounting to CHF 0.1 million (prior year: CHF 0.1 million) was paid on the loan.

Taxes Warranties From pension plans

Restructuring Other Total

11. Provisions

At 1 April 2013 350 756 0 68 781 1 955

Additions 722 250 0 910 1 882

Release – 2 – 131 – 32 0 – 166

Utilisation 0 – 17 – 36 – 311 – 365

Currency translation differences

– 2 0 1 0 – 1

At 31 March 2014 1 069 857 0 0 1 380 3 306

of which current 0 819 0 0 245 1 063

At 1 April 2014 1 069 857 0 0 1 380 3 306

Additions 738 743 19 2 110 3 610

Release – 37 – 59 0 – 96

Utilisation – 200 – 596 – 795

Currency translation differen-ces – 4 – 2 – 21 – 25

At 31 March 2015 1 766 1 340 17 0 2 874 5 997

of which current 0 1 144 0 0 377 1 521


Fina

ncia

l Rep

ort

55

Warranties

There is a risk that medical products developed, distributed and produced by Ypsomed could have material defects or product faults, resulting in legal liability and product liability in particular, as well as other liabilities, such as the withdrawal or recall of products. Provisions are recorded based on man-agement’s best estimate and relate to guarantees and also to replacement costs for withdrawn prod-ucts. The company’s management bases these provisions on the estimated potential guarantee claim for each product.

Ypsomed holds insurance policies with third par-ties to cover material damages, interruption of oper-ation, product liability and other risks, with world-wide cover. Ypsomed believes that its insurance cover and provisions with regard to business activi-ties and the associated operative risks involved with this are appropriate and sensible. However, events can arise that are not covered or only partly covered by insurance policies or provisions made by Yp-somed. The closing of an insurance contract, cover-ing product liability, depends on the development of the insurance market and, in particular, on the gen-eral development of the pharmaceutical industry, in which high claims for compensation are typical. Al-though no such losses are presently expected at Ypsomed, there is no guarantee that the company might not be subjected to damage claims in the fu-ture that are in excess of the cover available.

Provisions for warranties cover any guarantee claims that may occur for products on the market. The provisions extend for the average life of the products, which is between one and four years, de-pending on the product, and are also determined by the best possible assessment of the risk of a claim for each product category.

Other provisions

Other provisions are based on estimates and have the purpose of complying with requirements for the disposal of waste related to the upcoming conver-sions of buildings. In the reporting year, CHF 0.3 million was appropriated in connection with the sale of the property in Solothurn. Also included are provisions for employee gifts on the occasion of service anniversaries. In addition, during the re-porting year provisions amounting to CHF 0.7 mil-lion were accrued for legal costs in connection with the international sales network.

Taxes Warranties From pension plans

Restructuring Other Total

11. Provisions

At 1 April 2013 350 756 0 68 781 1 955

Additions 722 250 0 910 1 882

Release – 2 – 131 – 32 0 – 166

Utilisation 0 – 17 – 36 – 311 – 365

Currency translation differences

– 2 0 1 0 – 1

At 31 March 2014 1 069 857 0 0 1 380 3 306

of which current 0 819 0 0 245 1 063

At 1 April 2014 1 069 857 0 0 1 380 3 306

Additions 738 743 19 2 110 3 610

Release – 37 – 59 0 – 96

Utilisation – 200 – 596 – 795

Currency translation differen-ces – 4 – 2 – 21 – 25

At 31 March 2015 1 766 1 340 17 0 2 874 5 997

of which current 0 1 144 0 0 377 1 521


56

12. Share capital

Share capital (in thousand CHF) 2014/15 2013/14

At 1 April 178 994 178 994

At 31 March 178 994 178 994

Shares issued at 31 March 12 649 739 12 649 739

Treasury shares at 31 March 22 341 35 013

Shares outstanding at 1 April 12 614 726 12 614 726

Purchases 11 635 0

Average price in CHF 79.0 0

Disposals 24 307 0

Average price in CHF 83.8 0

Shares outstanding at 31 March 12 627 398 12 614 726

Authorised share capital (in thousand CHF) 2014/15 2013/14

At 1 April 42 450 42 450

At 31 March 0 42 450

Conditional share capital (in thousand CHF) 2014/15 2013/14

At 1 April 2 264 2 264

At 31 March 2 264 2 264

Ypsomed Holding AG was founded on 29 Decem-ber 2003 with original share capital of CHF 250 000, consisting of 2 500 shares with a nominal value of CHF 100 each. Today a total of 12 649 739 shares

The company has a conditional share capital total-ing CHF 2.3 million (prior year: CHF 2.3 million). The company may issue a maximum of 160 000 fully paid-up registered shares with a nominal value of CHF 14.15 (prior year: CHF 14.15) each to selected

On 26 June 2014, the authorised capital expired in full. Correspondingly, Ypsomed Holding AG does not have any authorised capital as at 31 March 2015.

Non-distributable reservesNon-distributable reserves in the Group’s share-holders’ equity amounted to CHF 89.5 million at the end of the year under review (CHF 89.5 million in 2013).

exists, each with a par value of CHF 14.15. As of 31 March 2015, the Ypsomed Group and the employ-ee pension fund held 38 797 treasury shares in total (prior year: 51 469).

employees and members of the Board of Directors. The Board of Directors proposes to the Ordinary General Meeting of Shareholders of 1 July 2015 that the contingent capital should be cancelled.


Fina

ncia

l Rep

ort

57

Authorised share capital (in thousand CHF) 2014/15 2013/14

At 1 April 42 450 42 450

At 31 March 0 42 450

Conditional share capital (in thousand CHF) 2014/15 2013/14

At 1 April 2 264 2 264

At 31 March 2 264 2 264

13. Long-term contracts

2014/15 2013/14

Revenue from development and industrialisation services (PoC method) 3 389 2 755

Long-term contracts in the balance sheet 31 March 2015 31 March 2014

Trade receivables 387 150

Inventories 0 0

Prepayments from customers 2 189 2 017

14.Personnelexpenses

2014/15 % 2013/14 %

Wages and salaries 85 397 84.9 81 116 84.9

Socialsecurityexpenses 13 767 13.7 13 330 14.0

Otherpersonnelexpenses 1 434 1.4 1 080 1.1

Total 100 598 100.0 95 526 100.0

Personnel at 31 March (full-time equivalents) 31 March 2015 31 March 2014

Switzerland 708 690

Germany 172 156

Netherlands 9 7

France 23 27

Scandinavia 7 6

Czech Republic 57 43

United Kingdom 17 13

Austria 4 3

India 9 12

Italy 4 2

China 2 0

Total 1 013 958

Headcount 1 050 999


58

15. Employee pensions

16. Financial income

2014/15 2013/14

Interest income 15 28

Reversal of an impairment 0 1 133

Foreignexchangegains 2 913 1 018

Otherfinancialincome 253 120

Total 3 180 2 299

The impairment on the participating interest in Bionime was reversed in full during the previous year under review following the recovery in the share price.

Per end of the business years 2013/14 and 2014/15, there were no employer contribution reserves existing.

Surplus/deficit Economicalbenefit/economic obligation

Contributions concerning the

business period

Pensionbenefitexpenseswithin personnel expenses

31.03.2015 31.03.2015 31.03.2014 2014/15 2014/15 2013/14

Pension institutions with surplus 9 473 0 0 3 747 3 747 3 666

Pension institutions without own assets

0 0 0 435 435 432

Theimpairmentinthecurrentyearresultedfromadecreaseinthemarketvalueofafinancialasset.

Within the Group, there are various employee pen-sion plans, of which most employees are members. For the companies abroad and one company in Switzerland, there are pension plans for which the obligation to provide benefits such as retirement,deathorinvaliditybenefitslieswithastateinstitu-tion and/or an insurance company. For the pension plan for two companies in Switzerland representing a proportion of 62 % of the Group’s workforce as at 31 March 2015, there is a separate pension scheme set up in accordance with the Swiss Federal Act on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG) and independent of the Group. As at 31 March 2015, the pension scheme held a valuefluctuationreserveofCHF28.9million (prioryear: CHF 19.6 million). The surplus in the value fluctuationreserve,i.e.theamountbywhichthere-

serves exceed the target value of 14.6 % of assets, stands at CHF 9.5 million (prior year: CHF 3.0 mil-lion). This corresponds to a calculated level of cover within the meaning of Art. 44 of the Ordinance on Occupational Retirement, Survivors’ and Disability Pension Plans (BVV2) of 127.5 % based on a techni-cal interest rate of 2.75 % and BVG 2010 (prior year: 120.6 %, technical interest rate 2.75 % and BVG 2010). The board responsible for the pension scheme has decided not to use the surplus in the value fluctuation reserve to reduce contributions.This surplus thus does not represent an economic benefitwithinthemeaningofSwissGAAPFER16and was therefore not capitalised. Pension costs as part of personnel expense correspond to the stand-ard contribution payments by the Group companies involved.

17.Financialexpenses

2014/15 2013/14

Interestexpenses 845 1 041

Losses from marketable securities 0 9

Impairment 1 736 0

Foreignexchangelosses 5 338 1 576

Otherfinancialexpenses 75 74

Total 7 993 2 702


Fina

ncia

l Rep

ort

59

31 March 2015 31 March 2014

Capitaliseddeferredtaxassets 9 169 8 835

of which temporary differences 1 951 1 917

of which not yet utilised tax-loss carryforwards 7 219 6 918

18.Incometaxes

2014/15 2013/14

Current income taxes 4 124 1 869

Deferred income taxes 214 – 234

Total 4 339 1 635

Average tax rate in % 18.3 % 10.7 %

For the purposes of company management, the Yp-somed Group is organised into business sectors ac-cording to products and services. The “Delivery De-vices” segment comprises the product groups pen systems, pen neeedles, infusion sets and other injec-tion mouldings produced by Ypsomed. The “Diabe-

tes Direct Business” business segment covers the direct trade in a range of diabetes articles. “Others” contains the business segment precison turned parts and currently unused real estate for operational pur-poses. Intersegmental sales are executed at arm’s length.

19. Segment information

Business year 2014/15 Delivery Devices Diabetes Direct Business

Others Eliminations Group

Sales of goods and services to third-party customers 151 735 137 665 17 231 306 632

Intersegmental sales 1 952 – 1 952 0

Total sales of goods and services 151 735 137 665 19 183 – 1 952 306 632

Operatingprofit 13 440 13 022 2 085 28 546

Investmentsinfixedandintangibleassets 25 946 775 3 774 30 494

Depreciation /Amortisation / Impairment 24 858 1 383 2 581 28 822

Business year 2013/14 Delivery Devices Diabetes Direct Business

Others Eliminations Group

Sales of goods and services to third-party customers

141 877 118 380 16 000 276 257

Intersegmental sales 1 950 – 1 950 0

Total sales of goods and services 141 877 118 380 17 950 – 1 950 276 257

Operatingprofit 9 274 6 289 83 15 645

Investmentsinfixedandintangibleassets 28 821 256 1 560 30 637

Depreciation /Amortisation / Impairment 20 207 1 161 2 570 23 938

Tax-loss carryforwards are only recognised if it is probable that theassociated taxbenefitscanberealised.

TheGroupbenefitsfromreducedtaxratesforindi-vidual companies. These rates are subject to annual changes. Changes to these tax rates and differenc-es in the allocation of profits to these companies

affect the effective tax rate. In the previous year a significant proportion of tax provisions were re-leased and credited to income.


60

21. Contractual obligations

31 March 2015 31 March 2014

Contractual purchase commitments for products 38 161 27 989

Contractual obligations from rental contract with Techpharma Management AG until 31.12.2019

4 306 1 813

Contractual obligations from service contract with GBUK Healthcare until 31.03.2016 964 1 641

ContractualobligationsfromservicecontractwithExelMedicalGmbH – 35

Contractual obligations from rental contract of the German subsidiaries 2 287 –

Total contractual obligations 45 539 31 478

Sales of goods and services

2014/15 2013/14

Switzerland 20 947 18 079

Europe 252 038 229 481

North America 25 714 22 066

Rest of the world 7 932 6 631

Total 306 632 276 257

The Group has contingent liabilities of kCHF 638 (prior year: kCHF 669) toward third parties arising in the ordinary course of business. Ypsomed does

not anticipate that any material liabilities will arise from the contingent liabilities.

The rental contract between Ypsomed AG and Techpharma Management AG, a company con-trolled by Willy Michel, was signed at arm’s length. Rental interest is based on an independent rental value estimate and was per reduced as of 1 Janu-ary 2012 from CHF 985 402 to CHF 906 570 annual-ly plus VAT. It is linked to the consumer price index. The rental contract arranges for small and normal maintenance work on the building to be paid by the

tenant up to a maximum amount of 2 % of the an-nual rent per calendar year.

As at 31 March 2015, contractual obligations for the purchase of fixed assets amount to CHF 1.9million (prior year: CHF 4.2 million), for the pur-chase of intangible assets to CHF 0.2 million (prior year: CHF 0.3 million) and for material and other purchase to CHF 3.9 million (prior year: CHF 0.0 million)

Sales of goods and services are reported by geographical location

Sales of goods and services are reported by geo-graphical location in accordance with the invoice address. The sales of injection systems to biotech

and pharmaceutical partners are made mainly to their European group companies. These compa-nies market the products worldwide.

20. Contingent liabilities

22. Transactions with related parties

Related Group parties are Techpharma Manage-ment AG, Adval Tech Group, Finox AG and employ-ee pension funds. Services are remunerated in line with industry standards. Receivables from related parties amounted to kCHF 3 (prior year: kCHF 14) on the balance sheet date. Liabilities amounted to

kCHF 4 (prior year: kCHF 2). In the year under re-view, the following transactions were made with related parties:


Fina

ncia

l Rep

ort

61

Willy Michel (i.e. his company Techpharma Manage-ment AG) has been renting out the building on Buch-mattstrasse in Burgdorf (Ypsomed Nord) to Yp-somed since 1 January 2006. The parties signed a rental contract set at an indexed market rent based on a rental assessment performed by an independ-ent party. The rental contract can be terminated each month subject to 24 months’ notice. See Cor-porate Governance “Rental contract” on page 83. Willy Michel (i.e. his company Techpharma Manage-ment AG) and Ypsomed have concluded a frame-work service contract that can be terminated by ei-ther side at any time. This contract allows for Techpharma Management AG to provide occasional services to the Ypsomed Group (e.g. hotel, catering and transport services) as well as selected manage-ment support services (including temporary person-nel leasing) and, for its part, for the Ypsomed Group to offer occasional services to Techpharma Manage-

ment AG (e. g. management and IT support, includ-ing temporary personnel leasing). The services are invoiced at normal market conditions. The mutual supply of temporary personnel is invoiced at the personnel cost rate. This contract was discussed and approved by the Board of Directors, in whose opinion this is a cooperation agreement at normal market conditions. See also Corporate Governance “Other contractual relationships” on page 84. In June 2007, Ypsomed AG and Adval Tech Holding AG signed an agreement on strategic cooperation in tool construction. The services purchased are in line with normal market conditions. A licencing agree-ment has existed between Ypsomed Holding AG and two of its subsidiaries, on the one hand, and Finox AG, on the other hand, since December 2011. See also Corporate Governance “Contractual rela-tionship with Finox AG” on page 84.

23. Earnings per share

Earnings per share are calculated by dividing net profit by the weighted monthly number of sharesoutstanding during the period. The average number

of treasury shares is deducted from the number of shares issued.

2014/15 2013/14

Techpharma Management AG (interest according to Note 10) 128 149

Techpharma Management AG (compensation for rented business premises) 907 907

Techpharma Management AG (amounts in accordance with service contract) 37 99

Adval Tech Group 900 561

FinoxAG – 61 – 76

FinoxAG 9 4

Total 1 920 1 644

2014/15 2013/14

NetprofitinthousandCHF 19 395 13 608

Number of outstanding shares weighted on a monthly basis 12 624 614 12 614 726

Earnings per share in CHF (basic and diluted) 1.54 1.08

Seethenotestothefinancialstatements2014/15ofYpsomedHoldingAGfrompage66andtheCompen-sation Report from page 95.

24.Compensationstatementandsignificantshareholders


62

Report of the group auditors


Fina

ncia

l Rep

ort

63


64

In thousand CHF

Assets 31 March 2015 31 March 2014

Cash and cash equivalents 233 317

Marketable securities 1 635 2 343

Accruedincomeandprepaidexpenses 0 18

Other receivables 21 19

Total current assets 1 889 2 698

Loans to Group companies 193 405 201 268

Investments 323 485 324 315

Expendituresrelatedtocapitalincrease 0 0

Total non-current assets 516 890 525 583

Total assets 518 779 528 281

Liabilities and equity 31 March 2015 31 March 2014

Trade payables 24 37

Accruedexpensesanddeferredincome 959 1 079

Bank loans 45 000 50 500

Currentincometaxespayable 94 339

Total current liabilities 46 077 51 955

Non-currentfinancialliabilitiestomajorshareholder 15 000 20 000

Total non-current liabilities 15 000 20 000

Share capital 178 994 178 994

Capital contribution reserves 172 320 176 105

Disagio – 150 – 150

Legal reserves 50 50

Reserves for own shares 1 635 2 343

Retained earnings 99 693 89 632

Netprofit 5 161 9 352

Total equity 457 702 456 326

Total liabilities and equity 518 779 528 281

Balance sheet of Ypsomed Holding AG – statutoryfinancialstatements


Fina

ncia

l Rep

ort

65

In thousand CHF

Income1 April 2014 –

31 March 20151 April 2013 –

31 March 2014

Financial income 9 819 12 708

Total income 9 819 12 708

Expenses

Depreciation and amortisation 0 – 397

Financialexpenses – 2 444 – 847

Administration – 1 664 – 1 691

Incometaxexpenses – 550 – 421

Totalexpenses – 4 658 – 3 356

Netprofit 5 161 9 352

Proposal for the appropriation of retained earningsThe Board of Directors proposes to the General Meeting of Shareholders that the retained earnings be appropriated as follows:

In thousand CHF 31 March 2015 31 March 2014

Retained earnings 98 984 89 632

Increase reserve for own shares 708 0

Netprofitforbusinessyear 5 161 9 352

Retained earnings at disposal of the General Meeting of Shareholders 104 853 98 984

Allotment from capital contribution reserves 7 576 3 784

Distribution of dividend from capital contribution reserves1 – 7 576 – 3 784

Carriedforwardtothenextyear 104 853 98 984

Income statement of Ypsomed Holding AG – statutoryfinancialstatements

1 The Board of Directors proposes to the General Meeting of Shareholders a tax free distribution of capital contribution reserves in the amount of CHF 0.60 per share. The total distribution based on the actual share capital as per 31 March 2015 will be appro-ximately CHF 7.6 million (prior year: CHF 3.8 million). This amount will be credited to shareholders.


66

Income

Financial income mainly consists of dividends, in-terest income and gains on securities.

Share capital

The share capital of CHF 178 993 806 (prior year CHF 178 993 806) consists of 12 649 739 (prior year 12 649 739) registered shares with a nominal value of CHF 14.15 (prior year CHF 14.15).

Conditional share capital

The company has a conditional share capital total-ling CHF 2.3 million (prior year: CHF 2.3 million). The

Significantshareholders and shareholder groups 31 March 2015 31 March 2014

Number of shares Capital and vote share1

Number of shares Capital and vote share1

Shareholder group Michel family 9 502 337 75.1 % 9 681 119 76.5 %

PatinexAG 556 847 4.4 % 1 350 724 10.7 %

Investments 31 March 2015 31 March 2014

Interest held Book value (CHF) Interest held Book value (CHF)

YpsomedAG,CH-Burgdorf 100 % 277 180 644 100 % 277 180 644

Share capital CHF 10 000 000

YpsotecAG,CH-Grenchen 100 % 13 643 520 100 % 13 643 520


TecPharmaLicensingAG,CH-Burgdorf 100 % 18 161 816 100 % 18 161 816

Share capital CHF 100 000

YpsomedDistributionAG,CH-Burgdorf 100 % 6 000 000 100 % 6 000 000


BionimeCorporation,Taiwan 10.2 % 8 488 196 10.2 % 9 318 261

Share capital TWD 514 467 940(Prior year TWD 439 467 940)

InsuletCorporation,Bedford,MA,U.S.A. 0.0 % 10 638 0.0 % 10 638

Share capital USD 56 299(Prior year USD 45 441)

Total investments 323 484 813 324 314 879

Own shares 31 March 2015 31 March 2014

Number of shares Ø price Number of shares Ø price

Purchase of own shares 11 635 79.0 0

Disposal of own shares 24 307 83.8 0

Own shares held 22 341 35 013

1 In line with Art. 16 paragraph 2 of the Articles of Association, no shareholder may directly or indirectly amalgamate more than 5 % of the total voting rights in the form of his/her own shares and those he/she is representing. In accordance with

paragraph 3, this provision of the Articles of Association does not apply to shareholders to whom more than 5 % of all voting rights were registered at the time the provision was issued.

NotestothefinancialstatementsofYpsomedHoldingAG

company may issue a maximum of 160 000 (prior year 160 000) fully paid-up registered shares with a nominal value of CHF 14.15 (prior year: CHF 14.15) each to selected employees and members of the Board of the Directors. The Board of Directors pro-poses to the General Meeting of Shareholders of 1 July 2015 that the contingent share capital should be cancelled.

Authorised share capital

On 26 June 2014, the authorised share capital ex-pired in full. Correspondingly, Ypsomed Holding AG does not have any authorised share capital as at 31 March 2015.


Fina

ncia

l Rep

ort

67

Securities,reserveforguaranteesandcollateralorder in favour of third parties

31 March 2015 31 March 2014

CreditSuisse,CH-ZurichGuaranteeinthecontextofcreditbusinessforYpsomedAG

37 500 000 37 500 000

Claim subject to subordination clause against subsidiaries

31 March 2015 31 March 2014

Claim subject to subordination clause against subsidiaries 32 100 000 32 100 000

In addition, there is a letter of comfort with an unlimited amount in favour of a group company.

Risk assessment

Ypsomed Holding AG performs an extensive risk assessment at least once a year. This standardised process is based on an inventory of risks, which covers the relevant categories of risks such as stra-tegic risks, management risks, general risks of the businessareas,legalrisks,systemicrisks,financialrisks, including market, credit and liquidity risks, and event risks, including

political, regulatory, fiscal and external risks. Thesignificantrisksareevaluatedregardingtheproba-bility of occurrence and impact, and both Manage-ment and the Board of Directors decide on meas-ures to be taken and monitor their implementation according to predetermined criteria.


68

Investments held by members of the Board of DirectorsandExecutiveManagement

As of 31 March, members of the non-executive and executive boards, Executive Management and people closely related to them held the following shares. No Ypsomed share options were held.

Share ownership of Board of DirectorsShares as of

31 March 2015Shares as of

31 March 2014

WillyMichel,Chairman* 8 717 746 8 574 114

TechpharmaManagementAGasrelatedpartytoWillyMichel,Chairman 478 682 657 480

BVHoldingAGasrelatedpartytoWillyMichel,Chairman 22 500 22 500

Total of Willy Michel and Techpharma Management AG and BV Holding AG 9 218 928 9 254 094

AntonKräuliger,ViceChairman 5 100 2 000

Prof.em.Dr.NorbertThom,member 132 75

GerhartIsler,member 8 100 5 000

Total 9 232 260 9 261 169

ShareownershipofExecutiveManagement

SimonMichel,CEO* 144 888 144 888

Dr.BeatMaurer,SeniorVicePresidentLegalServices&IntellectualProperty 500 500

YvonneMüller,SeniorVicePresidentHumanResources 800 800

NiklausRamseier,SeniorVicePresidentFinance/IT(CFO) 1 069 1 069

Hans-UlrichLehmann,SeniorVicePresidentTechnology 150 70

UlrikeBauer,SeniorVicePresidentMarketing&SalesDeliverySystems** 150 –

Dr.EberhardBauer,SeniorVicePresidentMarketing&SalesDiabetesCare** 2 110 –

Dr.BenjaminReinmann,SeniorVicePresidentOperations 50 50

Total 149 717 147 377

* Until June 2014, Willy Michel was CEO of the Ypsomed Group. Simon Michel took over as CEO on 1 July 2014 (previously Senior Vice President Marketing & Sales).** On 1 July 2014, Ulrike Bauer and Dr. Eberhard Bauer joined the Executive Management of Ypsomed Group.

For information on the Family Michel shareholder group and their shareholding, see also the “Corporate Governance” section on page 78.


Fina

ncia

l Rep

ort

69

Report of the statutory auditors


70


Fina

ncia

l Rep

ort

71

In thousand CHF 2014/15 2013/14 2012/13 2011/12

Sales of goods and services1 306 632 276 257 244 565 248 593

Grossprofit 85 850 70 526 57 074 56 373

Grossprofitin% 28.0 % 25.5 % 23.3 % 22.7 %

Operatingprofit 28 546 15 645 4 846 5 140

Operatingprofitin% 9.3 % 5.7 % 2.0 % 2.1 %

Netprofit 19 395 13 608 1 646 8 500

Netprofitin% 6.3 % 4.9 % 0.7 % 3.4 %

Depreciationoffixedassets 21 308 18 931 19 939 19 578

Amortisation of intangible assets 7 514 6 139 5 704 8 146

EBITDA2 57 369 40 715 30 489 32 865

EBITDA in % 18.7 % 14.7 % 12.5 % 13.2 %

Current assets 123 498 114 584 108 731 94 604

Non-current assets 237 713 239 944 233 062 232 668

Current liabilities 100 628 103 037 101 367 90 895

Non-current liabilities 19 946 23 329 23 052 18 374

Balance sheet total 361 211 354 528 341 793 327 273

Capitalexpenditure – 17 212 – 18 530 – 15 945 – 7 501

Cashflowfromoperatingactivities 41 381 41 206 15 168 31 055

Cashflowfrominvestingactivities – 26 232 – 30 062 – 26 290 – 19 781

Cashflowfromfinancingactivities – 14 167 – 4 523 10 957 – 6 425

Issued shares at 31 March 12 649 739 12 649 739 12 649 739 12 649 739

Average shares outstanding 12 624 614 12 614 726 12 614 726 12 615 303

Earnings per share in CHF (basic / diluted) 1.54 1.08 0.13 0.67

Dividend per share (in CHF) 0.60 0.30 0.20 0.20

Book value per issued share (in CHF)3 19.02 18.04 17.18 17.23

Shareprice:year’shighest(inCHF) 94.00 80.80 60.00 58.00

Shareprice:year’slowest(inCHF) 77.40 52.00 47.00 43.50

Shareprice:year-end(inCHF) 91.10 78.00 55.00 55.00

Market capitalisation (in million CHF) 1 152 987 696 696

Average headcount 1 022 996 1 021 1 062

Average full-time equivalent 983 954 976 1 018

Year-end headcount 1 050 999 1 015 1 026

Year-end full-time equivalent 1 013 958 971 980

Sales per average full-time equivalent (in CHF) 311 935 289 578 250 579 244 197

1 Seebasisfortheconsolidatedfinancialstatementsonpage44.2 Operatingprofitbeforedepreciationandamortisation.3 The goodwill was offset with equity under Swiss GAAP FER.

Five-year overview

Lavender field – France

Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

Corporate Governance and Compensation Report

This Corporate Governance report describes the management and control principles at the highest corporate level of Ypsomed Holding AG and its subsidiaries according to the directive of SIX Swiss Exchange concerning information on corporate govern-ance.

2014 / 15

CHF 1 152 391 223

2013 / 14 CHF 986 679 642

2014 / 15

24.9 %

2013 / 14 12.8 %

Free float of Ypsomed registered shares

Market capitalisation

Switzerland 98.2 % RoW 1.5 % Europe 0.3 %

Geographic distribution of registered shareholders in %

Ypsomed – Corporate Governance

74

Corporate Governance

This Corporate Governance report describes the management and control principles at the highest corporate level of Ypsomed Holding AG and its subsidiaries according to the directive of SIX Swiss Exchange concerning information on corporate governance.

Ypsomed, with headquarters in Burgdorf, Swit-zerland, is a world leader in the field of injectionsystems for the administration of pharmaceutical substances. Ypsomed develops and produces its products primarily in Switzerland. Ypsomed injec-tion systems are largely marketed by globally active biotechnology and pharmaceutical companies. As part of its diabetes care business segment, Yp-somed focuses on self-medication products for pa-tients with diabetes. The company’s own pen nee-dles as well as infusion sets and commercial products purchased from third parties, in particular devices for the self-monitoring of blood glucose levels as well as infusion pumps, accessories and many day-to-day items for diabetics, are sold through the company’s own distribution network and by independent distributors. The Ypsomed Group also includes Ypsotec, with headquarters in Grenchen, Switzerland, a supplier of precision turned parts and components.

The Ypsomed Group’s rules and regulations on CorporateGovernancearedefinedintheArticlesofAssociation, in the Organisational Policy of Yp-somed Holding AG and in the Code of Conduct of the Ypsomed Group and correspond to the Corpo-rate Governance Directive of 1 September 2014, issued by SIX Swiss Exchange. The organisational policy issued by the Board of Directors governs the duties, powers and responsibilities of the executive bodies of the Ypsomed Group. The main features of this policy are set out on page 86 under the section on regulations concerning authority. A copy of Ypsomed Holding AG’s Articles of Association (in German) can be ordered in print form from the company or can be viewed on the company’s web-site at www.ypsomed.com (under Media & Inves-tors / Publications / Corporate Governance). A copy of the Code of Conduct of the Ypsomed Group (in German, English and French) can be ordered in

print form from the company or can be viewed on the company’s website at www.ypsomed.com (under Media & Investors / Publications / Corporate Governance). Compliance with the basic principles and values laid down in the Code of Conduct is re-viewed on an ongoing basis during the company’s day-to-day business. In addition, the Board of Di-rectors receives information on a regular basis re-garding experiences with the Code of Conduct.

Group structure

Ypsomed Holding AG is organised as a holding company pursuant to Swiss law and directly or in-directly owns or controls all the companies that form part of the Ypsomed Group worldwide. None of Ypsomed Holding AG’s subsidiaries are listed companies.

History of Ypsomed’s development

Ypsomed was formed from what was previously Disetronic, which was founded in 1984 and which developed and produced infusion systems and also, from 1986, injection systems. On 30 April 2003, Roche Holding AG acquired the infusion business of Disetronic through a public tender of-fer. Willy Michel continued the injection business under the Ypsomed trade name.

Listed Group company

Ypsomed Holding AG, which has its headquarters in Burgdorf, is the parent company of the Ypsomed Group. It has a share capital of CHF 178 993 806.85, divided into 12 649 739 registered shares with a nominal value of CHF 14.15 each. Shares in Ypsomed Holding AG were traded on the Main Standard of SIX Swiss Exchange from 22 Septem-ber 2004 to 28 September 2011. Since 29 Septem-ber 2011, shares in Ypsomed Holding AG have been traded on the Domestic Standard of SIX

As at 31 March 2015 As at 31 March 2014

Market capitalisation in CHF 1 152 391 223 986 679 642

In % of equity 478.9* 432.4*

Share price in CHF 91.1 78.0

Price/earnings ratio 59.4** 72.5**

* Equity capital on 31 March 2015: kCHF 240 637 Equity capital on 31 March 2014: kCHF 228 162** Earnings per share as at 31 March 2015: CHF 1.54 Earnings per share as at 31 March 2014: CHF 1.08


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

75

Swiss Exchange. The shares have also been traded since 27 June 2007 on the BX Berne eXchange. The move from the Main Standard to the Domestic Standard of SIX Swiss Exchange was associated with the switch in accounting standards from IFRS (International Financial Reporting Standards) to Swiss GAAP FER, which, in accordance with SIX Swiss Exchange’s accounting guidelines, results in a change of segment. Security number: 1939699 / ticker symbol: YPSN.

Operating organisation

The operating organisation of the Ypsomed Group is based on a parent company structure. The CEO is responsible for the following departments: Oper-ations (incl. Production, Logistics, Quality Manage-ment & Regulatory), Technology, Corporate Fi-nance / IT, Marketing & Sales (Delivery Systems and Diabetes Care), Human Resources and Legal & In-tellectual Property. As a rule, two members of Yp-somed Executive Management sit on the Board of Directors of each subsidiary. The Executive Man-agement of Ypsotec reports directly to the CEO, whereas the executive management bodies of the

international distribution companies report to the Senior Vice President of Marketing & Sales for Dia-betes Care. In terms of operations, the Ypsomed Group is divided into two business segments: The Delivery Devices segment consists of business with the product group’s pen systems, pen nee-dles, infusion sets and other injection-moulded parts that are developed and manufactured by Yp-somed. The Diabetes Direct Business segment consists of the sales and direct trade business with various supplies for diabetes care, for example de-vices for the self-monitoring of blood glucose levels as well as infusion pumps, accessories and other day-to-day items for diabetics. The Others seg-ment comprises precision turned parts and real es-tate not currently in operational use.

Group structure as at 31 March 2015

Ypsotec AGGrenchen

100 %

TecPharmaLicensing AG

Burgdorf100 %

DiaExpertGmbHLiederbach, DE

100 %

Ypsomed GmbHLiederbach, DE

100 %

feelfree GmbHLiederbach, DE

100 %

Ypsomed BVVianen, NL

100 %

Ypsomed ABBromma, SE

100 %

Ypsomed SASParis, FR

100 %

Ypsomed S.r.l.Varese, IT

100 %

Ypsomed Holding AGBurgdorf

Ypsotec s.r.oTábor, CZ

100 %

Ypsomed AGBurgdorf / Solothurn

100 %

Ypsomed Distribution AG

Burgdorf100 %

Ypsomed India Private Ltd.

New Delhi, IN 100 %

Ypsomed Ltd. Escrick, UK

100 %

Ypsomed GmbHVienna, AT

100 %

Ypsomed Medical DevicesCo.,Ltd.

Beijing, CN100 %


76

Share capital

The share capital of Ypsomed Holding AG amounts to CHF 178 993 806.85, divided into 12 649 739 fully paid-up registered shares, each with a nominal val-ue of CHF 14.15.

Conditional share capital

Ypsomed Holding AG has conditional share capital of CHF 2 264 000. The company may issue to se-lected employees and members of the Board of Directors up to a maximum of 160 000 registered shares, to be paid up in full, with a par value of CHF 14.15 each. Shareholders’ purchase and advance

subscription rights are excluded. Pursuant to the Articles of Association, shares and option rights may be issued at a price below the stock market value. The acquisition of shares through the exer-cising of subscription or option rights is subject to the statutory recording limitation and the statutory voting right limitation (see below). The company has not issued any shares or option rights to date. The Board of Directors proposes to the Annual General Meeting of Shareholders of 1 July 2015 that the conditional share capital should be can-celled.

General statutory reserves

Date Issue Number of shares Nominal value Share capital Capital reserves Retained earnings Reserves from equity General reserves Reserves for own shares Total

01.04.12 Balance 12 649 739 14.15 178 993 806.85 –150 000.00 80 865 605.61 181 150 546.80 50 000.00 2 343 459.40 443 253 418.66

12.07.12 Reassignment of capital reserves to reserves as capital investments

– 2 522 945.20 440 730 473.46

31.03.13 Netprofit 8 766 447.94 449 496 921.40


– 2 522 945.20 446 973 976.20

31.03.14 Netprofit 9 352 303.09 456 326 279.29

10.07.14 Reassignment of capital reserves to reserves as capital investments – 3 784 417.80 452 541 861.49

31.03.15 Reserves for own shares 708 210.15 – 708 210.15 452 541 861.49

31.03.15 Netprofit 5 160 591.26 457 702 452.75

31.03.15 Balance 12 649 739 14.15 178 993 806.85 –150 000.00 104 853 158.05 172 320 238.60 50 000.00 1 635 249.25 457 702 454.75

Equity analysis of Ypsomed Holding AG

Capital structure


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

77

Authorised share capital

On 26 June 2014, the authorised share capital ex-pired in full. Correspondingly Ypsomed Holding AG has no authorised share capital as at 31 March 2015.

Sharesandparticipationcertificates

The 12 649 739 registered shares are fully paid-up and each has a nominal value of CHF 14.15. One registered share represents one vote. The shares have equal dividend rights. Ypsomed Holding AG hasnoparticipationcertificatecapital.

Participationcertificates

YpsomedHoldingAGhas noparticipation certifi-cates.

Changes in capital

The capital changed as follows in the past years: Changes in the share capital up to 31 March 2014 pursuant to the accounts of Ypsomed Holding AG produced in accordance with company law.

General statutory reserves

Date Issue Number of shares Nominal value Share capital Capital reserves Retained earnings Reserves from equity General reserves Reserves for own shares Total

01.04.12 Balance 12 649 739 14.15 178 993 806.85 –150 000.00 80 865 605.61 181 150 546.80 50 000.00 2 343 459.40 443 253 418.66


– 2 522 945.20 440 730 473.46

31.03.13 Netprofit 8 766 447.94 449 496 921.40


– 2 522 945.20 446 973 976.20

31.03.14 Netprofit 9 352 303.09 456 326 279.29

10.07.14 Reassignment of capital reserves to reserves as capital investments – 3 784 417.80 452 541 861.49

31.03.15 Reserves for own shares 708 210.15 – 708 210.15 452 541 861.49

31.03.15 Netprofit 5 160 591.26 457 702 452.75

31.03.15 Balance 12 649 739 14.15 178 993 806.85 –150 000.00 104 853 158.05 172 320 238.60 50 000.00 1 635 249.25 457 702 454.75

Equity analysis of Ypsomed Holding AG


78

Registered shareholders

There were 3 966 shareholders registered in the Share Register on 31 March 2015 (prior year: 4 241 shareholders). Of these shareholders, 98 % report Switzerland as their place of residence. The distri-bution of shareholdings is as follows:

Shareholder structure

Significantshareholdersandsignificantshareholder groups

The Michel family shareholder group, set up for the purposes of holding shares in family ownership, comprises Willy Michel, Chairman of the Board of Directors of Ypsomed Holding AG, who holds shares both directly and indirectly via the compa-nies he controls, Techpharma Management AG and BV Holding AG, as well as his children Simon Michel, CEO of Ypsomed Holding AG and the Yp-somed Group, Serge Michel and Lavinia Camilla Nussio, who each hold shares directly. As at 31 March 2015, the Michel family shareholder group holds a combined total of 9 502 337 registered shares (prior year: 9 681 119) in Ypsomed Holding AG, which represents 75.12 % (prior year: 76.53 %) of all the shares in the company.

Patinex AG, Egglirain 24, CH-8832 Wilen, which is directly controlled by Martin and Rosmarie Ebner, and BZ Bank Aktiengesellschaft, Egglirain 15, 8832 Wilen, which they indirectly control, disclosed that their shareholding fell below the threshold limit of 10 % on 10 July 2014 and the threshold limit of 5 % on 15 January 2015. On 31 March 2015, Patinex AG posted a holding in the company of 4.40 % (pri-or year: 10.68 %). BZ Bank Aktiengesellschaft cur-rently does not hold any shareholdings subject to disclosure.

Therearenootherknownsignificantsharehold-ers or significant shareholder groups. No share-holder agreements have been disclosed.

In the reporting year, there were no further dis-closure notifications. The disclosure notificationspublished pursuant to Art. 20 of the Stock Ex-change Act can be accessed at the website of SIX Swiss Exchange via the following link: www.six-exchange-regulation.com.

Accounting

With effect from 30 September 2011, Ypsomed changed its accounting standard from IFRS to Swiss GAAP FER. Since then, SWISS GAAP FER has been used as the accounting and reporting standard. The primary principle of Swiss GAAP FER is to promote a true and fair view of the assets, liabilities, financial position and profit or loss,meaning informative and reliable accounting re-mains guaranteed under Swiss GAAP FER. Group accounting in accordance with Swiss GAAP FER comprises comprehensive consolidated accounts including a profit and loss statement, balancesheet,cashflowstatement,statementofchangesin equity, as well as selected management statis-tics.

Cross participations

There are no cross participations.

Limitation on the transferability of shares

NosharecertificatesareissuedforYpsomedHold-ing AG shares. Any shareholder may ask the com-panyatanytimetoissueaconfirmationregardingthe registered shares entered in the Share Register in his/her name. Any person validly entered in the ShareRegisterasanownerorbeneficiary iscon-sidered to be a shareholder of the company. Any personacquiringregisteredsharesorthebeneficialentitlement to registered shares must apply in writ-ing to be entered in the Share Register. Approval is given by the Board of Directors, which may dele-gate this power. The transfer is then entered in the Share Register. Applicants will be entered in the Share Register as shareholders with voting rights provided they expressly declare that they have ac-

Number of sharesNumber of shareholders

as at 31 March 2015Number of shareholders

as at 31 March 2014

1 to 100 2 213 2 399

101 to 1000 1 591 1 705

1001 to 10 000 137 121

10 001 to 100 000 17 9

more than 100 000 8 7


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

79

parties involved the right to be heard, remove from the Share Register the entry as a shareholder with voting rights and replace it instead with an entry as a shareholder without voting rights. In the reporting year, no applications for the entry of nominees were made.

Restrictions on the transfer of registered shares may only be amended by a resolution passed at the GeneralMeeting of Shareholders with a qualifiedmajority of at least two-thirds of the votes repre-sented and an absolute majority of the nominal share capital represented at the meeting.

Convertible bonds and options

There are no outstanding convertible bonds and no options on participation rights for Ypsomed Hold-ing AG or any Group companies have been issued.

quired the registered shares in their own name and for their own account. If this declaration is not made, the Board of Directors may refuse the entry. The Board of Directors may draw up guidelines for the entry of nominees and may permit nominees to be entered in the Share Register with voting rights for shares up to a maximum of 5.0 % of the nominal share capital. The Board of Directors may also al-low nominees to be entered in the Share Register with voting rights for shares exceeding this limit if the nominees disclose the names, addresses, na-tionality, domicile and shareholdings of the natural persons and legal entities on whose account they hold 1.0 % or more of the share capital. The 5.0 % limit also applies to nominees who are related to one another through capital ownership or voting rights by virtue of a common management or other-wise. If a shareholder has been entered in the Share Register on the basis of incorrect information then the Board of Directors may, after having given the

TheheadofficeoftheYpsomedGroupisinBurgdorf.


80

Board of Directors

Dr.h.c.WillyMichel, Chairman of the Board of Di-rectors of Ypsomed Holding AG. Until April 2003, Willy Michel was the Chairman of the Board of Di-rectors and CEO of Disetronic Holding AG and since 2003 he has been Chairman of the Board of Directors of Ypsomed Holding AG. From August 2011 to June 2014, Willy Michel was Delegate of the Board of Directors and CEO of Ypsomed Holding AG and the Ypsomed Group. He founded Disetronic together with his brother in 1984 and they were to-gether until his brother’s departure from the busi-ness in 1995, whereupon Willy Michel became solely responsible for the development, production, distribution and sale of Disetronic products (until 1999). Within the scope of the sale of Disetronic to Roche Holding AG in 2003, Willy Michel bought back Disetronic’s injection business, which has subsequently traded under the name Ypsomed. Prior to the founding of Disetronic, Willy Michel, whoholdsaprofessionalqualificationasapharma-ceutical consultant with a federal diploma, obtained a broad range of experience with several industrial andpharmaceuticalcompaniesinthefieldsofde-velopment, sales and marketing and he was the head of novo Nordisk Switzerland for six years (from 1978 until 1984). Willy Michel is the majority shareholder and Chairman of the Board of Direc-tors of the non-listed company Finox AG, which is active in the development, manufacturing and sale of pharmaceuticals, Vice Chairman (Chairman from 2001 to March 2008) of the Board of Directors of BV Holding AG, an equity investment company which is listed on the BX Berne eXchange and Chairman (since 2012, a member since 2007) of the Board of Directors of Adval Tech Holding AG, which is listed on SIX Swiss Exchange. In addition, he is the owner of a number of companies, including well-known firms involved in the fields of art,watch-making and gastronomy, and is a member of the Boards of Directors of various non-listed com-panies operating in different sectors from the Yp-somedGroupandofnosignificancetoitsbusinessactivities. Willy Michel was declared the “Master Entrepreneur of the Year” for his overall business performance by Ernst & Young AG in 2005 and in 2006 he was awarded an honorary doctorate (Dr. h. c.) by the Economic and Social Science Faculty of the University of Bern. In 2014, the Swiss Associa-tion for Internal and Integrated Communication (Schweizerischer Verband für interne und integri-erte Kommunikation SVIK) awarded Willy Michel the “Communicator of the Year” (COTY) Award 2014.

AntonKräuliger, Vice Chairman of the Board of Directors of Ypsomed Holding AG (member of the Board since 2007). After completing his studies at ETH Zurich with a degree in Mechanical Engineer-ing, Anton Kräuliger joined the family business in 1971 and in 1978 took over the majority sharehold-ing in Lyss AG (today Metalyss AG), a metal found-ryandfittingsfactory.HedevelopedthiscompanyintotheleadingfittingsgroupontheSwissmarket,the Similor Group. Within the scope of the sale of thefittingsdivisiontoMadisonPrivateEquityHold-ing AG in 2002 and 2005, Mr Kräuliger repurchased the Industrial Division, which today is combined into Metalyss AG once more. Between 1993 and 2004, Mr Kräuliger was a member of the Board of Directors of the listed Berner Kantonalbank BEKB I BCBE. He was also a member of the Board of Di-rectors of Sécheron-Hasler Holding AG (2005 to 2013) and Chairman of the Board of Directors of Sécheron SA (2005 to 2014). He continues to be active as Chairman of the Board of Directors of Metalyss AG (since 1978).


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

81

Prof.em.Dr.NorbertThom, member of the Board of Directors of Ypsomed Holding AG since 2005. Af-ter studying economics and social sciences at the University of Cologne (Dr. rer. pol. and postdoctoral qualification in business management), NorbertThom completed a full academic career spanning some 40 years spent at four universities (Cologne, Giessen, Fribourg, Bern) before his retirement in 2012. In Berne, Prof. Thom was founder and direc-tor of the Institute of Organisation and Human Re-source Management (1991 to 2012) as well as holding several other offices at the university in-cluding Vice Rector for Finance and Planning. Prof. Thom has received awards in Switzerland and abroad for his academic achievements, including three honorary doctorates and one honorary pro-fessorship. Prof. Thom has maintained close links with the business world for many years. As well as consultancy work and membership of advisory boards, he has also been a member of several boards of non-listed companies operating in differ-ent sectors from the Ypsomed Group and of no sig-nificancetoitsbusinessactivities.Currently,inhiscapacity as professor emeritus, he retains ties to the University of Bern, most notably as a supervisor and examiner for its Executive Master of Health Ad-ministration programme. Since 2012, he has also been a member of the Supervisory Board of the REHAU Group (Muri bei Bern), a global plastics company.

GerhartIsler, member of the Board of Directors of Ypsomed Holding AG since 2008. After completing his studies in economics at the University of Zurich, Gerhart Isler joined the family newspaper publish-ing company Finanz und Wirtschaft AG as an editor in 1976. In 1980, he managed the company’s edito-rial department in New York, was head of foreign correspondence from 1981 until 1986 and then held the position of manager of the publishing house until 1989. He then became the owner of Fi-nanz und Wirtschaft, which enjoyed strong growth up to 2000 and became the country’s most impor-tant financial newspaper. Mr Isler subsequentlysoldthepublishingfirmbutcontinuedasitseditoruntil the end of 2004. From 2005 until the end of 2008, Mr Isler was a member of the Board of Direc-tors of the listed company PubliGroupe and from 2008 to spring 2012 he was a member of the Board of Directors of the listed investment company New Value. In 2005, he was elected to the Board of Di-rectors of Grand Casino Baden. Mr Isler has been a member of the Board of Trustees of the move>med Foundation,whichisinvolvedinthefieldofsports,since 2005. Furthermore, Mr Isler has been Mayor of Bergdietikon since early 2010.

Name Nationality Year of birth Position Member since * Elected until General Mee-ting of Shareholders **

Dr. h. c. Willy Michel **** CH 1947 Chairman of the Board of Directors

1984 01.07.2015

Anton Kräuliger *** CH 1946 Vice Chairman of the Board of Directors

2007 01.07.2015

Prof. em. Dr. Norbert Thom *** DE / CH 1946 Member of the Board of Directors

2005 01.07.2015

Gerhart Isler *** CH 1949 Member of the Board of Directors

2008 01.07.2015

* First election including membership of the Board of Directors of Disetronic (until 2003).** Following the enactment of the Minder initiative, all the members of the Board of Directors and the chairman had to stand for

re-election at the 2014 Annual General Meeting of Shareholders.*** Non-executive member of the Board of Directors, member of the Compensation Committee: No operational activity for Ypsomed Holding AG and its subsidiaries in the current year and the three preceding business years.**** Until April 2003, Willy Michel was a member of the Executive Management of Disetronic Holding AG and from 2003 to August

2011 he was the non-executive Chairman of the Board of Directors of Ypsomed Holding AG. From August 2011 to June 2014, Willy Michel was Delegate of the Board of Directors and CEO of Ypsomed Holding AG and the Ypsomed Group. Since July 2014, he has been the non-executive Chairman of the Board of Directors of Ypsomed Holding AG.

Board of Directors


82

Dr. h. c. Willy Michel Prof. em. Dr. Norbert Thom

Anton Kräuliger Gerhart Isler


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

83

Other activities and vested interests

There are no other activities or vested interests apart from those already mentioned.

Significantbusinessrelations

With the exception of Willy Michel, there are no business relations between the individual members of the Board of Directors and Ypsomed Holding AG and its subsidiaries. There were the following busi-ness relations between Willy Michel and people closely related to him as well as to Ypsomed Hold-ing AG and its subsidiaries in the reporting year.

Executiveloan

Willy Michel made a loan to Ypsomed Holding AG, which he assigned to his company Techpharma Management AG. In the reporting year, an amortisa-tion payment of CHF 5 million was made. As at 31 March 2015, a loan amount of CHF 15 million was still outstanding. Since 1 April 2010, the loan has borne interest at a rate based on the CHF 12-month LIBOR as published by the Swiss National Bank plus interest of 0.5 %, but at least 0.7 %, and it is adjusted in line with the prevailing rate as at the end of March and the end of September every year. The other key terms of the loan agreement in its currently valid version as at 31 March 2014 are: Ypsomed Holding AG may repay the loan in full or in part at any time. However, it is repayable by 31 March 2017 at the latest. Techpharma Manage-ment AG has renounced the possibility of any fur-ther amortisation until 31 March 2016. However, as of 1 April 2016 it may each year demand repayment of a maximum of CHF 5.0 million at three months’ notice, whereby the loan becomes due for repay-ment on 31 March 2017. There are no further exec-utive loans.

Rental contract

Willy Michel (i.e. the company Techpharma Man-agement AG which he controls) has been renting out the building on Buchmattstrasse in Burgdorf (Ypsomed Nord) to Ypsomed since 1 January 2006. The parties signed a rental contract set at an in-dexed market rent based on a rental assessment performed by an independent party. The rent was reduced on 1 January 2012 to CHF 906 570 plus VAT (excluding additional costs). The rental con-tract can be terminated on 31 December 2019 con-ditional upon 24 months’ notice and after this on anymonth. The tenant hasunlimited first right ofrefusal for purchasing the property for the entire rental period, but for a maximum of 25 years from the start of the rental. The rental contract stipulates that small and standard maintenance work on the building shall be paid by the tenant up to a maxi-mum amount of 2.0 % of the annual rent per calen-dar year. Major maintenance work and repairs nec-essary for safeguarding the asset value of the building are at the lessor’s expense. On termination of the contract, the tenant will be reimbursed for the alterations carried out to the leased property with the lessor’s consent in application of Swiss GAAP FER depreciation rates at the residual book value. The rental contract was discussed and ap-proved by the Board of Directors, in whose opinion it is commensurate with a rental contract at normal market conditions.


84

ContractualrelationshipwithFinoxAG

Finox AG (Finox), which is controlled by Willy Michel, develops and distributes pharmaceuticals, in particular fertility hormones as well as the asso-ciated pen systems for their administration. There has been a licencing agreement between Ypsomed Holding AG and two of its subsidiaries and Finox since December 2011, which replaced a former co-operation agreement. The licencing agreement reg-ulates the rights to the technology and the industri-al property rights regarding the pen systems. Ypsomed AG is granted a licence under this agree-ment for the use of two administering technologies outsideofthespecifiedareasofapplication.FinoxAG may use the industrial property rights devel-oped under the cooperation agreement on an ex-clusivebasiswithinspecifiedareasofapplication.

In the reporting year, Finox also concluded two supply agreements with Ypsomed AG. Under the firstagreementYpsomedshallsupplyFinoxwithitsClickfine® pen needles and under the second agreement, Ypsomed shall produce and supply Fi-nox with the pen systems that are used for the ad-ministration of its fertility hormone. The agreements include clauses that are standard for such agree-ments. They were discussed and approved by the Board of Directors and, in the opinion of the Board, they represent a cooperative relationship that is usual in the market.

Other contractual relationships

Ypsomed AG and Adval Tech Holding AG signed an agreement on strategic cooperation in mould mak-ing in June 2007. The objective of this cooperative venture is to combine the respective strengths and core competencies of Ypsomed and Adval Tech and exploit them for the economically efficientmanufacture of high-quality products. Willy Michel (i.e. his company Techpharma Management AG) and Ypsomed have concluded a framework service contract that can be terminated by either side at any time. This contract allows for Techpharma Management AG to provide occasional services to the Ypsomed Group (e.g. hotel and catering servic-es) as well as selected management support ser-

vices (including temporary personnel leasing) and, for its part, for the Ypsomed Group to offer occa-sional services to Techpharma Management AG (e.g. management and IT support, including tem-porary personnel leasing). The services are in-voiced at normal market conditions. This contract was discussed and approved by the Board of Di-rectors, in whose opinion it is a cooperation agree-ment at normal market conditions. The framework service contract was expanded insofar as Willy Michel performed the function of CEO of the com-pany from August 2011 until June 2014. The amount of compensation remained unchanged at CHF 140 000. Following the enactment of the Mind-er initiative and the corresponding adjustment of the framework service contract, compensation of the same amount (CHF 140 000) was paid to Willy Michelforthefirsttimeasafeeforhischairman-ship of the Board of Directors of Ypsomed AG for the business year ending 31 March 2014. For the business year ending 31 March 2015, Willy Michel has decided to take only half this amount, which means that the fee for his chairmanship of the Board of Directors of Ypsomed AG amounts to CHF 70 000 for the reporting year. This amount, together with the compensation for the chairmanship of the Board of Directors of Ypsomed Holding AG, repre-sents the full compensation for all consulting and management services provided by Willy Michel, in-cluding his activity as CEO in the reporting year up to 30 June 2014. Willy Michel has expressly waived the right to any more extensive compensation for his operating activities as CEO in the reporting year.

Number of permissible mandates

The Articles of Association of Ypsomed Holding AG havenotyetbeenmodifiedinaccordancewiththeOrdinance against Excessive Compensation in Listed Stock Companies (VegüV). The Board of Di-rectors shall correspondingly propose a compre-hensive revision of the Articles of Association at the General Meeting of Shareholders of 1 July 2015. Pursuant to the recommendation, the members of the Board of Directors should not accept more than 15 additional mandates in legal entities and only a maximumoffiveofthesemaybewithcompanieswhose participation rights are listed on an ex-change.

A mandate is deemed to be any activity in the highest management or administrative bodies of other legal entities that are obliged by law to be entered into the commercial register or a compara-ble foreign register and that are not directly or indi-rectly controlled by Ypsomed Holding AG or control the company. Mandates with different legal entities that are under joint control are not deemed to be mandates in this sense. Mandates that a member


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

85

of the Board of Directors accepts on the instruc-tions of the company, as well as mandates in asso-ciations, organisations and legal entities that are of a charitable or public nature, or in foundations, trusts and pension schemes are not governed by the restriction on admissible mandates.

Electionandperiodofoffice

The members of the Board of Directors and the chairman are elected on an annual basis. Re-elec-tion is possible. There is no restriction to the period of office. Themembers of theBoard ofDirectorswere each re-elected at the General Meeting of Shareholders in 2014 and Willy Michel was also re-elected as chairman. The results of the firstelection can be seen in the table on page 81. The Articles of Association of Ypsomed Holding AG havenotyetbeenmodifiedinaccordancewiththeOrdinance against Excessive Compensation in Listed Stock Companies (VegüV). The Board of Di-rectors shall correspondingly propose a compre-hensive revision of the Articles of Association at the General Meeting of Shareholders of 1 July 2015. Pursuant to the recommendation, no rules that de-viate from the statutory provisions regarding the appointment of the chairman, the members of the compensation committee and the independent proxy are anticipated.

Internal organisation

The Chairman of the Board of Directors is elected by the General Meeting of Shareholders. In addi-tion, the Board of Directors constitutes itself. There is no advisory board.

Division of duties in the Board of DirectorsWilly Michel, Chairman of the Board of Directors of Ypsomed Holding AG, chairs the General Meeting of Shareholders and the meetings of the Board of Directors. He is the link between the Board of Di-rectors and the CEO, is in regular contact with the CEO, discusses individual transactions with the CEO, monitors the activities of the CEO and of Ex-ecutive Management and represents the Board of Directors outside the company.

Due to the size and composition of the Board of Directors, it can offer advice and make decisions on all questions as a full Board of Directors and it

therefore can dispense with the creation of further committees, with the exception of the compensa-tion committee. However, it can transfer individual powers to an executive committee.

Compensation committeeThe General Meeting of Shareholders of 1 July 2014 elected Anton Kräuliger, Norbert Thom and Gerhart Isler as members of the compensation committee. The Board of Directors appoints the chairman of the compensation committee. Anton Kräuliger was appointed as chairman. The com-pensation committee supports the full Board of Di-rectors in determining and reviewing the compen-sation principles, in drafting the compensation report and in preparing the proposals for the Gen-eral Meeting of Shareholders with regard to the compensation of the Board of Directors and Exec-utive Management. In addition, it draws up recom-mendations regarding the compensation princi-ples, which are then decided on by the Board of Directors.

Modus operandi of the Board of Directors and its committeesAs a rule, the Board of Directors meets four times a year. In these meetings, it considers the written re-port and the verbal comments of the CEO and de-liberates and decides on the proposals of the CEO. The auditors participate in the May Board meeting, in which they provide information on the compre-hensive report and on other questions. The Board of Directors meets on one additional occasion per year for two to three days within the context of a strategy meeting with Executive Management. Oc-casionally, the Board of Directors also passes reso-lutions by means of circular letter. The agendas for


86

the meetings are set by the chairman; any member as well as the CEO can request that an item should be added to the agenda. The members, the CEO andCFOaswellastheofficersresponsibleforin-ternal audit and risk management generally receive the agenda and the necessary documentation for decision making seven to ten days before the meeting. Any member of the Board of Directors may request information about any aspect of the Group’s affairs. Votes and elections within the Board of Directors are passed by majority decision. In the event of a tied vote, the chairman has the casting vote. Should the chairman be absent, the vice chairman shall have the casting vote. Votes may not be taken by proxy. The CEO and generally theCFOaswellastheofficersresponsibleforin-ternal audit and risk management and, on a case-by-case basis, other members of Executive Man-agement or employees with an advisory role are present at the meetings.

In the reporting year, the Board of Directors met four times and passed several resolutions by circu-lar letter. The lead auditor took part in the Board of Directors meeting in May 2014. In addition, the Board of Directors convened for two and a half days in March 2015 as part of the strategy meeting with Executive Management. All the members of the Board of Directors took part in all the Board of Directors meetings and in the General Meeting of Shareholders in July 2014. With the exception of Norbert Thom, all the members of the Board of Di-rectors took part in the strategy meeting in March 2015.

The compensation committee also meets during the strategy meeting and prior to or subsequent to the Board of Directors meeting in May. All the rec-ommendations of the committee are dealt with in the standard Board of Directors meetings. In the reporting year, the compensation committee met once during the strategy meeting in order to decide on recommendations for the attention of the full Board of Directors.

DefinitionofcompetencesThe Board of Directors has by law certain non-trans-ferable and irrevocable duties. It has the highest decision-making power in the company, under re-striction of those matters on which shareholders must decide in accordance with the law. In particu-lar, it defines company policy, the mission state-ment – consisting of a mission and a vision – and

the strategic direction of the Ypsomed Group, sets its targets and priorities and allocates the resourc-es for achieving the targets set. The Board of Direc-tors defines the organisation of the YpsomedGroup, supervises business activities, controls the financeandaccountingdivisionsand is responsi-ble for appointments and dismissals as well as the supervision of the individuals entrusted with man-agement duties. It is responsible for the Annual Re-port and the Compensation Report, issues the Code of Conduct, approves the budget and the mid-term planning for Executive Management and also monitors the business activities of the Group companies and it periodically assesses strategic, operationalandfinancialrisks.TheBoardofDirec-tors approves individual business affairs. This in-cludes, in particular, decisions on the purchase or sale of companies, properties and new technolo-gies as well as the conclusion of contracts regard-ing strategic cooperations and contracts with other financialsignificance.Inaddition,theBoardofDi-rectorsapprovesthefinancialstatementsandanyamendments to or dissolution of employment con-tracts with members of Executive Management. The competences of the Board of Directors and of the other decision-makers within the Ypsomed Group are determined within the competence regu-lation. Otherwise, the Board of Directors has dele-gated responsibility for running the company to the CEO.

Instruments for information and control with regardtoExecutiveManagementThe Ypsomed Group’s information and control tools, which are at the disposal of the Board of Di-rectors, consist of a quarterly written management report (management review, quarterly reports), and afinancialreport.TheChairmanoftheBoardofDi-


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

87

rectors and the CEO have direct access at all times to the management information system (MIS). The CEOandgenerallytheCFOaswellastheofficersresponsible for internal audit and risk management and, on a case-by-case basis, other members of Executive Management or employees with an advi-sory role, are present at the meetings. Furthermore, the full Board of Directors meets for two to three days within the context of a strategy meeting with Executive Management and other employees dur-ing which there is also a focus on risk management.

Furthermore, the Board of Directors uses strate-gic planning documents as management tools for steering the company. Responsibility for risk man-agement and monitoring rests with Executive Man-agement, which reports on these matters periodi-cally to the full Board of Directors, but at least once a year. In addition to these documents, further se-lected financial figures are available to ExecutiveManagement on a monthly basis.

Risk assessment is based on a risk inventory that encompasses the relevant risk categories such as strategic risks, management risks, general risks in the operating business, legal risks, systemic risks, financial risks (includingmarket, credit andliquidity risks) and event risks (including political, regulatory,fiscalandexternalrisks).Theserisksareassessed with regard to probability of occurrence and impact.

The Internal Auditing function, for which the Board of Directors is directly responsible, is com-missioned with the constant expansion of the doc-umented, internal control system. The auditing plans are based on a risk-oriented procedure that relates to business processes and are geared to-wards the following goals and tasks: reviewing the fulfilmentofbusinessgoalsandobjectives;evalua-tion of the effectiveness of risk management, con-trol and corporate management processes; optimi-sation of business processes; improvement of controls and processes with regard to the informa-tionsystems;verificationofcontrolsandprocessesfor accounting systems and financial reporting;confirmationandguaranteeofauthorisedbusinesstransactions; safeguarding and protection of as-sets; support with regard to complying with legal and regulatory requirements; reviewing significantor special business cases and transactions. The Board of Directors can determine additional areas tobereviewed.Theofficerresponsibleforinternalauditing provides the auditors several times per year with appropriate documentation on his/her in-ternal auditing activities and coordinates these with the auditing to be carried out by the auditors within the framework of the interim and year-end audits.


88

Dr. Beat MaurerSenior Vice President Legal & Intellectual Property

Name Nationality Year of birth

Position Employed at Ypsomed (i.e. be-fore 2003 for Disetronic) since

Simon Michel * CH 1977 CEO 2006

Dr. Beat Maurer CH 1958 SeniorVicePresidentLegal&Intellectual Property,SecretaryoftheBoard

1992

Hans Ulrich Lehmann ** CH 1966 Senior Vice President Technology 2000

Ulrike Bauer *** DE 1969 SeniorVicePresidentM&S Delivery Systems

2001

Niklaus Ramseier CH 1963 ChiefFinancialOfficer(CFO) 2002

Dr. Benjamin Reinmann **** CH 1969 Senior Vice President Operations 2002

Yvonne Müller CH 1969 Senior Vice President Human Resources 2003

Dr. Eberhard Bauer *** DE 1960 SeniorVicePresidentM&SDiabetesCare 2012

Simon MichelChiefExecutiveOfficer,CEO

* CEO since July 2014. Previously Senior Vice President Marketing & Sales** Since April 2015, Hans Ulrich Lehmann has been managing the Operations area on an ad interim basis*** Member of Executive Management since July 2014**** Left the Ypsomed Group at the end of March 2015

ExecutiveManagement

The CEO as well as Executive Management are re-sponsible for the operational management of the Ypsomed Group within the scope of the guidelines laid down by the Board of Directors.


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

89

Niklaus RamseierChiefFinancialOfficer(CFO)

Dr. Eberhard BauerSenior Vice President M & S Diabetes Care

Yvonne MüllerSenior Vice President Human Resources

Hans Ulrich LehmannSenior Vice President Technology

Ulrike BauerSenior Vice President M & S Delivery Systems

Dr. Benjamin ReinmannSenior Vice President Operations


90

SimonMichel,CEO of Ypsomed Holding AG and the Ypsomed Group. With Ypsomed since October 2006. Member of management since 2008 and re-sponsible for Marketing & Sales. CEO since July 2014. From 2003 until 2006, Simon Michel worked for Orange Communications AG in Zurich and Lau-sanne, where he was responsible for, among other things, the introduction and marketing of UMTS. Simon Michel studied economics at the University of St. Gallen and completed a Masters with a focus on media and communications management. Since 2006, he has been a member of the Board of Direc-tors of Sphinx Werkzeuge AG and since 2008 a board member of the Burgdorf-Emmental Trade and Industry Association. Since 2015, he has been a member of the Board of Directors of the Solothu-rn Chamber of Commerce, Chairman of the Indus-try Commission and a member of the Board of Di-rectors of FASMED, the Federation of Swiss Medical Devices Trade and Industry Associations, as well as a member of further boards of trustees and advisory boards.

BeatMaurer, Dr. iur., attorney-at-law, Senior Vice President Legal and Intellectual Property, Secretary to the Board of Directors of Ypsomed Holding AG, with Ypsomed (pre-2003 with Disetronic) since1992, prior to that tax and legal consultant with a trust and auditing company. Education: degree in Law from the University of Fribourg, studied at the Free University of Berlin, took a doctorate in law at the University of Bern and was admitted to the bar in the canton of Berne. Beat Maurer has been a judge specialising in issues relating to business law and intellectual property law at the commercial court of the canton of Berne since 2002. He is also a mem-ber of the Board of Directors of FASMED, the Fed-eration of Swiss Medical Devices Trade and Indus-try Associations.

Hans Ulrich Lehmann, Senior Vice President Technology. As of April 2015, Hans Ulrich Lehmann has been managing Operations on an ad interim basis. He has been a member of Executive Man-agement since 2011 and is responsible for Technol-ogy. He has been with Ypsomed since 2000 (pre-2003 at Disetronic) in different positions, initially as Senior Project Manager for R&D projects, before spending several years as Vice President Manufac-turing and Vice President Technology. Previously, he worked at various medical device manufacturing and injection moulding companies in Switzerland and the USA. He graduated as a mechanical engi-neer and completed the postgraduate programme in business administration at the University of Ap-plied Sciences in Berne and also completed the Program for Leadership Development PLD at Har-vard Business School in Boston, USA.

Ulrike Bauer, Senior Vice President Market-ing & Sales Delivery Systems, with Ypsomed (pre-2003 with Disetronic) since 2001 in different Mar-keting & Sales functions and since 2014 a member of Executive Management. Previously Product Manager with Mettler Toledo (1996 – 2001). Ulrike Bauer graduated in chemical engineering and bio-technology at the University of Aachen and com-pleted a postgraduate diploma in International Management at the Kalaidos University of Applied Sciences in Zurich. Ulrike Bauer and Eberhard Bau-er are not related in any way.

NiklausRamseier, CFO, with Ypsomed (pre-2003 with Disetronic) since 2002, prior to that Head of Finance and Controlling for the industrial services product line of the Von Roll Group (from 1995 until 2002) and various advisory and accounting func-tions within a trust and auditing company. Educa-tion:Swisscertifiedexpertinaccountingandcon-trolling.

Organisation of Ypsomed

* Since April 2015, Hans Ulrich Lehmann has been managing the Operations area on an ad interim basis

CEOS. Michel

Board of Directors

Legal&IPDr. B. Maurer

Finance&ITCFO

N. Ramseier

Human Resources

Y. Müller

Marketing&SalesDiabetes Care

Dr. E. Bauer

Marketing&SalesDelivery Systems

U. Bauer

TechnologyH. U. Lehmann

Operations*Dr. B. Reinmann


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

91

Benjamin Reinmann, Dr. med., Dr. phil. med., Senior Vice President Operations until March 2015. Member of Executive Management since 2011 and responsible for Operations. Benjamin Reinmann has carried out a number of different roles at Yp-somed (and at Disetronic prior to 2003) since join-ing the company in 2002 in the areas of Marketing & Sales, Technology and Production. He was previ-ously a medical practitioner at the Universität-skinderspital (University Children’s Hospital) Bern (2001 – 2002) and a research associate at the Uni-versity of Bern and the University of Indianapolis, USA (1997 to 2001). Education: studied medicine, took his doctorate in medicine and structural biolo-gy at the University of Bern, then completed post-graduate studies in business management at PHW Bern. Benjamin Reinmann left the company on 31 March 2015.

YvonneMüller, Senior Vice President Human Re-sources, with Ypsomed since 2003, prior to that responsibility for training at Berner Kantonalbank BEKB I BCBE (from 2002 until 2003) and for human resources at X-Media and Scout24 (from 2000 until 2002) as well as at IKEA (from 1996 until 2000). Ed-ucation: graduated as a human resources special-ist and has an Executive MBA in General Manage-ment from Bern University of Applied Sciences.

Dr.EberhardBauer, Dr. med. vet, Senior Vice Pres-ident Marketing & Sales Diabetes Care. Since July 2014, member of Executive Management and re-sponsible for Marketing & Sales in the Diabetes Care business area. Eberhard Bauer was responsible for the global distribution and the distribution compa-nies of Diabetes Care from July 2012 until July 2014. Prior to this, he held various functions with Boehringer Mannheim and Roche Diagnostik over more than 20 years, including Division Head Iberia, Global Head of Marketing and Product Develop-ment for Roche Diabetes Care and most recently, Head Latin America. He graduated as Dr. med. vet. from the Ludwig-Maximilians-Universität München and carried out postgraduate studies at IMD Laus-

anne and the London Business School. Ulrike Bauer and Eberhard Bauer are not related in any way.

Other activities and vested interests

There are no other activities or vested interests apart from those already mentioned.

Number of permissible mandates

The Articles of Association of Ypsomed Holding AG havenotyetbeenmodifiedinaccordancewiththeOrdinance against Excessive Compensation in List-ed Stock Companies (VegüV). The Board of Direc-tors shall correspondingly propose a comprehensive revision of the Articles of Association at the General Meeting of Shareholders of 1 July 2015. Pursuant to the recommendation, the members of Executive Management should not accept more than seven additional mandates in legal entities and only a max-imum of two of these may be with companies whose participation rights are listed on an exchange.

A mandate is deemed to be any activity in the highest management or administrative bodies of other legal entities that are obliged by law to be en-tered into the commercial register or a comparable foreign register and that are not directly or indirectly controlled by Ypsomed Holding AG or control the company. Mandates with different legal entities that are under joint control are not deemed to be man-dates in this sense. Mandates that a member of Ex-ecutive Management accepts on the instructions of the company, as well as mandates in associations, organisations and legal entities that are of a charita-ble or public nature, or in foundations, trusts and pension schemes are not governed by the restriction on admissible mandates.

Management contracts

There are no management contracts.

Compensation,participationsandloans

Information on the compensation and participa-tions of members of the Board of Directors and Ex-ecutive Management, the contents and determina-tion procedure as well as the statutory rules governing the principles, loans, credits and insur-ance benefits and the principles governing thevotes of the General Meeting of Shareholders re-

garding compensation as well as the actual com-pensation paid to current and former members of the Board of Directors and Executive Management in 2014/15 as stipulated by the VegüV (formerly Art. 663bbis of the Swiss Code of Obligations) can be found in the Compensation Report 2014/15, on page 95.


92

Shareholders’ rights of participation

Voting-right restrictions and representation

All shareholders who are entered in the Share Reg-ister with voting rights are entitled to vote at the General Meeting of Shareholders. Shareholders may arrange to be represented at the General Meeting of Shareholders by written proxy. In exer-cising his/her voting rights, no shareholder may di-rectly or indirectly amalgamate more than 5 % of the total voting rights in the form of his/her own shares and those he/she is representing. Legal en-tities and partnerships that are related to one an-other through capital ownership or voting rights or by virtue of a common management or otherwise, as well as natural persons, legal entities or partner-ships that adopt a coordinated approach in order to circumvent the restrictions on voting rights, will be considered as one person. However, the restriction on voting rights will not apply to the exercise of vot-ing rights by the independent proxy, nor to Willy Michel, because more than 5 % of all voting rights were registered to him in the Share Register at the time the Articles of Association were drawn up (Art. 16 of the Articles of Association). There are no rules governing the annulment of statutory voting-right restrictions.

Independentproxy

The General Meeting of Shareholders of 1 July 2014 elected Dr. Peter Stähli, attorney-at-law and notary, Burgdorf, as the independent proxy for the period up to the conclusion of the next General Meeting of Shareholders. The Articles of Associa-tion valid as at 31 March 2015 have not yet been modifiedinaccordancewiththeOrdinanceagainstExcessive Compensation in Listed Stock Compa-nies (VegüV) and therefore contain no provisions governing the issuance of instructions to the inde-pendent proxy. The Board of Directors shall corre-spondingly propose a comprehensive revision of the Articles of Association at the General Meeting of Shareholders of 1 July 2015. The proposal shall authorise the Board of Directors to issue a directive governing the independent proxy. It shall be au-thorised to determine the requirements under which valid instructions may be issued to the inde-pendent proxy. For the coming General Meeting of Shareholders of 1 July 2015, the shareholders may also issue their powers of attorney and instructions electronically to the independent proxy. The pre-cise details regarding the issuance of instructions electronically to the independent proxy shall be ex-plained in the invitation to attend the General Meet-ing of Shareholders.

Quorums according to the Articles of Association

Unless otherwise stipulated by law or by the Arti-cles of Association, the General Meeting of Share-holders shall adopt resolutions and conduct votes on the basis of an absolute majority of the votes cast, excluding blank and invalid votes. The chair-man shall also vote and, if the vote is tied, he/she shall have the casting vote. The quorums laid down intheArticlesofAssociationreflectstatutoryquo-rums.

Convening the General Meeting of Shareholders

The General Meeting of Shareholders will be con-vened at least 20 days prior to the meeting by way of a letter to the shareholders who are entered in the Share Register as well as by publishing a notice intheSwissOfficialGazetteofCommerce(SOGC).

Agenda items

Shareholders holding shares with a nominal value of at least CHF 1 million have the right to request that a specific matter be put on the agenda byspecifying the item of the agenda and the proposal. Such requests must be submitted in writing to the Chairman of the Board of Directors at least 45 days before the meeting.

Entries in the Share Register

Entries in the Share Register shall be made until six days prior to the General Meeting of Shareholders. There are no rules governing the granting of excep-tions.


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

93

Change of control and blocking mechanisms

In the event of a public takeover bid, the bidder is required pursuant to Art. 32 of the Swiss Stock Ex-change Act to make an offer for all of the compa-ny’s listed shares as soon as he/she acquires shares in the company directly, indirectly or in con-cert with third parties, which along with the shares already held exceed the threshold of 49 % of the voting rights of the company, whether exercisable or not (Art. 10 Articles of Association).

There are no change-of-control clauses with mem-bers of the Board of Directors, Executive Manage-ment and / or other management personnel.

Auditors

Term of mandate of auditors and term of the lead auditor

On 27 June 2007, the General Meeting of Share-holders of Ypsomed Holding AG selected Er-nst&YoungAG,Berne,asauditorsforthefirsttime.The lead auditor, Dr. Thomas Nösberger, has been inofficeatYpsomedHoldingAGsinceJune2014.He replaces Christian Schibler, who was lead audi-tor from 2007 and needed to be replaced due to the rotation obligation. The auditors are each appoint-edforaperiodofofficeofoneyearbytheGeneralMeeting of Shareholders, the last time being on the occasion of the 2014 General Meeting of Share-holders.

Auditing fees

The total auditing fees charged by the auditor for Ypsomed Holding AG and its Group companies in the course of the reporting year amounted to kCHF 277. Ypsomed Holding AG and its Group compa-nies were invoiced a total of kCHF 325 for addition-al so called non-auditing services regarding the intended disposal of DiaExpert and for tax consul-tancy services.

Tools for the supervision and control of auditing

The full Board of Directors undertakes the supervi-sion and control of the auditor. The lead auditor is in attendance during the discussion and accept-ance of the consolidated and annual financialstatements by the Board of Directors. The auditor compiles a comprehensive report annually for the attention of the Board of Directors and this is dis-cussed by the Board of Directors with the lead au-ditor in attendance.


94

Information policy

Ypsomed Holding AG maintains an open and trans-parent communication policy towards sharehold-ers,potentialinvestors,financialanalysts,theme-dia, customers and other interested people, based on the principle of equality. The company uses the following tools: annual report, interim report pres-entationoftheannualresultstothemediaandfi-nancial analysts ahead of the General Meeting of Shareholders,aswellasmediabriefingsandcom-pany publications that have potential relevance to the share price. Responsibility for communication with investors rests with the Chairman of the Board of Directors.

The following research banks monitor the developmentoftheYpsomedGroup:

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), all interested parties can access up-to-date and potentially market-relevant infor-mation (pull system) without charge. Furthermore, all interested parties can subscribe to an e-mail distribution list under www.ypsomed.com / media.html(pushsystem).TheofficialpublicationorganofYpsomedHoldingAGistheSwissOfficialGazetteof 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.

Equity trading

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

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

Important forthcoming dates

1 July 2015General Meeting of Shareholders, Berne

29 October 2015Media conference and analysts’ presentation of thesemi-annualfigures2015/16,Solothurn

26 May 2016Media conference and analysts’ presentation of theannualfigures2015/16,Burgdorf

Contact

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

Tel. +41 34 424 41 59Fax +41 34 424 41 55

www.ypsomed.com

Ypsomed – Compensation Report

Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

95

Compensation Report

The Compensation Report for Ypsomed Holding AG for the business year 2014 / 15 sets out the compen-sation principles, the compensation system and the actual compensation for the Board of Directors and Executive Management in accordance with the provi-sions pursuant to the Ordinance against Excessive Compensation in Listed Stock Companies (VegüV). The Articles of Association for Ypsomed Holding AG have not yet been aligned with the VegüV. The Board of Directors shall correspondingly propose a compre-hensive revision of the Articles of Association at the General Meeting of Shareholders of 1 July 2015.

Theoverall responsibility for thedefinitionof thecompensation principles is held by the Board of Di-rectors. The compensation committee supports the full Board of Directors in determining and reviewing the compensation principles, in drafting the compen-sation report and in preparing the proposals for the General Meeting of Shareholders with regard to the compensation of the Board of Directors and Execu-tive Management and prepares recommendations regarding the compensation principles, which are then decided on by the Board of Directors. The mem-bers of the Board of Directors and the members of Executive Management present at the relevant meet-

ing of the Board of Directors have the right of partici-pation and the right to comment if their compensation is being decided by the committee responsible. For thefirsttimeattheGeneralMeetingofShareholdersof Ypsomed Holding AG of 1 July 2015, the General Meeting of Shareholders shall decide with binding effect and in separate votes on the maximum total amountofthefixedcompensationbothforthemem-bers of the Board of Directors for the period until the next General Meeting of Shareholders and for the members of Executive Management for the duration of the following business year. It shall also decide on the performance-related compensation for the mem-bers of the Board of Directors and Executive Man-agement for the business year preceding the General Meeting of Shareholders. The relevant total amounts include all the employer contributions to the social insurance and occupational insurance. No credits, loansorinsurancebenefitsapartfromthosefromtheoccupational insurance were granted to the members of the Board of Directors and Executive Management. Fees and expenses that are paid in compliance with the regulations approved by the authorities are not deemed to be compensation subject to authorisation.

Type of compensation Compensation committee

Full Board of Directors

General Meeting of Shareholders

Board of Directors

Maximumamountofthefixedcompensation of the members of the Board of Directors for the period from 1 July 2015 until the next ordinary general meeting in June 2016.

Examination of the principles and recom-mendation to the Board of Directors

Proposal to GMOS

Approval of GMOS dated 1.7.2015

Individual compensation for the chairman and members of the Board of Directors

Proposal to Board of Directors

Approval

Total amount of the performance-re-lated compensation for the members of the Board of Directors for the busi-ness year ending on 31 March 2015

RecommendationProposal to GMOS


Individual compensation for members of the Board of Directors


Approval

Executive Management

Maximumamountofthefixedcom-pensation for members of Executive Management for the business year 2016 / 17

Examination of the principles and recom-mendation to the Board of Directors

Proposal to GMOS


Individual compensation to the mem-bers of the Board of Directors


Approval

Total amount of the performance-rela-ted compensation for the members of Executive Management for the busi-ness year ending on 31 March 2015

RecommendationProposal to GMOS


Individual compensation for members of Executive Management


Approval

Compensation approval process


96

Board of Directors compensation

The bases and elements of the compensation grant-edtotheBoardofDirectors,comprisingafixedbasiccomponentandfurtherbenefits(e.g.attendancefee)as well as a performance-related component, are dis-cussed, examined and presented to the full Board of Directors for a decision annually by the compensation committee. The full Board of Directors determines the compensation annually at its own discretion and withoutconsultingexternaladvisors.Thefixedcom-ponent comprises CHF 150 000 (prior year: CHF 150 000) for the Chairman of the Board of Directors and CHF 90 000 (prior year: CHF 90 000) for each member of the Board of Directors. The perfor-mance-related component comprises between 0 % and a maximum of 41 5⁄8%of thefixedcomponent.The amount of the performance-related component is dependent on the targets achieved vis-à-vis the budgeted targets, based on two-thirds of the consol-idated EBIT margin and one-third of the consolidated sales. In the reporting year, this amounted to around CHF163000and/or36%ofthetotalofthefixedba-sic compensation of the Board of Directors, respec-tively. If target attainment had been 100 %, the perfor-mance-related components would have totalled around CHF 142 000. The attendance fee amounts to CHF 1 500 for every meeting that lasts at least half a day (prior year: CHF 1 500) No attendance fee is paid for shorter meetings and participation in strategy meetings and the General Meeting of Shareholders.

Participation in the compensation committee is not remunerated separately. Board of Directors’ fees and attendance fees are paid to the members of the Board of Directors after the General Meeting of Sharehold-ers. All compensation is paid in cash. There are no equity or option plans.

The Chairman of the Board of Directors of Ypsomed Holding AG and / or of his company Tech-pharma Management AG was awarded a flat ratesum of CHF 70 000 (prior year: CHF 140 000) as a fee for his work as a Board member for Ypsomed AG in addition to the above-mentioned fee for his work as Chairman of the Board of Ypsomed Holding AG (see Corporate Governance Report 2014 / 15, page 84, Other contractual relationships). Both the fees men-tioned represent the full compensation for all the ac-tivities carried out by Willy Michel in the Ypsomed Group, including his function as CEO until the end of June 2014. Depending on the situation, VAT or statu-tory social insurances must be paid on the compen-sation. Members of the Board of Directors are not grantedanyinsurancebenefitsfromtheoccupationalinsurance.

Information on all the actual compensation paid to the current and former members of the Board of Di-rectors in the business year 2014/15 that is pre-scribed by the VegüV (formerly Art. 663bbis of the Swiss Code of Obligations) is given in the following table.

(Gross, in thousand CHF, exclusive of VAT) Willy Michel(Chairman)

Anton Kräuliger(Vice Chairman)

Prof. em. Dr. Norbert Thom

(Member)

Gerhart Isler(Member)

Total

2014 / 15 2013 / 14 2014 / 15 2013 / 14 2014 / 15 2013 / 14 2014 / 15 2013 / 14 2014 / 15 2013 / 14

Fixedcompensation 150.0 150.0 90.0 90.0 90.0 90.0 90.0 90.0 420.0 420.0

Other compensation 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 24.0 24.0

Employer contribution to social insurance

5.5 5.5

Totalfixedcompensation 156.0 156.0 96.0 96.0 96.0 96.0 101.5 96.0 449.5 444.0

Performance-related component 57.5 56.7 34.5 34.0 34.5 34.0 34.5 34.0 161.0 158.7

Employer contribution to social insurance

2.0 2.0

Total performance-related comp. 57.5 56.7 34.5 34.0 34.5 34.0 36.5 34.0 163.0 158.7

Compensation to Willy Michelas Chairman of the Board of Directors of Ypsomed AG

70.0 140.0 70.0 140.0

Total compensation for Board of Directors 283.5 352.7 130.5 130.0 130.5 130.0 138.0 130.0 682.5 742.7

Highest compensation to Willy Michel 283.5 352.7

FurthertransactionstoaffiliatedpersonsofWillyMichel:

TechpharmaManagementAG:forloan(interest) 128.2 149.2

TechpharmaManagementAG:forrentedbusinesspremises(rent) 906.6 906.6

Board of Directors compensation


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

97

ExecutiveManagementcompensation

The amounts paid to Willy Michel as Chairman of the Board of Directors of Ypsomed Holding AG and Chairman of Ypsomed AG (see page 96) are the full compensation for all the activities of Willy Michel including his work as CEO up until the end of June 2014. As in previous years, Willy Michel has ex-pressly refused any further compensation for his operational activities as CEO (until June 2014).

The elements of the compensation granted to Executive Management comprise a fixed basiccomponent, further benefits (e.g. service yearsaward) as well as a performance-related compo-nent based on the company result and the attain-ment of individual targets. The compensation com-mittee assesses every year the performance and the compensation of the members of Executive Management and recommends any adjustments to the Board of Directors to decide on at its own dis-cretion.Thefixedbasiccompensation isdepend-ent on the function, the qualification, the profes-sional experience and the performance of the relevant person. The performance-related compo-nent amounts to between 0 % and a maximum of 31 1⁄4 % of the annual basic compensation (gross) of the individual member of Executive Manage-ment. The performance-related component is de-pendent on the targets achieved vis-à-vis the budgeted targets and is based to 50 % on the con-solidated EBIT margin, 25 % on the consolidated sales and 25 % on the attainment of the individual targets of the relevant member of Executive Man-agement. The individual targets are set together with the line manager during the annual perfor-mance appraisal. These can be project targets, personal development targets or the contribution to the target attainment of the team or the depart-ment. A management system for the assessment of performanceensures that targetsaredefinedand

that target attainment is assessed during the annu-al performance appraisal. The amount of the per-formance-related component paid to the members of Executive Management in the reporting year came to around CHF 557 000 and/or 33 % of the fixedbasiccompensation,basedonatargetattain-ment level of 111 1⁄4 %. If the target attainment had been 100 %, the performance-related component would have been around CHF 54 000 less. All com-pensation is paid in cash. There are no equity or option plans.

The Board of Directors is entitled to pay all types of compensation from the authorised, fixed com-pensation amounts and/or the additional amounts. Members of Executive Management are granted insurancebenefitsfromtheoccupationalinsurancewithin the framework of the statutory provisions and the provisions according to the regulations in-cludingextra-mandatorybenefitsandinthecaseofillness or accident their compensation continues to be paid and/or is paid as insurance and bridging benefitswithintheframeworkofthestatutorypro-visions and the provisions according to the regula-tions.

Fees and expenses that are paid according to the regulations approved by the authorities respon-sible are not deemed to be compensation that is subject to approval. No severance pay and no no-tice periods of more than six months have been agreed with any members of Executive Manage-ment. In the reporting year, no severance pay was paid to former members of executive bodies. Infor-mation on the actual compensation paid to mem-bers of Executive Management either directly or indirectly in the business year 2014 / 15 and to for-mer members of Executive Management that is prescribed by the VegüV (formerly Art. 663bbis of the Swiss Code of Obligations) is given in the fol-lowing table.

(Gross, in thousand CHF) Fixed compensation Other compensation

Performance-related compensation

Employer contribution to

social insurance

Total

2014/15 2013/14 2014/15 2013/14 2014/15 2013/14 2014/15 2013/14 2014/15 2013/14

SimonMichel,CEO* 344.4 0.0 172.5 51.2 568.1

Dr.BeatMaurer,SeniorVice PresidentLegalServices& Intellectual Property 303.5 0.0 83.5 55.0 442.0

Add. members ** 1 579.5 1 168.9 9.0 3.0 384.8 325.4 286.7 203.3 2 259.9 1 700.6

Total management compensation 2 828.0 2 142.6

* CEO since July 2014. Previously Senior Vice President Marketing & Sales ** On 1 July, Ulrike Bauer and Dr. Eberhard Bauer joined the Executive Management of the Ypsomed Group; their compensation as members of Executive Management thus comprises nine months (1 July 2014 to 31 March 2015). Compensation to Willy Michel, who was CEO until 30 June 2014, is not listed in this table illustrating compensation to Board members (page 96). *** The full performance-related compensation for Executive Management comes to a total of kCHF 632.9 (performance-related component kCHF 557.3 incl. the corresponding employer contributions to the social insurances of kCHF 75.6).

ExecutiveManagementcompensation


98

Rules according to the Articles of Association governing the principles regarding compensa-tion

The Articles of Association of Ypsomed Holding AG havenotyetbeenmodifiedinaccordancewiththeOrdinance against Excessive Compensation in Listed Stock Companies (VegüV). The Board of Di-rectors shall correspondingly propose a compre-hensive revision of the Articles of Association at the General Meeting of Shareholders of 1 July 2015. The proposal provides that:

The General Meeting of Shareholders approves annually on a binding basis and upon the pro-posal of the Board of Directors the total amounts of thefixedcompensation for the followingap-proval periods:

– for the Board of Directors until the next Ordi-nary General Meeting of Shareholders.

– for Executive Management for the business year following the Ordinary General Meeting of Shareholders.

If the General Meeting of Shareholders should refuse to approve a total amount, the Board of Directors may propose new motions at the same General Meeting of Shareholders or defer the ap-proval of the compensation until an Extraordinary General Meeting of Shareholders or until the next Ordinary General Meeting of Shareholders.

Until thefixedcompensationcomponentshavebeen approved by the General Meeting of Share-holders the compensation can be paid subject to approval.

The General Meeting of Shareholders approves annually on a binding and individual basis the amount of the performance-related compensa-tion components for the members of the Board of Directors and Executive Management for the business year preceding the General Meeting of Shareholders.

Performance-related compensation components may be paid only once the resolution for approv-al has been passed by the General Meeting of Shareholders

The amounts of compensation approved by the General Meeting of Shareholders can be paid by the company itself or by the company that it con-trols.

The Board of Directors is entitled to pay all types ofcompensationfromtheauthorised,fixedcom-pensation amounts and/or the additional amounts.

If new members are elected to Executive Manage-ment following the resolution of the General Meet-ing of Shareholders, an additional amount of a maximum of 25 % of the previous total of the ap-provedfixedcompensationamounts for theap-proval period shall be made available to the com-pany. The General Meeting of Shareholders shall not vote on the use of the additional amount.

The company can conclude temporary and per-manent contracts with members of the Board of Directors governing their compensation. Tempo-rary contracts have a maximum period of one year, but they may be renewed more than once. Permanent contracts have a maximum notice period of twelve months.

The company can conclude temporary and per-manent contracts with members of Executive Management governing their compensation. Temporary contracts have a maximum period of six months, but they may be renewed more than once. Permanent contracts have a maximum no-tice period of six months.

Compensation to members of Executive Man-agement may be paid until the end of the con-tractual notice period, even if the employee was released from duties and has taken on a new ap-pointment.

The compensation for non-competition clauses concluded with members of Executive Manage-ment may be paid for a maximum of twelve months and must not exceed the last annual compensation paid prior to the departure of this member.

Members of the Board of Directors and Executive Management are not granted any credits or loans orany insurancebenefitsapart from those fromthe occupational insurance.


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

99

Investments held by members of the Board of DirectorsandExecutiveManagement

As of 31 March members of the non-executive and executive boards, Executive Management and people closely related to them held the following shares. No Ypsomed share options were held.

Share ownership of Board of DirectorsShares as of

31 March 2015Shares as of

31 March 2014

WillyMichel,Chairman* 8 717 746 8 574 114

TechpharmaManagementAGasrelatedpartytoWillyMichel,Chairman 478 682 657 480

BVHoldingAGasrelatedpartytoWillyMichel,Chairman 22 500 22 500

Total of Willy Michel and Techpharma Management AG and BV Holding AG 9 218 928 9 254 094

AntonKräuliger,ViceChairman 5 100 2 000

Prof.em.Dr.NorbertThom,Member 132 75

GerhartIsler,Member 8 100 5 000

Total 9 232 260 9 261 169

ShareownershipofExecutiveManagement

SimonMichel,CEO* 144 888 144 888

Dr.BeatMaurer,SeniorVicePresidentLegalServices&IntellectualProperty 500 500

YvonneMüller,SeniorVicePresidentHumanResources 800 800

NiklausRamseier,SeniorVicePresidentFinance/IT(CFO) 1 069 1 069

Hans-UlrichLehmann,SeniorVicePresidentTechnology 150 70

UlrikeBauer,SeniorVicePresidentMarketing&SalesDeliverySystems** 150 –

Dr.EberhardBauer,SeniorVicePresidentMarketing&SalesDiabetesCare** 2 110 –

Dr.BenjaminReinmann,SeniorVicePresidentOperations 50 50

Total 149 717 147 377

* Willy Michel was CEO of the Ypsomed Group until June 2014. On 1 July 2014, Simon Michel took over the role of CEO (previously Senior Vice President Marketing & Sales).** Ulrike Bauer and Dr. Eberhard Bauer joined the Executive Management of the Ypsomed Group on 1 July 2014.

See Corporate Governance page 78 for information on the Family Michel shareholder group and its shareholdings.


100

Auditor report on the remuneration report


Co

rpo

rate

Go

vern

ance

Co

mp

ensa

tio

n R

epo

rt

101

Ypsomed – Glossary

102

Glossary

AnaemiaAnaemia means an insufficiency of blood. This can manifest itself in a reduction in haemoglobin concentration (red blood pigment), in the haematocrit (measurement of blood thickness, packed cell volume) and / or in the number of erythrocytes (red blood cells) in the blood compared with the age norm. One of its effects is a reduction in the capability of the blood to deliver oxygen. The classic symptoms include loss of energy and rapid fatigue as well as pallor, fatigue, breathlessness and palpitations (the heart beats irregularly, faster or more forcefully than it should in relation to the level of activity demanded of it). Anaemia can have a number of different causes.

AutoinjectorIn autoinjectors, needle insertion into the skin and / or injection of the drug are automatic, usually driven by means of a spring mechanism.

Basal ratesThe basal rate is the continuous dosage of rapid-acting insulin to cover a patient’s basic needs.

Biomolecule injectablesDrugs manufactured using biotechnology. Such biomolecules cannot be delivered using traditional methods (e. g. orally) because they would be destroyed by the digestive tract and thus require the injectable route of administration.

BiosimilarThe term “biosimilar” refers to a protein-based mimetic drug that has been produced using biotechnology and which is approved after the expiration of the patent period for the original active substance. Unlike the classic drugs defined in terms of molecular structure, the active substances of these novel biotechnology products are not completely identical to the original active sub-stance and therefore require more extensive approval and mon-itoring procedures than the classic generics. The main reasons for these differences are the different organisms (for example E. coli bacteria) on which the target protein is expressed and the different methods applied, such as separation and cleansing.

Blood sugar (blood glucose)Blood sugar means, in general, the level of glucose in the blood. Glucose is an important source of energy for the body and represents a significant measured value in medicine. If the blood sugar is high over a sustained period of time (hyperglycaemia), diabetes mellitus typically exists. In intensive insulin therapy, the blood sugar or blood glucose should be measured at least four times a day so that the amount of insulin administered can be adjusted to actual requirements. A person’s insulin requirements change over the course of the day due to the varying levels of hormones that influence blood sugar, the consumption of food, physical activity or febrile infectious diseases.

Blood sugar monitoring (blood glucose monitoring)Diabetics normally measure their blood sugar levels themselves using a portable blood sugar monitor. To carry out the measure-ment, a small blood sample must first be placed on a test strip. Through an enzymatic reaction with the test strip, the blood sugar is converted into a measurable product that is then measured using a photometric or electrochemical process and displayed by the monitoring device. In the case of intensive insulin therapy, the measuring of the blood sugar takes place at least four times daily.

BolusWhen a patient needs more insulin (especially at mealtimes), a bolus, i.e. an additional dose of insulin, is administered to cover this increased requirement.

CannulaSee Pen needle.

CartridgeA drug reservoir containing the drug to be administered used with, for example, reusable pens. Some substances need pens with dual-chamber cartridges, which contain lyophilised drugs and diluent that are mixed automatically in the pen before use.

CE registrationIn Europe, the process of CE registration encompasses the in-dependent examination and licencing of a product and confirms that it bears the required safety-related marking.

CM (contract manufacturing)Contract manufacturing refers to the assigning of one or several stages in the manufacture of a product to a contractor (outsourcing manufacturing). There are cost benefits for the OEM / ODM manu-facturer as the infrastructure is not just utilised for a single product line / assembly line or product, but for several manufacturers or products. The specialisation of the contractor with a specific infrastructure results in larger production volumes (numbers of units). This leads to a win-win situation.

ComplianceIn medicine we talk about the compliance of the patient. This means that, in the case of many illnesses, the patient must have a cooperative attitude for healing to occur. In the medical sense therefore, compliance can be described as observing your therapy and taking your medicine as prescribed; in short, following the doctor’s recommendations. Compliance is particularly important for diabetics with regard to taking their medicine, following a diet or making lifestyle changes.

Diabetes mellitusDiabetes mellitus is a chronic metabolic disorder involving in-creased blood sugar levels. In people with diabetes mellitus, the glucose in the blood can no longer be absorbed into the cells of the body in the requisite quantity for the production of energy. As a result, there is excess glucose in the blood (hyper-glycaemia / excess sugar), which is then excreted in part through the kidneys. In Type 1 diabetes mellitus, the body produces insufficient insulin, or no insulin at all (absolute insulin deficiency), because most or all of the insulin-producing cells in the pancreas have become damaged by an autoimmune disease. It generally manifests itself in persons up to 35 years old and requires the regular subcutaneous administration (injection) of insulin. Type 1 diabetes mellitus accounts for about 10 % of all cases of diabetes mellitus and, thanks to its clear principal symptoms, is generally correctly diagnosed and treated by physicians. In Type 2 diabetes mellitus, which is much more common, the pancreas continues to produce insulin, however its effectiveness is reduced by an insulin resistance (insulin insensitivity) of the somatic cells. As a rule, this leads to an increased release of insulin (hyperinsulin anemia) in order to compensate for the deficient insulin effectiveness. Risk factors, such as being overweight or lack of exercise, promote the development of Type 2 diabetes. It is therefore frequently labelled an illness of affluence. Type 2 diabetes mellitus is generally diag-nosed in people over the age of 40 and who are overweight. As a first step, it is often successfully treated by following a healthy diet and by getting more physical exercise. In later phases, tablets and insulin injections may be considered. According to estimates,


Glo

ssar

y

103

about half of all people who currently have Type 2 diabetes mel-litus are unaware of that fact. If both types of diabetes are not diagnosed at an early stage or if they are inadequately treated, this can lead to serious secondary diseases affecting the kidneys, nerves, eyes or blood vessels.

Dual-chamber cartridgeThe dual-chamber cartridge was developed primarily for lyophilised substances. Dual-chamber technology enables the efficient use of the active substance through careful product reconstitution. The dual-chamber technology was thus designed specifically for sensitive drugs that are preserved through freeze drying. One of the two chambers contains the lyophilised active substance (freeze-dried active substance) and the other contains the solvent. The two are mixed together only immediately before use. This “all-in-one” design facilitates both a higher degree of accuracy in dosage and easier handling.

FSH (follicle stimulating hormone)FSH is a germ line hormone (a hormone excreted by the anterior pituitary gland and placenta) that stimulates follicle growth in females and activates sperm-forming cells in males. FSH is used for treating infertility.

GLP-1Glucagon-like peptide-1 (GLP-1) is a peptide hormone formed in the intestines that plays an important part in glucose metabolism as part of the “incretin effect” – the insulin response of beta cells in the pancreas to the supply of sugar through the intestines and the blood. GLP-1 is released directly into the bloodstream when food is eaten. It is broken down within minutes by the enzyme dipeptidyl peptidase-4 (DPP-4) and therefore must be produced on an ongoing basis. It stimulates the production of insulin in the pancreas and slows the emptying of the stomach contents into the intestine, thereby suppressing hunger pangs and thirst. It also reduces glucagon levels. Glucagon helps the release and synthesis of glucose from the liver. In this way, secretion in suffi-cient quantities or the subcutaneous injection of GLP-1 prevents excessively high levels of blood sugar.

HeparinMedication with anticoagulant properties. An anticoagulant is a substance that delays or stops blood clotting.

HyperglycaemiaHyperglycaemia (excess sugar) is an increased blood sugar value (glucose value) with clinical values above 110 mg / dl (6.1 mmol / l) on an empty stomach or above 140 mg / dl (7.8 mmol / l) two hours after eating. The cause of the hyperglycaemia is a relative or absolute insulin deficiency (diabetes mellitus). This has the effect that the glucose cannot be transported from the blood into the cells and at the same time glucose is released from the liver, for example. The result is that blood sugar increases. The body attempts to excrete the blood sugar through the kidneys, thereby losing vital amounts of liquid, and affected parties react with strong thirst and frequent urination. Slight increases in blood sugar remain unnoticed for the most part because the initial symptoms, such as fatigue and lethargy, are not recognised as resulting from high levels of blood sugar. A complete insulin deficiency and a prolonged increase in blood sugar may lead to nausea, vomiting, a smell of acetone on the breath, the appearance of glucose and

acetone in the urine and finally to a life-threatening diabetic coma. Insulin is administered and the intake of liquids is increased for the treatment of hyperglycaemia.

HypoglycaemiaHypoglycaemia is low blood sugar with a blood sugar value of less than 40 mg / dl (2.2 mmol / l) without the presence of symptoms. Hypoglycaemia can occur in all diabetics who are treated with sulphonylurea, glinides or insulin. Low blood sugar can occur when the factors reducing blood sugar (e. g. insulin, tablet effectiveness, physical activity) outweigh the factors increasing blood sugar (e. g. food intake, sugar regeneration in the liver). The symptoms include, among other things, trembling and sweating, increased appetite, headaches, weakness, a loss of concentration and blurred vision. It can be treated by the immediate administration of glucose or by drinking fruit juice. Severe hypoglycaemia can lead to unconsciousness and requires immediate medical attention.

InjectionAdministration of liquid substances with a syringe.

Injection systems / injection devicesInjection systems or injection devices include self-injection devices such as pens and autoinjectors as well as pen needles.

IncretinsIncretins are hormones produced in the small intestine (peptide hormones) that are released after food is eaten and stimulate insulin secretion by the pancreas. At the same time, they prevent the insulin antagonist, glucagon, from being released. Patients with Type 2 diabetes release lower levels of incretin than healthy individuals. The incretins GLP-1 (glucagon-like peptide-1) and GIP (gastric inhibitor peptide) are of particular interest in the treatment of diabetes. There are two new classes of drugs that act on incretin metabolism: the “incretin mimetics” that imitate the action of incretins, and the “DPP-4 inhibitors” that delay the breakdown of endogenous incretins.

InsulinA vital peptide hormone that is produced by the pancreas in the beta cells of the islets of Langerhans. The primary effect of insulin is the fast reduction of the blood sugar concentration in that it supports the transport of glucose from the blood into the cells’ interior. Insulin was first discovered in 1921 by two Canadians, Dr. Frederick Banting and Charles Best, and has since been used to treat diabetes. Today, it is produced mainly by means of biotechnological processes and must be either injected or infused. It cannot be administered orally because the peptide hormone insulin would be destroyed by gastric acid.

Insulin analoguesInsulin analogues are insulins with a modified amino acid sequence that have an altered metabolism compared with human insulin. The motivation for developing insulin analogues was to improve the ability to control the insulin treatment. In the case of normal insulin, the effect sets in after about 30 minutes and the maximum effect is reached after one to two hours. Through the exchange of certain amino acids, the insulin metabolism (pharmacokinet-ics) can be altered without affecting its action, i.e. binding to the insulin receptors.

Insulin pumpInsulin pumps are small, battery-operated devices (about the size of a pager or mobile phone) that can replace regular insulin injections for patients managing diabetes. They contain an in-sulin cartridge with fast-acting insulin. The insulin is delivered at regular intervals into the subcutaneous fatty tissue of the body


104

by means of a catheter, the cannula for which is under the skin. The catheter and cannula are changed every one to three days. The infusion pump allows for an almost normal adjustment of blood sugar by continuously delivering small doses of insulin, pre- programmed by the patient, around the clock, even while he/she is asleep. In addition, the patient can deliver extra insulin doses at the touch of a button in order to be able to cover additional insulin requirements, for example at mealtimes. The treatment with an insulin pump requires the patient to continue to take regular blood sugar measurements so that the insulin dose can be adjusted as necessary.

Interferon alphaInterferons play an important role as messengers and cues for different defence mechanisms in the immune system. They are released by cells that are afflicted with viruses. In this way, defence cells of the immune system, such as macrophages, natural killer cells and cytocidal T lymphocytes, are activated. In addition, interferons inhibit the growth and the division of healthy as well as malignant cells. Alpha interferon is used for the treatment of acute and chronic hepatitis C infections.

Lantus®

Lantus® from Sanofi is a long-acting insulin analogue injected one to two times daily that lowers glucose levels for up to 24 hours. Lantus® is a basal insulin in that it provides for a slow and steady release of insulin.

Monoclonal antibodiesMonoclonal antibodies are highly specialised and targeted antibodies – active protein molecules that are produced by the immune system in response to a foreign substance (e. g. foreign bodies, pathogens) and can render it harmless – that are created synthetically using biotechnological processes. What is special about them is that they are able to activate the body’s own natural defence mechanisms to combat a disease. Until now, monoclonal antibodies have been used in cancer therapy, in particular, and for the suppression of adverse immune reactions, e. g. in cases of psoriasis. This may also involve autoimmune diseases or even the prevention of rejection reactions after organ transplants.

ODM (Original Design Manufacturer)A company is described as an original design manufacturer (ODM) if it carries out make-to-order production for another company. An ODM manufactures products commissioned by other companies, some of which it develops itself. The products are then sold under the purchasing company’s brand name. This method enables a customer of an ODM to offer branded products without having to run its own factory for this purpose. “Design” is significant in the definition of an ODM, as an ODM also carries out the planning and design of the parts produced. This is in contrast to a CM (contract manufacturer), which only carries out make-to-order production.

Pen (injection pen)Injection device that looks like a fountain pen or ballpoint pen. The dose of medication prescribed by a doctor is set by adjusting a dosage knob and is injected from a cartridge through a cannula (pen needle) into the body.

Pen needle (cannula)A fine, hollow needle for single use attached to the tip of the injection pen in order to inject the drug into the body. Ypsomed’s pen needles feature a click-on mechanism that makes the pen needle easy to attach to the pen.

Peptide hormonesPeptide hormones have a protein structure and are insoluble in fats. They consist of chains of amino acids and are created by protein synthesis. These special proteins perform the functions of a hormone, i.e. they act as messengers, triggering specific changes in the human body (as well as in animals). Insulin is one example of a peptide hormone.

PsoriasisPsoriasis is a non-communicable autoimmune disorder that affects the skin, resulting in lesions over various areas of the body. The most common form (accounting for 80 % of all cases) is plaque psoriasis, characterised by red, raised skin covered with scales.

® / ™

The ® or ™ symbols, when used in this document, indicate that the relevant name is a registered trademark of the relevant phar-maceutical partner of Ypsomed or Ypsomed itself.

Rheumatoid arthritisRheumatoid arthritis (also chronic polyarthritis) is the most common condition that leads to inflammation in the lining of the joints. Most commonly, the chronic condition develops episodically, with an episode lasting typically between several weeks and a few months. The pain recedes between individual episodes. The cause of the condition has not been fully explained although it is thought to result from an autoimmune condition.

Self-injection devicesWhen used in this document, self-injection devices include pens (disposable, reusable and semi-disposable pens), autoinjectors, motor-driven injection systems, safety products and needle-free technology.

Subcutaneous(from Lat. sub = under, cutis = skin, abbr. s. c.)A subcutaneous injection is an injection into the fatty tissue under the skin. Using pens or other injection systems, drugs can, for example, be administered intramuscularly, subcutaneously or intravenously.

TenderA (public) call for bids.

EditorYpsomed Holding AG, Burgdorf

Concept and DesignYpsomed AG, Marketing Communications, Burgdorf

PrintingStämpfliPublikationenAG,Bern

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

DisclaimerThisannualreportscontainscertainforward-lookingstatements.Thesecanbeidentifiedbytermssuchas“should”,“accept”,

“expect”, “anticipate”, “intend” or similar terms and phrases. The actual future results may differ materially from the forward-look-

ingstatementsinthisannualreport,duetovariousfactorssuchaslegalandregulatorydevelopments,exchangeratefluctua-

tions, 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 re-

sponsibility forany 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 11Fax +41 34 424 41 22

[email protected]

Ypsomed Holding AG – Annual Report 2014 / 15

Documents