The consolidated financial statements are prepared in accordance with the provisions of Title 9, Book 2 of the Dutch Civil Code and the firm pronouncements in the Dutch Accounting Standards, as published by the Dutch Accounting Standards Board ('Raad voor de Jaarverslaggeving').

Assets and liabilities are generally valued at historical cost, production cost or at fair value at the time of acquisition. If no specific valuation principle has been stated, valuation is at historical cost. In the balance sheet, income statement and the cash flow statement, references are made to the notes.

Royal Ahrend is an international leader in office furniture committed to delivering contemporary and highly sustainable office lifestyles to corporate end-users around the world. Products and interiors are designed to encourage the wellbeing and productivity of the people. Ahrend operates from offices in over 15 countries on five continents, including China and Dubai. Royal Ahrend delivers furniture and services for office, education, healthcare and retail environments through a portfolio of leading furniture brands such as Ahrend, Gispen and Techo. These recognised brands are often leaders in their relevant markets and some look back at a heritage of more than 125 years.

In 2024 focus was on increasing share of own product sales and further optimisation and integration of the worldwide supply chain organisation. The brand new wood hub facility in Prague, Czech Republic, has become fully operational since mid-2024. The worldwide integration efforts fit within the midterm plan for the period 2024-2027, as approved by the Supervisory Board and published by Royal Ahrend in 2023. The midterm plan is built on five pillars:

• Vitalising workspaces: creating vitalising workspaces that enhance the wellbeing and performance of organisations     
• Sustainability: leading by example and creating both direct and indirect impact in putting the circular economy principles into practice
• One-Company: Royal Ahrend is one company, in which everyone across locations and areas of expertise works together to achieve common goals
• People: Royal Ahrend’s people want to make a difference, together with the team(s) they work in, as well as in their own area of expertise. Royal Ahrend supports their diversity, collaboration and initiative.
• Digitalisation: Royal Ahrend strives to deliver the best customer experience possible as well as facilitate its employees in doing their work as effectively as possible.

It is expected that through focus and worldwide integration, Royal Ahrend is prepared for the future and the performance and profitability of Royal Ahrend will increase in the coming years. Royal Ahrend keeps investing in enhancing the efficiency of its organisation and optimisation of its assortment and services offerings towards its customers. This will lead to permanent savings on wages and operational expenses and growth of revenues and margin.

Management closely monitors developments in the world market and proactively responds to changes therein. Reference is also made to the note on Royal Ahrend's financial instruments, when it comes to managing foreign exchange risk, interest rate and cash flow risk, other price risk, credit risk and liquidity risks. 

The financing agreement with KBC Bank for a total of €43.5mln with a term of five years provides in the day-to-day financing needs of the company. The final maturity date of the agreement is March 2028, as such the remaining term at balance sheet date is more than 3 years. Ultimo 2024 Royal Ahrend has a net cash position of €20.2mln.

The accounting principles applied to the valuation of assets and liabilities and the determination of results in these financial statements are therefore based on the assumption of continuity of the company.

There are no changes in the accounting policies.

In applying the principles and policies for drawing up the financial statements, the management of Royal Ahrend makes different estimates and judgments that may be essential to the amounts disclosed in the financial statements.

Estimates are used to verify the correct valuation of assets included in the balance sheet. Deferred tax assets are considered to be the assets with the most significant valuation risk. The valuation is verified using long-term forecasts of financial performances. The estimates used are based on the actual results, the operational budget 2025 and the long-term forecast. Based on the performed analysis it is concluded that no indicator for impairment is present by the end of 2024.

Estimates are used in the calculation of the Right of Use assets and corresponding Lease Liabilities. Especially determining whether or not extension or termination options will be exercised or not. This could have a significant impact on the expected duration of a lease contract and thus impact the related balances.

Other provisions, such as the warranty and jubilee provisions, and accruals, including the bonus accrual, also contain estimates to a certain (limited) extent. If it is necessary in order to provide the true and fair view required under Book 2, article 362, paragraph 1, the nature of other estimates and judgments, including related assumptions, is disclosed in the notes to the relevant financial statement item.

The accounting estimates did not change compared to prior year’s financial statements.

Ultimate parent company

HAL Trust, a Bermudian Trust, is the ultimate parent company and controlling party of Royal Ahrend (Koninklijke Ahrend BV). The financial data of Royal Ahrend are included in the consolidated financial statements of both HAL Trust and HAL Holding NV. HAL Holding NV’s registered address is in Willemstad, Curacao, and its office is located in Rotterdam, the Netherlands. The consolidated financial statements of HAL Trust and HAL Holding NV are available at cost price at the office of HAL Holding NV and the financial statements of HAL Trust are also available via the website www.halholding.com.

• Ahrend Produktiebedrijf Zwanenburg BV, Zwanenburg: wholly-owned subsidiary (2023: 100%)

• Ahrend Produktiebedrijf Sint-Oedenrode BV, Sint-Oedenrode: wholly-owned subsidiary (2023: 100%)

• Ahrend Nederland BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Ahrend International BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Ahrend NV, Brussels, Belgium: wholly-owned subsidiary (2023: 100%)
• Ahrend France SAS, Meudon, France: wholly-owned subsidiary (2023: 100%)

• Ahrend Ltd., Hove/London, UK: wholly-owned subsidiary (2023: 100%)
- liquidated in 2024
• Ahrend Beteiligungs.Mbh, Köln, Germany: wholly-owned subsidiary (2023: 100%)
• Ahrend GmbH & Co. KG, Köln, Germany: wholly-owned subsidiary (2023: 100%)


• Ahrend Espana BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Ahrend UK Ltd., Hove/London, UK: wholly-owned subsidiary (2023: 100%)

• Ahrend Holdings Ltd., Hove/London, UK: wholly-owned subsidiary (2023: 100%)
- liquidated in 2024
• Ahrend Support BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Ahrend Group BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Ahrend Europe BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Gispen BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Ahrend APAC BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Gispen Nederland BV, Culemborg: wholly-owned subsidiary (2023: 100%)

• Ahrend Onroerend Goed BV, Amsterdam: wholly-owned subsidiary (2023: 100%)

• Ahrend Onroerend Goed II BV, Culemborg: wholly-owned subsidiary (2023: 100%)

• NgispeN BV, Culemborg: wholly-owned subsidiary (2023: 100%)

• Suzhou Antriol Sheet Metal Production Company Ltd., Suzhou, China: wholly-owned subsidiary (2023: 100%)

• Ahrend Furniture (Suzhou) Co., Ltd., Suzhou, China: wholly-owned subsidiary (2023: 100%)
• Roels BV, Sint-Oedenrode: wholly-owned subsidiary (2023: 100%)

• Presikhaaf Schoolmeubelen BV, Arnhem: wholly-owned subsidiary (2023: 100%)


• Ahrend a.s.., Prague, Czech Republic: wholly-owned subsidiary (2023: 100%)

• Interier Rícany, Prague, Czech Republic: wholly-owned subsidiary (2023: 100%)

• Ahrend Services s.r.o., Prague, Czech Republic: wholly-owned subsidiary (2023: 100%)

• Techo s.r.o., Prague, Czech Republic: wholly-owned subsidiary (2023: 100%)

• Ahrend s.r.o., Bratislava, Slovakia: wholly-owned subsidiary (2023: 100%)

• Ahrend Rumania S.r.l., Bucharest, Romania: wholly-owned subsidiary (2023: 100%)

• Ahrend Kft, Budapest, Hungary: wholly-owned subsidiary (2023: 100%)

• Ahrend d.o.o., Zagreb, Croatia: wholly-owned subsidiary (2023: 100%)

• TOB Ahrend Ltd, Kiev, Ukraine: wholly-owned subsidiary (2023: 100%)
• Ahrend Austria GmbH, Vienna, Austria: wholly-owned subsidiary (2023: 100%)

• O.o.o. Royal Ahrend Rus LLC, Moscow, Russia: wholly-owned subsidiary (2023: 100%)
- liquidated in 2024
• Ahrend Poland sp.z.o.o., Warsaw, Poland: wholly-owned subsidiary (2023: 100%)
• Ortsalip Deutschland GmbH i.L., Frankfurt, Germany: wholly-owned subsidiary (2023: 100%)
• Circulaire Hub BV, Sint-Oedenrode: wholly-owned subsidiary (2023: 100%)
• Circular Interiors BV, Sint-Oedenrode: no interest held by Koninklijke Ahrend BV (refer to paragraph below).

The percentages stated represent the equity interests held. 

Koninklijke Ahrend BV has issued downstream guarantees pursuant to Section 403 of Book 2 of the Dutch Civil Code for almost all Dutch group companies.

Circular Interiors BV (hereafter: CI BV) is – like Koninklijke Ahrend BV - a fully-owned group subsidiary of Stonehaven 2006 BV. The main activity of CI BV is acting as a lessor of operational leases of office furniture. The concerning furniture is sold by Koninklijke Ahrend to CI BV. The Board of Directors of both companies is equal. As such policy-making influence by Royal Ahrend management is deemed to be present (RJ 217.202/205/206). CI BV is therefore included in the scope of consolidation of Koninklijke Ahrend.

Carried at net asset value:

• Ahrend Gulf FZCO, Dubai, United Arab Emirates: 33.3% participating interest (2023: 33.3%)
• Despace Holding Pte. Ltd., Singapore: 33.4% participating interest (founded in 2024)

The consolidated financial statements include the financial data of the company and its group companies at 31 December of the financial year. Group companies are legal entities and companies over which the company exercises control. In connection with this, financial instruments containing potential voting rights are also taken into account.

Group companies are fully consolidated as from the date on which control is obtained and until the date that control no longer exists. The items in the consolidated financial statements are determined in accordance with consistent accounting policies. The accounting policies of group companies and other consolidated entities have been changed where necessary, to align them to the prevailing group accounting policies.

Intragroup transactions included both in balance sheet and profit and loss are eliminated in full.

Minority interests are presented separately in the consolidated financial statements. Minority interests in group companies are part of group equity. Minority interests in profit or loss of group companies are deducted from group profit or loss after taxation.

If the losses attributable to the minority interest exceed the minority interest in equity of the group companies, the balance as well as any further losses are charged in full to Royal Ahrend, unless and to the extent that the minority shareholder is liable for, and able to bear, those. If the group companies subsequently achieve profits, those profits accrue in full to Royal Ahrend until the losses borne by Royal Ahrend are recovered.

Since the income statement for 2024 of the Company is included in the consolidated financial statements, an abridged income statement has been disclosed in the company financial statements in accordance with Section 402, Book 2 of the Dutch Civil Code.

All legal entities that can be controlled, jointly controlled or significantly influenced are considered to be a related party. Also, entities which can control the company are considered to be a related party. In addition, statutory directors, other key management of Koninklijke Ahrend BV and of the ultimate parent company and close relatives are regarded as related parties. All transactions between related parties are considered to be at arm’s length.

Acquisitions are recognised in the financial statements according to the purchase accounting method. This means that any assets and liabilities acquired are carried at fair value as at the acquisition date. The difference between cost and the company’s share of the fair value of the identifiable assets and liabilities acquired at the time of the transaction of a participating interest is recognised as goodwill.
In the case of a transaction under common control, the carry-over accounting method is applied. This means that the transaction is stated at the carrying amount in the financial statements for the financial year, in line with the amount included in the financial statements of the parent, as of the merger date. The comparative figures are not restated. The difference between cost and the carrying amounts of the acquired assets and liabilities is recognised in equity.

The consolidated financial statements are prepared in euros, the functional and presentation currency of the Group. Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions denominated in foreign currencies are initially carried at the functional exchange rates ruling at the date of transaction. Monetary balance sheet items denominated in foreign currencies are translated at the functional exchange rates ruling at the balance sheet date. Non-monetary balance sheet items that are measured at historical cost in a foreign currency are translated at the functional exchange rates ruling at the date of transaction. Non-monetary balance sheet items that are measured at current value are translated at the functional exchange rates ruling at the date of valuation. 

Exchange rate differences arising on the settlement or translation of monetary items denominated in foreign currencies are taken to the profit and loss account, except for exchange rate differences resulting from net investments in foreign activities, or from loans taken out to finance or effectively hedge net investments in foreign activities. These exchange rate differences are taken directly to the foreign currency translation reserve. The foreign currency translation reserve is included under the legal reserves.

Exchange rate differences arising from the translation of non-monetary balance sheet items denominated in foreign currencies that are carried at current value are taken directly to the revaluation reserve, provided the changes in value of the non-monetary items are likewise taken directly to reserves. 

Goodwill and fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign activity are treated as assets and liabilities of the foreign activity and translated at the rate of exchange ruling at the balance sheet date.

The assets and liabilities of foreign activities are translated into the presentation currency (euros) at the rate of exchange ruling at the balance sheet date and the income and expenses of these foreign activities are translated at the annual average exchange rates. Resulting exchange rate differences are taken directly to the legal foreign currency translation reserve. On the disposal of a foreign activity, the cumulative exchange rate differences taken directly to the reserves are taken to the profit and loss account as part of the gain or loss on the sale.

Assets and liabilities are only offset in the financial statements if and to the extent that:

• An enforceable legal right exists to offset the assets and liabilities and settle them simultaneously;
  and
• The positive intention is to settle the assets and liabilities on a net basis or simultaneously.

Financial instruments include both primary financial instruments, such as receivables, securities and payables, and derivative financial instruments.

All purchases and sales of financial assets made according to standard market conventions are recognised as at the transaction date, being the date on which the group enters into a binding agreement.

For the accounting policies applicable to primary financial instruments, please refer to the treatment of individual balance sheet items. For the valuation and recognition of derivatives, please refer to the separate section on Derivatives and hedge accounting.

General

An intangible fixed asset is recognised in the balance sheet if:

• The asset is identifiable.
• Royal Ahrend has control (power to obtain benefits from the asset).
• It is probable that the future economic benefits that are attributable to the asset will accrue to the group.
• The cost of the asset can be reliably measured.

Costs relating to intangible fixed assets not meeting the criteria for capitalisation (for example, cost of research, internally developed brands, logos and client databases) are taken directly to the profit and loss account.

Internally generated development costs are capitalised if they satisfy all technical, commercial and financial feasibility criteria set for them (RJ 210). A legal reserve equivalent to the carrying amount is formed. Ultimo 2024 the amount of capitalised internally generated development costs, such as man hours, is limited, as not all criteria are met. 

Development costs are amortised on a straight-line basis over the estimated economic useful life of the asset, depending on the nature and type of asset, generally being 5 years, but no longer than 20 years.

Trademarks are recognised if future economic benefits are probable. These costs are amortised on a straight-line basis over the estimated economic useful life of the asset. The capitalised trademark is amortised in 15 years.

Software is capitalised in case the standard requirements for capitalisations are met. Purchased software is capitalised using the cost method. These costs are amortised on a straight-line basis over the estimated economic useful life of the asset being 5 years. 

Software being an operating system for machinery (hardware) is included in the valuation of the tangible fixed assets (PPE). The economic useful life of this software is considered to be equal to the economic useful life of the hardware of the machinery.

Internally developed software is charged to the profit and loss account unless the following capitalisation requirements are met: technological feasibility, probable future benefits, intent and ability to use or sell the software, resources to complete the software, and ability to measure cost.

Tangible fixed assets in use by the company are carried at the cost of acquisition or production net of accumulated depreciation and, where applicable, accumulated impairment losses. Tangible fixed assets carried at cost do not include capitalised interest charges.

Tangible fixed assets are depreciated on a straight-line basis over their estimated useful economic lives, taking into account the residual value, as follows:

• Land is not depreciated.
• Buildings are depreciated in 30 to 40 years.
• Machinery and equipment are depreciated in 5 to 15 years.
• Other tangible fixed assets are depreciated in 5 to 10 years.
• Assets under construction and prepayments are not depreciated.

If important components of a tangible fixed asset can be distinguished from each other and differ in useful life or expected use pattern, these components are depreciated separately. If the expected depreciation method, useful economic life and/or residual value are subject to changes over time, they are treated as a change in accounting estimate.

Costs of major maintenance are capitalised if the recognition criteria are met. Individual major maintenance activities are capitalised as component and are depreciated on a straight-line basis over the estimated useful economic live of the individual components. The carrying amount of the components to be replaced will be regarded as a disposal and taken directly to the profit and loss account. All other repair and maintenance costs are taken directly to the profit and loss account.

Retired tangible fixed assets are carried at the lower of cost and their fair value less costs to sell.

A tangible fixed asset is derecognised upon sale or when no further economic benefits are expected from its continued use or sale. The gain or loss arising on the disposal is taken to the profit and loss account under the other operating expenses.

The Group applies IFRS16 regarding Leases. This is allowed under RJ292 Leasing.

Contracts may contain both lease and non-lease components. The group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of cars for which the group is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date
• amounts expected to be payable by the group under residual value guarantees
• the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. To determine the incremental borrowing rate, the group:

• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the group, which does not have recent third-party financing, and
• makes adjustments specific to the lease, e.g. term, country, currency and security.

The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and
• restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

Lease income from operating leases where the group is a lessor (CI BV) is recognised in income on a straight-line basis over the lease term (note 3). Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The respective leased assets are included in the balance sheet based on their nature.

Participating interests

Non-consolidated participating interests over whose financial and operating policies the group exercises significant influence are valued using the net asset value method. To determine whether there is significant influence, the financial instruments containing potential voting rights are also considered. Under the net asset value method, participating interests are carried at the group’s share in their net asset value. The group’s share in the results of the participating interests is recognised in the profit and loss account. If and to the extent the distribution of profits is subject to restrictions, these are included in a legal reserve. The company’s share in direct equity increases and decreases of participating interests is also included in the legal reserve except for asset revaluations recognised in the revaluation reserve.

If the value of the participating interest under the net asset value method has become nil, this method is no longer applied, with the participating interest being valued at nil if the circumstances are unchanged. In connection with this, any long-term interests that, in substance, form part of the investor’s net investment in the participating interest are included. A provision is formed if and to the extent the company stands surety for all or part of the debts of the participating interest or if it has a constructive obligation to enable the participating interest to repay its debts.

A subsequently acquired share of the profit of the participating interest is recognised only if and to the extent that the accumulated share of the previously unrecognised loss has been recovered

Following application of the net asset value method, the group determines whether an impairment loss has to be recognised in respect of the participating interest. At each reporting date, the group assesses whether there are objective indications of impairment of the participating interest. If any such indication exists, the group determines the impairment loss as the difference between the recoverable amount of the participating interest and its carrying amount, taking it to the profit and loss account.

Participating interests over whose financial and operating policies no significant influence is exercised are carried at cost less any impairment. Dividend is designated as income and recognised under financial income and expense.

Results from transactions with or between non-consolidated participating interests carried at net asset value are recognised proportionally. Results from transactions with or between non-consolidated participating interests carried at cost are recognised in full, unless they are effectively unrealised.

For the valuation and recognition of deferred tax assets, please refer to the separate section on Taxes.

On each balance sheet date, the company assesses whether there are any indications that a fixed asset may be subject to impairment. If there are such indications, the realisable value of the asset is determined. If it is not possible to determine the realisable value of the individual asset, the realisable value of the cash-generating unit to which the asset belongs is determined. Impairment occurs when the carrying amount of an asset is higher than the realisable value; the realisable value is the higher of the fair value less cost to sell and the value in use. An impairment loss is directly recognised in the income statement while the carrying amount of the asset concerned is concurrently reduced.

The realisable value is initially based on a binding sale agreement; if there is no such agreement, the realisable value is determined based on the active market, whereby usually the prevailing bid price is taken as market price. The costs deducted in determining net realisable value are based on the estimated costs that are directly attributable to the sale and are necessary to realise the sale. For the determination of the value in use, an estimate is made of the future net cash flows in the event of continued use of the asset / cash-generating unit; these cash flows are discounted.

If it is established that an impairment that was recognised in the past no longer exists or has reduced, the increased carrying amount of the asset concerned is set no higher than the carrying amount that would have been determined if no impairment value adjustment for the asset concerned had been reported. An impairment of goodwill cannot be reversed.

The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If any such evidence exists, the impairment loss is determined and recognised in the income statement. The amount of an impairment loss incurred on financial assets stated at amortised cost is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss shall be reversed. The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal shall be recognised through profit or loss.

Inventories of raw materials and consumables, work in progress being semi-manufactured goods, finished goods and goods for resale are carried at the lower of cost of acquisition or production and net realisable value.
The costs of raw materials, consumables and goods for resale are calculated based on the first in, first out principle. The costs of finished goods and work in progress being semi-manufactured goods represent the cost of raw materials used and direct production costs, plus a mark-up for indirect cost of production based on normal production capacity, excluding interest on loans. Indirect costs included under inventories carried at cost relate to depreciation and maintenance of plant and machinery, as well as salary costs of the factory’s management and administrative staff.

The net realisable value is the estimated selling price less directly attributable selling costs. In determining the realisable value, the obsolescence of the stocks is taken into account.

Current receivables not forming part of the trading portfolio are initially measured at fair value and subsequently carried at amortised cost less a provision for doubtful debts where necessary. If there are no discounts and premiums and transaction costs, the amortised cost is equal to the nominal value of the receivables.

A financial instrument or its separate components are classified in the consolidated financial statements as liability or as equity in accordance with the substance of the contractual agreement underlying the financial instrument. In the company financial statements, a financial instrument is classified in accordance with the legal reality. Interest, dividends, gains and losses relating to a financial instrument, or part of a financial instrument, are included in the financial statements in accordance with the classification of the financial instrument as liability or equity.

A provision is formed if the group has a legal or constructive obligation as at the balance sheet date if it is probable that an outflow of resources will be required to settle the obligation and the amount of the liability can be reliably estimated. The amount of the provision is determined based on a best estimate of the amounts required to settle the liabilities and losses concerned at the balance sheet date. Provisions for one-off events (restructuring, environmental clean-up, settlement of a lawsuit, etcetera) are measured at the most likely amount. Provisions for large populations of events (warranties) are measured at a probability-weighted expected value. Provisions are carried at discounted value, unless the value of discounting is immaterial.

If third-party reimbursement of expenses required to settle a provision is probable, the reimbursement is recognised as a separate asset.

Contributions payable to the pension plan administrator are recognised as an expense in the profit and loss account. Contributions payable or prepaid contributions as at year-end are recognised under accruals and deferred income, and prepayments and accrued income, respectively.

A provision is formed for liabilities other than the contributions payable to the pension plan administrator if, as at the balance sheet date, the group has a legal or constructive obligation towards the pension plan administrator and/or to its own employees, if it is probable that settlement of these liabilities will entail an outflow of resources and if a reliable estimate can be made of the amount of the liabilities.

The provision for additional liabilities to the pension plan administrator and/or the employees is based on a best estimate of the amounts required to settle these liabilities concerned at the balance sheet date. The provision is carried at present value if the effect of the time value of money is material.

The total pension provision has been equal to €0 since ultimo 2022.

For the valuation and recognition of the provision for deferred taxation, please refer to the separate section entitled Taxes.

The other provisions include mainly the jubilee provision, restructuring provision, warranty provision and environmental provision.

The jubilee provision is actuarially calculated on an annual basis taking into account the actual employee data (including starting date), mortality table AG2024 and a discount rate of 3.15%. The warranty provision is measured at a probability-weighted expected value. Experience figures are used to estimate the change of warranty complaints. The environmental provision is related to one specific former production facility. In the past an investigation was executed by an external consultant who estimated the expected costs to remove the polluted soil. The provision was aligned with the consultant’s report.

Current taxes

Taxes are calculated on the profit as disclosed in the profit and loss account based on current tax rates, allowing for tax-exempt items and cost items which are non-deductible, either in whole or in part.

Tax assets and liabilities are netted if the general conditions for netting are met.

Taxes are settled as if each company is an independent taxable entity. Royal Ahrend and its Dutch group companies constitute a fiscal unity together with Stonehaven 2006 BV. For further details about the valuation of deferred tax assets refer to the next paragraph.

A deferred tax liability is recognised for all taxable temporary differences between the valuation for tax and financial reporting purposes. A deferred tax asset is recognised for all deductible temporary differences between the valuation for tax and financial reporting purposes and carry-forward losses, to the extent that it is probable that future taxable profit will be available for set-off. Deferred tax assets and liabilities are recognised under financial fixed assets and provisions, respectively.

Deferred tax liabilities and deferred tax assets are carried on the basis of the tax consequences of the realisation or settlement of assets, provisions, liabilities or accruals and deferred income as planned by the group at the balance sheet date. Valuation is based on the tax rates prevailing at year-end, or at the rates that will apply in future years, as far as they have already been determined by law. Deferred tax liabilities and deferred tax assets are carried at non-discounted value.

Deferred tax assets and liabilities are netted if the group has a legally enforceable right to set off tax assets against tax liabilities within the same tax jurisdiction.

Valuation of deferred tax assets
Group management recognises a deferred tax asset to the level that convincing evidence is available to sustain the valuation. This evidence is based on the budgeted and/or actual results of the years following balance sheet date and other events which are more likely than not and relevant in this respect. 
The calculation of deferred tax assets and liabilities is based on the tax rates prevailing at year end, or at the rates that will apply in future years, as far as these have already been determined by law.

When long-term liabilities are recognised initially, they are measured at fair value, less, in the case of financial liabilities not classified at fair value through profit or loss, directly attributable transaction costs. 

After initial measurement, long-term liabilities are carried at amortised cost using the effective interest method. Gains and losses are taken to the profit and loss account when the liabilities are derecognised, as well as through the amortisation process.

On initial recognition, current liabilities are carried at fair value less directly attributable transaction costs (in the case of financial liabilities not carried at fair value through profit or loss).

After initial measurement, current liabilities are carried at amortised cost using the effective interest method. The effective interest method is not applied when the impact is deemed to be not material. Gains or losses are recognised in the profit and loss account when the liabilities are derecognised, as well as through the amortisation process.

Amortised cost is the amount at which a financial asset or liability is measured at initial recognition less repayments of the principal, plus or less the cumulative amortisation using the effective interest method for any difference between this initial amount and the maturity amount, and less any reductions (effected directly or through a provision being formed) for impairment and doubtful debts.

The group uses derivative financial instruments such as forward currency contracts to hedge its risks associated with foreign currency fluctuations.

The group separates an embedded derivative from the host contract if the following conditions are met:

• There is no close relationship between the economic characteristics and risks of the embedded derivative and those of the host contract.
• A separate instrument having the same characteristics as the embedded derivative would be classified as a derivative;
  and
• The compound instrument is not measured at fair value with changes in fair value recognised through profit or loss.

The separated derivative is initially recognised at historical cost price (nihil) and subsequently measured against fair value through P&L. No hedge accounting is applied. The fair value is derived from quoted market prices. 

A financial instrument is derecognised if a transaction results in the transfer, to a third party, of all or nearly all rights to economic benefits and of all or nearly all the risks attached to the position.

General

The result is the difference between the realisable value of the goods/services provided and the costs and other charges during the year. The results on transactions are recognised in the year in which they are realised.

Profit or loss is determined taking into account the recognition of unrealised changes in fair value of derivative financial instruments not designated as hedging instruments.

An agreement may include several performance obligations (agreed-upon commitments to deliver distinct goods or services). Revenue is recognised for each separate performance obligation. The following performance obligations are distinguished:

• Revenues from sale of goods
• Revenues from provision of services

The total transaction price is allocated in proportion to the value of the performance obligations where an agreement contains several such obligations (commitments).

The obligation to repair or replace defective products under the legal warranty period is recognised as a provision.

Income from the sale of goods is recognised in the profit and loss account once all the major rights to economic benefits and significant risks relating to the goods have been transferred to the buyer, the income can be reliably measured and the income is probable to be received. Royal Ahrend believes that the economic benefits and significant risks are transferred to the buyer when the goods are delivered at client site. Although some contracts include a required acceptance procedure, based on experience it is concluded that this is rather a formality. As such, revenue of goods is in general recorded after delivery.

In addition to the sale of goods Royal Ahrend provides several services to its customers, such as fit-out services (light construction work at client site), project management and installation services. If the result of a transaction relating to a service can be reliably estimated and the income is probable to be received, the income relating to that service is recognised in proportion to the service delivered.

Stage of completion is based on the costs incurred in providing the services up to the balance sheet date in proportion to the estimated costs of the total services to be provided.

Expenses 

Expenses are determined with due observance of the aforementioned accounting policies and allocated to the financial year to which they relate. Foreseeable and other obligations as well as potential losses arising before the financial year-end are recognised if they are known before the financial statements are prepared and provided all other conditions for forming provisions are met.

Costs of raw materials and consumables are allocated to the period concerned.

Salaries, wages and social security contributions are charged to the income statement based on the terms of employment, where they are due to employees and the tax authorities respectively.

Koninklijke Ahrend BV applies the liability approach for all pension schemes. The premium payable during the financial year is charged to the result. Please also refer to the valuation principles for assets and liabilities, under Provision for pensions.

Intangible assets, including goodwill, are amortised and tangible fixed assets are depreciated over their estimated useful lives as from the moment they are ready for use. Land and investment property are not depreciated. Future depreciation and amortisation is adjusted if there is a change in estimated future useful life. 

Interest is allocated to successive financial reporting periods in proportion to the outstanding principal. Premiums and discounts are treated as annual interest charges so that the effective interest rate, together with the interest payable on the loan, is recognised in the profit and loss account, with the amortised cost of the liabilities being recognised in the balance sheet.

Transactions in foreign currencies are stated in the financial statements at the exchange rate of the functional currency on the transaction date. The income and expenses in functional currencies that are not equal to the presentation currency, are translated into the presentation currency at annual average exchange rates. 

Tax on the result is calculated based on the result before tax in the income statement, taking account of the losses available for set-off from previous financial years (to the extent that they have not already been included in the deferred tax assets) and exempt profit components and after the addition of non-deductible costs. Due account is also taken of changes which occur in the deferred tax assets and deferred tax liabilities in respect of changes in the applicable tax rate.

The result is the amount by which the carrying amount of the participation has changed since the previous financial statements as a result of the earnings achieved by the participation to the extent that this can be attributed to Koninklijke Ahrend BV.