VI. Further Disclosures on Financial Instruments in Accordance with IFRS

Information on financial instruments by category

The following table compares the carrying amounts and fair value of the financial instruments for the classes of financial instruments in accordance with IFRS 7:

According to IFRS 13, the material parameters on which the measurement is based must be disclosed for all financial instruments whose fair value is presented or that are accounted for at fair value. The assessment methods are divided into the following three levels:

• Level 1: Measurement at prices (not adjusted) quoted on active markets for identical assets and liabilities

• Level 2: Measurement of the asset or liability takes place either directly or indirectly on the basis of observable input data, which do not represent quoted prices as stated in Level 1

• Level 3: Measurement is based on models using input parameters not observable on the market

The cash flows of the financial derivatives accounted for as hedges will occur within a period of two months of the balance sheet date.

Convertible bond. In 2023, an unsecured and unsubordinated bond with a total nominal value of €300 million with conversion rights into new and/or existing no-par-value shares of Bechtle AG was placed. The convertible bonds with a denomination of €100 thousand each were issued at 100 per cent of the nominal amount. The term to maturity is six years. The initial conversion price of €54.99 was determined with a conversion premium of 30 per cent over the reference share price of €42.30. The convertible bonds bear interest at a nominal rate of 2.0 per cent. Termination of the outstanding convertible bonds by Bechtle is possible after five years at the earliest, if the share price has not reached 130 per cent of the applicable conversion price. Termination of the outstanding convertible bonds by Bechtle is possible at any time if the total nominal amount of the convertible bonds has dropped to 20 per cent or less of the total nominal amount originally issued. Holders of the convertible bonds have the right to demand premature repayment of their convertible bonds at the nominal amount after five years. The accounting took place using the effective interest method.

Liabilities resulting from acquisitions are conditional, additional purchase price payments (earn-outs) for acquisitions (IFRS 3.58). The fair value was determined with the help of the DCF method. Alongside the planned business development of the unit taken over, a discount rate that is appropriate for the period was used. The creditworthiness of the debtor Bechtle (IFRS 13.42 ff) was taken into account via an overhead percentage method, taking into account the amount, the probability of default and the recovery rate in the event of inability to pay. The difference between the fair value and the amount to be paid at maturity according to the contract is €1,524 thousand (previous year: €587 thousand), which only contains an insignificant change of the credit risk. The factor that has the greatest impact on the fair value is the planned business development, which is based on earnings-oriented performance indicators. In the event of a reduction of the target achievement to 90 per cent of the target achievement assumed at the acquisition, the liabilities from acquisitions would drop by about 23 per cent; in the event of an increase to 110 per cent of the target achievement assumed at the acquisition, the liabilities would increase by 9 per cent. In the event of a payout, the liabilities will be repaid by the years 2026 to 2028.

The fair value of time deposits, loans and non-current trade receivables and non-current trade payables corresponds to the present value of the cash flows under consideration of the risk-weighted interest rates appropriate for the periods plus creditworthiness impairment. In this context, material input factors that cannot be observed are the discount for the credit risk of the counterparty and the discount for the own non-performance risk. An increase (reduction) in the discount of 5 per cent for the counterparty credit risk would reduce the fair values of non-current trade receivables by €22 thousand (increase by €22 thousand) and reduce non-current lease receivables by €40 thousand (increase by €40 thousand). In the event of an increase (reduction) of the discount for own credit risk by 5 per cent, the fair value of non-current lease liabilities would decrease by €7 thousand (increase by €7 thousand), the fair value of non-current trade payables would decrease by €2 thousand (increase by €2 thousand) and the fair value of loans would decrease by €17 thousand (increase by €17 thousand).

For all current financial assets and liabilities, the carrying amount corresponds to the fair value (IFRS 7.29). This comprises current trade receivables, other financial assets, current trade payables, cash and cash equivalents, time deposits and other financial liabilities.

During the reporting period, there were no reclassifications between measurements at fair value of Level 1 and Level 2 and no reclassifications to or from measurements at fair value of Level 3.

The development of the financial instruments in Level 3 as measured at fair value is as follows:

The €270 thousand (previous year: €156 thousand) recognised as an expense in financial earnings relates to payments due in the future for liabilities from acquisitions recognised as of 31 December 2025.

The expenses, income, losses and earnings from financial instruments can be allocated to the following categories (net result):

The financial assets and liabilities presented essentially reflect total interest income from fixed-term deposits and total interest expense relating mainly to the convertible bond and promissory note loans. Other influencing factors include impairment losses and gains and losses from fair value changes, disposals and currency translation.

Disclosures on netted and non-netted assets and liabilities

The following financial instruments have been netted in the balance sheet on the basis of a current legal netting entitlement or the existing intention to settle on a net basis:

Trade receivables include €1,935 thousand in liabilities to customers and liabilities to customers include €175 thousand in receivables from customers. Bechtle’s respective customers have the intention and, on the basis of contractual agreements, the right to offset these items against each other. Trade payables include €3,375 thousand in receivables from suppliers and receivables from suppliers include €3,159 thousand in liabilities. Based on contractual agreements, Bechtle is entitled to net these items against each other. These items are principally bonus revenues that suppliers pay out to Bechtle and that Bechtle pays out to its customers.

Disclosures on risk management of financial instruments

Currency risk

Receivables, liabilities and cash and cash equivalents which are not transacted in the functional (local) currency used by the companies are exposed to currency risks from financial instruments. The Bechtle Group is exposed to currency risks from financial instruments denominated in foreign currencies from intra-group trade, cash and cash equivalents, and trade with external suppliers and customers.

Hedging transactions are used to hedge against risks from exchange rate fluctuations for receivables and liabilities in foreign currencies and for open orders and purchase orders in foreign currencies that have not yet been recognised. The Bechtle Group uses forward exchange transactions and currency swaps as hedges.

In the consolidated financial statements (EUR), translation differences arose from the conversion of foreign currency financial statements of subsidiaries abroad. These differences are carried and recognised separately directly in equity. To largely offset these currency translation differences recognised directly in equity and as a hedge of a net investment in a foreign operation (IAS 39, IFRIC 16), Bechtle used the following forward exchange transactions in the reporting period, which had already been realised as of the reporting date:

On the other hand, there was a negative effect of −€5,324 thousand ( previous year: positive effect of €3,277 thousand) from currency translation differences in group equity. These were largely caused by EUR/CHF conversion.

Alongside the above-mentioned hedges of a net investment in a foreign operation, Bechtle made use of other hedges to hedge its business operations. The loss of −€28 thousand (previous year: gain of €216 thousand) attributable to the effective portion of the currency hedges (cash flow hedge) was recognised in other comprehensive income, taking into account deferred taxes (€8 thousand; previous year: −€65 thousand). This was hedged at an average EUR/USD exchange rate of 1.17 (previous year: 1.09).

In addition to the aforementioned individual cases with a hedging relationship, hedging transactions with terms of up to ten years and individual volumes of up to a maximum of €2 million are regularly concluded for operational purposes in the ordinary course of business. The following table shows the volume of the hedges concluded in the respective fiscal year as well as the buy and sell obligations as of the balance sheet date.

The valuation of these open currency transactions resulted in a loss of −€2,888 thousand (previous year: gain of €2,624 thousand), which was recognised in the income statement.

The following sensitivity analysis illustrates the impact a decrease (or increase) in the euro exchange rate could have on consolidated earnings before taxes. The changes in the fair values of the financial assets and liabilities in foreign currencies recognised as of the respective balance sheet date due to changes in the exchange rate for major currencies are taken into account. The hedges existing as of the balance sheet date are taken into consideration in the sensitivity analysis. Exchange rate differences from the translation of financial statements into the group’s currency are not taken into account.

The following sensitivity analysis illustrates the impact a decrease (or increase) in the euro exchange rate could have on other comprehensive income (outside profit or loss). The change in fair value of the derivatives accounted for as hedges, as well as the change in value of assets and liabilities of the subsidiaries with the respective currency as functional currency, are taken into consideration.

Interest rate risk

The interest rate risk to which the Bechtle Group is exposed mainly concerns the interest earned by its cash and cash equivalents. The interest rate risks of the Bechtle Group are centrally analysed, and the resulting measures are actively managed by the central finance department. The approach to this area is subject to regular review as determined by management.

Apart from this, the group has only a minimal position – and thus an insignificant interest rate risk – in variable-rate financial instruments, which are exposed to cash flow risks from a possible deterioration in interest rates. There is also an insignificant interest rate risk for fixed-interest financial instruments with fair value risk due to the fluctuating fair values of non-current receivables and trade payables depending on interest rates.

The sensitivity analysis was conducted on the basis of the Bechtle Group’s cash and cash equivalents, and time deposits as of the balance sheet date, taking into account the relevant interest rates in the relevant currencies. A hypothetical decrease or increase in these interest rates from the beginning of the reporting period by 100 basis points or 1.0 per cent per year (at constant exchange rates) would have led to a decrease or increase in interest income of €4,520 thousand (previous year: €7,162 thousand).

Liquidity risk

The liquidity risk from financial instruments results from future interest payments and redemption payments for financial liabilities and from derivative financial instruments. The tables below show the non-discounted payment obligations for the relevant balance sheet items as of the balance sheet date and the prior year’s balance sheet date in accordance with IFRS 7. Bechtle has credit lines that can be used both for cash loans and for guarantee credit. Detailed information on this is presented in 20. Financial liabilities.

Liquidity risk is managed and monitored weekly with the help of a 14-day liquidity preview.

The cash and cash equivalents are spread over 41 banks and finance groups. For bank deposits within the European Union, we ensure that the credit balance is only held at a bank or group of banks with a good to very good credit rating. The low credit risk exemption of IFRS 9 (IFRS 9 B5.5.22) applies to cash and cash equivalents, according to which financial instruments with only a low default risk on the acquisition date can be allocated to the stage with the lowest probability of default (“01 – very high credit rating”). The internal bank rating assessment identified no significant default risks in respect of cash and cash equivalents, and no loss allowance was therefore recognised.

Credit risk

The carrying amounts of the financial assets correspond to the maximum credit risk. There are no hedges except for common liens for all trade receivables as well as country-specific deposit guarantee funds for all cash and cash equivalents and time deposits. Any credit risks identified in the financial assets are recognised in the form of impairments. Except for lenders in connection with buildings, Bechtle provides virtually none of its creditors with collateral.

In the investment of excess liquidity, quick availability is more important than maximum yield, e.g. in order to be able to access available cash and cash equivalents in the event of acquisitions or major project pre-financing measures. Thus, purely financial goals – such as the optimisation of the financial income – are subordinate to the acquisition strategy and the company growth. This financial flexibility forms the basis for success in a highly consolidating market. The liquidity situation is centrally managed and monitored by the treasury.

Investment business is only conducted with investment-grade debtors. For time deposits within the European Union, investments with a deposit guarantee are preferred. Given that such a guarantee only exists to a limited extent in Switzerland, investments in this country are only made at banks with an excellent credit rating.

To avoid risk concentrations, customer-specific credit lines are determined by means of ongoing creditworthiness checks.