Dear Shareholders


During 2015, Tecan was able to grow sales strongly, benefitting from major development programs in prior years and the subsequent introduc tion of the wave of new exciting platforms and products. In our Life Scienc es Business we launched an all-new multimode microplate reader platform, called Spark® and we continued to introduce new features and applications for our Fluent™ next generation liquid handling platform, first introduced in 2014. Our Partnering Business saw the FDA clearance and US launch of the ORTHO VISIO N™ Analyzer by our partner Ortho Clinical Diagnostics and the completion of the CE marked version of the ORTHO VISION™ Max Analyzer. Further, with the ac quisition of Sias AG, we made an important step to expand our leading OEM in strument business. These growth drivers will also be important elements of our further expansion in 2016.


We are pleased with Tecan’s financial performance in 2015. With strong sales, net profit and operating cash flow we delivered on our commitments for the year.

Financial results full-year and second half of 2015

In the second half of 2015, order entry increased by 13.8 % in local currencies and by 10.9 % in Swiss francs. On an organic basis, orders in the second half grew by 12.3 % in local currencies and by 9.6 % in Swiss francs. Organic development excludes any contributions from acquisitions from those months in the reporting period that were not already included in the consolidated financial statements in the prior-year period. For the full year, order entry increased by 14.1 % in local currencies to CHF 465.0 million (2014: CHF 417.4 million), corresponding to growth of 11.4 %. On an organic basis, order entry increased by 10.9 % in local currencies and by 8.3 % in Swiss francs. 


Sales in the second half rose by 8.7 % in local currencies and by 5.6 % in Swiss francs against a strong base in the prior-year period. This corresponds to organic sales growth of 7.0 % in local currencies and 4.0 % in Swiss francs. Sales in financial year 2015 increased by 13.1 % in local currencies and 10.2 % in Swiss francs to CHF 440.3 million (2014: CHF 399.5 million), setting a new company record. On an organic basis, sales grew by 9.6 % in local currencies and 6.8 % in Swiss francs.


Operating profit before depreciation and amortization (earnings before interest, taxes, depreciation and amortization; EBITDA) rose by 23.5 % to CHF 83.4 million in the fiscal year (2014: CHF 67.5 million). The EBITDA margin improved by 200 basis points to 18.9 % of sales (2014: 16.9 %), thereby exceeding the margin targets for the year of “more than 100 basis points”. 


These results include acquisition-related costs. The results development was helped by a positive exchange rate effect and a one-time impact from revised pension liabilities according to IAS 19. 


Net profit reported for the year 2015 increased by 42.1 % and reached CHF 57.1 million (2014: CHF 40.2 million). Net profit increased more than operating profit as a result of an improved financial result and a lower tax rate. The net profit margin improved by 290 basis points to 13.0 % of sales (2014: 10.1 %). Earnings per share increased by 39.1 % to CHF 5.05 (2014: CHF 3.63).



Chairman of the Board

Dr. David Martyr

Chief Executive Officer


Cash flow from operating activities more than doubled to CHF 99.1 million (2014: CHF 48.2 million), corresponding to a cash conversion of 22.5 % of sales. 


Details on the course of business of the Life Sciences Business and Partnering Business segments can be found in the relevant sections on pages 28 and 36. Details regarding the regional development of sales are discussed in the Chief Financial Officer’s Report on page 78.

Acquisition of Sias to further expand Partnering Business

On October 27, 2015, we announced that Tecan had reached agreement with the majority shareholders of Sias to acquire Sias AG, a leading OEM supplier of a wide range of modular and complete laboratory automation solutions. From December 1, 2015, Sias is included in the consolidated financial statements of the Tecan Group as a part of the Partnering Business segment. Sias’ modular platforms and robotic components are ideally suited for low- to medium-throughput applications and thus expand the range of Tecan’s existing automation solutions and components offering.

Strong balance sheet – increase in dividend proposed

Tecan’s equity ratio increased to 68.7 % as of December 31, 2015 (December 31, 2014: 65.4 %). Net liquidity (cash and cash equivalents minus bank liabilities and loans) amounted to CHF 198.8 million (December 31, 2014: CHF 122.7 million). This figure includes the acquisition of Sias AG with a purchase consideration of around CHF 25 million, of which the net payable was fully paid in cash. The increase in net liquidity was the result of the high cash flow from operating activities as well as the sale of 249,331 treasury shares during the first half of 2015, which was necessary for tax reasons. Sales proceeds totaled CHF 31.6 million, while the company’s share capital was CHF 1,146,758 as at the reporting date of December 31, 2015 (December 31, 2014: CHF 1,144,458), consisting of 11,467,577 registered shares with a nominal value of CHF 0.10.


The Board of Directors will propose an increase in the dividend from CHF 1.50 to CHF 1.75 per share to the shareholders at the Company’s Annual General Meeting on April 13, 2016.


Tecan has a clear strategy to ensure the long-term success of the Company. For details, please refer to pages 20 – 27 of this report. The implementation of Tecan’s strategy is supported through the implementation of priorities Company-wide.


Success in implementing priorities for 2015

For 2015 we defined five Company-wide priorities, some of which involve continuing previous longer-term priorities and activities.


Our first priority was the Life Sciences Business. Tecan was at the start of a new product cycle for two main platforms: the Fluent family in liquid handling and the Spark platform for detection. In 2015 we started marketing new application-specific solutions as well as new hardware and software options for the Fluent product line, a new generation of liquid handling platforms. These solutions open up a wider range of applications. After launching the Spark product family in February 2015, Tecan introduced a series of additional features over the course of the year. Both platforms – Fluent and Spark – were extremely well received on the market. We also continued to grow in China, where despite being faced with a persistently challenging environment, the overall situation improved during the year under review and Tecan once again succeeded in achieving double-digit growth. 


In the Partnering Business, we were successful in supporting our customers with a further increase in serial production of the Dako Omnis and the ORTHO VISION™ Analyzer. Our partner Ortho Clinical Diagnostics, a market leader in immunohematology, launched the ORTHO VISION™ Analyzer also in the USA in August, and the development of ORTHO VISION™ Max was successfully concluded. This instrument variant was developed for high-volume transfusion medicine laboratories. In October, Ortho Clinical Diagnostics announced that ORTHO VISION™ Max had received CE Mark clearance, making it available for purchase in Europe and Japan.


In a multi-year project, launched in 2014, to reduce material costs and optimize manufacturing, we realized cost savings, identified further potential and set the path for our continued collaboration with our suppliers in 2015. What is more, the significant increase in the Swiss franc in January 2015 provided us with further impetus to work together with suppliers to find joint cost-cutting opportunities through imports from the Eurozone and where appropriate to support our partners with our know-how in this area. 


We also set ourselves the goal of further improving efficiency in product development in 2015. Our progress in doing so is high­lighted by the development of further variants of the Fluent and Spark platforms in our Life Sciences Business and the other already mentioned product launches with our partner Ortho Clinical Diagnostics in the Partnering Business. It was also thanks to the efficiency gains that research and development spending fell from 9.9 % to 9.1 % of sales in the year under review. 


Our fifth priority was to examine external growth opportunities through either acquisitions or collaborations. In the year under review our Corporate Development team carried out further market analysis and maintained contact with numerous interesting companies, taking a closer look at a selection of them. The acquisition of Sias in the fourth quarter of 2015 provided us with an ideal complement to our Partnering Business, and marked the successful completion of the second transaction within the last two years. 


Priorities for 2016

We have again defined five business-wide operational priorities for 2016, some of which involve continuing previous priorities and activities.


Our first priority for the year is to increase operational efficiency. Within the framework of the project launched in 2014, we aim to focus even more closely on material cost savings and productivity projects while maintaining the fast pace of innovation. In order to do this, we will continue to optimize procurement processes and enter into more strategic partnerships with suppliers. We plan to achieve shorter manufacturing times for new instruments. We have optimized work processes and we now have a well-functioning team whose members have more experience with the new instruments. In development, the aim is to create a further wave of innovation with the Fluent and Spark platforms in the Life Sciences Business, and to rapidly complete development projects involving instruments and components in the Partnering Business.


The second priority focuses on the Partnering Business. Following on from our progress in ramping up serial production in 2015, we aim for a continued increase in 2016. We are supporting partners with upcoming market launches for several instrument projects. Furthermore, we are focusing on concluding new development agreements. We would like to acquire new business in our traditional markets, while also placing a particular focus on China. We expect our Partnering Business to receive a further boost through the integration of Sias, whose relocation into our buildings in Männedorf is planned for 2016 and will help to ensure that Sias rapidly becomes an integral part of our Partnering Business. 


The third priority addresses the Life Sciences Business, and is based on the successful market launch of our main platforms Fluent and Spark. We aim to drive the marketing of these product lines forward and generate further growth in order entry and sales. This year will see the launch of additional variants and packages based on new applications. Already at the beginning of the year, we introduced the next model of the Spark platform: the Spark 20M which has become the most productive multimode microplate reader on the market with industry-leading sensitivity. We also want to drive growth with immunoassays, by introducing new tests, adapting further tests for automation and placing a higher number of optimized instruments onto the market. By these means we are working on our strategic objective of increasing recurring revenues. 


In Corporate Development we are continuing with our central tasks of the two previous years. Following completion of two successful acquisitions, we will continue the integration of those companies and would also like to carry out further acquisitions. We have a list of attractive candidates and are working hard on projects aimed at helping us to achieve this goal. We are focusing particularly on companies with specific reagents and consumables, as we also wish to be able to offer performance-optimized and potentially closed systems. Also of great interest to us are instruments that will allow us to broaden our range in our core markets or into adjacent market segments, leveraging our local sales and service organizations.


The fifth priority has been newly defined, but is based on a well-established Tecan business. We aim to achieve a significant increase in recurring revenues with plastic consumables. Tecan already operates a rapidly growing business with consumables, especially pipette tips. In 2015, these products accounted for around 11 % of total sales, with both Business Segments having contributed to this result. In order to achieve our ambitious growth targets, at the beginning of 2016 we created a central management position and a dedicated organization for the consumables business as a whole that bears cross-divisional responsibility. We see promising opportunities for further expanding the business with existing products with a view to benefitting to an even greater extent from the broad base of installed instruments. What is more, we plan to expand the existing portfolio, develop new products and work together with new partners to this end. 

Outlook 2016

In 2016, total Tecan Group sales are forecast to again increase with a double-digit rate in local currencies. This growth will be driven by the continued ramp up of major instrument platforms and launches of new products in both business segments as well as a full-year contribution of Sias.


The underlying EBITDA margin, excluding the Sias business and adjusted for tailwinds in 2015, mainly from the one-time positive net impact of revised pension liabilities, is expected to further expand by at least 50 basis points. Integration costs related to the Sias acquisition are expected to reach a mid single-digit million Swiss franc amount in 2016 and the acquisition to become accretive in 2017. Including these one-time integration costs, the EBITDA is expected to reach about a similar level as in 2015.


These expectations regarding profitability are based on an average exchange rate forecast for full-year 2016 of one euro equaling CHF 1.05 and one US dollar equaling CHF 0.98 and exclude further acquisitions. 

Our gratitude

In 2015, we launched two main platforms, Fluent and Spark, on the market. We have used a comprehensive brand refresh project to define the common guidelines, values and principles of conduct that underpin our corporate culture and the Tecan brand – a key factor for the company’s success. A wide range of employees and managers played their part in putting the project together, and it has been rolled out worldwide. We also made an acquisition – the second in two successive financial years.


All of these projects called for above-average commitment. For that, we want to express the heartfelt gratitude of the Board of Directors and the Management Board to all our employees. We are also especially grateful to our new colleagues at Sias, whom we welcome wholeheartedly to our ranks. We would also like to thank our customers for their loyalty, our shareholders for their confidence in us and our business partners for their continued trust and support. 


Männedorf, March 11, 2016