Definitions of alternative performance measures

The annual report, the half year report and other communication to investors contain certain financial performance measures, which are not defined by IFRS Accounting Standards. In addition to information based on IFRS Accounting Standards, management uses these alternative performance measures to assess the financial and operational performance of the Group. Management believes that these non-IFRS financial performance measures provide useful information regarding Galenica's financial and operational performance. Alternative performance measures are used in Galenica's value-based management as the basis for management's incentive and remuneration schemes. Such measures may not be comparable to similar measures presented by other companies. The main alternative performance measures used by Galenica are explained and/or reconciled with the IFRS Accounting Standards measures in this section.

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.

IAS 19 – Employee benefits

The pension plans of Galenica are organised in legally independent pension funds and are based purely on the defined contribution principle as stated in the Swiss «BVG» law. Nevertheless, Galenica's pension plans are classified as defined benefit pension plans under IAS 19. For this reason, Galenica evaluates its performance by adjusting personnel costs as if those plans were defined contribution plans (adjustments for the effects of IAS 19). Furthermore any compensation payments to the pension funds resulting from the integration of acquired companies into the Galenica pension fund are included under this item.

IFRS 16 – Leases

With its large network of retail pharmacies, IFRS 16 has a significant impact on Galenica's income statement, balance sheet and cashflow statement. Galenica adjusts its financial statements for comparability by treating lease agreements as operating leases. All lease expenses are shown evenly under other operating costs, while depreciation, interest on lease liabilities and the corresponding tax effects are removed.

IFRS 3 - Acquisition-related amortisation (new)

Following the acquisition of Diagnostic Group (Labor Team), Galenica’s profitability is significantly affected by acquisition‑related amortisation of intangible assets such as customer relationships, trademarks or other intangible assets. As these charges do not reflect operational value creation of the acquired business, they are excluded from the alternative performance measures. This adjustment applies prospectively from the 2025 financial year.

One-off effect - Revaluation of associates and joint ventures (new)

Galenica occasionally carries out step acquisitions, which require a revaluation of the previously held investments. Such revaluations as well as other value changes or impairments of investments in associates and joint ventures do not affect operational value creation, they are consequently excluded from the alternative performance measures.

One-off effect - Gains and losses related to the disposal or closure of business units (new)

The planned discontinuation of the production activities at Bichsel would have a significant impact on Galenica’s results, particularly in the first half of 2026. As these effects are not related to Galenica’s continuing business operations, they are excluded from the alternative performance measures. No effects from this planned discontinuation have been recognised in the financial year 2025.