Notes to the consolidated financial statements

SFS Group is a limited company according to Swiss law, incorporated and domiciled in Heerbrugg, municipality of Widnau/SG (Switzerland). SFS Group AG is the parent company of all SFS Group companies and therefore the ultimate holding company of the SFS Group. It is listed on the SIX Swiss Stock Exchange AG in Zurich with the security code symbol SFSN.

All amounts are in CHF million unless otherwise stated.

These unaudited and condensed half-year consolidated financial statements have been prepared in accordance with Swiss GAAP FER 31 para 9 to 12 Interim Reporting. These half-year consolidated financial statements need to be considered in conjunction with the consolidated financial statements 2024 and have been prepared using the same accounting and valuation methods. No new standards have been adopted.

Recognized critical accounting estimates, judgments and the financial risk management used in the consolidated financial statements 2024 have remained unchanged in the first half of the year 2025. Similarly, there are no material changes in the financial risk.

Due to seasonal variations in the segments, higher net sales and a higher operating profit are typically achieved in the second half of the year. The strongest characteristics results from the end-user markets of the electrical and electronics industry and the construction industry. In the electrical and electronics industry, the second half of the year sees the launch of new products from important end customers and higher sales due to the holiday season. The construction industry generally benefits from the seasonally strong autumn months. In other end markets, sales are more balanced throughout the year.

SFS Group is divided into the three segments Engineered Components, Fastening Systems and Distribution & Logistics.

The Construction & Wood business area of the Distribution & Logistics segment that is focused on customers in the construc­tion industry was allocated to the Fastening Systems segment from January 1, 2025 onward.

The previous year’s figures have been restated for better comparability.

Detailed information about the segments is presented in the “Segment Report” section of the Half-Year Report.

In addition to the elimination of intercompany transactions, the Corporate segment contains corporate data relating to the Technology and Business Support Functions (former Corporate Services and Corporate IT & Finance).

Reconciliation of segment results to income statement and balance sheet

In these half-year consolidated financial statements, the income taxes have been recorded on the basis of local tax rates.

The dividend distribution for fiscal year 2024 of CHF 2.50 per share was approved at the annual general meeting and paid out in the total amount of CHF 97.2 million in May 2025.

Marketable securities and financial assets are measured at market value through profit or loss. In the absence of a market value, marketable securities and financial assets are measured at historical costs less any impairment. “Investments” include investments in associates, joint ventures and immaterial subsidiaries that are not included in the scope of consolidation.

In connection with the financing of the Hoffmann SE acquisition and the corresponding issuance of two bonds with a volume of CHF 400 million (refer to note 12), the SFS Group has entered into two cross-currency swaps (CHF/EUR) in 2022 with the same volume and maturity. The cross-currency swaps (designated as hedging instruments) are used to hedge the foreign currency exposure which arises from the translation of net investments in foreign entities (designated as hedged items) into the Group’s presentation currency. Changes in the fair values of the cross-currency swaps (net investment hedges) are recognized in equity and reversed through profit and loss upon disposal of the foreign entity. The impact arising from the expiration of the cross-currency swap as of June 6, 2025 in the amount of CHF 26.0 million remains recognized in equity until the foreign entity is disposed of. As of June 30, 2025, the fair value of the remaining cross-currency swap amounts to CHF 20.4 million and is disclosed as a financial asset (fair value December 31, 2024: CHF 20.4 million).

In connection with the financing of the Hoffmann SE acquisition, SFS Group issued two bonds in June 2022 for a total of CHF 400 million. The first bond of CHF 250 million has a coupon of 1.00% and a maturity of three years (maturity date June 6, 2025) and the second bond of CHF 150 million has a coupon of 1.45% and a maturity of five years (maturity date June 8, 2027). Bonds are recognized in the balance sheet at nominal value. Deviations from the nominal value in the case of below- or above-par issues are offset with the emission costs and recognized as accruals and deferrals, and afterwards reversed on a straight-line basis over the term of the bonds. The first bond was fully repaid on June 6, 2025. Due to the acquisition, the existing loan contract was prematurely renewed and two additional banks were included in the syndicate. The new contract term, after execution of the extension options, ends on May 10, 2029. The committed and uncollateralized revolving credit line amounts to CHF 600 million. It may be increased by a maximum amount of an additional CHF 100 million, provided the lenders agree to the request of SFS Group. The option to increase the maximum amount can be used up to three months before the final maturity date.

The SFS Group can use non-derivative financial instruments (financial liabillities) to hedge the foreign currency exposure which arises from the translation of net investments in foreign entities (designated as hedged items) into the Group’s presentation currency (net investment hedge). Changes in the fair values of the hedging instruments of net investment hedges are recognized in equity and reversed through profit and loss upon disposal of the entity. As of June 30, 2025 borrowings include a EUR loan in the amount of CHF 224.4 million (nominal value EUR 240.0 million) which SFS Group has designated as hedging instrument in a net investment hedge.

As part of restructuring measures, short-term provisions in the amount of CHF 4.2 million were recognized as of June 30, 2025. These primarily relate to costs associated with personnel reduction measures as well as other expenses in connection with changes to the production and distribution network.

As of May 1, 2024, SFS Group acquired the Etanco S.A.U., a Spanish distributor of fasteners, fixings, and accessories to the building envelope. The acquisition of Etanco will strengthen the market position of the Construction division in Spain and Portugal. With about ten employees, Etanco generated sales of approximately EUR 4 million in 2023. Contract clauses do not include any contingent consideration (earnout).

On June 30, 2025, a contract for the sale of Allchemet AG was signed. The completion of the transaction is expected by the end of 2025. The Distribution & Logistics segment is affected by this decision as follows:

On July 16, 2025, the Board of Directors decided to launch a program to increase profitability. SFS expects this program and changes to the production and distribution network already approved in the first half-year to reduce sales by a total of around CHF 110 million and for it to result in project-specific non-recurring costs of approximately CHF 75 million of which CHF 5.9 million have already been considered in the half-year closing. A total of around 650 jobs are affected by company sales, transfers and site closures.

The Board of Directors approved the half-year consolidated financial statements on July 16, 2025. SFS is not aware of any further events that occurred after the balance sheet date that could have a material impact on these consolidated financial statements.