Notes to the consolidated financial statements 
as of March 31, 2025

1. Basis for preparation

1.1 Corporate information

The Sonova Group (the “Group”) is a global leader in innovative hearing care solutions: from personal audio devices and wireless communication systems to audiological care services, hearing aids and cochlear implants. The Groupʼs globally diversified sales and distribution channels serve an ever growing consumer base in more than 100 countries. The ultimate parent company is Sonova Holding AG, a limited liability company incorporated in Switzerland. Sonova Holding AGʼs registered office is located at Laubis­rütistrasse 28, 8712 Stäfa, Switzerland.

1.2 Basis of consolidated financial statements

The consolidated financial statements of the Group for the reporting period April 1, 2024 to March 31, 2025 have been prepared in accordance with IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) and comply with Swiss law. The consolidated financial statements were prepared under the historical cost convention except for the revaluation of certain financial assets at market value. The consolidated financial statements were authorised for issue by the Board of Directors of Sonova Holding AG on May 8, 2025 and are subject to approval by the Annual General Shareholdersʼ Meeting on June 10, 2025.

The consolidated financial statements are presented in millions of Swiss Francs (CHF) and rounded to the nearest hundred thousand. Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. All ratios and variances are calculated using the underlying amount rather than the presented rounded amounts.

The consolidated financial statements include Sonova Holding AG as well as the domestic and foreign subsidiaries over which Sonova Holding AG exercises control. A list of the significant consolidated companies is given in Note 7.6.

Accounting policies of relevance for an understanding of the consolidated financial statements are set out in the specific notes to the financial statements.

1.3 Significant accounting judgments and estimates

Preparation of financial statements in conformity with IFRS Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. This includes estimates and assumptions in the ordinary course of business as well as non-recurring events such as the outcome of pending legal disputes. The estimates and assumptions are continuously evaluated and are based on experience and other factors, including expectations of future events that are believed to be reasonable. Actual results may differ from these estimates and assumptions.

The main estimates and assumptions with a significant risk of resulting in a material adjustment within the next financial year are described in the following notes:

Description

Further information

Allocation of the transaction price to performance obligations

Note 2.3: Revenue

Renewal options in leases

Note 3.4: Leases

Capitalization of development costs

Note 3.5: Intangible assets

Impairment test

Note 3.5: Intangible assets

Provisions for warranty, returns and product liabilities

Note 3.7: Provisions

Fair value of financial liabilities at fair value through profit or loss

Note 4.8: Financial instruments

Deferred tax assets

Note 5.1: Taxes

Business combinations

Note 6.1: Acquisitions/disposals of subsidiaries

Defined benefit plans

Note 7.3: Employee benefits

1.4 Changes in accounting policies

In 2024/25 the Group adopted the following new IFRS Accounting Standards, interpretations and amendments to existing ones, without having a significant impact on the Groupʼs result and financial position:

  • Non-current liabilities with covenants – Amendments to IAS 1
  • Classification of liabilities as current or non-current – Amendment to IAS 1
  • Lease liability in a sale and leaseback – Amendments to IFRS 16
  • Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7

The Group has assessed the expected impacts of the various new and revised standards and interpretations that will be effective for the financial year starting April 1, 2025. These standards are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions. The Group is also assessing other new and revised standards which are not mandatory until after 2025.

IFRS 18 “Presentation and Disclosure in Financial Statements”: The new standard on presentation and disclosure in financial statements. The key new concepts introduced in IFRS 18 relate to the structure of the statement of profit or loss, required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entityʼs financial statements and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. The Group is currently assessing the impact of adopting the standard, which will become effective from April 1, 2027.

2. Operating result

2.1 Income statement reconciliation

The Group presents the “Consolidated income statement” based on a classification of costs by function and is continuously amending its business portfolio with acquisitions, resulting in acquisition-related intangibles (see section “Intangible assets” in Note 3.5) and related amortization charges. To calculate EBITA1), which is the key profit metric for internal (refer to Note 2.2) as well as external purposes, acquisition-related amortization is separated from the individual functions as disclosed below.

April 1 to March 31, CHF million

2024/25

Income statement as reported

Acquisition related amortization

Income statement EBITA separation

Sales

3,865.4

3,865.4

Cost of sales

(1,080.9)

(1,080.9)

Gross profit

2,784.5

2,784.5

Research and development

(235.1)

1.5

(233.6)

Sales and marketing

(1,465.1)

56.3

(1,408.8)

General and administration

(392.6)

(392.6)

Other income / (expenses), net

0.2

0.2

Operating profit before acquisition-related amortization (EBITA)1)

749.8

Acquisition-related amortization

(57.9)

(57.9)

Operating profit (EBIT)2)

691.9

691.9

1)Earnings before financial result, share of profit/(loss) in associates/joint ventures, taxes and acquisition-related amortization (EBITA).

2)Earnings before financial result, share of profit/(loss) in associates/joint ventures and taxes (EBIT).

April 1 to March 31, CHF million

2023/24

Income statement as reported

Acquisition related amortization

Income statement EBITA separation

Sales

3,626.9

3,626.9

Cost of sales

(1,016.5)

(1,016.5)

Gross profit

2,610.4

2,610.4

Research and development

(239.0)

1.5

(237.5)

Sales and marketing

(1,346.0)

55.6

(1,290.4)

General and administration

(354.9)

(354.9)

Other income / (expenses), net

(0.6)

(0.6)

Operating profit before acquisition-related amortization (EBITA)1)

727.0

Acquisition-related amortization

(57.1)

(57.1)

Operating profit (EBIT)2)

669.9

669.9

1)Earnings before financial result, share of profit/(loss) in associates/joint ventures, taxes and acquisition-related amortization (EBITA).

2)Earnings before financial result, share of profit/(loss) in associates/joint ventures and taxes (EBIT).

2.2 Segment information

Information by business segments

The Group is active in the two segments, hearing instruments and cochlear implants, which are reported separately to the Groupʼs chief operating decision maker (Chief Executive Officer). The financial information that is provided to the Groupʼs chief operating decision maker, which is used to allocate resources and to assess the performance, is primarily based on sales analysis as well as consolidated income statements and other key financial metrics for the two segments. The Group uses EBITA as a key metric to measure profit or loss for both segments (refer to Note 2.1). Transactions between segments are based on market terms.

Hearing instruments:

This operating segment includes the activities of the design, development, manufacture, distribution and service of hearing instruments and related products, as well as wireless headsets, speech-enhanced hearables and audiophile headphones. Research and development is centralized in Switzerland while some supporting activities are also performed in Canada and Germany. Production is concentrated with production centers located in Switzerland, China, Mexico, Germany, Ireland and Vietnam – with technologically advanced production processes being performed in Switzerland and standard product assembly being located in Asia and Mexico. Most of the marketing activities are steered by the brand marketing departments in Switzerland, Canada, the United States and Germany. The execution of marketing campaigns lies with the sales organizations in each market. Product distribution is done through sales organizations in the individual markets for hearing instruments and through 21 sales subsidiaries and with long-established trading partners. The distribution channels of the Group vary in the individual markets depending on the sales strategy and the characteristics of the countries. The distribution channels can be split broadly into a retail business where Sonova operates its own store network and sells directly to end consumers and a hearing instruments business, reflecting the wholesale sales to independent audiologists, 3rd party retail chains, multinational and government customers.

Cochlear implants:

This operating segment includes the activities of the design, development, manufacture, distribution and service of hearing implants and related products. The segment consists of Advanced Bionics and the related sales organizations. Research and development as well as marketing activities of Advanced Bionics are centralized predominantly in the United States and Switzerland while production resides in the United States and Mexico. The distribution of products is effected through sales organizations in the individual markets.

in CHF million

2024/25

2023/24

2024/25

2023/24

2024/25

2023/24

2024/25

2023/24

Hearing Instruments

Cochlear Implants

Corporate / Eliminations

Total

Segment sales

3,569.7

3,357.1

307.5

282.4

3,877.2

3,639.5

Intersegment sales

(8.3)

(9.2)

(3.6)

(3.5)

(11.8)

(12.7)

Sales

3,561.4

3,347.9

303.9

278.9

3,865.4

3,626.9

Operating profit before acquisition-related amortization (EBITA)

721.4

701.7

28.4

25.4

0.0

(0.0)

749.8

727.0

Depreciation, amortization and impairment

(223.3)

(216.7)

(25.2)

(29.6)

(248.5)

(246.2)

Segment assets

5,084.8

5,069.3

573.9

580.8

(741.0)

(738.9)

4,917.7

4,911.2

Unallocated assets1)

1,006.4

880.6

Total assets

5,924.2

5,791.8

1)Unallocated assets include cash and cash equivalents, other current financial assets (excluding loans), investments in associates/joint ventures and deferred tax assets.

Reconciliation of reportable segment profit CHF million

2024/25

2023/24

EBITA

749.8

727.0

Acquisition-related amortization

(57.9)

(57.1)

Financial costs, net

(45.3)

(27.0)

Share of profit/(loss) in associates/joint ventures, net

5.4

4.4

Income before taxes

652.0

647.3

Entity-wide disclosures

Sales and selected non-current assets by regions CHF million

2024/25

2023/24

2024/25

2023/24

Country / region

Sales1)

Selected non-current assets2)

Switzerland

29.8

30.6

211.2

221.7

EMEA (excl. Switzerland)

1,943.4

1,828.4

1,656.0

1,712.2

USA

1,156.8

1,074.0

1,022.7

1,048.0

Americas (excl. USA)

278.9

264.4

252.7

261.5

Asia/Pacific

456.4

429.4

485.2

470.7

Total Group

3,865.4

3,626.9

3,627.9

3,714.2

1)Sales based on location of customers.

2)Total of property, plant & equipment, right-of-use assets, intangible assets and goodwill, investments in associates/joint ventures and other non-current operating assets.

As common in this industry, the Sonova Group has a large number of customers. There is no single customer who accounts for more than 10% of total sales.

2.3 Revenue

The Group generates revenue primarily from the sale of audio devices, hearing instruments, cochlear implants and related services. The following provides a disaggregation of the sales by business and the timing of revenue recognition:

Sales by business CHF million

2024/25

2023/24

Hearing Instruments business

1,821.4

1,697.7

Audiological Care business

1,487.5

1,410.5

Consumer Hearing business

252.5

239.7

Total Hearing Instruments segment

3,561.4

3,347.9

Cochlear Implant systems

214.9

185.5

Upgrades and accessories

89.0

93.4

Total Cochlear Implants segment

303.9

278.9

Total sales

3,865.4

3,626.9

Timing of revenue recognition CHF million

2024/25

2023/24

At point in time

3,698.8

3,480.6

Over time

166.6

146.3

Total sales

3,865.4

3,626.9

The following table summarizes the contract assets and contract liabilities related to contracts with customers:

Contract balances CHF million

31.3.2025

31.3.2024

Contract assets

11.7

10.5

Contract liabilities

263.4

281.5

Contract liabilities relate to advance consideration received from customers for the Groupʼs various services, such as extended warranties, loss and damage and battery plans. In addition to the contract liabilities, the Group also recognizes contract assets that relate to loss and damage services. Contract assets are presented within other operating assets (refer to Note 3.6) in the consolidated balance sheet.

Significant changes in the contract liabilities during the period are as follows:

Movement in contract liabilities CHF million

2024/25

2023/24

Balance April 1

281.5

299.8

Changes through business combinations

0.1

0.9

Increase due to advance consideration received in the period

154.9

134.5

Decrease due to revenue recognized in the period that,

- was included in the contract liabilities at the beginning of the period

(129.5)

(107.1)

- relates to consideration received in the period

(36.9)

(38.4)

Reversals

(0.2)

(2.3)

Exchange differences

(6.5)

(5.9)

Balance March 31

263.4

281.5

Expectation on timing of revenue recognition:

Within 1 year

117.4

123.6

Within 2 years

56.7

75.4

Within 3 years

46.9

39.7

Within 4 years

20.5

20.1

More than 4 years

21.9

22.7

No material revenue was recognized in the current period from performance obligations satisfied in previous periods.

Accounting policies

The Group recognizes revenue at point in time when control of the products is transferred to the buyer, mainly upon delivery. The transaction price is adjusted for any variable elements, such as rebates and discounts. For audiological care customers, revenue recognition usually occurs after fitting of the device or when the trial period lapses. For hearing instruments sold in bundled packages (i.e. including accessories and services), the transaction price is allocated to each performance obligation on the basis of the relative stand-alone selling price of all performance obligations in the contract.

For cochlear implants, sales are generally recognized at point in time when control of the products is transferred to the buyer (mainly hospitals), either at delivery or after surgery.

When the customer has a right to return the product within a given period, the amount of revenue is adjusted for expected returns, which are estimated based on historical product return rates. A return provision for the expected returns is recognized as an adjustment to revenue. In addition, an asset for the right to recover returned goods is recognized, measured by reference to the carrying amount, which is presented as part of other current operating assets.

The Group also offers various services, such as extended warranties, loss and damage and battery plans. Revenue for these services is predominantly recognized on a straight-line basis over the service period. In the majority of countries in which the Group operates, the standard warranty period is two years and the extended warranty covers periods beyond the second year. Loss and damage is offered in some, but not all countries, in which the Group operates. This service assures replacement of hearing instruments that are not covered by the warranty. In some countries, the Group reinsures loss and damage. Insurance costs are capitalized as contract assets and are recognized as cost of sales over the loss and damage service period.

Payment terms vary significantly across countries and also depend on whether the customer is a private or public customer.

Accounting judgements and estimates

In order to allocate the transaction price to each performance obligation in a contract, management estimates the standalone selling price of the products and services at contract inception. Mostly, the standalone selling price is based on established price lists. For loss and damage services, management considers the likelihood of a customer claim in the calculation of the standalone selling price.

If the sum of the standalone selling prices of a bundle of goods or services exceeds the consideration in a contract, the discount is allocated proportionally to all of the performance obligations in the contract unless there is observable evidence that the discount relates to only one or some of the performance obligations.

2.4 Earnings per share

Basic earnings per share

2024/25

2023/24

Income after taxes (CHF million)

540.5

601.0

Weighted average number of outstanding shares

59,599,343

59,630,111

Basic earnings per share (CHF)

9.07

10.08

Diluted earnings per share

2024/25

2023/24

Income after taxes (CHF million)

540.5

601.0

Weighted average number of outstanding shares

59,599,343

59,630,111

Adjustment for dilutive share awards

184,069

160,699

Adjusted weighted average number of outstanding shares

59,783,412

59,790,810

Diluted earnings per share (CHF)

9.04

10.05

Accounting policies

Basic earnings per share is calculated by dividing the income after taxes attributable to the ordinary equity holders of the parent company by the weighted average number of shares outstanding during the year.

In the case of diluted earnings per share, the weighted average number of shares out­standing is adjusted assuming all outstanding dilutive awards from share participation plans will be exercised. For the option plans, the weighted average number of shares is adjusted for all dilutive options issued under the stock option plans which have not yet been exercised. Options that are out-of-the-money (compared to average share price) are not considered. The calculation of diluted earnings per share is based on the same income after taxes for the period as is used in calculating basic earnings per share.

3. Operating assets and liabilities

3.1 Trade receivables

CHF million

31.3.2025

31.3.2024

Trade receivables

602.5

563.6

Loss allowance for doubtful receivables

(25.6)

(25.4)

Total

576.9

538.3

As is common in this industry, the Sonova Group has a large number of customers. There is no significant concentration of credit risk.

For further information on the aging of the trade receivables and related allowances, please refer to Note 4.7.

During 2024/25, the Group utilized CHF 7.1 million (previous year CHF 3.5 million) of the loss allowance for doubtful receivables to write-off receivables.

The carrying amounts of trade receivables are denominated in the following currencies:

CHF million

31.3.2025

31.3.2024

BRL

26.4

19.2

CAD

26.2

23.4

CHF

9.2

12.5

EUR

217.5

211.6

GBP

22.4

17.6

USD

182.5

165.8

Other

92.8

88.3

Total trade receivables, net

576.9

538.3

Accounting policies

Trade receivables are initially recorded at the transaction price and subsequently measured at amortized cost using the effective interest method, less loss allowance (see Note 4.7). The charges to the income statement are included in general and administration costs. Due to the short-term nature of trade receivables, their carrying amount is considered to approximate their fair value.

3.2 Inventories

CHF million

31.3.2025

31.3.2024

Raw materials and components

85.5

60.1

Work-in-process

145.6

156.4

Finished products

303.8

282.3

Allowances

(66.5)

(63.2)

Total

468.5

435.6

The “cost of sales” corresponding to the carrying value of inventory (which excludes outbound freight, packaging, logistics as well as certain overhead cost) amounted in 2024/25 to CHF 910.2 million (previous year CHF 858.7 million). The Group recognized write-downs of CHF 26.5 million (previous year CHF 31.8 million) on inventories in cost of sales.

Accounting policies

Purchased raw materials, components and finished goods are valued at the lower of cost or net realizable value. To evaluate cost, the standard cost method is applied, which approximates historical cost determined on a first-in first-out basis.

Manufactured finished goods and work-in-process are valued at the lower of production cost or net realizable value. Standard costs take into account normal levels of materials, supplies, labor, efficiency, and capacity utilization. Standard costs are regularly reviewed and, if necessary, revised in the light of current conditions. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion (where applicable) and selling expenses.

Allowances are established for slow moving, phase out and obsolete stock.

3.3 Property, plant and equipment

CHF million

2024/25

Land & buildings

Machinery & technical equipment

Room installations & other equipment

Advance payments & assets under construction

Total

Cost

Balance April 1

221.2

346.1

419.3

37.8

1,024.4

Changes through business combinations

0.1

1.2

2.7

4.0

Additions

4.4

22.7

44.0

18.8

89.9

Disposals

(1.6)

(9.7)

(24.6)

(36.0)

Transfers

3.3

5.1

9.4

(17.8)

Exchange differences

(2.2)

(6.6)

(10.9)

(4.0)

(23.7)

Balance March 31

225.2

358.8

439.8

34.8

1,058.6

Accumulated depreciation

Balance April 1

(107.4)

(269.5)

(267.1)

(644.2)

Depreciation

(7.9)

(26.0)

(40.5)

(74.4)

Disposals

1.4

9.3

20.2

30.8

Exchange differences

1.0

3.9

3.8

8.8

Balance March 31

(113.0)

(282.3)

(283.7)

(679.0)

Net book value

Balance April 1

113.8

76.6

152.2

37.6

380.2

Balance March 31

112.2

76.5

156.2

34.8

379.6

CHF million

2023/24

Land & buildings

Machinery & technical equipment

Room installations & other equipment

Advance payments & assets under construction

Total

Cost

Balance April 1

221.3

325.7

402.1

29.7

978.8

Changes through business combinations

0.6

2.4

3.0

Additions

1.8

28.2

37.6

17.7

85.3

Disposals

(0.8)

(4.9)

(21.9)

(27.6)

Transfers

0.8

2.4

7.2

(10.4)

Exchange differences

(1.9)

(5.9)

(8.1)

0.8

(15.2)

Balance March 31

221.2

346.1

419.3

37.8

1,024.4

Accumulated depreciation

Balance April 1

(101.7)

(250.2)

(255.8)

(607.7)

Depreciation

(6.9)

(27.3)

(37.5)

(71.9)

Disposals

0.4

3.9

21.6

25.9

Exchange differences

0.8

4.1

4.6

9.5

Balance March 31

(107.4)

(269.5)

(267.1)

(644.2)

Net book value

Balance April 1

119.6

75.4

146.3

29.7

371.1

Balance March 31

113.8

76.6

152.2

37.6

380.2

Accounting policies

Property, plant and equipment is valued at purchase or manufacturing cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the expected useful lifetime of the individual assets or asset categories. Where an asset comprises several parts with different useful lifetimes, each part of the asset is depreciated separately over its applicable useful lifetime.

The applicable useful lifetimes are 25 – 40 years for buildings and 3 – 10 years for production facilities, machinery, equipment, and vehicles. Land is not depreciated. Leasehold improvements are depreciated over the shorter of useful life or lease term.

Subsequent expenditure on an item of tangible assets is capitalized at cost only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Expenditure for repair and maintenance, which does not increase the estimated useful lifetimes of the related assets are recognized as an expense in the period in which they are incurred.

The Group assesses at each reporting date, whether there is any indication, that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. If the recoverable amount is lower than carrying amount, an impairment loss is recognized.

3.4 Leases

Right-of-use assets CHF million

2024/25

Buildings

Vehicles and other assets

Total

Cost

Balance April 1

317.0

9.1

326.1

Changes through business combinations

1.3

1.3

Additions

49.0

1.7

50.7

Disposals

(16.8)

(0.6)

(17.4)

Exchange differences

(11.0)

(0.4)

(11.3)

Balance March 31

339.5

9.8

349.3

Accumulated depreciation

Balance April 1

(52.8)

(3.7)

(56.5)

Depreciation

(71.7)

(2.5)

(74.2)

Disposals

16.8

0.6

17.4

Exchange differences

1.9

0.1

2.0

Balance March 31

(105.7)

(5.5)

(111.3)

Net book value

Balance April 1

264.2

5.4

269.6

Balance March 31

233.7

4.3

238.0

Right-of-use assets CHF million

2023/24

Buildings

Vehicles and other assets

Total

Cost

Balance April 1

328.2

9.7

337.9

Changes through business combinations

6.0

6.0

Additions

50.7

1.8

52.5

Disposals

(61.0)

(2.2)

(63.2)

Exchange differences

(6.9)

(0.2)

(7.1)

Balance March 31

317.0

9.1

326.1

Accumulated depreciation

Balance April 1

(46.0)

(3.4)

(49.5)

Depreciation

(74.4)

(2.6)

(77.0)

Disposals

61.0

2.2

63.2

Exchange differences

6.6

0.2

6.8

Balance March 31

(52.8)

(3.7)

(56.5)

Net book value

Balance April 1

282.2

6.3

288.4

Balance March 31

264.2

5.4

269.6

Lease liabilities CHF million

2024/25

2023/24

Balance April 1

279.1

296.9

Changes through business combinations

1.3

6.0

Additions

50.7

52.5

Interest expense

7.2

6.7

Payments

(80.4)

(81.7)

Exchange differences

(9.2)

(1.2)

Balance March 31

248.6

279.1

thereof short-term

68.7

74.3

thereof long-term

179.9

204.8

The maturity analysis of lease liabilities is disclosed in Note 4.7

Lease disclosures CHF million

2024/25

2023/24

Expenses relating to short-term leases

12.9

9.4

Expenses relating to leases of low-value assets (excluding short-term leases of low-value assets)

0.0

0.3

Expenses relating to variable lease payments

5.7

6.0

The total cash outflow for leases in the financial year 2024/25 amounted to CHF 99.0 million (prior year CHF 97.4 million). The future lease payments relating to variable lease payments amount to CHF 5.7 million (prior year CHF 6.0 million).

Accounting policies

The group leases buildings for retail stores as well as for office, laboratory, manufacturing and storage use. The leasing terms vary significantly across countries. The leases of office space typically run for a period of up to 10 years, and leases of retail stores typically for a period of 3 to 5 years. Leases of vehicles and other assets have an average lease term of 3.6 years. Some leases include an option to renew the lease for an additional period after the end of the contract term.

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and, subsequently at cost less accumulated depreciation and impairment losses and also includes adjustments for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date and are discounted using the Groupʼs incremental borrowing rate if the interest rate implicit in the lease is not readily determinable. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It is remeasured when there is a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

Accounting judgements and estimates

The Group uses judgement to determine the lease term for some lease contracts which include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term which significantly affects the amount of lease liabilities and right-of-use assets recognized. Extension options and termination options are re-assessed only when a significant event or change in circumstances occurs that is within the control of the Group and affects whether it is reasonably certain to exercise an option.

3.5 Intangible assets

CHF million

2024/25

Goodwill

Intangibles relating to acquisitions 1)

Capitalized development costs

Software and other intangibles

Total

Cost

Balance April 1

2,558.4

920.7

250.8

190.2

3,920.1

Changes through business combinations

52.0

23.2

0.1

75.3

Additions

19.6

28.1

47.7

Disposals

0.0

(0.6)

(0.6)

Exchange differences

(67.3)

(24.3)

(1.7)

(1.6)

(94.9)

Balance March 31

2,543.2

919.6

268.7

216.2

3,947.7

Accumulated amortization and impairments

Balance April 1

(138.9)

(469.2)

(163.7)

(109.7)

(881.5)

Amortization

(57.8)2)

(18.7)

(23.3)

(99.8)

Disposals

0.0

0.5

0.5

Exchange differences

3.2

13.0

0.3

1.1

17.7

Balance March 31

(135.7)

(514.0)

(182.0)

(131.3)

(963.1)

Net book value

Balance April 1

2,419.6

451.5

87.1

80.5

3,038.6

Balance March 31

2,407.5

405.6

86.6

84.9

2,984.6

1)Intangibles relating to acquisitions consists of customer relationships (CHF 221.6 million), trademarks (CHF 175.7 million) and technology (CHF 8.3 million).

2)Relates to research and development (CHF 1.5 million) and sales and marketing (CHF 56.3 million).

CHF million

2023/24

Goodwill

Intangibles relating to acquisitions 1)

Capitalized development costs

Software and other intangibles

Total

Cost

Balance April 1

2,542.2

919.6

241.1

155.7

3,858.5

Changes through business combinations

73.8

28.5

3.0

105.3

Additions

10.3

32.9

43.3

Disposals

(6.5)

(6.5)

Exchange differences

(57.5)

(20.9)

(0.7)

(1.4)

(80.5)

Balance March 31

2,558.4

920.7

250.8

190.2

3,920.1

Accumulated amortization and impairments

Balance April 1

(140.8)

(426.5)

(141.8)

(91.5)

(800.7)

Amortization

(57.1)2)

(22.0)

(18.1)

(97.1)

Disposals

6.5

6.5

Exchange differences

2.0

7.9

(0.2)

9.8

Balance March 31

(138.9)

(469.2)

(163.7)

(109.7)

(881.5)

Net book value

Balance April 1

2,401.3

493.1

99.3

64.2

3,057.9

Balance March 31

2,419.6

451.5

87.1

80.5

3,038.6

1)Intangibles relating to acquisitions consists of customer relationships (CHF 254.9 million), trademarks (CHF 186.0 million) and technology (CHF 10.6 million).

2)Relates to research and development (CHF 1.5 million) and sales and marketing (CHF 55.6 million).

Based on the impairment tests performed, there was no need for the recognition of any impairment of goodwill for the 2024/25 and 2023/24 financial years.

The cash flow projections used for impairment testing, were based on the most recent business plan. The business plan was projected over a five year period.

Hearing instruments

As of March 31, 2025, the carrying amount of goodwill, expressed in various currencies, amounted to an equivalent of CHF 2,123.6 million (prior year CHF 2,128.9 million) and for intangible assets with indefinite useful lives to CHF 98.2 million (prior year: CHF 100.1 million). The intangible assets with indefinite useful lives relates to the Sennheiser brand name that was acquired as part of the acquisition of the Consumer Division from Sennheiser in financial year 2021/22. It has been determined to have an indefinite useful life as there is no intention to abandon the brand name. It has existed for many years and the Group has the ability to maintain its brand value for an indefinite period of time. Thus, the brand is not amortized but is assessed for impairment annually.

Cash flows beyond the projection period were extrapolated with a long-term growth rate of 2.1% (prior year 2.1%) which represents the projected inflation rate. For the calculation, a pre-tax weighted average discount rate of 9.6% (prior year 11.2%) was used. The Group performed a sensitivity analysis, which shows that changes to the main input parameters (increase of discount rate +1%, or long-term growth rate –1%) would not result in an impairment of goodwill.

Cochlear implants

As of March 31, 2025, the carrying amount of the goodwill, expressed in various currencies, amounted to an equivalent of CHF 284.0 million (prior year CHF 290.7 million).

Cash flows beyond the projection period were extrapolated with a long-term growth rate of 2.1% (prior year 2.2%) which represents the projected inflation rate. For the calculation, a pre-tax weighted average discount rate of 9.0% (prior year 11.8%) was used. The Group performed a sensitivity analysis, which shows that changes to the main input parameters (increase of discount rate +1%, or long-term growth rate –1%) would not result in an impairment of goodwill.

The capitalized development costs are reviewed on a regular basis. In the current financial year this review did not lead to any valuation adjustments. The capitalized development costs are included in the reportable segment “cochlear implants” disclosed in Note 2.2.

Accounting policies

Goodwill

Goodwill is recognized for any difference between the cost of the business combination and the net fair value of the identifiable assets, liabilities, and contingent liabilities (refer to accounting policies in Note 6.1). Goodwill is not amortized, but is assessed for impairment annually, or more frequently if events or changes in circumstances indicate that its value might be impaired. For the purpose of impairment testing, goodwill is allocated to cash-generating units that are expected to benefit from the synergies of the corresponding business combination. For the Group, a meaningful goodwill allocation can only be done at the level of the segments, hearing instruments and cochlear implants. This also reflects the level that the goodwill is monitored by management. To assess for impairment, the recoverable amount of cash-generating units are compared to the carrying amount. The carrying amount is determined based on a value-in-use calculation considering a five-year cash flow projection period and extrapolated using a terminal value for cash flows beyond the planning period. The cash flow projections are estimated on the basis of the strategic plan approved by the Board of Directors. Future cash flows are discounted with the Weighted Average Cost of Capital (WACC).

Intangibles, excluding goodwill

Purchased intangible assets such as software, licenses and patents are measured at cost less accumulated amortization (applying the straight-line method) and any impairment in value. Software is amortized over a useful lifetime of 3 – 5 years. Intangibles relating to acquisitions of subsidiaries (excluding goodwill) consist generally of technology, client relationships, customer lists, and brand names, and are amortized over a period of 3 – 20 years (except for the Sennheiser brand name as disclosed above). Other intangible assets are generally amortized over a period of 3 – 10 years. For capitalized development costs in the cochlear implants segment, amortization starts when the capitalized asset is ready for use, which is generally after receipt of approval from regulatory bodies. These assets are amortized over the estimated useful lifetime of 2 – 7 years applying the straight-line method. For in-process capitalized development costs, these capitalized costs are tested annually for impairment. Except for goodwill and the Sennheiser brand, the Sonova Group has no intangible assets with an indefinite useful life.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable.

Research costs are expensed as incurred. Development costs are capitalized only if the identifiable asset is commercially and technically feasible, can be completed, its costs can be measured reliably and will generate probable future economic benefits. Group expenditures, which fulfill these criteria are limited to the development of tooling and equipment as well as costs related to the development of cochlear implants. All other development costs are expensed as incurred. In addition to the internal costs (direct personnel and other operating costs, depreciation on research and development equipment and allocated occupancy costs), total costs also include externally contracted development work. Such capitalized intangibles are recognized at cost less accumulated amortization and impairment losses.

Accounting judgements and estimates

Goodwill and intangible assets with indefinite useful lives

The recoverable amount of cash-generating units is measured on the basis of value-in-use calculations and as such is significantly impacted by the projected cash flows, the discount rate, and the long-term growth rate, which are subject to management judgment. Actual cash flows as well as other input parameters could vary significantly from these estimates.

Capitalized development costs

The Group capitalizes costs relating to the development of cochlear implants. The capitalized development costs are reviewed on a regular basis as a matter of a standard systematic procedure. In determining the commercial as well as the technical feasibility, management judgment may be required.

3.6 Other operating assets

Other current operating assets CHF million

31.3.2025

31.3.2024

Other receivables

89.1

90.9

Prepaid expenses

53.8

42.4

Contract assets

4.7

3.9

Right to recover products

12.0

10.8

Total

159.6

148.0

Other non-current operating assets CHF million

31.3.2025

31.3.2024

Contract assets

7.0

6.6

Total

7.0

6.6

The largest individual items included in other receivables are recoverable value added taxes and deposits. Prepaid expenses mainly consist of advances to suppliers. Contract assets relate to reinsurance of loss and damage services and rights to recover returned goods relate to hearing instrument sales with a right of return (refer to Note 2.3).

3.7 Provisions

CHF million

2024/25

Warranty and returns

Reimbursement to customers

Product liabilities

Other provisions

Total

Balance April 1

123.5

11.0

44.8

29.4

208.7

Changes through business combinations

0.2

0.4

0.5

Amounts used

(40.1)

(9.9)

(15.7)

(13.1)

(78.8)

Reversals

(19.7)

(3.7)

(0.2)

(7.4)

(31.0)

Increases

57.6

15.5

17.5

90.6

Present value adjustments

0.5

0.5

Exchange differences

(3.6)

(0.2)

(1.0)

(0.7)

(5.5)

Balance March 31

117.8

12.6

28.4

26.3

185.1

thereof short-term

87.3

12.4

5.8

13.0

118.5

thereof long-term

30.5

0.2

22.7

13.3

66.6

CHF million

2023/24

Warranty and returns

Reimbursement to customers

Product liabilities

Other provisions

Total

Balance April 1

139.7

10.7

58.5

36.3

245.2

Changes through business combinations

1.6

1.6

Amounts used

(54.6)

(15.6)

(12.0)

(12.3)

(94.5)

Reversals

(7.8)

(3.6)

(1.1)

(5.0)

(17.5)

Increases

49.6

19.8

10.1

79.5

Present value adjustments

0.5

0.5

Exchange differences

(3.4)

(0.3)

(1.1)

(1.3)

(6.1)

Balance March 31

123.5

11.0

44.8

29.4

208.7

thereof short-term

91.4

10.9

11.0

15.0

128.3

thereof long-term

32.1

0.1

33.9

14.4

80.5

Warranty and returns

The provision for warranty and returns considers any costs arising from the warranty given on products sold. In general, the Group grants a 12 to 24 months warranty period for audio devices, hearing instruments and related products and up to 10 years on cochlear implants. The calculation is based on turnover, past experience and projected number and costs of warranty claims and returns.

Reimbursement to customers

The provision for reimbursement to customers considers commitments to provide volume re­bates. The provision is based on expected volumes. The large majority of the cash outflows are expected to take place within the next 12 months.

Product liabilities

The provisions for product liabilities mainly relates to the Advanced Bionics voluntary field corrective action regarding cochlear implant products, as announced on February 18, 2020.

The provisions for product liabilities are reassessed on a regular and systematic basis and follow a financial model which is consistently applied. The calculation of the provision is based on past experience regarding the number and cost of current and future claims. In the 2024/25 financial year, changes in the assessment of the expected number and cost of current and future claims led to reversals of CHF 0.2 million (previous year reversals of CHF 1.1 million). As per March 31, 2025 the provision for product liabilities amount to CHF 28.4 million (previous year CHF 44.8 mil­lion). The timing of future cash outflows is uncertain since it will largely depend on the outcome of administrative and legal proceedings. In the case of the voluntary recall of AB products in 2006, considering periods of limitation, claims will have until 2026 to be filed in most jurisdictions. However, depending on the length of proceedings and negotiations, further years may pass until all claims are settled. We expect the main cash outflow relating to the provision for product liabilities to occur within the next 4 years.

Other provisions

Other provisions include provisions for specific business risks such as litigation CHF 1.0 million (prior year CHF 0.7 million) and restructuring costs CHF 8.9 million (prior year CHF 7.1 million). While the timing of the cash outflow from the restructuring provisions is expected to take place within the next 12 months, the cash outflows for the remainder of the other provisions is expected to take place within the next two years.

Accounting policies

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows.

Accounting judgements and estimates

Provisions are based upon managementʼs best estimate, taking into consideration past experience regarding the number and cost of claims. Management believes that the provisions are adequate based upon currently available information. However, given that judgment has to be applied, the actual costs and results may differ from these estimates.

3.8 Other operating liabilities

Other short-term operating liabilities CHF million

31.3.2025

31.3.2024

Other payables

76.8

97.3

Accrued expenses

297.7

280.8

Deferred income

2.0

1.5

Total

376.4

379.6

Other payables include amounts to be remitted for withholding taxes, value added taxes, social security payments and employeesʼ income taxes deducted at source. Accrued expenses include salaries, social expenses, vacation pay, bonus and incentive compensation as well as accruals for outstanding invoices from suppliers.

3.9 Contingent assets and liabilities

Lawsuits and disputes

In October 2018, MED-EL Elektronische Geräte GmbH and MED-EL Corporation, US (together, “MED-EL”) filed a complaint against Advanced Bionics LLC (“AB”) in the US District Court for the District of Delaware for alleged patent infringement of two MED-EL patents related to ABʼs Ultra 3D product. In response, AB filed counterclaims alleging patent infringement by MED-EL of various AB patents. After years of litigation, in February 2023, the US district court granted summary judgment of non-infringement of the asserted MED-EL patents, effectively ending MED-ELʼs district court case – and any threat of damages or injunction – subject to appeal. In December 2023, Advanced Bionics won its counterclaim suit against MED-EL for two AB patents. The jury awarded AB USD 1.4 million, subject to increases for interest and the juryʼs finding of wilful infringement. In October 2024, the court issued a ruling on the post-trial motions: (1) upholding the juryʼs findings of infringement, wilful infringement, and damages; and (2) granting AB supplemental damages through patent expiration, as well as pre- and post-judgment interest. In November 2024, the Court entered a final judgment ordering MED-EL to pay AB damages in the amount of USD 2.1 million plus USD 267/day of interest. MED-EL subsequently posted a bond to stay payment of the judgment pending appeal, and filed a notice of appeal with the United States Court of Appeals for the Federal Circuit. In the beginning of April 2025, MED-EL filed its opening appeal brief, challenging various aspects of the summary judgment decision as well as the trial rulings and verdict.

In a related case brought by MED-EL in Germany, the Regional Court of Mannheim reached a first instance judgment in March 2022 which included an injunction enforced later by MED-EL. AB appealed that first instance judgement and after the European Patent Office substantially limited MED-ELʼs asserted European patent, the Higher Regional Court of Karlsruhe stopped MED-ELʼs enforcement of the injunction until its final decision. MED-EL asserted a second patent in the Higher Regional Court of Karlsruhe–and this second patent was recently narrowed by the European Patent Office to have similar scope as the first, in a decision in September 2024–and both of these patents will now proceed to a decision expected to be received in the second half 2025.

In further related proceedings in the Netherlands, ABʼs non-infringement of MED-ELʼs narrowed European patent has also been confirmed by the first instance court and is now under appeal by MED-EL. For additional national revocation and infringement proceedings related to the national part of a divisional patent of MED-EL a hearing has been conducted and the first instance decision is expected for Q2 2025. In the UK, the UK part of one of MED-ELʼs patents was invalidated by the High Court in June 2022, and this decision was upheld by the Court of Appeal in May 2023. MED-EL has since surrendered two further patents in the UK, thus abandoning the legal basis for further offensive action against AB in the UK.

In the newly formed Unified Patent Court (UPC), AB proactively filed a revocation action against a divisional patent of MED-EL in September 2023. In response, MED-EL filed an infringement action against AB based on that divisional patent. In the UPC revocation the divisional patent was upheld with amendments – this decision is currently subject of appeal proceedings. In the UPC infringement proceedings, the hearing has recently been conducted and the written decisions is expected for Q2 2025.

AB believes that the MED-EL complaints in Germany, the Netherlands and at the UPC are without merits and continues to strongly defend its position.

In August 2024, AB filed a complaint against MED-EL in the United States International Trade Commission for unlawful importation of sound processors and cochlear implant systems that infringe two Advanced Bionicsʼ patents. The investigation was instituted in September 2024 and has proceeded through fact and expert discovery. An evidentiary hearing in the investigation is scheduled for June 2025, with an Initial Determination from the Administrative Law Judge due in October 2025. For the German counterpart of one of these two Advanced Bionics patents, AB also filed a complaint against MED-EL in Germany.

4. Capital structure and financial management

4.1 Cash and cash equivalents

CHF million

31.3.2025

31.3.2024

Cash on hand

1.6

1.2

Current bank accounts

460.1

512.2

Term deposits

225.2

0.2

Total

686.9

513.6

Bank accounts and term deposits are mainly denominated in CHF, EUR and USD. The assessment on the credit risk related to cash and cash equivalents is disclosed in Note 4.7.

Accounting policies

Cash and cash equivalents includes cash on hand and cash at banks, bank overdrafts, term deposits and other short-term highly liquid investments with original maturities of three months or less. The consolidated cash flow statement summarizes the movements in cash and cash equivalents.

4.2 Financial income/expenses, net

CHF million

2024/25

2023/24

Interest income

4.4

4.8

Other financial income

2.4

7.5

Total financial income

6.8

12.3

Interest expenses

(18.8)

(21.0)

Interest expenses on lease liabilities

(7.2)

(6.7)

Other financial expenses

(25.7)

(11.1)

Interest and present value adjustments

(0.5)

(0.5)

Total financial expenses

(52.1)

(39.2)

Total financial income / expenses, net

(45.3)

(27.0)

Other financial income includes primarily fair value adjustments of financial instruments of CHF 1.9 million (previous year CHF 6.2 million). Other financial expenses includes foreign exchange gains and losses from the management of foreign currencies as well as net losses from the hedging of foreign exchange exposures of CHF 22.4 million (previous year CHF 9.7 mil­lion) and valuation adjustments on financial instruments of CHF 1.3 million (previous year CHF 0.3 million).

4.3 Dividend per share

The Board of Directors of Sonova Holding AG proposes to the Annual General Shareholdersʼ Meeting, to be held on June 10, 2025, that a dividend of CHF 4.40 per share shall be distributed (previous year CHF 4.30).

4.4 Other financial assets

Other current financial assets

CHF million

31.3.2025

31.3.2024

Financial assets at amortized cost

Financial assets at fair value through profit or loss

Total

Financial assets at amortized cost

Financial assets at fair value through profit or loss

Total

Marketable securities

0.2

0.2

0.2

0.2

Positive replacement value of forward foreign exchange contracts

1.6

1.6

0.6

0.6

Loans to third parties

10.4

10.4

9.8

9.8

Total

10.4

1.8

12.2

9.8

0.8

10.7

The Group regularly hedges its net exposure from foreign currency balance sheet positions with forward contracts. Such contracts are not qualified as cash flow hedges and are, therefore, not accounted for using hedge accounting principles. Gains and losses on these transactions are recognized directly in the income statement (refer to Note 4.7).

Other non-current financial assets

CHF million

31.3.2025

31.3.2024

Financial assets at amortized cost

Financial assets at fair value through profit or loss

Total

Financial assets at amortized cost

Financial assets at fair value through profit or loss

Total

Loans to associates

0.6

0.6

0.9

0.9

Loans to third parties

57.2

57.2

53.0

53.0

Rent deposits

3.8

3.8

2.8

2.8

Other non-current financial assets

2.9

2.9

3.9

3.9

Total

61.5

2.9

64.4

56.7

3.9

60.6

The loans are primarily denominated in CAD, CHF, EUR, GBP, JPY, PLN and USD. Loans to third parties consist mainly of loans to customers. As of March 31, 2025, the respective repayment periods vary between one and nine years and the interest rates vary generally between 1% and 5%.

Other non-current financial assets mainly consist of certain minority interests in patent and software development companies specific to the hearing aid industry.

Accounting policies

Financial assets are classified into the following categories:

  • Financial assets at amortized cost
  • Financial assets at fair value through profit or loss (FVPL)

The classification depends on the business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will be recorded in the income statement.

At initial recognition, the Group measures a financial asset at its fair value. In the case of financial assets at amortized cost, the fair value includes transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Subsequent measurement of debt instruments depends on the Groupʼs business model for managing the asset and the cash flow characteristics of the asset.

Financial assets at amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly in the income statement.

Financial assets at fair value through profit or loss (FVPL)

Assets that do not meet the criteria for amortized cost are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognized in the income statement in the period in which it arises.

4.5 Financial liabilities

As of March 31, 2025, the Group has the following bonds/US Private Placement outstanding:

Financial liabilities

Currency

Nominal value

Interest rate

Maturity

US Private Placement

USD

180

2.84%

July 14, 2025

Fixed-rate bond

CHF

200

0.50%

October 6, 2025

Fixed-rate bond

CHF

300

0.75%

October 6, 2028

Fixed-rate bond

CHF

200

1.05%

February 19, 2029

Fixed-rate bond

CHF

100

0.00%

October 11, 2029

Fixed-rate bond

CHF

200

1.95%

December 12, 2030

Fixed-rate bond

CHF

250

1.40%

February 19, 2032

Fixed-rate bond

CHF

100

0.40%

October 11, 2034

In April 2024, the Group replaced the existing credit facility in the amount of CHF 250 million with a new facility amounting to CHF 400 million and an option to increase to CHF 500 million. The new agreement is valid until April 2027, with options to extend by additional two years. As of March 31, 2025, the Group did not make us of the facility.

The Group maintains uncommitted credit facilities from various lenders. The credit facilities can be cancelled at short notice. As of March 31, 2025, the Group did not make use of these credit facilities.

Current financial liabilities

CHF million

31.3.2025

31.3.2024

Financial liabilities at amortized cost

Financial liabilities at fair value through profit or loss

Total

Financial liabilities at amortized cost

Financial liabilities at fair value through profit or loss

Total

Bank debt

0.2

0.2

0.2

0.2

Bond / US Private Placement

363.3

363.3

4.8

4.8

Deferred payments

0.4

0.4

0.3

0.3

Contingent considerations

9.5

9.5

12.2

12.2

Other current financial liabilities

0.4

0.4

1.3

1.3

Total

363.9

9.9

373.8

5.3

13.4

18.8

Unused borrowing facilities

517.9

370.5

Non-current financial liabilities

CHF million

31.3.2025

31.3.2024

Financial liabilities at amortized cost

Financial liabilities at fair value through profit or loss

Non-financial instruments

Total

Financial liabilities at amortized cost

Financial liabilities at fair value through profit or loss

Non-financial instruments

Total

Bonds

1,148.4

1,148.4

1,510.5

1,510.5

Deferred payments

1.6

1.6

1.4

1.4

Contingent considerations

52.5

52.5

59.2

59.2

Other non-current financial liabilities

0.0

3.3

3.3

0.0

5.0

5.0

Total

1,150.0

52.5

3.3

1,205.8

1,511.9

59.2

5.0

1,576.1

Besides the bonds, financial liabilities mainly consist of contingent considerations (earn-out agreements) and deferred payments from acquisitions.

Other non-current financial liabilities mainly consist of amounts due in relation to the share appreciation rights (SARs) (refer to Note 7.4).

Analysis of non-current financial liabilities by currency

Analysis by currency CHF million

31.3.2025

31.3.2024

Bonds

Deferred payments and contingent considerations

Other non-current financial liabilities

Total

Bonds / US Private Placement

Deferred payments and contingent considerations

Other non-current financial liabilities

Total

CHF

1,148.4

2.3

1,150.7

1,347.4

3.9

1,351.3

EUR

46.0

46.0

52.6

52.6

CNY

6.4

6.4

6.6

6.6

USD

0.9

0.9

163.1

0.0

163.1

BRL

0.5

0.5

1.0

1.0

Other

0.3

1.0

1.3

0.4

1.1

1.4

Total

1,148.4

54.1

3.3

1,205.8

1,510.5

60.6

5.0

1,576.1

Reconciliation of liabilities arising from financing activities

Liabilities from financing activities CHF million

2024/25

Bank debt

Bonds / US Private Placement

Deferred payments and contingent considerations

Lease liabilities

Other financial liabilities

Total

Balance April 1

0.2

1,515.3

73.1

279.1

6.3

1,873.9

Changes through business combinations

(6.2)

1.3

(5.0)

Additions to lease liabilities

50.7

50.7

Repayment of borrowings

(0.9)

(0.9)

Repayment of lease liabilities - principal portion

(73.3)

(73.3)

Repayment of lease liabilities - interest portion

(7.2)

(7.2)

Exchange differences

(3.7)

(1.7)

(9.2)

(14.6)

Other

(0.0)

1.0

(1.2)

7.2

(2.6)

4.4

Balance March 31

0.2

1,511.7

64.0

248.6

3.7

1,828.2

thereof short-term

0.2

363.3

9.9

68.7

0.4

442.5

thereof long-term

1,148.4

54.1

179.9

3.3

1,385.7

Liabilities from financing activities CHF million

2023/24

Bank debt

Bonds / US Private Placement

Deferred payments and contingent considerations

Lease liabilities

Other financial liabilities

Total

Balance April 1

0.4

1,517.5

89.4

296.9

6.5

1,910.7

Changes through business combinations

(8.5)

6.0

(2.5)

Additions to lease liabilities

52.5

52.5

Repayment of lease liabilities - principal portion

(75.1)

(75.1)

Repayment of lease liabilities - interest portion

(6.7)

(6.7)

Exchange differences

(2.4)

(2.6)

(1.2)

(6.2)

Other

(0.2)

0.2

(5.2)

6.7

(0.3)

1.3

Balance March 31

0.2

1,515.3

73.1

279.1

6.3

1,873.9

thereof short-term

0.2

4.8

12.5

74.3

1.3

93.1

thereof long-term

1,510.5

60.6

204.8

5.0

1,780.9

Accounting policies

Financial liabilities are classified as measured at amortized cost or at fair value through profit or loss (FVPL). A financial liability is classified as at FVPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVPL are measured at fair value and net gains and losses, including any interest expense, are recognized in the income statement. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in the income statement.

Derivative financial instruments are initially recognized in the balance sheet at fair value and are remeasured as to their current fair value at the end of each subsequent reporting period.

Bonds are initially measured at fair value and direct transaction costs included. In subsequent accounting periods, they are remeasured at amortized costs applying the effective interest method.

Accounting policies for lease liabilities are included in Note 3.4.

4.6 Movement in share capital

Issued registered shares

Issued registered shares

Treasury shares1)

Outstanding shares

Balance April 1, 2023

61,159,719

(1,566,263)

59,593,456

Purchase of treasury shares

(200,000)

(200,000)

Sale/transfer of treasury shares

219,766

219,766

Cancellation of treasury shares2)

(1,532,910)

1,532,910

Balance March 31, 2024

59,626,809

(13,587)

59,613,222

Purchase of treasury shares

(225,100)

(225,100)

Sale/transfer of treasury shares

219,862

219,862

Balance March 31, 2025

59,626,809

(18,825)

59,607,984

Nominal value of share capital CHF million

Share Capital

Treasury shares1)

Outstanding share capital

Balance March 31, 2025

3.0

(0.0)

3.0

Each share has a nominal value of CHF 0.05.

1)Treasury shares are purchased on the open market and are not entitled to dividends.

2)The Annual General Shareholder's Meeting of June 12, 2023, approved the proposed cancellation of 1,532,910 treasury shares, resulting in a reduction of share capital of 76,645.50 Swiss francs, retained earnings and other reserves of CHF 421.4 million offset by changes in treasury shares of CHF 421.5 million. This cancellation was executed on September 8, 2023.

Share buyback program

On March 29, 2022, Sonova Holding AG announced that its Board of Directors approved a share buyback program of up to CHF 1.5 billion. The program started in April 2022 and was concluded on April 17, 2025. During the financial years 2024/25 and 2023/24 no shares were bought as part of the share buyback program. During financial year 2022/23, 1,532,910 treasury shares were bought under the share buyback program and were cancelled during the financial year 2023/24.

Capital range

Sonova Holding AG has a capital range of 10% of the share capital from CHF 2,683,206.45 (lower limit) to CHF 3,279,474.45 (upper limit). The Board of Directors shall be authorized within the capital range to increase (by issuing up to 5,962,680 registered shares, each with a nominal value of CHF 0.05) or to reduce the share capital (by cancelling up to 5,962,680 registered shares, each with a nominal value of CHF 0.05) once or several times in amounts or to acquire or dispose of shares directly or indirectly at any time until June 12, 2028 or until an earlier expiry of the capital range. The capital increase or decrease may also be effectuated by increasing or reducing the nominal value of the existing registered shares. In certain events, as defined in Art. 5 of the Articles of Association, the Board of Directors is authorized to exclude or restrict the subscription rights of existing shareholders and allocate such rights to third parties, the company, or any of its group companies.

The Board of Directors did not make use of this authorization in the 2024/25 financial year.

Conditional capital

At the Annual General Shareholdersʼ Meeting on July 7, 2005, the conditional share capital of CHF 264,270 (5,285,400 shares) was increased by CHF 165,056 (3,301,120 shares) to CHF 429,326 (8,586,520 shares). Consistent with the prior year, 5,322,133 shares remain unissued as of March 31, 2025. These shares are reserved for long-term incentive plans (2,021,013 shares) as well as for initiatives to increase the companyʼs financial flexibility (3,301,120 shares).

Accounting policies

Ordinary shares are classified as equity. Dividends on ordinary shares are recorded in equity in the period in which they are approved by the parent companiesʼ shareholders.

In case any of the Group companies purchase shares of the parent company, the consideration paid is recognized as treasury shares and presented as a deduction from equity. Any consideration received from the sale of own shares is recognized in equity.

4.7 Risk management

Group risk management

Risk management at Group level is an integral part of business practice and supports the strategic decision-making process. The assessment of risk is derived from both “top-down” and “bottom-up” and covers corporate, all business segments, and all consolidated Group companies. This approach allows for the Group to examine all types of risk exposures caused by internal and external impacts and events, from financial, operational processes, customer and products, management and staff. The risk exposures are managed by specific risk mitigating initiatives, frequent re-evaluations, communication, risk consolidation and prioritization.

The responsibility for the process of risk assessment and monitoring is allocated to the corporate risk function. The Management Board, in addition to Group companies and functional managers, supports the annual risk assessment and is responsible for the management of the risk mitigating initiatives. The risk mitigation progress is reviewed by the Audit Committee on a quarterly basis. The Board of Directors discusses and analyzes the Groupʼs risks at least once a year in the context of a strategy meeting.

Risk of price changes of raw materials or components used for production is limited. A change in those prices would not result in financial effects being above the Groupʼs risk management tolerance level. Therefore, no sensitivity analysis has been conducted.

The Group aims to ensure cost effective sourcing, while at the same time managing the risk of supply shortages that could lead to a failure to deliver certain products at the quantities required. Wherever feasible, critical components are sourced from multiple suppliers in order to mitigate this risk.

The relationship with suppliers is governed by Sonovaʼs Group Supplier Principles (SGSP). We regularly audit and visit suppliers and inspect their management capabilities through employee interviews and on-site inspections. Suppliers have to follow all applicable laws and regulations, ensure a healthy and safe working environment and are prohibited from using child labor.

Through its multiple manufacturing sites around the globe, the Group maintains effective options to rebalance its production capacity between different facilities and to shift production where necessary to avoid delivery shortages and to adapt to potential changes of the operating or general environment.

The unpredictable nature of geopolitical events such as international conflicts, trade disputes, political instability, and regulatory changes can have implications for our business operations, supply chain, and market dynamics, potentially leading to increased volatility in business results.

Financial risk management

Due to Sonova Groupʼs worldwide activities, the Group is exposed to a variety of financial risks such as market risks, credit risks and liquidity risks. Financial risk management aims to limit these risks and seeks to minimize potential adverse effects on the Groupʼs financial performance. The Group uses selected financial instruments for this purpose. They are exclusively used as hedging instruments for cash in- and outflows and not for speculative positions. The Group does not apply hedge accounting.

The fundamentals of Sonova Groupʼs financial risk policy are periodically reviewed by the Audit Committee and carried out by the Group finance department. Group finance is responsible for implementing the policy and for ongoing financial risk management.

Market risk

Exchange rate risk

The Group operates globally and is exposed to foreign currency fluctuations, mainly with respect to the US dollar and the Euro. As the Group uses Swiss francs as presentation currency and holds investments in different functional currencies, net assets are exposed to foreign currency translation risk. Additionally, a foreign currency trans­action risk exists in relation to future commercial transactions, which are denominated in a currency other than the functional currency.

To minimize foreign currency exchange risks, forward currency contracts are entered into. The Group hedges its net foreign currency exposure based on future expected cash in- and outflows. The hedges have a duration of between 1 and 6 months.

Positive replacement values from forward contract hedges are recorded as financial assets at fair value through profit or loss whereas negative replacement values are recorded as financial liabilities at fair value through profit or loss.

As of March 31, 2025, the Group engaged in forward currency contracts amounting to CHF 391.3 million (previous year CHF 419.2 million). The open contracts on March 31, 2025 as well as on March 31, 2024 were all due within one year.

Notional amount of forward contracts CHF million

31.3.2025

31.3.2024

Total

Fair value

Total

Fair value

Positive replacement values

293.7

1.6

133.4

0.7

Negative replacement values

97.6

(0.4)

285.7

(1.3)

Total

391.3

1.3

419.2

(0.6)

Exchange rate risk CHF million

2024/25

2023/24

2024/25

2023/24

Impact on income after taxes1)

Impact on equity

Change in USD/CHF +5%

(9.4)

(7.4)

8.0

7.4

Change in USD/CHF –5%

9.4

7.4

(8.0)

(7.4)

Change in EUR/CHF +5%

5.7

4.7

0.1

16.7

Change in EUR/CHF –5%

(5.7)

(4.7)

(0.1)

(16.7)

1)Excluding the impact of forward currency contracts.

Interest rate risk

The Group has only limited exposure to interest rate changes. The most substantial interest exposure on assets relates to cash and cash equivalents with an average interest-bearing amount for the 2024/25 financial year of CHF 351.4 million (previous year CHF 285.6 million). If interest rates during the 2024/25 financial year had been 1% higher, the positive impact on income before taxes would have been CHF 2.1 million. If interest rates had been 1% lower, the income before taxes would have been negatively impacted by CHF 1.5 million. The Groupʼs long-term financial liabilities are at fixed rate and thus not subject to interest rate risk.

Credit risk

Financial assets, which could expose the Group to a potential concentration in credit risk, are principally cash and bank balances, receivables from customers and loans.

Core banking relations are maintained with at least “A-” rated (S & P) financial institutions. As of March 31, 2025 the largest balance with a single counterparty amounted to 19% (previous year 26%) of total cash and cash equivalents.

The Group performs frequent credit checks on its receivables. Due to customer diversity, there is no single credit limit for all customers, however, the Group assesses its customers based on their financial position, past experience, and other factors. Due to the fragmented customer base (no single customer balance is greater than 10% of total trade accounts receivable), the Group is not exposed to any significant concentration risk. The same applies to loans to third and related parties. As part of the normal process, management held the regular Expected Credit Loss (ECL) Committee meeting to review the expected credit loss rates on an annual basis in January 2025.

Impairment of financial assets

Impairment losses on financial assets are calculated based on the expected credit loss (ECL) model of IFRS 9. The Groupʼs loss allowances on financial assets other than trade receivables are not material.

Accounting policies

The Group applies the IFRS 9 simplified approach for measuring expected credit losses (ECLs) for trade receivables, which uses a lifetime expected loss allowance for trade receivables at each reporting date. To measure ECLs, trade receivables are grouped based on regions and the days past due. ECLs are calculated separately for state and non-state customers considering historical credit loss experience as well as forward-looking factors. Data sources in determining ECLs include actual historical losses, credit default swaps, country specific risk ratings, development of the customer structure and change in market performance and trends.

The following table provides information about the exposure to credit risk and ECLs for trade receivables:

CHF million

31.3.2025

31.3.2024

State customers

Expected loss rate

Gross carrying amount

Loss allowance

Net carrying amount

Expected loss rate

Gross carrying amount

Loss allowance

Net carrying amount

Not overdue

0.5%

112.4

(0.6)

111.8

0.4%

97.9

(0.4)

97.5

Overdue 1-90 days

1.5%

17.4

(0.3)

17.2

1.1%

11.0

(0.1)

10.8

Overdue 91-180 days

6.1%

1.8

(0.1)

1.7

5.2%

2.7

(0.1)

2.6

Overdue 181-360 days

49.3%

1.3

(0.6)

0.6

40.4%

2.2

(0.9)

1.3

Overdue more than 360 days

93.8%

0.8

(0.7)

0.0

98.5%

1.2

(1.2)

0.0

Total

1.7%

133.6

(2.3)

131.3

2.3%

115.0

(2.7)

112.3

CHF million

31.3.2025

31.3.2024

Non-state customers

Expected loss rate

Gross carrying amount

Loss allowance

Net carrying amount

Expected loss rate

Gross carrying amount

Loss allowance

Net carrying amount

Not overdue

0.9%

390.0

(3.4)

386.6

0.8%

352.4

(2.9)

349.5

Overdue 1-90 days

9.1%

42.6

(3.9)

38.7

4.9%

59.8

(2.9)

56.8

Overdue 91-180 days

41.3%

8.3

(3.4)

4.9

24.5%

15.7

(3.8)

11.9

Overdue 181-360 days

30.9%

15.2

(4.7)

10.5

43.6%

11.6

(5.1)

6.6

Overdue more than 360 days

61.0%

12.9

(7.9)

5.0

87.2%

9.2

(8.0)

1.2

Total

5.0%

468.9

(23.3)

445.6

5.1%

448.7

(22.7)

425.9

The closing loss allowance for trade receivables as at March 31, 2024 reconciles to the closing loss allowance as at March 31, 2025 as follows:

CHF million

31.3.2025

31.3.2024

Loss allowance for doubtful receivables, April 1

(25.4)

(31.5)

Utilization

7.1

3.5

Reversal

1.8

3.6

Additions

(9.8)

(1.8)

Exchange differences

0.7

0.7

Loss allowance for doubtful receivables, March 31

(25.6)

(25.4)

Trade receivables are written off when there is no reasonable expectation of recovery. Impairment losses on trade receivables and subsequent recoveries are included in general and administration costs.

Liquidity risk

Group finance is responsible for centrally managing the net cash/debt position and to ensure that the Groupʼs obligations can be settled on time. The Group aims to grow further and wants to remain flexible in making time-sensitive investment decisions. This overall objective is included in the asset allocation strategy. A rolling forecast based on the expected cash flows is conducted and updated regularly to monitor and control liquidity.

Visibility over the majority of bank accounts is provided by central treasury organization. Cash pools are automated and daily SWIFT balance tracking is applied where feasible.

The following table summarizes the Groupʼs financial liabilities as of March 31, 2025 and 2024 based on contractual undiscounted payments. Bonds include the notional amount as well as interest payments.

CHF million

31.3.2025

Due less than 1 year

Due 1 year to 5 years

Due more than 5 years

Total

Bank debt

0.2

0.2

Trade payables

269.0

269.0

Other short-term operating liabilities1)

123.3

123.3

Lease liabilities

67.9

160.8

19.9

248.6

Bonds/US Private Placement

372.5

642.9

561.1

1,576.6

Deferred payments

0.4

1.6

2.0

Contingent considerations

10.4

37.0

40.8

88.2

Other financial liabilities

0.4

3.3

3.7

Total financial liabilities

844.1

845.7

621.8

2,311.6

CHF million

31.3.2024

Due less than 1 year

Due 1 year to 5 years

Due more than 5 years

Total

Bank debt

0.2

0.2

Trade payables

202.4

202.4

Other short-term operating liabilities1)

123.9

123.9

Lease liabilities

73.5

147.3

58.3

279.1

Bonds/US Private Placement

17.8

916.1

668.9

1,602.8

Deferred payments

0.3

1.4

1.7

Contingent considerations

13.5

38.0

50.0

101.6

Other financial liabilities

1.3

5.0

6.3

Total financial liabilities

432.8

1,107.8

777.3

2,317.9

1)Financial portion of other short-term operating liabilities.

Capital management

It is the Groupʼs policy to maintain a strong equity base and to secure a continuous “investment grade” rating. The Groupʼs strong balance sheet and earnings tracking provides for additional debt capacity.

The company aims to return excess cash to shareholders as far as not required for organic and acquisition related growth, and amortization of debt.

4.8 Financial instruments

This note discloses the categorization of financial instruments measured at fair value based on the fair value hierarchy.

Accounting policies

Financial instruments measured at fair value are allocated to one of the following three hierarchical levels:

Level 1:

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.

Level 2:

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques are based on observable market data, where applicable. If all significant inputs required to value an instrument are observable, the instrument is included in level 2.

Level 3:

If a significant amount of inputs is not based on observable market data, the instrument is included in level 3. For this level, other techniques, such as discounted cash flow analysis, are used to determine fair value.

During the reporting period, there were no reclassifications between the individual levels.

The following table summarizes the financial instruments of the Group and the valuation method for financial instruments at fair value through profit and loss.

CHF million

31.3.2025

Notes

Amortized cost

FVPL

Total financial instruments

Non-financial instruments

Total

Fair value1)

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

4.1

686.9

686.9

686.9

Other current financial assets

4.4

10.4

1.8

12.2

12.2

1.8

0.2

1.6

Trade receivables

3.1

576.9

576.9

576.9

Other current operating assets

3.6

99.3

99.3

60.2

159.6

Other non-current financial assets

4.4

61.5

2.9

64.4

64.4

2.9

1.2

1.7

Total

1,435.1

4.7

1,439.8

60.2

1,500.0

4.7

1.4

1.6

1.7

Liabilities

Current financial liabilities

4.5

0.6

9.9

10.4

10.4

9.9

0.4

9.5

Trade payables

269.0

269.0

269.0

Other short-term operating liabilities

3.8

123.3

123.3

253.1

376.4

Bonds/US Private Placement2)

4.5

1,511.7

1,511.7

1,511.7

1,518.3

1,359.7

158.6

Non-current financial liabilities

4.5

1.6

52.5

54.1

3.3

57.4

52.5

Total

1,906.2

62.4

1,968.6

256.4

2,225.0

1,528.2

1,359.7

158.9

62.0

1)For financial assets and financial liabilities measured at amortized cost, fair value information is not provided if the carrying amount is a reasonable approximation of fair value.

2)Includes short- and long-term portion of Bonds/US Private Placement.

CHF million

31.3.2024

Notes

Amortized cost

FVPL

Total financial instruments

Non-financial instruments

Total

Fair value1)

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

4.1

513.6

513.6

513.6

Other current financial assets

4.4

9.8

0.8

10.7

10.7

0.8

0.2

0.6

Trade receivables

3.1

538.3

538.3

538.3

Other current operating assets

3.6

89.1

89.1

58.9

148.0

Other non-current financial assets

4.4

56.7

3.9

60.6

60.6

3.9

2.2

1.7

Total

1,207.4

4.7

1,212.2

58.9

1,271.1

4.7

2.4

0.6

1.7

Liabilities

Current financial liabilities

4.5

0.6

13.4

14.0

14.0

13.4

1.3

12.2

Trade payables

202.4

202.4

202.4

Other short-term operating liabilities

3.8

123.9

123.9

255.7

379.6

Bonds/US Private Placement2)

4.5

1,515.3

1,515.3

1,515.3

1,490.9

1,328.5

162.3

Non-current financial liabilities

4.5

1.4

59.2

60.6

5.0

65.6

59.2

Total

1,843.5

72.6

1,916.1

260.8

2,176.9

1,504.3

1,328.5

163.6

71.4

1)For financial assets and financial liabilities measured at amortized cost, fair value information is not provided if the carrying amount is a reasonable approximation of fair value.

2)Includes short- and long-term portion of Bonds/US Private Placement.

The following table presents the changes in level 3 financial instruments for the year ended March 31, 2025 and 2024:

Contingent considerations CHF million

2025

2024

Total

Total

Balance April 1

71.4

85.9

Changes through business combinations

5.2

6.0

Cash outflow for contingent considerations

(12.0)

(13.1)

Gains recognized in profit or loss

(1.1)

(4.9)

Exchange differences

(1.5)

(2.5)

Balance March 31

62.0

71.4

Financial liabilities at fair value through profit or loss mainly consist of contingent considerations from business combinations (refer to Note 6.1). The fair values are determined by considering the possible scenarios of the future performance of the acquired companies, contractual obligations and milestone achievements, the amount to be paid under each scenario and the probability of each scenario. The significant unobservable inputs are the forecast sales and other performance criteria. As at March 31, 2025 and 2024, the maximum potential payments under contingent considerations do not differ significantly from the amounts provided.

Contingent considerations mainly relate to a license agreement for the Sennheiser brand for which a liability was recognized for the expected future licensing payments. The amount of the liability is determined based on a discounted cash flow calculation over a remaining licensing period of 12 years considering five possible payment scenarios. Significant unobservable inputs used in the fair value measurement include the probability of each scenario, projected revenues, the brand licensing fee and the discount rate.

As of March 31, 2025 the fair value of the license liability amounts to CHF 48.3 million (prior year CHF 53.7 million). The valuation model remained unchanged to the prior year. Significant unobservable inputs were updated based on the latest strategic plan. For the calculation a licensing fee of 2.5% for the first 8 years, 1.3% for the subsequent years and a discount rate of 3.4% was used. The gain on the fair value change of the financial liability of CHF 1.0 million (prior year CHF 4.4 million) is considered in the income statement in line “Financial income”. The Group performed a sensitivity analysis, which shows that a decrease in the discount rate of 1% would increase the license liability as of March 31, 2025 by CHF 2.5 million and negatively impact income before taxes by CHF 2.5 million.

Accounting judgements and estimates

Contingent considerations are dependent on the future performance of the acquired companies as well as contractual obligations. If the future performance is not achieved or the estimate needs to be revised, the liability is adjusted accordingly, with a resulting change in the income statement. At the end of the 2024/25 financial year, such liabilities contingent on future events amount to CHF 62.0 million (previous year CHF 71.4 million) and are disclosed under Financial liabilities at fair value through profit or loss (Note 4.5).

4.9 Exchange rates

The following main exchange rates were used for currency translation:

31.3.2025

31.3.2024

2024/25

2023/24

Year-end rates

Average rates for the year

AUD 1

0.55

0.59

0.58

0.58

BRL 1

0.15

0.18

0.16

0.18

CAD 1

0.61

0.67

0.64

0.66

CNY 1

0.12

0.13

0.12

0.12

EUR 1

0.95

0.97

0.95

0.96

GBP 1

1.14

1.14

1.13

1.11

JPY 100

0.59

0.60

0.58

0.61

USD 1

0.88

0.90

0.89

0.89

Accounting policies

The consolidated financial statements are expressed in Swiss francs (“CHF”), which is the Groupʼs presentation currency. The functional currency of each Group company is based on the local economic environment to which an entity is exposed, which is normally the local currency.

Transactions in foreign currencies are accounted for at the rates prevailing on the dates of the transactions. The resulting exchange differences are recorded in the local income statements of the Group companies and included in net income.

Monetary assets and liabilities of Group companies, which are denominated in foreign currencies are translated using year-end exchange rates. Exchange differences are recorded as an income or expense. Non-monetary assets and liabilities are translated at historical exchange rates. Exchange differences arising on intercompany loans that are considered part of the net investment in a foreign entity are recorded in other comprehensive income in equity.

When translating foreign currency financial statements into Swiss francs, year-end exchange rates are applied to assets and liabilities, while average annual rates are applied to income statement accounts. Translation differences arising from this process are recorded in other comprehensive income in equity. On disposal of a Group company, the related cumulative translation adjustment is transferred from equity to the income statement.

5. Taxes

5.1 Taxes

CHF million

2024/25

2023/24

Current income taxes

66.2

120.1

Deferred taxes

38.8

(82.3)

Total income taxes

105.0

37.8

Reconciliation of tax expense

Income before taxes

652.0

647.3

Group's expected average tax rate

15.6%

17.2%

Tax at expected average rate

101.7

111.1

+/- Effects of

Non-taxable income/non-tax-deductible expenses

3.2

1.5

Changes of unrecognized loss carryforwards/deferred tax assets

(2.1)

(10.6)

Local actual tax rate different to Group's expected average tax rate

(39.2)

(59.3)

Change in tax rates on deferred tax balances

(0.9)

0.0

Related to tax-deductible goodwill in Switzerland1)

49.5

(39.1)

Prior year adjustments and other items, net2)

(7.3)

34.1

Total income taxes

105.0

37.8

Effective tax rate

16.1%

5.8%

1)Considering impact from annual assessment.

2)Other items include changes in uncertain tax positions.

The Groupʼs expected average tax rate is the rate obtained by applying the expected tax rate for each jurisdiction to its respective result before taxes, adjusted for significant one-time effects. The expected tax rate might vary on a year-over-year basis depending on changes in tax regulations and where the results are achieved.

Significant management judgement is required to determine the amount of deferred tax asset that can be recognised for the temporary difference related to the tax-deductible goodwill in Switzerland. This evaluation is based on the timing and amount of future taxable profits, the interpretation of local tax regulation and new OECD administrative guidance on Pillar Two. The Group carried out the annual assessment considering recent developments.

Deferred tax assets and (liabilities) CHF million

31.3.2025

31.3.2024

Assets

Liabilities

Net amount

Assets

Liabilities

Net amount

Inventories

51.7

(20.6)

31.1

50.5

(12.1)

38.4

Property, plant & equipment

2.5

(6.9)

(4.5)

2.8

(6.9)

(4.1)

Intangible assets

(143.5)

(143.5)

(141.7)

(141.7)

Right-of-use assets and lease liabilities

64.2

(62.6)

1.5

60.7

(60.2)

0.5

Other assets and liabilities1)

257.6

(79.1)

178.5

294.9

(73.7)

221.2

Tax loss carryforwards

111.3

111.3

104.2

104.2

Total tax assets (liabilities)

487.2

(312.7)

174.6

513.1

(294.7)

218.5

Offset of assets and liabilities

(186.3)

186.3

(165.3)

165.3

Amounts in the balance sheet

Deferred tax assets

301.0

301.0

347.8

347.8

Deferred tax liabilities

(126.3)

(126.3)

(129.4)

(129.4)

Total deferred taxes, net

174.6

218.5

1) Deferred tax assets mainly relate to provisions and contract liabilities, deferred tax liabilities mainly relate to provisions, contract assets and trade and other receivables. Including deferred tax assets in the amount of CHF 127.6 million (2023/24: CHF 177.1 million) related to tax-deductible goodwill in Switzerland.

Movement of deferred tax assets and (liabilities) CHF million

2024/25

Inventories

Property, plant & equipment

Intangible assets

Right-of-use assets and lease liabilities

Other assets and liabilities

Tax loss carry- forwards

Total

Balance April 1

38.4

(4.1)

(141.7)

0.5

221.2

104.2

218.5

Changes through business combinations

(5.2)

1.1

(4.1)

Deferred taxes recognized in the income statement1)

(6.5)

(0.8)

0.9

(0.5)

(36.3)

4.4

(38.8)

Deferred taxes recognized in OCI2)

(0.6)

(0.6)

Exchange differences

(0.9)

0.5

2.6

1.5

(6.9)

2.7

(0.5)

Balance March 31

31.1

(4.5)

(143.5)

1.5

178.5

111.3

174.6

1)Deferred taxes recognized in the income statement include the impact related to tax-deductible goodwill in Switzerland.

2)Other comprehensive income.

Movement of deferred tax assets and (liabilities) CHF million

2023/24

Inventories

Property, plant & equipment

Intangible assets

Right-of-use assets and lease liabilities

Other assets and liabilities

Tax loss carry- forwards

Total

Balance April 1

22.1

(3.4)

(140.4)

0.6

210.7

47.6

137.1

Changes through business combinations

(6.2)

1.5

(4.6)

Deferred taxes recognized in the income statement1)

16.4

(1.1)

2.7

(0.1)

8.4

56.0

82.3

Deferred taxes recognized in OCI2)

(2.3)

(2.3)

Exchange differences

(0.1)

0.4

2.1

0.0

2.9

0.7

6.0

Balance March 31

38.4

(4.1)

(141.7)

0.5

221.2

104.2

218.5

1)Deferred taxes recognized in the income statement include the impact related to tax-deductible goodwill in Switzerland.

2)Other comprehensive income.

Deferred tax assets have been capitalized based on the projected future performance of the Group companies.

The gross values of unused tax loss carryforwards, which have not been capitalized as deferred tax assets, with their expiry dates are as follows:

CHF million

31.3.2025

31.3.2024

Within 1 year

1.6

13.4

Within 2-5 years

31.6

0.7

More than 5 years or without expiration

372.4

382.7

Total

405.6

396.8

Tax loss carryforwards, which have not been capitalized also include tax losses from acquired entities with limitation of use and losses that do not qualify for capitalization. The inherent uncertainty regarding the level and use of the tax losses and changes in tax regulations and laws can impact the annual assessment of these unused tax loss carryforwards.

Pillar Two income taxes

In October 2021, more than 135 jurisdictions agreed to adopt Global Anti-Base Erosion Rules (GloBE – Pillar Two) as part of the OECDʼs BEPS 2.0 initiatives. These rules aim to ensure that large multinational enterprises pay at least 15% income tax in each jurisdiction where they operate. In December 2021, the OECD released the GloBE Model Rules, which establish a coordinated system for implementing this 15% tax on a globally standardized tax base. This system also includes provisions for levying additional tax (top-up tax) if necessary to meet the 15% threshold.

In December 2023, Switzerland passed the Minimum Tax Ordinance, enforcing OECD Qualified Domestic Minimum Top-up Tax (QDMTT) rules for Sonovaʼs Swiss entities starting from the financial year commenced April 1, 2024. Additionally, other jurisdictions where Sonova operates have also introduced Pillar Two legislation, which will affect Sonova group companies started from the same financial year. Sonova assessed the Pillar Two income taxes of the constituent entities and jurisdictions in scope of the legislation for the 2024/25 financial year. Based on this assessment, the Group concluded that all of the jurisdictions where Sonova operates qualify for at least one CbCR Safe Harbor measure. The financial impact for the Group from Pillar Two income taxes is not material.

In September 2024, Switzerland enacted the Income Inclusion Rule (IIR), which impose the 15% minimum top-up tax on all Sonova subsidiaries starting from April 1, 2025. Sonova does not foresee significant exposure to Pillar Two income taxes from the Swiss introduction of the IIR.

Sonova has used the mandatory exception to not disclose information about deferred tax assets and liabilities related to Pillar Two income taxes.

Accounting policies

Income taxes include current and deferred income taxes. The Group is subject to income taxes in numerous jurisdictions and significant judgment is required in determining the worldwide provision for income taxes. The multitude of transactions and calculations implies the use of certain estimates and assumptions. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and outcome is uncertain. Management establishes provisions, where appropriate, on the basis of amounts expected to be at risk to be paid to the tax authorities.

Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Deferred tax is recorded on the valuation differences (temporary differences) between the tax bases of assets and liabilities and their carrying values in the consolidated balance sheet. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the temporary differences and tax losses can be offset. Deferred income tax liabilities are provided for non-taxable temporary differences arising from investments in subsidiaries, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Accounting judgements and estimates

The consolidated balance sheet includes deferred tax assets of CHF 173.4 million (previous year CHF 170.7 million) related to deductible differences and, in certain cases, tax loss carry forwards, provided that their utilization is considered probable. The recoverable value is based on forecasts of the corresponding taxable Group company over a period of several years. As actual results may differ from these forecasts, the deferred tax assets may need to be adjusted accordingly.

Deferred tax assets further include CHF 127.6 million (previous year: CHF 177.1 million) related to the Swiss tax reform introduced by the Swiss Federal Act on Tax Reform and AHV Financing (TRAF). The calculation of the deferred tax assets required management to make significant estimates and assumptions. Some of these estimates are based on interpretations of existing tax laws or regulations. Whenever circumstances have changed or there is new information that affects these judgements, the estimates will be reassessed.

6. Changes in Group structure

6.1 Acquisitions/disposals of subsidiaries

During the financial years 2024/25 and 2023/24, several small businesses were acquired in EMEA, Americas and Asia/Pacific. All of these companies acquired are in the business of distributing and servicing hearing instruments. Due to the size of these transactions, they had no material impact on the financial statements.

Assets and liabilities resulting from the acquisitions are as follows:

CHF million

2024/25

2023/24

Total

Total

Cash and cash equivalents

2.7

5.5

Trade receivables

1.3

3.8

Inventories

0.8

1.1

Other current operating assets

0.7

0.1

Total current assets

5.5

10.4

Right-of-use assets

1.3

6.0

Intangible assets

23.4

31.5

Other non-current assets

1.2

3.1

Deferred tax assets

1.1

1.5

Total non-current assets

27.0

42.1

Current financial liabilities

(0.0)

(0.4)

Current lease liabilities

(0.4)

(1.6)

Trade payables

(0.6)

(2.1)

Short-term contract liabilities

(0.1)

(0.9)

Other short-term operating liabilities

(2.7)

(10.3)

Short-term provisions

(0.4)

(1.5)

Total current liabilities

(4.2)

(16.7)

Non-current financial liabilities

(0.1)

(0.2)

Non-current lease liabilities

(0.9)

(4.4)

Long-term provisions

(0.1)

(0.1)

Other long-term operating liabilities

(0.1)

(0.1)

Deferred tax liabilities

(5.2)

(6.2)

Total non-current liabilities

(6.5)

(10.9)

Net assets

21.8

24.8

Goodwill

52.0

73.8

Purchase consideration

73.8

98.6

Liabilities for contingent considerations and deferred payments1)

(7.1)

(7.5)

Cash and cash equivalents acquired

(2.7)

(5.5)

Cash outflow for contingent considerations and deferred payments

13.3

16.1

Cash consideration for acquisitions, net of cash acquired

77.3

101.6

1)Contingent considerations (earn-out payments) are dependent on the future performance of the acquired companies as well as contractual conditions. The liability for contingent considerations is based on the latest estimate of the future performance.

The initial accounting for the acquisitions completed in the current financial year is provisional and the fair values assigned to the identifiable assets acquired and liabilities assumed are still subject to change. The finalization of the accounting from acquisitions in the prior year did not result in material fair value adjustments.

Liabilities for contingent considerations amount to CHF 5.2 million (previous year CHF 5.9 million) and deferred payments amount to CHF 1.8 million (previous year CHF 1.6 million). Contingent considerations are dependent on the future performance of the acquired companies as well as contractual obligations and milestone achievements. Goodwill is attributed mainly to economies of scale and expected synergies such as favorable sales growth potential, increase in share of Sonova products within acquired distribution companies and cost reductions in administrative and corporate functions as well as to the labor force. Recognized goodwill is not expected to be deductible for income tax purposes.

Acquisition-related intangible assets in the amount of CHF 23.2 million (previous year CHF 28.5 million) for the acquisitions in the current financial year relate to customer relationships. The assigned lifetime range is between 10 and 15 years. On these intangibles deferred taxes have been considered.

Acquisition-related transaction costs in the amount of CHF 2.1 million (previous year CHF 2.1 million) were expensed and are included in the line “General and administration”.

April 1 to March 31, CHF million

2024/25

2023/24

Total

Total

Contribution of acquired companies from date of acquisition

Sales

25.8

15.8

Net income

3.7

2.5

Contribution, if the acquisitions had occurred on April 1

Sales

32.9

32.8

Net income

6.3

6.5

Accounting policies

Business combinations are accounted for using the acquisition method of accounting. The cost of a business combination is equal to the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Sonova Group, in exchange for control over the acquired company. Any difference between the cost of the business combination and the net fair value of the identifiable assets, liabilities, and contingent liabilities recognized is treated as goodwill. Goodwill is not amortized, but is assessed for impairment annually, or more frequently if events or changes in circumstances indicate that its value might be impaired (Refer to Note 3.5). Acquisition-related costs are expensed. For each business combination, the Group recognizes the non-controlling interests in the acquiree at fair value or at the non-controlling interests proportionate share in the recognized amounts of the acquireeʼs identifiable net assets.

If a business combination is achieved in stages (control obtained over an associate), the previously held equity interest in an associate is remeasured to its acquisition date fair value and any resulting gain or loss is recognized in “financial income/expenses” in profit or loss.

Accounting judgements and estimates

In the course of recognizing assets and liabilities from business combinations, management judgments might be required for the following areas:

  • Acquisition-related intangibles resulting from technology, customer relationships, client lists, or brand names.
  • Contingent consideration arrangements (refer to Note 4.8)

6.2 Investments in associates/joint ventures

The Groupʼs share in the results as well as in assets and liabilities of associates/joint ventures, all unlisted enterprises, is as follows:

CHF million

2024/25

2023/24

Current assets

5.1

4.6

Non-current assets

4.5

3.8

Total assets

9.6

8.4

Current liabilities

(1.5)

(1.8)

Non-current liabilities

(1.4)

(1.4)

Total liabilities

(2.9)

(3.2)

Net assets

6.6

5.2

Income for the year

12.1

10.5

Expenses for the year

(6.7)

(6.1)

Profit for the year

5.4

4.4

Net book value at year-end

18.6

19.2

Share of profit / (loss) recognized by the Group

5.4

4.4

In the financial years 2024/25 and 2023/24, no associates were acquired/divested.

Sales to associates in the 2024/25 financial year amounted to CHF 12.8 million (previous year CHF 11.4 million). At March 31, 2025, trade receivables towards associates amounted to CHF 3.2 million (previous year CHF 2.3 million).

At the end of the 2024/25 and 2023/24 financial years, no unrecognized losses existed.

Investments with a net book value of CHF 18.6 million (previous year CHF 19.2 million) have a business year different than the Sonova Group. The latest available information for the respective companies are as per December 2024.

Accounting policies

Investments in associates and joint ventures are accounted for using the equity method of accounting. Investments in associates are entities in which Sonova has a significant influence but no control (usually 20% – 50% of voting rights). Joint ventures are joint arrangements whereby two or more parties have rights to the net assets of the arrangement.

Under the equity method, the investment in an associate/joint venture is recognized initially at cost (including goodwill on acquisition) and the carrying amount is increased or decreased to recognize Sonovaʼs share of profit or loss of the associate/joint venture after the acquisition date. When the Groupʼs share of losses in an associate/joint venture equals or exceeds its interest in the associate/joint venture, no further losses are recognized, unless there is a legal or constructive obligation. In order to apply the equity method the most recent available financial statements of an associate/joint venture are used, however, due to practicability reasons the reporting dates might vary up to three months from the Groupʼs reporting date.

7. Other disclosures

7.1 Number of employees

On March 31, 2025, the Sonova Group employed the full time equivalent (FTE) of 17,990 people (previous year 18,151). They were engaged in the following regions and activities:

By region

31.3.2025

31.3.2024

Switzerland

1,434

1,469

EMEA (excl. Switzerland)

7,427

7,514

Americas

4,984

4,945

Asia/Pacific

4,145

4,223

Total

17,990

18,151

By activity

Research and development

1,243

1,208

Operations

4,557

4,578

Sales and marketing, general and administration

12,190

12,365

Total

17,990

18,151

The average number of employees (full time equivalents) of the Sonova Group for the year was 18,385 (previous year 17,700). Total personnel expenses for the 2024/25 financial year amounted to CHF 1,380.8 million (previous year CHF 1,279.9 million).

7.2 Transactions and relations with members of the Management Board and the Board of Directors

CHF million

2024/25

2023/24

2024/25

2023/24

2024/25

2023/24

Management Board

Board of Directors

Total

Short-term employee benefits

7.8

6.9

2.1

1.9

9.8

8.8

Post-employment benefits

0.6

0.7

0.6

0.7

Share based payments

4.7

5.6

1.8

1.6

6.5

7.2

Total

13.1

13.1

3.9

3.6

16.9

16.7

The total compensation to the Management Board for the 2024/25 reporting period, as shown above, relates to eight active members and members that left during the financial year (2023/24: eight active members and one former member).

The total compensation to the Board of Directors for the 2024/25 reporting period, as shown above, relates to ten active members (2023/24: nine active members and one former member).

Transactions between the Group and the various post-employment benefit plans for the employees of the Group are described in Note 7.3.

Further information in accordance with Swiss law relating to remuneration and ownership of shares and options of the Board of Directors and the Management Board can be found in the Note 3.6 of the financial statements of Sonova Holding AG.

7.3 Employee benefits

Defined benefit plans

Sonova Groupʼs retirement plans include defined benefit pension plans in Switzerland, Austria, Belgium, Canada, France, Germany and Israel. These plans are both funded and unfunded and governed by local regulations using independent actuarial valuations according to IAS 19. Sonova Groupʼs major defined benefit plan is located in Switzerland, which in total accounts for CHF 567.1 million or 96.7% (previous year CHF 530.4 million or 96.4%) of Sonovaʼs defined benefit obligation.

Pension plans in Switzerland

The current pension arrangement for employees in Switzerland is made through a plan governed by the Swiss Federal Occupational Old Age, Survivors and Disability Pension Act (BVG). The plan of Sonovaʼs Swiss companies is administered by a separate legal foundation, which is funded by regular employer and employee contributions as defined in the pension fund rules. The Swiss pension plan contains a cash balance benefit which is, in essence, contribution-based with certain minimum guarantees. Due to these minimum guarantees, the Swiss plan is treated as a defined benefit plan for the purposes of these consolidated financial statements, although it has many of the characteristics of a defined contribution plan. The plan is invested in a diversified range of assets in accordance with the investment strategy and the common criteria of asset and liability management. A potential under-funding may be remedied by various measures such as increasing employer and employee contributions or reducing prospective benefits. Above a set insured salary, the savings capital will be split into pension-accumulating and capital-accumulating savings capital. The pension-accumulating savings capital will generate a life-long retirement pension upon retirement. The insured person may request a lump sum settlement in lieu of the retirement pension or a part thereof. The capital-accumulating savings capital will generate a one-off capital payment upon retirement. An annuity rate of 5.4% to the individual accumulated retirement savings capital was applied for the financial years 2024/25 and 2023/24.

As of March 31, 2025, 1,460 employees (previous year 1,495 employees) and 192 beneficiaries (previous year 178 beneficiaries) are insured under the Swiss plan. The defined benefit obligation has a duration of 16.4 years (previous year 15.6 years).

The results of all defined benefit plans are summarized below:

Amounts recognized in the balance sheet CHF million

31.3.2025

31.3.2024

Present value of funded obligations

(572.5)

(537.1)

Fair value of plan assets

591.2

553.4

Net present value of funded plans

18.7

16.3

Present value of unfunded obligations

(13.8)

(13.5)

Total assets (liabilities), net

4.9

2.9

Amounts in the balance sheet:

Retirement benefit obligation

(14.8)

(13.9)

Retirement benefit asset

19.7

16.8

Assets (liabilities) in the balance sheet, net

4.9

2.9

Remeasurements recognized in equity CHF million

2024/25

2023/24

Balance April 1

(10.7)

2.5

Actuarial losses/(gains) from

- changes in demographic assumptions

(0.1)

(0.5)

- changes in financial assumptions

4.9

67.0

- changes in experience adjustments

6.2

17.5

Return on plan assets excluding interest income

(15.1)

(28.0)

Change in asset ceiling

(69.2)

Balance March 31

(14.7)

(10.7)

Amounts recognized in the income statement CHF million

2024/25

2023/24

Current service cost1)

21.8

15.3

Net interest cost

0.2

(1.0)

Interest expense on effect of asset ceiling

1.4

Total employee benefit expenses2)

21.9

15.7

1)Excluding Participants' contributions.

2)The amount recognized in the consolidated income statement 2024/25 has been charged to:

– cost of sales CHF 2.7 million (previous year CHF 2.0 million);

– research and development CHF 8.9 million (previous year 6.1 million);

– sales and marketing CHF 4.3 million (previous year 3.0 million);

– general and administration CHF 5.9 million (previous year CHF 4.2 million);

– financial expense CHF 0.2 million (previous year CHF 0.4 million).

Movement in the present value of the defined benefit obligations CHF million

2024/25

2023/24

Beginning of the year

550.5

457.4

Interest cost

7.5

9.8

Current service cost

21.8

15.3

Participants' contributions

16.1

15.6

Benefits paid, net

(19.5)

(31.9)

Actuarial losses/(gains) on obligations

11.0

84.1

Exchange differences

(1.2)

0.2

Present value of obligations at end of period

586.3

550.5

Movement in the fair value of the plan assets CHF million

2024/25

2023/24

Beginning of the year

553.4

512.3

Interest income on plan asset

7.2

10.7

Employer's contributions paid

18.5

17.9

Participants' contributions

16.1

15.6

Benefits paid, net

(19.0)

(31.2)

Return on plan assets excluding interest income

15.1

28.0

Exchange differences

0.1

0.0

Fair value of plan assets at end of period

591.2

553.4

The plan assets consist of:

31.3.2025

31.3.2024

Cash

4.5%

1.7%

Domestic bonds

19.5%

19.3%

Foreign bonds

6.9%

7.8%

Domestic equities

11.2%

10.3%

Foreign equities

30.2%

30.7%

Real estates

15.9%

13.9%

Alternative investments

11.9%

16.2%

With the exception of cash, all of the plan assets have quoted market prices. The actual return on plan assets amounted to CHF 22.2 million (previous year CHF 38.7 million). The expected employerʼs contributions for the Swiss retirement benefit plan to be paid in the 2025/26 financial year amount to CHF 18.1 million.

Principal actuarial assumptions Swiss retirement benefit plan (weighted average)

2024/25

2023/24

Discount rate

1.40%

1.30%

Future salary increases

1.50%

2.00%

Future pension increases

0%

0%

Fluctuation rate

BVG 2020

BVG 2020

Demography

BVG 2020GT

BVG 2020GT

The following sensitivity analysis shows how the present value of the benefit obligation for the Swiss retirement benefit plan would change if one of the principal actuarial assumptions was changed. For the analysis, changes in the assumptions were considered separately and no interdependencies were taken into account.

Sensitivity analysis - impact on defined benefit obligation CHF million

31.3.2025

31.3.2024

Discount rate

Discount rate +0.25%

(20.2)

(18.9)

Discount rate –0.25%

23.0

21.5

Life expectancy

One year increase

9.7

9.0

One year decrease

(10.1)

(9.3)

Pension growth

Pension growth +0.5%

22.3

20.5

Fluctuation rate

Fluctuation rate +5%

(19.8)

(18.2)

Fluctuation rate –5%

28.3

26.6

Defined contribution plans

Several of the Groupʼs entities have a defined contribution plan. The employerʼs contributions amounted to CHF 31.0 million in the year ended March 31, 2025 (previous year CHF 27.1 million) and are recognized directly in the income statement.

Accounting policies

Most employees are covered by post-employment plans sponsored by corresponding Group companies in the Sonova Group. Such plans are mainly defined contribution plans (future benefits are determined by reference to the amount of contributions paid) and are generally administered by autonomous pension funds or independent insurance companies. These pension plans are financed through employer and employee contributions. The Groupʼs contributions to defined contribution plans are charged to the income statement in the year to which they relate.

The Group also has several defined benefit pension plans, both funded and unfunded. Accounting and reporting of these plans are based on annual actuarial valuations. Defined benefit obligations and service costs are assessed using the projected unit credit method, with the cost of providing pensions charged to the income statement so as to spread the regular cost over the service lives of employees participating in these plans. The pension obligation is measured as the present value of the estimated future outflows using interest rates of high quality corporate bonds, which have terms to maturity approximating the terms of the related liability. Service costs from defined benefit plans are charged to the appropriate income statement heading within the operating results.

A single net interest component is calculated by applying the discount rate to the net defined benefit asset or liability. The net interest component is recognized in the income statement in the financial result.

Actuarial gains and losses, resulting from changes in actuarial assumptions and differences between assumptions and actual experiences, are recognized in the period in which they occur in “Other comprehensive income” in equity.

Accounting judgements and estimates

The Sonova Group has various employee benefit plans. Most of its salaried employees are covered by these plans, of which some are defined benefit plans. The present value of the defined benefit obligations at the end of the 2024/25 financial year amounts to CHF 586.3 million (previous year CHF 550.5 million). This includes CHF 567.1 million (previous year CHF 530.4 million) from the Swiss pension plan. With such plans, actuarial assumptions are made for the purpose of estimating future developments, including estimates and assumptions relating to discount rates, and future wage as well as pension trends. Actuaries also use statistical data such as mortality tables and staff turnover rates with a view to determining employee benefit obligations. If these factors change due to a change in economic or market conditions, the subsequent results could deviate considerably from the actuarial reports and calculations. In the medium term, such deviations could have an impact on the equity.

7.4 Equity plans

Equity plans are offered annually to the members of the Board of Directors (BoD), to the members of the Management Board (MB) as well as to other management and senior employees of the Group, entitling them to receive long-term incentives in the form of equity plans free of charge. Equity plans are settled either with Sonova Holding AG shares (equity-settled share-based payment) or for certain US employees with an equivalent amount in cash (cash-settled share-based payment). The amount granted varies depending on the degree of management responsibility held.

In the 2024/25 and 2023/24 financial years, as part of the Executive Equity Award Plan (EEAP) Sonova granted restricted shares, restricted share units (RSUs), performance share units (PSUs), options, and for US employees, share appreciation rights (SARs). Options as well as PSUs granted to the Management Board in 2024/25 and 2023/24 include a performance criterion.

The following share-based payment costs have been recognized in the financial years

CHF million

2024/25

2023/24

Equity-settled share-based payment costs

20.4

22.6

Cash-settled share-based payment costs

0.0

0.2

Total share-based payment costs

20.4

22.8

The following table shows the outstanding options and/or SARs, granted as part of the EEAP 2018 to 2025. All of the equity instruments listed below (except for the non-recurring performance options granted to the COO (now CEO) in 2017/18) vest in 4 equal tranches, annually over a period of 4 years.

Summary of outstanding options and SARs granted until March 31, 2025:

Financial year granted

Instruments granted

First vesting date / expiry date

Granted

Exercise price (CHF)

Outstanding

Average remaining life (years)

Exercisable

2017/18

Options/SARs1)

1.4.2023 30.9.2027

47,415

147.85

46,528

2.5

46,528

2017/18

Options2)

1.6.2019 31.1.2028

341,943

147.85

59,752

2.8

59,752

2018/19

Options/SARs3)

1.6.2020 31.1.2029

249,760

182.40

84,493

3.8

84,493

2019/20

Options/SARs4)

1.6.2021 31.1.2030

208,245

241.80

100,711

4.8

100,711

2020/21

Options/SARs5)

1.6.2022 31.1.2031

170,694

218.70

105,029

5.8

78,586

2021/22

Options/SARs6)

1.6.2023 31.1.2032

112,656

333.60

74,269

6.8

36,916

2022/23

Options/SARs7)

1.6.2024 31.1.2033

138,302

233.40

101,107

7.8

25,243

2023/24

Options/SARs8)

1.6.2025 31.1.2034

118,673

279.10

102,333

8.8

2024/25

Options/SARs9)

1.6.2026 31.1.2035

99,502

319.20

99,502

9.8

Total

1,487,190

773,72410)

6.0

432,22911)

Thereof:

Equity-settled

1,328,472

704,655

390,434

Cash-settled

158,718

69,069

41,795

1)Non-recurring performance options, granted to the COO (now CEO). Terms were amended in the financial year 2020/21 - for further details refer to section "Options" in this note.

2)Including 150,114 performance options, granted to the CEO and MB members.

3)Including 80,850 performance options, granted to the CEO and MB members.

4)Including 77,574 performance options/SAR, granted to the CEO and MB members.

5)Including 61,779 performance options/SAR, granted to the CEO and MB members.

6)Including 38,252 performance options/SAR, granted to the CEO and MB members.

7)Including 46,012 performance options/SAR, granted to the CEO and MB members.

8)Including 41,799 performance options/SAR, granted to the CEO and MB members.

9)Including 32,640 performance options/SAR, granted to the CEO and MB members.

10)Weighted average exercise price of outstanding options/SARs amounts to CHF 241.87

11)Weighted average exercise price for exercisable options/SARs amounts to CHF 210.24

The fair value of options and/or SARs is calculated at the grant date by using an “Enhanced American Pricing Model”. The expected volatility is based on historical measures. The main valuation assumptions used for the options and/or SARs granted in the current and in the previous financial year are as follows:

Assumptions for valuation at grant date

EEAP 2025 - Management Board Options/SARs

EEAP 2025 Options/SARs

EEAP 2024 - Management Board Options/SARs

EEAP 2024 Options/SARs

Valuation date

1.2.2025

1.2.2025

1.2.2024

1.2.2024

Expiry date

31.1.2035

31.1.2035

31.1.2034

31.1.2034

Restriction period

5 years

5 years

Share price on grant date

CHF 319.20

CHF 319.20

CHF 279.10

CHF 279.10

Exercise price

CHF 319.20

CHF 319.20

CHF 279.10

CHF 279.10

Volatility

31.7%

31.7%

31.3%

31.3%

Expected dividend yield

1.5%

1.5%

1.7%

1.7%

Weighted risk free interest rate

0.4%

0.3%

1.2%

1.1%

Weighted average fair value of options/SARs issued

80.88

78.60

72.69

70.55

Options

The exercise price of options is equal to the market price of Sonova Holding AG shares on the SIX Swiss Exchange at grant date. The fair value of the options granted is estimated at grant date and recorded as an expense over the corresponding vesting period. Assumptions are made regarding the forfeiture rate which is adjusted during the vesting period (including adjustments due to re-assessments of the likely ROCE targets achievements for performance options granted to the CEO and the other members of the MB) to ensure that only a charge for vested amounts occur. Options may be exercised after the vesting date, until their expiry date. If options are exercised, one share per option from the conditional share capital is issued, or treasury shares are used for fulfillment. In the financial year 2024/25 and 2023/24 the options granted to the CEO and the members of the MB include a restriction period of 5 years, which was considered in the fair value of the options at grant date.

Changes in outstanding options:

2024/25

2023/24

Number of options

Weighted average exercise price (CHF)

Number of options

Weighted average exercise price (CHF)

Outstanding options at April 1

827,185

224.78

885,588

207.93

Granted1)

88,257

319.20

110,397

279.10

Exercised2)

(159,297)

187.98

(136,099)

150.57

Forfeited3)

(51,490)

274.68

(32,701)

260.70

Outstanding options at March 31

704,655

241.09

827,185

224.78

Exercisable at March 31

390,434

208.55

443,419

192.44

1)2024/25 includes 30,044 performance options (previous year 41,799 performance options), granted to the CEO and MB members in February 2025.

2)The total consideration from options exercised amounted to CHF 29.8 million (previous year CHF 20.5 million). The weighted average share price of the options exercised during the year 2024/25 was CHF 298.71 (previous year CHF 263.62).

3)Includes forfeiture of performance options granted to CEO and MB members subject to ROCE hurdle, which vested in the financial year 2024/25 and 2023/24 (performance adjustment). In addition 2023/24 includes forfeiture of options relating to the one-time performance options granted in 2017/18 to the COO (now CEO).

Share appreciation rights (SARs)

The exercise price of SARs is generally equal to the market price of Sonova Holding AG shares on the SIX Swiss Exchange at grant date. Upon exercise of SARs, an employee shall be paid an amount in cash equal to the number of shares for which the employee exercised SARs, multiplied by any surplus, of the per share market price at the date of exercise versus the per share exercise price (determined at the date of grant of SARs). The initial fair value of the SARs is in line with the valuation of the options of the respective period and recorded as an expense over the corresponding vesting period. Assumptions are made regarding the forfeiture rate which is adjusted during the vesting period (including adjustments due to re-assessments of the likely ROCE targets achievements for performance options/SARs granted to the members of the MB) to ensure that only a charge for vested amounts occur. Until the liability is settled, it is revalued at each reporting date recognizing changes in fair value in the income statement. The SARs may be sold after the vesting date, until they expire, except for the SARs granted to members of the MB, which include a restriction period of 5 years.

Changes in outstanding SARs:

2024/25

2023/24

Number of SARs

Weighted average exercise price (CHF)

Number of SARs

Weighted average exercise price (CHF)

Outstanding SARs at April 1

76,900

237.07

74,518

229.76

Granted1)

11,245

319.20

8,276

279.10

Exercised

(6,659)

183.83

(1,760)

170.47

Forfeited

(12,417)

268.67

(4,134)

217.80

Outstanding SARs at March 312)

69,069

249.89

76,900

237.07

Exercisable at March 313)

41,795

226.04

36,693

212.80

1)2024/25 includes 2,596 performance SARs (previous year 0) granted to a MB member.

2)The carrying amount of the liability relating to the SARs at March 31, 2025 is CHF 3.0 million (previous year CHF 3.9 million).

3)The intrinsic value of the SARs exercisable at March 31, 2025 amounts to CHF 1.3 million (previous year CHF 1.8 million).

Performance share units (PSUs)

In 2025, as well as in the previous year, grants made to the members of the Management Board under the EEAP consist of PSUs. The PSUs are measured on relative TSR (rTSR) against the constituents of a recognized index. The fair value of a PSU at grant date was based on a “Monte-Carlo valuation”. PSUs entitle the holder up to two shares per PSU, subject to the achievement of the performance criterion. PSUs granted are subject to a restriction period, which was considered in the fair value of the PSU at grant date. Upon vesting of the PSUs, the respective shares are either created out of the conditional share capital or treasury shares are used. The cost of the PSUs granted is expensed over their vesting period. Assumptions are made regarding the forfeiture rate which is adjusted during the vesting period, to ensure that only vested amounts are expensed.

Assumptions for valuation at grant date

PSU 2025

PSU 2024

Valuation date

1.2.2025

1.2.2024

Date of grant

1.2.2025

1.2.2024

Share price on grant date

CHF 319.20

CHF 279.10

Fair value

CHF 346.86

CHF 293.53

End of restriction period

31.1.2030

31.1.2029

Performance conditions

Total shareholder return (TSR)

Total shareholder return (TSR)

TSR performance period

1.2.2025 - 31.3.2028

1.2.2024 - 31.3.2027

TSR comparator group

Swiss Leader Index (SLI)

Swiss Leader Index (SLI)

Restricted share units (RSUs)

Under the EEAP grants 2020 to 2025, entitled employees have been granted RSUs. The value of an RSU is equal to the market price of Sonova Holding AG shares on the SIX Swiss Exchange on the grant date, adjusted for the fair value of expected dividends, as RSUs are not entitled to dividends. The fair value of a RSUs granted on February 1st, 2025 amounted to CHF 307.01 (fair value of grant February 1st, 2024 CHF 267.29). RSUs entitle the holder to one share per RSU after the vesting period. Upon vesting of the RSUs, the respective shares are either created out of the conditional share capital or treasury shares are used. The cost of the RSUs granted is expensed over their vesting period. Assumptions are made regarding the forfeiture rate which is adjusted during the vesting period to ensure that only vested amounts are expensed.

Restricted shares

In addition to the PSUs granted in respect to the EEAP 2025 and 2024, restricted shares have been granted to the Chairman of the Board of Directors as well as to the other members of the Board of Directors in the financial year 2024/25 and 2023/24. These shares are entitled to dividends and are restricted for a period of 64 months (Chairman), respectively 52 months (other members of the Board of Directors). The fair value of a restricted share granted on February 1st, 2025 amounted to CHF 319.20 (fair value of grant February 1st, 2024 CHF 279.10).

The costs for the restricted shares granted to the members of the Board of Directors have been fully expensed in the 2024/25 financial year as these shares have no vesting period.

Changes in outstanding PSUs/RSUs/Restricted shares:

2024/25

2023/24

Number of PSUs

Number of RSUs

Number of restricted shares

Total

Number of PSUs

Number of RSUs

Number of restricted shares

Total

Balance April 1

33,270

189,424

39,028

261,722

33,620

193,831

40,052

267,503

Granted

6,044

49,558

5,668

61,270

8,456

58,901

5,909

73,266

Subject to holding period (PSUs)

-

-

7,956

7,956

4,540

4,540

Settled

(9,565)

(48,086)

(11,359)

(69,010)

(4,689)

(50,082)

(11,473)

(66,244)

Forfeited

(5,581)

(16,047)

-

(21,628)

(4,117)

(13,226)

(17,343)

Balance March 31

24,168

174,849

41,293

240,310

33,270

189,424

39,028

261,722

In addition to the plans described above a cash-settled share based payment arrangement existed in relation to an acquisition entered in the financial year 2019/20. A portion of the deferred payments of that transaction can be settled in Sonova shares (number of shares granted 102,421) or in cash at the discretion of the counterparties and represent share-based payments as the payment was linked to employment conditions. In the financial year 2023/24 the last tranche vested and a liability of CHF 6.0 million was transferred to equity as the beneficiaries opted for settlement in Sonova shares.

Accounting policies

The Board of Directors of Sonova Holding AG, the Management Board, and certain management and senior employees of other Group companies participate in equity compensation plans. The fair value of all equity compensation awards granted to employees is determined at the grant date and recorded as an expense over the vesting period. The expense for equity compensation awards is charged to the appropriate income statement heading within the operating result and an equivalent increase in equity (for equity-settled compensation) or financial liability (for cash-settled compensation) is recorded. In the case of cash-settled compensation, until the liability is settled, it is revalued at each reporting date, recognizing changes in the fair value in the income statement.

7.5 Events after the balance sheet date

There have been no material events after the balance sheet date.

7.6 List of significant companies

Company name

Activity

Domicile (country)

Share/paid-in capital1) Local currency 1,000

Shares held

Switzerland

Sonova Holding AG

A

Stäfa

CHF

2,981

100%

Sonova AG

A, B, C, D

Stäfa

CHF

2,500

100%

Advanced Bionics AG

A, B

Stäfa

CHF

4,350

100%

EMEA (excluding Switzerland)

Boots Hearing Care Ltd.

B

Conwy (UK)

GBP

0

2)

51%

SOD Invest SAS

A

Cahors (FR)

EUR

60,000

100%

Sonova Audiological Care Austria GmbH

B

Wals-Himmelreich (AT)

EUR

450

100%

Sonova Audiological Care France SAS

B

Cahors (FR)

EUR

60,000

100%

Sonova Audiological Care Italia S.r.l

B

Milan (IT)

EUR

1,166

100%

Sonova Audiological Care Nederland B.V.

B

Rotterdam (NL)

EUR

19

100%

Sonova Audiological Care Polska Sp.z.o.o.

B

Lodz (PL)

PLN

678

100%

Sonova Consumer Hearing GmbH

A, B

Wedemark-Hannover (DE)

EUR

25

100%

Sonova Deutschland GmbH

B

Fellbach (DE)

EUR

41

100%

Sonova France S.A.S.

B

Bron-Lyon (FR)

EUR

1,000

100%

Sonova Ibérica S.A.U.

B

San Vicente del Raspeig (ES)

EUR

7,000

100%

Sonova Retail Belgium NV

B

Groot-Bijgaarden(BE)

EUR

8,999

100%

Sonova Retail Deutschland GmbH

B

Dortmund (DE)

EUR

1,000

100%

Sonova UK Ltd.

B

Warrington (UK)

GBP

2,500

100%

Activities:

AHolding/Finance: The entity is a holding or finance company.

BSales: The entity performs sales and marketing activities.

CProduction: This entity performs manufacturing for the Group.

DResearch: This entity performs research and development activities for the Group.

1)Share/paid-in capital may not reflect the taxable share/paid-in capital amount and does not include any paid-in surplus.

2)GBP 133

Company name

Activity

Domicile (country)

Share/paid-in capital1) Local currency 1,000

Shares held

Americas

Advanced Bionics Corp.

A

Valencia (US)

USD

1

100%

Advanced Bionics LLC

B, C, D

Valencia (US)

USD

0

2)

100%

Alpaca Group Holdings, LLC

A

Delaware (US)

USD

298,893

100%

Connect Hearing Inc.

B

Aurora (US)

USD

0

3)

100%

Development Finance Inc.

A

Aurora (US)

USD

0

4)

100%

National Hearing Services Inc.

B

Kitchener (CA)

CAD

0

2)

100%

Sonova Canada Inc.

B

Mississauga (CA)

CAD

0

2)

100%

Sonova Consumer Hearing USA LLC

B

Old Lyme (US)

USD

20,000

100%

Sonova do Brasil Produtos Audiológicos Ltda.

B

Sao Paulo (BR)

BRL

120,379

100%

Sonova North American Operations Center, S.A. de C.V.

C

Monterrey, Nuevo León (MX)

MXN

10

100%

Sonova United States Hearing Instruments, LLC

A

Aurora (US)

USD

0

2)

100%

Sonova USA, Inc.

B

Aurora (US)

USD

46,608

100%

Asia/Pacific

Hubei Hysound Health Technology Corp. Ltd.

B

Wuhan (CN)

CNY

1,000

100%

Shanghai Chengting Technology Corp. Ltd

B

Shanghai (CN)

CNY

18,871

100%

Sonova (Shanghai) Co., Ltd.

B

Shanghai (CN)

CNY

20,041

100%

Sonova Audiological Care Australia Pty. Ltd

B

NSW (AU)

AUD

109,277

100%

Sonova Audiological Care New Zealand Ltd

B

Auckland (NZ)

NZD

20,450

100%

Sonova Australia Pty Ltd

B

Norwest (AU)

AUD

10,475

100%

Sonova Hearing (Beijing) Co., Ltd

B

Beijing (CN)

CNY

44,932

100%

Sonova Hearing (Suzhou) Co., Ltd.

C

Suzhou (CN)

CNY

46,249

100%

Sonova Operation Center Vietnam Co., Ltd.

C

Binh Duong (VN)

VND

36,156,000

100%

Activities:

AHolding/Finance: The entity is a holding or finance company.

BSales: The entity performs sales and marketing activities.

CProduction: This entity performs manufacturing for the Group.

DResearch: This entity performs research and development activities for the Group.

1)Share/paid-in capital may not reflect the taxable share/paid-in capital amount and does not include any paid-in surplus.

2)Without par value

3)USD 1

4)USD 10

7.7 Other accounting policies

Investments in subsidiaries

Investments in subsidiaries are fully consolidated. These are entities over which Sonova Holding AG directly or indirectly exercises control. Control exists when the Group is exposed, or has rights, to variable returns from its relationship with an entity and has the power to affect those returns. Control is presumed to exist when the parent owns, directly or in­directly through subsidiaries, more than half of the voting power of an entity unless, in exceptional circumstances, it can clearly demonstrate that such ownership does not constitute control. For the consolidated entities, 100% of assets, liabilities, income, and expenses are included. Non-controlling interests in equity and net income or loss are shown separately in the balance sheet and income statement. Changes in the ownership interest of a subsidiary that do not result in a loss of control will be accounted for as an equity transaction. Hence, neither goodwill nor any gains or losses will result.

Group Companies acquired during the year are included in the consolidation from the date on which control over the company transferred to the Group. Group companies divested during the year are excluded from the consolidation as of the date the Group ceased to have control over the company. Intercompany balances and transactions (including unrealized profit on intercompany inventories) are eliminated in full.

Related parties

A party is related to an entity if the party directly or indirectly controls, is controlled by, or is under common control with the entity, has an interest in the entity that gives it significant influence over the entity, has joint control over the entity or is an associate or a joint venture of the entity. In addition, members of the Board of Directors and the Management Board or close members of their families are also considered related parties as well as post-employment plan organizations (pension funds) for the benefit of Sonova employees. No related party exercises control over the Group.