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Notes to the financial statements of Galenica Ltd.

Principles

The financial statements of Galenica Ltd. with registered office in Bern, Switzerland, have been prepared in accordance with Article 957 et seqq. of Title 32 of the Accounting law based on the Swiss Code of Obligations (CO). Where not prescribed by law, the significant accounting and valuation principles applied are described below.

Galenica Ltd. has prepared its consolidated financial statements in accordance with a recognised accounting standard (IFRS Accounting Standards). In accordance with the CO, the Company decided to forgo presenting additional information on audit fees in the notes as well as a cash flow statement.

Financial income

Financial income includes the gain on partial sale of subsidiaries of CHF 71.6 million (previous year: none) and a reversal of a bad debt allowance on non-current intercompany loans of CHF 15.0 million (previous year: CHF 15.0 million). In 2022, financial income includes a reversal of an impairment on investments of CHF 35.5 million.

Other income

Other income includes group-internal management fees of CHF 48.3 million (previous year: CHF 50.5 million) and IT services of CHF 75.3 million (previous year: CHF 66.4 million). Revenue is recognised when the service is provided.

Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and impairment. Depreciation is charged on a straight-line basis over the assets' useful lives.

Property, plant and equipment

in thousand CHF

2023

2022

Furniture, fittings

876

66

IT equipment

6,488

9,379

Vehicles

4,905

4,578

Total net carrying amount

12,269

14,023

Intangible assets

Intangible assets include purchased or internally developed software. These items are measured at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over the estimated economic useful life.

Financial assets

Galenica holds equity instruments of CHF 115.9 million (previous year: CHF 4.7 million). Those financial assets are measured at cost less accumulated impairment. Furthermore, financial assets include non-current loans to Group companies of CHF 74.7 million (previous year: CHF 74.7 million), to joint ventures of CHF 7.1 million (previous year: CHF 4.9 million) and to other companies of CHF 0.9 million (previous year: 1.4 million).

Subordinated loans

As at 31 December 2023, subordinated loans to Group companies amounted to CHF 1.9 million (previous year: CHF 1.9 million) and to third parties amounted to CHF 0.9 million (previous year: CHF 1.4 million).

Investments

An overview of the investments that are directly or indirectly controlled by Galenica Ltd. is provided in note 32 to the Consolidated financial statements 2023 of the Galenica Group.

Interest-bearing liabilities

The current and non-current interest-bearing liabilities are recognised at nominal value.

Interest-bearing liabilities

in thousand CHF

2023

2022

Bond 0.50 % (15 June 2017–15 June 2023) ISIN CH0367206692

200,000

Bond 1.00 % (15 June 2017–15 December 2026) ISIN CH0367206700

180,000

180,000

Bond 2.35% (8 Mai 2023–8 November 2029) ISIN CH1255924453

240,000

Interest-bearing liabilities

420,000

380,000

– of which current interest-bearing liabilities

200,000

– of which non-current interest-bearing liabilities

420,000

180,000

Lease obligations

The lease obligations, which do not expire or cannot be terminated within 12 months, have the following maturity structure. These amounts include the payments owed from rental and leasing agreements up to the end of the contract or the expiry of the notice period.

Lease obligations

in thousand CHF

2023

2022

Within 1 year

20

1,223

In 2 to 5 years

3,663

1,854

In more than 5 years

23,772

25,600

Total

27,455

28,677

Share capital

As at 31 December 2023, the share capital of Galenica amounted to CHF 5,000,000, divided into 50,000,000 fully paid-up and publicly listed shares with nominal value of CHF 0.10 each.

Authorised capital

As at 31 December 2023, Galenica Ltd. has no authorised capital.

Reserves from capital contributions

The reserves from capital contributions have been reduced to CHF 199.9 million (previous year: CHF 254.8 million) due to the dividend paid out to the shareholders on 9 May 2023 taken from the reserves from capital contributions in the amount of CHF 54.9 million (previous year: CHF 52.2 million).

Release of hidden reserves

In 2023, hidden reserves of CHF 15.0 million were released (previous year: CHF 15.0 million).

Contingent liabilities

As at 31 December 2023, total contingent liabilities amounted to CHF 564.6 million (previous year: CHF 347.4 million), including issued guarantees to Group companies of CHF 364.5 million (previous year: CHF 217.2 million) as well as CHF 200.0 million (previous year: CHF 130.0 million) for guarantees to secure intraday transactions for Group companies in connection with the zero balance cash pooling.

Full-time equivalents

The average number of full-time equivalents for the reporting period amounted to 447 (previous year: 413).

Treasury shares

Treasury shares

 

 

2023

 

2022

 

Number

in CHF

Number

in CHF

1 January

183,740

 

361,503

 

1st quarter

 

 

 

 

– Bought

3,553

264,170

2,161

141,737

– Sold

–44,424

–3,213,343

–59,930

–3,874,139

2nd quarter

 

 

 

 

– Bought

70,752

5,169,896

1,288

93,873

– Sold

–34,600

–2,548,636

–39,680

–2,597,453

3rd quarter

 

 

 

 

– Bought

4,794

335,636

1,630

116,782

– Sold

–93,044

–6,600,541

–85,857

–6,559,475

4th quarter

 

 

 

 

– Bought

77,049

5,240,448

2,625

186,644

– Sold

31 December

167,820 1)

 

183,740 1)

 

1) of which 15,495 owned by subsidiaries (previous year: 183,740)

The treasury shares are reserved for share-based payments to employees.

Further disclosures

In 2023, 14,047 shares (previous year: 12,307 shares) with fair value of CHF 1,013,491 (previous year: CHF 906,616) have been allocated to the members of the Board of Directors.

In 2023, 10,701 performance share units (previous year: 11,957 performance share units) with fair value at grant date of CHF 702,199 (previous year: CHF 689,956) have been allocated to the members of the Corporate Executive Committee. In 2023, 3,797 performance share units (previous year: 3,857 performance share units) with fair value at grant date of CHF 249,173 (previous year: CHF 222,585) have been allocated to other employees of Galenica Ltd.

Shareholders' equity

Shareholders' equity developed as follows:

Shareholders' equity

in thousand CHF

Share capital

Reserves from capital contributions

General legal retained earnings

Reserves for treasury shares 1)

Treasury shares

Free reserve

Available earnings

Shareholders' equity

Balance as at 31 December 2020

5,000

351,612

1,000

11,600

102,400

77,240

548,852

Allocation to free reserve

 

 

 

 

 

32,000

–32,000

Adjustment to the reserves for treasury shares

 

 

 

–8,600

 

8,600

 

Dividends

 

–44,602

 

 

 

 

–44,602

–89,204

Profit for the year

 

 

 

 

 

 

228,676

228,676

Balance as at 31 December 2021

5,000

307,010

1,000

3,000

143,000

229,314

688,324

Allocation to free reserve

 

 

 

 

 

176,000

–176,000

Adjustment to the reserves for treasury shares

 

 

 

5,000

 

–5,000

 

Dividends

 

–52,222

 

 

 

 

–52,222

–104,443

Profit for the year

 

 

 

 

 

 

168,099

168,099

Balance as at 31 December 2022

5,000

254,789

1,000

8,000

314,000

169,192

751,980

Allocation to free reserve

 

 

 

 

 

114,000

–114,000

Adjustment to the reserves for treasury shares

 

 

 

–6,900

 

6,900

 

Addition of treasury shares

 

 

 

 

–10,725

 

 

–10,725

Dividends

 

–54,881

 

 

 

 

–54,881

–109,761

Profit for the year

 

 

 

 

 

 

224,262

224,262

Balance as at 31 December 2023

5,000

199,908

1,000

1,100

–10,725

434,900

224,573

855,756

1) Owned by subsidiaries

Proposal of the Board of Directors for the appropriation of available earnings and reserves from capital contributions

At the Annual General Meeting as at 10 April 2024, the Board of Directors will propose the following allocation of available earnings and reserves from capital contributions:

in CHF

2023

2022

Appropriation of available earnings

 

 

Balance brought forward

311,094

1,092,850

Profit for the year

224,261,845

168,098,939

Available earnings at the disposal of the Annual General Meeting

224,572,939

169,191,789

Dividend per share CHF 1.10 (2022: CHF 1.10)

-55,000,000 1)

–54,880,695

Allocation to free reserve

–169,000,000

–114,000,000

Balance to be carried forward

572,939

311,094

 

 

 

Appropriation of reserves from capital contributions

 

 

Reserves from capital contributions

199,907,823

254,788,518

Dividend per share CHF 1.10 (2022: CHF 1.10) paid out of reserves from capital contributions

-55,000,000 1)

–54,880,695

Balance to be carried forward

144,907,823

199,907,823

1) The proposed dividend payment and appropriation of reserves from capital contributions covers all issued shares. However, no dividend will be paid on treasury shares. As a result, the total dividend amount payable depends on the number of treasury shares held on the distribution date. Based on the number of treasury shares held as at 31 December 2023, the total dividend would amount to CHF 109.6 million

The Board of Directors proposes to issue a dividend for fiscal year 2023 of CHF 2.20 per registered share. For this purpose, CHF 1.10 is to be taken from the reserves from capital contributions and CHF 1.10 from retained earnings. On the part taken from the reserves from capital contributions, the dividend can be distributed without deduction of Swiss withholding tax of 35%. Natural persons living in Switzerland are not liable for income tax on the dividend paid from the reserves from capital contributions.

Assuming the Annual General Meeting approves the dividend, payments will be made on 16 April 2024. The last trading day with entitlement to receive the dividend is 11 April 2024. The shares will be traded ex-dividend on 12 April 2024.

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