General

PolyPeptide Group AG (the “Company”) is the holding company of a group of companies (the “Group”) engaged in the development, manufacturing and marketing of peptide-based compounds for use in the pharmaceutical and related research industries. The Group offers a full-service concept from early-stage custom development to contract manufacturing in both solid phase and solution phase technology.

The registered office of the Company is Neuhofstrasse 24, 6340 Baar, Switzerland.

As at 31 December 2025, the Company was a 55.47% subsidiary of Draupnir Holding B.V., a company registered in the Netherlands. Draupnir Holding B.V.’s ultimate controlling parent entity is Cryosphere Foundation, a foundation registered on Guernsey, of which Mr. Frederik Paulsen (Lausanne, Switzerland) is at present a named beneficiary pursuant to the charter of the foundation governed by the laws of Guernsey, although he has no vested interest in any portion of the foundation assets.

1 Summary of material accounting policy information

Basis of preparation

The consolidated financial statements of PolyPeptide Group AG and its subsidiaries have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The financial year for the Group is 1 January–31 December 2025.

All amounts are stated in thousands of Euros (EUR), unless otherwise indicated.

Changes in accounting policies and presentation

The following amendments became mandatorily effective from 1 January 2025:

• Lack of Exchangeability (Amendments to IAS 21)

The adoption of the amendments to the IFRS Accounting Standards has not had any significant impact on the 2025 financial statements of the Group.

On 28 November 2025, the IASB issued Disclosures about Uncertainties in the Financial Statements – Illustrative examples, which amended multiple IFRS Accounting Standards to include illustrative examples demonstrating how companies can apply IFRS Accounting Standards when reporting the effects of uncertainties in their financial statements. The illustrative examples are accompanying materials to IFRS Accounting Standards and do not have an effective date. The IASB had issued a near-final staff draft of the illustrative examples in July 2025. The Group has considered these illustrative examples in its preparation of the consolidated financial statements and no additional disclosures or changes in presentation were considered necessary.

As a result, the accounting policies are consistent with prior years.

Principles of consolidation

The consolidated financial statements include the Company and its subsidiaries as at 31 December of each year. Subsidiaries are all entities over which the Group has control. The Group controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are consolidated from the date the Company obtains control until such time as control ceases.

The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. Reference is made to Note 11 for information regarding the consolidated subsidiaries. All intra-group balances, income and expenses and unrealized gains and losses resulting from intra-group transactions are eliminated in full. A change in the ownership interest of a subsidiary, without loss of control, is accounted for as an equity transaction.

Translation of foreign currencies

The Group’s consolidated financial statements are presented in Euros. The functional currency of the parent company is Swiss Franc (CHF). Each entity within the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Translation of transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their functional currency spot rate at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognized in the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rates as at the dates of the initial transactions. When a gain or loss on a non‑monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. Conversely, when a gain or loss on a non‑monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

Translation of subsidiaries
The functional currencies of the foreign operations are the Euro (EUR), US Dollar (USD), Indian Rupee (INR) and the Swedish Krona (SEK). As at the reporting date, the assets and liabilities of the subsidiaries with a functional currency other than the Euro are translated into the presentation currency of the Group (the Euro) at the rate of exchange ruling at the reporting date and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are recorded in other comprehensive income. On disposal of a foreign entity, the component of other comprehensive income relating to that foreign operation is recognized in the income statement.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Net investment in a foreign operation

One subsidiary has a monetary item that is receivable from another subsidiary. As of 1 October 2025, settlement of the inter-company loan (functional currencies EUR and USD) is neither planned nor likely to occur in the foreseeable future. As a result, the monetary item was reclassified and, in substance, became part of the parent company’s net investment in the foreign operation. As of 1 October 2025, exchange differences arising from the translation of the loan into the functional currency of the parent company are therefore recognized in other comprehensive income and remain in equity, without subsequent reclassification to profit or loss unless the net investment is disposed of.

The parent company of the Group has a monetary item that is a receivable from one of its subsidiaries. As of 1 December 2024, settlement of the receivable is neither planned nor likely to occur in the foreseeable future. As a result, the monetary item became, in substance, a part of the parent company’s net investment in the subsidiary. As of 1 December 2024, exchange differences arising from the translation of the receivable into the functional currency of the parent company are thus initially recognized in other comprehensive income in the consolidated financial statements and reclassified to profit or loss on disposal of the net investment.

Revenue recognition

Revenue is recognized to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other taxes and duties. Revenue is recognized when a performance obligation is satisfied.

Performance obligations and timing of revenue recognition
The Group earns the majority of its revenues from the sale of goods. As a result, most of the Group’s revenues are recognized at a point in time when control of the goods has transferred to the customer. All indicators of transfer of control according to IFRS 15 are normally in place when the Group delivers the goods to the customer. The level of judgement needed to determine the point in time at which a customer obtains control of the goods is thus limited.

When bill-and-hold arrangements are in place, the Group satisfies its performance obligation while still retaining physical possession of the goods until it is transferred to the customer at a point in time in the future. However, IFRS 15 clearly states four criteria that must be met for a customer to have obtained control of a product in a bill-and-hold arrangement. These criteria are reflected in the agreements with the customers, and the level of judgement needed for revenue recognition for bill-and-hold arrangements is thus also limited.

The Group has no sales contracts that include performance obligations relating to warranties or returns.

The Group also incurs a portion of its revenues in connection with pharmaceutical services like development and analytical services. In some cases, these contracts run longer than a year with revenue recognized typically on an over time basis. These service contracts are set up in a way to be distinct and the consideration related to the services is based upon standard hourly prices. For these services, the Group recognizes revenues based upon stage of completion which is estimated by comparing the number of hours actually spent on the project with the total number of hours expected to complete the project (i.e. an input-based method). This is considered a faithful depiction of the transfer of services as the contracts are initially priced on the basis of anticipated hours to complete the projects and therefore also represent the amount to which the Group would be entitled to based on its performance to date.

Determining the transaction price
With respect to the sale of goods, a transaction price is agreed in an order or order confirmation between the Group and its customer. Prices may also be included in the master service agreements, which are usually updated every year. However, the price in the order confirmation is controlling. There are no other variable components included in the transaction price such as payables to the customer, non-cash considerations, etc. All other special considerations such as volume discounts are calculated on a calendar-year basis and therefore do not result in any uncertainties about the amount of the transaction price at the end of the financial year. The transaction price for services is based upon a price list with standard prices (fair value) for different kind of services.

In determining the transaction price, the Group adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the Group and the customer (either explicitly or implicitly) provides the Group with a significant benefit of financing the transfer of goods or services to the customer. The objective of this adjustment is to recognize revenue at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer. When adjusting the promised amount of consideration for a significant financing component, the Group uses the discount rate that would be reflected in a separate financing transaction between the Group and its customer at contract inception.
If the Group expects, at contract inception, that the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less, the Group applies a practical expedient and does not adjust the promised amount of consideration for the effects of a significant financing component.

Allocating amounts to performance obligations
As each performance obligation in a customer contract is generally priced against its fair value, only limited judgment is involved in the allocation of the total contract price to the individual performance obligations. This allocation will usually be determined by dividing the total contract price by the number of units ordered or hours spent.

Contract liabilities
If a customer pays consideration, or the Group has a right to an amount of consideration that is unconditional, before the Group transfers a good or service to the customer, the Group recognizes a contract liability when the payment is received, or the payment is due (whichever is earlier). The contract liability is derecognized and offset as revenue when the Group subsequently transfers the good or service to the customer.

Contract assets
A contract asset is defined as an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity’s future performance).
The Group recognizes a contract asset for unbilled work in progress related to the transfer of services where revenue is recognized ’over time’.
Contract assets are subject to impairment assessment. Please refer to the accounting policies on impairment of financial assets.

Contract costs
The Group capitalizes costs to fulfil a contract as ’Contract costs’ if the costs incurred are not within the scope of another IFRS standard, and all of the following criteria are met:

• the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify;
• the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and
• the costs are expected to be recovered.

Capitalized contract costs are amortized in a manner that reflects the expected progress towards complete satisfaction of the related performance obligations. In most cases, this does not follow a straight-line basis over the contract terms.

Other income, costs and expenses

Other income, costs and expenses are allocated to the year to which they relate. Losses are accounted for in the year in which they arise.

Interest

For all financial instruments measured at amortized cost, interest income or expense is recorded using the effective interest rate. Interest income and expense is included in financial income and expense in the income statement.

Research expenses

Research expenses relating to Custom Projects are included in ’Cost of sales’ in the income statement. Research expenses not relating to Custom Projects are presented on the separate financial line item ’Research expenses’ in the income statement

Share-based payment

Share-based compensation is provided to members of the Board of Directors, the Executive Committee and certain other selected key employees (as applicable).

The programs are classified as equity arrangements where the fair value of the shares granted under the programs are recognized as an expense with a corresponding increase in equity. The fair value of the shares is measured at the market share price of PolyPeptide Group AG’s shares, adjusted to take into account terms and conditions upon which the shares were granted. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the Company revises its estimates of the number of shares that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

Taxes

Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Corporate income tax is calculated on taxable profit according to the applicable tax rates in the various countries.

Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss. Current income tax items are recognized in correlation to the underlying transaction either in profit or loss, through other comprehensive income or directly in equity.

Tax credits
Tax credits that can only be realized by a reduction of current or future corporate tax payments, rather than being directly settled in cash, are presented as part of the income tax charge for the year.

Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, except:

• When the deferred income tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect to taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences, the carry-forward of unused tax credits and any unused tax losses.

Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilized, except:

• When the deferred income tax asset relating to the deductible temporary difference arises from initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each reporting date and are recognized to the extent that it is probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the assets are realized and the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred income tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in profit or loss, through other comprehensive income or directly in equity.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

VAT
Income, expenses and assets are recognized net of the amount of VAT, except:

• When the VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the VAT is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of VAT included.

The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Fair value measurements

The Group measures certain financial instruments at fair value. The fair values of financial instruments measured at amortized costs are disclosed in the financial statements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability; or
• in the absence of a principal market, in the most advantageous market for the asset or liability.

The Group must be able to access the principal market or the most advantageous market at the measurement date.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs significant to the fair value measurement as a whole:

• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internal development of software for internal use is recognized as intangible assets if the recognition criteria are met. Otherwise, the expenditure is reflected in the income statement in the year in which it is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The amortization expense on intangible assets with finite useful lives is recognized in the income statement in the expense category consistent with the function of the intangible asset.

Gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the income statement when the asset is derecognized.

Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognized as an intangible asset when the Group can demonstrate:

• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
• Its intention to complete and its ability to use or sell the asset
• How the asset will generate future economic benefits
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure during development
• The ability to use the intangible asset generated

Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit.

The Group’s intangible assets consist of software that is amortized on a straight-line basis over five to ten years.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Such cost includes the costs of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement, if the recognition criteria are satisfied. All other repair and maintenance costs are recognized as dwelling costs in the income statement.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, as stated hereunder.

• buildings (and leasehold improvements)

  10 to 50 years

• machinery and equipment

  3 to 20 years

• other

  3 to 5 years

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognizing the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognized.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if appropriate.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Financial assets

Initial recognition and measurement

Financial assets are classified at initial recognition and subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. Except for trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.

For a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are “solely payments of principal and interest” on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement
The subsequent measurement of financial assets depends on their classification as described below:

Financial assets at amortized cost (debt instruments)
This category is most relevant to the Group. The Group’s financial assets at amortized cost mainly include trade receivables.

The Group measures financial assets at amortized cost if both of the following conditions are met:

• the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified, or impaired.

Factoring
In the reporting period beginning 1 January 2023, the Group decided to enter a non-recourse factoring agreement with a bank for a few selected customers. The arrangement is non-recourse between the Group and the bank where all risks and rewards of ownership of receivables are fully transferred to the bank, and where the Group does not provide any guarantee about the performance of the receivables. When the Group derecognizes the receivable from the customer and recognizes the consideration received from the bank, the difference between the carrying amount of the receivable and the consideration received from the bank is recognized as a financial expense in the income statement.

Impairment of financial assets

The Group recognizes an allowance for expected credit losses for all debt instruments not held at fair value through profit or loss. Expected credit losses are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from credit enhancements that are integral to the contractual terms.

Financial assets at amortized cost (debt instruments)
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime expected credit loss at each reporting date.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed, to the extent that the carrying value of the asset does not exceed its amortized cost.

The Group considers a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Inventories

Inventories are valued at the lower of cost and net realizable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials are recognized at standard cost at the time of purchase.
Finished goods and work-in-progress include costs of direct materials and labor and a proportion of manufacturing overhead based on normal operating capacity but excluding borrowing cost as the production does not require a substantial period of time.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Other current assets

All other current assets are stated at the amounts at which they were acquired or incurred.

Cash and cash equivalents

Cash and cash equivalents in the statement of financial position and in the statement of cash flows comprise cash on hand and in banks and short-term deposits with an original maturity of three months or less.

Financial liabilities

Initial recognition and measurement
Financial liabilities are classified at initial recognition as financial liabilities at fair value through profit or loss, loans and borrowings and payables as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.

Subsequent measurement
After initial recognition, the financial liabilities are measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the effective interest rate amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the income statement.

Derecognition of financial assets and liabilities

Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when:

• the rights to receive cash flows from the asset have expired; or
• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Group’s continued involvement in the asset. If there is an associated liability, the Group recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continued involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the net of the carrying amount and the maximum amount of the consideration that the Group could be required to repay.

Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the income statement.

Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax discount rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as financial expenses in the income statement.

Pensions

The Group has insured contributory pension plans covering substantially all employees. Pension obligations are funded through annual premiums. The Group has defined benefit obligations to employees. The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit actuarial valuation method.

Remeasurements, comprising actuarial gains and losses and the return on plan assets (excluding net interest), are recognized immediately in the consolidated statement of financial position with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognized in profit or loss on the earlier of:

• the date of the plan amendment or curtailment; and
• the date that the Group recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.

The net defined benefit liability is the aggregate of the present value of the defined benefit obligation and the fair value of plan assets out of which the obligations are to be settled. Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies.

Plan assets are not available to the creditors of the Group, nor can they be paid directly to the Group. Fair value is based on market price information and in the case of quoted securities it is the published bid price.

Leases

All leases are accounted for by recognizing a right-of-use asset and a lease liability, except for:

• Leases of low value assets; and
• Leases with a term of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes that the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes:

• amounts expected to be payable under any residual value guarantee;
• the exercise price of any purchase option granted in favor of the Group if it is reasonably certain to assess that option;
• any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of a termination option being exercised.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

• lease payments made at or before commencement of the lease;
• initial direct costs incurred; and
• the amount of any provision recognized where the Group is contractually required to dismantle, remove or restore the leased assets.

Subsequent to initial measurement, lease liabilities are increased as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. If the lease transfers ownership of the underlying asset by the end of the lease term or if the cost of the right-of-use asset reflects that a purchase option will be exercised, the right-of-use asset is depreciated from the commencement date to the end of the useful life of the underlying asset. Otherwise, the right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the revised net present value of future lease payments. The carrying amount of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or an index is revised. In both cases, an equivalent adjustment is made to the carrying amount of the right-of-use asset, with the revised carrying amount being depreciated over the remaining (revised) lease term.

Other liabilities

All other liabilities are stated at the amounts at which they were acquired or incurred.

Cash flow statement

The cash flow statement is prepared according to the indirect method. Cash and cash equivalents comprise cash on hand and in banks and short-term deposits with an original maturity of three months or less. Interest and income tax cash flows are included in the cash flow from operating activities.

Future changes in accounting policies

The following standards, amendments to standards, and interpretations have been issued by the IASB and are mandatorily effective for reporting periods beginning 1 January 2026 or later. The Group has not early adopted any of these and does not believe these standards, amendments to standards, and interpretations will have a material impact on the recognition and measurements of financial items in the consolidated financial statements once adopted:

• Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)
  These amendments provide additional clarification and disclosure requirements relating to the derecognition of financial liabilities and classification of financial assets. The Group does not expect these changes to have a material impact on its financial instruments.
• Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7)
  The amendments clarify accounting treatment for nature-dependent electricity contracts. The Group is assessing potential implications for its electricity procurement contracts; no significant impact is anticipated.
• IFRS 18 Presentation and Disclosure in Financial Statements
  IFRS 18 replaces IAS 1 and introduces new requirements aimed at improving comparability, transparency and the usefulness of financial information. The new standard is effective for annual reporting periods beginning on or after 1 January 2027, with retrospective application required.
  Although IFRS 18 will not impact the Group’s net profit or the recognition and measurement of financial statement items, the Group expects presentation-related changes in several areas:
  Statement of profit or loss – Income and expenses will be presented within new mandatory categories (operating, investing and financing). Certain foreign exchange effects currently shown in finance income/expense may be reclassified and presented above operating profit.
  Aggregation and disaggregation – IFRS 18 strengthens the principles for providing meaningful, structured information. While the content of disclosures is expected to remain broadly consistent, the grouping of information may change.
  New disclosures – The standard introduces expanded requirements, including: – management-defined performance measures (MPMs), – a breakdown of the nature of expenses for line items presented by function in the operating category, and – a reconciliation in the first year of application between IAS 1 and IFRS 18 presentation.
  Statement of cash flows – The starting point will change to operating profit, and interest received/paid will be reclassified to investing/financing cash flows, respectively.
  The Group is currently assessing the detailed impact of IFRS 18. Based on preliminary analysis, no material impact on equity, total comprehensive income or cash flows is expected.
• IFRS 19 Subsidiaries without Public Accountability: Disclosures
  Effective from 1 January 2027, this standard provides reduced disclosure requirements for eligible subsidiaries. The Group is assessing the applicability of IFRS 19 to certain subsidiaries. However, IFRS 19 will have no impact on the consolidated financial statements.

Significant accounting judgments and estimates

The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date and tests for impairment when there are indicators that the carrying amounts may not be recovered. When value in use calculations is undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate to calculate the present value of those cash flows. Even though 2024 and 2025 were characterized by a volatile macroeconomic environment, the Group has not identified any indicators of impairment. No impairment losses of non-current assets have thus been recognized in 2025 (2024: No impairment losses).

Pension and other employment benefits
The cost of defined benefit pension plans is determined using actuarial calculations. The actuarial calculations include assumptions about discount rates, future salary increases, and life expectancy. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions (see Note 16).

Deferred income tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Management’s judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies (see Note 5).

2Segment information

PolyPeptide generates revenue that is presented in Note 3. Effective as of the start of the current reporting period, for a more concise discussion of business drivers, the Company now has two primary business areas “Commercial revenue” and “Development revenue”.
This revised presentation reflects the distinction between revenue from ongoing commercial supply activities and revenue from early-stage development collaborations.

The chief operating decision maker (i.e., the Executive Committee) reviews revenue generated within each business area but does not review results at this disaggregated level. As a result, the two business areas are not considered two separate operating segments since only revenue information for each area is reviewed by the chief operating decision maker. The Group continues to have one operating segment in accordance with IFRS 8 – Operating segments.

The segment disclosures are thus provided in accordance with the requirements applicable for entities that have a single reportable segment.

Revenue from major customers (10% or more of total revenue)

In 2025, revenues of approximately kEUR 56,890 and kEUR 47,980, respectively, were derived from two customers.
In 2024, revenues of approximately kEUR 43,900 and kEUR 41,200, respectively, were derived from two customers.

Geographical areas

Shown below are the carrying amounts of non-current assets other than deferred income tax assets and other financial assets, broken down by location of the assets. Related additions to intangible assets and property, plant and equipment (PP&E) during the year and revenues generated from the location of the assets are shown as well.

3Revenue and expenses

PolyPeptide generates revenue that can be divided into the two business areas described below:

Revenue by business area

Development revenue (formerly Custom Projects) business area specializes in the manufacturing of custom research-grade peptides, in milligram, gram or pilot scale quantities, at predefined purity levels for use in pre-clinical and clinical development as well as for regulatory and scientific studies. Development also provides cGMP manufacturing services during the later phases of development. Revenue is allocated to Development for sales of products in the pre-clinical through clinical stage development (i.e., prior to commercial launch) as generally set out in master service agreements and/or the accompanying work / purchase orders.

Commercial revenue (formerly Contract Manufacturing/Generics and Cosmetics) business area manufactures peptides for commercial stage peptide therapeutics, at scale, in commercial batches and in accordance with cGMP requirements. The Group’s Commercial services also include consultation for continuous improvement and process stabilization / optimization to support scale-up, process changes to support cost of goods sold enhancement, lifecycle management and extension as well as regulatory support. Revenue is allocated to Commercial where production is related to the commercial supply, as generally set out in master supply agreements and/or the accompanying work / purchase orders. In addition, Commercial also includes manufacturing of peptide-based generics for the human and veterinary market. The business area also includes revenue generated from the sale of peptides used in cosmetics.

Revenue by geographical area

Revenue is attributed to the individual geographical area based on the invoice address of the respective customer.

Revenue from contracts with customers

Revenues from Active Pharmaceutical Ingredients (API) fully relate to the sale of goods and revenues from related services relate to the rendering of services. All revenues from contracts with customers classify as business-to-business.

Contract assets and contract liabilities

Contract assets

Contract liabilities

Contract costs

In 2025, the Group incurred costs of nil in relation to setup activities required in order to satisfy future performance obligations (2024: 1,563). The costs in 2024 (i) directly relate to two contracts with customers, (ii) have generated resources that will be used in satisfying the performance obligations in the contracts, and (iii) are expected to be recovered. Since the nature of the costs incurred is not within the scope of another IFRS standard, the costs incurred have been capitalized as an asset from costs to fulfil a contract in accordance with IFRS 15 – Revenue from Contracts with Customers.

The asset will be amortized in a way that reflects the expected progress towards complete satisfaction of the performance obligations. It is not expected that this will be on a straight-line basis over the terms of the contracts.

Other operating income

The research refund relates to a deduction on tax paid due to qualified research in chemistry.
The investment grants relate to improving air emission handling, etc. Sale of intellectual property mainly reflects proceeds from the disposal of internally generated know-how that had not previously been capitalized.

Marketing and sales expenses

Research expenses

General and administrative expenses

Financial income

Financial expenses

Staff costs

An amount of kEUR 113,737 (2024: kEUR 102,541) relating to salaries and employee benefits has been included in cost of sales.

The average number of FTEs of the principal departments is as follows:

Average number of employees

Depreciation and amortization included in the income statement

Included in Cost of sales:

Included in General and administrative expenses:

4Share-based payment

The following equity-settled share-based payment arrangements are recognized in the consolidated financial statements:

Board of Directors

Members of the Board of Directors receive at least half of their fixed fees in shares, with the option to elect to be paid up to 100% of their fixed fee in shares. For Board members electing to receive more than 50% of their fixed fee in shares, the shares exceeding the 50% portion are granted at a discount of 20% to market price. The proportion between shares (in excess of 50%) and cash is selected by each Board member upon election at the general meeting and is fixed until the next general meeting. The Board of Directors is compensated on a pro-rata basis for the period of service, even in the case of early termination or removal.

In 2025, the fair value at grant date amounted to kEUR 795 (2024: kEUR 785), reflecting a measurement based on a total number of shares of 51,895 (2024: 25,796) considering a 20% discount for any portion of the fee exceeding 50% of the total board compensation paid in shares. All shares will be fully vested at the general meeting in April 2026. In 2025, a total amount of kEUR 798 (2024: kEUR 802) was recognized as “General and administrative expenses” in the income statement according to the principles of graded vesting in IFRS 2.

Executive Committee and selected key employees

The Board of Directors has adopted a Long-Term Incentive Plan (“LTIP”) for Executive Committee members and selected key employees of the Group. Under this share-based incentive program, eligible participants are awarded the contingent right to receive a certain number of shares in the future (“PSU(s)”) in the Company, subject to, inter alia, continued employment and achievement of market as well as non-market performance targets. The actual number of PSUs that will eventually vest and be settled in shares depends on revenue, EBITDA, and Total Shareholder Return (“TSR”) performance of the Group over a three-year performance period.

• In H1 2024, 30 employees of the Group, including members of the Executive Committee, were granted PSUs in the Company. The total fair value at grant date amounted to kEUR 3,408. The fair value at grant date for the PSUs conditioned on revenue and EBITDA performance (i.e., non-market vesting conditions) amounted to kEUR 2,629, reflecting a measurement based on 81,640 number of PSUs potentially vesting and the share price of PolyPeptide Group AG as of the grant date of EUR 32, adjusted for a value cap of 500% at vesting. The impact of the value cap has been determined based on a Monte-Carlo simulation. The fair value at grant date for the PSUs conditioned on TSR performance amounted to kEUR 779, reflecting a measurement based on 17,499 number of PSUs and a fair value per PSU of EUR 45. The fair value per PSU is determined based on a Monte-Carlo simulation that also incorporates a value cap of 500% at vesting.
• In H2 2024, three employees of the Group were granted PSUs in the Company. The total fair value at grant date amounted to kEUR 38. The fair value at grant date for the PSUs conditioned on revenue and EBITDA performance (i.e., non-market vesting conditions) amounted to kEUR 30, reflecting a measurement based on 1,056 number of PSUs potentially vesting and the share price of PolyPeptide Group AG as of the grant date of EUR 28, adjusted for a value cap of 500% at vesting. The impact of the value cap has been determined based on a Monte-Carlo simulation. The fair value at grant date for the PSUs conditioned on TSR performance amounted to kEUR 8, reflecting a measurement based on 226 number of PSUs and a fair value per PSU of EUR 38. The fair value per PSU is determined based on a Monte-Carlo simulation that also incorporates a value cap of 500% at vesting.
• In H1 2025, 41 employees of the Group, including members of the Executive Committee, were granted PSUs in the Company. The total fair value at grant date amounted to kEUR 3,557. The fair value at grant date for the PSUs conditioned on revenue and EBITDA performance (i.e., non-market vesting conditions) amounted to kEUR 3,203, reflecting a measurement based on 154,364 number of PSUs potentially vesting and the share price of PolyPeptide Group AG as of the grant date of EUR 21, adjusted for a value cap of 500% at vesting. The impact of the value cap has been determined based on a Monte-Carlo simulation. The fair value at grant date for the PSUs conditioned on TSR performance amounted to kEUR 354, reflecting a measurement based on 33,076 number of PSUs and a fair value per PSU of EUR 11. The fair value per PSU is determined based on a Monte-Carlo simulation that also incorporates a value cap of 500% at vesting.
• In H2 2025, one employee of the Group joined the Long-Term Incentive Plan and was granted PSUs in the Company. The total fair value at grant date amounted to kEUR 101. The fair value at grant date for the PSUs conditioned on revenue and EBITDA performance (i.e., non-market vesting conditions) amounted to kEUR 85, reflecting a measurement based on 3,602 PSUs potentially vesting and the share price of PolyPeptide Group AG as of the grant date of EUR 24, adjusted for a value cap of 500% at vesting. The impact of the value cap has been determined based on a Monte-Carlo simulation. The fair value at grant date for the PSUs conditioned on TSR performance amounted to kEUR 16, reflecting a measurement based on 772 PSUs and a fair value per PSU of EUR 20. The fair value per PSU is determined based on a Monte-Carlo simulation that also incorporates a value cap of 500% at vesting. During H2 2025, 1,235 PSUs granted to two participants were forfeited due to termination of employment prior to vesting. In accordance with IFRS 2, the related share‑based payment expense recognized in prior periods was reversed, and no further expense is recognized in respect of these forfeited awards.

The participants are compensated for missed dividend payments during the vesting period if the PSUs vest. As a result, expected dividends during the vesting period have not impacted the fair value measurements of the grant.

An expense of kEUR 1,223 (2024: kEUR 512) has been recognized in 2025 as “General and administrative expenses” in the income statement relating to these grants.

Chief Executive Officer

The CEO of the Group, Juan Jose Gonzalez, is participating in the share-based incentive program described above. In addition to these, he was also granted PSUs on 6 September 2023 (“2023 CEO Grant”). The vesting of the PSUs for the 2023 CEO Grant depends on RONOA and EPS performance of the Group over a three-year performance period.

In accordance with IFRS 2, the maximum number of shares potentially vesting was used for the determination of the fair value of the grant. As a result, the fair value at grant date amounted to kEUR 1,135, reflecting a measurement based on 51,060 number of PSUs and the share price of PolyPeptide Group AG as of the grant date of EUR 23. The vesting period ends 10 trading days after the shareholders approve the 2025 audited consolidated financial statements.

The participant is compensated for missed dividend payments during the vesting period if the PSUs vest. As a result, expected dividends during the vesting period have not impacted the fair value measurement of the grant.

In 2025, no expense has been recognized in the income statement since it is expected that no PSUs from the 2023 CEO Grant will eventually vest. In H1 2024, an amount of kEUR 146 was recognized as “General and administrative expenses” in the income statement. This amount has been reversed in H2 2024.

5Taxation

Taxation includes local and foreign taxation. Major components of the tax expense were:

Amounts recorded in the consolidated statement of comprehensive income related to deferred income taxes on actuarial gains and losses on defined benefit plans as a result of IAS 19.

A reconciliation of the income tax charge applicable to profit from operating activities before income tax at the Swiss statutory income tax rate to income tax expense at the Company’s effective income tax rate for the years ended 31 December was as follows:

The effective tax rate for 2025 is -5.5% (2024: -7.8%). The Group has recorded a limited tax expense, despite the loss before tax. This low tax expense is mainly due to non-capitalized tax assets, partly offset by R&D tax credits incurred in the US group entities in 2025.

Non-capitalized tax losses are also related to further build-up of tax losses in Polypeptide Group AG, due to the current year loss making position. A deferred tax asset has not been recognized for the tax losses due to uncertainty on whether the tax losses will be utilized before expiry (tax losses in Switzerland expire after seven years).

Income from R&D tax credits is related to US R&D tax credits. This income is subsequently reversed through the impairment of the US deferred tax assets.

The deferred tax assets include an amount of kEUR 2,682 (2024: kEUR 2,757) relating to US R&D tax credits that have been claimed, but for which uncertainty exists on whether these will be sustained by the US tax authorities.

The deferred tax assets for losses carried forward relate to tax losses of PolyPeptide Laboratories Holding (PPL) AB (Sweden) and PolyPeptide Laboratories France S.A.S. (France) and PolyPeptide A/S (Denmark). The tax losses are expected to be offset against future taxable profits which are expected to be realized within the foreseeable future.

The valuation of deferred tax assets for losses carried forward are based on management approved medium-term budgets. Tax losses are expected to be utilized within five years.

The net deferred tax asset compose of temporary differences, mainly related to intangible assets, inventory, pension liabilities, deferred tax deduction of book expenses as well as unutilized R&D tax credits in PolyPeptide Laboratories Inc. (USA), including accounting for uncertainty on whether this can be sustained by US tax authorities.

The Group has unrecognized tax loss carry forwards available for losses incurred in various countries approximating mEUR 36.6 (2024: mEUR 1,155), of which mEUR 19.1 (2024: mEUR 10.2) has no expiration date and mEUR 17.5 will expire between 2028 and 2032. No deferred income tax asset has been recognized due to uncertainty with respect to available taxable profits in the future for these tax jurisdictions and the limitations imposed in tax legislation in order to utilize the tax losses.

The significant decrease in unrecognized deferred tax losses is caused by PolyPeptide Group AG’s reassessment of the valuation approach for its investment in PolyPeptide Laboratories Holding (PPL) AB in accordance with the Swiss Code of Obligations. Management determined that the quoted market price of PolyPeptide Group AG no longer provided the most appropriate basis for estimating the recoverable amount of the investment. The recoverable amount is now determined with reference to the consolidated IFRS net‑equity value of PolyPeptide Laboratories Holding (PPL) AB and its subsidiaries, which is considered a more reliable indicator under the current circumstances. The change in the valuation approach and the associated tax treatment has been confirmed by the respective tax authority. Consequently, the tax losses incurred because of the impairment of the investment no longer exist, but have been replaced by a temporary difference related to the tax value of the investment.

No deferred tax asset has been recognized for the temporary difference of mEUR 1,894, as PolyPeptide Group AG does not yet meet the probability threshold for having sufficiently reliable evidence that future taxable profits will be available to utilize the temporary difference.

The effect of this accumulated tax deduction and corresponding valuation allowance on the deferred tax asset has been reported through equity. As no net deferred tax asset is recognized for the tax loss generated by this tax deduction, there is no net tax effect reported in equity.

Deferred income tax liabilities as at 31 December relate to the following:

Differences in the carrying amount and tax values of assets and liabilities mainly relate to differences in valuation of Land & Buildings and Machinery & Equipment.

The deferred income tax charge relates to the following:

Translation differences mainly relate to Swedish Krona and United States Dollar.

6Shareholders’ equity

Share capital

There have been no changes to the share capital of the parent company of the Group, PolyPeptide Group AG, during 2025. As a result, the share capital of PolyPeptide Group AG comprised 33,125,001 registered shares with a nominal value of CHF 0.01 each as at 31 December 2025.

All shares are fully paid-up.

Treasury shares

Cash distribution

No cash distribution was made in 2025 (2024: no cash distribution).

7Earnings per share

Basic earnings per share has been calculated by dividing the result for the year attributable to the owners of PolyPeptide Group AG by the weighted average number of shares outstanding during the year. Treasury shares are not considered as outstanding shares.

Diluted earnings per share is calculated by dividing the result for the year attributable to the owners of PolyPeptide Group AG by the weighted average number of shares outstanding adjusted for all potentially dilutive shares. Dilutive shares arise from the share-based payment described in Note 4. 

8Intangible assets

The Group’s intangible assets only consist of software.

As at 31 December 2025, the carrying amount of software includes an amount of EUR 7.8 million (2024: EUR 7.1 million) that is still under construction. This software will be taken into use in subsequent periods and hence no amortization has been recognized for this software yet.

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. If any indicators of impairment have been identified, the Group calculates the amount of impairment as the difference between the recoverable amount of the asset and its carrying value and recognizes the impairment loss in the income statement. The Group has not identified any indicators of impairment during the year.

9Property, plant and equipment

In 2024, the Group decided to exercise a purchase option of a right-of-use asset. As a result, the asset was reclassified from right-of-use assets to property, plant and equipment. This is reflected in the table above by the net transfer of kEUR 64 (acquisition value) and kEUR 15 (accumulated depreciation), respectively.

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. If any indicators of impairment have been identified, the Group calculates the amount of impairment as the difference between the recoverable amount of the asset and its carrying value and recognizes the impairment loss in the income statement.

During 2025, the Group determined that certain machinery within the production facility was no longer in use and has no expected future economic benefit. As a result, the carrying amount of these assets was reviewed and written down to their recoverable amount. An impairment loss of kEUR 1,298 was recognized in the year.

During 2024, the Group decided to discontinue the development of certain assets under construction. As a result, an impairment loss of kEUR 1,486 was recognized, reflecting a recoverable amount of nil after the impairment.

The amount of borrowing costs capitalized during the year was kEUR 2,199 (2024: nil).

As at 31 December 2025, the carrying amount of Land & Buildings includes an amount of approximately kEUR 6,000 (2024: kEUR 6,300) for which the legal ownership is no longer with the Group due to the transaction with Monedula AB, as further disclosed in Note 18.

10Leases

Set out below are the carrying amounts of right-of-use assets recognized in the statement of financial position and the movements during the year:

Set out below are the carrying amounts of the lease liabilities recognized in the statement of financial position and the movements during the year:

The maturity of the total undiscounted lease liability as at 31 December is disclosed in Note 23.

The following amounts are recognized in the income statement:

The Group had total cash outflows for leases of kEUR 9,407 in 2025 (2024: kEUR 6,869).
The total lease liability of the Group mainly relates to leases of buildings in Torrance, California, USA. The remaining lease liability largely consists of machinery and company cars in various Group companies, primarily having fixed monthly lease payments.

11Investments in subsidiaries

The consolidated financial statements include the financial statements of the Company and the subsidiaries listed below. Details of investments in subsidiaries as at 31 December are as follows:

Percentage of voting shares is equal to percentage of ownership.

12Inventories

Raw materials that are expired or that are no longer used in production, and finished goods for which no future sales are expected, are fully written down at the balance sheet date. Finished goods that are expected to be sold after retesting are written down for the expected loss during this retesting. The estimated loss is approximately 10% of the original weight of the batch.

Costs of inventories recognized in cost of sales in the income statement during the financial year amounted to kEUR 141,615 (2024: kEUR 132,771).

Provisions for obsolete stock amounted to kEUR 55,030 as at 31 December 2025 (2024: kEUR 51,282).Inventory write downs recognized in cost of sales in the income statement during the financial year 2025 amounts to kEUR 23,069, mainly due to inventory write-downs in Belgium and USA (2024: kEUR 13,636, mainly due to inventory write-downs in Belgium).

13Trade receivables

Trade receivables are non-interest bearing and are generally on 30–90 day terms.

The Group has entered into a non-recourse factoring agreement with a bank for a few selected customers. The arrangement is non-recourse between the Group and the bank where all risks and rewards of ownership of receivables are fully transferred to the bank, and where the Group does not provide any guarantee about the receivables’ performance. As a result, PolyPeptide has no continuing involvement in the transferred receivables.

When the receivable is derecognized, the difference between the carrying amount of the receivable and the consideration received from the bank is recognized as a financial expense in the income statement.

In 2025, consideration received from the bank as part of the non-recourse factoring agreement amounted to kEUR 95,212 (2024: kEUR 50,551) which resulted in a related financial expense of kEUR 579 (2024: kEUR 388).

The aging analysis of trade receivables is as follows:

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.

A significant part of the outstanding accounts receivable balance relates to large reputable pharmaceutical companies with no known history of write-offs. The expected credit loss for these large pharmaceutical companies is estimated at nil. For smaller outstanding debtors, the expected loss rates are based on the Group’s historical credit losses experienced over a three-year period prior to the end of the reporting period. These historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group’s customers.

Movements in the bad debt allowance for trade receivables are as follows:

14Other current assets

“Other” mainly comprises advance payments to suppliers.

15Cash and cash equivalents

For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents comprise the following as at 31 December of each year:

Changes in liabilities arising from financing activities for the years were as follows:

16Pensions

The Group participates in local pension plans in the countries in which it operates. The pension plans are either structured as defined contribution plans or defined benefit plans:

• Defined contribution plans, where the Group is only obliged to pay a pension premium to a fund or insurance company on behalf of the employee. Contributions to defined contribution pension schemes are recognized as incurred in the consolidated income statement.
• Defined benefit plans, where the Group is obliged to provide pension benefits related to services rendered based on final salary levels. The obligation arising from the defined benefit plans is recognized as a net defined benefit obligation in the statement of financial position. This plan is used in Sweden, France, Belgium, India and Switzerland.

The majority of the total net defined benefit obligation recognized in the consolidated financial statements relates to the entities in Sweden and Belgium. For each of the defined benefit plans, no trust is established, and the full liability is recorded in the statement of financial position with compulsory insurance coverage.

The Swedish net defined benefit obligation is calculated by a third-party institution, the Pension Registration Institute (PRI). PRI also administrates the pension payments to employees, which are subsequently charged to the company.

The Belgian fund is outsourced to an insurance company called AXA Insurance. All funds requested to cover the year are called by and paid to the insurance company. The net defined benefit obligation is calculated by a third-party institution, Willis Towers Watson.

The movement in the net defined benefit obligation is shown on the following pages.

There was no impact of minimum funding requirements or asset ceiling on the net defined benefit obligation in 2025.

There was no impact of minimum funding requirements or asset ceiling on the net defined benefit obligation in 2024.

Pension expenses reflected in the income statement

Weighted average principal assumptions used in determining the present value of the defined benefit obligation

Sensitivity to changes in assumptions

Changes in the assumptions will impact the defined benefit pension obligation as at 31 December as follows:

Expected contributions to the plan for next annual reporting period

The Group expects to pay kEUR 3,889 in contributions to defined benefit plans in 2026 (2025: kEUR 3,605).

Weighted average duration

The weighted average duration of the defined benefit obligation is 14.51 years (2024: 15.5 years).

17Provisions

The provision for restoration costs relates to the requirement to return leased properties of the Torrance facility into the conditions required by the terms and conditions of the lease agreements and depollution activities for other sites.

In 2024, the provision for litigation relates to labor law claims from former employees.

Movement of the provision for the years was as follows:

18Other financial liabilities

Financial liability to Monedula AB

In December 2019, PolyPeptide Laboratories (Sweden) AB sold all its shares in PolyPeptide Fastighets AB to related party Draupnir Holding B.V. PolyPeptide Fastighets AB was subsequently renamed into Monedula AB.

Monedula AB is the owner of the premises that are leased by PolyPeptide Laboratories (Sweden) AB. At transaction date, PolyPeptide Laboratories (Sweden) AB and Monedula AB extended the existing lease agreement to 31 December 2035.

Although the legal ownership of the premises was transferred to the buyer, management concluded that the transfer of the premises did not satisfy the requirements of IFRS 15 to be accounted for as a sale of the asset. Therefore, the carrying value of the premises as at the transaction date remained in the consolidated statement of financial position of the Group.

The consideration received for the premises in the amount of SEK 124.8 million (kEUR 11,997) was recognized as a financial liability and accounted for in accordance with IFRS 9 as prescribed in IFRS 16.103(a).

The financial liability is currently measured at amortized cost using an effective interest rate of 5.57% (2024: 5.57%). The financial liability matures on 31 December 2035 and will be settled with future lease terms payable to Monedula AB. The total carrying value of the liability as at 31 December 2025 amounts to SEK 116.8 million (kEUR 10,796), of which SEK 14.7 million (kEUR 1,361) is presented as a current financial liability. The total carrying value of the liability as at 31 December 2024 amounted to SEK 123.5 million (kEUR 10,774), of which SEK 14.5 million (kEUR 1,266) was presented as a current financial liability.

The lease payments change each year based on changes in a consumer price index. When the adjustment to the lease payments takes effect, the financial liability is remeasured to reflect the new net present value of the future lease payments.

19Interest-bearing loans and borrowings

As at the reporting date, the Company had in place a revolving credit facility agreement provided by UBS Switzerland AG, Zürcher Kantonalbank and Danske Bank (the “RCF”). During 2025, the Company amended and restated the RCF, increasing the capital commitments from EUR 111 million to EUR 151 million and extending the term to March 2028.

The RCF agreement includes a financial covenant. For each period of twelve months ending on 30 June or 31 December in any year, the Group must comply with a predetermined financial ratio that is based on debt and earnings.

One of the lenders participating in the RCF has issued a bank guarantee in the amount of EUR 10 million in favor of one of the Group’s customers in relation to amounts received for (i) manufacturing capacity reservations and (ii) raw material prepayments. The amount of the bank guarantee has reduced the available drawings under the RCF accordingly.

The interest rate on the RCF amounted to EURIBOR plus an average margin of 2.95% in 2025 per annum. In H1 2025, the margin was 2.60% per annum and in H2 2025, the margin was 3.15% per annum (H1 2024: 3.40% per annum and H2 2024: 2.45%). As at 31 December 2025, an amount of kEUR 90,000 was drawn from the RCF (31 December 2024: kEUR 40,000).

As at the reporting date, the Company also had in place a subordinated credit facility with its main shareholder, Draupnir Holding B.V., in the amount of EUR 20 million, which was fully drawn as at 31 December 2025 (31 December 2024: kEUR 30,000) (the “Draupnir Facility”). During 2025, the Company amended and restated the Draupnir Facility extending the term to May 2027. The interest rate on the Draupnir Facility amounts to three-month EURIBOR plus a margin between 3.25% and 3.95% (2024: 3.25% and 4.20%) per annum on the amounts drawn.

As at 31 December 2025, an amount of kEUR 1,200 was granted by ING Bank (31 December 2024: kEUR 1,200), of which nil was drawn (31 December 2024: nil). In 2025 and 2024, the interest rate on the ING Bank credit facility amounted to 1-month EURIBOR plus a margin of 1.2% on the amounts drawn, and a facility fee of 0.30% on the total facility amount.

20Trade payables and other current liabilities