Notes to the consolidated financial statements

The consolidated financial statements have been prepared in accordance with the IFRS Accounting standards as issued by the International Accounting Standards Board (IASB).

The material accounting policies applied in preparing these consolidated financial statements are included in the respective notes. General types of material accounting policies are set out in note 8.8. These policies have been consistently applied to all the reporting periods presented unless otherwise stated. Changes in accounting policies are disclosed in note 8.7.

The consolidated financial statements are based on historical cost, with the exception of certain financial instruments and defined benefit plan assets, which are measured at fair value.

The consolidated financial statements are presented in Swiss francs, the functional and presentation currency of Rieter Holding Ltd.

Financial reporting requires management to make estimates and exercise judgment in applying the Group’s accounting policies, both of which can affect the reported amounts of assets, liabilities, contingent liabilities, and contingent assets at the date of the financial statements, and reported amounts of income and expenses during the reporting period. These accounting estimates and judgments are periodically reviewed. In the financial years 2024 and 2023, the effects of the global economic and geopolitical uncertainties on these assumptions have been taken into account.

The areas involving significant accounting estimates and judgments are related to the accounting of the acquisition in 2024 (see note 2.1) as well as the topics included in the following notes:

The development in recent years, particularly the increased operational significance and integration, have made Electro-Jet S.L. (Gurb, Spain) and Prosino S.r.l. (Borgosesia, Italy), both suppliers of Rieter, an integral part of Rieter’s business. Consequently, the recognized share in profit or loss of associated companies has been reclassified from financial result to the operating result. The resulting EBIT impact in 2024 amounts to CHF 2.9 million (2023: CHF 3.1 million).

On January 5, 2024, Rieter Holding Ltd. (Winterthur, Switzerland) acquired 100 percent of the shares of Petit Spare Parts SAS (Aubenas, France). This entity is active in the business of spare parts for textile machines and employs ten full-time employees. The purchase price amounted to CHF 1.4 million. The acquired net assets primarily consist of inventories. No goodwill resulted from the acquisition.

On November 1, 2024, Rieter Holding Ltd. (Winterthur, Switzerland) acquired 11 percent of the shares of Prosino S.r.l. (Borgosesia, Italy), and therefore increased its investment to 60 percent. This entity is active in the business of manufacturing rings for spinning machines and had been a previous supplier of Rieter. Prosino S.r.l. employs 90 full-time employees. With the acquisition of Prosino S.r.l., Rieter has strengthened its portfolio of high-quality ring components, particularly spinning and twisting rings, which will be allocated to the Components segment.

Further 10 percent of the shares will be bought on January 1, 2025, and an additional 10 percent on January 1, 2026, at the same valuation as the initial transaction in 2024. For the remaining 20 percent of the shares, Rieter Holding Ltd. has a call option effective from January 1, 2027, while the seller is granted a put option effective from January 1, 2028. The exercise prices for the call respectively put option are based on an EBITDA multiple including a cap and a floor. The redemption amount for this part of the financial liability has been determined considering these clauses. The maximum amount to be paid is EUR 4.4 million (CHF 4.1 million).

Under the anticipated-acquisition method the contract is accounted for as if the forwards (purchase obligations of 10 percent on January 1, 2025, and 10 percent on January 1, 2026) had been satisfied by the non-controlling shareholders and the put option (effective from January 1, 2028) had been exercised already. Accordingly, Rieter does not recognize a non-controlling interest in the consolidated financial statements and accounts for the business combination as if it had acquired 100 percent interest. The respective forward and put liabilities for the remaining shareholding of 40 percent have been recognized as financial liabilities in the consolidated balance sheet.

The purchase price of the shares amounted to EUR 2.2 million (CHF 2.1 million) and was settled against cash. The transaction resulted in goodwill of CHF 5.0 million. The goodwill is attributable to the acquired workforce and the complementary nature of the acquired businesses. It is not deductible for tax purposes. The acquired business contributed sales of CHF 1.4 million and a net result of CHF -0.1 million to the Group for the period from November 1 to December 31, 2024. If the acquisition had occurred on January 1, 2024, consolidated pro-forma sales and the net result for the year ended December 31, 2024, would have been CHF 866.3 million and CHF 12.1 million, respectively. These amounts were calculated from the results of the business, adjusted by the differences in the accounting policies between Rieter and Prosino S.r.l., and from the additional depreciation and amortization that would have been charged assuming the fair value adjustments to inventories, property, plant, and equipment, and intangible assets had applied from January 1, 2024, together with the consequential tax effects.

The following table presents a breakdown of assets acquired and liabilities assumed at November 1, 2024:

Intangible assets identified comprise the value of customer relationships (CHF 1.3 million), and the related brands and trademarks (CHF 0.9 million). The fair value of acquired trade receivables amounted to CHF 0.9 million. The gross contractual amount of invoiced trade receivables was CHF 1.0 million, with a respective allowance of CHF 0.1 million recognized at the acquisition date.

Transaction costs of CHF 0.1 million relating directly to the acquisition were recognized in the income statement as other expenses. The accounting for the acquisitions is preliminary due to the ongoing identification and separation of related assets and liabilities.

On October 17, 2024, Rieter initiated further restructuring measures as a reaction to the persistently difficult market conditions, the current economic downturn, the continued high interest rates and the lower economic growth in various markets relevant to Rieter reflected in its order intake. Rieter intends to relocate customer-oriented functions to its sales markets, combine resources and simplify processes. This includes provisions for the reduction of positions in overhead functions across the Group, primarily in Winterthur (Switzerland). The consultation processes initiated with the employee representatives were completed in November 2024. Restructuring costs in 2024 amount to CHF 6.5 million and consist primarily of personnel-related restructuring costs. This includes mainly severance payments and outplacement costs.

On July 19, 2023, Rieter launched the “Next Level” performance program aimed at strengthening sales excellence, sharpening customer focus, improving cost efficiency in production, and optimizing fixed cost structures. Measures defined in the “Next Level” performance program were implemented in 2023 and mostly concluded in 2024.

The restructuring charges directly associated with the “Next Level” performance program are summarized in the table below:

Restructuring costs directly related to the “Next Level” performance program in 2023 included personnel-related restructuring costs in the amount of CHF 28.8 million. This included mainly severance payments and outplacement costs. Impairment losses on property, plant, and equipment directly related to the “Next Level” performance program included the impairment loss on the right-of-use asset related to the leased office premises no longer used due to the closure of the Ingolstadt location.

The following table presents the operating result before interest and taxes (EBIT) of Rieter before and after restructuring and impairment:

In 2023, other restructuring costs consist of expenses directly related to the relocation of Rieter Automatic Winder GmbH, which was contractually agreed with the seller of the business. In 2024, total restructuring costs and total impairment losses on property, plant, and equipment amounted to CHF 6.5 million (2023: CHF 48.6 million) and CHF 1.1 million (2023: CHF 6.0 million) respectively.

On September 26, 2023, Rieter sold the land and buildings no longer required for operations at Klosterstrasse in Winterthur (Switzerland) to Allreal (Glattpark, Switzerland). The following table summarizes the effects of the disposal on the consolidated income statement 2023:

The costs directly attributable to the disposal consisted mainly of provisions for obligations related to site restoration, ambient protection, and other liabilities directly related to the sale of the land and buildings in Winterthur.

The following amounts are included in the consolidated cash flow statement 2023:

On February 6, 2023, a devastating earthquake occurred in southern Türkiye and northern Syria. This region is home to an important part of the Turkish textile industry and thus represents a key market for Rieter. The earthquake had a significant impact on Rieter’s top line. Sales to and order intake from Türkiye decreased in 2023 and particularly in 2024 due to a lack of investment in new machinery and systems in combination with further postponements and cancellations of existing orders. The property damage at Rieter’s repair center and the financial loss incurred due to business interruption have been evaluated in cooperation with the respective insurance company. The insurance claim for property and inventory damage at Rieter’s repair center and the financial loss incurred from business interruption has been settled in the amount of CHF 14.0 million. In 2024, the compensation was allocated to the consolidated income statement in the line items cost of sales and other income.

Rieter’s business activities in Ukraine, Russia, Belarus, and the Middle East are not significant. Consequently, the military conflicts in Ukraine and the Middle East have no direct impact on Rieter, as neither subsidiaries (assets) nor major customers are based in this region.

Against this background, Rieter has reviewed the areas involving material accounting estimates and judgments (see note 1.2) to assess the impact of the earthquake in Türkiye and the global economic and geopolitical uncertainties. The results of this review are included in the respective notes. In addition, the earthquake in Türkiye and the global economic and geopolitical uncertainties had no significant impact on any other balance sheet line items at December 31, 2024 (at December 31, 2023: none).

Segment information is based on the Group’s organization and management structure and internal financial reporting to the Chief Operating Decision Maker up to the level of EBIT. The Chief Operating Decision Maker at Rieter is the Chief Executive Officer. Segment reporting is based on the same accounting policies as those used for the preparation of the consolidated financial statements. The Group consists of three reportable segments: Machines & Systems, Components and After Sales. There is no aggregation of operating segments. Rieter Machines & Systems develops, produces and distributes machinery and systems used to convert natural and man-made fibers and their blends into yarns. Rieter Components supplies technology components to spinning mills and to textile machinery manufacturers as well as precision winding machines. Rieter After Sales serves customers with spare parts, value-adding after sales services and solutions over the entire product life cycle.

The other result that is not allocated to reportable segments includes all those elements of income and expenses that are not allocated on a reasonable basis to the segments, such as certain costs of central functions and infrastructure (internally reported as “Corporate”) as well as the elimination of unrealized profits on inter-segment deliveries.

No individual customer accounted for more than 10 percent of consolidated sales in 2024 and 2023. The greatest granularity available for products and product groups is segment level, which is reflected in the segment reporting shown above.

Revenue from sales of services is mainly incurred at Rieter After Sales.

Material accounting policies

Rieter sells textile machinery and systems on a global scale. The respective customer contracts may include further elements such as installation. Installation is treated as a separate performance obligation due to the nature of the service rendered. Revenue from textile machinery and systems sales is recognized when control is transferred to the customer. In general, this happens at the point in time when products are handed over to the customer or its freight carrier based on contractually agreed terms (International Commercial Terms or Incoterms). Upon handover, the customer assumes physical control as well as significant risks and future rewards. Prior to delivery, Rieter ensures that machinery and systems comply with contractually agreed performance criteria. As a consequence, no significant unfulfilled obligations exist for Rieter upon handover, with the exception of installation. Installations are invoiced at the same time as the delivery of machinery and systems, although the service is rendered at a later date. Revenue from installation services is therefore deferred as contract liability in the line item deferred revenue and is recognized in the period when the service is rendered (see note 4.7). The progress of the activities is determined based on accumulated working hours or expenses compared to total expected working hours or expenses (over time). Estimates of total expected working hours or expenses are adjusted in the event of changes. The effects of such adjustments are recognized in the respective period. The total selling price agreed in machinery and systems contracts (including discounts granted) is allocated to individual performance obligations based on relative stand-alone selling prices.

The Group also distributes technology components and spare parts for textile machinery and systems. Revenue from these products is recognized when control is transferred to the customer. In general, this happens at the point in time when products are handed over to the customer or its freight carrier based on the relevant contractually agreed terms (Incoterms). Upon handover, the customer assumes physical control as well as significant risks and future rewards.

In addition, Rieter offers a wide range of services and solutions over the entire life cycle of textile machinery and systems (e.g. mill assessments and preventive maintenance as well as upgrade and conversion packages). Revenue from such services rendered at customers’ machinery and systems is usually fixed and is recognized in the period when the service is rendered. The progress of the activities is determined based on accumulated working hours or expenses compared to total expected working hours or expenses (over time).

In the case of customers’ advance payments for goods or services, the respective contract liability is accrued separately in the line item advance payments from customers (see note 4.8).

For receivables which are not covered by advance payments, the general payment term is normally between 30 and 60 days. Since payment terms of more than one year are not generally granted, customer contracts do not normally include any financing component.

Gain on existing interest results from the revaluation of the investment in Prosino S.r.l. (Borgosesia, Italy) at fair value due to the increased interest in voting rights (see note 6.3).

Miscellaneous other income includes income that is not presented as sales, such as income from export incentive schemes and income from government grants. In 2024, this also includes a portion of the insurance compensation received for the earthquake in Türkiye in 2023 and the release of the environmental provision relating to the sold land and buildings in Ingolstadt (Germany) (see notes 2.4 and 4.9).

Miscellaneous other expenses include expenses that are not directly linked to cost of sales, or which cannot be allocated to research and development expenses or selling, general, and administrative expenses. Such expenses include costs related to cancelled customer projects and losses from onerous customer contracts.

The operating result before interest, taxes, depreciation, amortization, and impairment (EBITDA) is used by Rieter as an alternative performance measure. The table below contains a reconciliation of EBITDA:

Trade receivables are divided into the following major currencies:

For further information on credit risks, aging structure of trade receivables, and movements in the allowance for trade receivables, see note 8.5.

Material accounting policies

Trade receivables are initially recognized at their transaction price and subsequently measured at amortized cost, which is usually the original invoice value less an allowance for expected credit losses. The allowance for trade receivables is determined based on lifetime expected credit losses, which are calculated as the present value of expected cash shortfalls. Changes are recognized in the income statement as other income or expenses.

Other current receivables do not include any overdue or impaired items.

The allowance for inventories developed as follows:

Significant accounting estimates and judgments

When assessing the value of inventories, estimates of their recoverability are necessary. The recoverability of the respective items is based on the expected consumption. The allowance for inventories is calculated at item level using a range of coverage analysis. The assumptions used in this analysis are reviewed annually and modified if necessary. Changes in sales volumes, the production process, or other circumstances may result in carrying amounts having to be adjusted accordingly. Rieter does not expect any significant adverse impact from the earthquake in Türkiye and the global economic and geopolitical uncertainties on inventories presented above.

Material accounting policies

Raw materials, consumables, and trading goods are measured at the lower of average cost or net realizable value. Semi-finished and finished goods are stated at the lower of manufacturing cost or net realizable value. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Allowances on inventories are recognized for slow-moving items and excess stock.

No land and buildings are pledged as security for financial debt. At the end of 2024, open purchase commitments in respect of major investments in tangible fixed assets amounted to CHF 0.8 million (December 31, 2023: CHF 1.4 million).

Material accounting policies

Property, plant, and equipment are recognized at historical cost and depreciated on a straight-line basis over the estimated useful life. Depreciation of an asset starts when it is available for use. Historical cost also includes expenditure that is directly attributable to the acquisition. Useful life is determined based on the expected period of utilization of individual assets. The respective ranges are as follows:

Assets under construction that are not yet available for use, as well as land, are not depreciated. Value adjustments are recognized if required. Where components of significant assets have differing useful lives, these are depreciated separately.

All gains or losses arising from the disposal of property, plant, and equipment are recognized in the income statement. Cost related to repair and maintenance is charged to the income statement as incurred.

Investment grants received for capital projects are deferred and credited to the income statement on a straight-line basis over the expected useful life of the related assets.

Borrowing costs that are attributable to the acquisition, construction, or production of a qualifying asset are capitalized as a part of the acquisition costs of the qualifying asset.

For accounting policies in relation to right-of-use assets see note 8.3.

Software consists of capitalized cost for internally generated software. Brands and trademarks include the brands of SSM, Accotex, Temco, Schlafhorst, Autoconer, and Prosino. Technology consists only of capitalized costs for acquired technology in connection with acquisitions.

Significant accounting estimates and judgments

No development costs were recognized as intangible assets in the year under review or in the previous year. Due to rapid technological changes and wide cyclical fluctuations in the industry, future economic benefits could not be sufficiently demonstrated. The earthquake in Türkiye as well as the global economic and geopolitical uncertainties had no impact on these accounting estimates and judgments, as Rieter has no intangible assets or development projects based in Türkiye, Ukraine, Russia, Belarus, or the Middle East.

Material accounting policies

Intangible assets acquired from third parties such as product licenses, patents, trademark rights (brands), and customer relationships are recognized in the balance sheet at historical cost and are amortized on a straight-line basis over the expected useful life of up to 15 years. Rieter does not hold any intangible assets with an indefinite useful life.

Internally generated software is capitalized as intangible asset only if the costs can be measured reliably, the completion of the project is intended, and it can be demonstrated that the software project is technically and financially feasible and will generate a future economic benefit. All other costs associated with internally generated software are recognized in the income statement as incurred. Internally generated software is amortized over a period of up to five years.

The respective ranges of useful life are as follows:

Research and development activities focus on the expansion and improvement of Rieter’s product and service portfolio. Expenses related to research activities are recognized in the income statement as incurred. Expenditure in connection with development projects is capitalized as intangible assets only if the costs can be measured reliably and it can be demonstrated that the project is technically and financially feasible and will generate a future economic benefit. Otherwise, the respective costs are expensed as incurred.

Goodwill is allocated to the corresponding cash-generating unit (CGU) and monitored by management. Rieter tests whether goodwill has suffered any impairment on an annual basis. For 2024 and 2023, the recoverable amount of the CGUs was determined on value-in-use calculations.

A segment-level summary of the goodwill allocation, the CGU, and the respective key assumptions used, are presented below:

Based on the performed impairment tests using the key assumptions mentioned above, there is no need for an impairment charge at December 31, 2024 and 2023.

Goodwill allocated to CGUs Machines & Systems and After Sales contains the goodwill from the automatic winding machine business acquired in 2022, including the goodwill from the winder-related service and commission business in India acquired in 2021. Gross profit and cash flows depend on sales volume and sales growth. The results of both impairment tests confirm the purchase price paid without an indication for impairment. No reasonably possible changes in key assumptions would cause the recoverable amount to equate the carrying amount of goodwill.

Regarding SSM, there is currently no indication of a long-term decrease of the market share or profitability. Gross profit and cash flows depend on sales volume and sales growth. No reasonably possible changes in key assumptions would cause the recoverable amount to fall short of the carrying amount of goodwill.

Regarding Accotex and Temco, there is currently no indication of a long-term decrease in the market, the market share, or the profitability. Gross profit and cash flows depend on sales volume and sales growth. The results of the impairment tests confirm the purchase price paid without an indication for impairment, but showed only a small headroom for Accotex. Rieter performed sensitivity analysis in order to determine which reasonably possible changes in key assumptions would cause the recoverable amount to fall short of the carrying amount of goodwill.

The sensitivity analysis for Accotex showed that the recoverable amount would fall short of the carrying amount of Accotex if the pre-tax discount rate would be increased by 2.0 percentage points (2023: +0.7 percentage points), the sales volume growth would be reduced by 3.4 percentage points (2023: -0.8 percentage points), or the long-term sales growth rate would be decreased by 2.2 percentage points (2023: -0.8 percentage points). The recoverable amount of Accotex exceeds the carrying amount by CHF 7.9 million (2023: CHF 2.7 million). The sensitivity analysis for Temco showed that no reasonably possible changes in key assumptions would cause the recoverable amount to fall short of the carrying amount of goodwill.

Sales growth rates are calculated as compound average growth rate derived from the underlying business plans. Long-term sales growth rates are based on long-term inflation assumptions assuring rates are in line or below external market information provided by industry specialists. Pre-tax discount rates are determined on the basis of the weighted cost of capital using market participants information.

Significant accounting estimates and judgments

For the goodwill impairment test, Rieter uses financial plans for the next four years as approved by the Board of Directors and the Group Executive Committee. These plans are extrapolated to a period of five years. Management thereby makes assumptions related to sales growth rates and profit margins. Expected future cash flows are discounted with a market-specific discount rate. The earthquake in Türkiye and the global economic and geopolitical uncertainties (see note 2.4) have been reflected appropriately in these assumptions in 2024 and 2023.

Material accounting policies

Goodwill resulting from business combinations represents the difference between the purchase considerations paid and the fair value of net assets acquired. Due to its indefinite useful life, it is subject to an impairment test performed at least on an annual basis.

Deferred revenue consists mainly of revenue for installations of machines and components at Rieter customer sites, which were invoiced already, but have not yet been completed. Of the deferred revenue at December 31, 2023, CHF 30.7 million were recognized as sales and therefore included in the consolidated income statement 2024. Additional significant changes comprise services invoiced in 2024, which were either recognized as sales in 2024 or which are still included in deferred revenue at December 31, 2024. The majority of deferred revenue is recognized as revenue within twelve months. Miscellaneous current liabilities consist primarily of payables to customers, accounts receivable with a credit balance, and payables for VAT and social insurance.

Of the advance payments from customers at December 31, 2023, CHF 86.0 million were recognized as sales and therefore included in the consolidated income statement 2024. Additional significant changes comprise advance payments received in 2024, which were not recognized in sales in 2024.

Restructuring provisions cover legal and constructive obligations in connection with restructuring measures. In 2024, additional restructuring measures (see note 2.2) resulted in an increase in provisions of CHF 5.1 million. The respective obligations mainly include expected severance payments, outplacement costs and consulting expenses. The utilization of restructuring provisions relates to the “Next Level” performance program launched in 2023 (see note 2.2).

Personnel provisions include provisions for part-time arrangements for older employees, long-service awards, and other long-term benefits attributable to employees.

Guarantee and warranty provisions are recorded in the context of product deliveries and services and are based on past experience. Non-current warranty provisions are expected to result in outflows of resources in one or two years on average.

Environmental provisions contain obligations for site restoration associated with the disposal of land and buildings in Ingolstadt (Germany) in 2019 and in Winterthur (Switzerland) in 2022. The release of the provision relates to the sold land and buildings in Ingolstadt (Germany), where the respective contractual obligation has expired. The remaining provisions are expected to be utilized in the years after 2025.

Rieter has recognized other provisions mainly for ongoing legal proceedings, for onerous contracts (where the unavoidable direct cost of performance exceeds the expected financial benefit), or for contracts with benefits linked to conditions that have to be fulfilled in the future (e.g. government grants). Non-current other provisions are expected to be utilized in the years after 2024.

Significant accounting estimates and judgments

In the course of the ordinary operating activities of Rieter, obligations can arise from restructuring measures, warranty claims, ongoing legal proceedings, site restoration, or onerous contracts. Provisions for the respective obligations are measured on the basis of expected cash outflows when accounts are drawn up. However, the outcome of the events mentioned above may result in claims against the Group that are higher or lower than the respective provisions and which are not – or only partially – covered by a relevant insurance benefit. At December 31, 2024, the potential impact of the earthquake in Türkiye and the global economic and geopolitical uncertainties on the provision balances has been assessed. No significant impact was identified (December 31, 2023: none).

Material accounting policies

Provisions for restructuring, personnel, warranty claims, ongoing legal proceedings, site restoration, or onerous contracts are recognized if Rieter has a present legal or constructive obligation as a result of past events, it is probable that an outflow of economic resources will be required to settle the obligation, and the amount can be estimated reliably. Provisions are discounted if the impact is considered to be significant.

Rieter uses net debt and free cash flow as alternative performance measures. Net debt is calculated as follows:

Free cash flow consists of:

Material accounting policies

Cash and cash equivalents include bank accounts, investments in money market funds, and current time deposits with original maturities of up to three months.

On November 27, 2024, Rieter placed a fixed-rate bond amounting to CHF 70.0 million. This bond has a term of five years with a maturity date on November 27, 2029, a fixed interest rate of 3.5 percent p.a. and is listed on the SIX Swiss Exchange. The fair value of this bond amounted to CHF 71.5 million at December 31, 2024. The effective interest expenses in the amount of CHF 0.4 million were charged to the income statement 2024. On November 25, 2021, Rieter issued a fixed-rate bond with a nominal value amounting to CHF 100.0 million. This bond has a term of six years with a maturity date on November 24, 2027, a fixed interest rate of 1.4 percent p.a. and is listed on the SIX Swiss Exchange. The fair value of this bond amounted to CHF 98.0 million at December 31, 2024 (December 31, 2023: CHF 98.4 million). The effective interest expenses in the amount of CHF 1.4 million were charged to the income statement 2024 (2023: CHF 1.4 million). On September 17, 2024, Rieter repaid the existing fixed-rate bond in the amount of CHF 75.0 million. The bond had a term of four years, a fixed interest rate of 1.55 percent and was listed on the SIX Swiss Exchange. The effective interest expenses were CHF 0.9 million in 2024 (2023: CHF 1.2 million).

By currency, financial debt is divided up as follows:

Financial debt changed as follows:

Material accounting policies

Financial debt is recognized initially at fair value, net of transaction costs incurred. Financial debt is subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the term of the obligation using the effective interest rate method. Financial debt is classified as a current liability, unless Rieter has an unconditional, contractually agreed right to defer settlement for at least twelve months after the balance sheet date. For accounting policies in relation to lease liabilities, see note 8.3.

The following table presents the calculation of basic and diluted earnings per share:

The dividend paid in 2024 amounted to CHF 13.5 million and was distributed from retained earnings (2023: CHF 6.7 million). Based on the financial statements of Rieter Holding Ltd. at December 31, 2024, the Board of Directors proposes to the Annual General Meeting a dividend of CHF 2.00 per share.

The table below summarizes the dividend payout ratio of the financial years 2024 and 2023:

Material accounting policies

Earnings per share are calculated by dividing net profit attributable to Rieter Holding Ltd. shareholders by the average number of shares outstanding. Diluted earnings per share additionally take into account the effects of the potential dilution as if all rights relating to the long-term incentive plan (see note 7.3) were to be exercised.

In 2024, Rieter Holding Ltd. purchased share capital of Rieter India Pvt. Ltd. with a nominal value of INR 0.2 million (CHF 0.0 million), acquiring the remaining non-controlling interests. Furthermore, Rieter Ltd. sold 30 percent of Rieter Textilsystemen LLC (Tashkent, Uzbekistan) to an external investor, resulting in a non-controlling interest of 30 percent. Rieter also increased its investment in Prosino S.r.l. (Borgosesia, Italy) from 49 to 60 percent. Under the anticipated-acquisition method Rieter does not recognize a non-controlling interest for this business combination (see note 2.1). In 2023, non-controlling interests remained unchanged.

Material accounting policies

Net profit or loss and each component of other comprehensive income are attributed to the shareholders of Rieter Holding Ltd. and to the non-controlling interests in subsidiaries, even if this results in a deficit balance of non-controlling interests.

In 2024, the subsidiary Rieter Management AG (Winterthur, Switzerland) was merged with Maschinenfabrik Rieter AG (Winterthur, Switzerland), which in turn changed its name to Rieter Ltd. (Winterthur, Switzerland). Moreover, the subsidiary Hogra Holding AG (Freienbach, Switzerland) was merged with Tefina Holding-Gesellschaft AG (Zug, Switzerland). Furthermore, Rieter Ingolstadt GmbH (Ingolstadt, Germany) was merged with Spindelfabrik Suessen GmbH (Suessen, Germany). Additionally, Rieter acquired Petit Spare Parts SAS (Aubenas, France, see note 2.1). As part of a reorganization, Changzhou Rieter Textile Machinery Trading Co., Ltd. (Changzhou, China) was incorporated as a subsidiary of Rieter China Textile Instruments Co. Ltd. (Changzhou, China). Rieter also increased its interest in voting rights in Prosino S.r.l. (Borgosesia, Italy) from 49 percent to 60 percent, changing from equity accounting to full consolidation (see note 2.1).

In 2023, Rieter transferred the entire business in Uzbekistan from Rieter Uzbekistan FE LLC (Tashkent, Uzbekistan) to the newly established and wholly owned subsidiary Rieter Textilsystemen LLC (Tashkent, Uzbekistan). Following an increase in share capital fully financed by an external investor, Rieter lost control of Rieter Uzbekistan FE LLC and therefore deconsolidated this subsidiary in 2023. The change in Group structure did not have a significant impact on the consolidated financial statements 2023. Furthermore, SSM Giudici S.r.l. (Galbiate, Italy) changed its name to SSM Italy S.r.l. (Galbiate, Italy).

Material accounting policies

The consolidated financial statements comprise the financial statements of Rieter Holding Ltd. and its subsidiaries (or group companies) at December 31, 2024. Subsidiaries are all entities over which Rieter has control. Control is achieved when Rieter 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 fully consolidated from the date on which control is transferred to Rieter. They are deconsolidated from the date that control ceases.

Intercompany transactions and balances as well as unrealized gains on transactions between group companies are eliminated. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those of the Group.

The table below summarizes the development of investments in associated companies:

Rieter holds 25 percent of the share capital and the voting rights of Electro-Jet S.L. based in Gurb (Spain). Until October 31, 2024, investments in associated companies also included the investment of 49 percent in Prosino S.r.l. incorporated in Borgosesia (Italy). On November 1, 2024, Rieter increased its interest in voting rights in Prosino S.r.l. (Borgosesia, Italy) from 49 to 60 percent, changing from equity accounting to full consolidation. As a consequence of the change to full consolidation, the existing investment of 49 percent has been revalued at a fair value of CHF 9.2 million, resulting in a gain of CHF 3.3 million. The revaluation gain on the existing investment is presented in the consolidated income statement in other income (see note 3.3). Aside from the revaluation gain, the effects of the associated companies on the consolidated financial statements are insignificant.

The recognized share in profit or loss of associated companies has been reclassified from financial result to the operating result (see note 1.3).

In 2024, Rieter purchased products from associated companies with a total value of CHF 14.1 million (2023: CHF 35.5 million). The respective open trade payable balances at December 31, 2024, were interest free and amounted to CHF 0.1 million (December 31, 2023: CHF 2.4 million). In addition, Rieter sold products to associated companies with a total value of CHF 0.1 million in 2024 (2023: CHF 0.6 million). At December 31, 2024, Rieter had no open trade receivables out of these sales.

Rieter’s total share in profit of individually immaterial associated companies resulted from continuing operations. The share in other comprehensive income was insignificant.

Material accounting policies

Associated companies are entities over which Rieter has significant influence, generally through a shareholding of between 20 and 50 percent of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize Rieter’s share in profit or loss of associated companies after the date of acquisition.

Defined contribution plans

The expense for defined contribution plans amounted to CHF 3.9 million in 2024 (2023: CHF 4.1 million).

Defined benefit plans

Defined benefit plans in accordance with IAS 19 exist mainly in Switzerland and Germany.

In Switzerland, plan participants are insured against the financial consequences of old age, disability, and death. The amount of risk benefits provided by the plans in case of disability or death depends on the insured salary of the employee. Life-long retirement benefits are calculated by multiplying the individual retirement savings capital at the date of retirement by the conversion rate defined and guaranteed in the regulations of the plan.

The plans are administered by independent and legally autonomous foundations that are under government supervision. The pension plans’ most senior governing body (board of trustees) is composed of equal numbers of employee and employer representatives.

All material risks (financial and actuarial risks) are borne by the foundations. These risks are monitored on an ongoing basis and addressed by the board of trustees. If a plan is underfunded, the board of trustees has to perform an overall assessment of the financial situation, identify the reasons for the deficit, and decide on appropriate measures to eliminate the shortfall.

Pursuant to the Swiss Federal Law on Occupational Retirement, Survivors’, and Disability Pension Plans (BVG), the trustees of the foundations are responsible for the definition and the execution of the investment strategy. The investment strategy defined by the trustees aims at aligning the plan assets and liabilities in the medium and long term.

The status of defined benefit plans was as follows:

The defined benefit plan obligations changed as follows:

The weighted average duration of the defined benefit plan obligations is 11.5 years (2023: 11.7 years).

The fair value of defined benefit plan assets developed as follows:

The total result on plan assets was CHF 83.3 million in the year under review (2023: CHF 70.4 million). The Group expects employer contributions in the amount of CHF 6.5 million to its defined benefit plans in 2025.

The major categories of plan assets were as follows:

At the end of 2024, plan assets included no Rieter Holding Ltd. bonds (December 31, 2023: none). No Rieter shares were held at the end of 2024 and 2023. Cash equivalents (e.g. money market instruments), equity instruments and 50 percent of the debt instruments have a quoted market price on an active market. Real estate and other assets, which include private equity investments, do not usually have a quoted market price.

Expenses recognized in the income statement for the defined benefit plans include:

Remeasurements of defined benefit plans recognized as other comprehensive income contain:

Main actuarial assumptions used at year-end are:

The global interest rate levels remain volatile. After a decrease in 2023, in particular long-term interest rates decreased again in 2024 by 0.6 percentage points.

The measurement of the defined benefit plan obligations is particularly sensitive to changes in the discount rate and the assumptions regarding future pension growth. The table below shows the potential impact of a change of 0.5 percentage points in the discount rate and a change of 0.5 percentage points in the assumed future pension growth rate on the defined benefit plan obligations:

A change in the assumption of future wage growth rate by 0.5 percentage points would impact defined benefit plan obligations by less than 1 percent (same as 2023).

The sensitivity analysis above considers the change in one assumption while leaving the other assumptions unchanged. Interdependencies were not taken into account.

Significant accounting estimates and judgments

Defined benefit plans require actuarial calculations in order to determine defined benefit plan obligations. These calculations are based on assumptions such as discount rates, future trends in wages and pensions as well as the employee share in the costs of the future benefits. Statistical data such as mortality tables and staff turnover probability rates are also used to calculate defined benefit plan obligations. If these parameters change, actual future results can deviate from the actuarial calculations. Such deviations can have an effect on the defined benefit plan obligations. Apart from the above-mentioned decrease in discount rate in 2024, the earthquake in Türkiye and the global economic and geopolitical uncertainties had no significant impact on the remaining assumptions used in the actuarial calculations at December 31, 2024 and 2023.

Material accounting policies

Employee benefit plans are operated by certain subsidiaries, depending upon the level of coverage provided by government post-employment benefit facilities in the respective countries. Such employee benefit plans exist on the basis of both defined contributions and defined benefits.

Contributions to defined contribution plans are recognized as personnel expenses in the period in which they are incurred.

For defined benefit plans, the benefit plan obligation is determined using the projected unit credit method, with valuations being carried out by independent actuaries, usually at the end of each year. The present value of the defined benefit plan obligation less the fair value of the defined benefit plan assets is recognized in the balance sheet as a liability. When the calculation results in a potential asset, the respective defined benefit plan asset recognized is limited to the present value of the economic benefits available in the form of reductions of future contributions to the plan (asset ceiling). Remeasurements of the net defined benefit plan assets and liabilities, which comprise actuarial gains and losses, the return on defined benefit plan assets (excluding interest), and the effect of the asset ceiling, are recognized immediately as other comprehensive income. Contributions by employees are recognized as a reduction of service cost in the period in which the related service is rendered.

Net interest on the net defined benefit plan assets and liabilities is determined by applying the discount rate used to measure the defined benefit plan obligation at the beginning of the year. Service cost and net interest are recognized in the income statement as personnel expenses.

The members of the Board of Directors can choose whether to receive all or part of their remuneration in Rieter shares. In the context of their remuneration for 2024, four members of the Board of Directors received in total 5 868 shares on January 17, 2025. The cost of CHF 0.5 million was charged to the consolidated income statement 2024. On January 17, 2024, five members of the Board of Directors received in total 7 880 shares in connection with their remuneration for 2023. The market value of the shares granted was CHF 0.7 million and was charged to the consolidated income statement 2023. The shares are taken from treasury shares of Rieter Holding Ltd. and cannot be sold for three years.

In the context of the variable remuneration for 2024, the members of the Group Executive Committee will receive Rieter shares with a market value of CHF 1.3 million in April 2025. The respective cost of CHF 1.3 million was charged to the consolidated income statement 2024. In the context of the variable remuneration for 2023, the members of the Group Executive Committee received 5 707 shares with a market value of CHF 0.7 million on April 17, 2024. The respective cost of CHF 0.7 million was charged to the consolidated income statement 2023. These shares are taken from treasury shares of Rieter Holding Ltd. and cannot be sold for three years.

Rieter operates an incentive plan for the members of the senior management (excluding the members of the Group Executive Committee). In January 2024, it was decided that a defined percentage of the existing short-term incentive will be settled by transferring it to the new incentive plan. The participants will receive Rieter shares with a market value of CHF 2.1. million in April 2025. The respective cost of CHF 2.1 million was charged to the consolidated income statement 2024. The shares are taken from treasury shares of Rieter Holding Ltd. and cannot be sold for three years.

The previous long-term incentive plan, granting the participants rights to receive a certain number of Rieter shares free of charge or to receive cash compensation in the amount of the same number of shares at the market price after three years, expires on May 4, 2025. The exercise of the rights in three years is subject to an unterminated employment contract. If employment is terminated within three years, the rights expire. Exceptions can be granted by the Remuneration Committee. There are no further performance-related criteria.

The movement of the outstanding rights was as follows:

The estimated fair value of the outstanding rights amounts to the market value of a Rieter share of CHF 84.90 at December 31, 2024. In 2024, the cost of the long-term incentive plan in the amount of CHF 0.1 million affected the income statement (2023: CHF 0.1 million). The liability recognized in the balance sheet at the end of the year was CHF 0.4 million (December 31, 2023: CHF 0.3 million).

Material accounting policies

Rieter uses share-based awards in the context of the compensation of the members of the Board of Directors, the Group Executive Committee, and senior management. There are equity-settled and cash-settled share-based awards.

Share-based payments are measured at fair value at the grant date and recognized in the consolidated income statement over the vesting period. For share-based payments that are settled with equity instruments, a corresponding increase in equity is recognized.

The following deferred income tax effects were recognized in other comprehensive income: