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.

For the purposes of this consolidated annual report, Koninklijke Ahrend B.V. is referred to as “Royal Ahrend” or "Group". Unless explicitly stated otherwise, "Royal Ahrend" or "Group" comprises Koninklijke Ahrend B.V. and all its subsidiaries. 

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 15 countries on five continents. 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.

The financial statements are prepared on the basis of the going concern assumption. This is based on management's judgment that there are no events or circumstances that give rise to significant doubt about the company's ability to meet its obligations.

As from the financial year 2025, Royal Ahrend applies cash flow hedge accounting for foreign currency risks. Reference is made to the accounting policy on Derivatives and hedge accounting.

This constitutes a change in the accounting policy applied to financial instruments. In accordance with Dutch GAAP (RJ), cash flow hedge accounting is applied prospectively from the date of formal designation and documentation of the hedge relationship. Comparative figures have therefore not been restated. If hedge accounting had been applied in 2024, the impact on the income statement would have been nihil, while other comprehensive income, as part of equity, would have increased by approximately €0,2mln.

There are no other 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 2026 and the long-term forecast. Based on the performed analysis it is concluded that no indicator for impairment is present by the end of 2025.

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.

Estimates are applied in determining the recognition and measurement of the contingent consideration liability. The contingent consideration liability is initially recognised at the present value of the expected future payments. The measurement is based on management’s estimates and is reassessed when relevant assumptions change. Changes in these assumptions may result in an adjustment to the carrying amount of the liability.

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.

The immediate shareholder of Koninklijke Ahrend B.V. is Stonehaven 2006 B.V.

• Ahrend Produktiebedrijf Zwanenburg BV, Zwanenburg: wholly-owned subsidiary (2024: 100%)

• Ahrend Produktiebedrijf Sint-Oedenrode BV, Sint-Oedenrode: wholly-owned subsidiary (2024: 100%)

• Ahrend Nederland BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Ahrend International BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Ahrend NV, Brussels, Belgium: wholly-owned subsidiary (2024: 100%)
• Ahrend France SAS, Meudon, France: wholly-owned subsidiary (2024: 100%)

• Ahrend Beteiligungs.Mbh, Köln, Germany: wholly-owned subsidiary (2024: 100%)
• Ahrend GmbH & Co. KG, Köln, Germany: wholly-owned subsidiary (2024: 100%)


• Ahrend Espana BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Ahrend UK Ltd., Hove/London, UK: wholly-owned subsidiary (2024: 100%)

• Ahrend Support BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Ahrend Group BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Ahrend Europe BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Gispen BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Ahrend APAC BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Gispen Nederland BV, Culemborg: wholly-owned subsidiary (2024: 100%)

• Ahrend Onroerend Goed BV, Amsterdam: wholly-owned subsidiary (2024: 100%)

• Ahrend Onroerend Goed II BV, Culemborg: wholly-owned subsidiary (2024: 100%)

• NgispeN BV, Culemborg: wholly-owned subsidiary (2024: 100%)

• Suzhou Antriol Sheet Metal Production Company Ltd., Suzhou, China: wholly-owned subsidiary (2024: 100%)

• Ahrend Furniture (Suzhou) Co., Ltd., Suzhou, China: wholly-owned subsidiary (2024: 100%)
• Ahrend Gulf FZCO, Dubai, United Arab Emirates: 66.7% controlling interest (2024: 33.3%)
• Roels BV, Sint-Oedenrode: wholly-owned subsidiary (2024: 100%)

• Presikhaaf Schoolmeubelen BV, Arnhem: wholly-owned subsidiary (2024: 100%)


• Ahrend a.s.., Prague, Czech Republic: wholly-owned subsidiary (2024: 100%)

• Interier Rícany, Prague, Czech Republic: wholly-owned subsidiary (2024: 100%)

• Ahrend Services s.r.o., Prague, Czech Republic: wholly-owned subsidiary (2024: 100%)

• Techo s.r.o., Prague, Czech Republic: wholly-owned subsidiary (2024: 100%)

• Ahrend s.r.o., Bratislava, Slovakia: wholly-owned subsidiary (2024: 100%)

• Ahrend Rumania S.r.l., Bucharest, Romania: wholly-owned subsidiary (2024: 100%)

• Ahrend Kft, Budapest, Hungary: wholly-owned subsidiary (2024: 100%)

• Ahrend d.o.o., Zagreb, Croatia: wholly-owned subsidiary (2024: 100%)

• TOB Ahrend Ltd, Kiev, Ukraine: wholly-owned subsidiary (2024: 100%)
• Ahrend Austria GmbH, Vienna, Austria: wholly-owned subsidiary (2024: 100%)

• Ahrend Poland sp.z.o.o., Warsaw, Poland: wholly-owned subsidiary (2024: 100%)
• Ortsalip Deutschland GmbH i.L., Frankfurt, Germany: wholly-owned subsidiary (2024: 100%)
• Circulaire Hub BV, Sint-Oedenrode: wholly-owned subsidiary (2024: 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 is, like Koninklijke Ahrend BV, a fully-owned group subsidiary of Stonehaven 2006 BV. The main activity of Circular Interiors BV is acting as a lessor of operational leases of office furniture. The concerning furniture is sold by Royal Ahrend to Circular Interiors 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). Circular Interiors BV is therefore included in the scope of consolidation of Royal Ahrend.

Beginning of November 2025, Royal Ahrend acquired an additional one-third interest in Ahrend Gulf FZCO, Dubai, United Arab Emirates. As a result of this transaction, Royal Ahrend's ownership interest increased from 33.3% to 66.7%. As from this acquisition date, Royal Ahrend obtained control over Ahrend Gulf FZCO. 

Following this acquisition of an additional equity interest and the resulting change in control, a non‑controlling interest arose. As at year‑end 2025, this non‑controlling interest amounts to nil and is therefore presented as zero in the consolidated financial statements.

Participating interests over which significant influence is exercised are accounted for using the net asset value method. 

Carried at net asset value:

• Despace Holding Pte. Ltd., Singapore: 33.4% participating interest (2024: 33.4%)
• WJB Beteiligungen AG, Switzerland: 45% participating interest (2024: 0%)
• designfunktion Beteiligungs GmbH, Germany: 26% participating interest (2024: 0%)

The consolidated financial statements include the financial data of Koninklijke Ahrend B.V. and its group companies, together referred to as Royal Ahrend, at 31 December of the financial year. Group companies are legal entities and companies over which Koninklijke Ahrend B.V. 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 income statement 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 2025 of Koninklijke Ahrend B.V. 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. Legal entities belonging to the same group are also related parties. Also, entities which can control the company are considered to be a related party. In addition, statutory directors, other key management of Royal Ahrend 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.

Significant transactions with related parties are disclosed to the extent that they are not entered into under normal market conditions. This includes disclosing the nature and extent of the transaction and any other information necessary for providing the required insight.

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 Royal Ahrend. 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. 

The majority of Royal Ahrend’s transactions are denominated in euros (EUR). In addition, Royal Ahrend conducts significant operating activities in British pounds (GBP), Czech koruna (CZK), Chinese Yuan (CNY) and to a lesser extent US dollars (USD). Royal Ahrend's foreign currency exposure primarily relates to operating activities and working capital positions in these foreign currencies, which represent a significant portion of Royal Ahrend's non-euro transactions.

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 income statement, 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 income statement 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 Royal Ahrend 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 Royal Ahrend.
• 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 income statement.

Intangible fixed assets obtained on the acquisition of a group company are carried at fair value as at the date on which they are obtained. 

Intangible fixed assets are carried at cost of acquisition or production net of accumulated amortisation and accumulated impairment losses where applicable.

Intangible fixed assets are amortised on a straight-line basis over their expected useful economic lives, subject to a maximum of 20 years when the economic useful life could be measured reliably. If not the maximum timespan is 10 years. The economic useful life and the amortisation method are reviewed at each financial year-end.

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 2025 the amount of capitalised internally generated development costs is limited to the development costs of the large scale ERP-project. 

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 newly capitalised trademark relates to the purchase of the Gispen Classics intellectual property rights and is amortised in 20 years. The estimated useful life is based on management's estimate, but does not exceed intellectual property right registrations. The longer existing 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 income statement 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. Further reference is made to the paragraph on internally generated development costs regarding intangible fixed assets.

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 income statement. All other repair and maintenance costs are taken directly to the income statement.

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. The gain or loss arising on the disposal is taken to the income statement under the other operating expenses.

Royal Ahrend applies IFRS16 regarding Leases. This is allowed under RJ292 Leasing.

Contracts may contain both lease and non-lease components. Royal Ahrend 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 Royal Ahrend 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 Royal Ahrend. 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 payments 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 Royal Ahrend under residual value guarantees
• the exercise price of a purchase option if Royal Ahrend is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects Royal Ahrend 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 by Royal Ahrend, 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, Royal Ahrend:

• 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 Royal Ahrend, which does not have recent third-party financing, and
• makes adjustments specific to the lease, e.g. term, country, currency and security.

Royal Ahrend 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 the income statement 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 Royal Ahrend 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 the income statement. 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 Royal Ahrend is a lessor (via Circular Interiors 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 Royal Ahrend 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 Royal Ahrend's share in their net asset value. Royal Ahrend's share in the results of the participating interests is recognised in the income statement. If and to the extent the distribution of profits is subject to restrictions, these are included in a legal reserve. In addition, the company recognises its share in non‑distributable equity movements of participating interests in a legal reserve. Equity movements arising from transactions with shareholders of the participating interest, such as capital contributions or distributions, are excluded from the legal reserve.

If the carrying amount of a participating interest under the net asset value method has been reduced to nil, the application of this method is discontinued. Further losses are recognised only to the extent that the entity has long‑term interests which, in substance, form part of its net investment in the participating interest. If and to the extent that the entity has guaranteed the debts of the participating interest or has a constructive obligation to provide financial support, a provision is recognised.

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, Royal Ahrend determines whether an impairment loss has to be recognised in respect of the participating interest. At each reporting date, Royal Ahrend assesses whether there are objective indications of impairment of the participating interest. If any such indication exists, Royal Ahrend determines the impairment loss as the difference between the recoverable amount of the participating interest and its carrying amount, taking it to the income statement. 

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.

Royal Ahrend 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 in the income statement.

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 Royal Ahrend 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 income statement. 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, Royal Ahrend 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.

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 3.60%. 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 income statement 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 Royal Ahrend 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 Royal Ahrend has a legally enforceable right to set off tax assets against tax liabilities within the same tax jurisdiction.

Valuation of deferred tax assets
Royal Ahrend's management recognises a deferred tax asset to the level that convincing evidence is available to sustain the valuation. This evidence is based on the actual results, the operational budget 2026 and the long-term forecast.

On initial recognition long‑term debts are recognised at fair value. Transaction costs which can be directly attributed to the acquisition of the long‑term debts are included in the initial recognition. After initial recognition long‑term debts are recognised at the amortised cost price, being the amount received taking into account premiums or discounts and minus transaction costs.

The difference between the carrying amount and the mature redemption value is accounted for as interest cost in the income statement based on the effective interest rate during the estimated term of the long‑term debts.

The effective interest rate takes into account the expected future cash flows. If the expected cash flows change due to contractual changes, the carrying amount is adjusted to reflect the actual cash flows and the revised estimated cash flows. The carrying amount is calculated by discounting the revised estimated cash flows at the adjusted effective rate, if there is a change due to changes in the market interest rate or, if this is not the case, the original effective rate. The adjustment is recognised as income or expense in the income statement.

Current liabilities are initially recognised at fair value. Short-term liabilities are subsequently measured at amortised cost, being the amount received taking into account premiums (agio) or discounts (disagio) and minus transaction costs. If there are no premiums, discounts, or transaction costs, then this is the nominal value.

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.

Royal Ahrend uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its exposure to foreign currency fluctuations and interest rate risks on borrowings.

Royal Ahrend 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. The fair value is derived from quoted market prices. 

Hedge accounting is applied on forward currency contracts. Reference is made to the paragraph on hedge accounting.

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
• Other revenues

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 income statement 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 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.

Royal Ahrend 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 is 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 income statement, 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 Royal Ahrend.