Pegasus Group Holding GmbH

Pegasus Group Holding GmbH

Bindlach

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2024 bis zum 31.12.2024

Fliegendes Pferd Group S.à r.l.
Luxemburg

Consolidated Financial Statements for the Financial Year Ended 31 December 2024

(with the report of the Réviseur d'Entreprises agréé thereon)

REPORT OF THE REVISEUR D’ENTREPRISES AGREE

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of Fliegendes Pferd Group S.à r.l. and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position as at 31 December 2024, and the consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including material accounting policy information and other explanatory information.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (the "Law of 23 July 2016") and with International Standards on Auditing ("ISAs") as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier ("CSSF"). Our responsibilities under the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the « Responsibilities of "reviseur d'entreprises agréé" for the audit of the consolidated financial statements »> section of our report. We are also independent of the Group in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants ("IESBA Code") as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other information

The Board of Managers is responsible for the other information. The other information comprises the information stated in the consolidated management report but does not include the consolidated financial statements and our report of the "réviseur d'entreprises agréé" thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard.

Responsibilities of the Board of Managers for the consolidated financial statements

The Board of Managers is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards as adopted by the European Union, and for such internal control as the Board of Managers determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Managers is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Managers either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Responsibilities of the "reviseur d'entreprises agree" for the audit of the consolidated financial statements

The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of the "reviseur d'entreprises agréé" that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on other legal and regulatory requirements

The consolidated management report is consistent with the consolidated financial statements and has been prepared in accordance with applicable legal requirements.

Consolidated statement of financial position as of 31 December 2024

The accompanying notes form an integral part of the consolidated financial statements

Consolidated statement of profit and loss and other comprehensive income (OCI) for financial year 1 January to 31 December 2024

Consolidated statement of changes in equity for the financial year from 1 January to 31 December 2024

The accompanying notes form an integral part of the consolidated financial statements

Consolidated cash flow statement for financial year 1 January to 31 December 2024

The accompanying notes form an integral part of the consolidated financial statements

Consolidated notes for the fiscal year from 01 January to 31 December 2024

Content

1 Corporate information

2 Accounting policies

2.1 Basis of preparation of the financial statements

2.2 Significant accounting judgements, estimates and assumptions

2.3 Summary of significant accounting policies

2.4 Changes of significant accounting policies

2.5 New standards not yet adopted

2.6 Exemption option under section 264 paragraph 3 German Commercial Code

3 Notes to the statement of comprehensive income

3.1 Revenue

3.2 Other operating income

3.3 Personnel expenses

3.4 Other operating expenses

3.5 Net financial result

3.6 Other taxes

3.7 Income taxes

4 Notes to the statement of financial position

4.1 Intangible assets

4.2 Property, plant and equipment

4.3 Impairment of non-current assets

4.4 Inventories

4.5 Financial assets

4.6 Non-financial assets

4.7 Cash and cash equivalents

4.8 Equity

4.9 Leases

4.10 Liabilities to shareholders and to affiliated undertakings

4.11 Derivative financial instruments

4.12 Provisions for pensions and similar obligations

4.13 Other Provisions

4.14 Trade payables

4.15 Other financial and non-financial liabilities

4.16 Interest-bearing loans and liabilities due to financial institutions

5 Contingent liabilities and other financial obligations

6 Related party and persons disclosures

7 Disclosures on financial instruments and on risk management

8 Audit and advisory fees

9 Subsequent events

Notes to the consolidated financial statements for the fiscal year from 01 January to 31 December 2024

1 Corporate information

Fliegendes Pferd Group S.à r.l. (hereinafter named "Fliegendes Pferd Group", the "Group" or the "Company") is a limited liability company incorporated under the laws of Luxembourg on 28 February 2019 for an unlimited period domiciled in 20, rue Eugène Ruppert, L-2453 Luxembourg. The Company is entered in the Registre de Commerce et des Sociétés Luxembourg [Luxembourg commercial register] under no. B232853.

The consolidated financial statements of Fliegendes Pferd Group were prepared for the fiscal year from 1 January to 31 December 2024, as well as the reference period from 1 January to 31 December 2023. The Company is the parent undertaking for the investment held in NKD Group¹ by a group of investment funds managed by TDR Capital LLP ("TDR Capital") (registered in the United Kingdom ("UK")), a European private equity investor.

Along with the parent company 15 direct and indirect subsidiaries (31 December 2023: 15 subsidiaries) in total are included in the consolidated financial statements. See 'Consolidation principles' in note 2.1 for further information regarding the individual Group companies. There is also an investment (31 December 2023: one investment) that is not consolidated.

The consolidated financial statements of Fliegendes Pferd Group were authorised for issue by management resolution on 8 August 2025. The consolidated financial statements will be published in the Registre de Commerce et des Sociétés Luxembourg.

NKD is the leading value retailer and local supplier amongst the textile discounters with key markets in Central Europe. As of 31 December 2024, the Group has 2,108 stores (31 December 2023: 2,130 stores) mainly in secondary and tertiary cities as well as shopping centres primarily in Germany, Austria and Italy as well as smaller operations in Slovenia, Croatia, the Czech Republic and Poland. With more than 9,700 employees (31 December 2023: approx. 9,600), NKD represents one of the largest competitors in the German textile discount sector.

¹ The term "NKD Group" is used when referring to the shareholding structure below the company Fliegendes Pferd Group S.à r.l .. The term "NKD" is used, when referring to the NKD brand and the retail business.

2 Accounting policies

2.1 Basis of preparation of the financial statements

The consolidated financial statements are prepared on a historical cost basis except for derivative financial instruments, which were measured at fair value. The items included in the financial statements of each Group company are measured using the currency of the primary economic environment in which the Company operates. The consolidated financial statements are presented in Euro and all rounded to the nearest thousand (EUR k) except where otherwise indicated. Due to rounding differences, figures in tables and cross-references may differ slightly from the actual figures.

Going concern basis of accounting

The Group achieved a positive EBITDA (earnings before interest, tax, depreciation and amortization) of EUR 122,383k (2023: EUR 86,669k), a positive operating cash flow of EUR 130,895 (2023: EUR 113,788k), and a total cash flow of EUR 26,574 (2023: EUR 2,282k) for the fiscal year 2024. The midterm plan for 2025 to 2027 forecasts further positive operative cash flows.

As of 31 December 2024 the Group is financed via an IFPEC agreement amounting to EUR 87,506k, long-term shareholder loans amounting to EUR 32,914k (31 December 2023: EUR 121,892k), short-term shareholder loans amounting to EUR 3,625k as well as credit facilities and bank loans amounting to EUR 62,624k (31 December 2023: EUR 62,646k) (see note 4.10 and 4.16 for further information). Subordination agreements exist for the shareholder loans in the amount of EUR 32,914k (31 December 2023: EUR 121,892k). The credit facility agreement with an original nominal value of EUR 75,000k (asset-based lending 2022; thereof utilised per 31 December 2024 EUR 63,750k) granted by Callodine Commercial Finance SPV, LLC, Boston, USA („Callodine“) as well as by Oldenburgische Landesbank AG, Frankfurt am Main („Oldenburgische Landesbank“), was due 23 December 2025 or 23 March 2026 as of financial year end. The repayment of the liabilities has already been taken into account in the short- and middle-term financial plan and has been affected in due time up to this date. On 12 June 2025 the credit facilities were refinanced (see note 9).

As of 31 December 2024 the Group's equity attributable to owners of the company amounts to EUR 15,782k (31 December 2023: EUR 2,132k). Taking the IFPEC's (EUR 87,506k; 31 December 2023: EUR 0k), the liabilities due to subordinated shareholders (EUR 32,914k; 31 December 2023: EUR 121,892k), the short-term shareholder loans (EUR 3,625k; 31 December 2023: EUR 26k) and the liabilities to affiliated undertakings of (EUR 65k; 31 December 2023: EUR 1,646k) into consideration, the adjusted equity as of 31 December 2024 amounts to EUR 139,892 (31 December 2023: EUR 125,696k). Due to the business development, the positive EBITDA by the Group in the current fiscal year and considering the positive cash and cash equivalents of EUR 69,313k as of 31 December 2024 (31 December 2023: EUR 42,737k) as well as the conversion of shareholder loans into equity in 2024 the Group management believes that any obligation for the next 12 months will be met. On 12 June 2025 the credit facilities were refinanced (see note 9).

Statement of compliance with IFRS

The consolidated financial statements of Fliegendes Pferd Group were prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the EU. All International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) effective for the fiscal year 2024 as well as all interpretations by the International Financial Reporting Standards Interpretations Committee (IFRS IC) and interpretations of the Standing Interpretations Committee (SIC) were applied.

The statement of financial position is presented in accordance with IAS 1 and presents current and non-current assets and liabilities, some of which are presented in more detail in the notes by maturity. The consolidated statement of comprehensive income is presented in accordance with the total cost method supplemented with other components of profit and loss.

Consolidation principles

The consolidated financial statements comprise the financial statements of Fliegendes Pferd Group and its subsidiaries, which are directly or indirectly controlled by Fliegendes Pferd Group in accordance with IFRS 10.

According to IFRS 10, a company controls an entity when it is exposed or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are consolidated in full on the date of acquisition, i.e., the date on which control is transferred to the Group using the acquisition method and continue to be fully consolidated until the date on which the parent ceases to control the subsidiary. Pegasus International holds a 100% share in all direct and indirect subsidiaries. All subsidiaries are fully consolidated.

In addition to Fliegendes Pferd Group as the parent company, the consolidated financial statements as of 31 December 2024 include the following entities:

^{2 )} Functional currency according to IAS 21 is EUR, because the company is active in a EUR economic environment and mainly generates and spends its means of payment from it.

The financial statements of the parent company and the subsidiaries use consistent accounting policies and are prepared for the same reporting period, which in principle corresponds to the calendar year.

As of the reporting date Fliegendes Pferd Midco held 14.4% (31 December 2023: 18.9%) of the limited partnership interest in Fliegendes Pferd MEP GmbH & Co. KG, Bindlach, Germany ("MEP KG"). MEP KG is not consolidated, but is accounted for as an investment.

All intra-group balances and transactions, and all unrealised gains and losses resulting from intra-group transactions are eliminated in full when preparing the consolidated financial statements. Unrealised losses are eliminated in a similar manner as unrealised gains unless the transaction provides evidence of an impairment.

2.2 Significant accounting judgements, estimates and assumptions

The preparation of the Group’s consolidated financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of income, expenses, assets, liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability in question in future periods.

Judgements

In the process of applying the entity’s accounting policies, the management has made the following judgements that have a significant effect on the amounts recognised in the financial statements. This does not include decisions based on estimates:

Leases - Group as lessee

The Group’s companies have leases for commercial properties and for furniture, fixtures and office equipment. The leases usually run for an average term of 6.0 years as of 31 December 2024 (average term of 4.9 years as of 31 December 2023) and contain extension options after this date. Lease payments for real estate properties will be renegotiated from time to time to reflect the current market rents if this is of advantage for the Group to secure more favourable conditions. For agreements with unlimited duration the Group assumes a term of 10 years. Some leases stipulate additional variable revenue-based payments. These variable leasing components are not taken into account when determining the right of use and liabilities. In 2024, the variable revenue-based leasing payments amounted to EUR 86k (2023: EUR 87k) for which a provision was set up.

Some of the leases contain extension options for the Group, which may be exercised by the Group. As far as practicable, the Group tries to include extension options into new leases to ensure operational flexibility. The extension options held can only be executed by the Group and not by the lessors. Upon lease commencement, the Group evaluates whether it is sufficiently certain to execute the extension options. The Group re-evaluates whether it is reasonably certain to execute the options if a significant event or material change of the circumstances under its control occurs. In 2024, 44.2% (31 December 2023: 56.7%) of all leases contain such extension options. The Group estimates, that the potential future lease payments will account to leasing liabilities of EUR 435m (31 December 2023: EUR 497m) provided all extension options are exercised.

Applying IFRS 16 on leases, the Group has made use of a number of exemptions. In detail, the Group:

These leases are short-term leases and/or leases of low value. The Group decided not to recognise use-of-right assets and lease liabilities for such leases. The Group’s average interest rate for discounting is 3.16% as of 31 December 2024 (31 December 2023: 2.85%).

Leases - Group as lessor

The Group's companies are lessors of some of its investment properties (31 December 2024: one store; 31 December 2023: one store) which includes ownership as well as rights of use.

In 2024 as well as in 2023, the Group has concluded sub-lease agreements which are classified as finance leases.

Deferred tax assets

Deferred tax assets are recognised for deductible temporary differences and all unused tax losses to the extent that it is probable that sufficient taxable profit will be available against which the unused tax losses can be utilised. The calculation of the amount of the deferred tax assets requires significant judgement from the management regarding the amount and timing of the future taxable income.

Estimates and assumptions

In the process of applying the entity’s accounting policies, the management is required to make judgements, estimates and assumptions for carrying amounts of assets and liabilities that cannot be determined readily from other sources. Estimates and their underlying assumptions result from previous experience and further factors considered relevant. Actual figures can differ from the estimates.

The assumptions underlying the estimates are regularly reviewed. Changes in estimates are only taken into account in one period if they only affect this period. If changes affect the current and the following reporting periods, these changes are accordingly taken into account in this period and the following periods.

Estimates mainly refer to the determination of useful lives of intangible assets and property, plant and equipment, assessment of the impairment of non-current assets, the valuation of derivative financial instruments and inventories, intangible assets and provisions during the business acquisition as of 31 May 2019 and as of the reporting date. Due to the use of these estimates and assumptions, the actual figures may differ in some cases. In such cases, adjustments are recognised in profit or loss at the time new information becomes available.

The key assumptions concerning the future and other major sources of estimation uncertainty on the reporting date that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next fiscal year are discussed below.

Definition of useful lives of intangible assets and property, plant and equipment

As of the acquisition date 31 May 2019, the Group defined useful lives for all intangible assets and property, plant and equipment in detailed asset categories on the basis of empirical data and the expected use. To define these useful lives, empirical data on the use of assets within the Group and on their expected use were provided by NKD management and department heads. The useful lives determined at the acquisition date were validated by the Group management at year end 31 December 2024 and the management concluded that these useful lives are still appropriate.

For more information on the useful lives used, see also note 2.3.

Impairment of non-financial assets

On each reporting date, the Group assesses whether there is an indication that a non-financial asset may be impaired. Intangible assets with indefinite useful lives are tested for impairment at least once a year and whenever there is an indication of impairment. Other non-financial assets are tested for impairment if there is an indication that the carrying amount exceeds the recoverable amount.

To estimate the value in use, the management must estimate the future cash flows expected to be derived from the cash-generating unit (CGU) and apply an appropriate discount rate to determine the present value of those cash flows. Within the Group, each store is considered to be a CGU. A discounted cash flow method is used to calculate the value in use for each individual store. The cash flows are derived from the budget and the midterm plan for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the CGU being tested. Terms with more than 5 years are valued with a growth rate of 1.0%. The value in use is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate. However, the brands are tested for impairment at the Group level, so above all cash-generating units as the brands promote the market presence of all stores and the value of the brands does not depend on the success of individual stores. The impairment test for the goodwill is carried out at the level of the sales companies of the particular countries. See note 4.3 for more details, including a sensitivity analysis of significant assumptions.

Valuation of inventories and the NKD brand at fair value on the acquisition and at the reporting date

In connection with the Company’s acquisition of the Group companies, assets and liabilities (see the other comments in this section), inventories and the NKD brand were recognised at market value.

The NKD brand was valued at the acquisition date 31 May 2019 with the market value using the relief from royalty method, on the basis of the revenue planning for a period ending 2030, a growth rate of 1.0% to determine the terminal value of the brand and a royalty rate of 0.2%. On 31 December 2024, the NKD brand was tested for impairment applying a WACC rate of 8.45% (31 December 2023: 8.72%) after tax resulting in no impairment loss.

Provisions for restoration obligations

In its store lease agreements, the Group companies enter into obligations to restore the property to its original condition at the end of the lease term. In accordance with IAS 37, a provision must be recognised to account for the cash outflows ensuing from these contractual obligations. The expected costs of restoring the stores, the expected likelihood and date of restoration and the discount rate are the key parameters that have to be estimated in measuring the provision. The Group has defined an average cost rate for each store and a risk-specific interest rate for discounting the provision. All of the Group's stores are covered by the provision based on the expected likelihood of the shop closure. The Group management has estimated the average costs based on empirical data, depending on the country, in amounts ranging from EUR 1.0k to EUR 8.6k (31 December 2023: EUR 3.3k to EUR 6.0k).

Provision for potential losses from rent obligations

The Group also has some stores with negative contribution margins (loss making shops). As of the reporting date 31 December 2024, the Group management assessed whether a net loss will be incurred for these stores by the end of the minimum lease period. If a net loss is expected, it is discounted using a market interest rate and a corresponding allocation is made to the provision for potential losses for rent obligations. A corresponding provision is only recognised as liability for surplus obligations after devaluation. The key estimation parameters are the expected earnings development of the stores and the interest rate used. For more details we refer to note 4.13.

Post-employment benefits

The cost of recognizing provisions for termination benefits to meet a legal obligation in some of the Group's countries under which employees are paid a termination benefit upon retirement or on leaving the company is calculated on the basis of actuarial principles. The actuarial valuation and therewith key valuation parameters involve making assumptions about discount rates, future wage and salary increases and future pension increases. As these plans are of a long-term nature, such estimates are highly uncertain. Further details are contained in note 4.12.

Fair value of financial instruments

The fair value of the derivatives recognised in the balance sheet is derived directly from the active markets.

2.3 Summary of significant accounting policies

The Group consistently used the following accounting policies on any periods reported in the consolidated financial statements.

Currency translation

The consolidated financial statements are presented in euros, which is the parent’s functional currency and the Group’s presentation currency. Each entity in the Group determines its own functional currency. Items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate on the reporting date. All variances from currency translation are recognised in profit or loss. Nonmonetary items measured at historical or production cost in a foreign currency are translated at the rate prevailing on the date of the transaction. The consolidated financial statements contain no separate financial statements from hyperinflationary countries.

The financial statements of the subsidiaries with a functional currency different from Euro are translated into the Group’ currency on the basis of the functional currency. All assets and liabilities are translated at the closing rate and all income and expenses at the average rate for the fiscal year. Equity items are translated at the historical rate. Any resulting translation differences are recognised in other comprehensive income. On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that particular foreign operation is transferred to the consolidated statement of comprehensive income. The following exchange rates were used to translate the significant foreign currencies used in the Group:

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation for currency translation purposes.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method if the acquired set of activities and assets meets the definition of a business and the Group has obtained control. To determine whether a certain set of activities and assets is a business, the Group assesses whether the acquired set of activities and assets includes at least one input of resources and a substantive procedure and whether the Group is in a position to generate output.

The Group can perform a “concentration test” which permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is fulfilled if substantially all of the fair value of gross assets acquired is concentrated in a single asset or a Group of similar assets.

The consideration transferred in the acquisition and the acquired identifiable assets and liabilities are always measured at fair value. Any goodwill arising from the transaction is annually tested for impairment. Any potential profit from the acquisition at a price below the market value is immediately recognised in the statement of comprehensive income. Transaction costs are recognised as expenses as they occur unless they are related to the issuance of debt instruments or shares.

The transferred consideration includes no amounts related to the settlement of previously existing relationships. These amounts are always recognised in profit and loss.

Any contingent consideration is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, it will not be remeasured, and a settlement is recognised in equity. Any other contingent consideration is measured at fair value at each reporting date and subsequent changes of the contingent consideration’s fair value are recognised in profit and loss.

When share-based payment awards (replacement awards) need to be exchanged for awards that are held by employees of the acquired company (awards of the acquired company) the replacement awards of the acquirer are included, in full or in part, into the measurement of the consideration transferred in the business combination. The determination is based on the ratio of the market-based value of the replacement awards to the value of the acquired company’s awards and the extent to which the replacement awards relate to services before the business combination.

The goodwill resulting from a business combination is recognised at cost less necessary impairment, if any, and is accounted for in the consolidated balance sheet under intangible assets. To test for impairment, the goodwill must be allocated at acquisition to each CGU (or groups of CGUs) of the Group that is expected to benefit from the synergies of the business combination. Groups of CGUs to which part of the goodwill is allocated are tested for impairment at least once a year or whenever there is an indication that the unit is impaired. The impairment test is performed using the discounted cash flow method. The CGU corresponds to the country segments Germany, Austria and Italy.

An identified impairment loss is to be allocated first to the carrying amount of any goodwill attributed to the unit through profit and loss and then pro rata to the other assets on the basis of the carrying amount of each asset within the unit proportional to the total carrying amount. The reversal of an impairment loss for goodwill is prohibited.

There were no business acquisitions within the meaning of IFRS 3 in the fiscal year 2024.

Subsidiaries

Subsidiaries are companies controlled by the Group. The Group controls an entity when it is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated in full from the moment the Group obtains control and continue to be fully consolidated until the Group ceases to control the subsidiary.

Non-controlling interests (NCI)

NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

Intangible assets

Intangible assets are initially recognised at historical or production cost. The historical cost of intangible assets acquired in a business combination is their fair value as of the date of acquisition. In subsequent periods, the intangible assets are measured at cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets with finite useful lives are amortised over the useful life. The amortization period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each fiscal year-end. The required changes to the amortisation schedule over the useful life due to changes in the expected useful life or in the expected consumption of the future economic benefits of the asset are treated as changes to estimates. The amortization expense on intangible assets with finite lives is recognised in the consolidated statement of comprehensive income under amortization, depreciation and impairment.

Costs for research activities are recognised in profit or loss as they occur. Development expenditure is capitalised only if the development costs can be measured reliably, the product or process is technically and commercially suitable, future economic benefits are probable and the Group both intends and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognised in profit or loss as they occur. Capitalised development expenditures are assessed at acquisition or production costs, net of accumulated depreciation and accumulated impairment losses.

Intangible assets with finite lives are amortised on a straight-line basis over the following useful lives:

The “NKD” brand has an indefinite useful life as it is not subject to the limitations of a license or user agreement. As a result, the Group has unlimited use of the brand on a worldwide scale.

Property, plant and equipment

Property, plant and equipment are stated at historical or production cost, net of accumulated depreciation and/or accumulated impairment losses, if any. An item of property, plant and equipment is separated into parts (components) when those parts represent a significant portion of the items value. When significant parts of property, plant and equipment are required to be replaced periodically, the Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. This separate recognition is mainly used for store remodelling measures. Remodelling measures for Group are changes to the overall appearance of a store and typically include new flooring, installation of energy-efficient LED lighting, store facilities and furnishings. Repair and maintenance costs are recognised in profit or loss as incurred. Furthermore, the present value of the estimated cost of dismantling and restoring is included in the initial measurement to the extent the Group had recognised an obligation for that cost.

Depreciation is calculated on a straight-line basis over the useful lives of the assets as follows:

^* or the shorter contractual lease term where NKD has no option to renew

Rights-of-use from leasing agreements are amortised based on the useful life, or if shorter, the contractual lease term. The right-of-use is not accounted for separately but included in property, plant and equipment.

Property, plant and equipment is derecognised on disposal or if no further economic benefit is expected from the continued use or sale of the asset. Any profit or loss resulting from the derecognition of the asset (calculated as difference between the net disposal proceeds and the carrying amount of the asset) are recognised in the consolidated statement of comprehensive income in the period in which the asset is derecognised.

The residual values, useful lives and depreciation methods used are reviewed at the end of each fiscal year and adjusted as required.

Impairment of non-financial assets

On each reporting date, the Group assesses whether there is an indication that a non-financial asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or CGU's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets or groups of assets.

In assessing the value in use, the expected future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s CGU to which the individual assets are allocated. The Group has classified each individual store as a CGU. These budgets and forecast calculations generally cover a period of three years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the third year.

Where the recoverable amount of an asset or the respective CGU is less than the respective carrying amount, an impairment loss is recognised.

In assessing the recoverable amount, the expected future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Assets are assessed at every balance sheet date as to whether there are indications that an impairment loss previously recognised no longer exists or has decreased. If such indication exists, the Group estimates the recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. However, that amount cannot exceed the carrying amount that would have been determined, net of amortization, had no impairment loss been recognised for the asset in prior years. Any reversal is included in profit or loss for the period.

The following criteria must also be taken into account for certain assets:

Intangible assets

Intangible assets with indefinite useful lives are tested for impairment once a year on the reporting date, or if circumstances indicate that the value may be impaired. In the case of the “NKD” brand, the asset as a whole is tested.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets - Recognition and initial measurement

Trade receivables are initially recognised when they occur. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

During the fiscal year 2024 as well as 203, the Group had trade receivables and financial assets classified at amortised cost and at fair value through profit and loss (derivatives not designated as hedging instruments in a hedge relationship).

Financial assets - Classification and subsequent measurement

On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI - debt investment; FVOCI - equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis. All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets.

On initial recognition, the Group may irrevocably elect to present a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as FVTPL if this prevents or significantly reduces an accounting mismatch that would otherwise arise.

The subsequent measurement of the financial assets which are classified at amortised cost and at fair value through other comprehensive income as well as of leasing receivables, is carried out taking into account valuation allowances for expected credit losses.

The Group measures the valuation allowance at the amount equal to the full lifetime expected credit losses, except for the following valuation allowances which are measured at the amount equal to the 12-month expected credit losses:

Valuation allowances for trade receivables (incl. leasing receivables) are always measured at the amount equal to the full lifetime expected credit loss.

To determine whether the default risk of a financial assets has increased significantly since initial recognition and to estimate expected credit losses the Group takes appropriate and reliable information into account which is relevant and available without inappropriate time and cost expenditures. This includes quantitative and qualitative information and analysis based on previous experiences of the Group and sound assessments, including forward-looking information.

The Group considers a financial asset as to be in default when it is unlikely that the debtor is able to pay its credit obligation to the Group in full, without the need for the Group to resort to measures such as the realisation of collateral, if any.

Full lifetime expected credit losses are expected credit losses which result from all kinds of default events during the expected term of the financial instrument.

12-months expected credit losses are the part of the expected credit losses which result from those default events that are possible within 12 months after the reporting date (or a shorter period, if the expected term of the instrument is less then twelve months).

The maximum period to be considered in estimating expected credit losses is the maximum contractual term in which the Group is exposed to credit risks.

Financial assets - Business model assessment

The Group assesses the objectives of the business model in which the financial asset is held on a portfolio level, as this reflects best how the business is controlled and information is provided to the management. The information considered includes:

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group’s continuing recognition of the assets.

Financial assets that are held or managed for trading and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets - Definition of principal and interest

For the purposes of this assessment ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

Financial assets - Subsequent measurement and gains and losses

Financial liabilities - Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, if it is a derivative or if it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. Foreign exchange gains and losses from foreign currency options and futures and from bank accounts denominated in a currency other than the functional currency are recognised in the financial result. Other exchange gains and losses are recognised in other operating income or in other operating expenses. The items are not netted in the current fiscal year, as in the previous reporting period.

During the fiscal years 2024 and 2023 the Group had financial liabilities classified as measured at FVTPL (derivatives not designated as hedging instruments in hedge relationships).

Derecognition

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred.

The Group also derecognises a financial asset when the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The Group enters into transactions whereby it transfers assets recognised in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss. The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates.

The Group does not apply hedge accounting for its hedging activities. However, the Group uses derivative financial instruments such as foreign currency options and futures as well as simple combinations of both to hedge currency risks. On the date of their inception and also in subsequent periods, these derivative financial instruments are recognised and measured at fair value. Derivative financial instruments are carried under assets if the fair value is positive and under liabilities if the fair value is negative.

For derivative financial instruments that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are recognised directly in profit or loss.

When measuring a derivative or similar financial instrument, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either

The Group must have access to the principal market or most advantageous market.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant who finds the highest and best use for the asset. The Group uses measurement methods that are appropriate in the respective circumstances and for which sufficient data are available to measure the fair value in conjunction with as many significant, observable inputs as possible and as few unobservable inputs as possible.

All assets and liabilities for which a fair value is determined or reported in the financial statements are classified according to the following fair value hierarchy, based on the lowest level input that is significant to the entire fair value measurement:

For assets or liabilities that are recorded in the financial statements on a recurring basis, the Group determines whether there have been any movements between the hierarchy levels by reviewing the classification at the end of each reporting period based on the lowest level input that is significant to the entire fair value measurement.

Inventories

Inventories are measured in accordance with IAS 2 at the lower of cost and net realisable value. Sales and other risks are taken into account in the calculation of the net realisable value where necessary. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. The net realisable value is reviewed on a group of similar articles basis and every group has very similar characteristics in regards of purchase price, style, material and layout. At this, seasonal goods and never-outof-stock goods are considered separately. Consumables and supplies are recognised at the lower of cost and net realizable value.

Cash and cash equivalents

Cash and cash equivalents and short-term deposits in the balance sheet comprise cash on hand and bank balances with an original maturity of less than three months. Cash and cash equivalents in the consolidated statement of cash flows are classified using the above definition.

Provisions

Principles

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

Pensions and other post-employment benefits

The Group also has certain defined benefit plans for group companies. Under these plans, the Group incurs payment obligations when an employee retires which are classified as postemployment benefits. These benefits are not financed through an external fund. The obligation under the defined benefit plans is determined separately for each beneficiary using the projected unit credit method. Actuarial gains and losses for defined benefit plans are recognised in full in the period in which they occur in other comprehensive income and are not reclassified to profit or loss in subsequent periods.

Other long-term employee benefits

The Group pays long term service awards (anniversary bonuses) to a certain group of employees. The respective obligations are calculated using the projected unit credit method. The long-term service awards were measured in line with IAS 19 (revised 2011). The measurement was carried out in accordance with accepted actuarial principles using the projected unit credit method. The obligation value according to the projected unit credit method is defined as the actuarial present value of the anniversary bonuses earned by the employees up to this point in time based on their service periods completed in the past. The measurement takes into account trend assumptions regarding the amount of future anniversary benefits and any fluctuation probabilities. The Heubeck Mortality Tables 2018 G served as basis for the calculation. The actuarial interest rate (DBO) is between 3.3% and 3.56% p.a.

Provisions for restoration obligations

For obligations in connection with restoration, the present value of the expected cost for restoration is recorded on initial recognition as part of the historical or production cost of the respective asset and as a provision. The provisions are discounted at a current rate that reflects the risks specific to the restoration liability. The unwinding of the discount is expensed as incurred and recognised in the statement of comprehensive income as a financial expense. The estimated future costs for restoration are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the historical or production cost of the asset (if this change does not relate to assets already recorded at the acquisition date of NKD Group with the fair value).

Provision for onerous contracts

A provision for losses from onerous contracts is recognised if a present contractual obligation results in unavoidable costs to fulfil the obligation that are higher than the expected economic benefits associated with the respective contract insofar as these have not yet been taken into account in accordance with IFRS 16. The Group recognises the following types of provisions for onerous contracts:

1) Potential losses for rented space that is no longer in use: Provisions are recognised for expected future payments under rental agreements in place for stores that have been vacated by Group companies due to the location’s lack of profitability. A provision is recognised either for expected compensation for the expected or agreed early termination of the rental agreement or for the present value of the total remaining outstanding rental payments.

2) Potential losses for loss-making stores: For loss-making stores that the Group has not yet abandoned because their operations are still covering at least a portion of rental expenses for the stores, the Group recognised a provision equal to the present value of the net cash outflows incurred until the end of the minimum lease term.

3) Potential losses for purchase commitments: The Group reviewed all goods purchase commitments as of 31 December 2024 and recognised provisions for potential losses as of the respective reporting dates for all goods orders which, including costs to sell, are expected to result in a negative margin.

Leases

At inception of the lease, the Group determines whether the contract is or contains a lease. This is the case if the arrangement entitles the Group to control the use of an identified asset for a certain period against payment. The Group takes the definition of a lease according to IFRS 16 as a basis to determine whether an arrangement contains the right to control an identified asset.

The Group as lessee

Upon lease commencement or when a contract containing a lease component is amended, the Group allocates the contractually agreed consideration based on the relative individual selling prices. However, for real estate leases, the Group has decided not to separate the nonlease components and instead to account for lease and non-lease components as single lease component.

Upon lease commencement the Group recognises the right-of-use asset and a lease liability. The right-of-use asset is initially measured at historical costs which equal the initial measuring of the lease liabilities adjusted for payments made at or prior to commencement plus possible initial direct costs as well as the estimated costs for reconstruction or disposal of the underlying asset or for the reconstruction of the underlying asset or the location in which the asset is located less potential received lease incentives.

Subsequently, the right-of-use asset is depreciated on a straight-line basis from commencement to the end of the leasing term unless the ownership of the underlying asset is transferred to the Group at the end of the lease term or the costs of the right-of-use asset take into account that the Group will exercise a purchase option. In this case the right-of-use asset is depreciated over the useful life of the underlying asset which is determined under the regulations for property, plant and equipment. Additionally, the right-of-use asset is continuously adjusted for depreciation, if necessary, as well as for certain reassessments of the lease liability.

The lease liability is initially measured at the present value of the lease payments outstanding at the lease commencement, at the interest rate implicit in the lease or, if this cannot be readily determined, at the Group's incremental borrowing rate. Usually, the Group determines its incremental borrowing rate as discount rate.

To determine its incremental borrowing rate the Group obtains interest rates from different external financial sources and makes certain adjustments to reflect the lease conditions and the nature of the asset.

The lease payments included in the measurement of the lease liabilities comprise:

The lease liability is measured at the amortised carrying amount using the effective interest rate method. It will be remeasured when the future lease payments vary due to a change in index or (interest) rate, when the Group adjusts its estimation of the expected payments under a residual value guarantee, when the Group changes its assessment regarding the exercise of a purchase, renewal or termination option or if a de facto fixed lease payment change.

If the lease liability is reassessed in this way, the carrying amount of the right-of-use asset is adjusted accordingly or, if the carrying amount of the right-of-use asset has been reduced to zero, this adjustment is recognised in profit or loss.

In the balance sheet, the Group accounts for right-of-use assets, which are not classified as property investment, in property, plant and equipment and lease liabilities in other financial liabilities.

Short-term lease liabilities and leases with an underlying low value asset: The Group decided not to recognize assets for right-of-use asset and lease liabilities with an underlying low value asset and short-term leases, incl. IT equipment. The Group recognizes lease payments in connection with these leases on a straight-line basis over the term of the lease as expense. Lease instalments paid in the consolidated cash flow statement are attributed to the cash flow from financing activities.

The Group as lessor

At the commencement of the agreement or when a contract containing a lease component is amended, the Group allocates the contractually agreed consideration based on the relative individual selling price.

If the Group acts as lessor, it classifies each lease as financial lease or as operating lease at the commencement of the agreement.

To classify each lease, the Group carried out an overall assessment whether the lease transfers substantially all the risks and rewards of ownership of the underlying asset. If this is the case, the lease is classified as finance lease. Otherwise, it is classified as operating lease. In making this assessment, the Group considers certain indicators, such as whether the lease covers the major part of the economic life of the asset.

If the Group acts as intermediate lessor, it recognizes the main lease and the sub-lease separately. It classifies the sub-lease based on its right-of-use asset from the main lease and not based on the underlying asset. If the main lease is a short-term lease, on which the Group applies the above exemption, it classifies the sub-lease as operating lease.

If an arrangement includes lease and non-lease components, the Group applies IFRS 15 to allocate the contractual consideration.

The Group recognizes lease payments from operating leases on a straight-line basis over the lease term in other operating income.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group, and the revenue can be reliably measured. The Group recognises revenues when a customer obtains control - at a point in time. In case of Group, the contracts with customers mainly consist of over-the-counter transactions in physical NKD stores. In these transactions, the control of the goods is transferred to the customer simultaneously with the receipt of payment by the Group at one point in time. Revenue is measured at fair value of the consideration received. Cash discounts, discounts as well as VAT or other charges are not taken into account.

Furthermore, the following recognition criteria must be met before revenue is recognised:

Sale of goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer. This occurs when the goods are handed over at the sales counter or, for internet sales, when the risks are transferred on delivery to the customer. The Group deferred revenue from goods, which the customer has the right to return, based on empirical historical data, thus making provision for the utilization of these general rights of return.

Rental income

Income from operating leases is recognised on a straight-line basis over the term of the lease and reported under other operating income.

Assets held for sale and disposal groups

Non-current assets or disposal groups which include assets and liabilities are classified as held for sale or held for distribution if it is most likely that they are mainly realised through sale or distribution and not through continued use.

In general, such assets or disposal groups are carried at the lower of their carrying amount and fair value less disposal costs. Any impairment loss of a disposal group is first allocated to goodwill and then to the remaining assets and liabilities on a pro rata basis; with the exception that no loss is allocated to inventories, financial assets, deferred tax assets, assets associated with employee benefits, investment property which are continuously measured under the Group’s other accounting policies. Impairment losses initially classified as held for sale or held for distribution and subsequent gains or losses on reassessment are recognised in profit or loss.

Intangible assets and property, plant and equipment are no longer subject to regular depreciation or amortization and any investment recognised using the equity method is no longer recognised using the equity method as soon as they are classified as held for sale or held for distribution.

During the fiscal year 2024 as well as in 2023, no assets were held for sale and their activities discontinued.

Taxes

Tax expense comprise current taxes and deferred taxes. Current taxes and deferred taxes are recognised in profit and loss, except to the extent in which they are related to a business combination or with an item directly recognised in equity or in other comprehensive income.

The Group determined that interests and penalties on income taxes, including uncertain tax items, do not meet the definition of income taxes and are therefore recognised in accordance with IAS 37.

Current taxes

Current tax is the expected tax liability or tax receivable on the taxable income or tax loss for the year, based on tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax liabilities in respect of previous years. The amount of the expected tax liability or tax receivable reflects the amount that represents the best estimate, taking into account tax uncertainties, if any. Current tax liabilities also include all tax liabilities arising from the assessment of dividends. Current tax receivables and liabilities are only netted under certain conditions.

Additionally, the Group management estimates risks for possible subsequent tax payments from ongoing tax audits on the basis of the expected findings as of the balance sheet date.

Deferred taxes and tax risks

Deferred taxes are recognised for temporary differences between the carrying amounts of assets and liabilities for Group financial reporting purposes and the used amounts for tax purposes. Deferred tax liabilities and assets are not recognised for:

A deferred tax asset is recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that sufficient taxable profit will be available against which they can be utilised. Future taxable profits are determined based on the reversal of taxable temporary differences. If the amount is not sufficient to fully activate the deferred tax assets, the future taxable profits - considering the reversal of temporary differences - are determined based on the individual business plans of the subsidiaries. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extend that it is no longer probable that the related tax benefit can be realised; Attributions are made when the probability of future taxable income improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it is probable that future taxable profit will allow realization.

Deferred taxes are measured at the tax rates that are expected to apply to temporary differences when they reverse, using tax rates that have been enacted or substantively enacted by the reporting date. Deferred taxes reflect any uncertainty contained in income taxes.

The measurement of deferred taxes reflects the tax consequences which arise from the expectation of the Group regarding the manner in which the carrying amounts of its assets and liabilities will be recovered or settled at the balance sheet date.

Deferred tax assets and deferred tax liabilities are netted if certain conditions are met.

Value Added Tax (VAT)

Revenues, expenses and assets are recognised net of VAT with the following exceptions:

• If the VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, the paid VAT is recognised as part of the historical cost of the asset or as part of the expense item as applicable.

• Receivables and payables that are stated with the amount of VAT included.

The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated balance sheet.

Government grants

An unconditional government grant that refers to an asset is recognised as other income in profit or loss when a right to receive the grant is established. Other government grants relating to assets are initially recognised as deferred income at fair value if there is reasonable assurance that they are granted, and the Group meets the conditions associated with the grant. Subsequently, these other government grants are recognised as other income in profit or loss over the period of the useful life of the asset.

Grants that compensate the Group for incurred costs are recognised as other income in profit or loss in the periods in which the costs are recognised, unless the grant conditions are only met after the associated costs were recognised. In this case the grant is recognised in the period in which it becomes receivable.

Government assistance in form of government guarantees for loans from financial institutes are taken into account in determining the fair value of the loan.

2.4 Changes of significant accounting policies

The Group applied all standards, amendments and interpretations in its consolidated financial statements that have been endorsed by the EU Commission and become effective before the financial statements are authorised for issue. No standards and interpretations were applied earlier than required. In the fiscal year 2024, the following standards were applied for the first time:

Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

The amendments to IAS 1 issued in 2020 state clarifications regarding the requirements for a classification of liabilities as current or non-current and are mandatory to annual reporting periods beginning on or after 1 January 2024.

Supplier finance agreements (Amendments to IAS 7 & IFRS 7)

The amendments describe supplier finance agreements and their accounting treatment and disclosure requirements in the notes.

2.5 New standards not yet adopted

Several new standards have to be applied in the first reporting period in the fiscal year after 01 January, 2024, whereas early application is possible; the Group however, has not applied the new or amended standards early in the preparation of this consolidated financial statements.

The Company does not plan to apply early.

IFRS 18 will supersede IAS 1 (Presentation of financial statements) and becomes effective for annual periods beginning on or after 01 January, 2027. The new standard sets out the new key requirements as follows:

Companies will be obliged to classify all items of income and expense included in the statement of profit or loss into five categories: the operating category, the investing category, the financing category, the income taxes category, and the discontinued operations category. Companies will also be obliged to present a newly defined subtotal the “operating profit subtotal”. The companies’ profit or loss will be unchanged.

Certain company-specific performance measures (Management-defined Performance Measures, MPMs) will be disclosed in a single note to the financial statements.

Improved guidelines for the classification of information in the financial statements will be implemented. Furthermore, all companies will be obliged to use the operating profit subtotal as the starting point, if the indirect method of reporting cash flows from operating activities is used.

Currently, the Group is assessing the possible effects of the new standard, especially regarding the structure of the consolidated income statement, the cash flow statement and the additional disclosure obligations for MPMs. The Group also examines the effects on the way, how information is classified in the financial statements, including items which are currently specified as “other”.

Other standard amendments planned to date should not be significant to the consolidated financial statements and are therefore not explained in detail.

2.6 Exemption option under section 264 paragraph 3 German Commercial Code

By shareholders’ resolution of 13 December 2024, the option under section 264 paragraph 3 of the German Commercial Code to effectively exempt the subsidiary NKD Group GmbH from its obligation to disclose its annual financial statements was exercised. The shareholders of the NKD Group GmbH have approved the exemption under section 264 paragraph 3 sentence 1 no. 1 of the German Commercial Code. Under section 264 paragraph 3 sentence 1 no. 2 of the German Commercial Code, the parent company has assumed the obligation to cover losses for the NKD Group GmbH for the fiscal year 2024. The consolidated financial statements and the Group management report were prepared and audited in accordance with section 264 paragraph 3 sentence 1 no. 3 of the German Commercial Code according to the applicable national and EU regulations. The documents to be published are published in the company register under section 264 paragraph 3 sentence 1 no. 5 of the German Commercial Code in conjunction with section 325 paragraph 1 to 1b. For the subsidiary NKD Deutschland GmbH, in which the Pegasus International GmbH indirectly holds a 100% share through the intermediate parent company NKD Group GmbH the same conditions for exemption apply.

3 Notes to the statement of comprehensive income

3.1 Revenue

The Group generates revenue primarily from the sale of clothing and living accessories at the NKD retail outlets and the online merchandise sales. All revenue positions are continuing operations.

In the following table, revenue from contracts with customers is disaggregated according to the sales regions of NKD.

3.2 Other operating income

The miscellaneous other operating income during the current financial year amount to EUR 4,408k, thereof mainly income from IFRS 16 reassessments EUR 1,819k, income from subsidiary companies EUR 1,113k (mainly NKD Italy EUR 318k, NKD Germany EUR 83k, NKD Group EUR 119K, NKD Poland EUR 97k and NKD Slovenia EUR 125k), claims for damages EUR 788k, income from other accounting periods EUR 307k. The remaining miscellaneous other income is spread over various individual items in the Group.

As of 31 December 2023, the miscellaneous other operating income during the current financial year amount to EUR 3,132k, thereof mainly income from subsidiary companies EUR 1,307k (mainly NKD Austria EUR 251k, NKD Italy EUR 297k, NKD Germany EUR 486k, NKD Poland EUR 173k), income from other accounting periods EUR 821k, income from further invoicing of tenant fixtures EUR 174k, income from commissions of EUR 168k. The remaining miscellaneous other income is spread over various individual items in the Group.

3.3 Personnel expenses

The average number of employees working at the Group for the year 2024 was 9,661 (2023: 9,567):

3.4 Other operating expenses

The miscellaneous other operating expenses for the current financial year amount to EUR 1,556k, thereof mainly expenses for other auxiliary and package material of EUR 1,137k, and commissions for the purchase of goods of EUR 293k. The miscellaneous other operating expenses as of 31 December 2024 are spread over various individual items in the NKD group.

The miscellaneous other operating expenses for the business year 2023 amount to EUR 18,901k, thereof mainly expenses for provisions for the repayment of the public Covid19 aid (Überbrückungshilfe) of EUR 12,000k, expenses for the other auxiliary and package material of EUR 987k, expenses for other acquisition costs (cost, discounts, bonuses), expenses for commissions for the purchase of goods EUR 436k, expenses for operating and office equipment of EUR 1,020k, expenses for the purchase of goods for the canteen of EUR 223k, expenses for outsourcing of EUR 216k, expenses for liquidation costs of the subsidiary NKD Finance S.à r.l EUR 123k, expenses for labelling and sorting of EUR 90k, expenses for building land contributions EUR 64k. The remaining miscellaneous other operating expenses as of 31 December 2023 are spread over various individual items in the Group.

3.5 Net financial result

The financial income during the fiscal year of EUR 14,971k (2023: EUR 8,036k) mainly result from exchange rate gains of EUR 7,606k (2023: EUR 4,145k), from foreign exchange futures (also see note 7), from the valuation of bank balances in foreign currency as of the balance sheet date of EUR 5,140k (2023: EUR 0k) as well as from the reversal of provisions for derivatives with a negative market value (EUR 1,892k; 2023: EUR 3,715k).

For the financial year as well as the reference period, the financial expenses break down as follows:

Interest expenses in the amount of EUR 10,070 (2023: EUR 14,571k) mainly include interest from shareholder loans of EUR 2,043 (2023: EUR 4,550k) (see note 4.10), interest from the Oldenburgische Landesbank and Callodine funding (new ABL funding) in the amount of EUR 7,420k (2023: EUR 7,371k). Additionally, expenses from the fair value measurement of the foreign exchange futures of EUR 0k (2023: EUR 1,971k) and from the reporting date valuation of bank accounts in foreign currency of EUR 0k (2023: EUR 165k) are included.

3.6 Other taxes

Other taxes amount to EUR 556k (2023: EUR 471k). EUR 488k (2023: EUR 471k) thereof resulting from property tax of the NKD Deutschland GmbH.

3.7 Income taxes

Taxes on income paid or due as well as deferred taxes from income are stated as income taxes. Tax expense and income attributable to income taxes break down by origin as follows:

Consolidated statement of comprehensive income (expenses -/ income +):

EUR 1,082k from the current income tax expenses relate to the previous year (31 December 2023: 2,924k). Risks for possible supplementary tax payments from tax audits in the amount of EUR 1,082k are included in this amount.

The expected income tax expense which would have been incurred on the IFRS consolidated profit or loss before tax if the tax rates of the German consolidated entities as the main entities of the Group of 28.1% had been applied, can be reconciled as follows to the income from income taxes as stated in the statement of comprehensive income (expenses - / income +):

The Group tax rate is primarily based on the tax rate of the German Group companies. It amounts (as in the previous year) to 28.1% and comprises the corporate income tax/ solidarity surcharge (CIT) of 15.825% and municipal business tax (MBT) of 12.275%.

As of 31 December 2024 and 31 December 2023 the Group has the following tax loss carryforwards (including interest carryforwards) available to reduce future taxable income:

The earnings situation of the German Group companies (tax group: Pegasus International GmbH, NKD Group GmbH, NKD Deutschland GmbH) as well as NKD Österreich Holding GmbH and NKD Italia S.r.l. regarding the planning horizon (2025 to 2029) proves to be stable and leads to a planned utilisation of the tax loss carryforwards existing as of 31 December 2024. The earnings situation of NKD d.o.o. Slovenia, NKD Moda spółka z o.o. Poland and NKD Moda d.o.o. Croatia showed a positive development for the planning horizon 2025 to 2029 and can be regarded as stable. Therefore, the Group management decided to recognise deferred tax assets in the amount of the planned utilisation.

Since the earnings situation of NKD Moda s.r.o., Czech Republic regarding the planning horizon 2025 to 2029 is uncertain, the NKD Group management is not sufficiently sure about the future development of the respective entities. For this reason, no deferred tax assets were recognised for the unused tax losses. No deferred tax assets were recognised on the domestic interest carryforwards, as it is not expected that they will be utilised in the near future due to the planned net interest expenses.

The remaining loss carryforwards attributable to Germany, for which no deferred tax assets were recognised, are entirely attributable to loss carryforwards of the NKD Deutschland GmbH. Due to the existing income tax group with Pegasus International GmbH they are blocked until the end of the tax group and therefore cannot be utilised until this time.

Therefore, deferred tax assets from tax loss carryforwards and interest carryforwards of EUR 11,540k were not recognised as of 31 December 2024 (31 December 2023: EUR 12,679k).

Utilisation of the tax loss carryforwards of NKD Moda d.o.o. Croatia of EUR 6,276k as well as of NKD d.o.o. Slovenia in the amount of EUR 9,741k is limited to the years 2025 to 2029. The tax loss carryforwards of the other Group companies can be carried out for an indefinite period.

Deferred tax assets and deferred tax liabilities are offset against each other when the Group has an enforceable right to offset the current tax assets against the current tax liabilities and these assets and liabilities relate to income taxes levied by the same tax authority for the same taxable entity.

Deferred tax liabilities in connection with investments in subsidiaries amount to EUR 254k as of 31 December 2024 (31 December 2023: EUR 254k). As in the previous period, these were not recognised, as the Group has decided that the previously retained profits of its subsidiaries will not be distributed in the foreseeable future and no sale of companies is planned.

With effect from 01 January, 2024 the Minimum Taxation Directive was implemented into national law in Germany and in the European Union, so that the newly introduced minimum taxation, also due to its effect beyond the European Union, generally has tax implications for all countries in which the NKD Group operates subsidiaries/companies. However, as the group’s turnover is less than the minimum threshold of € 750 million, that must be exceeded in at least two years within a rolling observation period of four years under German tax law, the minimum taxation does not apply in the following year, which is why no tax effects are expected from the minimum taxation.

Deferred taxes classified by their type of temporary differences and due to unused tax losses are presented below:

As of 31 December 2024, deferred taxes of EUR -62k were recognised in OCI (December 31, 2023: EUR -96k).

4 Notes to the statement of financial position

4.1 Intangible assets

Goodwill

The carrying amount of the goodwill was allocated to the following CGU groups before the recognition of impairment losses for the purpose of impairment testing:

According to IFRS 3 goodwill is not amortised but is subjected to an annual impairment test on 31 December 2024 (impairment test under IAS 36). Material assumptions for the annual impairment test for the goodwill as of the reporting date were the detail planning for the business years 2025 to 2029, the discount rate and the growth rate.

No growth in the perpetual annuity is assumed. As in the previous year, the testing showed no impairment loss. Even a reduction of the growth rate by 0.5% would not result in a need for impairment.

Other intangible assets

The development of the intangible assets in the reporting period is presented in the following table:

The “NKD” umbrella brand has an indefinite useful life as it is not subject to the limitations of a license or user agreement. See comments on the valuation of the brands in note 2.

As part of the asset-based lending agreement of 2022, the Group pledged the umbrella brand “NKD”, the product brand “Laura T” and internet domains in an amount of EUR 3,180k (see note 4.16 for further information).

The impairment test for trademarks was based on the relief from royalty method taking into account the expected sales revenue and a discount rate (WACC) of 8.45% (31 December 2023: 8.72%). No impairment was identified. Even a sustained reduction in sales revenue by 15% compared to 2024 would not result in a need for impairment.

4.2 Property, plant and equipment

The development of property, plant and equipment in the reporting period is presented in the following table:

Property, plant and equipment contains right-of-use assets in the amount of EUR 426,374k (31 December 2023: EUR 436,206k) in connection with leasing objects which do not fulfil the definition of investment property. These are included in the item buildings and stores as well as in other equipment. See note 4.9 for information about the amount of right-of-use assets. During the current fiscal year, impairment losses for loss-making shop locations in the amount of EUR 1,634k (2023: EUR 1,280k) were recognised.

4.3 Impairment of non-current assets

The Group tests intangible assets with an indefinite useful life (“NKD” umbrella brand) as well as the product brand “Laura Torelli” with a definite useful life of 10 years for impairment at least once a year. An impairment test is also performed whenever circumstances indicate that the asset could be impaired (triggering event).

The impairment test is carried out at the level of each cash-generating unit. For the Group, every store is a cash-generating unit as management assesses every store for its success in order to make investment and restructuring decisions. The Group therefore allocated all noncurrent assets to the individual stores. However, the brands are tested for impairment at the NKD Group level, so above all cash-generating units as the brands promote the market presence of all stores and the value of the brands does not depend on the success of individual stores. The impairment test for the goodwill is carried out at the level of the sales companies of the particular countries.

The recoverable amount of each cash-generating unit is determined on the basis of the fair value less costs to sell. The calculation is based on level 3 of the fair value hierarchy of IFRS 13. For this purpose, cash flow forecasts are used. The projections are based on financial plans which management approves for the next business year as well as a detailed planning period of 5 years which transfers into a perpetual annuity. Management determines the discount rates on the basis of the weighted average cost of capital (WACC) of the cashgenerating unit. For calculating WACC, assumptions are required for the cost of capital, the beta factor and the capital structure. These are derived from comparable group entities. Management based its assumptions underlying the cash flow projections in relation to revenue forecasts, gross profit margins and the development of the network of outlets, market share and growth rates on past experience and market expectations. This involved compiling and analysing comprehensive market data relating to market potential and price developments in sales and purchases as well as forecasting and optimizing cost trends at outlets and in central functional areas.

As of 31 December 2024, the NKD Group reviewed impairment risks on cash generating unit/store level based on the NKD Group’s accounting policies. As a result, the impairment on store equipment and corporate assets amounted to EUR 7,488k (31 December 2023: EUR 5,854k) and refers to stores for which future income projections do not cover the carrying value assigned to the asset.

Sensitivity to changes in assumptions

The key assumption made in the business plan is that of continuous revenue growth, based on the development of the stationary store network and the associated increase in sales volumes with the ability of the market to absorb these volumes being assessed based on market analyses. If the actual results differ significantly from these assumptions, future impairment of property, plant and equipment cannot be ruled out.

4.4 Inventories

The carrying amounts of inventories break down as follows:

Inventory pledged for liabilities amount to EUR 80,125k (31 December 2023: EUR 97,606k) (for further information see note 4.16).

Inventories comprise merchandise and consumables and supplies, which relate to supply materials and sales aids.

Cost of materials amounts to EUR 254,733k in the reporting period from 01 January to 31 December 2024 (2023: EUR 262,984k).

Cost of materials from operational changes to inventories includes write-downs of merchandise. In accordance with the net realisable value concept, merchandise was written down by the difference to their lower net realisable value in the amount of EUR 2,346k (31 December 2023: EUR 4,680k). The historical cost of the inventories, which were written down to their lower net realisable value as of 31 December 2024 was EUR 8,627k (31 December 2023: EUR 15,321k).

4.5 Financial assets

Non-current financial assets and other non-current assets in the amount of EUR 6,364k (31 December 2023: EUR 5,919k) mainly comprise security deposits in the amount of EUR 5,755k (31 December 2023: EUR 5,477k) as well as advance payments on assets in construction EUR 599k (31 December 2023: EUR 370k).

Current financial assets in the total amount of EUR 5,256k (31 December 2023: EUR 115k) include the positive fair value of the currency options of EUR 5,256k (31 December 2023: positive fair value of the currency options in the amount of EUR 115k). For further details see note 7.

4.6 Non-financial assets

Other current non-financial assets are as follows:

The miscellaneous assets as of 31 December 2024 in the amount of EUR 3,212k mainly comprise creditors with debit balances of EUR 322k, receivables from insurance claims in the amount of EUR 14k, receivables from health insurance funds/social security funds of EUR 992k, loan receivables to group managers and other of EUR 750k (see Note 6) and outstanding receivables from the online shop in the amount of EUR 34k and prepayments of EUR 337k. The remaining miscellaneous other current non-financial assets are spread over various individual items. These are less than 10% of the total other current non-financial assets.

The miscellaneous assets as of 31 December 2023 in the amount of EUR 4,060k mainly comprise creditors with debit balances of EUR 583k, receivables from insurance claims in the amount of EUR 279k, receivables from health insurance funds/social security funds of EUR 849k, and outstanding receivables from the online shop in the amount of EUR 277k and prepayments of EUR 224k. Furthermore, receivables from government subsidies due to Covidrelated loss of sales in Austria in the amount of EUR 697k and other assets from the purchase of shares in Fliegendes Pferd MEP GmbH & Co KG EUR 250k. The remaining miscellaneous other current non-financial assets are spread over various individual items. These are less than 10% of the total other current non-financial assets.

4.7 Cash and cash equivalents

Cash and cash equivalents include short term bank deposits, cash in store cash tills and cash in transit from the stores to the bank accounts of the Group. Bank balances earn interest at floating rates based on daily bank deposit rates.

The Group held cash and cash equivalents in the amount of EUR 69,313k as of 31 December 2024 (31 December 2023: EUR 42,737k).

The account balances pledged as collateral amount to:

The pledge of bank balances related to the asset-based lending agreement becomes effective in the event that outstanding loan amounts of asset-based lending agreement fall due. Other pledged bank balances are capitalised in the event of default on the rental guarantee.

4.8 Equity

The table below breaks equity down into its components:

Authorised and subscribed capital and share premium

The Company was incorporated on 28 February 2019 with an authorised share capital of EUR 100,000k, divided into 100,000,000 shares with a nominal value of EUR 1 each.

As of 31 December 2024, the subscribed share capital of the Company was EUR 2,512.5k, comprising 12,500 ordinary shares and five classes of shares (classes A - E), each of 500,000 shares and each class having different dividend rights attaching to them in the event of a dividend distribution by the Company (31 December 2023: EUR 2,512.5k). Total number of shares consist of:

All shares have been fully paid up by the sole shareholder, TDR Nominees 2016 Limited (“TDR Nominees”), a private limited company existing under the laws of England and Wales, registered with Companies House under number 10299000 and having its registered office at 20 Bentinck Street, W1U 2EU London, UK.

As at 31 December 2024, the share premium account of the Company amounted to EUR 87,138k (31 December 2023: EUR 87,138k).

Reserve

Under Luxembourg law, 5% of the net profit of the year must be allocated to a legal reserve until such reserve equals 10% of the issued share capital. The reserve is not available for dividend distribution.

As at 31 December 2024, the legal reserve amounted to EUR 251k (31 December 2023: EUR 251k).

Accumulated other comprehensive income

The OCI includes the translation reserve, which is used to recognize exchange differences from the translation of the financial statements of foreign operations. The translation reserve recognized in equity at year-end amounted to EUR 55k (31 December 2023: EUR -62k). Furthermore, the OCI contains the remeasurement effect related to defined benefit plans according to IAS 19 in the amount of EUR 251k (31 December 2023: EUR 389k) as well as initial recording of deferred tax impact on remeasurement of defined benefit plans of EUR -62k (31 December 2023: EUR -96k). In addition, the OCI includes a tax reserve for 2024 amounting EUR 110k (31 December 2023: EUR 110k), which was allocated from share premium and other amounting to EUR 21k (31 December 2023: EUR 29k).

Non-controlling interests

The non-controlling interests in equity amounts to EUR 1,338k as of 31 December 2024 (31 December 2023: EUR -99k).

Total equity balance

Due to the result and the facts described above during the financial year, the total equity balance of the Group increased from EUR 2,033k to EUR 17,120k.

4.9 Leases

See description of the accounting method in note 2.3.

Leases as lessee

The Group has finance leases for real estate properties as well as for furniture, fixtures and office equipment. In 2024 and 2023, the Group has also sub-leased real estate properties. These leases have terms of renewal but no purchase options and escalation clauses. The present value of the future minimum lease payments from finance leases is presented below:

The finance lease agreement for the central warehouse of the Group was entered into in September 2013 for a term from August 2013 to July 2023. In 2014, it was extended to 30 November 2024 and in 2021 the agreement was extended again to 2029. For information regarding leases under IFRS 16 see comments in note 2.2 and as follows.

Right-of-use assets

Right of use associated with leased real estate properties which do not qualify as investment property are reported as property, plant and equipment.

Amounts recognised in the statement of comprehensive income

Amounts recognised in the cash flow statement

Leases as lessor

The Group is lessor to its investment properties comprising of leased real estate property. From the lessor point of view, the leases are classified as finance lease. The leases which comprise an operating lease are not material and thus not explained in more detail.

Finance leases

In 2024 and 2023, the Group sub-leased real estate property reported as right-of-use asset in property, plant and equipment.

The following table presents a maturity analysis of the leasing receivables and shows the undiscounted lease payments to be received after the reporting date:

4.10 Liabilities to shareholders and to affiliated undertakings

Intra-group Loan Agreements

On 29 May 2019 and with amendment dated 30 September 2019 the shareholder TDR Nominees, and Fliegendes Pferd Group entered into an intra-group loan agreement, regarding the provision of a loan in an aggregate principal amount of EUR 135,000k (the "TDR loan") by TDR Nominees to Fliegendes Pferd Group to finance the purchase of the NKD Group and to finance the operative business activities of the NKD Group, bearing interest at a rate of 3.9% per annum. The TDR loan inclusive accrued interest were due on 31 December 2025 according to the initial contractual situation.

On 26 March 2024, through a board resolution, the outstanding shareholder loan signed by the Group in May 2019 was assigned and transferred in the remaining amount of EUR 87,506k to the Company against the issuance of 87,506,313 interest free preferred equity certificates ("IFPECs") with a nominal value of EUR 1 each. The IFPECs are redeemable in March 2053; early redemption by the Company is possible. Accrued and unpaid interest in the amount of EUR 2,833k was left outstanding as a short-term shareholder loan. At the same time the outstanding loan signed by the Group with the affiliated undertaking was assigned and transferred in the amount of EUR 1,646k to the Group extinguishing the repayment obligations.

Bridge loan agreement

As of 30 September 2019, TDR Nominees and Fliegendes Pferd Group entered into an English law governed intra-group loan agreement pursuant to which TDR Nominees made available to Fliegendes Pferd Group an intra-group loan in the aggregate principal amount of EUR 30,000k. The nominal interest rate is 3.9% per annum. The bridge loan with TDR Nominees inclusive accrued interest as of financial year end was finally due on 31 March 2027. The termination date was extended to 31 December 2028 on 12 June 2025.

The unpaid interest accumulated up to 30 September 2024 is capitalized.

As at 31 December 2024, the remaining principal amount of the bridge loan payable by Fliegendes Pferd Group amounts to EUR 25,029k plus accrued interest EUR 246k (31 December 2023: EUR 24,088k plus accrued interest EUR 237k).

Intra-group facility agreement

On 21 September 2022, TDR Nominees and Fliegendes Pferd Group entered into an intragroup loan agreement pursuant to which TDR Nominees made available to Fliegendes Pferd Group an intra-group loan in the aggregate principal amount of EUR 30,000k. The amount could be drawn down until 31 January 2023. The nominal interest rate is 3.9% per annum. The loan with TDR Nominees inclusive accrued interest is due on 31 December 2025 according to the present contractual situation.

As at 31 December 2024, the remaining principal amount of the loan payable by Fliegendes Pferd Group amounts to EUR 7,557k plus accrued interest EUR 82k (31 December 2023: EUR 7,273k plus accrued interest EUR 79k) and was as of financial year end finally due on 30 September 2027. The termination date was extended to 31 December 2028 on 12 June 2025.

For further information regarding the maturity as well as disclosure see note 7.

Other short-term loans to shareholders

A short-term loan in the amount of EUR 26k to the shareholders is recognised as of 31 December 2024 (31 December 2023: EUR 26k), consisting of costs disbursed by TDR for analysis and research services for the NKD Group. For further information regarding disclosure see note 6.

4.11 Derivative financial instruments

The Group has acquired foreign currency options in the fiscal year 2024 as well as in 2023 and recorded a fair value of EUR 5,256k from it as of 31 December 2024 (31 December 2023: EUR -1,269k). In the current fiscal year, these are recognised in financial assets with an amount of EUR 5,256k (31 December 2023: financial assets EUR 115k and other provisions EUR -1,384k). See note 7 for further information on the foreign currency risk.

4.12 Provisions for pensions and similar obligations

In some countries, the Group is subject to statutory termination/post-employment benefits. The claims of the employee in question depend on duration of employment, number of years of service until termination of employment or retirement, salary trends and the general development of prices in these countries. The defined benefit plans are valued using the projected unit credit method. The Group expects contributions to the defined benefit plans in an amount of EUR 503k in 2025.

The following tables summarise the components of net benefit expense recognised in the statement of comprehensive income and the funded status and amounts recognised in the statement of financial position for the respective legal requirements:

The following expenses are recognised in personnel expenses for the respective reporting period:

The amounts recorded in other comprehensive income are as follows:

The changes of the defined benefit obligations are as follows:

The principal assumptions used in determining termination benefit obligations are shown below:

The principal assumptions of each country are as follows:

The calculation was done under the assumption that each entitled employee would leave the company at the earliest possible age of retirement.

4.13 Other Provisions

The development and breakdown of other provisions in the financial year is presented in the following table:

The development and breakdown of other provisions in the preceding financial year is presented in the following table:

The Group pays long term service awards (anniversary bonuses) to a certain group of employees. The respective obligations are calculated using the projected unit credit method. See note 2 on estimates and assumptions.

Provisions for restoration relate to the store leases and reflect the estimated costs of possible restoration work for future store closures. These restorations are based on the store lease agreements. Restoration costs are calculated using a retrograde approach for the stores. The average restoration costs are between EUR 1.0k and EUR 8.6k (31 December 2023: EUR 3.3k to EUR 6.0k).

The provision for termination costs relate to expected losses for rented space that is no longer in use but with valid rental agreements; the Group has vacated these stores due to the location’s lack of profitability. Additionally, included in this provision are the expected termination/penalty costs for stores, which are currently in negotiation between the lessor and NKD management. The determination is based on settlement agreements for closed stores with ongoing leasing agreements concluded after the reporting date on 31 December 2024 on the one hand and on best possible estimations of potential settlements or ongoing lease payments for the remaining lease term on the other hand.

4.14 Trade payables

Trade payables amounted to EUR 47,174k (31 December 2023: EUR 41,033k). All trade payables are due in up to one year and are non-interest bearing.

4.15 Other financial and non-financial liabilities

The other current financial liabilities amount to a total of EUR 1,541k (31 December 2023: EUR 2,316k). They include the fair value of currency futures in the amount of EUR Ok (31 December 2023: EUR 1,384k) and lorry hire purchases EUR 1,541k (31 December 2023: EUR 932).

The transition from changes in liabilities and equity to cash flows from financing activities according to IAS 7 breaks down as follows:

Other current non-financial liabilities are as follows:

On 31 December 2024, other liabilities of EUR 14,272k mainly comprise liabilities for repayment obligations for benefits from public authorities in the amount of EUR 7,000k. Furthermore, the item also includes liabilities from the return of goods in the amount of EUR 140k, liabilities for still outstanding rents, ancillary rental costs and increase of the rental index in the amount of EUR 1,510k as well as other tax liabilities of EUR 3,227k and outstanding supplier invoices of EUR 523k. The remaining miscellaneous other current non-financial liabilities are spread over various individual items.

On 31 December 2023, other liabilities of EUR 21,311k mainly comprise liabilities for repayment obligations for benefits from public authorities in the amount of EUR 12,000k. Furthermore, the item also includes liabilities from the return of goods in the amount of EUR 140k, liabilities for still outstanding rents, ancillary rental costs and increase of the rental index in the amount of EUR 1,050k, liabilities from the sale of shares in Fliegendes Pferd MEP GmbH & Co KG EUR 450k as well as other tax liabilities of EUR 5,243k. The remaining miscellaneous other current non-financial liabilities are spread over various individual items.

4.16 Interest-bearing loans and liabilities due to financial institutions

The following tables show a breakdown of the interest-bearing loans and liabilities due to financial institutions as of 31 December 2024 and 31 December 2023:

Credit facilities agreement

Asset-based lending agreement 2022

On 23 December 2022, the Group signed a credit facilities agreement of EUR 75,000k with a banking consortium under the management of the agent and security agent Callodine Commercial Finance, LLC, Boston, USA. As of the reporting day, EUR 63.8m were utilised (31 December 2023: EUR 63.8m). The credit facility as a whole, consisted of three loans at financial year end.

As security for the loan amount the Group pledged all inventories of the NKD Group GmbH as well as from the NKD Osterreich GmbH to the lenders. The calculation was carried out monthly on a consistent basis using “Borrowing Base Certificate” and therefore differs from the carrying amount in the balance sheet (see note 4.4). Therefore, formal credit agreements existed for the loan agreement with regard to the reporting obligations. The credit facility agreement included an early repayment option for the Group at any point during the loan term. Additionally, diverse bank accounts (see note 4.7) and trademark rights and domains were pledged (see note 4.1).

Within the framework of the loan a predefined minimum level of liquidity of EUR 7,500k had to be maintained.

The refinancing was signed on 12 June 2025 (see note 9).

Other liabilities due to financial institutions

Bank overdrafts are cancellable and repayable at short notice. Interest payments are made at short term interest rates.

5 Contingent liabilities and other financial obligations

Purchase commitments

As of the reporting date, the Group reports liabilities from the purchase of goods in the amount of EUR 131,033k (31 December 2023: EUR 101,921k) and store fittings in the amount of EUR 453k (31 December 2023: EUR 312k). The obligations are short term and due in less than one year.

Contingent liabilities from litigation

The Group is involved in various legal disputes which occur in the normal course of business. Some of these legal disputes relate to disputes with employees and landlords of stores. However, in the fiscal year 2024 as well as in 2023 no material litigation occurred.

Beyond the provisions recognised and the described potential risk from the contingent liability, the Group does not expect other legal disputes to have a material negative effect on the Group’s net assets, financial position and results of operations.

Bank guarantees for rent contract deposits

The Group has rented all store facilities from Group external parties. For some of these rent contracts the Company has provided own cash deposits as security payment for the open rent payables and additional obligations from the respective rent contracts. In the countries Germany, Austria and Italy however, for some of the rent contracts the Group has asked for bank guarantees for these rent deposits. The contingent liabilities related to these bank guarantees amount to EUR 787k as of 31 December 2024 (31 December 2023: EUR 878k). The level of uncertainty regarding the amount or timing of outflows is considered small.

6 Related party and persons disclosures

Entities with significant influence over the Company

TDR Nominees holds 100% of the share capital of Fliegendes Pferd Group S.à r.l., the Group's ultimate parent. TDR Nominees is a wholly owned subsidiary of TDR Capital and holds the investment in Fliegendes Pferd Group S.à r.l., on behalf of a group of UK investments funds managed by TDR Capital, the Company's ultimate controlling party. As TDR Capital is not required to prepare consolidated financial statements that include the Group, these consolidated financial statements represent the largest group of consolidated companies.

Transactions with related parties and persons in the fiscal year from 1 January to 31 December 2024 and from 1 January to 31 December 2023 are presented below. See comments on outstanding balances, for the conditions and collateral for the loans granted by TDR Nominees and MEP KG as of 31 December 2024 and 31 December 2023 in note 4.10.

During the current period no expenses are recognised for uncollectible or doubtful receivables relating to amounts owed by related parties.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties as well as the granting of shareholder loans are made at arm’s length. The shareholder loans as well as the outstanding balances at the short fiscal year-end are unsecured. There have been no guarantees provided or received for any related party liabilities. See the table above for receivables from related parties as of the balance sheet date.

Remuneration of Group management

During the reporting period the following persons have been members of the Group’s management: Jonathan Rosen (until 02 May, 2024), Alexander Schmokel, Christian Welles and Nils Bolender. In the previous year, Stefan Macheleidt (until 14 September 2023) and Dr Ulrich Hanfeld (until 31 December 2023) were members of the group’s management; Nils Bolender joined on 01 October, 2023. Other current or former persons of the individual companies do not belong to the management as defined by the Group.

The remuneration of the Group’s management for the current and the previous year’s reporting period was as follows:

Participation of Group management members

In 2019 and in the following years, executives of the Group have invested in Fliegendes Pferd MEP GmbH & Co. KG. The investment was evaluated in accordance with IFRS 2 and classified as a program based on the issuance of equity instruments. The cost of transactions based on the issuance of equity instruments is determined at the fair value of any benefit granted, if any, at the grant date using an appropriate valuation technique. The fair value of any benefit granted, determined by comparing the amount invested by the senior executives with the market value of the investment, is not positive in the present case. Therefore, no expenses on the basis of this co-investment program have to be recognized in the balance sheet.

Loans to related party members

In 2024 the Group granted loans to Group management members and TDR advisor. The loans have a total nominal amount on EUR 750k. The interest rate is 4% per annum. The loan together with accrued interest is due for repayment upon the occurrence of the earlier of (i) the date on which proceeds resulting from an Exit are distributed to the Borrower, (ii) the termination of this Loan Agreement and (iii) the tenth anniversary of this Loan Agreement.

7 Disclosures on financial instruments and on risk management

Other financial liabilities of the Group comprise loan agreements, finance lease liabilities, trade payables, other financial liabilities as well as shareholder loans. The Group has various financial assets such as trade receivables, security deposits for rental agreements, other receivables as well as cash and short-term deposits which arise directly from its operations.

The Group uses EURIBOR as the reference interest rate.

Default risk

The default risk is the risk of financial losses if a customer or contractual partner of a financial instrument does not meet its or their contractual liabilities. The carrying amounts of financial assets correspond to the maximum default risk.

For reasons of immateriality, no expected credit losses are recognised on the financial assets presented. The assessment is based on historical default risks and on the credit ratings of the business partners.

The Group held cash and cash equivalents in the amount of EUR 69,313k as of 31 December 2024 (31 December 2023: EUR 42,737k). The cash and cash equivalents are deposited with banks and financial institutions rated Aa2 - to A1+, based on the rating of Moody's Investors Service rating agency. No new allowance for impairment of cash and cash equivalents was recognised in the current financial year as no such default was identified in previous years.

The Group considers its cash and cash equivalents to be at very low to no risk of default based on the external ratings of banks and financial institutions.

As of 31 December 2024, the impairment is EUR 25k of outstanding receivables (31 December 2023: EUR 25k).

Interest rate risk

Interest rate risk describes the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Except for the variable interest rate agreed on 23 December 2022 for the Callodine Commercial Finance, LLC loan (see note 4.16), all interest-bearing receivables and liabilities of the Group are all subject to fixed interest rates as of the reporting date. The variable interest component of the loan is the 3M - EURIBOR (for details see note 4.16). Due to the fact, that the expected EURIBOR rate will be more than 1.5% by the end of the loan term in March 2026, a sensitivity calculation for interest rate fluctuations was carried out.

The sensitivity calculation has shown that the Group is exposed to an annual future risk of approximately EUR 646k for each one percentage point increase in the EURIBOR.

The hedging relationships are not affected by the uncertainty arising from the IBOR reform, as the Group does not use such reference interest rates. The Group expects that the used reference rate will not change as a result of the reference rate reform.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to USD currency risks mainly because it purchases its goods in Asia. Additionally, lesser currency risks arise from sales activities in other European countries outside the European Monetary Union (Czech Republic, Poland).

To control the currency risk the Group uses currency options and futures as well as simple combinations of futures and options to restrict the limit to buy US Dollar. Goal of the hedging measures is to transfer financial risks from changing exchange rates of the US dollar against the euro into reliable cash flows that can be planned. A risk-averse approach is taken when using these financial instruments. Future purchases of goods in US dollar (underlying transactions) are hedged, whereby a hedging ratio of between 80% and 90% with a time horizon of eight months is targeted. Not the individual transaction, but the purchase volume in the respective period under review is hedged using a rolling seasonal purchase plan (macro hedge). Corresponding with the risk-averse approach as hedging instrument risks and opportunities of changes in prices of the foreign currency options and futures are compensated on a large scale through an opposed price development of the relevant underlying transactions. The exclusive use of foreign currency options and futures for currency hedging also limits liquidity risks and risks from the fluctuation of cash flows of these instruments due to the development of the respective hedged foreign currency positions or cash flows. To minimize the credit risks in connection with the financial instruments used the currency hedging is only concluded with financial institutions with a high credit rating.

As of 31 December 2024 the Group has currency futures in an amount of USD 132,500k with an equivalent value of EUR 121,238k and an average exchange rate of EUR/USD 1.0929 (31. December 2023: foreign exchange transactions of USD 103,900k with an equivalent value of EUR 94,929k and an average exchange rate of EUR/USD 1.0945).

The market value resulting from these currency futures as of the reporting date 31 December 2024 amounted to EUR 5,256k (31 December 2023: EUR -1,269k) and is recorded under financial assets and in the previous year under other financial liabilities in the Group’s consolidated balance sheet. The Group has not applied hedge accounting for these currency options but has recognised the fair value changes of the derivatives immediately in profit and loss.

The following table shows the sensitivity of the Group’s profit or loss and equity (before deferred taxes) in the consolidated financial statements for the fiscal year 2024 as well as 2023. Possible changes in the US dollar exchange rate are simulated. All other variables remain unchanged.

The changes in profit/loss arise from a change in the fair value of derivative financial instruments not effectively used for hedging and from monetary liabilities (trade accounts payable) denominated in US dollars as well as bank balances denominated in US dollars. As no foreign currency options and futures were documented for hedge accounting as of the reporting date, the potential change in the USD rate has a 100% impact on the Group profit/loss before taxes.

At the end of 2024 in scenario A there is a negative impact on the profit/loss before taxes and on the consolidated equity, because the positive impact from trade accounts payable in USD in the amount of EUR +2,609k is compensated by the negative impact from the foreign currency options and futures in the amount of EUR -5,294k and the bank balances in the amount of EUR -47k. In scenario B there is a positive impact on the profit/loss and consolidated equity, because the negative impact from trade accounts payable balances in USD in the amount of EUR -3,188k is compensated by positive impact from the foreign currency options and futures in the amount of EUR +20,471k and the bank balances in the amount of EUR +57k.

At the end of 2023 in scenario A there is a negative impact on the profit/loss before taxes and on the consolidated equity, because the positive impact from trade accounts payable in USD in the amount of EUR +2,142k is compensated by the negative impact from the foreign currency options and futures in the amount of EUR -9,450k and the bank balances in the amount of EUR -428k. In scenario B there is a positive impact on the profit/loss and consolidated equity, because the negative impact from trade accounts payable balances in USD in the amount of EUR -2,618k is compensated by positive impact from the foreign currency options and futures in the amount of EUR 9,545k and the bank balances in the amount of EUR 523k.

Credit risk

Credit risk is the risk that a party to a financial instrument cannot meet its obligations, leading to financial losses for the other party. NKD is not subject to significant credit risks from customers as the goods are mainly paid for upon handover.

With regard to the other financial assets of the Group, the maximum credit risk in the event of default by a counterparty is the carrying amount of these instruments. The credit risk is limited in this case as these instruments are mainly cash and security deposits for the stores used by the Group. Credit risk from balances with banks and financial institutions is managed by the Group’s financial management in accordance with the Group’s policy.

Liquidity risks

Liquidity risks relate to the Company’s possible inability to meet its existing financial obligations, under both normal and tense conditions, at the time that they fall due. The Group continually monitors the risk of potential liquidity shortfalls using a liquidity planning tool. This tool takes into account monthly debits from possible bank loans as well as expected cash flows from operating activities and available financial capital, provided by shareholder loans that are already available or can still be drawn. The forecast period in each case is the current fiscal year. A short-term forecast (short-term cash flow) is also prepared weekly for a 13-week planning horizon. In line with the loan agreement with Callodine (for further information see note 4.16), there are financial covenants (additional contractual clauses/obligations or ancillary agreements) that must be complied with by the Group at all times since 23 December 2022. If the covenants are not complied with, the lender may demand additional collateral (cash or otherwise) to make good the breach of covenant or, as a final consequence, demand full early repayment of the loan.

The Group held cash and cash equivalents in the amount of EUR 69,313k as of 31 December 2024 (31 December 2023: EUR 42,737k).

The tables below summarize the maturities of the Group’s financial liabilities as of the reporting date and as of end of the reporting date of the preceding year. The disclosures are made on the basis of the contractual, non-discounted payments.

Capital management

The objectives of the capital management strategy are to safeguard business operations, increase the business value and to safeguard the liquidity and creditworthiness of the Group. The optimization of the capital structure and cash inflow and outflow from financing activities as well as effective risk management and the reduction of costs of capital are contributing factors.

The Group monitors capital using certain financial ratios such as the ratio of net financial liabilities to earnings before interest, taxes and depreciation and amortization (EBITDA).

The Group’s equity in the broader sense includes actual equity of EUR 17,120k (31 December 2023: EUR 2,033k) as well as liabilities due to shareholders in the amount of EUR 124,045k as of 31 December 2024 (31 December 2023: EUR 126,202k). The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions. By shareholders’ resolution of 26 March 2024 the shareholder Pegasus Group Holding GmbH transferred loan receivables in the amount of EUR 92,554k to the capital reserve of Pegasus International.

Disclosures on financial instruments

The Group uses the following hierarchy for determining and recognizing the fair value of financial instruments by measurement technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities

Level 2: Fair values that are determined on the basis of valuation techniques which use inputs that have a significant effect on the recorded fair value and are based on directly or indirectly observable market data

Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data

The Group classifies currency options, futures as well as simple combinations of both of them and derivative embedded in loans exclusively as financial instruments measured at fair value and belonging to Level 2.

The following tables show the allocation of the financial instruments to the individual classes and categories pursuant to IFRS 9 as of 31 December 2024 and 31 December 2023. The respective fair value of financial instruments as of the reporting dates is also presented. It is not necessary to disclose the fair value of lease liabilities for the current year.

31 December 2024

31 December 2023

The following tables show the net gains/losses for each category:

Net gains/losses for the reporting period 2024

Net gains/losses for the reporting period 2023

The interests from financial instruments are recognised in the financial result.

8 Audit and advisory fees

The Group has elected KPMG Audit S.à r.l. as auditor for the consolidated IFRS financial statements. The following amounts invoiced for services provided to the Group by KPMG Audit S.à r.l. and other member firms of the KPMG network were as follows:

9 Subsequent events

In June 2025, as part of the restructuring of NKD Group's external debt, the existing external debt was extended until June and September 2028 and the repayment date of the shareholder loans advanced to the Company were extended at the same time until December 2028.

Group management report for the fiscal year from 01 January to 31 December 2024 of the Fliegendes Pferd Group S.à r.l., Luxembourg

Content

1 Background of the Group

1.1 Corporate profile and business model

1.2 Research and Development

2 Economic report

2.1 Economic and industry-specific conditions

2.3 Financial and non-financial performance indicators

2.4 Compliance und ESG (not audited)

2.5 Financial review

3 Forecast, opportunities and risks

3.1 Forecast

3.2 Risks

3.3 Opportunities

3.4 Overall statement of the management regarding the risk and opportunities situation

4 Equal participation of women and men in leadership positions (not audited) 5 Subsequent events

1 Background of the Group

1.1 Corporate profile and business model

Fliegendes Pferd Group S.à r.l. (hereinafter named "Fliegendes Pferd Group", the "Group" or the "Company") is a limited liability company incorporated under the laws of Luxembourg on 28 February 2019 for an unlimited period domiciled in 20, rue Eugène Ruppert, L-2453 Luxembourg. The Company is entered in the Registre de Commerce et des Sociétés Luxembourg [Luxembourg commercial register] under no. B232853.

The company is the parent undertaking for the investment held in NKD Group¹ by a group of investment funds managed by TDR Capital, a European private equity investor.

In total, the Group's scope of consolidation includes the parent company, 15 subsidiaries (previous year 15) in Luxembourg and abroad. Further information about the individual companies can be found in the overview under section 2.1.

The NKD Group, headquartered in Bindlach, Germay, is the leading value retailer and local supplier amongst the textile discounters with its key markets in Central Europe. As of 31 December 2024, the Group has more than 2,108 stores (31 December 2023: 2,130 stores) mainly in secondary and tertiary cities as well as shopping centres primarily in Germany, Austria and Italy as well as smaller operations in Slovenia, Croatia, the Czech Republic and Poland. With more than 9,700 employees (31 December 2023: approx. 9,600), the NKD Group represents one of the largest competitors in the German textile discount sector. The NKD Group offers a balanced assortment of current fashion for the whole family and functional sportswear as well as home textiles, seasonal decorative articles and selected brand assortments. The products are mainly acquired in diverse countries in the Far East.

1.2 Research and Development

In 2024, the NKD Group did not have research costs. In 2024, the Company capitalised development costs of software projects in an amount of EUR 0.3m (previous year: EUR 0.0m).

¹ The term "NKD Group" is used when referring to the shareholding structure below the company Fliegendes Pferd Group S.à r.l.. The term "NKD" is used, when referring to the NKD brand and the retail business.

2 Economic report

Despite a still high inflation and the consumer restraint on the customer side, it was possible to achieve an increase in revenue against the market trend.

Key figures overview

Revenue in 2024 amounted to EUR 684.6m (2023: EUR 654.2m), creating a positive EBITDA in the amount of EUR 122.4m (2023: EUR 86.7m).

2.1 Economic and industry-specific conditions²

Following a prolonged stagnation, the EU economy resumed growth in the beginning of 2024. As projected in spring, this trend first continued at a subdued, yet steady pace for the rest of the year, amidst further abating inflationary pressures. The conditions for a mild acceleration of domestic demand appeared in place. The ongoing Ukraine/Russia conflict and the still existing conflict in the Middle East, however, are still dampening the growth outlook.

While online fashion retail more than stabilised, fashion retail in shops stagnated. Consumers were more hesitant to buy and distributed their budgets differently. Chinese online low-budget platforms are also likely to have increased their share of the online fashion market in 2024.

The Autumn Forecast of the European Commission has projected real GDP growth in 2024 at 0.9% in the EU and 0,8% in the euro area. For the EU, this is 0.1 pps. lower with respect to spring, while it is unchanged for the euro area. It is expected that growth in the EU will pick up to 1.5% in 2025, as consumption is shifting up a gear and investment is set to rebound from the contraction of 2024.

Growth in the euro area is set to follow similar dynamics. The disinflationary process that started towards end-2022 continued over the summer. Notwithstanding a slight pick-up in October, largely driven by energy prices, headline inflation in the euro area is set to more than halve in 2024, from 5.4% in 2023 to 2.4% and easing more gradually in 2025.

In October, the European Central Bank cut its policy rate for the third time since the beginning of its loosening cycle in May. At the cut-off date of the autumn forecast, markets priced the euro area deposit facility rate below 3% by the end of the year. By the end of 2025, the policy rate is expected to fall further to around 2% and to stabilise around that level for the rest of the forecast horizon.

Household disposable income kept expanding in the first half of the year, supported by expanding employment and continued recovery in real wages. By mid-year, the purchasing power of wages had recouped almost half of the loss caused by high inflation.

As inflation continues to ease, household real disposable income is set to grow further in 2025. With reduced incentives to save and improving credit conditions, households are projected to gradually lower their saving rate and consumption growth to accelerate throughout the forecast horizon, and therefore retail in the relevant markets for the Group could benefit.

The development of the markets most relevant to the NKD Group is as follows:

Germany - NKD primary market³ :

In 2024, the economic activity in Germany once more declined. High uncertainty has been weighing on consumption and investment, and the trade outlook has worsened as global demand for industrial goods, among other things, weakened. The overall economic situation, the general political situation after the collapse of the traffic light coalition and also worries about the development of the own income has probably put weight onto the people in Germany.

Amidst this low consumer sentiment, the saving rate increased. Despite an increase in real disposable income, the private consumption did not support economic growth. Important industry sectors produced less, export declined, and investment decreased strongly. Household consumption is estimated to have rebounded only slightly since the third quarter of 2024. Overall, real GDP is expected to contract by 0.2%. Following a decline of 0.1% in 2023, this is the second year in a row with negative growth.

² Autumn 2024 Economic Forecast - Austria, European Commission

³ Autumn 2024 Economic Forecast - Germany, European Commission, BIP: Bundesbank.de, Deutschlandprognose

Domestic demand is forecast to become again the main driver of economic growth in 2025 and 2026. As energy costs are expected to remain significantly above pre-pandemic levels, they are set to continue weighing on the cost-competitiveness of energy-intensive industries.

From January to September 2024, the labour market deteriorated slightly as economic output stagnated. Labour demand weakened, and the number of vacancies fell by 23% y-o-y to 1.3m in 2024-Q2. As employment growth flattened, the unemployment rate increased by 0.5 pps. yo-y to 3.5% by September 2024. As economic growth slightly increases and ageing continues to weigh on labour supply, the deterioration of the labour market is expected to be marginally contained and the unemployment rate for 2024 to be at 3.3%.

With an expected further easing of inflation to an average 2.4% for 2024 and 2.1% for 2025, real household income is set to continue to recover, and private consumption continues to increase, albeit at a slow pace.

Easing of monetary policy and the associated lower financing costs are projected to support a recovery in investment even beyond 2026 and also to offer opportunities for growth for the retail sector.

Economic forecast Europe

Austria - second most important market for the NKD Group⁴ :

2024 is projected to be the second consecutive year of recession in Austria. Declining investment, lower exports and weak private consumption were holding back economic activity. However, growth is set to resume in 2025.

Investment is expected to recover driven by exports to Austria’s main trading partners. In addition, private consumption is set to support the recovery as the inflationary shock subsides and consumer confidence is restored. The general government deficit is projected to surpass 3% of GDP in 2024 to 2026, while the public debt-to-GDP ratio is forecast to rise above 80% of GDP.

Headline inflation significantly declined from 7.7% in 2023 to1.8% in September 2024. This was mainly driven by the gradual pass-through of lower wholesale energy prices to consumers and the fading of inflationary pressures on industrial goods and food. Services inflation has been more persistent, reflecting high nominal wage growth in 2024 to compensate for the past inflationary shock. However, in 2025 and 2026, wage growth and services inflation are forecast to decrease. Headline inflation is projected to ease from 2.9% in 2024 to 2.1% in 2025 and 1.7% in 2026, strengthening private spending power.

Economic forecast Europe

⁴ Autumn 2024 Economic Forecast - Austria, European Commission

Italy - growth market of the NKD Group⁵ :

Real GDP is expected to grow by 0.7% in 2024, supported by investment and falling imports. Economic activity is set to expand by 1% and 1.2% in 2025 and 2026, respectively, as consumption picks up and RRP-related spending accelerates, in which Italy is entitled to extensive funds from an EU stimulus package.

The phase-out of sizeable housing tax credits and buoyant revenue are expected to push the government deficit significantly down in 2024, to 3.8% of GDP. The deficit is forecast to fall further in 2025 and 2026, to just below 3% of GDP. By contrast, the debt ratio is set to rise over the forecast horizon, reaching 139.3% of GDP in 2026 (from134.8% in 2023), mainly driven by the lagged impact of the housing renovation tax credits accrued in the deficit until 2023.

On the back of the continued fall of energy prices until October 2024, headline inflation for the year as a whole is expected to drop to 1.1%. The stabilisation in energy prices assumed for 2025 and 2026 motivates subdued projections for the other HICP components. Services where wages are still expected to exert upward are still an exception. Headline inflation is forecast at 1.9% in 2025 and 1.7% in 2026, forecasting a possible growth in private consumption.

Economic forecast Europe

Slovenia⁶ :

With export demand remaining rather weak and investment growth subdued especially for construction, GDP growth is set to moderate in Slovenia in 2024 to1.4%. However, not least due to a growth in private consumption, GDP is expected to pick up and to remain robust over 2025 and 2026.

According to the forecasts, labour market remains tight, the unemployment rate of around 3.6%, however, remains broadly stable. Limited availability of workers continued to be the dominant factor in the labour market. Against this background, wage growth is set to remain strong over the forecast horizon, also influenced by public sector wage increases expected to take effect as of January 2025.

The moderation in inflation has continued in 2024 and it is forecast to ease to 2.1% for the year as whole. Inflation is expected to accelerate in 2025 to projected 3.2%, as consumers are set to face higher electricity bills due to the reintroduction of charges that were temporarily suspended during the energy price crisis, and to grid fee increases.

⁵ Autumn 2024 Economic Forecast - Italy, European Commission
⁶ Autumn 2024 Economic Forecast - Slovenia, European Commission

Services inflation is projected to remain rather elevated particularly in 2025, driven by the fast growth of wages. However, in 2026, inflation is forecast to ease again to currently projected 2.1%.

Economic forecast Europe

Croatia⁷ :

Croatia’s GDP is projected to grow by 3.6% in 2024. Growth is expected to be mainly driven by private consumption, boosted by strong real wage and employment growth as well as sustained investment.

However, growth is forecast to decelerate to 3.3% in 2025 and 2.9% in 2026, as consumption growth moderates on the back of slower wage increases.

Headline inflation is set to decline from 8.4% in 2023 to 4.0% in 2024. A milder deceleration to 3.4% is forecast for 2025, mostly due to projected energy price increases. Inflation is projected to reach 2.0% in 2026, strengthening consumers’ purchasing power.

Economic forecast Europe

Czech Republic⁸ :

Czechia’s real GDP is expected to grow only 1.0% in 2024 as both domestic and external demand show only modest signs of recovery. However, economic growth is expected to accelerate to 2.4% in 2025 and 2.7% in 2026.

As inflation recedes, the growth in real wages should help household consumption re-emerge as the main driver of economic activity. However, the pace of growth is expected to remain restrained, reflecting consumers’ still cautionary behaviour.

⁷ Autumn 2024 Economic Forecast - Croatia, European Commission
⁸ Autumn 2024 Economic Forecast - Czechia, European Commission

Headline inflation is projected at 2.7% in 2024 and 2.4% in 2025, with services contributing the most.

Economic forecast Europe

Poland⁹ :

After a slow economic growth in 2023, the Polish economy rebounded sharply in 2024. In 2024, real GDP is expected to increase to 3.0%, slightly higher than what had been projected in the Spring Forecast.

Private consumption is set to be the main growth driver. Supported by rapidly rising wages, increased government spending on support to families, improved consumer sentiment, and receding inflationary pressures, retail will also participate strongly.

Economic forecast Europe

US Dollar/Euro exchange rate:

The NKD Group sources its goods to a large extent in South East Asian countries with US Dollar as an invoice currency (USD sourcing volume 2024: approx. USD 213m; 2023: approx. USD 190m). In 2024, the EUR/USD rate (daily reference rate of the ECB) decreased from 1.10 (31 Dec, 2023) to 1.04 (31 Dec, 2024). With 1.08, the daily average exchange rate of the reference rate remained on the same level in 2024 as in 2023 (1,08). Coming from a Euro/USD average of 1.09 for the first three quarters, the last quarter, which experienced a drop from 1.12 (30 Sep) to 1.04, once again had a strong impact on the overall annual average. To mitigate the influence of the Euro/USD exchange rate development and to secure the USD demand for the respective following eight months, the NKD Group mainly uses currency futures and sometimes currency options.

⁹ Autumn 2024 Economic Forecast - Poland, European Commission

2.2 Business development

Sales development

Revenue for the fiscal year 2024 stated in the consolidated statements amounted to EUR 684.6m in total, exceeding the sales revenue for the fiscal year 2023 (EUR 654.2m) by EUR 30.4m.

In 2024, the foreign subsidiaries of the NKD Group were able to record a growth in sales of EUR 15.1m compared to the fiscal year 2023.

In 2024, the stores of the NKD Group in the key market Germany recorded a growth in sales of approx. EUR 15.3m or 3.8% compared to the previous year.

Optimisation of the store portfolio:

The NKD Group further invested into the future, modernising the store portfolio by opening new shops. The overall number of stores for the NKD Group was 2,108 as of 31 December 2024 (31 December 2023: 2,130). Besides the key market Germany (1.297 stores), in which 61.2% of the sales revenue is generated, the NKD Group also has stores in Austria (327 stores), Italy (302 stores), Slovenia (69 stores), Croatia (62 stores), the Czech Republic (38 stores) and Poland (13 stores). The NKD Group closed 87 stores and opened 65 new stores in the reporting period from 01 January to 31 December 2024.

The NKD Group continues to focus on the expansion and optimisation of the on-site store portfolio in 2025. Therefore, the company plans to open additional stores throughout all countries in 2025 with a strong focus especially on Germany and Italy.

Online business:

Next to its on-site store network the NKD Group also runs an online store, which recorded an increase in orders by 7% in 2024. The Click & Reserve share increased by a total of 2% yearon-year.

2.3 Financial and non-financial performance indicators

The management performs a holistic analysis of financial and non-financial factors. It uses numerous instruments and indicators to measure business performance, refine its strategy and make investment decisions.

Financial performance indicators

Various reporting systems are in place. They are used to measure financial performance indicators. A distinction is made between group and company level as well as the level of the individual product ranges.

The management is monitoring the development of the operating business on a daily basis through various reports. Actual figures are compared with budget figures, deviations analysed, and countermeasures taken if necessary.

Key figures as EBITDA and revenue are used as most important key figures at group level and as most important performance indicators within the meaning of DRS 20 (German Accounting Standard No. 20). The key figure EBITDA comprises earnings before interest, income taxes and amortisation.

Special attention is paid to the observation of early indicators which can be used to predict future performance. Significant early indicators include the development of the US Dollar exchange rate as well as the key performance indicators (KPIs) as outlined in the key figures overview (section 2).

Non-financial performance indicators

One part of the non-financial performance indicators of the NKD Group are the HR KPIs like labour turnover, sickness absence rates, years of employment and employee recruitment programmes (employees recruit employees). These KPIs allow comprehensive insight into further training, apprenticeship, recruitment and succession planning and enable assessment of the HR strategy and development.

Employees and their continuous development through basic and further training are of key importance to the long-term success of the NKD Group. Not only do they contribute to strengthen the competitiveness, but also promote innovation, efficiency and a positive corporate culture. The NKD Group invests in its employees and offers jobs for trainees at the head office, in the stores and for Handelsfachwirte (commercial specialists), securing itself a clear advantage in an increasingly dynamic market environment.

As of the reporting date, the Group had about 9,700 employees (previous year about 9,600 employees). In addition to the intended increase in earnings as a result of cost and process optimisation, another focus is on further improving customer and employee satisfaction. Customer satisfaction is measured using KPIs such as conversion rate or customer surveys. In 2024, further training opportunities mainly focused on the promotion of young employees, qualification of our district managers and individual senior management trainings. The continuing shortage of skilled workers requires further investment in our employees. The training programs are target-group-specific designed and, as well as helping them to identify with the NKD Group, they also help to increase their loyalty to the company. Another central HR activity in 2024 was to intensify the expansion of the employer branding communication both internal and through all relevant social media channels, thus increasing the external perception and reputation as “employer of choice”.

2.4 Compliance und ESG (not audited)

As a company, we are aware of our social and societal responsibilities and see them as an integral part of our corporate policy. For years, compliance with social and environmental standards in our production countries has been subject to a Code of Conduct for the Group’s manufacturers and suppliers. This Code of Conduct is designed to ensure that all of our partners act in a fair, honest and responsible manner while conducting their business activities. The NKD Group’s Code of Conduct includes the following key points: no child labour, no forced labour, no punishment or harassment, no discrimination, freedom of association and collective bargaining, health and safety, fair wages, salaries and working hours as well as environmental protection.

As part of our ongoing development, we aim to meet our social and environmental obligations both within and outside the country. The CSR department is an eminent part of the NKD management structure, which monitors compliance with the Code of Conduct.

The Act on Corporate Due Diligence Obligations in Supply Chains became valid for the NKD Group as of 2023. Thanks to many years of work in the Partnership for Sustainable Textiles (including the public reporting obligation) as well as other memberships and initiatives such as Amfori, the Verband der Fertigwarenimporteure (German Importers,) and the Fur Free Retailer Program of Vier Pfoten, the NKD Group believes it is currently well positioned. The team of the global CSR & Compliance department will continue to analyse relevant processes and structures and initiate necessary adjustments.

In April 2024, the CSR software went into normal operation. The CSR software is designed to ensure that the requirements regarding documentation and transparency of the supply chain under the Act on Corporate Due Diligence Obligations in Supply Chains are met as well as an order specific surveillance of the supply chain. The implementation of a new CO₂ management software enables the calculation of the company’s greenhouse gas emissions across all three scopes and is a support for future reporting obligations as the Corporate Sustainability Reporting Directive (CSRD). Furthermore, the Group held CSR training courses both internal and along the global supply chain and participated in international CSR projects in 2024.

2.5 Financial review

2.5.1 Income statement

Revenue in the fiscal year 2024 amounted to EUR 684.6m (2023: EUR 654.2m) which corresponds with an increase of approx. 4.6%.

The core market Germany contributed EUR 418.7m (61.2%; 2023: EUR 403.4m, 61.7%) to the Group’s overall sales revenue. The remaining sales of EUR 265.9m (38.8%; 2023: EUR 250.8m, 38.3%) originated from Austria, Italy, Slovenia, Croatia, the Czech Republic and Poland.

Material costs for the fiscal year 2024 was EUR 254.7m (2023: 263.0m). As a result, the gross earnings for the fiscal year 2024 amounted to EUR 429.8m (2023: EUR 391.2m) which corresponds with a gross margin of 62.8% (previous year: 59.8%). The positive development of the gross margin was partly achieved by reducing the markdown rate.

Personnel expenses amounted to EUR 214.3m (2023: EUR 203.0m), the ratio of personal expenses in % of sales was 31.3% (previous year: 31.0%). The increase in the ratio of personal expenses compared to the previous year is due to the higher statutory minimum wage, mainly in Germany, as well as the increase of the collective agreement in Austria. New openings of stores and the accompanying increase in employees also contributed to the increase in personnel expenses.

Other operating expenses amounted to EUR 102.3m (2023: EUR 111,4m) and included among others advertising costs of EUR 14.0m (2023: EUR 12.3m), incidental rent and energy costs EUR 24.5m (2023: EUR 23.3m), shipping costs EUR 6.8m (2023: EUR 5.6m ) as well as legal and consulting fees of EUR 2.7m (2023: EUR 3.8m). Additionally, exchange rate effects in the amount of EUR 9.3m (2023: EUR 8.7m) and expenses for external staff in the amount of EUR 3.5m (2023: EUR 3.6m) are recognised in other operating expenses. Included in the other operating expenses is an amount of EUR 12.0m which was recognised in the previous fiscal year as a risk provision for the repayment of the governmental interim aid received in 2021.

During the current fiscal year impairment losses for loss-making shop locations in the amount of EUR 1.6m (2023: EUR 1.3m) were recognised.

For the fiscal year 2024, the Group’s consolidated financial statements report a positive result before income tax of EUR 19.6m and a Group result of EUR 13.6m (2023: negative result before income tax of -23.3m and a Group result of EUR -28.4m). EBITDA for the fiscal year was EUR 122.4m (2023: EUR 86.7m).

2.5.2 Statement of the financial position and statement of cash flow

The balance sheet total amounts to EUR 797.1m as of 31 December 2024 (31 December 2023: EUR 777,2m).

Non-current assets amount to EUR 576.6m as of 31 December 2024 (31 December 2023: EUR 588,2m), including next to property, plant and equipment (EUR 472.3m; 31 December 2023: EUR 485.1m) mainly goodwill (EUR 69.5m; 31 December 2023: EUR 69.5m) and other intangible assets (EUR 24.8m; 31 December 2023: EUR 25.0m). Property, plant and equipment contains right-of-use assets in the amount of 426.4m (31 December 2023: EUR 436.2m) in connection with leasing objects which do not fulfil the definition of investment property. These are included in the item buildings and stores as well as in other equipment.

Besides inventories of EUR 139.0m (31 December 2023: EUR 127.6m) mainly cash in the amount of EUR 69.3m (31 December 2023: EUR 42.7m) were reported in the current assets as of 31 December 2024. As security for an asset-based lending agreement signed in 2022 the Group pledged all inventories of the NKD Group GmbH and the NKD Osterreich GmbH to the lender.

The lease liabilities amount to EUR 435.2m as of 31 December 2024 (31 December 2023: EUR 440.9m) and include a long-term portion in the amount of EUR 362.9m (31 December 2023: EUR 370.5m) which is recognised in non-current liabilities in the consolidated balance sheet. The remaining short-term portion of the liabilities amounts to EUR 72.3m (31 December 2023: EUR 70.3m).

Reported in the current liabilities next to lease liabilities as of 31 December 2024 are mainly trade payables of EUR 47.2m (31 December 2023: EUR 46.7m) and other liabilities of EUR 70.1m (31 December 2023: 69.9m).

On 29 May 2019, and as amended on 30 September 2019, the shareholder, TDR Nominees, and Fliegendes Pferd Group entered into an intra-group loan agreement, regarding the provision of a loan in an aggregate principal amount of EUR 135.0m (the "TDR loan") by TDR Nominees to Fliegendes Pferd Group to finance the purchase of the NKD Group and to finance the operative business activities of the NKD Group, bearing interest at a rate of 3.9% per annum. The TDR loan inclusive accrued interest was due on 31 December 2025 according to the initial contractual situation and was subsequently extended as described in paragraph 5 of this report.

On 26 March 2024, the outstanding shareholder loan signed by the Group in May 2019 was assigned and transferred in the remaining amount of EUR 87.5m to the Company against the issuance of 87,506,313 interest free preferred equity certificates (“IFPECs”) with a nominal value of EUR 1 each. The IFPECs are redeemable in March 2053; early redemption by the Company is possible. Accrued and unpaid interest in the amount of EUR 2.8m was left outstanding. At the same time the outstanding loan signed by the Group with the affiliated undertaking was assigned and transferred in the amount of EUR 1.6m to the Group extinguishing the repayment obligations.

On 21 September 2022, the Company’s shareholder provided an additional loan facility in the amount of EUR 30.0m in total. The amount could be utilised up to 31 January 2023. By 31 January 2023 EUR 7.0m were utilised. The loan including the accrued interest is due 31 December 2027 according to the present contractual situation and was extended as described in paragraph 5 of the report. The nominal interest rate is 3.9%. The remaining amount of the loan repayable by the Company as of 31 December 2024 amounts to EUR 7.6m plus accrued interest in the amount of EUR 0.1m. (31 December 2023: EUR 7.3m plus EUR 0.1m). On 30 September 2024 a total of EUR 0.3m in accrued interest was added to the loan.

According to subordination agreements dated April 8, 2020, liabilities due to shareholders were subordinated. The liabilities subordinate all present and future claims of the other creditors of the NKD Group, including the creditors ranking under par.39, section 1, no. 1 to 5 InsO. There is equal rank with creditors who also subordinated. According to the changes in the development of the loans stated above EUR 32.9m are still subordinated as of 31 December 2024 (31 December 2023: EUR 121.9m).

The Group signed three external loan agreements in the amount of EUR 75.0m in total at the end of 2022 with a banking consortium under the management of the agent and security agent Callodine Commercial Finance, LLC, Boston, USA. As of the reporting day, EUR 63.8m were utilised (2023: EUR 63.8m). As part of the financial covenants a minimum liquidity of EUR 7.5m had to be maintained at all times for the Asset-based lending agreement.

Equity attributable to owners of the company amounts to EUR 15.8m as of the reporting date (31 December 2023: EUR 2.1m). Taking the IFPEC's EUR 87.5m (31 December 2023: EUR 0.0m), the liabilities due to subordinated shareholders EUR 32.9m (31 December 2023: EUR 121.9m), the short-term shareholder loans EUR 3.6m (31 December 2023: EUR 0.0m) and the liabilities to affiliated undertakings EUR 0.1m (31 December 2023: EUR 1.6m) into consideration, the adjusted equity as of 31 December 2024 amounts to EUR 139.9m (31 December 2023: EUR 125.7m). The subscribed capital equals the share capital of the Group parent company and amounted to 2,512,500 shares with a nominal value of EUR 1 each as of 31 December 2024, in total EUR 2.5m, fully paid as of the reporting date (31 December 2023: EUR 2.5m).

The NKD Group has further credit facilities available amounting to EUR 3.0m and EUR 1.2m for securities (31 December 2023: EUR 4.2m and EUR 1.5m). As of the reporting date the credit lines had not been drawn. Regarding contingent liabilities and other financial obligations not included in the balance sheet we refer to note 5 in the notes to the consolidated financial statements. During the fiscal year from 01 January to 31 December 2024 there was no material change in the contingent liabilities and other financial obligations.

Cash flow:

In the fiscal year 2024, a positive cash flow from the Group’s operating activities originated from the operating business. The improvement was mainly due to the positive effect of the Net Working Capital.

The cash flow from investing activities mainly contains payments for the acquisition of property, plant and equipment and intangible fixed assets in the amount of EUR 9.9m (2023: EUR 18.7m).

The cash flow from financing activities contains next to repayments and interest from lease liabilities (EUR 87.0m; 2023: EUR 84.3m) interest payments of the existing credit facilities (EUR 7.9m, 2023: EUR 7.3m).

The Group was able to meet its payment obligations promptly at all times during the entire business year 2024 and thus, the Group’s economic situation can be described as stable.

2.5.3 Overall evaluation of the economic position

The business development during the fiscal year is to be assessed against the background of the effects of the macroeconomic and geopolitical tensions. While the ongoing Ukraine/Russia and Middle East conflicts still have unpredictable effects on the consumer behaviour, especially in Germany further negative factors have appeared. Despite increasing real wages, weak export, the threat of punitive tariffs, a rise in group insolvencies and associated concerns about employment have an impact on private consumption and therefore the fashion retail.

Due to the consequences of the reluctant consumer behaviour in combination with the slight decrease of the store portfolio, revenue of the fiscal year 2024 of EUR 685m was slightly below the projected amount of EUR 700m.

Due to the implemented countermeasures to limit the negative impact of the global risks on the operating annual results, the EBITDA of EUR 122.4m was only marginally higher than the forecast of EUR 110m by 11.3%.

Against this background and especially due to the development of the operating performance the business development in the fiscal year 2024 was satisfactory according to the Board of Managers.

3 Forecast, opportunities and risks

Due to still ongoing macroeconomic and geopolitical tensions like the Russia/Ukraine conflict and the situation in the Middle East, factors for the global economy manifested which burden further evaluations with uncertainty. Debates about punitive tariffs on diverse product categories and continuing tensions between China, as one of our main supplier countries, and Taiwan may have an impact on international trade relations and thus are highly likely to also have further negative effects on the business activity of the NKD Group which are not jet completely foreseeable, if the conflict further escalates.

Due to the conflict in the Middle East, blockage attempts by rebels in the Red Sea continue and affect the transport of goods. This already resulted in risk premiums on transport costs for shipping containers from Asia in 2024, more than doubling the freight rates compared to 2023, partly due to the detours around South Africa.

Therefore, reliable statements regarding the future development cannot be made and mainly depend on the duration of the existing conflicts which have unpredictable effects on the European and global security situation and global economy as well as the purchase power and the consumer behaviour of the customers.

As a European clothing company focusing on the textile discount sector, we are affected by different developments. This results in opportunities and risks for our Group. We aim to recognize these opportunities early and to take swift action to counteract emerging risks decisively. Thereby, we define chances and risks as potential deviations from the projected business development, which we described in our comprehensive current business plan. This business plan is the basis for our operative actions. We aim to prevent or mitigate negative effects which might emerge from risks with appropriate mitigation strategies to sustainably enhance the Company value of our Group. In doing so, we rely on an opportunities and risk management system which enables us to handle possible opportunities and existing risks in our daily activities in a responsible manner. The opportunity management is not part of the risk management system.

Like the opportunity and risks report, the prognosis report includes future-oriented statements and is based on assumptions, estimations and expected developments of single processes. The forward-looking statements are based on the current expectations and were made under certain assumptions. Thus, they hold a number of risks and uncertainties and could easily change in the further course. A variety of factors, many of which are beyond our control, could cause actual results and events - both positive and negative - to differ from those anticipated here. The following factors are to be highlighted: changes in the general economic situation, implementation of competitive business fields by other companies, lack of customer acceptance, currency risks, further increasing consumer prices as well as the effects of the Ukraine-/Russia conflict and the Middle East conflict.

3.1 Forecast

In the light of the reluctant consumer behaviour, especially in the customer groups relevant to the NKD Group, and the effects of the ongoing macroeconomic and geopolitical tensions, the entire retail sector still has been faced with extensive challenges. The political turn in the United States of America and the threat of punitive tariffs may have extensive effects for the economic development in Europe. At this stage, the NKD Group cannot yet foresee the effects thereof completely.

The transport of goods was affected by the attacks on trading vessels on the for us important Red Sea transport route. This resulted in risk premiums in transport costs, and longer transportation times meant that replacement times for the goods had to be taken into account when placing the order, so the Group was still able to supply its stores with new goods on a regular basis. Although the forecast for 2025 suggests slightly lower freight rates, the transit times of the trading vessels will remain very long due to the detour around South Africa.

Despite these underlying conditions the NKD Group was able to slightly increase sales by EUR 0.8m or 1% in the first two months of the fiscal year 2025 compared to the previous year 2024.

For reasons of prudence, the Group has still established comprehensive measures to secure the free cash flow and to stabilise the Group results for the fiscal year 2025. Part of this is a proactive merchandise management to reduce seasonal inventory and act flexible regarding further expansion measures and investments. Based on information currently available, the further development of the consumer prices and the associated loss of spending power as well as the development of the Ukraine-/ Russia conflict and the Middle East conflict are uncertain and make it harder to forecast the business development in 2025. Additionally, we are proactively working on the future-oriented financing of the Group.

The NKD Group expects that the challenges in the market and in the geopolitical environment will continue. By means of a targeted growth strategy with store expansion as well as optimisation of and a clear direction in the product portfolio, we expect sales growth and sales revenue to be marginally more than EUR 720m.

The strengthening of profitability of the NKD Group is burdened by increasing prices in the various cost items. The NKD Group counters this by optimisation of the cost structure and its purchase and price strategy. The EBITDA is estimated to be slightly above EUR 130m.

Based on the current forecast, the NKD management expects to meet all payment obligations for the next 12 months at all times. All investments and repayments of loans and interests are expected to be secured by cash flows from the ongoing business activity. In February 2025, the Group started the process of refinancing the existing loans. The refinancing was signed on 12 June 2025 with a duration until June and September 2028 as described in paragraph 5 of this report.

As of 30 June 2025, the available liquidity in the Group amounted to EUR 59.5m.

It cannot be ruled out that the development of the NKD Group will be impaired if the consumer prices and the purchase power of the customers will worsen or the macroeconomic and geopolitical tensions will have negative effects on the NKD Group during the course of the year.

3.2 Risks

The risk management aims to protect against existing and future risks. Our risk management is based on a systematic process of risk detection and estimation within the entire Company. Controlling risks protects the net assets of the Company, its financial and earnings situation and it enables the management to recognise unfavourable developments at an early stage and implement necessary measures in a targeted manner. The risk management system of the Company is an integral part of corporate governance. It comprises all significant planning, control and reporting processes of the Group.

The main risks for the NKD Group are related to market developments on the selling side and the increased prices on the purchasing side (purchasing price changes due to currency rate fluctuations, development of commodity prices and macro-economic and political risks in sourcing countries). A significant risk thereby is the liquidity risk that the NKD Group is not able to meet its payment obligations in time due to the current risks.

To identify potential risks in connection with our business activities as early as possible and to take appropriate action, we consistently use planning and reporting systems as well as internal analyses, which represent an essential part of our business processes and have a strong influence on our business decisions. The risk management system basically depends on the financial resources and the operative planning. It contains several components which are coordinated with each other and are increasingly methodically embedded in the group-wide structural and process organization. The risk management system is continuously adjusted to changing conditions.

In the following, we describe the relevant risks that could have an essential adverse effect on our business, asset, financial and earnings situation and provide an assessment of the risk situation. The order in which the risks are listed does not correspond to their value.

3.2. 1 General and operational risks

Companies of the textile and clothing industry depend on the business with their end customers. Therefore, market changes or changes in consumer spending can have impacts for retailers.

The industry is exposed to strong competition, which can have an essential effect on the profit and growth opportunities. The sale of the products is subject to seasonal fluctuations and can be negatively influenced by adverse weather conditions.

3.2.2 Market risks

Exchange rate fluctuations can increase the procurement costs

The NKD Group purchases about 90% of its merchandise in Asia, which is paid for in foreign currency (so far, only US dollar). The price of cotton in particular, which is of critical importance in the textile and clothing industry, is largely traded in US dollar. If the external value of the euro decreases in relation to the US dollar, the prices for raw materials (e.g. cotton) and merchandise will rise. The NKD Group could incur losses if it is unable to offset the exchange rate-based increase in costs on the procurement and production side by a corresponding increase in prices on the sales side. Like in the previous year, the currency risk is limited due to hedging the total of procurement volume by derivative financial instruments. Most recently, the NKD Group used forward transactions to hedge future currency changes. The NKD Group is not hedging individual purchases, but the expected USD cash outflow from goods invoices per month with the derivative financial instruments.

The NKD Group continues to counter the risk from exchange rate fluctuations by using futures and occasional currency options. It remains possible, however, that exchange rate fluctuations will have a mid and long-term effect of the cost of sales. There is limited risk for the planning horizon, which extends over eight months, as about 87% of the planned and about 94% of the transacted purchases based on USD are already secured by hedging contracts.

Increase in procurement costs of the NKD Group (without currency risks)

The NKD Group's procurement costs are partly determined by the costs of raw materials, which are reflected in the producer's prices, particularly cotton and yarn. Although cotton only constitutes one portion of the overall procurement costs, it cannot be ruled out that a negative price development could also affect the NKD Group's gross profit margin (if the increased costs cannot be passed on to the end customer). There are further price risks of higher wage and additional costs, energy costs, higher shipping costs, especially container costs, as well as other costs in the procurement countries. It is possible that, in the coming years, the NKD Group will be unable to fully compensate for the relative cost increases that arise as a result of price inflation by increasing sales prices. This is because NKD Group operates in a competitive market in which price increases for comparable products cannot always be introduced in the short term without negatively affecting sales. In the medium and long-term, price increases can more easily be passed on to customers as the effects mentioned involve all market participants.

Political, economic and environmental risks in countries in which the NKD Group operates

Almost all of the NKD Group’s merchandise is produced outside Germany, primarily in Asia Therefore, risks arising at the production sites but also risks resulting from the Ukraine/Russia or the Middle East conflict that spread to other geographical markets might adversely affect the business development of the Group.

The political, social, economic, and/or legal circumstances in the production locations, most notably in Asia, could thus change to the detriment of the NKD Group and other market competitors. This can relate to trade restrictions, currency control provisions, changes in customs regulations or an increase in customs duties, which have a negative impact on business operations. Furthermore, political unrest or upheaval in the production countries could lead to considerable negative consequences for the Group’s business activities.

Similarly, unfavourable changes relating to other important procurement and production requirements, such as economic stability, infrastructure, availability, and above all the costs for qualified workers in these countries, could in turn negatively affect the NKD Group. The possibility of future industrial action at the overseas production sites, which could lead to delays and cancellations of deliveries must also be taken into account.

Furthermore, environmental risks such as natural disasters could lead to supply bottlenecks or failure to deliver. The NKD Group’s significant production countries are located in regions with a high incidence of natural disasters which could have a corresponding impact.

Decline in demand and sales volume due to general economic developments

The NKD Group’s business performance is essentially shaped by the demand for its products in the retail market. This is in turn dependent on, among other factors, its customers’ levels of disposable income. A general weakening in the economic situation could lead to the current customer Group having a comparatively low disposable income and thus affect the revenue and earnings situation.

There is still a risk, that the predicted economic outlooks, especially due to the political turn in the United States of America in combination with the threat of punitive tariffs and the Ukraine- /Russia conflict as well as the Middle East conflict will again deteriorate further in the overall macro-economic situation in Europe, and especially in the Group's key markets. On the other hand, an economic slowdown could give rise to an increase in the size of the NKD Group's customer group if it causes consumers who currently shop in a higher price segment to switch to NKD's price segment.

3.2.3 Company risks

Liquidity risks

Liquidity risks relate to the Company’s possible inability to meet its existing financial obligations regarding timing, volume and currency structure. The Group’s treasury department uses an efficient cash management system to manage liquidity risk.

Considering the cash and cash equivalent balances of approximately EUR 69.3m (EUR 42.4m as of 31 December 2023) the management believes that the repayment of the facilities will be met as necessary, and all financial obligations for the next 12 months will be met in full. In February, the Group started the process of refinancing the existing loans which was signed on 12 June 2025.

Interest rate risks

Interest rate risks relate to the fact that liabilities with variable interest rates can lead to additional interest expenses if interest rates increase. The NKD Group is monitoring the interest development on the market.

Loss of customer buy-in to the NKD Group’s merchandise

The NKD Group’s business development is largely dependent on whether its merchandise caters to customers’ fashion tastes and therefore appeals to customers. However, customers’ tastes in fashion are subject to constant change, which means that collections have to be continually updated to reflect current trends. There is a certain risk that the NKD Group will not be able to adequately identify trends early enough and to adapt the collections to these trends. With a correspondingly low customer acceptance the goods produced can only be sold at reduced prices. Therefore, the NKD Group has taken steps to identify trends as soon as possible to include them in the extensive collection planning process.

Negative impact of sub-standard merchandise

The NKD Group does not produce the merchandise it sells, but has merchandise manufactured by third parties. Although the NKD Group has introduced extensive measures to review the quality standards set, it is possible, in exceptionally rare cases that faulty goods are sold to the NKD Group’s customers. This could result in customers being able to exercise their warranty rights and in damage to the NKD Group’s reputation. In addition, following tightened rules under the EU Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), the use of an unauthorized chemical could lead to criminal sanctions. The NKD Group pays particular attention to this topic in its internal quality controls and quality management. This is to prevent defective products or products that endanger patients' health from being placed on the market. Furthermore, this risk is countered by evaluating existing suppliers and constantly identifying and evaluating new suppliers.

Loss of reputation following non-compliance with social standards

The merchandise produced by third parties on behalf of the NKD Group is primarily manufactured in low-wage countries. The Group pays particular attention to ensure that producers meet social and environmental minimum standards, especially when it comes to human rights and environmental relevant aspects. In addition, the Group ensures that suppliers are contractually obliged to comply with these standards. Although the NKD Group considers the system it set up and operates to check and ensure compliance with the agreed social and environmental standards to be thorough and effective, non-compliance with such standards cannot be ruled out. Negative publicity could damage the NKD Group’s reputation. This risk is countered by constantly auditing existing and new suppliers.

Disruption and/or failure of central IT facilities could negatively impact the NKD Group’s business operations

Maintenance of all essential business processes as well as all internal processes of the group companies as logistic and store processing depends on a flawless and continuous IT operation. Disruption and/or failures of necessary IT systems cannot be ruled out. This may occur due to external factors such as computer viruses, fire damage, lightning, power cuts or other such events. Internal factors such as human mistakes or misconfiguration also can lead to this kind of events. A disruption and/or failure of this kind of IT systems could compromise the business operations of the NKD Group, giving rise to problems such as delays in the supply chain.

In 2024, the Group took measures to minimise the probability of occurrence and the effects caused by disruption and/or failure of central IT systems. To prevent physical events, a new cluster for virtualisation was purchased and put into operation to ensure high availability and system redundancy and minimise failures due to physical damage. This enabled the Group to virtualise existing server and minimise the risk of failures. Activities are not only taking place in the internal data processing centre but also in the store checkout environment to increase availability. The Group started to modernise the stores’ network connection and provide them with a redundant solution. Additionally, operative monitoring was gradually extended to recognise disruption and/or failures faster or even avoid them.

Despite all measures, disruption and/or failures of central IT systems can occur. For this reason, the Group took precautions to handle the situation. A new data backup concept provides that after a system failure, systems can be restored quickly and with as little data loss as possible. Furthermore, emergency processes in all crucial business areas were developed to maintain the business operation to the greatest possible extent in case of major failures. To validate these precautions and to train for emergency situations, Disaster Recovery Tests are carried out in which an emergency is simulated using a fictitious scenario. Based on the test results all measures and processes are further optimised as part of a constant optimisation process.

Personnel risks

Our employees are the backbone of our company. They play a central role in achieving strategic goals. Their expertise, motivation and ability to innovate are critical factors for the competitiveness and sustainable success of the NKD Group. High fluctuation, specialists and managers leaving to work for competing companies and the associated loss of know-how can lead to corresponding personnel risks. We counter this risk with our strategic personnel and succession planning and individual personnel development programs. With long-term oriented succession planning and a specific transfer of know-how, we minimise the risk of short-term personnel changes and create new career opportunities. In summary, we note that personnel risks could have a manageable negative impact on the business, asset and earnings situation in the future. From today's perspective, we consider the probability of occurrence to be unlikely.

3.2.4 Risk reporting relating to the use of financial instruments

To control the currency risk the NKD Group mainly uses futures and as appropriate currency options as well as simple combinations of futures and options to restrict the limit to buy US Dollar. Goal of the hedging measures is to transfer financial risks from changing exchange rates of the US dollar against the euro into reliable cash flows that can be planned.

A risk-averse approach is taken when using these financial instruments. Future purchases of goods in US dollar (underlying transactions) are hedged, whereby a hedging ratio of between 80% and 90% with a time horizon of eight months is targeted. Not the individual transaction, but the purchase volume in the respective period under review is hedged using a rolling seasonal purchase plan (macro hedge).

The exclusive use of foreign currency options and futures for currency hedging also limits liquidity risks and risks from the fluctuation of cash flows of these instruments due to the development of the respective hedged foreign currency positions or cash flows.

3.3 Opportunities

Despite the continuously changing market and competitive situation caused by macroeconomic and geopolitical factors and a strong competition, the NKD Group does outperform the market on a regular basis especially in its core market and gains market shares. Based on this development as well as the steadily optimised store portfolio of the company group, we see chances for a positive business development if the macroeconomic factors continue to normalise. We also expect further potential from the ongoing growth of the discount market segment, which is further expanding its share in the overall clothing market. Underlying consumer and macroeconomic trends support the sustainability of this segment's positive development.

The store portfolio is optimised on an ongoing basis. We also see further expansion opportunities with additional store openings. White spot analyses of potential locations for new store openings show additional potential for the expansion of our store portfolio in our core markets.

Besides the expansion of our store network, we see potential to increase the share of the NKD online business. We aim to utilise the strengths of both the on-site and the online business and offer customers a smooth shopping experience by combining the advantages of both channels. We will also use modern technologies such as Al online, for example.

The in-house buying processes, the cross functional interaction as well as the cooperation with strategic partners, are continuously improved. This successful execution in the buying strategy has led and will lead to further efficiency improvements, faster reduction of market and fixed costs as well as margin improvements.

Investments in our IT landscape and infrastructure are an important factor to further improve the efficiency of the Company and realize new opportunities by digitisation. We steadily invest in the replacement of legacy systems and the further optimisation of our system landscape.

3.4 Overall statement of the management regarding the risk and opportunities situation

The assessment of the overall risk and opportunities situation of the Group is the result of a consolidated consideration of the single risks described above. The management is currently not aware of significant risks, which either on their own or in combination with other risks, could jeopardize the continued existence of the Group as it hedged itself to a sufficiently high degree. However, we cannot exclude the possibility that factors that we are currently unaware of or that we currently consider to be immaterial or unrealistic, especially an inflation rate that remains on a high level with negative effects on the purchase power of our customers as well as possible indirect effects of the ongoing macro-economic and geopolitical tensions, may influence the existence of the Group and its consolidated companies.

4 Equal participation of women and men in leadership positions (not audited)

Under the act for equal participation of women and men in leadership positions in the private sector and in the civil service adopted on 24 April 2015 the management of the NKD Group identified the current proportion of women in the first and second level of management at Pegasus International GmbH, NKD Group GmbH, and at NKD Deutschland GmbH and determined minimum targets until 31 August 2025 for the proportion of women in the first management level and for the second management level at 0 % each. Currently, the proportion of women in leadership positions in both of the hierarchy levels below the management in the companies of the NKD Group totals about 42% (previous year: 38%). In view of the small number of members of the management, the minimum target figure for the management was set at 0%, as there is currently no woman in the management and, in the event of new appointments, professional and personal suitability, but not gender, should be decisive. As the Company currently does not have a supervisory board, there was no need to set a target figure for the proportion of women in the supervisory board.

5 Subsequent events

In June 2025, as part of the restructuring of NKD Group's external debt, the existing external debt was extended until June and September 2028 and the repayment date of the shareholder loans advanced to the Company were extended at the same time until December 2028.