Annual Report 2013 Merging Italian Creativity with Swiss Tradition
Total assets ( /000) Net fixed assets ( /00) 38.171 23.568 22.883 22.208 22.345 34.579 34.806 33.634 2010 2011 2012 2013 2010 2011 2012 2013 EBITDA ( /000) OPERATING INCOME (EBIT) ( /000) 5.446 6.313 5.441 5.525 4.493 5.359 4.494 4.554 2010 2011 2012 2013 NET PROFIT ( /000) 2010 2011 2012 2013 ROE 2.750 3.101 2.662 2.913 22,24% 24,29% 19,74% 20,14% 2010 2011 2012 2013 2010 2011 2012 2013
Annual Report 2013 Gerolamo Induno. Milano, 13 Dicembre 1825 - Milano, 18 Dicembre 1890 Scuola 800 Lombarda
Cav. Lav. Dr. Giuseppe G. Miglio
Letter of the Chairman Dear Shareholders, Ladies and Gentlemen: CREATIVITY LEADS TO A BETTER LIFE Another year has passed, and I have the pleasure again to send you an Annual Report on an exciting, yet challenging year. 2013 was dominated in Italy and specifically its pharmaceutical industry by annoying uncertainties. In many ways it was a "lost year": at a great cost for the country, politicians failed to provide the necessary leadership, and economic activity even fell below the already unexciting level of the previous year. Despite this dismal environment, Mipharm continued its journey towards prosperity successfully: Revenues grew 7.6% to 38.4 mio., and Net Profit at 2.9 mio. exceeded the previous year by even 11.5%. Our Balance Sheet continues to be remarkably healthy. These results are particularly impressive if we bear in mind that 2013 was anything but a normal year for Mipharm. The challenging turnaround of our Quality Assurance and Quality Control operations was in full swing and required a significant degree of Management time and attention, not to mention the heavy financial investments that were necessary of our Manufacturing and related areas. In fact, Manufacturing will be one key focus also in 2014. The area will have to cope with a tremendous workload again, and we will make absolutely sure that the Quality of their output remains in the range of excellence. Notwithstanding this challenging goal, Cost Management will also stay in our focus: without rigorously controlling our cash, our financial strength could not be maintained. Effective Cost Management and financial efficiencies continue to be a key objective. Also on the products side, there is promising news: the hormone commonly called "Vitamin D" has gained the medical community's attention around the world. Not just for bone health and muscle strength, as one would expect, but also for other areas, e.g. mental health and blood pressure. Mipharm attempts to play a key role in the manufacturing of Vitamin D. If Mipharm is to continue to grow and prosper, "business as usual" is hardly the recipe. The Company has to rely on the daily commitment, the creativity and the energy of all of its associates. Innovation will continue to occur in larger and smaller steps, but it can only happen in an organization that strives constantly for excellence and a high-performance culture like Mipharm's. My thanks for a difficult, but nevertheless great 2013 go to all our customers, our associates, and our shareholders. Success is always due to a joint effort. I am grateful to all of Mipharm's stakeholders for their continued support in the future. Cav. Lav. Dr. Giuseppe Giampiero Miglio Founder, Chairman and Chief Executive Officer 3
Mipharm Board of Directors Giuseppe G. Miglio Max Link Luca Grisotti Vittorio Rizzo Ernst Nikolas Meijnders Founder, Chairman and Chief Executive Officer Director Director Director Director Board of Auditors Ermanno Ramella Laura De Gioia Vittorio Dodi President Auditor Auditor MIPHARM S.p.A. Headquarters: Via Quaranta, 12 20141 Milano Italia Share Capital: 7,669,056.00 Milan Registered Company s number and Fiscal code: 10036820156 VAT number: 12304990158 4
MIPHARM Executive Committee MEC Giuseppe G. Miglio Founder, Chairman and Chief Executive Officer / CEO In the above picture, from your left: Francesco Petrucci CFO Donata Pezzuto Quality Unit Alessandro Cipriani Production Operations Nicola Cadei COO Massimo Prini Technology / Special Services Luca Grisotti General Manager Giovanni Baldelli Human Resources Paola Fazzalari Legal Affairs Mario Ronchetti. Cantù, 10 Marzo 1922 5
Luigi Conconi. Milano, 1852 - Milano, 1917 Scuola 800 Lombarda Leonardo Bazzaro. Milano, 13 Dicembre 1853 Milano, 2 Novembre 1937 Scuola 800 Lombarda 6
New Mipharm Financial Report Period Ending 31 December 2013 (in ) Period Ending 31 December 31 December 2013 2012 2013-2012 Revenues 38.359.072 100% 35.701.499 100% 2.657.573 7,4% EBITDA 5.525.192 14,4% 5.441.090 14,2% 84.102 1,5% Operating Income (EBIT) 4.553.652 11,9% 4.493.627 11,7% 60.025 1,3% Net Income 2.913.526 7,6% 2.662.025 6,9% 251.501 9,4% Primary Cash Flow 3.885.066 3.609.488 275.578 7,6% Free Cash Flow -503.927 2.353.232-2.857.159 ROE 20,1% 19,7% 0,4% ROI 11,9% 12,9% -1,0% ROS 11,9% 12,6% -0,7% Equity / Invested capital 37,9% 38,7% -0,8% Giovanni Boldini. Ferrara, 31 Dicembre 1842 Paris (Francia), 11 Luglio 1931 Scuola 800 Toscana 7
New Mipharm Income Statement Period Ending 31 December 2013 (in ) Period Ending 31 December 2013 31 December 2012 2013-2012 Revenues 38.359.072 100,0% 35.701.499 100,0% 2.657.573 7,4% Operating Costs 32.833.880 85,6% 30.260.409 84,8% 2.573.471 EBITDA 5.525.192 14,4% 5.441.090 15,2% 84.102 1,5% Operating Income (EBIT) 4.553.652 11,9% 4.493.627 12,6% 60.025 1,3% Financial Costs 322.872 0,8% 271.615 0,8% -51.257 Non-recurrent Income (Expenses) 318.260 0,8% 17.820 0,0% 336.080 Pre-Tax Income (EBT) 4.549.040 4.204.192 344.848 8,2% Taxes 1.635.707 4,3% 1.542.167 4,3% -93.540 Net Income 2.913.333 7,6% 2.662.025 7,5% 251.308 9,4% Leonardo Bazzaro. Milano, 13 Dicembre 1853 Milano, 2 Novembre 1937 Scuola 800 Lombarda 8
Leonardo Bazzaro. MIlano, 13 Dicembre 1853 - Milano, 2 Novembre 1937 Scuola 800 Lombarda 9
Silvestro Lega. Modigliana, 8 Dicembre 1826 Firenze, 21 Novembre 1895 Scuola 800 Toscana Beppe Ciardi. Venezia, 1875 - Quinto di Treviso, 1932 Scuola 800 Veneta 10
New Mipharm Cash Flow Statement Period Ending 31 December 2013 (in ) 12 Months Period Ending 31 December 2013 31 December 2012 Operating Activities Net Income (Loss) Depreciation of PP&E Amortization of Intangibles Employee Severance Payments Provision for Risk and Charges (Increase) Decrease in Receivables (Increase) Decrease in Inventory (Increase) Decrease in Other Current Assets Increase (Decrease) in Payables Increase (Decrease) in Other Current Liabilities Increase (Decrease) in Other Working Capital Net Cash from Operating Activities 2.913.526 865.302 106.238 85.777-112.643 371.871-1.951.528-916.517-1.200.274 641.639-88.426 543.411 2.662.025 840.930 81.533 279.945 259.675 1.557.192 1.904.235 139.771 200.548 925.758 23.564 3.259.700 Investment Activities Sale of PP&E and Intangibles Increase of Assets for internal work (Purchase) of PP&E and Intangibles Net Cash from Investment Activities 29.606 0 1.136.527 1.106.921 10.010 0 970.645 960.635 Financing Activities Capital increase Payment of Cash Dividends Net Cash from Financing Activities 59.583 2.540.624 2.481.041 54.167 2.498.376 2.444.209 Net Change in Cash & Cash Equivalents -3.044.551 145.144 11
New Mipharm Revenues Period Ending 31 December 2013 (in ) Period Ending 31 December 31 December 2013 2012 Manufacturing 37.244.988 34.601.956 Special Services 1.114.084 1.099.543 Total 38.359.072 35.701.499 12 Mario Acerbi. Milano, 1887 - Pavia, 1982 Scuola 800 Lombarda
Comments to Year 2013 Despite a few aftershocks after the eventful previous year, Mipharm ended 2013 in an enviable position - financially remarkably stronger, with a considerably expanded, modernized and more resourceful technology base and well trained, committed associates ready to confront the challenges of the future. With no internal discontinuities or external disruptions along the way, Mipharm stayed focused on an accelerated revenue generation, and, also thanks to rigorous cost controls, remarkably improved its profitability. Mipharm's technical capabilities, ranging all the way from product development to manufacturing as well as Quality Assurance and Quality Control are proof of our unwavering commitment to excellence and our perseverance. Vittorio Matteo Corcos. Livorno, 4 Ottobre 1859 - Firenze, 8 Novembre 1933 Scuola 800 Toscana 13
New Mipharm Profit and Loss Statement Period Ending 31 December 2013 (in /000) Period Ending 31 December 31 December 2013 2012 A Value of manufacturing 38.757 36.134 Net Revenues (sales and services) 35.084 34.289 Increase of WIP 3.275 1.412 Other operating income 398 433 B Cost of production 34.203 31.640 Raw material 13.699 13.332 Salaries and wages 11.364 9.955 Value adjustments 971 948 a Amortisation of intangible assets 106 82 b Depreciation of tangible assets 865 841 c Other adjustments 0 25 Other operating charges 8.169 7.405 Difference between value and cost production 4.554 4.494 C Financial income and charges 323 272 D Extraordinary income and charges 318 18 Proft (loss) before income taxes 4.549 4.204 Income taxes 1.636 1.542 Net Profit (loss) for the financial period 2.913 2.662 14
New Mipharm Balance Sheet, 2013 (in /000) Assets 2013 2012 31 December 31 December A Current Assets 14.442 11.859 Cash or Cash Equivalents 152 317 Inventories 6.224 4.272 Receivables and other assets 3.230 2.685 Non-Permanent Investments 4.836 4.585 B Fixed Assets 23.568 22.883 Tangible assets 22.244 22.305 Intangible assets 274 78 Financial assets 1.050 500 C Prepaid expenses and deferred charges 161 64 TOTAL ASSETS 38.171 34.806 Equity and Liabilities A Creditors 21.853 19.281 Banks 11.974 8.743 Other Financiers 308 408 Accounts Payable 6.283 7.483 Other Creditors 3.288 2.647 B Provision for Risk and Charges 243 355 C Employee severance payments 1.538 1.624 D Accruals and deferred income 71 63 E Capital and reserves 14.466 13.483 TOTAL EQUITY AND LIABILITIES 38.171 34.806 15
Giovanni Carnovali detto il Piccio. Montegrino Valtravaglia, 29 Settembre 1804 - Coltaro, 5 Luglio 1873 Scuola 800 Lombarda 16
Outlook for 2014 While 2013 was a record year by any standard, 2014 started more cautiously but in a nevertheless encouraging mode. By the time it is over, we are confident that we can add another financially successful year to a number of impressive years. In the meantime we stay focused on what we are doing best: patients' needs are at the forefront of our minds while we do everything to remain a reliable supplier to our customers as well as a demanding but fair employer for our associates. And we will attempt to deliver once again an attractive return to our shareholders. To be able to achieve our challenging objectives, we depend on a stable economic and political environment. Continued political instability in Italy in the longer term would have its costs for the economy of the country, including Mipharm. We are confident that our country will return to a more predictable pattern. Gaetano Spinelli. Bitonto, 6 Agosto 1877 Firenze, 4 Marzo 1945 Scuola 800 Toscana 17
Domenico Morelli. Napoli, 4 Agosto 1826 - Napoli, 13 Agosto 1901 Scuola 800 Napoletana 18
Rinaldo Agazzi. Mapello, 30 Ottobre 1857 - Bergamo, 24 Maggio 1939 Scuola 800 Lombarda 19
Produced by MIPHARM S.p.A. Italy Printed by: COLORSYSTEM SaS - Italy Milan, Italy March 2014
Imagination is more important than knowledge Albert Einstein Michele Gordigiani. Firenze, 29 Maggio 1835 - Firenze, 7 Ottobre 1909 Scuola 800 Toscana
Mipharm S.p.A. Via Quaranta, 12 20141 Milan Italy Phone (39) 02 53548.1 Fax (39) 02 53548.010 e-mail: info@mipharm.it www.mipharm.it