1 Basis of preparation

Since 2007, PolyPeptide Laboratories Holding B.V. (incorporated under the laws of The Netherlands) was the holding company of the Group, consisting of six integrated operating subsidiaries located in Sweden, USA, France, India, and Belgium plus a dormant company located in Denmark and a dormant company in the process of liquidation in Germany.

As part of the preparations for the IPO on SIX Swiss Exchange (SIX) on 29 April 2021, all the shares of PolyPeptide Laboratories Holding B.V. were contributed into a new Swiss entity, PolyPeptide Group AG, in the form of a capital contribution. As a result, PolyPeptide Group AG became the new parent holding company of the Group.

PolyPeptide Group AG (the "Company") was incorporated in Switzerland on 6 April 2021. The registered office of the Company is Dammstrasse 19, 6300 Zug, Switzerland. The Company is a 60% subsidiary of Draupnir Holding B.V., a company registered in The Netherlands. Draupnir Holding B.V.'s ultimate parent entity is Foundation Mamont, a foundation registered on Guernsey of which Mr. Frederik Paulsen (1006 Lausanne, Vaud, Switzerland) is at present the principal beneficiary pursuant to the charter of the Mamont Foundation governed by the laws of Guernsey.

In accordance with the International Financial Reporting Standards (IFRS) the aforementioned reorganisation is not considered to be a business combination under IFRS 3 Business Combinations, but rather the continuation of the existing business activities of the Group with a new parent entity.  As a result, the interim consolidated financial statements of PolyPeptide Group AG are presented using the values from the consolidated financial statements of the previous group holding entity, PolyPeptide Laboratories Holding B.V. Equity figures for the comparative period are based on actual circumstances, and therefore presented for the preceding holding company PolyPeptide Laboratories Holding B.V. A detailed reconciliation is set out in note 10.

These condensed consolidated financial statements are the unaudited, interim consolidated financial statements (hereafter “the half-year report”) of PolyPeptide Group AG and its subsidiaries (hereafter “the Group”) for the six-month period ended 30 June 2021 (hereafter “the interim period”). The half-year report is prepared in accordance with the International Accounting Standard 34 – Interim Financial Reporting. The half-year report should be read in conjunction with the consolidated financial statements for the year ended 31 December 2020 (hereafter “the annual report”) as it provides an update of the previously reported information. The accounting policies adopted in the half-year report are consistent with those of the previous financial year. The half-year report does not include all of the information required for a complete set of IFRS financial statements.

The preparation of the half-year report requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities. If in the future such estimates and assumptions, which are based on management’s best judgment at the date of the half-year report, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.

There were no new standards or amendments to existing standards that have a material effect on the Group's half-year report. However, share-based payment to eligible members of the Board of Directors, the Executive Committee and certain other senior managers was introduced during the first half year of 2021. As a result, IFRS 2 – Share-based Payment now applies for the preparation and presentation of the interim consolidated financial statements.

All amounts are stated in thousands of Euros, unless otherwise stated.

The half-year report was approved by the Board of Directors as at 16 August 2021.

Financial report

2 Segment information

The segment disclosures provided below reflect the information used by the Board of Directors for allocating resources and assessing the performance of the business.

The segments have been derived from internal reporting and the performance is assessed by revenues generated.

Revenue - business segments

Geographical areas

Shown below are the carrying amounts of non-current assets other than deferred income tax assets and other financial assets, broken down by location of the assets. Related additions to intangible assets and property, plant and equipment (PP&E) during the year and revenues generated from the location of the assets are shown as well.

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The activities of PolyPeptide are not subject to seasonal or cyclical variations in the underlying business. However, PolyPeptide may experience variability in its revenue across periods as a result of, among other things, the timing of customer purchase orders and payments, investments made during the period, increased competition, the number of selling days in a period and fluctuation of foreign currency exchange rates.

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4 Revenue

Revenue from contracts with customers

Revenues from Active Pharmaceutical Ingredients (API) fully relate to the sale of goods and revenues from related services relate to the rendering of services. All revenues from contracts with customers classify as business-to-business.

Revenue by geographical area

Revenue is attributed to the individual geographical area based on the invoice address of the respective customer.

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5 IPO costs

The following IPO-related expenses are included within ‘General and administrative expenses’ in the income statement for the six months ended 30 June 2021:

The IPO cash bonus amount relates to the bonus award made by the Company after the IPO to selected non-executives involved in the IPO process. The IPO share bonus amount relates to expenses incurred by the Company in relation to the shares awarded by Draupnir Holding B.V. in the IPO process, such expenses will be fully reimbursed by Draupnir Holding B.V.

In addition, an amount of kEUR 4,652 relating to consultancy services, Swiss Federal Issue Stamp Tax and Bank Commissions  has been charged directly to the share premium reserve in accordance with IAS 32 – Financial Instruments: Presentation.

Financial report

Share-based payment was introduced as part of the IPO on SIX on 29 April 2021. Eligible members of the Board of Directors and the Executive Committee as well as other eligible employees and a former Director of PolyPeptide Laboratories Holding B.V. were granted shares at an amount of kEUR 2,998 which vested immediately upon the listing. As a result, the amount was recognized as an expense in the income statement.

In addition, at least half of the base fee to members of the Board of Directors is paid in shares in the Company and the remainder in cash, whereby board members have the option to elect to be paid up to 100% of their base fee in shares. For board members electing to receive more than 50% of their base fee in shares, the shares exceeding the 50% portion will be granted at a discount of 20% to market price. For the current period (i.e. until the annual shareholders' meeting in 2022), the Board of Directors are compensated on a pro-rata basis for the period of service even in the case of early termination or removal.

An amount of kEUR 415 has been recognized as an expense in the income statement for the six months ended 30 June 2021 relating to the share-based payment to members of the Board of Directors.

Furthermore, as compensation for the loss of unvested options from his previous employer, CEO Raymond de Vré was granted a one-time grant of shares at a value of CHF 750,000 which was calculated at a 20% discount to the IPO offer price of CHF 64. The shares are vesting over a period of three years, one-third each year. The shares are entitled to dividends, if any, also during the vesting period.

To further compensate Raymond de Vré for his loss of variable payments for 2020 and 2021, he has been granted CHF 100,000 in shares at 15% discount to the IPO offer price of CHF 64 vesting at the end of June 2022. An amount of kEUR 152 has been recognized as an expense in the income statement for the six months ended 30 June 2021 relating to the shares granted to Raymond de Vré.

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7 Investment in subsidiaries

The consolidated financial statements include the financial statements of the Company and the subsidiaries listed below. Details of investments in subsidiaries as at 30 June are as follows:

Percentage of voting shares is equal to percentage of ownership.

PolyPeptide Institute Spol S.r.o. has been liquidated during the first six months of 2021 and PolyPeptide Laboratories GmbH is in the process of liquidation. No further financial impact is expected related to the final liquidation of this company.

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8 Related party disclosure

The following transactions have been entered into with related parties:

All disclosed related parties are either related through the C&P Investors Group ownership structure or through managerial control.

Purchases from and amounts due from Draupnir Holding B.V. relate to service and insurance fees.

Purchases from and amounts due to Thalamus AB relate to rental of premises.
Income from the Ferring Group and amounts due from the Ferring Group relate to sale of goods.

Purchases from Monedula AB relates to the lease of premises. Income from Monedula relates to property management fees and recharged improvements to the premises.
Income from and amounts due from Amzell B.V. relates to sale of goods.

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9 Short-term borrowings from banks

As at 31 December 2020, the Group had a EUR 25.000.000 Term loan from Danske Bank (due 29 August 2022) included as non-current liabilities.

The Group refinanced this Term loan in June 2021 and instead agreed to a EUR 25.000.000 short term Money Market loan from Danske Bank, which is scheduled to be paid back in Q3 2021. The short-term Money Market loan is included as current liabilities as at 30 June 2021.

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10  Shareholders' equity

The parent company of the Group, PolyPeptide Group AG, was incorporated on 7 April 2021 with 30,000,000 shares with a nominal value of CHF 0.01 each, corresponding to a share capital of CHF 300,000. On 29 April 2021, PolyPeptide Group AG increased its initial share capital by issuing 3,125,000 shares with a nominal value of CHF 0.01 each, corresponding to an increase in its share capital of CHF 31,250. This transaction increased the share premium reserve by CHF 199,968,750.

The contribution of all the shares of PolyPeptide Laboratories Holding B.V. into PolyPeptide Group AG increased the share capital by CHF 0.01.

As a result, the share capital of PolyPeptide Group AG comprised 33,125,001 shares of CHF 0.01 each as of 30 June 2021. All shares are fully paid.

On 29 April 2021, PolyPeptide Group AG purchased 93,750 own shares to be held as treasury shares at the offer price of CHF 64.

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11 Earnings per share

Basic earnings per share has been calculated by dividing the result for the period attributable to the owners of the Company by the weighted average number of shares outstanding during the period. Treasury shares are not considered as outstanding shares. As described in note 1, the parent company of the Group changed during 2021. However, due to the predecessor accounting for this reorganization, basic earnings per share for the first six months of 2020 has been calculated based on the total number of outstanding shares of 30,000,001, corresponding to the share capital of PolyPeptide Group AG prior to the capital increase of 3,125,000 shares, cf. the description above in note 10.

Diluted earnings per share is calculated by dividing the result for the period attributable to the owners of the Company by the weighted average number of shares outstanding adjusted for all potentially dilutive shares. Dilutive shares arise from the share-based payment described in note 6. Since share-based payment was not introduced in 2020, there is no dilution effect on earnings per share for the first six months of 2020.

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12 Subsequent events

There have been no significant events subsequent to the balance sheet date, which would require additional disclosure in the financial statements.