Galenica - Annual report 2024

1. Group organisation

General information

Galenica is a fully-integrated healthcare service provider in Switzerland. Galenica operates a network of pharmacies, develops and offers own brands and products, exclusive brands and products from business partners as well as a variety of on-site health services and tests for customers. Galenica is also a provider of pre-wholesale and wholesale distribution and database services in the Swiss healthcare market.

The parent company is Galenica Ltd., a Swiss public limited company with its headquarters in Bern. The registered office is at Untermattweg 8, 3027 Bern, Switzerland. Shares in Galenica Ltd. are traded on the SIX Swiss Exchange under securities no. 36067446 (ISIN CH0360674466).

The Board of Directors released the consolidated financial statements 2024 for publication on 5 March 2025. The 2024 consolidated financial statements will be submitted for approval to the Annual General Meeting on 10 April 2025.

2. Accounting principles

Basis of preparation

The consolidated financial statements of Galenica have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standard Board (IASB), as well as the interpretations of the IFRS Interpretations Committee (IFRIC) and the provisions of Swiss law.

The consolidated financial statements are based on the financial statements of the individual companies of Galenica, prepared in accordance with uniform accounting principles. The reporting period comprises twelve months to 31 December.

Galenica's consolidated financial statements are prepared in Swiss francs (CHF) and, unless otherwise indicated, figures are rounded to the nearest CHF 1,000.

Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. Totals are calculated using the underlying amount rather than the presented rounded number.

Foreign currencies are not material for the consolidated financial statements.

Estimation uncertainty, assumptions and judgments

The preparation of the Group's consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expense, and the disclosure of contingent liabilities as at the reporting date. Although these estimates and assumptions are made on the basis of all available information and with the greatest of care, the actual results may differ. This applies primarily to estimates and assumptions made with regard to the items set out below.

Leases (note 16)

IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a lease, if the lessee is reasonably certain to exercise that option. Where a lease includes the option for the Group to extend the lease term, Galenica applies judgment in assessing whether it is reasonably certain that the option will be exercised. This will take into account the length of the time remaining before the option is exercisable, current trading, future trading forecasts as to the ongoing profitability of the point of sale and the level and type of planned future capital investment. A reassessment of the remaining life of the lease could result in a recalculation of the lease liability and a material adjustment to the associated balances.

Goodwill and intangible assets (note 17)

Goodwill and other intangible assets with an indefinite useful life are tested for impairment at least once a year. This involves estimating the value in use of the cash-generating unit (CGU) or group of CGUs to which the goodwill is allocated. It also requires a forecast of expected future cash flows as well as the application of an appropriate discount rate to calculate the present value of these cash flows.

Employee benefit plans and other non-current employee benefits (note 24)

The costs of the employee benefit plans and other long-term employee benefits are determined using actuarial valuations. These valuations involve making assumptions about the discount rate, future salary and pension developments, mortality and the employee turnover rate. Galenica considers the discount rate, the selection of mortality tables and the development of salaries to be key assumptions.

Fair value of contingent consideration liabilities from business combinations (note 26)

Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability of meeting each performance target and the discount rate.

Amendments to IFRS Accounting Standards

As at 1 January 2024 Galenica adopted the following amended IFRS Accounting Standards:

Amendments to IAS 1 – Classification of liabilities as current or non-current
Amendments to IAS 7 and IFRS 7 – Supplier finance arrangements
Amendments to IFRS 16 – Lease liability in a sale and leaseback

These changes have no or no material impact on the financial position, financial performance and cash flows of Galenica nor on disclosures in these consolidated financial statements. Galenica has not early adopted any other standard or interpretation that has been issued but is not yet effective.

Future amendments to IFRS Accounting Standards

The IASB has issued various new and amended standards and interpretations with effective dates in the financial year 2025 or later. Galenica has not early adopted any of the following amendments to standards or interpretations that are potentially relevant for Galenica. Galenica intends to apply the new or amended standards for the first time in the financial year beginning on the date shown below:

Amendments to IAS 21 – Lack of exchangeability (1 January 2025)
IFRS 18 – Presentation and Disclosure in financial statements (1 January 2027)
Amendments to IAS 7 – Statement of cash flows (1 January 2027)

Galenica is currently assessing the impact of the Amendments to IAS 21. Based on a preliminary analysis, Galenica does not expect a material impact on the consolidated financial statements.

Galenica is currently working to identify all the impacts the introduction of IFRS 18 and the amendments to IAS 7 will have on the financial statements and related notes.

3. Operating segment information

Galenica operates mainly in Switzerland within two operating segments Products & Care and Logistics & IT. The CEO of Galenica acting as chief operating decision maker (CODM) allocates resources and monitors performance of the Group's operating segments Products & Care and Logistics & IT on the basis of information prepared in accordance with IFRS Accounting Standards with exception of defined benefit plans and long-service awards, which are recognised at Group level.

In the operating segment Products & Care with its large network of pharmacies the accounting for leases is of particular importance. The Group continues to prepare information as if its leases were accounted for as operating leases (e.g. in line with Galenica's accounting policies prior to the adoption of IFRS 16). Those figures are relevant for management incentive and remuneration plans. However, Galenica has determined that the figures including the effects of IFRS 16 are used by the CODM for monitoring and resource allocation decisions and therefore presents its segment reporting as below.

The operating result (EBIT) comprises all operating income generated and expenses incurred in the corresponding segments. Financial income and expenses as well as income taxes are reported at Group level only and not allocated to the segments. The assets and liabilities include all items of the statement of financial position that can be directly or reasonably allocated to a segment.

Products & Care

The Products & Care segment comprises the «Retail» business area with offerings for patients and end customers (B2C) and the «Professionals» business area with offerings for business customers and partners in the healthcare sector (B2B).

The «Retail» business area comprises the two sectors «Local Pharmacies» (point-of-sale) and «Pharmacies at Home» (mail-order and home care). Retail operates at 556 locations Galenica's pharmacy network, the largest in Switzerland. With 376 pharmacies of its own and 180 partner pharmacies, Retail has outlets throughout the country. Galenica's own pharmacies comprise the Amavita brand with 198 branches and the Sun Store brand with 85 branches. Galenica also operates a chain of 86 pharmacies in partnership with Coop under the Coop Vitality brand. Galenica's pharmacy network also covers the speciality pharmacy Mediservice in partnership with Redcare Pharmacy N.V., which is focused on medication for treatment of patients at home, 6 majority interests in pharmacies and 180 Winconcept partner pharmacies.

The «Professionals» business area comprises the «Products & Brands» and «Services for Professionals» sectors. Both business areas focus on the development, marketing and sale of healthcare services and products through the various Galenica distribution channels.

Logistics & IT

The Logistics & IT segment comprises the two sectors «Wholesale» and «Logistics & IT Services». These provide services for all those involved in the healthcare sector – pharmacies, drugstores, doctors, hospitals and care homes, partners and suppliers. Their activities focus on optimising and further developing the logistics services and service offering as well as providing innovative solutions that promote digitalisation in the healthcare market.

Wholesale plays an important role in the pharmaceutical supply chain. As a pharmaceutical wholesaler, Wholesale ensures on-schedule delivery within short deadlines to pharmacies, drugstores, doctors, hospitals and care homes throughout Switzerland.

Logistics & IT Services offers pharmaceutical and healthcare companies a broad range of specialised pre-wholesale services, from storage and distribution of products in Switzerland to debt collection. The companies of the Logistics & IT Services also offer solutions for the healthcare market. They operate comprehensive databases that provide additional knowledge for all service providers in the Swiss healthcare market and develop management solutions tailored specifically to the needs of the healthcare market. Logistics & IT Services is the leading provider of master data systems for Switzerland's entire healthcare market and publishes printed and electronic technical information on pharmaceutical products as well as complete management solutions for pharmacies. Furthermore, Logistics & IT Services provides Group internal IT services.

Group Services

The activities included within Group Services mainly comprise Galenica's central operations, which include Group Management and centralised Corporate functions such as Finance, Investor Relations, Insurance, Indirect procurement, Human Resources, Legal & Board Services, Communications and Transformation.

Corporate charges management fees to the group companies for the organisational and financial management services that it provides.

Eliminations

Operating activities involve the sale of goods and services between the operating segments.

Sale of goods and services between the operating segments and resulting unrealised gains are eliminated in the Eliminations column. In addition, Eliminations include adjustments recorded on Group level which mainly consist of costs for IAS 19 from defined benefit plans and long-service awards.

Segment assets and liabilities include loans and current accounts held with respect to other segments. These positions are eliminated in the Eliminations column.

Operating segment information 2024

in thousand CHF	Products & Care	Logistics & IT	Group Services	Eliminations	Galenica Group
Net sales	1,700,226	3,241,444	53,656	–1,074,244	3,921,081
– of which intersegmental net sales	–107,763	–915,055	–51,425	1,074,244	–
– of which net sales to third parties	1,592,462	2,326,389	2,231	–	3,921,081
Cost of goods	–909,819	–2,891,227	–	957,806	–2,843,240
Personnel costs	–378,146	–161,255	–46,660	3,335	–582,726
Share of profit from associates and joint ventures	6,237	–17	–	–11	6,209
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	230,996	93,651	29	–532 1)	324,144
Depreciation, amortisation and impairment	–70,983	–36,838	–2,145	188	–109,778
Earnings before interest and taxes (EBIT)	160,013	56,813	–2,116	–344 1)	214,367
Interest income					2,017
Interest expense					–12,654
Other net financial result					10,868
Earnings before taxes (EBT)					214,597
Income taxes					–30,898
Profit from continuing operations					183,699

Assets	1,844,485	1,069,816	620,682	-464,086 2)	3,070,898
Investments in associates and joint ventures	147,309	122	–	–2,344	145,087
Liabilities	569,114	550,563	830,692	-431,315 3)	1,519,053

Investments in property, plant and equipment	23,319	9,704	3,000	–	36,023 4)
Investments in intangible assets	1,388	35,505	–	–151	36,742 5)

Employees as at 31 December (FTE)	4,355	1,506	258	–	6,119

1) Including the effects of IAS 19 from defined benefit plans and long-service awards of CHF 0.5 million

2) Of which elimination of intercompany positions of CHF -445.1 million and other unallocated amounts of CHF -19.0 million

3) Of which elimination of intercompany positions of CHF -445.1 million and other unallocated amounts of CHF 13.8 million

4) Of which non-cash investments of CHF 1.5 million

5) Of which non-cash investments of CHF 4.1 million

Geographic information 2024

in thousand CHF	Switzerland	Other countries	Galenica Group
Net sales to third parties	3,874,423	46,658	3,921,081
Non-current assets 1)	1,747,311	414	1,747,725

1) Without financial assets and deferred tax assets

Operating segment information 2023

in thousand CHF	Products & Care	Logistics & IT	Group Services	Eliminations	Galenica Group
Net sales	1,635,633	3,076,988	50,051	–1,016,661	3,746,011
– of which Intersegmental net sales	–106,467	–863,775	–46,418	1,016,661	–
– of which Net sales to third parties	1,529,166	2,213,213	3,633	–	3,746,011
Cost of goods	–882,061	–2,746,003	–	913,622	–2,714,443
Personnel costs	–366,956	–151,351	–40,804	8,126	–550,984
Share of profit from associates and joint ventures	6,554	17	–	268	6,838
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	222,200	74,313	3,236	2,386 1)	302,135
Depreciation, amortisation and impairment	–68,429	–31,750	–3,058	237	–103,000
Earnings before interest and taxes (EBIT)	153,772	42,563	178	2,623 1)	199,135
Interest income					1,878
Interest expense					–9,466
Other net financial result					3,402
Earnings before taxes (EBT)					194,949
Income taxes					–29,245
Profit from continuing operations					165,704

Assets	1,832,129	1,029,042	600,327	-470,546 2)	2,990,952
Investments in associates and joint ventures	146,718	99	–	–2,832	143,985
Liabilities	591,285	630,139	747,648	-453,317 3)	1,515,755

Investments in property, plant and equipment	27,800	15,070	3,249	–	46,119 4)
Investments in intangible assets	1,483	31,337	–	–121	32,699 5)

Employees as at 31 December (FTE)	4,167	1,498	242	–	5,907

1) Including the effects of IAS 19 from defined benefit plans and long-service awards of CHF 5.8 million

2) Of which elimination of intercompany positions of CHF -472.3 million and other unallocated amounts of CHF 1.7 million

3) Of which elimination of intercompany positions of CHF -472.3 million and other unallocated amounts of CHF 19.0 million

4) Of which non-cash investments of CHF 2.5 million

5) Of which non-cash investments of CHF 2.6 million

Geographic information 2023

in thousand CHF	Switzerland	Other countries	Galenica Group
Net sales to third parties	3,705,756	40,255	3,746,011
Non-current assets 1)	1,711,285	488	1,711,773

1) Without employee benefit assets, financial assets and deferred tax assets

4. Business combinations

Business combinations 2024

Acquisition of pharmacies. Galenica acquired 100% of the interests in pharmacies in various locations in Switzerland. Upon acquisition, the pharmacies were merged with Galenicare Ltd.

The total purchase consideration amounted to CHF 23.0 million and was fully settled in cash. The fair value of the net identifiable assets amounts to CHF 6.4 million at the acquisition date. The goodwill of CHF 20.2 million was allocated to the operating segment Products & Care and corresponds to the added value of the pharmacies based on their locations and the know-how of the employees gained. Transaction costs were not material.

Business combinations

in thousand CHF	2024	2023
Cash and cash equivalents	3,580	3,961
Trade receivables	3,367	1,407
Inventories	1,751	4,161
Property, plant and equipment	382	387
Right-of-use assets	4,376	5,756
Intangible assets	–	9,333
Other current and non-current assets	742	367
Trade payables	–1,593	–437
Lease liabilities	–4,376	–5,756
Net deferred tax liabilities	95	–1,859
Employee benefit liabilities	–	–378
Other current and non-current liabilities	–1,915	–1,914
Fair value of net assets	6,409	15,029
Goodwill	20,168	19,650
Purchase consideration	26,577	34,679
Cash acquired	–3,580	–3,961
Deferred consideration	–	–64
Contingent consideration	–	–2,385
Net cash flow from current business combinations	22,997	28,268
Payment of consideration due to previous business combinations	64	–
Net cash flow from business combinations	23,061	28,268

Pro forma figures for acquisitions made in 2024 for the full 2024 financial year

Since their inclusion in Galenica's scope of consolidation, the businesses acquired contributed net sales of CHF 24.6 million and a negative operating result (EBIT) of CHF 0.4 million to the Group's results. If these acquisitions had occurred on 1 January 2024, they would have contributed additional net sales of CHF 7.0 million and increased EBIT by CHF 0.1 million.

Business combinations 2023

Acquisition of Padma AG. On 30 January 2023, Galenica acquired 100% of the shares in the Swiss company Padma AG. Padma AG is the parent company of the Padma Group with its two operating companies Padma Europe GmbH (Austria based) and Padma Deutschland GmbH (Germany based). Padma specialises in the manufacture and distribution of herbal formulations derived from Tibetan medicine.

The total purchase considerations amounted to CHF 23.3 million, of which CHF 20.9 million was settled in cash. A contingent consideration in the amount of CHF 2.4 million was recognised, which is due in 2026 if certain financial and operational targets are achieved. The fair value of the net identifiable asset amounted to CHF 14.2 million at the acquisition date. The goodwill of CHF 9.1 million was allocated to the operating segment Products & Care and corresponds to added value based on the acquirer-specific synergies expected to arise from the acquisition in expanding its complementary medicine portfolio and expanding its range of reimbursable medicines and the know-how of the employees gained. Transaction costs were not material.

Acquisition of pharmacies. Galenica acquired 100% of the interests in pharmacies in various locations in Switzerland. Upon acquisition, the pharmacies were merged with Galenicare Ltd.

The total purchase consideration amounted to CHF 11.4 million, of which CHF 11.3 million was settled in cash and CHF 0.1 million was recognised as deferred consideration, which was paid in 2024. The fair value of the net identifiable assets amounts to CHF 0.8 million at the acquisition date. The goodwill of CHF 10.6 million was allocated to the operating segment Products & Care and corresponds to the added value of the pharmacies based on their locations and the know-how of the employees gained. Transaction costs were not material.

Accounting principles business combinations

Subsidiaries, associates and joint ventures acquired during the reporting period are included in the financial statements as at the date when control, significant influence or joint control was obtained. Companies sold during the reporting period are included up to the date when control, significant influence or joint control was lost. The profit or loss on deconsolidation is recognised in operating income or other operating costs.

Contingent consideration is measured at fair value at the acquisition date and qualifies as a financial instrument. It is remeasured to fair value and any difference is recognised in other financial income or other financial expenses.

The difference arise from the acquisition of additional non-controlling interests in fully consolidated companies (purchase consideration less proportionate carrying amount of non-controlling interests) is considered to be an equity transaction and is thus taken directly to retained earnings in shareholders' equity.

5. Net sales

Net sales 2024

in thousand CHF	Sale of goods	Sale of services	Total net sales	Intersegmental net sales	Total net sales to third parties	of which sale of goods to third parties	of which sale of services to third parties
Local Pharmacies	1,278,232	86,838	1,365,070	–409	1,364,661	1,277,907	86,754
Pharmacies at Home	72,679	4,572	77,251	–	77,251	72,679	4,572
Retail (B2C) 1)	1,350,594	91,410	1,442,004	–91	1,441,913	1,350,586	91,326
Products & Brands	181,648	1,732	183,381	–89,728	93,653	92,130	1,523
Services for Professionals	69,313	15,525	84,838	–27,942	56,896	54,561	2,335
Professionals (B2B) 1)	250,988	17,223	268,210	–117,661	150,549	146,690	3,859
Products & Care 1)	1,595,357	104,869	1,700,226	–107,763	1,592,462	1,497,277	95,185
Wholesale	3,095,583	9,640	3,105,223	–853,435	2,251,789	2,244,698	7,090
Logistics & IT Services	128	157,037	157,166	–82,566	74,600	168	74,432
Logistics & IT 1)	3,095,711	145,733	3,241,444	–915,055	2,326,389	2,244,866	81,523
Group Services	–	53,656	53,656	–51,425	2,231	–	2,231
Eliminations 2)	–948,925	–125,319	–1,074,244	1,074,244	–	–	–
Galenica Group	3,742,143	178,938	3,921,081	–	3,921,081	3,742,143	178,938

1) Including eliminations of intercompany net sales

2) Eliminations of intersegmental net sales

Net sales 2023

in thousand CHF	Sale of goods	Sale of services	Total net sales	Intersegmental net sales	Total net sales to third parties	of which sale of goods to third parties	of which sale of services to third parties
Local Pharmacies	1,223,601	83,330	1,306,931	672	1,307,603	1,224,273	83,330
Pharmacies at Home	74,410	4,509	78,918	–283	78,635	74,126	4,509
Retail (B2C) 1)	1,297,725	87,838	1,385,564	674	1,386,237	1,298,399	87,838
Products & Brands	175,674	1,458	177,132	–87,205	89,927	88,522	1,405
Services for Professionals	63,116	15,819	78,934	–25,950	52,984	49,781	3,203
Professionals (B2B) 1)	238,815	17,248	256,064	–113,153	142,911	138,303	4,607
Products & Care 1)	1,534,129	101,504	1,635,633	–106,467	1,529,166	1,436,719	92,446
Wholesale	2,942,635	10,097	2,952,732	–812,965	2,139,767	2,132,506	7,260
Logistics & IT Services	390	143,575	143,965	–70,519	73,446	390	73,056
Logistics & IT 1)	2,943,019	133,968	3,076,988	–863,775	2,213,213	2,132,896	80,316
Group Services	–	50,051	50,051	–46,418	3,633	–	3,633
Eliminations 2)	–907,536	–109,124	–1,016,661	1,016,661	–	–	–
Galenica Group	3,569,612	176,399	3,746,011	–	3,746,011	3,569,612	176,399

1) Including eliminations of intercompany net sales

2) Eliminations of intersegmental net sales

Accounting principles net sales

Net sales represent revenue from contracts with customers from the sale of goods or services. Revenue is recognised in the amount that reflects the consideration to which Galenica expects to be entitled when the promised goods or services are transferred to customers.

Where invoices are issued, payment terms in Switzerland usually range between 10 and 30 days, for both goods and services.

Sale of goods

For retail pharmacy sales, revenue is recognised at the point in time when the customer takes possession of the products at the point-of-sale and for wholesale transactions upon shipment of the products to the customer.

Galenica has determined that its customer loyalty programs represent separate performance obligations to which revenue is allocated based on relative stand-alone selling prices, which considers historical redemption patterns. Revenue is deferred and recognised when the award credits are redeemed, which is typically 2 to 4 months after the sale of the initial products. At the end of each period, unredeemed credits are reflected as contract liabilities and included in trade and other payables in the consolidated statement of financial position.

Refund liabilities from contracts with customers are estimated based on actual sales volumes for the financial year and refund percentages as agreed with customers. These liabilities are usually settled in the subsequent financial year. Revenue from gift cards purchased by customers is deferred as contract liabilities until goods or services are transferred, which is typically within 12 months after the sale of the gift card. Any amounts not expected to be redeemed are recognised based on historical redemption patterns.

Customer returns are not material.

Sale of services

Revenue from services includes logistics services, healthcare and consultation services, the processing and sale of information and IT services as well as other contractually agreed services.

In the business area “Retail (B2C)“ sale of services mainly includes healthcare services and consultations sales. Most of sale of service in the business area “Professionals (B2B)” are in connection with marketing, purchase and other services for independent pharmacies or associates and joint ventures as well as providing education services for staff in pharmacies and drugstores. Depending on the service the performance obligations are either satisfied over time or at a point in time (i.e. when consultation took place).

In the business area “Logistics & IT Services” sale of services mainly includes pre-wholesale services and group external as well as group internal IT services and in the business area “Wholesale” sale of service mainly includes various logistic services. Depending on the service the performance obligations are either satisfied over time or at a point in time (i.e. when volumes are handled).

6. Other income

Other income

in thousand CHF	2024	2023
Income from own work capitalised	9,491	10,011
Rental income from operating leases	551	1,690
Gain on disposal of property, plant and equipment	3,308	703
Other operating income	2,872	4,636
Other income	16,223	17,040

7. Personnel costs

Personnel costs

in thousand CHF	2024	2023
Salaries and wages	476,846	449,756
Social security costs and pension expenses	68,459	60,040
Other personnel costs	37,422	41,188
Personnel costs	582,726	550,984

Average number of employees (FTE)	6,090	5,770

Social security costs and pension expenses contain expenses for defined benefit plans of CHF 33.9 million (previous year: expenses of CHF 26.6 million) (refer to note 24). Salaries and wages includes expenses for share-based payments of CHF 6.0 million (previous year: CHF 4.3 million) (refer to note 29).

8. Other operating costs

Other operating costs

in thousand CHF	2024	2023
Maintenance and repairs	32,857	29,380
Transport and shipping costs	44,116	42,158
Other operating and production costs	21,420	19,119
Rental and other lease expenses 1)	10,510	10,997
Administration costs	50,375	57,514
Marketing and sales costs	32,538	42,038
Non-income taxes	1,579	1,088
Loss on disposal of property, plant and equipment	6	34
Other operating costs	193,402	202,328

1) Of which other lease expenses (incidental expenses) of CHF 3.9 million (previous year: CHF 5.6 million)

Research and development

During the reporting period, expenses for research and development totalling CHF 14.0 million were recognised directly in other operating costs (previous year: CHF 12.7 million).

9. Financial result

Financial result

in thousand CHF	2024	2023
Interest income	1,619	1,749
Net interest income from employee benefit plans	398	129
Net remeasurement of change in fair value of contingent consideration liabilities	10,600	10,057
Other financial income	337	76
Net gain on foreign exchange	425	–
Financial income	13,379	12,012

Interest expense	9,538	6,515
Interest expense on lease liabilities	3,116	2,951
Other financial costs	494	6,343
Net loss on foreign exchange	–	388
Financial expenses	13,148	16,198

Net financial result	–230	4,186

10. Earnings per share

Number of outstanding shares

	2024	2023
Total number of shares	50,000,000	50,000,000
Average number of treasury shares	–157,074	–151,779
Average number of outstanding shares	49,842,926	49,848,221
Effect from share-based payments	43,301	46,724
Theoretical average number of outstanding shares (diluted)	49,886,227	49,894,945

Earnings per share

	2024	2023
Earnings per share
Net profit – attributable to shareholders of Galenica Ltd. (in thousand CHF)	182,951	285,367
Earnings per share (in CHF)	3.67	5.72
Diluted earnings per share (in CHF)	3.67	5.72
Earnings per share from continuing operations
Profit from continuing operations - attributable to shareholders of Galenica Ltd. (in thousand CHF)	183,031	164,919
Earnings per share from continuing operations (in CHF)	3.67	3.31
Diluted earnings per share from continuing operations (in CHF)	3.67	3.31
Earnings per share from discontinued operations
Profit from discontinued operations - attributable to shareholders of Galenica Ltd. (in thousand CHF)	–80	120,448
Earnings per share from discontinued operations (in CHF)	–	2.42
Diluted earnings per share from discontinued operations (in CHF)	–	2.41

11. Income taxes

Income taxes

in thousand CHF	2024	2023
Current income taxes	33,732	29,634
Income taxes of prior periods	–1,419	114
Deferred income taxes	–1,415	–503
Income taxes from continuing operations	30,898	29,245
Income taxes related to discontinued operations	–21	5,766
Total income taxes	30,877	35,012

Tax reconciliation

in thousand CHF	2024	2023
Earnings before taxes from continuing operations	214,597	194,949
Earnings before taxes from discontinued operations	–101	126,214
Earnings before income taxes	214,496	321,163
Weighted income tax rate in % of accounting profit	18.3%	17.7%
Expected income taxes	39,290	56,971
Effects due to the sale of participation of discontinued operations (not taxable)	–	–14,116
Effects of changes in tax rates	373	–290
Effects of unrecognised losses in the current year	72	50
Realisation of unrecognised tax losses of prior periods	–43	–668
Recognition of tax losses of prior periods	–390	–1,570
Remeasurement contingent consideration liabilities from business combinations (not taxable)	–2,173	–2,112
Effects of changes in investments (write-down/reversal of write down)	–7,122	–828
Income taxes of prior periods	–1,419	114
Other items	2,289	–2,539
Effective income taxes	30,877	35,012
Effective income tax rate in % of accounting profit	14.4%	10.9%
– of which income taxes attributable to continuing operations (reported in the statement of income)	30,898	29,245
– effective income tax rate attributable to continuing operations in % of EBT	14.4%	15.0%
– of which income taxes attributable to discontinued operations	–21	5,766

Deferred taxes

			2024		2023
in thousand CHF	Deferred tax assets	Deferred tax liabilities	Net carrying amount	Deferred tax assets	Deferred tax liabilities	Net carrying amount
Current assets	3,871	–26,686	–22,815	3,914	–27,000	–23,086
Property, plant and equipment	24	–2,122	–2,098	29	–2,518	–2,489
Right-of-use assets	–	–38,835	–38,835	–	–38,944	–38,944
Intangible assets	2,909	–25,561	–22,652	6,331	–24,917	–18,587
Investments	–	–690	–690	–	–685	–685
Financial assets	–	–2,025	–2,025	–	–20,211	–20,211
Lease liabilities	39,988	–	39,988	40,044	–	40,044
Provisions	–	–737	–737	–	–953	–953
Employee benefit plans	3,155	–	3,155	3,460	–3,677	–217
Other temporary differences	641	–1,823	–1,182	295	–1,856	–1,561
Shareholders' equity	614	–	614	734	–	734
Deferred taxes due to temporary differences	51,203	–98,480	–47,277	54,806	–120,761	–65,956
Tax loss carryforwards	5,098	–	5,098	1,440	–	1,440
Gross deferred taxes	56,301	–98,480	–42,179	56,246	–120,761	–64,515
Netting of assets and liabilities	–51,837	51,837		–51,300	51,300
Net deferred taxes	4,464	–46,643		4,946	–69,461

Analysis of net deferred taxes

in thousand CHF	2024	2023
1 January	–64,515	–45,126
Recognised as income taxes in profit or loss
– Change in temporary differences	–1,826	–1,112
– Fiscal realisation of recognised tax loss carryforwards	–563	–342
– Tax loss carryforwards taken into account for the first time	4,178	1,666
– Effects of changes in tax rates	–373	290
Recognised in other comprehensive income	20,728	–13,940
Recognised in shareholders' equity (related to share-based payments)	71	146
Addition to scope of consolidation	95	–1,859
Disposal from scope of consolidation	–	1,593
Discontinued operations	–	–5,766
Translation differences	27	–66
31 December	–42,179	–64,515

Temporary differences on which no deferred taxes have been recognised

in thousand CHF	2024	2023
Investments in subsidiaries	337,862	399,402

Tax loss carryforwards and tax credits

		2024		2023
in thousand CHF	Tax loss carryforwards / tax credits	Tax effect	Tax loss carryforwards / tax credits	Tax effect
Tax loss carryforwards and tax credits	28,805	5,116	6,728	1,491
– of which capitalised as deferred tax assets	–5,007	–1,122	–6,336	–1,427
– of which netted with deferred tax liabilities	–23,666	–3,976	–95	–13
Unrecognised tax loss carryforwards and tax credits	132	18	297	51
Of which expire:
– within 1 year	–	–	–	–
– in 2 to 5 years	–	–	289	49
– in more than 5 years	132	18	9	1

OECD Pillar Two model rules

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) addresses tax challenges from the digital economy, introducing the Global Anti-Base Erosion Model Rules (Pillar Two), applicable to multinational enterprises (MNEs) with revenues over EUR 750 million. Galenica is within the scope of the OECD Pillar Two model rules. Galenica applies the mandatory exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.

The Pillar Two model rules were adopted in Switzerland at the end of 2023 and are applicable starting from 1 January 2024. According to these rules, Galenica is considered a multinational enterprise to which the Pillar Two rules shall be applied. At the same time, Pillar Two legislation has been enacted or substantively enacted in several other jurisdictions in which the Group operates effective for the financial year beginning 1 January 2024. Galenica has performed an assessment of its potential exposure to Pillar Two income taxes based on 2024 financial information for the constituent entities in the Group. The Pillar Two effective tax rates in all the jurisdictions in which the Group operates is above 15% according to transitional safe harbour rules and expects there to be no top-up taxes for the financial year 2024. Galenica continues to follow Pillar Two legislative developments to evaluate the potential future impact on its consolidated results of operations, financial position and cash flows.

12. Discontinued operations

On 30 March 2023 Galenica announced the combination of the business activities of the specialty pharmacy Mediservice Ltd. (including Curarex swiss AG) and the online pharmacy redcare-apotheke.ch in a strategic partnership with Redcare Pharmacy N.V. The closing of the transaction occurred on 16 May 2023.

Through the transaction, Galenica sold 51% of the shares of Mediservice Ltd. to Redcare Pharmacy N.V. The total purchase consideration amounted to CHF 215.5 million, consisting of a 6.1% investment in the listed company Redcare Pharmacy N.V., Netherlands with a fair value of CHF 109.5 million and the retained 49% participation in Mediservice Ltd. (including the online pharmacy shop-apotheke.ch) with a fair value of CHF 106.0 million. The remaining 49% participation in Mediservice Ltd. is accounted for as an investment in an associate.

At the date of disposal, the purchase consideration was reduced by an estimated amount of CHF 10.6 million which is contingent on net working capital developments as well as certain market developments and will become due between 2024 and 2027. In 2024 the remeasurement of the contingent consideration liability resulted in a change in fair value of minus CHF 0.1 million (previous year: CHF 7.7 million) which was allocated to the net profit from discontinued operations.

Gain on sale of discontinued operations

in thousand CHF	2024	2023
Fair value of received equity instruments	–	109,456
Fair value of retained at equity investment in former subsidiary	–	106,011
Contingent considerations	–	–10,594
Total considerations received / interest retained	–	204,873

Carrying amount of net assets disposed	–	–86,776
Transaction costs	–	–813
Income taxes related to the sale of the discontinued operations	–	–5,515

Gain on sale of discontinued operations as per date of disposal	–	111,769

Net remeasurement of change in fair value of contingent consideration liabilities related to sale of discontinued operations	–80	7,663
Gain on sale of discontinued operations	–80	119,432

The table below shows the financial performance of the discontinued operations in the previous year.

Statement of income of discontinued operations

in thousand CHF	1.1.– 16.5.2023
Net sales	164,487
Other income	18
Expenses	–163,238
Earnings before tax (EBT) from discontinued operations	1,266

Income taxes	–251

Net profit from discontinued operations	1,015

Accounting principles discontinued operations

A disposal group is classified as a discontinued operation if it represents a separate major line of business or geographical business unit. Discontinued operations are not included in the result from continuing operations and are reported separately in the consolidated statement of income as profit from discontinued operations. The prior period amounts in the income statement and in the consolidated statement of cash flows are adjusted for comparison purposes. The elimination of intercompany transactions between continuing and discontinued operations is adjusted in order to reflect the impact of these transactions in continuing operations going forward. Therefore, intercompany transactions with the discontinued operations are treated as third parties transaction in the continuing operation.

13. Trade and other receivables

Trade and other receivables

in thousand CHF	2024	2023
Trade receivables	468,568	502,036
Bad debt allowances	–8,286	–16,044
Other receivables	39,717	32,301
Trade and other receivables	499,999	518,293

Change in bad debt allowances for trade receivables

in thousand CHF	2024	2023
1 January	–16,044	–9,752
Addition	–1,743	–8,053
Use	7,460	526
Reversal	2,042	775
Disposal from scope of consolidation	–	454
Translation differences	–1	6
31 December	–8,286	–16,044

Maturity profile of trade receivables

			2024			2023
in thousand CHF	Gross trade receivables	Bad debt allowances	Net trade receivables	Gross trade receivables	Bad debt allowances	Net trade receivables
Not past due	403,591	–3,596	399,995	407,341	–4,752	402,589
Past due:
– 1 to 30 days	46,149	–1,016	45,133	69,219	–994	68,226
– 31 to 60 days	7,192	–831	6,361	7,920	–176	7,744
– 61 to 90 days	2,466	–791	1,675	1,936	–230	1,706
– more than 90 days	9,170	–2,052	7,118	15,620	–9,892	5,728
Total	468,568	–8,286	460,282	502,036	–16,044	485,992

Accounting principles trade and other receivables

Trade receivables are initially measured at the transaction price determined in accordance with IFRS 15. Other receivables are carried at original invoice value. Allowances for uncollectable amounts are estimated based on expected credit losses, using life-time expected credit losses for trade receivables (simplified approach).

Any impairment losses are recognised in profit or loss in other operating costs.

14. Inventories

Inventories

			2024			2023
in thousand CHF	Raw material and merchandise 1)	Semi-finished and finished goods 2)	Total inventories	Raw material and merchandise 1)	Semi-finished and finished goods 2)	Total inventories
Gross carrying amount as at 1 January	366,064	9,550	375,614	331,281	4,162	335,443
Change in inventories	4,056	1,407	5,463	50,603	3,725	54,328
Addition to scope of consolidation	1,751	–	1,751	2,431	1,730	4,161
Disposal from scope of consolidation	–	–	–	–18,174	–	–18,174
Translation differences	10	12	22	–77	–67	–145
Gross carrying amount as at 31 December	371,881	10,969	382,850	366,064	9,550	375,614

Allowance as at 1 January	–17,006	–1,512	–18,518	–19,744	–540	–20,283
Addition	–3,821	–672	–4,493	–2,309	–1,085	–3,395
Reversal / use	2,971	252	3,223	5,026	109	5,135
Disposal from scope of consolidation	–	–	–	6	–	6
Translation differences	–3	–3	–6	15	4	19
Allowance as at 31 December	–17,860	–1,935	–19,795	–17,006	–1,512	–18,518

Net carrying amount as at 31 December	354,021	9,034	363,055	349,058	8,038	357,096

1) Including prepayments to suppliers

2) Including consumables / auxiliary material

Accounting principles inventories

The weighted average method is primarily used to determine cost for raw materials and merchandise. Semi-finished and finished goods are carried at the lower of cost of direct materials and labour and net realisable value.

Inventory allowances are recognised on inventories for slow moving items and excess stock.

Cost of goods mainly include costs of goods and merchandise from the operating segments Products & Care and Logistics & IT. Price discounts, rebates or supplier discounts and other payments received from suppliers that are not payment for distinct goods or services provided by Galenica and thus on the purchase of goods are directly deducted from cost of goods.

15. Property, plant and equipment

Property, plant and equipment

in thousand CHF	Real estate	Assets under construction	Warehouse equipment	Furniture, fittings	Other property, plant and equipment	Total property, plant and equipment
Net carrying amount as at 31.12.2022	159,544	1,958	41,465	21,877	24,650	249,495
Addition	23,016	1,993	4,949	8,202	7,959	46,119
Disposal	–283	–	–	–	–112	–394
Reclassification	167	–822	206	73	376	–
Depreciation	–14,108	–	–6,354	–5,190	–9,572	–35,224
Addition to scope of consolidation	–	–	64	223	100	387
Disposal from scope of consolidation	–318	–	–333	–31	–	–681
Net carrying amount as at 31.12.2023	168,019	3,129	39,996	25,156	23,402	259,702
Addition	16,007	2,654	5,578	6,507	5,277	36,023
Disposal	–714	–	–63	–24	–235	–1,037
Reclassification	772	–1,375	392	–	212	–
Depreciation	–16,341	–	–6,096	–5,377	–9,580	–37,394
Addition to scope of consolidation	–	–	–	359	23	382
Net carrying amount as at 31.12.2024	167,743	4,408	39,807	26,620	19,098	257,676

Overview as at 31.12.2023
Cost	344,854	3,129	116,950	119,677	71,152	655,763
Accumulated depreciation and impairment	–176,835	–	–76,954	–94,522	–47,750	–396,060
Net carrying amount as at 31.12.2023	168,019	3,129	39,996	25,156	23,402	259,702

Overview as at 31.12.2024
Cost	357,799	4,408	122,524	125,266	67,806	677,802
Accumulated depreciation and impairment	–190,056	–	–82,716	–98,645	–48,708	–420,126
Net carrying amount as at 31.12.2024	167,743	4,408	39,807	26,620	19,098	257,676

Accounting principles 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 as follows:

	Years
Land	unlimited
Buildings	10 – 50
Warehouse equipment	5 – 15
Manufacturing equipment	5 – 15
Furniture, fittings	5 – 10
IT equipment	3 – 10
Vehicles	3 – 10

Other property, plant and equipment consists of manufacturing equipment, IT equipment and vehicles.

When items of property, plant and equipment are sold or derecognised, gains are recognised in other income and losses in other operating costs.

16. Leases

Right-of-use assets

in thousand CHF	Real estate	Other right of-use assets	Total right-of-use assets
Net carrying amount as at 31.12.2022	226,489	196	226,685
Addition	22,104	139	22,243
Reassessment of existing lease contracts	31,297	5	31,302
Depreciation	–52,726	–118	–52,844
Impairment	–37	–	–37
Reversal of impairment	508	–	508
Addition to scope of consolidation	5,756	–	5,756
Disposal from scope of consolidation	–4,025	–	–4,025
Translation differences	–	–6	–6
Net carrying amount as at 31.12.2023	229,366	217	229,583
Addition	19,055	88	19,143
Reassessment of existing lease contracts	28,905	–7	28,898
Depreciation	–52,718	–117	–52,834
Impairment	–98	–	–98
Reversal of impairment	49	–	49
Addition to scope of consolidation	4,376	–	4,376
Translation differences	–	1	1
Net carrying amount as at 31.12.2024	228,936	182	229,118

Lease liabilities

in thousand CHF	2024	2023
Net carrying amount as at 1 January	236,041	233,178
Addition	19,143	22,243
Reassessment of existing lease contracts	28,902	31,299
Interest expense on lease liabilities	3,116	2,972
Repayment of lease liabilities (including interest)	–55,691	–55,173
Addition to scope of consolidation	4,376	5,756
Disposal from scope of consolidation	–	–4,228
Translation differences	1	–6
Net carrying amount as at 31 December	235,887	236,041
– of which current lease liabilities	52,693	50,484
– of which non-current lease liabilities	183,195	185,557

Leases recognised in profit or loss

in thousand CHF	2024	2023
Rental income from operating leases (included in other income)	551	1,690
Short-term lease expense (included in other operating costs)	–1,494	–1,282
Low-value lease expense (included in other operating costs)	–731	–51
Variable lease expense (included in other operating costs)	–4,339	–4,045
Depreciation of right-of-use assets	–52,834	–52,580
Impairment of right-of-use assets	–98	–37
Reversal of impairment of right-of-use assets	49	508
Interest expense on lease liabilities	–3,116	–2,951

The total cash outflow for leases including short-term leases, leases of low-value-assets and variable lease expenses was CHF 62.3 million (previous year: CHF 60.3 million).

Maturity profile of undiscounted lease liabilities

in thousand CHF	2024	2023
Up to 3 months	13,922	13,477
In 3 to 12 months	41,317	39,648
In 2 years	49,867	47,719
In 3 years	40,933	39,588
In 4 to 5 years	56,091	57,021
In 6 to 10 years	38,745	43,829
In more than 10 years	4,520	5,003
Total future cash flows from undiscounted lease liabilities	245,395	246,284

Possible future cash outflows related to extension options in an amount of CHF 213.8 million (previous year: CHF 192.6 million) are not included in lease liabilities because it is not reasonably certain that these options will be exercised.

The cash outflows for variable lease expenses in 2025 is expected to be similar to the amount recognised in 2024.

Galenica has entered into various lease contracts that have not yet commenced as at 31 December 2024. The future lease payments for these non-cancellable lease contracts amount to CHF 40.1 million (previous year: CHF 40.3 million).

Accounting principles leases

Galenica has lease contracts for furniture, vehicles and a large number of contracts for real estate, mainly store locations, which include fixed rental payments and variable sales-based components. The significant majority of these lease contracts concerns locations of the pharmacies in the operating segment Products & Care.

Galenica determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain at inception of the contract to be exercised. Galenica has the option, under some of its leases, to lease the assets for additional terms of several (three, five or more) years. Galenica applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. In doing so, Galenica considers all relevant factors including economic incentives. Galenica reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise, or not to exercise, the option to renew (e.g. a change in business strategy of the underlying asset).

Galenica uses the recognition exemptions for lease contracts that have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets).

17. Intangible assets

Intangible assets

in thousand CHF	Intangible assets with finite useful lives 1)	Trademarks with indefinite useful lives	Software	Goodwill	Total intangible assets
Net carrying amount as at 31.12.2022	10,422	82,720	92,267	914,703	1,100,112
Addition	508	–	32,191	–	32,699
Amortisation	–2,974	–	–12,783	–	–15,757
Addition to scope of consolidation	392	8,940	–	19,650	28,983
Disposal from scope of consolidation	–	–	–4,471	–63,046	–67,517
Translation differences	–16	–	–1	–	–17
Net carrying amount as at 31.12.2023	8,332	91,660	107,204	871,307	1,078,503
Addition	392	–	36,350	–	36,742
Disposal	–	–	–74	–	–74
Amortisation	–2,677	–	–16,824	–	–19,501
Addition to scope of consolidation	–	–	–	20,168	20,168
Translation differences	6	–	–	–	6
Net carrying amount as at 31.12.2024	6,054	91,660	126,656	891,475	1,115,844

Overview as at 31.12.2023
Cost	22,863	91,660	168,294	871,307	1,154,124
Accumulated amortisation and impairment	–14,530	–	–61,090	–	–75,620
Net carrying amount as at 31.12.2023	8,332	91,660	107,204	871,307	1,078,503

Overview as at 31.12.2024
Cost	23,260	91,660	202,484	891,475	1,208,879
Accumulated amortisation and impairment	–17,206	–	–75,829	–	–93,035
Net carrying amount as at 31.12.2024	6,054	91,660	126,656	891,475	1,115,844

1) Including trademarks, patents, licences and customer relationships

Trademarks with indefinite useful lives

This position includes trademarks that are well known nationally and internationally and actively advertised. These acquired trademarks are regarded as having indefinite useful lives for the following reasons: they were created many years ago, they do not expire, and the products sold under the trademarks have a history of strong revenue and cash flow performance. Galenica intends and has the ability to support the trademarks to maintain their values for the foreseeable future.

For impairment testing purposes the trademarks have been allocated to the cash-generating units Verfora, Padma and Spagyros in the operating segment Products & Care. The recoverable amount is determined on the basis of future discounted cash flows. Cash flows beyond the three-year planning period are based on the growth rates and discount rates before tax set out below, as approved in medium-term planning by management:

Trademarks with indefinite useful lives

in thousand CHF	2024	2023
Carrying amount	91,660	91,660
Growth rate	1.2%	1.0%
Pre-tax discount rate	7.2%	7.0%

According to the results of impairment testing for 2024 and 2023 using value in use calculations, no impairment was necessary. Galenica performed a sensitivity analysis taking into account reasonable changes in the assumptions used to calculate the discounted cash flows, such as higher discount rates, lower EBIT margins or lower perpetual growth rates. The sensitivity analysis for 2024 and 2023 did not reveal that a reasonable possible change in assumption would lead to an impairment.

Goodwill

		2024			2023
in thousand CHF	Carrying amount	Growth rate	Pre-tax discount rate	Carrying amount	Growth rate	Pre-tax discount rate
Products & Care	805,928	1.2%	7.2%	785,760	1.0%	7.1%
Logistics & IT	85,547	1.2%	7.2%	85,547	1.0%	7.1%
Total	891,475			871,307

According to the results of impairment testing for 2024 and 2023 using value in use calculations, no impairment was necessary. Galenica performed a sensitivity analysis taking into account reasonable changes in the assumptions used to calculate the discounted cash flows, such as higher discount rates, lower EBIT margins or lower perpetual growth rates. The sensitivity analysis for 2024 and 2023 did not reveal that a reasonable possible change in assumption would lead to an impairment.

Accounting principles intangible assets

Intangible assets include acquired trademarks, patents, licences, customer relationships, purchased or internally developed software and other assets without physical substance. These items are measured at cost less accumulated amortisation and impairment.

Expenditure on internally developed software is capitalised when the capitalisation criteria are met and future economic benefits from use or sale of the software are expected. Software that is not yet available for use is tested for impairment annually or more frequently if there are indications of impairment.

Amortisation is charged on a straight-line basis over the estimated economic or legal useful life, whichever is shorter as follows:

	Years
Trademarks, patents, licences, customer relationships	5 – 20
Software	2 – 15

The amortisation period and the amortisation method are reviewed at least at each financial year-end.

With the exception of trademarks in the business area Products & Brands, all intangible assets are assessed as having a finite useful life. Intangible assets with indefinite useful lives are not amortised but tested for impairment annually in the fourth quarter of the year, or more frequently if there are indications of impairment.

Goodwill is allocated to the cash-generating unit (CGU) or group of CGUs that are expected to benefit from a business combination. Management monitors goodwill at operating segment level.

Goodwill is tested for impairment annually in the fourth quarter of the year, or more frequently if there are indications of impairment. The impairment test is based on the discounted cash flow method. The WACC is used to determine the applicable pre-tax discount rate. The recoverable amount (higher of fair value less costs of disposal and value in use) of each CGU is determined on the basis of the medium-term plans for the next three years approved by management. Cash flows beyond the three-year planning period are extrapolated using a perpetual growth rate. If the recoverable amount is lower than the carrying amount, the carrying amount is reduced to the recoverable amount by recording an impairment charge.

18. Investments in associates and joint ventures

Investments in associates

in thousand CHF	2024	2023
Net carrying amount as at 1 January	112,969	3,108
Share of profit from associates	257	1,576
Remeasurement of net defined benefit plans from associates	405	–1,226
Investments	2,071	109,511 1)
Dividends received	–2,973	–
Net carrying amount as at 31 December	112,729	112,969

1) Including contribution of fair value of retained at equity investment in former subsidiary of CHF 106.0 million (refer to note 12, Discontinued operations)

Mediservice is the only significant associate of Galenica. Mediservice as specialty pharmacy offers a range of services for chronic and rare disease. Furthermore, Mediservice operates the pure online pharmacy Redcare-apotheke.ch and is registered in Zuchwil, Switzerland. Galenica owns 49% of the share capital and voting rights, Redcare Pharmacy N.V., Netherlands owns 51% of the share capital and voting rights.

Condensed financial information of Mediservice

in thousand CHF	2024	2023
Current assets	80,601	91,182
Non-current assets	200,737	202,811
Current liabilities	59,752	66,702
Non-current liabilities	7,269	9,432
Equity before appropriation of earnings	214,317	217,859
Operating income	471,376	295,665 1)
EBIT	1,655	4,526 1)
Net profit	1,632	4,011 1)
Remeasurement of net defined benefit plans recognised in other comprehensive income	826	-2,502 1)

1) Figures as from 16 May to 31 December 2023

The net carrying amount of the investment in Mediservice is CHF 105.0 million as at 31 December 2024 (previous year: CHF 106.8 million). Unrealised profits on inventory are not considered in these amounts.

Investments in joint ventures

in thousand CHF	2024	2023
Net carrying amount as at 1 January	31,016	29,574
Share of profit from joint ventures	5,951	5,263
Remeasurement of net defined benefit plans from joint ventures	95	–403
Investments	–	991
Dividends received	–4,704	–4,410
Net carrying amount as at 31 December	32,358	31,016

Coop Vitality is the only significant joint venture of Galenica. Coop Vitality is registered in Bern, Switzerland. Galenica owns 49% of the share capital and voting rights, Coop Cooperative owns 51% of the share capital and voting rights.

In case Coop Vitality was overindebted, Galenica has an unlimited obligation, in proportion to its equity interest, to restructure the company. At the reporting date, this joint venture is not overindebted.

Condensed financial information of Coop Vitality

in thousand CHF	2024	2023
Current assets	46,860	50,922
Non-current assets	104,643	101,604
– of which right-of-use assets	38,314	39,581
Current liabilities	51,101	53,720
– of which current lease liabilities	9,727	10,159
Non-current liabilities	35,487	37,128
– of which non-current lease liabilities	29,351	30,786
Equity before appropriation of earnings	64,915	61,678
Operating income	293,095	277,816
EBIT	16,324	14,625
Net profit	12,644	11,165
Remeasurement of net defined benefit plans recognised in other comprehensive income	194	–822

The net carrying amount of the investment in Coop Vitality is CHF 31.8 million as at 31 December 2024 (previous year: CHF 30.2 million). Unrealised profits on inventory are not considered in these amounts.

19. Financial assets

Financial assets

in thousand CHF	2024	2023
Loans	13,845	11,767
Rental deposits	5,248	4,954
Other financial assets	780	926
Loans and other financial assets	19,873	17,647
Equity instruments at fair value through profit or loss	2,515	2,536
Equity instruments at fair value through other comprehensive income	264,541	200,030
Financial assets	286,929	220,214

Accounting principles financial assets

Non-current financial assets comprise loans, time deposits with a term to maturity of more than twelve months, rental deposits, equity instruments and derivative financial instruments with a positive fair value and a residual term to maturity of more than twelve months. Other than the derivatives measured at fair value through profit or loss, the financial assets are held to collect contractual cash flows comprising solely principal and interest payments and are therefore measured at amortised cost subsequent to initial recognition. Any credit losses on financial assets recognised represent 12 month expected losses and are estimated based on the credit risk of the counterparty. Any impairment is recognised in financial expenses.

20. Financial liabilities

Financial liabilities

in thousand CHF	2024	2023
Bank loans	–	30,000
Loans	24,503	28,053
Mortgages	–	1,229
Liabilities to pension funds	14,365	10,708
Bonds	519,811	419,871
Contingent consideration liabilities from business combinations	30,907	41,507
Other financial liabilities	8,506	7,431
Financial liabilities	598,093	538,799
– of which current financial liabilities	58,385	70,231
– of which non-current financial liabilities	539,708	468,569

Bonds

in thousand CHF	ISIN	Nominal	Coupon	2024	2023
Straight Bond (15 June 2017 - 15 December 2026)	CH0367206700	180,000	1.00%	180,080	180,120
Straight Bond (8 May 2023 - 8 November 2029)	CH1255924453	240,000	2.35%	239,791	239,751
Straight Bond (30 April 2024 - 30 April 2031)	CH1331113634	100,000	1.65%	99,940	–
Bonds		520,000		519,811	419,871

Cash flow from financial liabilities and lease liabilities 2024

in thousand CHF	01.01.2024	Proceeds from financial liabilities	Repayment of financial liabilities	Addition to scope of consolidation	Other changes	31.12.2024
Bank loans	30,000	160,000	–190,000	–	–	–
Loans	28,053	1,150	–4,810	–	110	24,503
Mortgages	1,229	–	–1,229	–	–	–
Liabilities to pension funds	10,708	3,560	–	–	97	14,365
Private placement (notes)	–	45,000	–45,000	–	–	–
Bonds	419,871	99,934	–	–	6	519,811
Contingent consideration liabilities from business combinations	41,507	–	–	–	–10,600	30,907
Other financial liabilities	7,431	–	–	–	1,075	8,506
Financial liabilities	538,799	309,645	–241,039	–	–9,312	598,093
Lease liabilities	236,041	–	–52,576	4,376	48,046	235,887
Financial liabilities and lease liabilities	774,841	309,645	–293,615	4,376	38,733	833,980

Cash flow from financial liabilities and lease liabilities 2023

in thousand CHF	01.01.2023	Proceeds from financial liabilities	Repayment of financial liabilities	Addition to scope of consolidation	Disposal from scope of consolidation	Other changes	31.12.2023
Bank loans	–	60,000	–30,000	–	–	–	30,000
Loans	6,320	22,320	–653	–	–	66	28,053
Mortgages	1,241	–	–12	–	–	–	1,229
Liabilities to pension funds	12,099	5	–1,900	–	–	504	10,708
Private placement (notes)	–	55,000	–55,000	–	–	–	–
Bonds	380,194	239,726	–200,000	–	–	–48	419,871
Contingent consideration liabilities from business combinations	49,180	–	–	–	–	–7,672	41,507
Other financial liabilities	4,279	–	–	–	–	3,152	7,431
Financial liabilities	453,312	377,051	–287,565	–	–	–3,998	538,799
Lease liabilities	233,178	–	–52,201	5,756	–4,228	53,536	236,041
Financial liabilities and lease liabilities	686,490	377,051	–339,766	5,756	–4,228	49,538	774,841

21. Trade and other payables

Trade and other payables

in thousand CHF	2024	2023
Trade payables	418,274	384,774
Contract liabilities	10,381	9,500
Other payables	26,693	23,168
Trade and other payables	455,348	417,442

Contract liabilities are generally recognised in revenue within 12 months.

22. Provisions

Provisions

in thousand CHF	2024	2023
1 January	5,558	4,684
Addition	654	4,136
Use	–760	–2,304
Reversal	–372	–1,702
Addition to scope of consolidation	176	745
31 December	5,256	5,558
– of which current provisions	4,983	4,880
– of which non-current provisions	273	678

Provisions are recognised for the estimated cost on damage, contractual liabilities, customer complaints, litigation risk and ongoing legal proceedings.

23. Contingent liabilities and commitments

Galenica is subject to a variety of risks. These risks include, but are not limited to, risks regarding product liability, patent law, tax law, competition laws and anti-trust laws. A number of Group companies are currently involved in administrative proceedings, legal disputes and investigations relating to their business activities. The results of ongoing proceedings cannot be predicted with certainty. Management has established appropriate provisions for any expenses likely to be incurred. These projections, however, are also subject to uncertainty. Galenica does not expect the results of these proceedings to have a significant impact on the financial statements.

Galenica entered into various obligations regarding the purchase of services, goods, and equipment as part of its ordinary business operations.

Galenica has signed purchase agreements to acquire pharmacies in the next few months. The purchase prices will be fixed at the time of transfer of ownership, based on net asset value and discounted cash flows or a multiple analysis. The total purchase consideration is estimated at CHF 16.0 million and is due upon the closing of the transactions. These purchase rights or obligations fall due in 2025.

Galenica signed purchase agreements to acquire property, plant and equipment and intangible assets totalling CHF 15.9 million (previous year: CHF 17.3 million). The payments under these purchase commitments become due in 2025.

Furthermore, there are guarantees of CHF 12.4 million (previous year: CHF 6.8 million) and subordinated loans of CHF 1.1 million (previous year: CHF 0.9 million) to third parties.

There are no unusual pending transactions or risks to be disclosed.

24. Employee benefit plans

The vast majority of the Galenica employees work in Switzerland and participate in the Galenica Pension Fund, which is financed by the employers and the employees. This plan is legally separate from Galenica and qualifies as a defined benefit plan. The pension plan covers the risks of the economic consequences of old age, disability and death in accordance with the Swiss Federal Occupational Retirement, Survivors and Disability Pension Plans Act (BVG/LPP). The pension plan is structured in the legal form of a foundation. All actuarial risks are borne by the foundation and regularly assessed by the Board of Trustees based on an annual actuarial appraisal prepared in accordance with BVG/LPP. The company's liabilities are limited to contributions that are based on a percentage of the insured salary under the Swiss law. Only in cases of a funded status that is significantly below a funded status of 100% as per the BVG/LPP law can Galenica be required to pay additional contributions. The calculations made in these appraisals do not apply the projected unit credit method required by IFRS Accounting Standards. If the calculations made in accordance with the provisions of BVG/LPP reveal a funded status of less than 100%, suitable restructuring measures need to be introduced. The Board of Trustees consists of employee and employer representatives.

The defined benefit plan is funded. Plan assets are managed separately from Galenica's assets by the independent pension fund.

The most recent actuarial valuation was prepared as at 31 December 2024. The pension fund assets are invested in accordance with local investment guidelines. Galenica pays its contributions to the pension fund in accordance with the regulations defined by the fund.

The final funded status pursuant to BVG/LPP is not available until the first quarter of the subsequent year. The projected funded status as at 31 December 2024 for Galenica Pension Fund is 117.6% (unaudited) and as at 31 December 2023 108.3% (final).

Defined benefit plans and long-service awards

			2024			2023
in thousand CHF	Defined benefit plans	Long-service awards 1)	Total	Defined benefit plans	Long-service awards 1)	Total
Plan assets measured at fair value	1,228,826	–	1,228,826	1,101,802	–	1,101,802
Present value of defined benefit obligation	–1,188,654	–13,680	–1,202,334	–1,079,958	–14,290	–1,094,248
Surplus / (deficit)	40,172	–13,680	26,492	21,844	–14,290	7,554
Effect of asset ceiling	–44,022	–	–44,022	–6,346	–	–6,346
Net carrying amount recognised in employee benefit assets / liabilities	–3,850	–13,680	–17,530	15,498	–14,290	1,208
of which recognised in assets	–	–	–	20,429	–	20,429
of which recognised in liabilities	–3,850	–13,680	–17,530	–4,931	–14,290	–19,221

1) Long-service awards relate to provisions for jubilee payments

Change in present value of defined benefit obligation

			2024			2023
in thousand CHF	Defined benefit plans	Long-service awards	Total	Defined benefit plans	Long-service awards	Total
1 January	–1,079,958	–14,290	–1,094,248	–975,824	–14,988	–990,812
Current service cost	–32,761	–1,756	–34,517	–25,896	–1,633	–27,529
Past service cost	–95	–	–95	–112	–	–112
Interest on defined benefit obligation	–14,752	–184	–14,937	–19,768	–297	–20,066
Actuarial gain/(loss)	–55,377	1,023	–54,354	–68,933	889	–68,044
Employee contributions	–22,027	–	–22,027	–20,962	–	–20,962
Benefits/awards paid	16,315	1,527	17,842	8,740	1,500	10,240
Change in scope of consolidation	–	–	–	22,797	240	23,037
31 December	–1,188,654	–13,680	–1,202,334	–1,079,958	–14,290	–1,094,248

Change in fair value of plan assets

in thousand CHF	2024	2023
1 January	1,101,802	1,044,124
Interest on plan assets	15,423	21,712
Remeasurement gain/(loss)	73,340	17,104
Employee contributions	22,027	20,962
Employer contributions	33,586	31,634
Net benefits paid	–16,315	–8,740
Administration cost	–1,036	–1,051
Change in scope of consolidation	–	–23,943
31 December	1,228,826	1,101,802

Net defined benefit cost

in thousand CHF	2024	2023
Current service cost	32,761	25,896
Past service cost	95	112
Net interest on net defined benefit liability	–582	–430
Administration cost	1,036	1,051
Net defined benefit cost	33,310	26,628 1)

1) Of which continuing operations of CHF 26.3 million

Remeasurement of net defined benefit assets / liabilities

in thousand CHF	2024	2023
Actuarial gain/(loss) due to:
– Changes in demographic assumptions	24,399	–
– Changes in financial assumptions	–54,261	–91,366
– Experience adjustments	–25,515	22,433
Remeasurement of plan assets	73,340	17,104
Effect in the change of asset ceiling	–37,587	64,341
Remeasurement of net defined benefit assets / liabilities recognised in other comprehensive income 1)	–19,624	12,512 1)

1) Of which continuing operations of CHF 12.6 million)

Change in assumption and in estimate

During 2024, Galenica conducted a review of actuarial valuation parameters, including employee turnover rates. Considering actual historical patterns with turnover rates at approximate 120% of BVG 2020 tables in the retail business (previous year: 100% of BVG 2020) and 110% of BVG 2020 tables in the non-retail business (previous year: 60% of BVG 2020). This resulted in an decrease of the defined benefit obligation of CHF 24.4 million, which was recognised in other comprehensive income.

The experience adjustments of minus CHF 25.5 million (previous year: CHF 22.4 million) were the result of various elements not expected in the prior year mainly the additional interest rate in 2024 on the defined benefit plans, additional onetime pension payments and the overall development of the population and other items as calculated by the external actuary.

The decrease of the discount rate from 1.40% to 0.95% (previous year: decrease from 2.10% to 1.40%) resulted in a increase of the defined benefit obligation of CHF 54.3 million (previous year: increase of CHF 91.4 million).

Asset ceiling

in thousand CHF	2024	2023
1 January	–6,346	–69,941
Interest income	–89	–1,514
Change in the asset ceiling (recognised in other comprehensive income)	–37,587	64,341
Change in scope of consolidation	–	768
31 December	–44,022	–6,346

Investment structure of plan assets

in thousand CHF		2024		2023
Cash and cash equivalents	9,514	0.8%	4,726	0.4%
Debt instruments	269,158	21.9%	246,256	22.4%
Equity instruments	524,226	42.7%	453,405	41.2%
Real estate	276,572	22.5%	258,636	23.5%
Other investments	149,356	12.2%	138,779	12.6%
Fair value of plan assets	1,228,826	100.0%	1,101,802	100.0%
Current return on plan assets		8.1%		3.8%

The Board of Trustees is responsible for investing the plan assets. It defines the investment strategy and determines the long-term target asset structure (investment policy), taking into account the legal requirements, objectives set, the benefit obligations and the foundations' risk capacity. The Board of Trustees delegates implementation of the investment policy in accordance with the investment strategy to an investment committee, which also comprises trustees from the Board of Trustees and a general manager. Plan assets are managed by external asset managers in line with the investment strategy.

Cash and cash equivalents are deposited with financial institutions with a credit rating of A or above.

Debt instruments (e.g. bonds) have a credit rating of at least BBB and quoted prices in active markets (level 1 of the fair value hierarchy). They can be investments in funds and direct investments.

Equity instruments are investments in equity funds. These generally have quoted prices in active markets (level 1 of the fair value hierarchy).

Real estate relates to both residential property and offices. These can be investments in quoted real estate funds (level 1 of the fair value hierarchy) or direct investments (level 3 of the fair value hierarchy). If real estate is held directly, it is valued by an independent expert.

Other investments consist of hedge funds, insurance linked securities (ILS), infrastructures, senior loans, private equity and receivables. There are receivables from Group companies amounted to CHF 12.9 million (previous year: CHF 9.7 million). Investments in hedge funds are classified as alternative investments. They are primarily used for risk management purposes. In most cases, quoted prices in an active market are not available for hedge funds investments (level 2 or level 3 of the fair value hierarchy).

The use of derivative financial instruments is only permitted if sufficient liquidity or underlying investments are available. Leverage and short selling are not permitted.

The pension funds manage the assets of 5,900 active members (previous year: 5,829) and 1,036 pensioners (previous year: 993).

Galenica does not use any pension fund assets.

Basis for measurement

	2024	2023
Discount rate	0.95%	1.40%
Salary development	2.10%	2.25%
Pension development	0.00%	0.00%
Mortality (mortality tables)	BVG 2020 GT (CMI), 1.5%	BVG 2020 GT (CMI), 1.5%
Turnover	BVG 2020 (110% –120%)	BVG 2020 (60% –100%)

Sensitivity analysis

The discount rate, future salary development and mortality were identified as key actuarial assumptions. Changes in these assumptions would affect the defined benefit obligation (DBO) as follows:

Sensitivity analysis

		2024		2023
in thousand CHF	Variations in assumptions	Impact on DBO	Variations in assumptions	Impact on DBO
Discount rate	+0.25%	–36,871	+0.25%	–35,639
	-0.25%	39,257	-0.25%	37,808
Salary development	+0.25%	3,581	+0.25%	3,221
	-0.25%	–2,400	-0.25%	–3,221
Mortality	+1 year	30,837	+1 year	27,849
	-1 year	–30,837	-1 year	–27,868

The sensitivity analysis assumes potential changes in the above parameters as at year end. Every change in a key actuarial assumption is analysed separately. Interdependencies were not taken into account.

The pension obligations have an average duration of 14.7 years (previous year: 15.7 years).

Cash outflows for pension payments and other obligations can be budgeted reliably. The benefit plans collect regular contribution payments. Furthermore, the investment strategies safeguard liquidity at all times.

The employer contributions to the pension fund are estimated at CHF 34.0 million for 2025.

25. Shareholders' equity

25.1 Share capital and number of shares

Galenica has fully paid-up share capital of CHF 5,000,000, divided into 50,000,000 publicly listed shares with a par value of CHF 0.10 each, as at the reporting date. All shares have the same capital rights with the exception of the treasury shares which do not generate any dividends. Voting rights and restrictions on voting rights are described in detail in Galenica's Annual Report 2024 in the chapter Corporate Governance (unaudited).

Number of shares

	Total shares Galenica Ltd.	Treasury shares	Outstanding shares
Balance as at 31.12.2022	50,000,000	–183,740	49,816,260
Transactions with treasury shares	–	15,920	15,920
Balance as at 31.12.2023	50,000,000	–167,820	49,832,180
Transactions with treasury shares	–	–5,159	–5,159
Balance as at 31.12.2024	50,000,000	–172,979	49,827,021

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

25.2 Changes in consolidated shareholder's equity

On 10 April 2024, the Annual General Meeting approved a dividend payment of CHF 109.7 million for the financial year 2023 (previous year: CHF 109.8 million), corresponding to CHF 2.20 per registered share (previous year: CHF 2.20). For this purpose, CHF 1.10 was taken from the reserves from capital contributions (previous year: CHF 1.10) and CHF 1.10 from retained earnings (previous year: CHF 1.10) of Galenica Ltd. The dividend was paid out to the shareholders on 16 April 2024.

In the reporting period, 131,964 treasury shares (previous year: 156,148 treasury shares) were bought at an average price of CHF 73.53 (previous year: CHF 70.51) and 126,805 treasury shares (previous year: 172,068 treasury shares) were issued as share-based payments.

The expense for share-based payment transactions, allocated over the vesting period, has been recognised in personnel costs and accrued in consolidated shareholders' equity.

The acquisition of non-controlling interests reduced consolidated shareholders' equity by CHF 0.5 million (previous year: less than CHF 0.1 million). Remaining Shareholders of an acquisition made in 2022 have a put option to sell their shares to Galenica which gives rise to a financial liability. The changes in the carrying amount of this financial liability reduced consolidated shareholder’s equity by CHF 1.2 million (previous year: CHF 0.3 million).

The Board of Directors will submit a proposal to the Annual General Meeting on 10 April 2025 to pay a dividend of CHF 2.30 per share entitled to receive dividend for the financial year 2024. For this purpose, CHF 1.15 is to be taken from the reserves from capital contributions and CHF 1.15 from the retained earnings. However, no dividend will be paid on treasury shares. Based on the number of treasury shares as at 31 December 2024, the total dividend would amount to CHF 114.6 million.

26. Financial instruments

26.1 Categories of financial instruments

Carrying amounts of financial instruments 2024

in thousand CHF	Financial assets at amortised costs	Financial assets at fair value through OCI	Financial liabilities at fair value through profit or loss	Financial liabilities at amortised costs	Total
Cash and cash equivalents	129,682	–	–	–	129,682
Trade and other receivables	499,999	–	–	–	499,999
Financial assets	22,388 1)	264,541	–	–	286,929
Current financial liabilities	–	–	18,500	39,885	58,385
Current lease liabilities	–	–	–	52,693	52,693
Trade and other payables	–	–	–	444,967	444,967
Non-current financial liabilities	–	–	12,407	527,300 2)	539,708
Non-current lease liabilities	–	–	–	183,195	183,195
Total	652,069	264,541	30,907	1,248,039

1) Of which CHF 2.5 million are in connection to equity instruments which are designated as financial asset at fair value through profit or loss

2) Of which CHF 5.5 million are in connection to put options for non-controlling interests. Changes in the liability amount are recognised in equity

Carrying amounts of financial instruments 2023

in thousand CHF	Financial assets at amortised costs	Financial assets at fair value through OCI	Financial liabilities at fair value through profit or loss	Financial liabilities at amortised costs	Total
Cash and cash equivalents	116,159	–	–	–	116,159
Trade and other receivables	518,293	–	–	–	518,293
Financial assets	20,183 1)	200,030	–	–	220,214
Current financial liabilities	–	–	–	70,231	70,231
Current lease liabilities	–	–	–	50,484	50,484
Trade and other payables	–	–	–	407,943	407,943
Non-current financial liabilities	–	–	41,507	427,061 2)	468,569
Non-current lease liabilities	–	–	–	185,557	185,557
Total	654,635	200,030	41,507	1,141,276

1) Of which CHF 2.5 million are in connection to equity instruments which are designated as financial asset at fair value through profit or loss

2) Of which CHF 4.3 million are in connection to put options for non-controlling interests. Changes in the liability amount are recognised in equity

Net gain/(loss) on financial instruments 2024

in thousand CHF	Financial assets at amortised costs	Financial assets at fair value through OCI	Financial liabilities at fair value through profit or loss	Financial liabilities at amortised costs	Total
Change in fair value	–	–	10,600	–	10,600
Net gain/(loss) on foreign exchange	357	–	–	69	425
Other financial result	337	–	–	–42	295
Interest income	1,407	–	–	–	1,407
Interest expense	–	–	–	–9,538	–9,538
Interest expense on lease liabilities	–	–	–	–3,116	–3,116
Interest income on impaired trade receivables	212	–	–	–	212
Expected credit losses	337	–	–	–	337
Impairment on financial assets	–452	–	–	–	–452
Net gain/(loss) recognised in profit or loss	2,198	–	10,600	–12,628	170
Net gain/(loss) recognised in other comprehensive income 1)	–	2,408	–	–	2,408

1) Other comprehensive income includes changes in value of strategic investments (publicly and non-publicly traded equity instruments)

Net gain/(loss) on financial instruments 2023

in thousand CHF	Financial assets at amortised costs	Financial assets at fair value through OCI	Financial liabilities at fair value through profit or loss	Financial liabilities at amortised costs	Total
Change in fair value	-2,900 1)	–	10,057	–	7,157
Net gain/(loss) on foreign exchange	137	–	–	–526	–388
Other financial result	76	–	–	–94	–18
Interest income	1,418	–	–	–	1,418
Interest expense	–	–	–	–6,515	–6,515
Interest expense on lease liabilities	–	–	–	–2,951	–2,951
Interest income on impaired trade receivables	331	–	–	–	331
Expected credit losses	–7,124	–	–	–	–7,124
Impairment on financial assets	–3,349	–	–	–	–3,349
Net gain/(loss) recognised in profit or loss	–11,410	–	10,057	–10,086	–11,439
Net gain/(loss) recognised in other comprehensive income 2)	–	55,530	–	–	55,530

1) Related to equity instruments which are designated as financial asset at fair value through profit or loss

2) Other comprehensive income includes changes in value of strategic investments (publicly and non-publicly traded equity instruments)

Accounting principles financial instruments (measurement and categories)

Galenica distinguishes between the following types of financial assets and financial liabilities:

Financial assets at amortised cost

This category includes trade and other receivables as well as loans and other financial assets such as rental deposits. These financial assets are subsequently measured at amortised cost using the effective interest rate method less expected credit losses. Galenica uses the simplified approach to determine its bad debt allowances for trade receivables using lifetime expected credit losses. Expenses for expected credit losses comprise the change in bad debt allowance and receivables directly written off.

Uncollectible loans and receivables are only derecognised if a certificate of loss has been issued.

Financial assets at fair value through other comprehensive income

Financial assets measured at fair value through other comprehensive income includes equity instruments which were irrevocably classified to be strategic in nature.

Financial liabilities at fair value through profit or loss

Financial liabilities classified as at fair value through profit or loss correspond to contingent consideration liabilities from business combinations.

Financial liabilities at amortised costs

Financial liabilities mainly comprise trade and other payables as well as financial liabilities and bonds and are measured at amortised cost using the effective interest rate method.

Put options granted to non-controlling interests to sell their shares to Galenica as part of a business combination represent a contractual obligation to purchase non-controlling interests and give rise to a financial liability if the option does not provide Galenica with a present ownership interest in the shares concerned. This liability is measured at the redemption amount as if the put option had been exercised at the balance sheet date. Galenica accounts for changes in the carrying amount of this financial liability as an equity transaction.

26.2 Fair value measurement

Fair value

		2024		2023
in thousand CHF	Carrying amount	Fair value	Carrying amount	Fair value
Bond (level 1 of the fair value hierarchy)	519,811	541,600	419,871	427,050

With the exception of the bond the carrying amounts of all financial instruments approximate to their fair value or fair value disclosure is not required (lease liabilities).

As at 31 December 2024 Galenica holds equity instruments designated at fair value through other comprehensive income including a 10.3% (previous year: 7.9%) investment in the listed (level 1 of the fair value hierarchy) company Redcare Pharmacy N.V., Netherlands, with a fair value of CHF 261.4 million (previous year: CHF 196.1 million) and other investment in non-listed (level 3 of the fair value hierarchy) companies with a fair value of CHF 3.2 million (previous Year: CHF 3.9 million). These investments were irrevocably designated at fair value through other comprehensive income as Galenica considers these investments to be strategic in nature. Galenica recognised in the consolidated statement of comprehensive income a remeasurement gain of CHF 2.4 million (previous year: gain of CHF 55.5 million).

Fair value of financial instruments (level 3 of the fair value hierarchy)

Fair value of contingent consideration liabilities from business combinations (level 3 of the fair value hierarchy)

in thousand CHF	2024	2023
1 January	41,507	49,180
Arising from business combinations	–	2,385
Change in fair value (recognised in profit or loss)	–10,600	–10,057
31 December	30,907	41,507

Fair value changes of contingent consideration liabilities from business combinations are recognised in profit or loss (financial result) for the relevant reporting period.

Fair value of equity instruments designated at fair value through other comprehensive income (level 3 of the fair value hierarchy)

in thousand CHF	2024	2023
1 January	3,928	4,561
Addition	935	1,950
Change in fair value (recognised in other comprehensive income)	–1,682	–2,583
31 December	3,181	3,928

Fair value and sensitivity analysis of contingent consideration liabilities from discontinued operations

Determining the contingent consideration liability in connection with the sale of Mediservice forecasted gross margin of the discontinued operation were identified as key assumptions. Galenica has recorded the amount of CHF 3.0 million (previous year: CHF 2.9 million) as other liability based on the expected future gross margin for the years 2024-2026. The future cash outflows range between zero and CHF 3.1 million.

Further information of the discontinued operation can be found in note 12, Discontinued operations.

Sensitivity analysis of contingent consideration liabilities from business combinations (level 3 of the fair value hierarchy)

in thousand CHF	Lifestage Solutions	Bahnhof Apotheke Langnau	Aquantic	Padma
Fair value of contingent considerations as at 31.12.2024	9,500	13,914	3,571	3,922
Minimal payout		–	–	–
Maximal payout		29,000	5,450	4,000
Key assumption		forecasted net sales 1)	forecasted EBITDA 1)	forecasted sell out prices 1)
Year of relevance		2026+2027	2025+2026	2025
Sensitivity analysis
Impact on fair value by 5% increase of key assumption	–	–	403	–
Impact on fair value by 5% decrease of key assumption	–	–4,914	–403	–993

1) of the acquired business

The contingent consideration liability from the business combination of Lifestage Solutions Ltd. was settled on 31 January 2025 for an amount of CHF 9.5 million.

27. Financial risk management

Galenica is exposed to various financial risks and liquidity requirements. Galenica's financing and financial risk management activities are centralised in Group Treasury, which manages financial exposures of Galenica on account of changes in interest rates, currency risks, credit risks and liquidity in a manner that is consistent with underlying business risks and in line with the treasury policy approved by the Board of Directors as well as internal guidelines on cash and liability management. In addition, capital management of Galenica is also mainly exercised and monitored at Group level.

It is Galenica's policy not to enter into any speculative financial arrangements and to ensure matching maturities. Together, the risk management and monitoring measures described below are designed to limit negative impact on the financial statements.

27.1 Liquidity risk

Liquidity risk management

The aim of liquidity risk management is to provide sufficient cash to meet Galenica's financial liabilities on time while maintaining the flexibility to take advantage of market opportunities and optimum investment conditions. Group Treasury is responsible for raising current and non-current loans as well as for decisions on investments. Apart from financing operations, Galenica's credit standing enables it to borrow funds at an advantageous rate. To ensure that Galenica can meet its payment obligations in good time, liquidity is monitored centrally. Group Treasury monitors the cash flows using rolling liquidity planning. This takes into account the maturities of the financial instruments as well as the cash flows from operating activities.

Maturity profile of financial liabilities 2024

in thousand CHF	Carrying amount	Total undiscounted cash flows	up to 3 months	3 to 12 months	1 to 5 years	Maturities more than 5 years
Trade and other payables	444,967	444,967	444,967	–	–	–
Current financial liabilities	58,385	58,388	56,068	2,320	–	–
Current lease liabilities	52,693	55,239	13,922	41,317	–	–
Non-current financial liabilities	19,896	20,154	–	–	20,154	–
Bonds	519,811	563,350	–	9,090	452,610	101,650
Non-current lease liabilities	183,195	190,156	–	–	146,891	43,265
Total	1,278,946	1,332,254	514,956	52,728	619,655	144,915

Maturity profile of financial liabilities 2023

in thousand CHF	Carrying amount	Total undiscounted cash flows	up to 3 months	3 to 12 months	1 to 5 years	Maturities more than 5 years
Trade and other payables	407,943	407,943	407,943	–	–	–
Current financial liabilities	70,231	70,231	68,090	2,141	–	–
Current lease liabilities	50,484	53,125	13,477	39,648	–	–
Non-current financial liabilities	48,697	50,336	–	–	50,336	–
Bonds	419,871	459,240	–	7,440	206,160	245,640
Non-current lease liabilities	185,557	193,159	–	–	144,328	48,831
Total	1,182,783	1,234,034	489,510	49,229	400,824	294,471

27.2 Credit risk

Credit risk management

Credit risk arise when a customer or a third party fails to meet its contractual obligations and causes Galenica a financial loss. Credit risk are minimised and monitored by restricting business relations to known, reliable partners.

Corporate policy ensures that credit checks are performed for customers who are supplied on credit. Trade receivables are subject to active risk management procedures. They are continually monitored and credit risk is reviewed in the process of reporting to management. Allowances for expected credit losses are made in accordance with uniform guidelines on the measurement of outstanding receivables.

In addition, credit risk arise in relation to financial assets, comprising cash and cash equivalents, securities and loans. The creditworthiness of the counterparties is regularly monitored and reported to management.

Financial assets subject to credit risk

in thousand CHF	2024	2023
Cash and cash equivalents (without cash on hand)	128,055	114,566
Trade and other receivables	499,999	518,293
Loans and other financial assets	19,873	17,647
Financial assets subject to credit risk	647,927	650,506

The financial assets subject to credit risk are primarily receivables.

Galenica applies internal risk management guidelines to identify concentrations of credit risk.

Galenica's financial assets are not exposed to a concentration of credit risk.

Trade receivables past due are analysed on an ongoing basis. These receivables are accounted for using individual bad debt allowances, adjusted for forward-looking factors specific to the debtors and the economic environment. Based on past experience, Galenica considers the creditworthiness of non-past due trade receivables to be good.

28. Capital management

The capital of Galenica is managed and monitored at Group level. The objective of capital management at Galenica is to ensure the continuity of operations, increase enterprise value on a sustainable basis, provide an adequate return to investors, provide the financial resources to enable investments in areas that deliver future benefits for patients and customers and further returns to investors.

Galenica defines the capital that it manages as invested interest-bearing liabilities and equity. Galenica uses a system of financial control based on various key performance indicators. Capital is monitored based on the gearing, for example, which expresses net debt as a percentage of shareholders' equity including non-controlling interests and is communicated regularly to management as part of internal reporting.

Net debt, shareholders' equity and gearing are shown in the table below.

Net debt, shareholder's equity and gearing

in thousand CHF	2024	2023
Current financial liabilities 1)	38,868	69,990
Current lease liabilities	52,693	50,484
Non-current financial liabilities 1)	519,811	419,871
Non-current lease liabilities	183,195	185,557
Cash and cash equivalents	–129,682	–116,159
Interest-bearing receivables	–4,899	–11,607
Net debt	659,986	598,137

Equity attributable to shareholders of Galenica Ltd.	1,548,694	1,471,419
Non-controlling interests	3,150	3,777
Shareholders' equity	1,551,844	1,475,196

Gearing	42.5%	40.5%

1) Excluding non-interest-bearing financial liabilities

Galenica has no covenants requiring a minimum level of equity, nor is Galenica subject to any externally regulated capital requirements as seen in the financial services sector.

29. Share-based payments

Remuneration for members of the Board of Directors

The members of the Board of Directors receive fixed annual remuneration and can choose whether to receive it in full or in part (50%) in shares of Galenica Ltd. The amount settled in shares is paid out with a discount of 25%. The shares may not be traded for the first five years.

The fair value of the shares granted is equivalent to the amount to be paid out in shares plus the discount of 25%.

Share plan for members of senior management

According to the participation plan, members of senior management receive their performance-related bonus partly in cash and partly in shares of Galenica Ltd. The proportion of cash to shares is set out in the regulations and is based on the salary grade of the recipient. In addition, all members of senior management are obliged to hold a number of shares of Galenica. The amount to be settled in shares is paid out in the form of shares of Galenica Ltd. with a discount of 25%. The shares may not be traded for the first five years.

The fair value of the shares granted is equivalent to the amount to be paid out in shares plus the discount of 25%.

Long-term incentive plan (LTI)

Members of the Corporate Executive Committee of Galenica and certain members of senior management participate in a LTI plan for the allocation of performance share units. The number of these performance share units is based on the extent to which defined long-term performance targets such as the Galenica Economic Profit and the relative total shareholders return (TSR) are attained. TSR is measured as a percentile ranking against a peer group of relevant companies. A LTI plan always runs for a vesting period of three years. At the beginning of each financial year a new LTI plan with a new vesting period of three years is issued. At the start of the vesting period a defined number of performance share units are individually allocated. The number of performance share units allocated is dependent on the defined percentage of the annual salary incorporated into the LTI plan as well as the effective share price at the time of the allocation. At the end of the vesting period performance share units are paid out to eligible beneficiaries in the form of shares of Galenica Ltd.

16,780 performance share units (previous year: 17,607 performance share units) were granted to beneficiaries at a fair value of CHF 69.05 (previous year: CHF 65.95) at the beginning of the reporting period for the 2024 LTI plan.

Employee share plan

Employees of Galenica are entitled to buy a fixed number of shares of Galenica Ltd. at a preferential price. All employees who, at the time of the purchase offer, are not under notice and have an employment contract of unlimited duration are entitled to acquire shares.

The purchase price for the shares is calculated at the time of the purchase offer based on the average price for the previous month less a 30% discount. The price discount is borne by the employer. The shares may not be traded for the first three years.

In the reporting period, employees purchased 65,248 shares of Galenica Ltd. (previous year: 80,252 shares) at a price of CHF 52.70 (previous year: CHF 49.65). This includes a discount of CHF 23.00 (previous year: CHF 21.29) per share.

Share-based payment expense

in thousand CHF	2024	2023
Remuneration for members of the Board of Directors	1,387	1,013
Share plan for members of senior management	2,040	904
Long-term incentive plan (LTI)	1,036	692
Employee share plan	1,501	1,709
Total	5,963	4,318

30. Related party transactions

Related parties include all joint ventures, associates, pension funds, members of the Board of Directors and members of the Corporate Executive Committee.

Related party transactions

The transactions shown in the table below under joint ventures largely concern transactions with Coop Vitality and those under associates mainly concern transactions with Mediservice. All transactions are realised at market-based prices. The invoice payment for the sale of goods and services are due within 30 days and is payable in CHF.

Related party transactions

		2024		2023
in thousand CHF	Joint ventures	Associates	Joint ventures	Associates
Sale of goods	181,119	25,581	169,947	11,787
Income from services	7,589	1,560	8,087	1,712
Other income	18	–	17	–
Purchase of goods	283	9	216	13
Other operating costs	25	9,519	–	26
Financial income	249	1	247	34
Financial expenses	71	187	26	108

Receivables and loans	22,069	14,977	22,835	20,607
Trade payables and loans	5,863	20,357	7,320	21,280

The financial liabilities to pension funds amounted to CHF 14.3 million (previous year: CHF 10.7 million).

Remuneration of the Board of Directors and the Corporate Executive Committee

in thousand CHF	2024	2023
Remuneration	4,226	3,343
Social security costs and pension expenses	1,102	970
Share-based payments	2,184	1,686
Total	7,512	5,999

31. Subsequent events

The following transactions occurred between 31 December 2024 and 5 March 2025, the date on which the consolidated financial statements 2024 were released for publication.

Acquisition of pharmacies. Galenica acquired 100% of the interests in pharmacies at various locations in Switzerland.

The purchase consideration was CHF 9.6 million, and the fair value of the provisional net assets resulting from these additions was estimated at CHF 2.2 million at the acquisition date. Since the transactions were concluded shortly before the consolidated financial statements were issued, no further information was available to disclose the additional information required by IFRS Accounting Standards.

Furthermore Galenica signed purchase agreements after 31 December 2024 to acquire 100% of the interests in pharmacies at various locations in Switzerland. The net assets of these acquisitions will be consolidated beginning from the date control is obtained, which will be after 5 March 2025. The total purchase considerations are estimated to CHF 0.4 million and are due with the closing of the transactions. Since the transactions have not yet been concluded, it is not possible to disclose the additional information required by IFRS Accounting Standards.

There were no further significant events after the reporting date.

32. Group companies

Group companies Products & Care

					2024	2023
Group companies	Registered office	Method of consolidation	Currency	Share capital in thousand	Equity interest	Equity interest
Products & Care
Amavita Health Care Ltd.	CH-Niederbipp	full	CHF	100	100%	100%
Bahnhof Apotheke Langnau AG	CH-Langnau im Emmental	full	CHF	100	100%	100%
Bahnhof Apotheken Thun AG	CH-Thun	full	CHF	200	50%	50%
Bichsel AG 2)	CH-Bern	-	-	-	-	100%
Bichsel AG 1) 3)	CH-Interlaken	full	CHF	100	100%	100%
Coop Vitality AG	CH-Bern	at equity	CHF	5,000	49%	49%
Coop Vitality Health Care GmbH 1)	CH-Niederbipp	at equity	CHF	20	49%	49%
Coop Vitality Management AG	CH-Bern	at equity	CHF	100	49%	49%
curarex swiss AG 1)	CH-Zuchwil	at equity	CHF	100	49%	49%
Dr. A.&L. Schmidgall GmbH & Co KG 1)	AT-Vienna	full	EUR	145	100%	100%
Emeda Ltd.	CH-Wangen-Brüttisellen	at equity	CHF	200	50%	50%
FARMACIA CHIASSESE FARMADOMO SA 1)	CH-Chiasso	at equity	CHF	100	33%	-
Farmadomo Home Care Provider SA	CH-Bellinzona	at equity	CHF	100	33%	-
GaleniCare Ltd.	CH-Bern	full	CHF	700	100%	100%
GaleniCare Management Ltd.	CH-Bern	full	CHF	500	100%	100%
G-Pharma AG	CH-Niederbipp	full	CHF	100	100%	100%
Grosse Apotheke Dr. G. Bichsel AG 1)	CH-Interlaken	full	CHF	200	100%	100%
Hedoga AG	CH-Villars-sur-Glâne	full	CHF	100	100%	100%
Laboratorium Dr. G. Bichsel AG 1)	CH-Unterseen	full	CHF	200	100%	100%
Lifestage Solutions Ltd.	CH-Otelfingen	full	CHF	152	100%	100%
Medifilm Ltd.	CH-Oensingen	full	CHF	1,300	100%	100%
medinform AG	CH-Zürich	full	CHF	100	50%	50%
MediService Ltd.	CH-Zuchwil	at equity	CHF	363	49%	49%
PADMA Inc.	CH-Wetzikon	full	CHF	152	100%	100%
Padma Aktiengesellschaft für tibetische Heilmittel 1)	CH-Freienbach	full	CHF	100	100%	100%
PADMA EUROPE GmbH 1)	AT-Vienna	full	EUR	35	100%	100%
PADMA Deutschland GmbH 1)	DE-Gräfelfing	full	EUR	25	100%	100%
puravita AG	CH-Speicher	at equity	CHF	130	34.34%	34.34%
Schmidgall GmbH 1)	AT-Vienna	full	EUR	36	100%	100%
Spagyros Ltd.	CH-Worb	full	CHF	860	100%	100%
Sun Store Health Care Ltd.	CH-Niederbipp	full	CHF	100	100%	100%
SWISS PHARMA GmbH	DE-Rülzheim	full	EUR	51	100%	100%
Verfora Ltd.	CH-Villars-sur-Glâne	full	CHF	100	100%	100%
Winconcept Ltd.	CH-Bern	full	CHF	100	100%	100%
Zentral Apotheke Heerbrugg AG	CH-Au	full	CHF	100	100%	100%

1) Not directly held by Galenica Ltd.

2) The company was merged into Galenicare Ltd.

3) The company was renamed (previous year: Bichsel Interlaken Holding AG)

Group companies Logistics & IT and Group Services

					2024	2023
Group companies	Registered office	Method of consolidation	Currency	Share capital in thousand	Equity interest	Equity interest
Logistics & IT
1L Logistics Ltd.	CH-Burgdorf	full	CHF	100	100%	100%
Alloga Ltd.	CH-Burgdorf	full	CHF	8,332	100%	100%
Aquantic AG	CH-Zeiningen	full	CHF	100	100%	100%
Dauf SA 1)	CH-Lugano	full	CHF	100	94.54%	92.92%
Galexis Ltd.	CH-Niederbipp	full	CHF	25,000	100%	100%
HCI Solutions Ltd.	CH-Bern	full	CHF	100	100%	100%
Health Supply Ltd.	CH-Villmergen	at equity	CHF	100	40%	-
Pharma-Info AG 1)	CH-Biel	at equity	CHF	100	49%	49%
PharmaBlist Ltd. 1)	CH-Widnau	full	CHF	100	100%	100%
Pharmapool Ltd. 1)	CH-Widnau	full	CHF	962	100%	100%
Unione Farmaceutica Distribuzione SA	CH-Lugano	full	CHF	2,000	94.54%	92.92%
Group Services
Galenica Finanz Ltd.	CH-Bern	full	CHF	100	100%	100%

1) Not directly held by Galenica Ltd.

Notes to the consolidated financial statements of the Galenica Group

1. Group organisation

General information

2. Accounting principles

Basis of preparation

Estimation uncertainty, assumptions and judgments

Leases (note 16)

Goodwill and intangible assets (note 17)

Employee benefit plans and other non-current employee benefits (note 24)

Fair value of contingent consideration liabilities from business combinations (note 26)

Amendments to IFRS Accounting Standards

Future amendments to IFRS Accounting Standards

3. Operating segment information

Products & Care

Logistics & IT

Group Services

Eliminations

Operating segment information 2024

Operating segment information 2023

4. Business combinations

Business combinations 2024

Pro forma figures for acquisitions made in 2024 for the full 2024 financial year

Business combinations 2023

Accounting principles business combinations

5. Net sales

Net sales 2024

Net sales 2023

Accounting principles net sales

Sale of goods

Sale of services

6. Other income

7. Personnel costs

8. Other operating costs

Research and development

9. Financial result

10. Earnings per share

11. Income taxes

OECD Pillar Two model rules

12. Discontinued operations

Accounting principles discontinued operations

13. Trade and other receivables

Accounting principles trade and other receivables

14. Inventories

Accounting principles inventories

15. Property, plant and equipment

Accounting principles property, plant and equipment

16. Leases

Accounting principles leases

17. Intangible assets

Trademarks with indefinite useful lives

Goodwill

Accounting principles intangible assets

18. Investments in associates and joint ventures

Investments in associates

Investments in joint ventures

19. Financial assets

Accounting principles financial assets

20. Financial liabilities

21. Trade and other payables

22. Provisions

23. Contingent liabilities and commitments

24. Employee benefit plans

Change in assumption and in estimate

Sensitivity analysis

25. Shareholders' equity

25.1 Share capital and number of shares

25.2 Changes in consolidated shareholder's equity

26. Financial instruments

26.1 Categories of financial instruments

Accounting principles financial instruments (measurement and categories)

Financial assets at amortised cost

Financial assets at fair value through other comprehensive income

Financial liabilities at fair value through profit or loss

Financial liabilities at amortised costs

26.2 Fair value measurement

Fair value of financial instruments (level 3 of the fair value hierarchy)

Fair value and sensitivity analysis of contingent consideration liabilities from discontinued operations

Sensitivity analysis of contingent consideration liabilities from business combinations (level 3 of the fair value hierarchy)

27. Financial risk management

27.1 Liquidity risk