Kategorie: notes - Halbjahresbericht 2022

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 company limited by shares 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 interim financial statements 2022 on 8 August 2022 for publication.

2. Accounting principles

Basis of preparation

The unaudited consolidated interim financial statements of Galenica are based on the financial statements of the individual companies of Galenica as at 30 June 2022, prepared in accordance with uniform principles. Except for the amendments to International Financial Reporting Standards (IFRS) as detailed below, the consolidated interim financial statements have been prepared using the same accounting principles as the consolidated financial statements for the year ending 31 December 2021 and comply with IAS 34 – Interim Financial Reporting. The consolidated interim financial statements should be read in conjunction with the consolidated financial statements for the year ending 31 December 2021 as they update previously reported information.

Galenica's consolidated interim 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 effects are not material for the consolidated interim financial statements.

Restatement 2021 due to adjustments to provisional purchase price allocation

The purchase price allocation for the acquisition of Spagyros Ltd. was determined provisionally at the end of 2021 and has now be finalised. The fair value measurement leads to a decrease of property, plant and equipment based on the final external valuation in the amount of CHF 0.7 million and deferred tax liabilities in the amount of CHF 0.1 million. This adjustment leads to an increase in goodwill in the amount of CHF 0.6 million. The figures for the previous year were adjusted for the purposes of comparison.

Estimation uncertainty and assumptions

The preparation of the Group's consolidated interim 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.

Seasonal influences on operations

Sales in the business sectors in which Galenica operates are usually not significantly influenced by seasonal or cyclical fluctuations during the financial year.

Income taxes

Current income taxes are based on an estimate of the expected income tax rate for the full year.

Scope of consolidation

The consolidated interim financial statements of Galenica comprise those of Galenica Ltd. and all its subsidiaries, including associates and joint ventures.

Details of changes in the scope of consolidation in the reporting period are included in note 4, Business combinations.

Amendments to IFRS

As at 1 January 2022 Galenica adopted the following new International Financial Reporting Standards:

Amendments to IFRS 3 – Reference to the conceptual framework
Amendments to IAS 16 – Proceeds before intended use
Amendments to IAS 37 – Onerous Contracts – cost of fulfilling a contract
Annual Improvements 2018-2020 Cycle

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

3. Operating segment information

Operating segment information first half of 2022

in thousand CHF	Products & Care	Logistics & IT	Group Services	Eliminations	Galenica Group
Net sales	986,815	1,434,631	22,352	–483,920	1,959,878
Intersegmental net sales	–46,092	–416,313	–21,516	483,920	–
Net sales to third parties	940,724	1,018,318	837	–	1,959,878
Other income	4,010	2,962	1,438	–656	7,755
Share of profit from associates and joint ventures	1,937	20	–	62	2,019
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	110,973	40,345	242	1,089 1)	152,649
Depreciation and amortisation	–33,423	–14,963	–1,062	147	–49,301
Earnings before interest and taxes (EBIT)	77,550	25,382	–820	1,237 1)	103,348
Interest income					320
Interest expense					–2,666
Other net financial result					–128
Earnings before taxes (EBT)					100,875
Income taxes					–17,750
Net profit					83,124

Assets	1,735,549	952,034	388,076	-621,195 2)	2,454,464
Investments in associates and joint ventures	31,657	85	–	–1,244	30,499
Liabilities	661,509	593,768	631,305	-595,202 3)	1,291,381

Investments in property, plant and equipment	4,125	13,400	1,127	–	18,652 4)
Investments in intangible assets	769	11,499	–	–70	12,198 5)

Employees as at 30 June (FTE)	3,924	1,377	216	–	5,517

1) Including the effects of IAS 19 from defined benefit plans and long-service awards of CHF 1.4 million

2) Of which elimination of intercompany positions of CHF -603.6 million and other unallocated amounts of CHF -17.6 million

3) Of which elimination of intercompany positions of CHF -603.6 million and other unallocated amounts of CHF 8.4 million

4) Of which non-cash investments of CHF 0.9 million

5) Of which non-cash investments of CHF 1.8 million

Operating segment information first half of 2021

in thousand CHF	Products & Care	Logistics & IT	Group Services	Eliminations	Galenica Group
Net sales	918,926	1,377,914	10,485	–450,222	1,857,103
Intersegmental net sales	–35,419	–404,963	–9,840	450,222	–
Net sales to third parties	883,507	972,950	645	–	1,857,103
Other income	3,723	3,024	188	–825	6,111
Share of profit from associates and joint ventures	3,910	8	–	–170	3,748
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	112,403	39,343	–307	-4,846 2)	146,592
Depreciation and amortisation	–34,749	–12,989	–1	150	–47,589
Earnings before interest and taxes (EBIT)	77,654	26,354	–308	-4,697 2)	99,003
Interest income					189
Interest expense					–2,482
Other net financial result					–45
Earnings before taxes (EBT)					96,666
Income taxes					–17,108
Net profit					79,559

Assets 1)	1,687,729	864,050	404,017	-389,994 3)	2,565,802
Investments in associates and joint ventures 1)	31,015	66	–	–385	30,696
Liabilities 1)	585,459	515,479	641,402	-410,215 4)	1,332,125

Investments in property, plant and equipment	8,460	10,581	37	–155	18,924 5)
Investments in intangible assets	2,155	3,770	–	–102	5,824 6)

Employees as at 30 June (FTE)	3,799	1,364	225	–	5,388

1) Figures as at 31 December 2021 restated (refer to note 2)

2) Including the effects of IAS 19 from defined benefit plans and long-service awards of CHF -3.9 million

3) Of which elimination of intercompany positions of CHF -441.1 million and other unallocated amounts of CHF 51.1 million

4) Of which elimination of intercompany positions of CHF -441.1 million and other unallocated amounts of CHF 30.9 million

5) Of which non-cash investments of CHF 1.7 million

6) Of which non-cash investments of CHF 0.2 million

4. Business combinations

In the first half of 2022, the scope of consolidation has changed as a result of the following transactions:

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

The total purchase consideration amounted to CHF 10.4 million and was fully settled in cash. The fair value of the provisional net assets amounts to CHF 2.5 million at the acquisition date. The goodwill of CHF 7.9 million was allocated to the operating segment Products & Care and corresponds to the added value of the pharmacies based on their locations. Transaction costs were not material.

Business combinations

in thousand CHF	Fair value
Cash and cash equivalents	1,967
Trade receivables	855
Inventories	475
Right-of-use assets	2,158
Other current and non-current assets	258
Trade payables	–715
Lease liabilities	–2,158
Other current and non-current liabilities	–350
Fair value of net assets	2,491
Goodwill	7,943
Purchase consideration	10,434
Cash acquired	–1,967
Net cash flow from current business combinations	8,467

Pro forma figures for acquisitions made in the first half of 2022

Since their inclusion in Galenica's scope of consolidation, the businesses acquired contributed net sales of CHF 4.6 million and an operating result (EBIT) of CHF 0.1 million to the Group's results. If these acquisitions had occurred on 1 January 2022, they would have contributed additional net sales of CHF 2.1 million and increased EBIT by CHF 0.4 million.

5. Net sales

Net sales first half of 2022

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	590,444	37,503	627,947	–12	627,935	590,432	37,503
Pharmacies at Home	248,441	4,157	252,598	–188	252,410	248,253	4,157
Retail (B2C) 1)	838,782	41,660	880,442	–97	880,345	838,686	41,660
Products & Brands	74,136	960	75,097	–38,302	36,794	35,834	960
Services for Professionals	27,075	7,169	34,244	–10,660	23,584	21,672	1,913
Professionals (B2B) 1)	101,250	8,091	109,341	–48,963	60,378	57,506	2,873
Products & Care 1)	938,445	48,370	986,815	–46,092	940,724	896,191	44,532
Wholesale	1,374,463	4,963	1,379,426	–393,773	985,653	982,662	2,991
Logistics & IT Services	325	63,469	63,794	–31,130	32,665	324	32,340
Logistics & IT 1)	1,374,789	59,841	1,434,631	–416,313	1,018,318	982,986	35,332
Group Services	–	22,352	22,352	–21,516	837	–	837
Eliminations 2)	–434,057	–49,863	–483,920	483,920	–	–	–
Galenica Group	1,879,177	80,701	1,959,878	–	1,959,878	1,879,177	80,701

1) Including eliminations of intercompany net sales

2) Eliminations of intersegmental net sales

Net sales first half of 2021

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	581,825	35,101	616,926	–34	616,892	581,791	35,101
Pharmacies at Home	213,535	3,998	217,533	–225	217,309	213,311	3,998
Retail (B2C) 1)	795,188	39,099	834,286	–86	834,201	795,102	39,099
Products & Brands	58,228	1,355	59,583	–29,308	30,275	28,919	1,355
Services for Professionals	22,331	6,604	28,935	–9,903	19,032	17,237	1,795
Professionals (B2B) 1)	80,583	7,935	88,518	–39,212	49,307	46,156	3,151
Products & Care 1)	873,222	45,704	918,926	–35,419	883,507	841,258	42,249
Wholesale	1,313,526	15,261	1,328,787	–389,208	939,579	934,377	5,201
Logistics & IT Services	1,284	49,259	50,542	–17,171	33,372	293	33,079
Logistics & IT 1)	1,314,767	63,147	1,377,914	–404,963	972,950	934,670	38,280
Group Services	–	10,485	10,485	–9,840	645	–	645
Eliminations 2)	–412,061	–38,162	–450,222	450,222	–	–	–
Galenica Group	1,775,928	81,175	1,857,103	–	1,857,103	1,775,928	81,175

1) Including eliminations of intercompany net sales

2) Eliminations of intersegmental net sales

6. Financial assets and financial liabilities measured at fair value

Fair value

		30.06.2022		31.12.2021
in thousand CHF	Carrying amount	Fair value	Carrying amount	Fair value
Current financial liabilities	42,829	42,829	43,052	43,052
Bond (fair value level 1)	200,070	199,060	–	–
Current financial liabilities	242,898	241,889	43,052	43,052
Non-current financial liabilities 1)	26,112	26,112	26,238	26,238
Bond (fair value level 1)	180,180	174,888	380,306	389,270
Non-current financial liabilities	206,292	201,000	406,544	415,508

1) Of which contingent consideration liabilities from business combinations (fair value level 3) of CHF 24.0 million (previous year: CHF 24.0 million)

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

Sensitivity analysis of contingent consideration liabilities from business combinations

Determining the contingent consideration liability from business combinations net sales was identified as key assumption. Galenica has recorded the maximum amount as contingent consideration liability, an increase in the forecasted net sales of the acquired company would hence have no impact on the contingent consideration liability. In return, a decrease of the forecasted net sales 2024 by 5% would reduce the contingent consideration liability by CHF 2.2 million.

7. Employee benefit assets

Galenica realised in the consolidated statement of comprehensive income a remeasurement loss of CHF 56.5 million which is due to the negative market developments on plan assets exceeded the positive effect from the increase in the discount rate. The increase of the discount rate resulted in an actuarial gain (change in financial assumptions) and an asset ceiling. Overall Galenica has net employee benefit liabilities of CHF 14.0 million as at 30 June 2022 (as at 31 December 2021: net employee benefit assets of CHF 41.0 million).

Due to the remeasurement loss a deferred tax gain of CHF 10.2 million has been recorded in the consolidated statement of comprehensive income, which also resulted in a respective decrease of deferred tax liabilities.

8. Contingent liabilities and commitments

Galenica signed purchase agreements to acquire pharmacies and other businesses in the next few years. The purchase prices will be fixed at the time of transfer of ownership on the basis of net asset value and discounted cash flows. The unrecognised commitments are expected to involve payments of CHF 0.8 million at the most. The purchase rights have an estimated volume of CHF 1.3 million. These purchase rights or obligations fall due between 2022 and 2023.

9. Subsequent events

The following business combinations occurred between 30 June 2022 and 8 August 2022, the date that the consolidated interim financial statements were released for publication.

Acquisition of Medinform AG. On 5 July 2022, Galenica acquired 50% of the shares of the Swiss based Medinform AG. The company is a leading provider of training courses and specialisations for pharmacies and has a broad network of partners such as health insurance companies and doctors.

The purchase consideration amounting to CHF 4.3 million was settled in cash. Due to the proximity of the acquisition to the date of release for publication of these financial statements, the fair value of the provisional net assets at the acquisition date cannot yet be estimated with sufficient reliability.

Acquisition of Acquantic AG. On 11 July 2022, Galenica acquired 100% of the shares of the Swiss based Acquantic AG. With the acquisition, Galenica gains access to a digital ecosystem that significantly simplifies the reimbursement of specific medicines by linking pharmaceutical companies and health insurances.

The purchase consideration consists of a cash consideration of CHF 4.6 million as well as a contingent consideration of up to CHF 5.5 million depending on future events and the achievement of certain profitability targets. Due to the proximity of the acquisition to the date of release for publication of these financial statements, the fair value of the provisional net assets at the acquisition date cannot yet be estimated with sufficient reliability.

There were no further significant events after the reporting date.

Notes to the consolidated interim financial statements of the Galenica Group