3.8Financial Assets at Fair Value through Profit or Loss

During 2017, the Group signed various agreements to expand its partnerships into the Korean and other Asian markets. As part of these agreements, the Group acquired zero-coupon bonds with attached warrants (“Bonds and Warrants”), issued by Kumho & Company Inc., in the amount of KRW 160.0 billion with maturities from 1 to 20 years. As at December 31, 2025, KRW 35.7 billion or EUR 21.1m (2024: KRW 41.6 billion or EUR 27.2m; 2023: KRW 104.0 billion or EUR 72.6m) remain outstanding. The attached warrants allow conversion of the Bonds to equity of Kumho & Company Inc. under certain conditions. The Bonds and Warrants have been designated as a financial asset at fair value through profit or loss.

In 2024, the Group received cash amounting to EUR 41.8m as part of the voluntary redemption of the zero-coupon bonds issued by Kumho & Company Inc., corresponding to a principal repayment of KRW 62.4 billion. This redemption resulted in a gain of EUR 26.2m, which has been recognized in the financial result as well as additional fair value adjustments in the amount of EUR 15.4m (Note 4.2). The Bonds and Warrants were initially recognized at fair value of EUR 64.5m with the EUR 67.3m difference to the total cash outflow being recognized as an intangible asset in relation to the market access and customer relationship gained through these agreements. The customer relationship is amortized over its estimated useful life of 30 years. The Bonds and Warrants are measured at fair value through profit or loss.

The Bonds and Warrants are not traded in an active market and therefore have been categorized as Level 3 in the fair value hierarchy mainly due to their embedded warrants. The valuation is derived from valuation techniques that consider the characteristics of the components of the hybrid instrument, combining a discounted cash flow model for the debt component and a binomial option pricing model for the attached warrants. Main inputs into the valuation methodology include observable factors such as interest rates, credit risk spreads and country risk spreads, volatility as well as unobservable inputs such as book values of the underlying assets and profitability of the underlying business adjusted for future uncertainty.

In 2025, the Group received cash amounting to EUR 3.6m as part of the annual scheduled repayment. As at December 31, 2025, inputs used for the valuation include Korean risk-free rates of 2.1% (2024: 2.1%; 2023: 2.4%), a country risk premium of 0.7% (2024 and 2023: 0.7%), a credit risk premium of 4.1% (2024: 4.3%; 2023: 6.5%) based on a comparable company basket and a volatility of 21.0% (2024: 17.5%; 2023: 20.0%). Further, non-publicly available information was used in internal assessments to determine illiquidity discounts and input factors.