Contents

Management report3 Consolidated financial statements4 Consolidated statement of profit and loss5 Consolidated statement of comprehensive income6 Consolidated statement of financial position7 Consolidated statement of changes in equity9 Consolidated statement of cash flows10 Notes to the consolidated financial statements11

Management report

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Consolidated financial statements

Consolidated statement of profit and loss

for the year ended 31 December 2024		2024		2023
(x 1.000 )	Notes	€		€
Revenue	8,9	0		0
Other income		0		0
Changes in inventories		0		0
Costs of material		0		0
Employee benefits expense	22	0		0
Change in fair value of investment property	14	0		0
Depreciation, amortisation expense and impairment of non-financial assets		0		0
Impairment losses of financial assets and contract assets	34	0		0
Other expenses		0		0
Operating profit		0		0
Share of profit of equity accounted investments	7	0		0
Finance costs	27	0		0
Finance income	27	0		0
Other financial items	28	0		0
Profit before tax		0		0
Income tax expense	29	0		0
Profit for the year from continuing operations		0		0
Loss for the year from discontinued operations	20	0		0
Profit for the year		0		0
Profit for the year attributable to:
Non-controlling interest		0		0
Owners of the parent		0		0
		0		0
Earnings per share:	30
Basic earnings per share:
- From continuing operations		0.00		0.00
- From discontinued operations		0.00		0.00
Total		0.00		0.00
Diluted earnings per share:
- From continuing operations		0.00		0.00
- From discontinued operations		0.00		0.00
Total		0.00		0.00

Consolidated statement of comprehensive income

for the year ended 31 December 2024		2024		2023
(x 1.000 )	Notes	€		€
Profit for the year		0		0
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Revaluation of land	12	0		0
Remeasurements of defined benefit liability	22	0		0
Income tax relating to items not reclassified	21	0		0
		0		0
Items that will be reclassified subsequently to profit or loss:
Cash flow hedging	21	0		0
Exchange differences on translating foreign operations		0		0
Share of other comprehensive income of equity accounted investments	7	0		0
Income tax relating to items that will be reclassified	21	0		0
		0		0
Other comprehensive income for the year, net of tax		0		0
Total comprehensive income for the year		0		0
Total comprehensive income attributable to:
Non-controlling interest		0		0
Owners of the parent		0		0
		0		0

Consolidated statement of financial position

Assets		31 Dec 2024		31 Dec 2023
(x 1.000 )	Notes	€		€
Non-current assets
Goodwill	10	0		0
Other intangible assets	11	0		0
Property, plant and equipment	12	0		0
Right-of-use assets	13	0		0
Investments accounted for using the equity method	7	0		0
Investment property	14	0		0
Other long-term assets	8	0		0
Other long-term financial assets	16	0		0
Deferred tax assets	16	0		0
		0		0
Current assets
Assets included in disposal group classified as held for sale	20	0		0
Inventories	17	0		0
Prepayments and other short-term assets	8	0		0
Trade and other receivables	18	0		0
Derivative financial instruments	16	0		0
Other short-term financial assets	16	0		0
Cash and cash equivalents	19	0		0
		0		0
Total assets		0		0

EQUITY AND LIABILITIES		31 Dec 2024		31 Dec 2023
(x 1.000 )	Notes	€		€
Equity
Equity attributable to owners of the parent
Share capital	21	0		0
Share premium	21	0		0
Other components of equity	21	0		0
Retained earnings		0		0
		0		0
Non-controlling interest		0		0
Total equity		0		0
Non-current liabilities
Pension and other employee obligations	22	0		0
Borrowings	16	0		0
Lease liabilities		0		0
Deferred tax liabilties		0		0
Other liabilities	26	0		0
		0		0
Current liabilities
Liabilities included in disposal group classified as held for sale	20	0		0
Provisions	23	0		0
Pension and other employee obligations	22	0		0
Borrowings	16	0		0
Lease liabilities	13	0		0
Trade and other payables	24	0		0
Current tax liabilities		0		0
Derivative financial instruments	16	0		0
Contract and other liabilities	26	0		0
		0		0
Total liabilities		0		0
Total equity and liabilities		0		0

Consolidated statement of changes in equity

For the year ended 31 December 2024	Share capital		Share premium		Other components of equity		Retained earnings		Total attributable to owners of parent		Non-controlling interest		Total equity
(x 1.000)	€		€		€		€		€		€		€
Balance at 1 January 2024	0		0		0		0		0		0		0
Changes in equity for 2024
Dividends	0		0		0		0		0		0		0
Issue of share capital on exercise of employee share options	0		0		0		0		0		0		0
Employee share-based compensation	0		0		0		0		0		0		0
Issue of share capital on private placement	0		0		0		0		0		0		0
Transactions with owners	0		0		0		0		0		0		0
Total comprehensive income for the year	0		0		0		0		0		0		0
Balance at 31 December 2024	0		0		0		0		0		0		0
Balance at 1 January 2023	0		0		0		0		0		0		0
Changes in equity for 2023
Employee share-based compensation	0		0		0		0		0		0		0
Transactions with owners	0		0		0		0		0		0		0
Total comprehensive income for the year	0		0		0		0		0		0		0
Balance at 31 December 2023	0		0		0		0		0		0		0

Consolidated statement of cash flows

	2024		2023
(x 1.000)	€		€
Cash flows from operating activities
Profit before tax	0		0
Non-cash adjustments	0		0
Contributions to defined benefit plans	0		0
Net changes in working capital	0		0
Settling of derivative financial instruments	0		0
Taxes reclaimed (paid)	0		0
Net cash from operating activities	0		0
Cash flows from investing activities
Purchase of property, plant and equipment	0		0
Proceeds from disposal of property, plant and equipment	0		0
Purchase of other intangible assets	0		0
Proceeds from disposal of other intangible assets	0		0
Acquisition of subsidiaries, net of cash acquired	0		0
Proceeds from sale of subsidiaries, net of cash sold	0		0
Proceeds from disposal and redemption of non-derivative financial assets	0		0
Interest received	0		0
Dividends received	0		0
Taxes paid	0		0
Net cash used in investing activities	0		0
Cash flows from financing activities
Proceeds from borrowings	0		0
Repayment of borrowings and leasing liabilities	0		0
Proceeds from issue of share capital	0		0
Interest paid	0		0
Dividends paid	0		0
Net cash used in financing activities	0		0
Net change in cash and cash equivalents	0		0
Cash and cash equivalents, beginning of year	0		0
Exchange differences on cash and cash equivalents	0		0
Cash and cash equivalents at end of period	0		0
Cash and cash equivalents included in disposal group	0		0
Cash and cash equivalents for continuing operations	0		0

Notes to the consolidated financial statements

Nature of operations

The principal activities of IFRS Example N.V. and subsidiaries (the Group) include selling of telecommunications hardware and software, related after-sales service, consulting, and the construction of telecommunications systems. These activities are grouped into the following service lines:

• retail – focusing on the sale of the Group’s proprietary hardware and software products and related customisation and integration services
• after-sales service – providing fixed-price maintenance of extended warranty agreements to the Group’s retail customers
• consulting and outsourcing – advising companies on telecommunications systems strategies and IT security, and providing IT outsourcing services including payroll and accounts payable transaction processing
• construction – providing customers with complete telecommunications systems solutions from design to development and installation.

General information, statement of compliance with IFRS and going concern assumption

IFRS Example N.V., the Group’s ultimate parent company, is a limited liability company incorporated and domiciled in the Netherlands. The registered office according to the Articles of Association of IFRS Example N.V. is in The Hague. IFRS Example N.V. is registered in the Business Register of the Chamber of Commerce under the file number: 12345678. The address of ifrsexamplenv BV is street name, house number, postal code, The Hague, the Netherlands.

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). They have been prepared under the assumption the Group operates on a going concern basis, which assumes the Group will be able to discharge its liabilities as they fall due. In confirming the validity of the going concern basis of preparation, the Group has considered the following specific factors:

• the Group reported a profit of EUR 0 for the year and had an excess of current assets over current liabilities of EUR 0
• the Group generated positive operating cash flows of EUR 0 in the current period
• as disclosed in Note on liquidity needs of the Group are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Longterm liquidity needs for a 180-day and a 360-day lookout period are identified monthly. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout periods, which is typically 12 months from the date of authorisation of these financial statements
• management prepares an annual budget and longer-term strategic plan, including an assessment of cash flow requirements, and continue to monitor actual performance against budget and plan throughout the reporting period.

Based on these factors, management has a reasonable expectation that the Group has and will have adequate resources to continue in operational existence for the foreseeable future.

The consolidated financial statements for the year ended 31 December 2024 (including comparatives) were approved and authorised for issue by the board of directors on 31 May 2025.

New or revised Standards or Interpretations

New Standards adopted as at 1 January 2024

Some accounting pronouncements which have become effective from 1 January 2024 and have therefore been adopted do not have a significant impact on the Group’s financial results or position.

Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been adopted early by the Group

At the date of authorisation of these consolidated financial statements, several new, but not yet effective, Standards and amendments to existing Standards, and Interpretations have been published by the IASB or IFRIC. None of these Standards or amendments to existing Standards have been adopted early by the Group and no Interpretations have been issued that are applicable and need to be taken into consideration by the Group at either reporting date.

Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New Standards, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Group’s consolidated financial statements.

Material accounting policies

Basis of preparation

The Group’s consolidated financial statements have been prepared on an accruals basis and under the historical cost convention except for the revaluation of properties, investments and derivatives. Monetary amounts are expressed in Euroland currency (CU) and are rounded to the nearest thousands, except for earnings per share.

Basis of consolidation

The Group’s financial statements consolidate those of the parent company and all of its subsidiaries at 31 December 2024. All subsidiaries have a reporting date of 31 December.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.

Climate-related matters

Risks induced by climate changes may have future adverse effects on the Group’s business activities. These risks include transition risks (eg regulatory changes and reputational risks) and physical risks (even if the risk of physical damage is low due to the company activities and geographical locations). How the Group operates its businesses may be affected by new regulatory constraints on the CO2 emissions it generates via the data centers that the Group operates in several jurisdictions. Energy consumption of data centers is high, and the Group is currently implementing new technology solutions to reduce the level of energy needed, particularly in the area of maintaining the maximum protection possible for its critical IT infrastructure (through using highly efficient evaporative cooling solutions). The Group has indicated it is committed to sourcing 100% of its energy needs from renewable resources, no later than 2035. To achieve this goal, the Group is considering projects to install solar heating systems in all its offices around the world because using renewable energy should eventually lead to much lower energy costs.

The Group is also committed to reducing the carbon footprint of its employees by updating its business trip policies and minimising its use of air-freight travel. Management notes the cost of production of computer and telecommunications hardware could increase significantly in the future, due to the increasing price of commodities which in turn could affect the operational results of the Group (decrease in sales and/or of the gross margin of the retail segment). The Group could also be subject to new environmental taxes as a retailer of low recyclable hardware.

As part of its actions against climate change, the Group is committed to reduce its carbon emission from 50% by 2030 and to be carbon neutral no later than 2050. Please refer to the management report3 for further information on climate risk and any commitments made by the Group to address it.

Consistent with the prior year, as at 31 December 2024, the Group has not identified significant risks induced by climate changes that could negatively and materially affect the Group’s financial statements. Management continuously assesses the impact of climate-related matters.

The Group’s financial statements integrate climate-related matters in various items. Notably the Group’s commitments to reduce carbon emissions were considered when performing impairment tests and assessing the useful life of its non-current assets (for more details on these specific impacts, please refer to Note 10 – Goodwill, Note 12 – Property, Plant and Equipment, and Note 33 – Contingent liabilities).

Assumptions could change in the future in response to forthcoming environmental regulations, new commitments taken and changing consumer demand. These changes, if not anticipated, could have an impact on the Group’s future cash flows, financial performance and financial position.

Business combinations

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

If the Group acquires a controlling interest in a business in which it previously held an equity interest, that equity interest is remeasured to fair value at the acquisition date with any resulting gain or loss recognised in profit or loss or other comprehensive income, as appropriate.

Consideration transferred as part of a business combination does not include amounts related to the settlement of pre-existing relationships. The gain or loss on the settlement of any pre-existing relationship is recognised in profit or loss.

Assets acquired and liabilities assumed are measured at their acquisition-date fair values.

Investments in associates and joint ventures

Investments in associates and joint ventures are accounted for using the equity method. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group.

Where the Group’s share of losses in investment in associates and joint ventures equals or exceeds its equity accounted interest in the entities, including any other unsecured long-term receivables, the Group does not recognise further losses unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.

Foreign currency translation

Functional and presentation currency

The consolidated financial statements are presented in currency units CU, which is also the functional currency of the parent company.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at period-end exchange rates are recognised in profit or loss.

Non-monetary items are not retranslated at the period-end. They are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

Foreign operations

In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than the CU are translated into CU upon consolidation. The functional currencies of entities within the Group have remained unchanged during the reporting period.

On consolidation, assets and liabilities have been translated into CU at the closing rate at the reporting date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into CU at the closing rate. Income and expenses have been translated into CU at the average rate4 over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation, the related cumulative translation differences recognised in equity are reclassified to profit or loss and are recognised as part of the gain or loss on disposal.

Segment reporting

The Group has three operating segments: consulting, service and retail. In identifying these operating segments, management generally follows the Group’s service lines representing its main products and services (see Note 9).

Each of these operating segments is managed separately as each requires different technologies, marketing approaches and other resources. All inter-segment transfers are carried out at arm’s length prices based on prices charged to unrelated customers in stand-alone sales of identical goods or services.

The Group has previously reported four operating segments: project consulting, service, retail and construction. During the year an internal reorganisation occurred where the project consulting and construction segments were combined into a single segment, consulting. This reflects a realignment of internal management structures and resource allocation where the General Manager roles of the previous project consulting and construction segments were combined into a single line of reporting. This change better reflects the connected end-to-end delivery of its consumer centric telecommunication consulting services. As such, comparative information has been restated (see Note 9) to reflect the new business operating model.

For management purposes, the Group uses the same measurement policies as those used in its financial statements, except for certain items not included in determining the operating profit of the operating segments, as follows:

• post-employment benefit expenses
• share-based payment expenses
• research costs relating to new business activities, and
• revenue, costs and fair value gains from investment property.

In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. This primarily applies to the Group’s headquarters and the Illustrative Research Lab in Greatville.

Revenue

Overview

Revenue arises mainly from the sale of telecommunications hardware and non-customised software, bespoke solutions, after-sales maintenance and extended warranty services, consulting and IT services, and contracts for the construction of telecommunication systems.

To determine whether to recognise revenue, the Group follows a 5-step process:

1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations, and then
5. Allocating the transaction price to the performance obligations, and then

The Group often enters into customer contracts to supply a bundle of products and services (eg telecommunications hardware, software and related after-sales service). The contract is then assessed to determine whether it contains a single combined performance obligation or multiple performance obligations. If applicable the total transaction price is allocated amongst the various performance obligations based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected on behalf of third parties.

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers.

The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in its consolidated statement of financial position (see Note 25). Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises either a contract asset or a receivable in its consolidated statement of financial position, depending on whether something other than the passage of time is required before the consideration is due.

Hardware and software sales

Revenue from the sale of telecommunications hardware and non-customised software is recognised when or as the Group transfers control of the asset to the customer.

For stand-alone sales of telecommunications hardware and/or non-customised software without installation services, control transfers when the customer takes delivery of the hardware or is provided with a download key for the software. Non-customised software is supplied under licences with a fixed term of between 1 and 3 years which convey a right to use software as it exists at the start of the licence period. The Group does not modify the software during the licence period.

Bespoke solutions

The Group also supplies customers with bespoke telecommunication solutions that include customised hardware and software and an installation service that enables the solution to interface with the customer’s existing systems. The Group has determined that the hardware, software and installation service are each capable of being distinct as, in theory, the customer could benefit from them individually by acquiring the other elements elsewhere. However, the Group also provides a significant service of integrating these items to deliver a working solution such that, in the context of the actual contract, there is a single performance obligation to provide that solution.

The Group has assessed that control of these solutions transfers to the customer over time. This is because each solution is unique to the customer (has no alternative use) and under local law the Group is entitled to a right to payment for the work completed to date in the event the customer sought to terminate the contract in the absence of an explicit right to terminate in the contract. Revenue for these performance obligations is recognised as the customisation or integration work is performed, using the cost-to-cost method to estimate progress towards completion. Costs incurred are considered to be proportionate to the entity’s performance, so the cost-to-cost method provides a faithful depiction of the transfer of goods and services to the customer. The cost of uninstalled materials is excluded from the calculation because the Group assesses that including these costs could overstate its progress towards delivering the solution.

Billings on bespoke solutions contracts are based on attaining specified contract milestones. Contract assets will arise in situations where revenue is recognised in advance of the next progress billing.

Customer loyalty programme

The Group’s retail division operates a customer loyalty incentive programme. For each EUR 100 spent, customers obtain one loyalty point which they can redeem to receive discounts on future purchases. Loyalty points are considered to be a separate performance obligation as they provide customers with a material right they would not have received otherwise. Unused points expire if not used within two years. The Group allocates the transaction price between the material right and other performance obligations identified in a contract on a relative stand-alone selling price basis. The amount allocated to the material right is initially recorded as a contract liability and is later recognised in revenue when the points are redeemed by the customer.

The Group’s experience is that a portion of the loyalty points will expire without being used (‘breakage’). The Group recognises revenue from expected breakage in proportion to the points redeemed and trues-up this estimate when points expire. The Group has assessed it is highly improbable a significant reversal of revenue will arise if actual experience differs from expectations and therefore no further revenue constraint is needed.

Warranty arrangements

The Group provides a basic one-year product warranty on its telecommunications hardware whether sold on a stand-alone basis or as part of an integrated telecommunications system. Under the terms of this warranty customers can return the product for repair or replacement if it fails to perform in accordance with published specifications. These assurance-type warranties are not considered to be performance obligations so revenue is not allocated to them. The estimated costs of serving these warranties are recognised as provisions under IAS 37 ’Provisions, Contingent Liabilities and Contingent Assets’.

After-sales Services

The Group enters into fixed price maintenance and extended warranty contracts with its customers for non-cancellable terms between one and three years in length. Customers are required to pay in advance for each 12-month service period. Payments received in advance of performance obligations being satisfied are recognised as contract liabilities.

• Maintenance contracts – these agreements provide customers with regularly scheduled maintenance on telecommunications hardware purchased from the Group. The contracts consist of a single performance obligation that is transferred over time (ie the contract period) because they involve a series of services that are substantially the same and the benefit of each service is received and consumed immediately. Revenue is recognised over time based on the ratio between the number of hours of maintenance services provided in the current period and the total number of such hours expected to be provided under each contract. This method best depicts the transfer of services to the customer because: (a) details of the services to be provided are specified by management in advance as part of its published maintenance program, and (b) the Group has a long history of providing these services to its customers, allowing it to make reliable estimates of the total number of hours involved in providing the service.
• Extended warranty program – these agreements cover repairs and after-sales support for telecommunications hardware outside the Group’s standard warranty period. This service involves an indeterminate number of acts as the Group is required to ‘stand ready’ to perform whenever a request falling within the scope of the program is made by a customer. The benefits of the Group standing ready are received and consumed immediately and the service has therefore been assessed as a single performance obligation that is transferred over time (ie the warranty period). Revenue is recognised on a straight-line basis over the term of the contract. This method best depicts the transfer of services to the customer as (a) the Group’s historical experience demonstrates no statistically significant variation in the quantum of services provided in each year of a multi-year contract, and (b) no reliable prediction can be made as to if and when any individual customer will require service.

Consulting and IT outsourcing services

The Group provides consulting services relating to the design of telecommunications systems strategies and IT security. These involve developing a customer-specific design (no alternative use) with billings based on a specified payment schedule. Revenue is recognised over time if the schedule ensures the Group is entitled to payment for its performance to date throughout the contract period (including a profit margin that, in percentage terms, is equal to or more than the final expected profit margin). In other cases the payment schedule enables the Group to recover at least its costs at all times in the contract but not necessarily a full or proportionate profit margin. In these cases, taking into consideration the applicable contract law, the Group does not have has an enforceable right to payment for performance completed to date and recognises revenue only on delivery and acceptance of the final design.

Revenue for over-time contracts is recognised on a time-and-materials basis as services are provided and costs are expensed as incurred. Amounts remaining unbilled at the end of a reporting period are presented in the consolidated statement of financial position as accounts receivable if only the passage of time is required before payment of these amounts will be due or as contract assets if payment is conditional on future performance. For the point-in-time contracts, materials and supplies are recognised as inventory and other directly attributable costs are initially recognised as contract fulfilment assets. These costs are expensed on delivery and acceptance (ie when the related revenue is recognised).

The Group also provides IT outsourcing services including payroll and accounts payable transaction processing to customers in exchange for a fixed monthly fee. These contracts involve a series of services that are substantially the same and the benefit of each service is received and consumed immediately. These contracts therefore consist of a single performance obligation for which control is transferred over time and revenue is recognised on a straight-line basis over the term of each contract. This method provides a faithful depiction of the transfer of goods or services because the work required does not vary significantly from month-to-month.

Construction of telecommunication systems

The Group enters into contracts for the design, development and installation of telecommunication systems in exchange for a fixed fee. Due to the high degree of interdependence between the various elements of these projects, they are accounted for as a single performance obligation. The Group recognises the related revenue over time because the systems are constructed at the customer sites and the customer controls the asset as it is constructed. When a contract also includes promises to perform after-sales services, these services represent a second performance obligation that is also satisfied over time (for the same reasons as the Group’s maintenance contracts) but over a different period. The total transaction price is allocated between the two distinct performance obligations based on relative stand-alone selling prices.

To depict the Group’s progress in satisfying these performance obligations, and to establish when and to what extent revenue can be recognised, the Group measures its progress by comparing actual hours spent to date with the total estimated hours required to design, develop, and install each system. The hours-to-hours basis provides the most faithful depiction of the transfer of goods and services to each customer due to the Group’s ability to make reliable estimates of the total number of hours required to perform, arising from its significant historical experience constructing similar systems. In the early stage of some of these contracts the Group is unable to make a reliable estimate of the outcome of the project but still expects to recover its costs. The Group then recognises revenue equal to the costs incurred until it can make a reliable estimate.

Some contracts include bonus payments which the Group can earn by completing a project in advance of a targeted delivery date. At the inception of each contract the Group begins by estimating the amount of the bonus to be received using the “most likely amount” approach. The bonus is included in the Group’s estimate of the transaction price if it is expected to be received but the amount is constrained to the extent necessary to ensure it is highly probable that no significant reversal of revenue will arise in future if the bonus is not actually received. In making this assessment the Group considers its historical record of performance on similar contracts, whether the Group has access to the labour and materials resources needed to exceed the agreed-upon completion date, and the potential impact of other reasonably foreseen constraints. The Group updates its estimates of the transaction price at each period end and adjusts revenue accordingly.

These arrangements include detailed customer payment schedules. When payments received from customers exceed revenue recognised to date on a particular contract, any excess (a contract liability) is reported in the consolidated statement of financial position under other liabilities (see Note 25).

The construction of telecommunication systems normally takes 10–12 months from commencement of design through to completion of installation. As the period of time between customer payment and performance will always be one year or less, the Group applies the practical expedient in IFRS 15.63 and does not adjust the promised amount of consideration for the effects of financing.

In obtaining these contracts, the Group incurs a number of incremental costs, such as commissions paid to sales staff. As the amortisation period of these costs, if capitalised, would be less than one year, the Group makes use of the practical expedient in IFRS 15 and expenses them as incurred.

Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or as incurred. Expenditure for warranties is recognised when the Group incurs an obligation, which is typically when the related goods are sold.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs (see Note 27).

Profit or loss from discontinued operations

A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale. A discontinued operation represents a separate major line of the business. Profit or loss from discontinued operations comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal group(s) constituting the discontinued operation (see also Note 4.22 and Note 20).

Goodwill

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill is carried at cost less accumulated impairment losses. Refer to Note 4.16 for a description of impairment testing procedures.

Other intangible assets

Initial recognition of other intangible assets

Brand names and customer lists

Brand names and customer lists acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair values.

Internally developed software

Expenditure on the research phase of projects to develop new customised software for IT and telecommunication systems is recognised as an expense as incurred.

Costs that are directly attributable to a project’s development phase are recognised as intangible assets, provided they meet all of the following recognition requirements:

• the development costs can be measured reliably
• the project is technically and commercially feasible
• the Group intends to and has sufficient resources to complete the project
• the Group has the ability to use or sell the software, and
• the software will generate probable future economic benefits.

Development costs not meeting these criteria for capitalisation are expensed as incurred.

Directly attributable costs include employee costs incurred on software development along with an appropriate portion of relevant overheads and borrowing costs.

Subsequent measurement

All finite-lived intangible assets, including capitalised internally developed software, are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing as described in Note 4.16. The following useful lives are applied:

• software: 3-5 years
• brand names: 15-20 years
• customer lists: 4-6 years.

Any capitalised internally developed software that is not yet complete and intangible assets with indefinite useful life are not amortised but are subject to impairment testing as described in Note 4.16.

Amortisation has been included within depreciation, amortisation and impairment of non-financial assets.

Subsequent expenditures on the maintenance of computer software and brand names are expensed as incurred.

When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Property, plant and equipment

Land

Land owned is stated at revalued amounts. Revalued amounts are fair values based on appraisals prepared by external professional valuers once every two years or more frequently if market factors indicate a material change in fair value (see Note 35.2). Any revaluation surplus is recognised in other comprehensive income and credited to the revaluation reserve in equity. To the extent that any revaluation decrease or impairment loss (see Note 4.16) has previously been recognised in profit or loss, a revaluation increase is credited to profit or loss with the remaining part of the increase recognised in other comprehensive income. Downward revaluations of land are recognised upon appraisal or impairment testing, with the decrease being charged to other comprehensive income to the extent of any revaluation surplus in equity relating to this asset and any remaining decrease recognised in profit or loss. Any revaluation surplus remaining in equity on disposal of the asset is transferred to retained earnings.

As land does not have a finite useful life, related carrying amounts are not depreciated.

Buildings, IT equipment and other equipment

Buildings, IT equipment and other equipment (comprising fittings and furniture) are initially recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by the Group’s management. Buildings and IT equipment also include leasehold property (see Note 4.15). Buildings, IT equipment and other equipment are subsequently measured at cost less accumulated depreciation and impairment losses.

Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of buildings, IT equipment and other equipment. The following useful lives are applied:

• buildings: 25–50 years
• IT equipment: 2–5 years
• other equipment: 3–12 years.

In the case of right-of-use assets, expected useful lives are determined by reference to comparable owned assets or the lease term, if shorter. Material residual value estimates and estimates of useful life are updated as required, but at least annually.

Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss either within other income or other expenses.

Leased assets

The Group as a lessee

The Group makes the use of leasing arrangements principally for the provision of the main warehouse and related facilities, office space, and IT equipment and motor vehicles (although the Group currently has no motor vehicles). The rental contracts for offices are typically negotiated for terms of between 3 and 20 years and some of these have extension terms. Lease terms for office fixtures and equipment and motor vehicles have lease terms of between 6 months and 6 years without any extension terms. The Group does not enter into sale and leaseback arrangements. All the leases are negotiated on an individual basis and contain a wide variety of different terms and conditions such as purchase options and escalation clauses.

The Group assesses whether a contract is or contains a lease at inception of the contract. A lease conveys the right to direct the use and obtain substantially all of the economic benefits of an identified asset for a period of time in exchange for consideration.

Some lease contracts contain both lease and non-lease components. These non-lease components are usually associated with facilities management services at offices and servicing and repair contracts in respect of motor vehicles. The Group has elected to not separate its leases for offices into lease and non-lease components and instead accounts for these contracts as a single lease component. For its other leases, the lease components are split into their lease and non-lease components based on their relative stand-alone prices.

Measurement and recognition of leases as a lessee

At lease commencement date, the Group recognises a right-of-use asset and a lease liability in its consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

The Group depreciates the right-of-use asset on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the Group’s incremental borrowing rate because as the lease contracts are negotiated with third parties it is not possible to determine the interest rate that is implicit in the lease. The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount over a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should the lessee entity have a different risk profile to that of the Group.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between repayments of principal and finance costs. The finance cost is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability.

The lease liability is reassessed when there is a change in the lease payments. Changes in lease payments arising from a change in the lease term or a change in the assessment of an option to purchase a leased asset. The revised lease payments are discounted using the Group’s incremental borrowing rate at the date of reassessment when the rate implicit in the lease cannot be readily determined. The amount of the remeasurement of the lease liability is reflected as an adjustment to the carrying amount of the right-of-use asset. The exception being when the carrying amount of the right-of-use asset has been reduced to zero then any excess is recognised in profit or loss.

Payments under leases can also change when there is either a change in the amounts expected to be paid under residual value guarantees or when future payments change through an index or a rate used to determine those payments, including changes in market rental rates following a market rent review. The lease liability is remeasured only when the adjustment to lease payments takes effect and the revised contractual payments for the remainder of the lease term are discounted using an unchanged discount rate. Except for where the change in lease payments results from a change in floating interest rates, in which case the discount rate is amended to reflect the change in interest rates.

To respond to business needs, particularly in the demand for office space, the Group will enter into negotiations with landlords to either increase or decrease available office space or to renegotiate amounts payable under the respective leases. In some instances, the Group is able to increase office capacity by taking additional floors available and therefore agrees with the landlord to pay an amount that is commensurate with the stand-alone pricing adjusted to reflect the particular contract terms. In these situations, the contractual agreement is treated as a new lease and accounted for accordingly.

In other instances, the Group is able to negotiate a change to a lease such as reducing the amount of office space taken, reducing the lease term or by reducing the total amount payable under the lease, both of which were not part of the original terms and conditions of the lease. In these situations, the Group does not account for the changes as though there is a new lease. Instead, the revised contractual payments are discounted using a revised discount rate at the date the lease is effectively modified. For the reasons explained above, the discount rate used is the Group’s incremental borrowing rate determined at the modification date, as the rate implicit in the lease is not readily determinable.

The remeasurement of the lease liability beyond the COVID-19 practical expedient that was permitted by the IASB in 2022, is dealt with by a reduction in the carrying amount of the right-of-use asset to reflect the full or partial termination of the lease for lease modifications that reduce the scope of the lease. Any gain or loss relating to the partial or full termination of the lease is recognised in profit or loss. The right-of-use asset is adjusted for all other lease modifications.

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. These leases relate to items of office equipment such as desks, chairs, and certain IT equipment. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

The Group as a lessor

As a lessor the Group classifies its leases as either operating or finance leases.

The Group assessed whether it transfers substantially all the risks and rewards of ownership. Those assets that do not transfer substantially all the risks and rewards are classified as operating leases. The Group has currently not entered into any lease that is classified as finance lease.

Rental income is accounted for on a straight-line basis over the lease term and is included in revenue due to its operating nature.

Impairment testing of goodwill, other intangible assets and property, plant and equipment

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of a related business combination and represent the lowest level within the Group at which management monitors goodwill.

Cash-generating units to which goodwill and intangible asset that has an indefinite useful life or is not yet available for use has been allocated (determined by the Group’s management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s (or cash-generating unit’s) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures is directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect current market assessments of the time value of money and asset-specific risk factors.

Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to the cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit.

With the exception of goodwill, all assets are subsequently reassessed for indications an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the asset’s or cash-generating unit’s recoverable amount exceeds its carrying amount.

Investment property

Investment properties are properties held to earn rentals or for capital appreciation, or both, and are accounted for using the fair value model.

Investment properties are revalued annually with resulting gains and losses recognised in profit or loss. These are included in the consoldiated statement of financial position at their fair values. See Note 35.2.

Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Financial assets, other than those designated and effective as hedging instruments, are classified into one of the following categories:

• amortised cost
• fair value through profit or loss (FVTPL), or
• fair value through other comprehensive income (FVOCI).

In the periods presented the Group does not have any financial assets categorised as FVOCI.

The classification is determined by both:

• the entity’s business model for managing the financial asset, and
• the contractual cash flow characteristics of the financial asset.

All revenue and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

Subsequent measurement of financial assets

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows, and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

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

Financial assets held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at FVTPL. Further, irrespective of the business model used, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below).

The category also contains an equity investment. The Group accounts for the investment at FVTPL and did not make the irrevocable election to account for the investment in XY Ltd and listed equity securities at FVOCI. The fair value was determined in line with the requirements of IFRS 13 ‘Fair Value Measurement’.

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

Financial assets at fair value through other comprehensive income (FVOCI)

The Group accounts for financial assets at FVOCI if the assets meet the following conditions:

• they are held under a business model whose objective it is “hold to collect” the associated cash flows and sell, and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Any gains or losses recognised in OCI will be recycled upon derecognition of the asset.

Impairment of financial assets

IFRS 9’s impairment requirements use forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’. Instruments within the scope of the requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).

‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.

‘12-month expected credit losses’ are recognised for the first category (ie Stage 1) while ‘lifetime expected credit losses’ are recognised for the second category (ie Stage 2).

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Trade and other receivables and contract assets

The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

The Group assesses impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due. Refer to Note 34.2 for a detailed analysis of how the impairment requirements of IFRS 9 are applied.

Where consistent with the provisioning horizon, the possible impact of climate risks on the determination of expected credit losses has been integrated.

Classification and measurement of financial liabilities

The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at FVTPL.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

Derivative financial instruments and hedge accounting

Derivative financial instruments are accounted for at FVTPL except for derivatives designated as hedging instruments in cash flow hedge relationships, which require a specific accounting treatment.

To qualify for hedge accounting, the hedging relationship must meet all of the following requirements:

• there is an economic relationship between the hedged item and the hedging instrument
• the effect of credit risk does not dominate the value changes that result from that economic relationship, and
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.

For the reporting periods under review, the Group has designated certain forward currency contracts as hedging instruments in cash flow hedge relationships. These arrangements have been entered into to mitigate foreign currency exchange risk arising from certain highly probable sales transactions denominated in foreign currency.

All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the consolidated statement of financial position.

To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss.

At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. However, if a non-financial asset or liability is recognised as a result of the hedged transaction, the gains and losses previously recognised in other comprehensive income are included in the initial measurement of the hedged item.

If a forecast transaction is no longer expected to occur, any related gain or loss recognised in other comprehensive income is transferred immediately to profit or loss. If the hedging relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued and the related gain or loss is held in the equity reserve until the forecast transaction occurs.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less any directly attributable selling expenses.

Income taxes

Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

The calculation of current and deferred tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method. The carrying amounts of deferred tax are reviewed at the end of each reporting period on the basis of its most likely amount and adjusted if needed. Assessing the most likely amount of current and deferred tax in case of uncertainties (eg as a result of the need to interpreting the requirements of the applicable tax law), requires the group to apply judgments in considering whether it is probable that the taxation authority will accept the tax treatment retained.

Deferred tax assets are recognised to the extent it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Group’s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.

Deferred tax liabilities are generally recognised in full, although IAS 12 specifies limited exemptions. As a result of these exemptions the Group does not recognise deferred tax on temporary differences relating to goodwill, or to its investments in subsidiaries (only to the extent that the group control the timing of the reversal of the taxable temporary difference and that reversal is not likely to occur in the foreseeable future). The Group does not offset deferred tax assets and liabilities unless it has a legally enforceable right to do so and intends to settle on a net basis.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included in liabilities.

Non-current assets and liabilities classified as held for sale and discontinued operations

Non-current assets classified as held for sale are presented separately and measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. However, some held for sale assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group’s relevant accounting policy for those assets. Once classified as held for sale, the assets are not subject to depreciation or amortisation.

Any profit or loss arising from the sale of a discontinued operation or its remeasurement to fair value less costs to sell is presented as part of a single line item, profit or loss from discontinued operations (see Note 4.11).

Equity, reserves and dividend payments

Share capital represents the nominal (par) value of shares that have been issued.

Share premium includes any premiums received on the issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Other components of equity include the following:

• revaluation reserve – comprises gains and losses from the revaluation of land (see Note 4.14)
• remeasurement of net defined benefit liability – comprises the actuarial losses from changes in demographic and financial assumptions and the return on plan assets (see Note 4.24)
• translation reserve – comprises foreign currency translation differences arising from the translation of financial statements of the Group’s foreign entities into CU (see Note 4.6)
• reserves for cash flow hedges – comprises gains and losses relating to these types of financial instruments (see Note 4.18).

Retained earnings includes all current and prior period retained profits and share-based employee remuneration (see Note 4.25).

All transactions with owners of the parent are recorded separately within equity.

Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date.

Post-employment benefits and short-term employee benefits

Post-employment benefit plans

The Group provides post-employment benefits through various defined contribution and defined benefit plans.

Defined contribution plans

The Group pays fixed contributions into independent entities in relation to several retirement plans and insurances for individual employees. The Group has no legal or constructive obligations to pay contributions in addition to its fixed contributions, which are recognised as an expense in the period that related employee services are received.

Defined benefit plans

Under the Group’s defined benefit plans, the amount of pension benefit that an employee will receive on retirement is defined by reference to the employee’s length of service and final salary. The legal obligation for any benefits remains with the Group, even if plan assets for funding the defined benefit plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies.

The liability recognised in the consolidated statement of financial position for defined benefit plans is the present value of the defined benefit obligation (DBO) at the reporting date less the fair value of plan assets.

Management estimates the DBO annually with the assistance of independent actuaries. This is based on standard rates of inflation, salary growth rate and mortality. Discount factors are determined close to the end of each annual reporting period by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and have terms to maturity approximating the terms of the related pension liability.

Service cost on the Group’s defined benefit plan is included in employee benefits expense. Employee contributions, all of which are independent of the number of years of service, are treated as a reduction of service cost. Net interest expense on the net defined benefit liability is included in finance costs. Gains and losses resulting from remeasurements of the net defined benefit liability are included in other comprehensive income and are not reclassified to profit or loss in subsequent periods.

Short-term employee benefits

Short-term employee benefits, including holiday entitlement, are current liabilities included in pension and other employee obligations, measured at the undiscounted amount the Group expects to pay as a result of the unused entitlement.

Share-based employee remuneration

The Group operates equity-settled share-based remuneration plans for its employees. None of the Group’s plans are cash-settled.

All goods and services received in exchange for the grant of any share-based payment are measured at their fair values.

Where employees are rewarded using share-based payments, the fair value of employees’ services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (eg, profitability and sales growth targets and performance conditions).

All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to retained earnings5. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.

Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current period. The number of vested options ultimately exercised by holders does not impact the expense recorded in any period.

Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.

Provisions, contingent assets and contingent liabilities

Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. The timing or amount of the outflow may still be uncertain.

Restructuring provisions are recognised only if a detailed formal plan for the restructuring exists and management has either communicated the plan’s main features to those affected or started implementation. Provisions are not recognised for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material.

Any reimbursement that the Group is virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

No liability is recognised if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

Significant management judgement in applying accounting policies and estimation uncertainty

When preparing the Group’s consolidated financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, revenue and expenses.

Significant management judgements

The following are the judgements made by management in applying the accounting policies of the Group that have the most significant effect on these consolidated financial statements.

Recognition of contract revenue over time or at a point in time

For some of the Group’s contracts with customers significant judgement is required to assess whether control of the related performance obligation(s) transfers to the customer over time or at a point in time in accordance with IFRS 15. Specifically, for contracts that involve developing a customer-specific asset with no alternative use to the Group, judgement is needed to determine whether the Group is entitled to payment for its performance throughout the contract period if the customer sought to cancel the contract. This relates mainly to consulting contracts for design services which represent CU 110,810 (2023: CU 109,302) of the Group’s revenue. In making this assessment the Group compares the amount it is entitled to collect based on the agreed payment schedule to the estimated level of costs at all stages in the contract in order to estimate the percentage margin it would retain on cancellation. The Group then compares the lowest margin percentage through the contract period to the expected margin percentage on completion. If the lowest expected margin percentage is at least equal to the final percentage margin, within a tolerance of 2%, the Group assesses it has a right to payment for its performance throughout the contract period and recognises revenue over time. In the majority of cases the payment schedule is sufficiently front-loaded to meet this condition. If the condition is not met the Group recognises revenue on only completion. In making this judgement the Group has considered the applicable contract law in the event of a customer seeking to cancel a contact without having the right to do so and has concluded that the court of law would not necessarily enforce specific contract performance.

Capitalisation of internally developed software

Distinguishing the research and development phases of a new customised software project and determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired (see Note 4.13).

Climate-related matters

The potential impact of climate-related matters has been considered in the preparation of financial statements, including environmental legislations and commitments made by the Group which may affect the value of financial assets and liabilities. In many cases, the judgements applied refer to the recoverable amount of assets and useful life of tangible assets (see Note 4.3).

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions (see Note 4.20).

Control assessment

See Note 6.1.

Estimation uncertainty

Information about estimates and assumptions that may have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Climate-related matters

The long-term consequences of climate changes on financial statements are difficult to predict and require entities to make significant assumptions and develop estimates.

Assumptions used by the Group are subject to uncertainties relating to regulatory changes (eg green taxes adopted by governments), new environmental commitments made by the Group to meet its carbon reduction goals, development of new technologies, depletion of natural resources used to produce telecommunication hardware, etc. Due to these uncertainties, the figures reported in the Group’s future financial statements could differ from the estimates established at the time these financial statements were approved (see Note 10 – Goodwill, Note 12 – Property, plant and equipment, and Note 33 – Contingent liabilities).

Impairment of non-financial assets and goodwill

In assessing impairment, management estimates the recoverable amount of each asset or cashgenerating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate (see Note 4.16). In 2024, the Group recognised an impairment loss on goodwill (see Note 10) and internally generated software (see Note 11).

Useful lives and residual values of depreciable assets

Management reviews its estimate of the useful lives and residual values of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and environmental regulations that can make polluting assets to be depreciated more quickly.

Inventories

Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.

Business combinations

Management uses various valuation techniques when determining the fair values of certain assets and liabilities acquired in a business combination (see Note 4.4). In particular, the fair value of contingent consideration is dependent on the outcome of many variables including the acquirees’ future profitability (see Note 5.1).

Construction contract revenue

Recognised amounts of construction contract revenues and related receivables reflect management’s best estimate of each contract’s outcome and stage of completion. For more complex contracts in particular, costs to complete and contract profitability are subject to significant estimation uncertainty (see Note 4.8).

Defined benefit obligation (DBO)

Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses amount (as analysed in Note 22.3).

Fair value measurement

Management uses various valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date (see Note 35).

Leases – determination of the appropriate discount rate to measure lease liabilities

As noted above, the Group enters into leases with third-party landlords and as a consequence the rate implicit in the relevant lease is not readily determinable. Therefore, the Group uses its incremental borrowing rate as the discount rate for determining its lease liabilities at the lease commencement date. The incremental borrowing rate is the rate of interest that the Group would have to pay to borrow over similar terms which requires estimations when no observable rates are available.

The Group consults with its main bankers to determine what interest rate they would expect to charge the Group to borrow money to purchase a similar asset to that which is being leased. These rates are, where necessary, then adjusted to reflect the credit worthiness of the entity entering into the lease and the specific condition of the underlying leased asset. The estimated incremental borrowing rate is higher than the parent company for leases entered into by its subsidiary undertakings.

Acquisitions and disposals

Acquisition of Beispiel GmbH in 2024

On 31 March 2024, the Group acquired 100% of the equity instruments of Beispiel GmbH (Beispiel), a Köln (Germany) based business, thereby obtaining control. The acquisition was made to enhance the Group’s position in the online retail market for computer and telecommunications hardware in Germany. Beispiel is a significant business in Germany in the Group’s targeted market.

The details of the business combination are as follows:

(x 1.000 )			€
Fair value of consideration transferred:
Amount settled in cash			0
Fair value of contingent consideration			0
Total			0
Recognised amounts of identifiable net assets:
Property, plant and equipment (Note 12)			0
Intangible assets (Note 11)			0
Investment property (Note 14)			0
Total non-current assets			0
Inventories			0
Trade and other receivables			0
Cash and cash equivalents			0
Total current assets			0
Borrowings			0
Deferred tax liabilities			0
Total non-current liabilities			0
Provisions			0
Other liabilities			0
Trade and other payables			0
Total current liabilities			0
Identifiable net assets			0
Goodwill on acquisition (Note 10)			0

(x 1.000 )			€
Consideration transferred settled in cash			0
Cash and cash equivalents acquired			0
Net cash outflow on acquisition			0
Acquisition costs charged to expenses			0

Consideration transferred

The acquisition of Beispiel settled in cash amounting to EUR 0.

The purchase agreement included an additional consideration of EUR 0, payable only if the average profits of Beispiel for 2024 and 2025 exceed a target level agreed by both parties. The additional consideration will be paid on 1 April 2025. The EUR 0 of contingent consideration liability recognised represents the present value of the Group’s probability-weighted estimate of the cash outflow. It reflects management’s estimate of a 50% probability that the targets will be achieved and is discounted using an interest rate of 6.66%. As at 31 December 2024, there have been no changes in the estimate of the probable cash outflow but the liability has increased to EUR 0 due to the change in fair value.

Acquisition-related costs amounting to EUR 0 are not included as part of consideration transferred and have been recognised as an expense in the consolidated statement of profit or loss, as part of other expenses.

Identifiable net assets

The fair value of the trade and other receivables acquired as part of the business combination amounted to EUR 0, with a gross contractual amount of EUR 0. As of the acquisition date, the Group’s best estimate of the contractual cash flow not expected to be collected amounted to EUR 0.

Goodwill

Goodwill of EUR 0 is primarily growth expectations, expected future profitability, the substantial skill and expertise of Beispiel’s workforce and expected cost synergies. Goodwill has been allocated to the retail segment and is not expected to be deductible for tax purposes.

Beispiel’s contribution to the Group results

Beispiel incurred a loss of EUR 0 for the nine months from 31 March 2024 to the reporting date, primarily due to integration costs. Revenue for the nine months to 31 December 2024 was EUR 0.

If Beispiel had been acquired on 1 January 2024, revenue of the Group for 2024 would have been EUR 0, and profit for the year would have increased by EUR 0.

Acquisition of Example Inc. in 2023

On 30 June 2023, the Group acquired 100% of the equity instruments of Example Inc. (Example), a Delaware (USA) based business, thereby obtaining control. The acquisition of Example was made to enhance the Group’s position as an online retailer for computer and telecommunications hardware in the US market.

The details of the business combination are as follows:

(x 1.000 )			€
Fair value of consideration transferred:
Amount settled in cash			0
Recognised amounts of identifiable net assets:
Property, plant and equipment (Note 12)			0
Intangible assets (Note 11)			0
Total non-current assets			0
Inventories			0
Trade and other receivables			0
Cash and cash equivalents			0
Total current assets			0
Deferred tax liabilities			0
Total non-current liabilities			0
Provisions			0
Other liabilities			0
Trade and other payables			0
Total current liabilities			0
Identifiable net assets			0
Goodwill on acquisition (Note 10)			0
Consideration transferred settled in cash			0
Cash and cash equivalents acquired			0
Net cash outflow on acquisition			0
Acquisition costs charged to expenses			0

Consideration transferred

The acquisition of Example was settled in cash amounting to EUR 0.

Acquisition-related costs amounting to EUR 0 are not included as part of consideration transferred and have been recognised as an expense in the consolidated statement of profit or loss, as part of other expenses.

Settlement of pre-existing relationship

The Group and Example Inc. were parties to a long-term supply agreement. Example Inc. provided services to entities within the Group at agreed contract rates. This pre-existing relationship was terminated at the acquisition date. The Group has determined that the fair value to settle the pre-existing relationship was EUR 0. The fair value of the settlement has been determined based on an assessment of the difference between current market rates and the rates previously agreed in the long-term contract for the supply of services. This amount has been included within other expenses for the year.

Identifiable net assets

The fair value of the trade and other receivables acquired as part of the business combination amounted to EUR 0, with a gross contractual amount of EUR 0. As of the acquisition date, the Group’s best estimate of the contractual cash flow not expected to be collected amounted to EUR 0.

Goodwill

Goodwill of EUR 0 is primarily the sales force and the sales know-how of key personnel. Goodwill has been allocated to the retail segment and is not expected to be deductible for tax purposes.

Example’s contribution to the Group results

Example contributed EUR 0 of revenue and EUR 0 to the consolidated profit for the six months from 1 July 2023 to 31 December 2023. If Example had been acquired on 1 January 2023, revenue of the Group for 2023 would have been EUR 0. However, due to lack of IFRS-specific data prior to the acquisition of Example, pro-forma profit or loss of the combined entity for the complete 2023 reporting period cannot be determined reliably.

Disposal of Former Ltd in 2024

See Note 6.3 below.

Interests in subsidiaries

Composition of the Group

Set out below are the details of the subsidiaries held directly by the Group:

Name of the Subsidiary	Country of incorporation and principal place of business	Principal activity	Proportion of ownership interests held by the Group at period-end
			2024	2023
Beispiel GmbH	Germany	Online retailer of computer and telecommunications hardware	100%	–
Example Inc.	USA	Online retailer of computer and telecommunications hardware	100%	100%
Example Ltd	UK	Design and sale of phone and intranet applications	100%	100%
Example Corp	UK	Online sales of hardware and software products	100%	100%
New Example Ltd	UK	Design and sale of phone and intranet applications	–	100%

The annual reporting date of Example Ltd is 30 September, to align with the year ends of its major competitors. Additional information is obtained by the Group, including monthly management accounts for the period between 30 September and 31 December to allow the parent to consolidate the financial information of Example Ltd as at 31 December.

Significant judgements and assumptions

The Group holds 45% of the ordinary shares and voting rights in Example S.A. Two other investors each hold 15%. The remaining 25% is held by several other unrelated investors, none of whom own more than 2% individually. There are no arrangements for the other shareholders to consult one another or act collectively and past experience indicates that few of the other owners actually exercise their voting rights at all. The Group has appointed four of Equipe’s Board of Directors out of a total of eleven.

Management continually reassesses its involvement in Example S.A. in accordance with IFRS 10’s control definition and guidance. It has concluded it has significant influence but not outright control at both reporting dates. In making its judgement, management considered the Group’s voting rights, the relative size and dispersion of the voting rights held by other shareholders and the extent of recent participation by those shareholders in general meetings. Recent experience demonstrates that a sufficient number of the smaller shareholders participate in such a way that they, along with the two other main shareholders, have prevented the Group from having the practical ability to direct the relevant activities of Equipe unilaterally.

Subsidiary with material non-controlling interests

The Group includes one subsidiary, Example Ltd, with material non-controlling interests (NCI):

Name	Proportion of ownership interests and voting rights held by the NCI		Total comprehensive income allocated to NCI		Accumulated NCI
	2024	2023	2024	2023	2024	2023
Example Ltd	10%	10%	0	0	0	0

No dividends were paid to the NCI during the years ended 31 December 2024 and 2023.

Summarised financial information for Example Ltd, before intragroup eliminations, is set out below:

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