2025 Full Year Results

2 March 2026

RHI Magnesita N.V.

("RHI Magnesita" or the "Company" or "Group")

2025 Full Year Results

Strong H2 recovery driven by decisive self-help actions; margin momentum into 2026

RHI Magnesita, the leading global supplier of high-grade refractory products, systems and solutions, today announces its results for the year ended 31 December 2025 ("2025" or the "Year" or the "Period").

The Group delivered a strong second half performance, driven by continued execution of management-led self-help measures across pricing, cost control, and plant network optimisation, supported by modestly improved industrial demand. These actions resulted in a materially stronger H2 performance and provide a strong foundation for rebuilding margins into 2026 and beyond.

1. Adjusted figures are alternative performance measures "APMs" excluding impairments, amortisation of intangibles and exceptional items to enable an understanding of the underlying performance of the business. Full details are shown in the APM section.

2. 2025 Net debt includes IFRS16 lease liabilities of ?64 million. For further details see Note 37.

3. Pro Forma Adjusted EBITDA is used to assess financial gearing and includes a full year of Adjusted EBITDA contribution from businesses acquired during the year.

4. Recommended final dividend of ?1.20 per share, subject to AGM approval on 13 May 2026. Full year dividend of ?1.80 per share includes the interim dividend of ?0.60per share paid to shareholders on 25 September 2025.

Operational and strategic highlights

· Successful execution of sustainable self-help cost saving initiatives across operations, SG&A, and plant network, combined with modest price increases and slightly improved industrial demand, drove strong H2 performance after a poor H1.

· Regionalisation is further strengthened to lower fixed costs and drive agility in an increasingly fragmented and protectionist trade environment. North America continues to perform well delivering 32% of the Group's gross profit. India delivers 4% volume growth alongside growing steel production, but very soft pricing environment currently caps earnings growth. European demand remains poor but plant network optimisation and cost savings turned around profitability in H2. Business performance in South America and the newly defined region META (Middle East, Türkiye and Africa) has been undermined by Chinese exports.

· The acquisition and integration of Resco (closed on 28 January 2025) progressed well, delivering ?184 million of revenue and ?25 million of Adjusted EBITA during the eleven months.

· Continued progress on sustainability initiatives - recycling rate at a record of 15.9% (2024: 14.2%) and further potential through recent acquisitions (BPI).

Financial highlights

· Persistent global demand weakness and sustained pressure from Chinese steel and refractory exports resulted in a sales volume decline of 2% and a revenue decline of 3% (1% on constant currency basis) to ?3,366 million (including Resco).

· Revenue decreases in several regions were largely offset by growth in North America of ?154 million (+22% y/y, including Resco). Europe recorded the largest revenue decline of 12% primarily driven by lower sales volumes.

· Full year Adjusted EBITA is ?373 million with a strong H2 weighting driven by self-help actions. This result meets expectations despite external pressure driving fixed cost underabsorption, weak pricing in H1 and foreign exchange headwinds.

· Steel revenues were slightly ahead of the prior year at constant currency at ?2,328 million. The Resco acquisition offsets an organic volume reduction in steel across several regions, which together with pricing pressure, contributed to a reduced gross margin.

· The higher-margin Industrials project business (e.g., Non-ferrous metals and Glass) was softer than guided particularly in H1 2025. Further weakness in H2 2025 was largely offset by over-delivery on cost savings.

· Cash generation remains strong, with cash conversion of 105% (2024: 103%), supported by disciplined working capital management. Free cash flow of ?214 million was broadly in line with 2024 level.

· Despite strong cash generation the cash-out for the Resco acquisition increased net debt to ?1,495 million resulting in a leverage of 2.9x Net Debt to Pro Forma Adjusted EBITDA, lower than guidance.

Outlook and guidance

Market conditions are expected to remain challenging. They continue to be impacted by global uncertainty that depresses customer demand and investment. Steel end-markets remain at cyclical lows globally, with no near-term demand recovery reflected in the order book.

A number of regulatory developments in two of our key markets, the European Union and Brazil, may provide medium-term support, but the timing and impact of these measures remain uncertain and are not expected to materially affect refractory demand before 2027. 

Industrial project market visibility remains limited, with modest improvements expected in non-ferrous metals and no recovery currently evident in the glass segment. Overall visibility is expected to improve in the second half of 2026 at the earliest reflecting the planning lead time of industrial projects.

Adjusted EBITA for FY 2026 is expected to increase by approximately 17% to ?435 million on constant currency basis, which translates to around ?400 million due to foreign exchange headwinds. This improvement is driven by continued execution of self?help and efficiency measures. Earnings are expected to follow a more normalised H1:H2 split. With refractory raw material pricing expected to remain at historically low levels, further cost and portfolio optimisation measures are being implemented across raw material assets to support a structural improvement in vertical integration profitability over the coming years. Initial benefits from this are expected in 2026 with an increase to a double digit run rate from 2027.

Strong cash generation is expected to continue, with cash conversion above 90% and further deleveraging supported by disciplined working capital management. Net debt is expected to reduce further, with leverage reducing to around 2.6x at year end. M&A remains a core component of the strategy, but no closure of a sizable deal with an associated cash out is anticipated in 2026.

Stefan Borgas, CEO said: "Our relentless self-help driven turnaround measures delivered a strong and sustainable business performance increase in the second half against a very challenging market backdrop. While management was focused on the business performance turnaround, equally important strategic progress has been made. The Resco integration and synergy realisation are on track, recycling rates are up in almost all regions and our digital transformation is progressing well. Despite not yet foreseeing a major market tailwind yet, we expect our self-help measures and strategic progress to drive business performance further operational and financial improvements in 2026.

I want to thank all employees, customers, partners, and shareholders for their continued trust. With our enhanced global footprint, rigorous operational discipline, and clear strategic focus, we believe RHI Magnesita is forging a path for continued success despite persistent headwinds."

For further enquiries, please contact:

Investors: Alexander Ordosch, Head of Investor Relations, +43 699 1870 6162, [email protected]

Media: Hudson Sandler, +44 020 7796 4133, [email protected]

Conference call

A presentation for analysts will be held at 8:30am UK time (9:30 CET) on 2 March 2026 at the offices of Hudson Sandler, 25 Charterhouse Square, London EC1M 6AE. The analyst presentation will be broadcast live via webcast and conference call.

The webcast can be accessed using the following link:

https://www.investis-live.com/rhimagnesita/6978eea1b05b910017bae71c/lepp

A replay will be made available via the webcast link shortly after the event finishes.

About RHI Magnesita

RHI Magnesita is the leading global supplier of high-grade refractory products, systems and solutions which are critical for high-temperature processes exceeding 1,200°C in a wide range of industries, including steel, cement, non-ferrous metals and glass. With a vertically integrated value chain, from raw materials to refractory products and full performance-based solutions, RHI Magnesita serves customers around the world, with over 20,000 employees in 76 main production sites (including raw material sites), 16 recycling facilities and more than 70 sales offices. RHI Magnesita intends to leverage its leadership in terms of revenue, scale, product portfolio and diversified geographic presence to target strategically those countries and regions benefiting from more dynamic economic growth prospects.

RHI Magnesita offers investors EBITDA and free cash flow comparable to FTSE 100 peers, the highest free cash flow yield in the UK industrials sector, a compelling M&A growth story and high operational gearing to market recovery. The Group seeks to allocate capital to maximise value generation for shareholders. After maintenance capex and dividend, M&A, organic investments and buybacks compete for capital. The global refractory industry remains fragmented and the M&A pipeline presents an opportunity to continue a value-accretive consolidation strategy. RHI Magnesita's resilient margins and profitability support the use of debt financing to fund acquisitions, anchored by a leverage target of 1.0 - 2.0x EBITDA through the cycle and up to c.2.5x for compelling M&A opportunities.

The Group is listed within the Equity Shares (Commercial Companies) category (ESCC) of the Official List of the London Stock Exchange (symbol: RHIM) and is a constituent of the FTSE 250 index, with a secondary listing on the Vienna Stock Exchange (Wiener Börse). For more information please visit: www.rhimagnesita.com

FORWARD LOOKING STATEMENTS

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events. These statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions which could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and, except as required by applicable law, the Company does not assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained in it and nor does it intend to. You should not place undue reliance on forward looking statements, which apply only as of the date of this announcement. No statement in this announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. As a result of these risks, uncertainties and assumptions, the recipient should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise. The Company has no obligation or undertaking to update or revise the forward-looking statements contained in this announcement to reflect any change in its expectations or any change in events, conditions, or circumstances on which such statements are based unless required to do so by applicable regulations. The numbers presented throughout this announcement may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures, due to rounding.

CEO REVIEW

2025 was a year of continued transformation for RHI Magnesita. Disciplined and decisive action ensured we navigated the continued downturn while strengthening our business for long-term outperformance.

In 2025, RHI Magnesita continued a Group-wide shift towards a deeply embedded safety mindset by further driving our Safety Culture Transformation Programme. Having kicked off this extensive program in 2024, we soon understood it was necessary to increase both the depth and accuracy of our reporting, to enable us to take much more meaningful steps to improve safety standards for our colleagues. Tragically, the first half of 2025 was overshadowed by a devastating incident, with a Brazilian colleague passing away from the effects of a sepsis that occurred during long hospitalisation after a work-related injury. With no Serious Injuries or Fatalities in H2/2025 we are working tirelessly across our organisation towards a future where such incidents do not occur again. We are committed to our long-term goal of "Zero-Harm - No Injury".

Introduction & Financial Performance

In 2025, RHI Magnesita operated against a very challenging macroeconomic backdrop, with subdued global industrial demand and continued pricing pressure across end markets. Revenue for the year was impacted by weaker volumes, particularly in Europe. Annual Adjusted EBITA of ?373 million was delivered with a very significant H2 weighting. H1 Adjusted EBITA was ?141 million (margin of 8.4%), reflecting margin pressure from an adverse product mix and lower project activity. Management actions drove a clear improvement in performance in the second half of the year, with Adjusted EBITA of ?232 million, corresponding to a margin of 13.7% despite ongoing market headwinds. These improvements were driven by cost efficiency programmes, network optimisation and pricing discipline.

The acquisition of Resco, completed in January 2025, strengthened the Group's North American position and contributed positively to earnings, while integration progressed in line with expectations. Cash generation remained resilient, with adjusted operating cash flow of ?391 million, supporting a resilient balance sheet development. Net debt stood at ?1,495 million at year-end, resulting in leverage of 2.9x Net Debt to Pro Forma Adjusted EBITDA by year end. While 2025 was a demanding year, decisive operational and financial actions enabled RHI Magnesita to exit the year with improved profitability momentum, a more efficient cost base, and a stronger platform for value creation in 2026 and 2027.

Industrial Downturn & Trading Environment

In 2025, the slowdown in global industrial activity reduced global refractory demand. The continued high levels of global uncertainty caused subdued furnace utilisation, delayed maintenance cycles, and deferred metal and industrial project investments.

Within this backdrop, the Group experienced both a sharp reduction in order intake and volumes as customers postponed or cancelled major rebuilds, as well as pricing pressure arising from lower demand and elevated Chinese refractory exports. Despite available refractory capacity exceeding demand in all regions worldwide, short termism by undisciplined competitors results in further capacity additions in regions like India and META.

Coupled with this downturn was an uncertainty regarding global tariffs. RHI Magnesita navigated this by constantly reviewing supply chains, pricing and operational footprint. Our flexible global network allowed us to act quickly through multiple tariff iterations and maintain a strong and uninterrupted supply to our customers. Our North American business delivered a strong performance in 2025 despite headwinds, including unprecedented market volatility, a ~13% USD/EUR devaluation and an ongoing industrial-sector weakness. The region also successfully started to manage a major business transformation with the integration of Resco and BPI and the rollout of our digital transformation.

Despite the downturn and uncertainty in 2025, our diversified footprint, integrated production capabilities, innovation and integration with our customers provided reasonable stability in this context.

Management Measures Deliver Results

In response to a challenging demand and pricing environment in 2025, the management took decisive actions to protect profitability, strengthen cash generation and improve the structural efficiency of the Group. These measures delivered tangible benefits in the second half of the year and positioned RHI Magnesita for improved performance going forward. A comprehensive cost and efficiency programme was implemented across operations, including plant network optimisation and tighter cost control. These actions contributed to a significant and sustainable improvement in profitability.

4PRO proved to stabilise the business performance and protect long-term value. It combines process optimisation, vertical-integration, circular economy, technology, and customer-centric services into a unique framework, delivering customers performance-based solutions including design, installation, maintenance, monitoring and lifecycle services. It positions RHIM as specialist supplier of complex solutions, fully integrated with our customers, and thereby significantly stabilises RHIM's margins in times of commodity market volatility. We saw a significant strengthening of our 4PRO program in 2025 laying a solid framework for plans to execute an additional 30+ extensive contracts in 2026.

We saw great successes from our integration of Resco, following completion of the acquisition in January 2025. Organisational design and key health & safety measures were implemented swiftly, ensuring the focus of the combined team on delivering customer value while implementing higher safety standards for all. We delivered SG&A synergies from the Resco integration well over our target for 2025.

Sustainability

Our strong sustainability performance in 2025 was underpinned by further innovation and the expansion of our sustainable product offering. This continues to be an important commercial differentiator as our customers in hard-to-abate industries seek solutions to help reduce their CO2 emissions.

We exceeded our global recycling target of 15%, driven primarily by the outstanding performance in Europe. Across Europe, we reached an average recycling rate of more than 22%, with several months even surpassing 24% thanks to the collaboration with MIRECO and our European recycling team. Our recycling capabilities in the United States were also enhanced by the joint venture we agreed in June with BPI. The transaction will support our ability to supply lower carbon recycled refractories to our expanded customer base in North America under a tighter tariff regime.

Our constant focus on innovation delivers new sustainability gains, and we deepen our partnership with MCi Carbon to develop the world's first CCU plant in the refractory industry. This will be our Green Minerals Initiative, which will open a new business area for RHIM while absorbing 50kt/year of CO2 of our existing processes. To support this one-of-a-kind project, we secured a ?30 million grant from the Austrian government to build the first industrial-scale plant in our Hochfilzen operation in Austria. Additionally, we unveiled the world's first RAPTOR multi sensor system, which sets new standards for recycling. We have already reduced our CO2 intensity by 15% (scope 1,2 and 3 raw materials) since 2018 with new recycling initiatives and CCU technology opening further room to reduce.

Summary

In this difficult market environment, RHIM has delivered solid results and progressed strategically. The business is improving every year and the Company is well positioned for long-term success and any market recovery.

I thank all employees, customers, partners, and shareholders for their continued trust. With our enhanced global footprint, rigorous operational discipline, and clear strategic focus, we believe RHI Magnesita is forging a path for continued success.

FINANCIAL REVIEW

Reporting approach

The Company uses a number of alternative performance measures (APMs) in addition to measures reported in accordance with IFRS Accounting Standards as adopted by the European Union ("IFRS"), which reflect the way in which the Board and the Executive Management Team assess the underlying performance of the business. The Group's results are presented on an "adjusted" basis, using APMs that are not defined or specified under the requirements of IFRS, but are derived from the IFRS financial statements. The APMs are used to improve the comparability of information between reporting periods and to address investors' requirements for clarity and transparency of the Group's underlying financial performance. The APMs are used internally in the management of our business performance, budgeting and forecasting. A reconciliation of key metrics to the reported financials is presented in the section titled APMs.

All references to comparative 2024 numbers in this review are on a reported basis, unless stated otherwise. All reported volume changes year-on-year are excluding mineral sales.

Revenue

Group revenues for the year amounted to ?3,366 million, representing a 1% decrease on a constant currency basis (2024: ?3,390 million). On a reported basis, revenues declined by 3% (2024: ?3,487 million), reflecting the material impact of foreign exchange headwinds. Excluding M&A the Group revenues amounted to ?3,171 million. The depreciation of key currencies against the euro, specifically the US dollar, Chinese yuan, and Indian rupee, negatively impacted reported revenues by ?97 million.

Cost of goods sold

Cost of goods sold decreased by 1% to ?2,594 million (2024: ?2,628 million), although this represented an increase of 2% on a constant currency basis.

The cost of purchased raw materials declined by 5% to ?1,009 million. Plant-related labour costs decreased by 5% to ?551 million, driven by network optimisation and strict fixed-cost controls. Energy costs declined by 1% as supply conditions eased resulting in lower crude oil and natural gas prices. Freight costs remained broadly flat year-on-year, supported by subdued freight demand and global overcapacity following market disruptions linked to US tariff announcements. Expenditure on general supplies, including pallets, packaging, and spare parts, increased to ?615 million, compared to ?548 million in 2024.

Despite these overall input cost reductions, low production volumes resulted in fixed-cost underabsorption, which weighed on unit costs.

Raw material prices

Average raw material prices softened in 2025 relative to 2024. Notably, the price of high-grade dead burned magnesia (DBM) from China declined by 8%, primarily driven by oversupply in China and reduced global refractory demand. This pricing environment exerts downward pressure on finished goods pricing, as production costs decrease for non-vertically integrated competitors.

Gross profit

Gross profit declined to ?772 million (2024: ?859 million), with the gross margin contracting to 22.9% (2024:24.6%). This compression reflects pricing pressure, an unfavourable shift in product mix and fixed-cost under-absorption, particularly in the first half of the year.

1. Adjusted EBITA is an APM used by the Group. Refer to APMs for definitions.

2. Restated due to an accounting policy change. See Note (1) from the financial statements.

Selling, general and administrative expenses (SG&A), decreased by 12% to ?360 million (2024: ?408 million), despite inflationary pressures on labour costs across all regions. The reduction reflects focused efforts to reduce SG&A costs in Europe, the continued migration of activities into shared services and the India hub, realised synergies from the Resco acquisition, and lower bonus provisions.

Depreciation decreased to ?132 million (2024: ?136 million), and amortisation of intangible assets stood at ?52 million in 2025 (2024: ?39 million).

Adjusted EBITDA

The Group delivered Adjusted EBITDA of ?504 million, representing a 7% decrease compared to the prior year (2024: ?543 million). The Adjusted EBITDA margin declined to 15.0% (2024: 15.6%) primarily reflecting lower gross profit, partially mitigated by reductions in SG&A and R&D expenditure.

Adjusted EBITA

Adjusted EBITA decreased to ?373 million (2024: ?407 million), with a margin of 11.1% (2024: 11.7%). Currency movements had an adverse impact of ?13 million. The weak first-half performance was partially offset by management actions implemented during the year, which contributed ?70 million of savings in the second half. Resco and BPI contributed a combined ?25 million to Adjusted EBITA in 2025.

The Group's refractory business delivered a resilient margin contribution of 10.0 ppts to the Adjusted EBITA margin of 11.1%. Vertical integration contributed 1.1 ppts (2024: 0.8 ppts), remaining close to record lows due to persistently low prices for refractory raw materials. Lower raw material prices negatively impact the earnings contribution from the Group's raw material assets, which is based on the difference between market prices and cost of internal raw material production.

Items excluded from adjusted performance

In order to accurately assess the underlying performance of the business, the Group excludes certain items from Adjusted EBITA related to other income and expenses. In total, net adjustments to EBITA amounts to ?98 million, including:

· ?(44) million in expenses for the ERP system upgrade and digital architecture update

· ?(27) million in network optimisation costs related to closure of Mainzlar and Wetro plants

· ?(10) million in permanent SG&A headcount reduction

· ?(9) million in restructuring costs for outsourcing the Group's shared service centre network and expanding its scope

· ?(8) million in expenses related to M&A activities

Net finance expenses

Net finance expenses increased to ?95 million (2024: ?42 million). This aggregate figure includes interest payable on borrowings, net of interest income on cash balances, alongside the impact of foreign exchange movements, pension-related charges, present value adjustments, factoring costs, and expenses attributable to non-controlling interest.

Net interest expenses amounted to ?46 million (2024: ?39 million), reflecting reduced interest income on cash balances, and higher average borrowings following the Resco acquisition.

Foreign exchange movements resulted in a net loss of ?16 million in 2025 compared to a gain of ?11 million in 2024. This net loss relates primarily to the weakening of the Turkish lira, the Mexican peso and the US dollar, and includes embedded US dollar-linked derivatives in sales contracts and currency hedging costs.

Other net financial expenses totalled ?33 million (2024: ?14 million), comprising factoring costs of ?11 million (2024: ?10 million), pension charges of ?11 million (2024: ?12 million), and present value adjustments related to onerous contracts from the 2017 EU remedies amounting to ?(6) million (2024: ?(7) million). The increase in other net financial expenses is primarily attributable to significantly higher revaluation of the Group's obligation to purchase the remaining stakes it does not already own in Jinan New Emei and Chongqing.

Taxation

The reported tax charge for 2025 amounted to ?34 million (2024: ?46 million), resulting in a reported effective tax rate of 27% (2024: 23%). Reported profit before tax was ?128 million (2024: ?200 million).

On an adjusted basis, profit before tax was ?273 million (2024: ?347 million), with a corresponding adjusted effective tax rate of 25% (2024: 24%). The variance between the reported and adjusted tax metrics reflects the impact of specific adjusting items, comprising non-taxable IFRS income associated with put option valuations, non-capitalisable losses arising from restructuring initiatives, and non-deductible expenses incurred through M&A activity.

Profit after tax

On a reported basis, the Group generated profit after tax of ?94 million (2024: ?154 million). Profit attributable to the shareholders of RHI Magnesita N.V. stood at ?86 million (2024: ?142 million), resulting in reported earnings per share of ?1.82 (2024: ?3.01). Profit attributable to shareholders is derived after deducting non-controlling interests of ?8 million (2024: ?12 million). As the Group holds a 56% majority shareholding in RHI Magnesita India Ltd., the substantial majority of these non-controlling interests are attributable to the earnings consolidated from this subsidiary.

On an adjusted basis, profit after tax amounted to ?206 million (2024: ?263 million), with Adjusted earnings per share at ?4.18 (2024: ?5.32). A comprehensive reconciliation of EBITA to EPS and Adjusted EBITA to Adjusted EPS is provided in the table within the Alternative Performance Measures (APMs) section.

Working capital

Excluding the impact of M&A, working capital decreased to ?718 million (2024: ?865 million), primarily driven by reductions in inventory and accounts receivable in response to lower business activity and currency movements. Including the impact of M&A, total Group working capital amounted to ?769 million at year-end.

Working capital intensity measured as a percentage of annualised revenue over the final three months of the year, decreased to 21.7% (2024: 23.4%). Inventory intensity remained broadly flat at 26.3% (2024: 26.1%) and accounts receivable intensity improved to 11.7% (2024:12.9%).

Cash flow

Adjusted operating cash flow decreased to ?391 million (2024: ?419 million), representing a cash flow conversion from Adjusted EBITA of 105% (2024: 103%). The Adjusted operating cash flow decline primarily reflects a ?39 million reduction in Adjusted EBITDA compared to 2024 and lower cash generation from working capital, partially offset by lower capital expenditure of ?111 million (2024: ?145 million). Free cash flow decreased to ?214 million (2024: ?225 million).

Cash income tax payments decreased to ?54 million (2024: ?69 million), while net interest paid amounted to ?83 million (2024: ?89 million).

Financial position

Net debt increased to ?1,495 million (31 December 2024: ?1,251 million), primarily reflecting the acquisition of Resco. Net debt comprises gross debt of ?1,786 million, IFRS 16 lease liabilities of ?64 million and cash equivalents of ?355 million. Total leases of ?64 million are included in the Group's Net debt position as required by IFRS 16.

This results in a leverage ratio at 2.9x Net debt to Pro Forma Adjusted EBITDA, compared to 2.3x as at 31 December 2024. Pro forma Adjusted EBITDA includes a full-year contribution from businesses acquired during the year.

Available liquidity at 31 December 2025 was ?955 million (31 December 2024: ?1,376 million), comprising undrawn committed facilities of ?600 million and cash and cash equivalents of ?355 million (2024: ?576 million).

The Group continues to target a Net debt to Pro Forma Adjusted EBITDA range of 1.0-2.0x, with temporary increases for compelling M&A opportunities. Leverage is expected to reduce to around 2.6x by the end of 2026.

Return to shareholders

The Board has recommended a final dividend of ?1.20 per share for the 2025 financial year, representing a cash outflow of ?85 million for the full-year dividend. Subject to approval at the Annual General Meeting scheduled for 13 May 2026, the final dividend will be payable on 11 June 2026 to shareholders on the register at the close of trading on 29 May 2026. The ex-dividend date will be 28 May 2026.

Together with the interim dividend of ?0.60 per share paid on 25 September 2025, this results in a full year dividend of ?1.80 per share. This represents a dividend cover of 2.3x Adjusted earnings per share, in-line with the Board's stated dividend policy. 

The Board's dividend policy remains unchanged, targeting a dividend cover below 3.0x adjusted earnings over the medium term. Dividends are paid on a semi-annual basis, with one third of the prior year's full year dividend paid at the interim.

OPERATIONAL REVIEW

Steel overview

Supplying refractory products and services to the steel industry accounted for approximately 69% of Group revenues in 2025 (2024: 68%). Applications span ironmaking, primary steelmaking, secondary metallurgy and casting, with product lifecycles ranging from hours to several years depending on the application. As a result, refractory consumption is typically classified as an operating expense by steel producers and represents approximately 2-3% of steelmaking operating costs.

Global steel markets remained weak throughout 2025. Demand softness across construction, automotive, machinery and consumer goods was compounded by elevated Chinese steel exports, which continued to exert pricing and volume pressure on producers outside China. According to World Steel Association data, global steel production declined by approximately 2% in 2025.

Steel revenues declined by 2% to ?2,328 million (2024: ?2,367 million). Excluding the impact of M&A activity, revenues decreased by approximately 6% to ?2,218 million (2024 ?2,367 million), reflecting a combination of lower volumes and pricing pressure. Global steel demand declined across all Group regions excluding North America, India and META. Shipped volumes of steel refractories declined by 2% on an organic basis, partially offset by strong momentum in India. The acquisition of Resco largely offset organic volume declines, resulting in broadly flat reported volumes.

Gross profit declined to ?523 million (2024: ?553 million), with the gross margin compressing to 22.5% (2024: 23.4%). This reflects pricing pressure in competitive markets, particularly India and META, as well as fixed-cost under-absorption during the first half of the year. Competitive dynamics were exacerbated by elevated Chinese steel and refractory exports, particularly into the Middle East, Africa and Latin America.

Industrial overview

RHI Magnesita is a leading supplier of refractory products and services to a broad range of Industrial customers, including Cement & Lime, Non-ferrous metals, Glass, Energy, Environmental, Industrial applications and Chemicals. Industrial customers accounted for 28% of Group revenues in 2025. Refractories in these markets are typically classified as capital expenditure and exhibit longer replacement cycles, ranging from less than one year to over 20 years depending on application.

Industrial markets were uneven in 2025. While certain Non-ferrous metals segments showed resilience, overall demand was impacted by project deferrals, tariff-related uncertainty and weak end markets, particularly in Glass.

Industrial revenues contracted by 9% to ?958 million (2024: ?1,055 million), accompanied by a 6% decrease in overall shipped volumes. Industrial revenues excluding the impact of M&A declined by 17% to ?880 million (2024: ?1,055 million). This represents unusual underlying softness in Glass, Non-ferrous metals, and Industrial applications sub-segments, resulting in a 6% contraction in shipped volumes. The Year saw a cyclical low in high-value project execution, with volumes from major projects tracking below the comparative levels recorded in the prior year. Consequently, performance was notably skewed to the second half of 2025. This significant second-half weighting was primarily driven by two distinct dynamics: (i) the deferral of orders into the latter part of the year amidst uncertainty generated by global tariff tensions; and (ii) typical seasonal demand patterns during the peak cement production period. The Group anticipates a normalisation of trading patterns in 2026, with revenues weighting expected to return to a more balanced profile consistent with historical trends.

Gross profit declined to ?241 million (2024: ?300 million), with the gross margin compressing to 25.1% (2024: 28.4%).

Minerals

Raw materials not consumed internally are sold externally and reported under Minerals. External mineral sales generated revenues of ?80 million in 2025 (2024: ?65 million), with revenue growth driven primarily by price recovery against a weak prior-year comparative, while volumes remained broadly stable.

Regional business units

New definitions of regional business units

In 2025, the Group reassessed its operating segments, driven by significant progress in its local-for-local strategy, the integration of the acquired Resco Group and a comprehensive restructuring of profit centres. This acquisition is considered a milestone in the development of the local-for-local strategy, resulting in the reassignment of certain sales markets to the regions.

The Group re-organised its regional business units to drive increased focus as follows:

i. created a new 'Middle East, Türkiye and Africa' ("META") region, with the Middle East and Africa business having previously been included within 'India, West Asia and Africa' and Türkiye previously included in 'Europe, CIS and Türkiye';

ii. re-named 'India, West Asia and Africa' region to 'India', now focused solely on India;

iii. re-named 'South America' region to 'Latin America'; and

iv. moved Mexico out of the 'North America' region into 'Latin America'.

Although this section primarily focuses on customer industries the regional financial information presented in this section for 2025 including the comparative data for 2024 has been prepared according to the new regional structure adopted in 2025.

North America

North America delivered a strong performance, with revenue increasing by 22% to ?863 million (2024: ?709 million), or by 26% in constant currency terms. Growth was primarily driven by the acquisition and successful integration of Resco and BPI, which contributed ?195 million in incremental revenue. Excluding M&A, revenue remained broadly stable (down ?16 million) despite significant market volatility, tariff uncertainty and a weakening US dollar. 

Revenue performance in North America was materially reshaped by the acquisition of Resco, which structurally rebalanced exposure toward Industrial end markets relative to the historical dominance of Steel. Consequently, Industrial revenues increased by 20% to ?180 million (2024: ?150 million), while Steel revenues increased by 22% to ?683 million (2024: ?559 million), both supported by the M&A.

Gross profit increased to ?249 million (2024: ?219 million), supported by a 19% increase in shipped volumes following the acquisition. Gross margin declined to 28.9% (2024:30.9%), as higher average revenue per tonne was offset by increased production costs. North America contributed 32% of global gross profit, and slightly more on EBITA level due to lean fixed cost structure.

In the Steel segment, volumes excluding M&A remained broadly flat, compared to a 0.7% increase in regional steel production according to WSA data. Performance was mixed, with Canadian steel production declining by 7.2% following tariff-related mill shutdowns. Structurally, the North American steel industry continues to transition toward electric arc furnaces. This trend is expected to accelerate following Nippon Steel's acquisition of US Steel, which includes a committed ?11 billion investment in new or upgraded capacity by 2028 that will likely displace legacy integrated steel production.

In the Industrial segment, North America made solid progress integrating Resco's specific competencies in Foundry, Process Industries, and Petrochemicals, successfully delivering the expected synergies across the Group. However, tariff-related trade tensions during the first half of the year led to uncertainty and the deferral of several industrial projects.

Sustainability metrics remained flat, with the recycling rate in North America at 14.1% compared to 14.2% in 2024. This rate is projected to increase significantly in the future following the agreement of a joint venture with BPI Inc. in June 2025.

Trade policy uncertainty and currency volatility continue to drive macroeconomic uncertainty. US tariffs announced in April 2025 increased input costs, largely mitigated through pricing actions. While tariffs are expected to support domestic steel production over time, the Group faces exposure to tariffs on finished goods imports, including a 15% tariff on European products and a potential 50% tariff on Brazilian imports. This exposure is mitigated by the Group's strong local-for-local footprint, with production in-region expected to increase to over 75% in 2026. Trade tensions also drove considerable foreign exchange volatility, with the US dollar weakening to 1.16 against the euro (from 1.04 at year-end 2024), resulting in a ?24 million revenue headwind.

Europe & CIS

Revenues in Europe & CIS contracted by 12% to ?727 million (2024: ?829 million), driven primarily by a 14% reduction in shipped volumes against a backdrop of stable pricing. The volume reduction, combined with an unfavourable shift in product mix, weighed on profitability. Gross profit decreased by 15% to ?151 million (2024: ?178 million), with the gross margin declining to 20.8% (2024: 21.4%). This primarily reflects a temporary but significant contraction in the Industrial business, where sales volumes declined by 22%, outpacing the 10% decline in Steel, due to project deferrals in Non-ferrous metals and persistent weakness in Glass.

Regional steel production contracted by 4.1%, with the most pronounced decline in Germany, where steel output fell by 8.6% according to WSA data. Steel demand was severely impacted by weakness in the automotive sector, with European production in 2025 falling to levels last seen during the 2009 and 2020-2022 downturns. Trade policy volatility compounded these pressures, as the US reintroduced 25% tariffs on EU steel and aluminium exports in March, escalating to broader measures and a 50% tariff in June, materially undermining the competitiveness of European exports and disrupting supply chains. Although tariffs were partially reduced to 15% in the second half of the year, the earlier disruption significantly weighed on the Steel and Non-ferrous sectors. Despite these headwinds, the Group defended market share through more economical grades and expanded its 4PRO offering into Cement & Lime, Non-ferrous metals and Waste2Energy.

Industrial volumes declined, reflecting a lower number of projects during the Period. The Cement segment was resilient, supported by volume growth from infrastructure demand and disciplined pricing behaviour. The Glass market remained under pressure, particularly within the packaging end markets, leading glass makers to delay maintenance projects.

Low capacity utilisation and strategic alignment of the production footprint led to the closure of the Mainzlar and Wetro plants in Germany in 2025. Further network optimisation in the region and globally remains under consideration.

Recycling performance improved materially, with the region achieving a recycling rate of 22.3% (2024: 20.0%), as the MIRECO business model delivered growth in both the internal use of recycled raw materials and the sale of secondary raw materials to third parties. Operational efficiency and material recovery rates were enhanced by the deployment of advanced laser sorting technologies, specifically 'Maestro' and 'Raptor'.

Latin America

Revenues in Latin America decreased by 13% to ?536 million (2024: ?617 million), or by 9% on a constant currency basis. The average revenue per tonne fell by 9%, reflecting lower prices and an unfavourable product mix as the share of high-value industrial projects declined. Shipped volumes decreased by 4% as market conditions in the region remained challenging. The influx of Chinese imports exerted pressure on the domestic steel and refractory sectors, further compounded by US tariffs introduced in the second half of the year on both raw materials and finished goods from Brazil.

Gross profit declined to ?147 million (2024: ?190 million), with the gross margin contracting to 27.4% (2024: 30.8%). The impact of lower revenue was partially mitigated by lower input costs and operational efficiencies.

Steel volumes declined by 3%, more than regional steel production, which declined by 1.1% according to WSA data. The region delivered notable commercial achievements, securing projects in flow control, coke ovens, and reheat furnaces. While the Group successfully regained market share in Mexico, the country continues to face pressure from Chinese imports. The strategic focus in the region remains on driving adoption of the 4PRO model and renewing long-term contracts with key customers.

Industrial business declined in volume by 6%, driven by project postponements, particularly in Non-ferrous metals and an unfavourable shift toward lower-value Cement sales.

Recycling performance improved, with the recycling rate increasing to 12.2% (2024: 11.8%).

India

Revenues in India declined slightly to ?441 million (2024: ?458 million), but increased by 2% on a constant currency basis. Shipped volumes increased by 4%, reflecting sustained structural demand across end markets, while average revenue per tonne declined by 7% due to pricing pressure from imports and domestic competition.

Gross profit decreased by 18% to ?64 million (2024: ?78 million), with the gross margin decreasing to 14.4% (2024: 16.9%).

Steel sales volumes grew by 4%, supported by a robust macroeconomic backdrop. Steel production in India increased by 10.4% year-on-year, according to WSA data. Elevated imports from China, driven by domestic oversupply, intensified competition and pricing pressure from both multinational and local players. In response, Indian mills prioritised strict cost optimisation, reducing spend on refractories. Despite this challenging environment, the Group executed a strategic recovery, recapturing market share temporarily lost in the fourth quarter of 2024. RHI Magnesita strengthened its position in premium product categories through technical differentiation and targeted price increases, supported by the continued rollout of 4PRO, which secured significant contracts with tier-one steel mills. Demand for iron-making and Direct Reduced Iron (DRI) refractories also progressed well, generating a healthy pipeline of new orders.

Industrial business performance was weak in the region, partially offset by a 3% increase in sales volumes. Pricing pressure in Cement was driven by unseasonal monsoons and low capacity utilisation. The Group mitigated these challenges through accelerated deployment of 4PRO, recipe optimisation and the introduction of advanced global technologies to reinforce differentiation.

Sustainability initiatives continued to gain momentum, with the recycling rate increasing to 18.8% (2024: 15.5%), supported by an expanded local vendor base, closer collaboration with R&D and partnerships aimed at localising operations and increasing the use of recycled refractories.

China & East Asia

Revenues in the China & East Asia region declined by 11% to ?377 million (2024: ?425 million), reflecting a 3% decline in shipped volumes and an 8% reduction in average revenue per tonne. The challenging pricing environment weighed on profitability, with gross profit declining by 17% to ?75 million (2024: ?90 million) and the gross margin decreasing to 19.8% (2024: 21.2%), with the majority of the margin erosion concentrated in the Industrial business.

Steel refractory volumes increased by 1%, while steel revenue declined due to pricing pressure, representing a relative outperformance compared with WSA data which indicates a 4.2% decline in steel output in China in 2025.

Within the refractory market, subdued demand and excess capacity eroded pricing discipline across the industry. Despite these conditions, the Group demonstrated commercial resilience, securing new ladle, ISO, and 4PRO contracts in China, Japan, Indonesia, and Vietnam, partially offsetting softer volumes elsewhere.

The Industrial segment faced headwinds, with sales volumes decreasing by 11% and demand weakened across most end markets, with the Glass business particularly affected by oversupply following a sharp contraction in solar-related project pipelines. This downturn reflects a subdued construction environment, prompting leading cement producers to rationalise capacity. Customers adopted increasingly cost-focused procurement strategies, including bundled bidding and tighter purchasing limits, intensifying competitive pressure.

Despite the challenging market conditions, the Group continued to advance its strategic initiatives, including a new collaboration in the Environment, Energy & Chemicals product category, further expansion of 4PRO contracts and diversification of the Industrial portfolio into adjacent product categories. Sustainability initiatives also advanced, supported by partnerships in Southeast Asia and Japan, with the regional recycling rate increasing to 9.6% in 2025 (2024: 8.2%).

?

Middle East, Türkiye & Africa

Revenues in the Middle East, Türkiye and Africa region contracted by 11% to ?342 million (2024: ?384 million), reflecting a 6% reduction in shipped volumes and a 5% decline in average revenue per tonne. This translated into a 21% decrease in gross profit to ?78 million (2024: ?98 million), with the gross margin compressing to 22.8% (2024: 25.6%).

Steel demand across the region remained weak, with intensified price competition in the refractory market further pressuring performance. Steel refractory volumes declined by 5%, diverging from regional steel production growth of 3.3% reported by WSA, while average revenue per tonne fell due to tender-driven dynamics and heightened competition from Chinese refractory imports. Against this commoditised backdrop, the Group's 4PRO offering gained traction, resonating with customers through its focus on operational efficiency, extended campaign life and sustainability benefits.

The Industrial business revenues remained broadly stable, despite a 7% decline in volumes. Gross margin weakened, primarily due to product mix effects and softer demand in the Glass sector. Cement customers continue to be highly price-sensitive but increasingly sought energy-efficient and decarbonisation solutions integrated into their value chains. Aluminium and Hydrocarbon Processing Industry customers seek technical partnerships and installation support, creating opportunities for RHI Magnesita to differentiate through its 4PRO offering, which combines advanced materials with service and digital tools. Following the Resco acquisition, the Group is actively promoting its leading petrochemical product range in the Middle East and anticipates stronger traction going forward.

Recycling initiatives continued to advance, particularly in Türkiye, positioning circular solutions as a future growth lever. Recycling capabilities are expected to become an increasingly important differentiator in upcoming 4PRO contracts given the comparatively limited capabilities of competitors in the region.

ALTERNATIVE PERFORMANCE MEASURES (APMs)

Definitions of APMs used by the Group are set out below. The purpose and usefulness of each APM and a reconciliation to the nearest IFRS equivalent measure, or a reference to a reconciliation appearing elsewhere in this document. In general, APMs are presented externally to meet investor and analyst requirements for clarity and transparency of the Group's underlying financial performance. APMs are also used internally in the management of the Group's business performance, budgeting and forecasting. APMs are non-IFRS measures which enable investors and other readers to review alternative measurements of financial performance, but they should not be used in isolation from the main financial statements. Commentary within the Annual Report, including the Financial Review, the Consolidated Financial Statements and the accompanying notes, should be referred to in order to fully appreciate all the factors and context affecting the Group's financial performance. Readers are strongly encouraged not to rely on any single financial measure and to carefully review the Group's reporting in its entirety.

Performance APMs

Adjusted EBITDA

Adjusted EBITDA is a key non-IFRS measure that the Executive Management Team (EMT) and Directors use internally to assess the underlying financial performance of the Group and is viewed as relevant to capital intensive industries. The ratio of Net Debt to Adjusted EBITDA is used as a measure of financial gearing.

Adjusted EBITDA is defined as EBIT, as presented in the Consolidated Statement of Profit or Loss, before amortisation, depreciation, and Excluded Items (see definition below).

Pro Forma Adjusted EBITDA

Pro Forma Adjusted EBITDA is used to assess financial gearing and includes a full year of Adjusted EBITDA contribution from businesses acquired during the year.

Adjusted EBITA

Adjusted EBITA is a key non-IFRS measure that the EMT and Directors use internally to assess the underlying performance of the Group.

Adjusted EBITA is determined consistently with Adjusted EBITDA, but includes depreciation expense of property, plant and equipment to reflect the wear and tear cost and future replacement of productive assets.

Adjusted EPS

Adjusted EPS is a key non-IFRS measure and one of the Group's KPIs. Adjusted EPS is used to assess the Group's underlying operational performance, post tax and non-controlling interests on a per share basis.

This measure is based on Adjusted EBITA after finance income and expenses, taxes, share of profit or loss from associates and joint ventures and non-controlling interest. Share of profit or loss from associates and joint ventures is adjusted to exclude impairments and gains or losses recognised on disposals.

Adjusted EPS excludes finance income and expenses and certain foreign exchange effects, that are not directly related to operational performance. This includes the non-cash present value adjustments for the Oberhausen provision.

Taxes are calculated by applying the effective tax rate normalised for restructuring expenses and impairments.

Excluded items

Items that are excluded in arriving at the Group's Adjusted measures of Adjusted EBITA, EBITDA and EPS include:

Other income, other expenses and restructuring expenses as reflected on the Consolidated Statement of Profit or Loss as well as gains and losses within interest income, interest expenses and other net financial expenses that are non-recurring in nature and not reflective of the underlying operational performance of the business. Excluded items include restructuring related provisions, costs in relation to corporate transactions and other non-recurring costs. The tax impacts of the above Excluded Items are also adjusted for.

Cash flow performance measures

Adjusted operating cash flow and Free cash flow

Adjusted operating cash flow is a key non-IFRS measure used by the EMT and the Directors to reflect the operational cash generation capacity of the Group before the cash impacts of Excluded Items (see definition above).

Adjusted operating cash flow is defined as Adjusted EBITDA adjusted for working capital items, changes in other assets and liabilities and capital expenditure and other non-cash items, such as share based payments. This APM is reconciled to Net Cash flow from operating activities as follows:

1. As reflected in the Consolidated Statement of Cash Flows

Free cash flow is determined from the IFRS measures of Net cash flow from operating activities, net cash used in investing activities and net cash (used in)/provided by financing activities and excludes the cash impacts of purchases and disposals of business and subsidiaries, dividends paid to equity shareholders of the Group, share capital transactions with shareholders, proceeds and repayment of borrowings and current borrowings and repayment of leases.

Free cash flow is reconciled to Cash changes in Net debt in the table in the Cash flow and working capital section. Cash changes in Net debt is reconciled to Change in cash and cash equivalents in the Net Debt APM reconciliation.

Balance sheet

Liquidity

Liquidity comprises cash and cash equivalents, short term marketable securities and undrawn committed credit facilities.

1. As reflected in the Consolidated Statement of Financial Position.

Net Debt

Net Debt is the excess of current and non-current borrowings, associated debt derivatives for which hedge accounting is applied and lease liabilities over cash and cash equivalents and short-term marketable securities. The Board uses this measure for the purpose of capital management. A reconciliation of Net Debt is included in Note 33 to the Consolidated Financial Statements.

1. As reflected in the Consolidated Statement of Cash Flows

Working capital

Working capital consists of inventories plus trade receivables and other receivables minus trade payables and other payables. Working capital intensity provides a measure of how efficient the Company is in managing operating cash conversion cycles. It is measured as Working capital divided by trailing three-month revenues (annualised) and is expressed as a percentage.

Return on invested capital (ROIC)

ROIC reflects the annualised return on invested capital of the Group. ROIC is calculated as NOPAT (net operating profit after tax) divided by average invested capital of the year.

1. As reflected in the Consolidated Statement of Profit and Loss

2. As reflected in the Consolidated Statement of Cash Flows

3. As reflected in the Consolidated Statement of Financial Position

4. Invested capital figures are excluding the ?184million non-cash share from the Dalmia acquisition in India (closed in 2023).

5. NOPAT divided by average invested capital of the year.

GLOSSARY

Consolidated Statement of Profit or Loss for the year ended 31 December 2025

1) Restated due to an accounting policy change (see Note (1)).

2) EBIT is a non-IFRS measure and is defined in Note (37).

Consolidated Statement of Comprehensive Income for the year ended 31 December 2025

Consolidated Statement of Financial Position as at 31 December 2025

Consolidated Statement of Cash Flows for the year ended 31 December 2025

Consolidated Statement of Changes in Equity for the year ended 31 December 2025

1) This mainly relates to the recognition of the financial liability and derecognition of the non-controlling interest related to the acquisition of BPI RHIM LLC.

1) This mainly comprises the effects of the acquisition of non-controlling interests of Seven Refractories' Group and P-D-Refractories as well as the final adjustments to the purchase price allocations of Seven Refractories' Group and P-D Refractories, both completed in 2024.

1. Authorisation of Consolidated Financial Statements and Statement of Compliance with the IFRS Accounting Standards

The Consolidated Financial Statements of RHI Magnesita N.V. and its subsidiaries (collectively referred to as "RHI Magnesita" or "the Group") for the year ended 31 December 2025 were approved and authorised for issue by the Board of Directors on 1 March 2026 and will be submitted for adoption to the Annual General Meeting ("AGM") in May 2026. RHI Magnesita is a public limited company incorporated under the laws of the Netherlands (naamloze vennootschap), having its official seat (statutaire zetel) in Arnhem, the Netherlands, and its office at Kranichberggasse 6, 1120 Vienna, Austria. It is registered with the Dutch Trade Register under number 68991665 and listed on the London Stock Exchange, with a secondary listing on the Vienna Stock Exchange (Wiener Börse).

The Group is a global industrial group whose core activities include the development and production, sale, installation and maintenance of high-grade refractory products and systems used in industrial high-temperature processes exceeding 1,200°C.

The Consolidated Financial Statements of the Group have been prepared in accordance with IFRS Accounting Standards as adopted by the European Union. The Consolidated Financial Statements also comply with the financial reporting requirements included in Title 9 of Book 2 of the Dutch Civil Code.

The accounting policies that follow have been consistently applied to all years presented, except where otherwise indicated. With the exception of specific items such as derivative financial instruments, plan assets for defined benefit obligations, financial assets measured at Fair Value through Profit or Loss or Other Comprehensive Income and financial liabilities measured at Fair Value through Profit or Loss, the Consolidated Financial Statements are prepared on a historical cost basis.

Certain comparative figures in the Consolidated Financial Statements and accompanying Notes have been revised to conform to the current year presentation as a result of changing the accounting policies with regards to the composition of certain line items in the Consolidated Statement of Profit or Loss. Management believes that the following changes provide more useful information since the revised presentation has been aligned with the internal presentation for performance monitoring purposes:

? Amortisation of intangible assets is presented in a separate line item in the Consolidated Statement of Profit or Loss. Previously, amortisation was included in three line items, being cost of sales, selling and marketing expenses as well as general and administrative expenses, based on the internal allocation of amortisation to the functional expense categories. As a result, gross profit for the comparative period increased by ?11 million, while selling, general and administrative expenses and cost of sales for the comparative period decreased by ?28 million, respectively ?11 million, resulting in an amortisation of intangible assets of ?39 million for the comparative period.

? Presentation of selling, general and administrative expenses as a new line item in the Consolidated Statement of Profit or Loss. This line item combines the previous line items selling and marketing expenses as well as general and administrative expenses. 

? Research and development expenses are presented in a separate line item in the Consolidated Statement of Profit or Loss. Previously, they were included in the former line item general and administrative expenses.

In addition, the Group underwent a reassessment of its operating segments which also led to changes in the composition and number of RHIM's cash generating units for impairment testing of property, plant and equipment, intangible assets and goodwill. These changes are described in more detail in Notes (3), (5) and (17).

The financial year of RHI Magnesita N.V. and the Group corresponds to the calendar year. Subsidiaries with a financial year different to the Group, due to local legal requirements, provide financial information to allow consolidation consistent with the Group's financial year. The Consolidated Financial Statements are presented in Euros, and all values are rounded to the nearest ? million, except where otherwise indicated. The Group has availed of the exemption provided by section 264 paragraph 3 HGB of the German Commercial Code for the following entities: RHI Magnesita Sales Germany GmbH (Wiesbaden), RHI Refractories Site Services GmbH (Wiesbaden), RHI Magnesita Deutschland AG (Wiesbaden), RHI Magnesita Wetro GmbH (Puschwitz) and RHI Magnesita Bochum GmbH (Bochum). According to this provision, the mentioned companies are exempt from preparing statutory financial statements, where required by the German Commercial Code, since they are included in the Consolidated Financial Statements of the Group. Furthermore, the exemption pursuant to section?264b HGB has been applied for RHI Urmitz AG & Co. KG (Mülheim-Kärlich).

The Consolidated Financial Statements consolidate the Financial Statements of RHI Magnesita N.V. and its subsidiaries. Subsidiaries are consolidated from the date on which the Group obtains control, including when control is obtained via potential voting rights, and continue to be consolidated until the date that control ceases.

The financial information of subsidiaries is prepared for the same reporting year as the parent company, using consistent accounting policies. When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in the Consolidated Statement of Profit or Loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in Other Comprehensive Income (OCI) in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This treatment may mean that amounts previously recognised in OCI are recycled through the Statement of Profit or Loss. Intercompany balances and transactions, including unrealised profits arising from intragroup transactions, are eliminated in full. Unrealised losses are eliminated in the same way as unrealised gains except that they are only eliminated to the extent that there is no evidence of impairment.

Non-controlling interests represent the equity in subsidiaries that is not attributable, directly or indirectly, to the shareholders of RHI Magnesita N.V..

Please refer to the Company Financial Statements of RHI Magnesita N.V. for a list of the Company's subsidiaries, joint ventures and associates in which it holds more than 20%. Please refer to page 310 for more detail.

In considering the appropriateness of adopting the going concern basis in preparing the Consolidated Financial Statements, the Directors have assessed the potential cash generation of the Group and considered downside scenarios that model different degrees of potential economic downturn, using the same model performed for the viability assessment. This assessment covers at least 12 months from the date of approval of the Consolidated Financial Statements.

The scenarios considered by the Directors include a severe but plausible downside and a reverse stress test which determines the level of EBITDA that could breach the debt covenant of the Group's principal borrowing facilities. Mitigating actions within management control which would be undertaken in the downside and reverse scenarios, include but not limited to: reduce fixed costs and selling, general and administrative expenses, reduction of working capital and capital expenditure, seeking a debt covenant waiver and reducing or cancelling the dividend, but these were not incorporated in the downside modelling.

The Directors have also considered the Group's current liquidity, available facilities and debt covenant coverage. As of 31 December 2025, the Consolidated Statement of Financial Position reflects cash and cash equivalents of ?355 million (2024: ?576 million). In addition, the Group has access to a ?600 million (2024: ?600 million) Revolving Credit Facility (RCF), which is currently undrawn and not relied upon for the purpose of the going concern assessment. In 2025 and the previous reporting period, the Group complied with the debt covenant of the Group's principal borrowing facilities (refer to Notes (27) and (37)).

In the scenarios assessed and taking into account liquidity, available resources and before the inclusion of all mitigating actions, the Directors consider it is appropriate to continue to adopt the going concern basis in preparing the Consolidated Financial Statements for the period ended 31 December 2025.

2. Impact of new financial reporting standards and interpretations

Management has assessed the impact of new or amended IFRS Accounting Standards as adopted by the European Union effective on or after 1 January 2025. Management assessed that the application of these has not had a material impact on the Consolidated Financial Statements for 2025.

Furthermore, management has assessed the impact of new or amended IFRS Accounting Standards issued by the IASB that have not yet become effective. No new or amended IFRS Accounting Standards have been adopted early. Except for IFRS 18, the potential impact of which is currently being assessed, management does not anticipate any significant impact on the Consolidated Financial Statements in the period of initial application after the adoption of these amendments.

IFRS 18 'Presentation and Disclosure of Financial Statements' was published in April 2024 with the aim to enhance comparability of financial statements. The key changes introduced by IFRS 18 relate to the structure of the Consolidated Statement of Profit or Loss, disclosures related to management-defined performance measures ("MPMs"), aggregation and disaggregation of items in the primary financial statements as well as information disclosed in the Notes and minor changes in the Consolidated Statement of Cash Flows. IFRS 18 will replace existing guidance in IAS 1 'Presentation of Financial Statements' and some of the guidance in IAS 7 'Statement of Cash Flows'. IFRS 18 becomes effective for financial years beginning on or after January 1, 2027. The European Commission has already endorsed IFRS 18 for use in the EU. Management does not intend to early adopt IFRS 18.

IFRS 18 introduces a defined structure for the Consolidated Statement of Profit or Loss including five categories, namely operating, investing, financing, income tax and discontinued operations. Entities are required to classify their expenses and income to these categories mainly based on the main business activities and additional guidance provided by IFRS 18. In addition, according to IFRS 18 two subtotals must be presented on the face of the Consolidated Statement of Profit or Loss after the first two categories (i.e. operating profit or loss and profit or loss before financing and income tax).

IFRS 18 stipulates new disclosure requirements related to alternative performance measures that meet the definition of MPMs according to IFRS 18. According to the new guidance, disclosures related to MPMs include, but are not limited to, a reconciliation from the MPMs to the most directly comparable IFRS 18 specific subtotal or total presented in the Consolidated Statement of Profit or Loss and Consolidated Cash Flow Statement; these need to be disclosed in a single note within the Notes.

A review of the impact of IFRS 18 is being undertaken, and the impact of adopting the new IFRS accounting standard will be determined once this review has been completed. In particular, the classification of expenses and income to the five categories and the introduction of (new) subtotals requires an assessment at general ledger account level per legal entity. In addition, the impact of the MPM related disclosures requires an assessment of which of the Group's alternative performance measures meet the definition of MPMs according to IFRS 18 and how the information to be disclosed for both profit or loss as well as cash flow related MPMs can be obtained. Therefore, the impact of adopting IFRS 18 cannot be reliably estimated until this work is substantially complete.

3. Significant accounting policies, judgements and estimates

Business combinations are accounted for using the acquisition method. The identifiable assets acquired, and liabilities assumed, including any contingent consideration, are recognised at their fair values at the acquisition date. The amount of the purchase consideration and value of non-controlling interest on acquisition, if any, above the fair value of assets and liabilities is recognised as goodwill. A bargain purchase gain, if any, is recognised within other income immediately. Transaction costs related to a business combination are expensed as incurred. The acquisition of a non-controlling interest in a subsidiary and the sale of an interest are accounted for as transactions within equity unless they result in the loss of control. Sales of interests accounted for as equity transactions also include share issues in subsidiaries which dilute RHI Magnesita N.V.'s share in the subsidiary's net assets and where the dilution does not result in the loss of control. The difference between the purchase consideration or sale proceeds after tax and the relevant proportion of the non-controlling interest, measured by reference to the carrying amount of the interest's net assets at the date of acquisition or sale, is recognised in retained earnings as a movement in equity attributable to the shareholders of RHI Magnesita N.V..

Where the Group acquires less than 100% of shares in a business combination, there is an accounting policy choice whereby non-controlling interest is either reflected at the proportionate share of the acquired identifiable net assets (excluding goodwill) or at fair value. This accounting policy choice can be exercised individually for each acquisition. If a non-wholly owned subsidiary of RHI Magnesita N.V. is the deemed acquirer in a business combination, goodwill is measured either as the excess of the full consideration transferred plus non-controlling interests, if any, over the acquired identifiable net assets or as the excess of RHI Magnesita N.V.'s share in the consideration transferred plus non-controlling interests, if any, over the acquired identifiable net assets. This accounting policy choice can be exercised individually for each acquisition too. For business combinations achieved in stages, the Group's previously held equity interest is remeasured to fair value at the acquisition date. Any gains and losses arising from such remeasurement are recognised in profit or loss.

Net assets of subsidiaries not attributable to the shareholders of RHI Magnesita N.V. are shown separately in equity as non-controlling interests.

As part of a business acquisition or subsequently, the Group may enter into agreements with non-controlling interests in the form of a call option, a put option or a forward contract to acquire the outstanding shares. A call option provides the Group with the right to acquire the outstanding shares not already owned, while a written put option allows the non-controlling interest to sell their shares to the Group. A forward contract creates a commitment for the Group to purchase and for the non-controlling interest to sell the outstanding shares at a later date. The option or forward price may be based on an earnings multiple such as EBITDA subject to contractual limits, if any, or may be fixed and exercisable at a future date. A financial liability is recognised on the written put option or forward contract at the present value of the estimated redemption amount. Where the option is assessed to result in the non-controlling interest transferring the risks and rewards of ownership to the Group, on acquisition, the financial liability forms part of the purchase consideration with no value assigned to non-controlling interests. For fixed price call and put options or fixed price forward contracts, the risks and rewards of ownership relating to the outstanding shares are assumed to have transferred to the Group. Whereas variable price call and put options or variable price forward contracts, for which the price equals fair value and where the legal owner of the outstanding shares retains voting and dividend rights, the risks and rewards of ownership are assumed to remain with the legal owner of the outstanding shares.

Where the risks and rewards of ownership under the option or forward contract are not transferred to the Group, the financial liability is not considered as part of the purchase consideration and a non-controlling interest is recognised on acquisition. The financial liability is initially recognised against equity attributable to shareholders of RHI Magnesita N.V.. Subsequently, the Group derecognises the non-controlling interest, to the extent that it is equal or less than the financial liability, against equity attributable to shareholders of RHI Magnesita N.V..

The subsequent measurement of the financial liability is conditional on the nature of the underlying cash consideration. If the option or forward contract will be settled at a fixed cash consideration, the financial liability is subsequently measured at amortised cost. If the option or forward contract will be settled at a variable cash consideration (e.g. EBITDA multiple or similar profit or loss measures) the financial liability is subsequently measured at Fair Value through Profit or Loss. Fair value changes resulting from the remeasurement of the financial liability are presented within other net financial expenses.

If a financial liability is recognised for an option or a forward contract over outstanding shares, dividends paid to non-controlling interest are presented as an expense within other net financial expenses unless there is a contractual right to reduce the financial liability. Dividend payments to non-controlling interest without such a financial liability reduce the non-controlling interests presented in equity without impacting the Consolidated Statement of Profit or Loss.

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary at the date of acquisition. Goodwill is initially recognised at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill recognised as an asset is reviewed for impairment at least annually.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Mining rights arise from business acquisitions and are generally amortised based on the depletion of the related mines. Depletion is calculated based on the volume mined in the period in proportion to the total estimated economically viable volume. In exceptional cases, mining rights are amortised on a straight-line basis over their expected useful lives.

Customer relationships arise from business acquisitions and are measured at assigned fair values on acquisition, less accumulated amortisation and impairments. These intangibles are amortised on a straight-line basis over their expected useful lives.

Trade names arise from business acquisitions and are measured at assigned fair values on acquisition, less accumulated amortisation and impairments. These intangibles are amortised on a straight-line basis over their expected useful lives.

Research costs are expensed in the year incurred and presented within research and development expenses. Development costs, including internally developed software controlled by the Group, are only capitalised as internally generated intangible assets if the costs can be measured reliably and are expected to result in future economic benefits either through use or sale. Capitalisation will also only arise when the product or process development can be clearly defined and is feasible in technical, economic and capacity terms. For internally developed software controlled by the Group, costs are capitalised when these can be directly and conclusively allocated to individual programmes and represent new software or a significant extension or improvement on existing software. All other internally developed software costs are expensed. Development costs are amortised on a straight-line basis over their expected useful lives of up to ten years, with internally developed software amortised over a period of up to four years. Amortisation is presented in a separate line item which includes amortisation of purchased intangible assets in addition to amortisation of internally generated intangible assets.

These mainly represent purchased third-party software controlled by the Group, land-use rights and patent fees and are recognised when future associated economic benefits are expected to accrue to the Group. These intangibles are initially measured at their acquisition cost and amortised over their expected useful lives.

Where the Group does not have control of cloud-based third-party software, the configuration and customisation costs as well as the recurring service subscription fee are typically expensed in the reporting period the services are received.

The useful lives of the Group's main classes of intangible assets are:

The useful economic lives of intangible assets are reviewed regularly and adjusted if necessary.

The carrying values of intangible assets are assessed at each reporting period for indicators of impairments. See below for the accounting policy relating to impairment of non-current assets other than goodwill.

Property, plant and equipment is measured at acquisition or construction cost, less accumulated depreciation and accumulated impairment losses. These assets are depreciated on a straight-line basis over their expected useful life to their estimated residual values, if any, and from when they are available for use in the manner intended by management.

Construction costs of assets comprise direct costs as well as a proportionate share of capitalisable overhead costs and borrowing costs. If borrowed funds are directly attributable to an investment, borrowing costs are capitalised as a cost of the assets. If no direct connection between an investment and borrowed funds can be demonstrated, the weighted average rate on borrowed capital of the Group amounting to 3.31% (2024: 2.95%) is used as the capitalisation rate due to the central funding of the Group.

Expected demolition and disposal costs at the end of an asset's useful life are capitalised as part of its acquisition cost and recorded as a provision. The recognition criteria are: (i) a legal or constructive obligation towards a third-party and (ii) the ability to reliably estimate future cost.

Land and plant under construction are not depreciated. Depreciation of property, plant and equipment is based on the following useful lives:

The carrying value of property, plant and equipment is assessed at each reporting period for indicators of impairments. See below for accounting policy relating to impairment of non-current assets other than goodwill.

The residual values and economic useful lives of property, plant and equipment, are reviewed regularly and adjusted if necessary.

When components of plant or equipment have to be replaced at regular intervals, the relevant replacement costs are capitalised when economic benefits are expected to arise for the Group. The carrying amount of the replaced components is derecognised. Regular maintenance and repair costs are expensed as incurred.

Gains or losses from the disposal of property, plant and equipment, which result from the difference between the net realisable value and the carrying amount, are recognised as income or expense in the Consolidated Statement of Profit or Loss.

A contract, or part of a contract, which conveys the right to control the use of an identified asset for a period of time in exchange for payments to be made to the owners (lessors) is accounted for as a lease. Contracts are assessed to determine whether it is or contains, a lease at inception or when the terms and conditions of a contract are significantly changed. The lease term is the non-cancellable period of a lease, together with contractual options to extend or to terminate the lease early, where it is reasonably certain that an extension option will be exercised, or a termination option will not be exercised. At the commencement of a lease contract, a right-of-use asset and a corresponding lease liability are recognised, except for low-value items or for lease terms of less than 12 months. The commencement date of a lease is the date on which the underlying asset is made available for use. The lease liability is measured at an amount equal to the present value of the lease payments during the lease term that are not paid at that date. The lease liability includes contingent rentals and variable lease payments that depend on an index, rate, or where they are fixed payments in substance.

The lease liability is remeasured when the contractual cash flows of variable lease payments change due to a change in an index or rate when the lease term changes following a reassessment. Lease payments are discounted using the interest rate implicit in the lease. If that rate is not readily available, the incremental borrowing rate is applied. The incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term and similar security, the funds necessary to obtain an asset of a similar nature and value to the right-of-use asset in a similar economic environment.

In general, a corresponding right-of-use asset is recognised for an amount equal to each lease liability, adjusted by the amount of any pre-paid lease payment relating to the specific lease contract, less any lease incentives, and for any estimated restoration and removal costs. Right of use assets are depreciated on a straight-line basis over the useful life of the leased asset or, if this is shorter, over the lease term. The depreciation on right-of-use assets is recognised in the Consolidated Statement of Profit or Loss. Right-of-use assets are assessed for impairment indicators (see accounting policy on impairment of non-current assets).

Goodwill is reviewed at least annually for impairment. Any impairment loss is recognised as an expense immediately. For the purpose of impairment testing, goodwill is allocated to the individual Cash-Generating Units (CGUs) expected to benefit from the business combination. If the recoverable amount of the CGU is less than the carrying amount of the CGU (including goodwill) allocated to it, the resulting impairment loss is applied first to the allocated goodwill and then to the other assets on a pro-rata basis of the carrying amount of each asset. Reversals of impairment losses on goodwill are not permitted.

Property, plant and equipment, including right-of-use assets and intangible assets are tested for impairment if there is any indication that the value of these items may be impaired. An asset is considered to be impaired if its recoverable amount is less than its carrying amount. In the Group, individual assets do not generate cash inflows independent of one another, and assets are combined in CGUs, which largely generate independent cash inflows. In the reporting period, the composition and number of RHIM's CGUs changed due to the reassessment of its operating segments. The impact from transitioning from a customer industry-based CGU structure to a regional CGU structure is described in Note (17).

The recoverable amount of a CGU is defined as the higher of its fair value less costs of disposal and its value in use (present value of future cash flows). For the purpose of testing CGUs for impairment the Group determines the recoverable amount of the CGUs solely on the basis of value in use. In assessing value in use, the estimated future cash flows of the CGU in its present condition 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, including country, specific to the CGU.

The cash flows projections used for impairment testing are based on the strategic business and financial planning model of the Group including the 2026 Budget, as approved by the Board, and the Long-Term Plan covering a subsequently following four-year period. The terminal value is based on a growth rate derived from the difference of the current and the possible degree of utilisation of the assets. To forecast the CGUs' cash flows, management predicts the growth rate using external sources for the development of the sales regions and expert assumptions, including forecasts about the regional growth of steel production and the output of Industrial clients. Growth rates are also influenced by the development of the specific refractory consumption patterns, including technological improvements.

If the carrying amount is higher than the recoverable amount, an impairment loss equivalent to the resulting difference is recognised in the Consolidated Statement of Profit or Loss. If the reason for an impairment loss recognised in the past for property, plant and equipment or for intangible assets ceases to exist, a reversal of the impairment is recognised in profit or loss. An impairment loss is reversed only to the extent that the CGUs' carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in prior years.

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. In general, financial instruments can be classified to be measured subsequently at amortised cost, fair value through profit or loss or fair value through other comprehensive income. Classification of financial assets depends on the contractual terms of the cash flows as well as on the entity's business model for managing the financial assets. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Financial assets are classified as amortised cost if the contractual cash flows include solely payments of principal and interest and which are held in order to collect the contractual cash flows. If the contractual cash flows include solely payments of principal and interest, but are held to collect both the contractual cash flows and sell the financial asset, then they are classified as fair value through other comprehensive income. If the contractual cash flows do not solely include payments of principal and interest, then they are classified as fair value through profit or loss.

The Group initially recognises securities on the trading date when it becomes a party to the contractual provisions of the instruments. All other financial assets and financial liabilities are initially recognised on the date when they are originated. Financial instruments, except for trade receivables, are initially recognised at fair value. Financial assets are derecognised if the entity transfers substantially all the risks and rewards or if the entity neither transfers nor retains substantially all the risks and rewards and has not retained control. Financial liabilities are derecognised when the contractual obligations are settled, withdrawn or have expired.

Investments in debt securities are subsequently measured at fair value through profit and loss if the contractual terms of cash flows do not solely include payments of principal and interest. Otherwise, they are subsequently carried at amortised cost.

Investments in equity securities, including non-consolidated subsidiaries, are of minor importance and recognised and measured either at fair value through profit or loss, or at fair value through OCI, if the latter option was exercised.

Financial assets at amortised costs are measured by applying the effective interest method.

Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognised at fair value and, depending on the business model, subsequently carried either at amortised cost minus any valuation allowances or at fair value through other comprehensive income minus any valuation allowances for expected or incurred credit losses. Irrespective of the measurement category, any impairment losses are recognised in the Consolidated Statement of Profit or Loss. Valuation allowances for expected credit losses are calculated in accordance with the simplified approach of the impairment model for financial instruments (see accounting policy on impairment of financial assets below).

The Group sells trade receivables to financial institutions in the scope of factoring arrangements on a recurring basis based on its liquidity needs. Prospectively, the extent and the specific trade receivables impacted by future sales cannot be identified. Therefore, trade receivables which qualify for a future sale under the terms of existing factoring agreements are allocated to a portfolio whose objective is collecting the contractual cash flows and selling them. These trade receivables are carried at fair value through other comprehensive income minus any valuation allowances. Whereas trade receivables which do not qualify for a future sale under the terms of existing factoring agreements are allocated to a portfolio whose only objective is to collect the contractual cash flows and are therefore carried at amortised cost minus any valuation allowances.

In factoring arrangements, trade receivables are derecognised where the Group transfers substantially all the risks and rewards associated with the financial assets. Payments received from customers following the sale are recognised in current borrowings until repaid to the factorer.

Cash and cash equivalents include cash in hand, cheques received, cash at banks and short-term cash deposits with an original term of up to three months. Moreover, investments in money market funds exposed to insignificant value fluctuations due to their high credit rating and investments in short-term money market instruments that can be converted to defined cash amounts within a few days at any time, are also reflected as cash equivalents.

Financial liabilities include liabilities to financial institutions and other lenders and are measured at fair value less directly attributable transaction costs at initial recognition. In subsequent periods, these liabilities are measured at amortised cost applying the effective interest rate method.

A financial liability is derecognised when the obligation under the liability is discharged (by payment or legal release), cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. The difference in the respective carrying amounts is subsequently recognised in the Consolidated Statement of Profit or Loss, including any costs or fees.

These liabilities are initially recognised at fair value and subsequently measured at amortised cost.

The Group enables selected suppliers to participate in a variety of supplier finance arrangements which include a forfaiting arrangement, an arrangement with a payment service provider and reverse factoring arrangements. The forfaiting and reverse factoring arrangements give suppliers the option to receive early payment by selling either bills of exchange referring to supplier invoices or trade receivables to a financial institution at a discount. The Group then settles the liability to the financial institution at a later date in accordance with the payment terms agreed with the financial institution. Under the arrangement with a payment service provider, invoices from suppliers are paid by the payment service provider on behalf of RHIM on the original due date. The Group then settles the liability to the payment service provider at a later date in accordance with the payment terms agreed with the payment service provider. The liabilities subject to all supplier finance arrangements continue to be presented within trade payables and other liabilities. The settlement of these liabilities is classified as cash outflow from operating activities, except for any interest paid, which is presented within the cash flow from financing activities. This accounting policy is based on an analysis of the terms and conditions of each supplier finance arrangement and an assessment of whether the following criteria are met: the payables subject to the respective supplier finance arrangement represent liabilities to pay for goods or services, are invoiced or formally agreed with the supplier and are part of the working capital used in the Group's normal operating cycle. Management has determined that these criteria are met for all supplier finance arrangements.

Derivative contracts are used in the management of interest rate risk, commodity price risk and foreign currency risk. These derivative financial instruments, which are not designated in an effective hedging relationship, are recognised initially at fair value on the date on which a derivative contract is entered into and subsequently remeasured at fair value with changes in fair value reflected in the Consolidated Statement of Profit or Loss. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Derivative financial instruments include forward exchange contracts and embedded derivatives in open orders denominated in a currency other than the functional currency of either contracting party, with the assessment made on a case-by-case basis at the respective forward rate on the reporting date. These forward rates are based on spot rates, including forward premiums and discounts. Unrealised valuation gains or losses and results from the realisation are recognised in the Consolidated Statement of Profit or Loss in net expense on foreign currency effects.

Forward purchase or sale arrangements for the physical delivery of non-financial assets that are entered into in line with the Group's expected purchase, sale or usage requirements ('own use') and are normally entered into to hedge the associated price risk are not recognised or measured at fair value. These forward contracts are assessed to be off-balance-sheet executory contracts due to their own use features. If the own use exemption is not met, the forward contracts will be recognised at fair value, with fair value remeasurement recorded in the Consolidated Statement of Profit or Loss.

Due to the reduction of free CO2 emission certificates and the expected increase in CO2 market prices, the Group hedges the associated price risk by entering into forward purchase contracts for the delivery of CO2 emission certificates. Derivative financial instruments also include these contracts, since the own use exemption is not applicable.

For derivative financial instruments which are designated as an effective cash flow hedge, hedge accounting is applied. The hedging instruments, used to hedge the underlying items, are measured at fair value with the effective part of the fair value changes recorded in OCI as an unrealised gain or loss. At the time of the realisation of the underlying transaction, the fair value changes of the hedging instrument recognised in OCI is recycled to the Consolidated Statement of Profit or Loss. Ineffective parts of the cash flow hedges are recognised immediately in the Consolidated Statement of Profit or Loss. Where the hedged item is a non-financial asset or liability, the amount accumulated in OCI is transferred to the initial carrying amount of the asset or liability. If the hedged transaction is no longer expected to take place, the accumulated amount recorded in OCI is reclassified to the Consolidated Statement of Profit or Loss. All relationships between hedging instruments and hedged items are documented, as well as risk management objectives and strategies for undertaking hedge transactions. The effectiveness of hedges is also continually assessed, and hedge accounting is discontinued when there is a change in the risk management strategy.

Impairment of certain financial assets is based on expected credit losses (ECL). ECL is defined as the difference between all contractual cash flows the entity is entitled under the contract and the cash flows expected to be received. The measurement of expected credit losses is generally a function of the probability of default, loss given default and the exposure at default.

Loss allowance is measured for expected credit losses on debt instruments, trade receivables and contract assets measured at amortised cost. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Group recognises lifetime ECL for trade receivables and contract assets by applying the simplified approach. The ECL on these financial assets are generally estimated using a provision matrix based on the Group's historical credit loss experience for customer groups located in different geographic regions. Forward-looking information is incorporated in the determination of the applicable loss rates for trade receivables. For the Group, the general economic development of the countries in which it sells its goods and services is relevant in determining if the adjustment of the historical loss rates is necessary.

For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Group makes use of the practical expedient for financial instruments with an 'investment grade' rating which are assumed to be of low credit risk and have no significant increase in the credit risk. Under the practical expedient, the expected credit loss is calculated using the 12-month ECL. Among other factors, the Group considers a significant increase in credit risk to have taken place when contractual payments are more than 30 days past due.

The Group assumes that a default event has occurred when trade receivables are 180 days past due unless reasonable and supportable information confirms otherwise. For those financial instruments where objective evidence of default is present, an individual assessment of ECL takes place.

Generally, financial instruments are written off when there is no reasonable expectation of recovering amounts due.

Inventories are stated at the lower of cost or net realisable value as of the reporting date. The determination of acquisition cost of purchased materials is based on the average cost. Finished goods and work in progress are valued at fixed and variable production cost. The net realisable value is the estimated selling price in the ordinary course of business minus any estimated cost to complete and to sell the goods. Impairments due to reduced recoverability are reflected in the calculation of the net realisable value.

Purchased emission certificates are presented as inventory and are initially recognised at cost und subsequently measured at the lower of cost and net realisable value. The consumption of the purchased emission certificates based on the tons of CO2 emitted is recorded as expense in the cost of sales.

Those certificates that the Group received free of charge under the respective EU trading schemes are not recognised in the Consolidated Financial Statements.

To the extent that the CO2 emissions emitted exceed the emission cap under the free of charge and purchased emission certificates, the Group recognises a provision calculated based on the deficit of emission certificates and measured at the market price of emission certificates prevailing at the reporting date.

Provisions are recognised when the Group incurs a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to meet this obligation, and the amount of the obligation can be reliably estimated.

Provisions for warranties are created for individual contracts at the time of the sale of goods or after the service has been provided. The amounts of the provisions are based on the expected or actual warranty claims.

Provisions for restructuring are recognised once a detailed formal restructuring plan has been developed and announced prior to the reporting date or whose implementation was commenced prior to the reporting date.

The Group recognises provisions for demolition and disposal costs and environmental damages. The Group's facilities and its refractory, exploration and mining operations are subject to environmental and governmental laws and regulations in each of the jurisdictions in which it operates. These laws govern, among other things, reclamation or restoration of the environment in mined areas and the clean-up of contaminated properties. These provisions include the estimated demolition and disposal costs of plants and buildings as well as environmental restoration costs arising from mining activities, based on the present value of estimated cash flows of the expected costs. The estimated future costs of asset retirements are reviewed annually and adjusted, if appropriate.

A provision for an onerous or unfavourable contract is recognised when the expected benefits to be derived from a contract are lower than the unavoidable cost of meeting its obligations under the contract. Provisions are measured at the present value of the unavoidable costs of meeting the obligation under the contract which exceed the economic benefits expected to arise from that contract.

Provisions for labour and civil contingencies are recognised for all risks relating to legal proceedings that represent a probable loss. Assessment of the likelihood of loss includes an analysis of available evidence, including the opinion of internal and external legal advisors of the Group.

Provisions are measured at their discounted settlement value as of the reporting date if the discounting effect is material.

If maturities cannot be estimated, they are shown within current provisions.

Pension plans

With respect to post-employment benefits relating to pensions, a differentiation is made between defined contribution and defined benefit plans.

Defined contribution plans limit the Group's obligation to the agreed contributions to earmarked pension schemes. The contributions are expensed as incurred.

Defined benefit plans require the Group to provide agreed benefits to active and former employees and their dependents.

Pension obligations are measured using the projected unit credit method and is netted against the fair value of the plan assets, if any. If the plan assets are not sufficient to cover the obligation, the net obligation is recognised as a liability. However, if the plan assets exceed the obligations, the net surplus recognised is limited to reductions of future contribution payments to the plan and is presented as other non-current assets in the Consolidated Statement of Financial Position. The Group restricts recognition of the net surplus by applying an asset recognition ceiling where the Group does not have an unconditional right to a refund, assuming full settlement of the liabilities. Changes in the asset ceiling are recorded in OCI.

The present value of defined benefit obligations is determined separately for each plan, annually, by independent qualified actuaries. The present value of future benefits is based on the length of service, expected wage/salary developments and pension adjustments.

The expense to be recognised in a period includes current and past service costs, settlement gains and losses, interest expenses from the interest accrued on obligations, interest income from plan assets and administration costs paid from plan assets. The net interest expense is shown separately in net finance costs. All other expenses related to defined benefit plans are allocated to the costs of the relevant functional areas.

Actuarial assumptions required to calculate these obligations include the discount rate, increases in wages/salaries and pensions, retirement starting age and probability of employee turnover and actual claims. The calculation is based on local demographic parameters.

Interest rates, which are based on high-quality corporate bonds issued with comparable maturities and currencies, are applied to determine the present value of pension obligations. In countries where there is not a sufficiently liquid market for high-quality corporate bonds, the returns on government bonds are used as a basis.

The rates of increase for wages/salaries are based on an average of past years, which is also considered to be realistic for the future, while the retirement age is based on the respective statutory provisions of the country concerned.

Remeasurement gains and losses are recorded net of deferred taxes under OCI in the period incurred.

Other post-employment benefits

Other post-employment benefits include provisions for termination benefits primarily related to obligations to employees whose employment is subject to Austrian law.

Employees who joined an Austrian company before 31 December 2002 receive a one-off lump-sum termination benefit as defined by the Austrian labour legislation if the employer terminates the employment or when the employee retires. It is regarded as a post-employment benefit and classified as a defined benefit plan. The termination payment depends on the relevant salary at the time of the termination as well as the number of years of service and ranges between two and 12 monthly salaries. These defined benefit obligations are measured using the projected unit credit method applying an accumulation period of 25 years. Remeasurement gains and losses are recorded directly in OCI after considering tax effects.

For employees who joined an Austrian company after 31 December 2002, employers are required to make regular contributions equal to 1.53% of the monthly wage/salary to a statutory termination benefit scheme. The Company has no further obligations. Claims by employees to termination benefits are filed with the statutory termination benefit scheme, while the continuous contributions are treated as defined contribution plans and included in the personnel expenses of the functional areas.

This includes service anniversary bonuses, payments to semi-retirees and lump-sum settlements.

Service anniversary bonuses are one-time special payments that are dependent on the employee's wage/salary and length of service. The employer is required by collective bargaining agreements or company agreements to make these payments after an employee has reached a certain number of years of uninterrupted service with the same company. Obligations are mainly related to service anniversary bonuses in Austrian and German group companies. Provisions for service anniversary bonuses are calculated based on the projected unit credit method. Remeasurement gains or losses are recorded in the personnel costs of the functional areas.

Local labour laws and other similar regulations require individual group companies to create provisions for semi-retirement obligations. The obligations are partially covered by qualified plan assets and are reported on a net basis in the Consolidated Statement of Financial Position.

A contingent liability is disclosed, where material, if the existence of the obligation will only be confirmed by future events or where the amount of the obligation cannot be measured with reasonable reliability. A contingent liability is not disclosed if the likelihood of a material cash outflow is considered remote. The Group's contingent liabilities are reviewed on a regular basis.

Income tax expense represents the sum of current tax and deferred tax.

Income tax is recognised in the Consolidated Statement of Profit or Loss, except to the extent that it relates to items recognised in OCI or directly in equity, including tax-related impacts.

Current tax is based on the taxable profit for the period and is determined in accordance with the rules applicable in the relevant jurisdictions and includes taxes relating to prior periods. The liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted at the reporting date.

Deferred tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences except:

· Where the deferred tax liability arises on initial recognition of goodwill

· Where the deferred tax liability arises on the initial recognition of an asset or liability in a transaction that is not a business combination, at the time of the transaction, affects neither accounting profit nor taxable profit or loss and, at the time of the transaction, does not give rise to equal taxable and deductible temporary differences

· In respect of taxable temporary differences associated with investments in subsidiaries and associates and interest in joint arrangements, where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future

· For financial instruments which were issued by subsidiaries to non-controlling interests, and which are classified as a financial liability in accordance with IFRS Accounting Standards

Deferred tax assets are recognised for deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which these can be utilised, except where the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit and loss and, at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.

In respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable or increased to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred taxes of the Group's Austrian subsidiaries are determined at the corporation tax rate which is expected to be applicable when the temporary differences reverse.

Deferred tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the current tax assets and liabilities on a net basis or to realise the assets and settle the liabilities simultaneously.

Where tax legislation may not be clear or result in uncertainty, the Group will determine its tax obligations and resulting income tax expense using an approach which it believes has a probable chance of being accepted by the tax authorities based on historical experience, legal advice and communication with the tax authorities, as appropriate. Where the Group adopts an approach to an uncertain tax position that it regards as having a less than probable chance of being accepted by the tax authorities, the income tax expense and resulting income and deferred tax balances are adjusted to reflect this uncertainty using either the most likely outcome method or the expected value method.

The global minimum top-up tax payable under the Pillar Two legislation is recognised as a current income tax expense when it is incurred. In accordance with the temporary exception, the Group does not recognise deferred taxes in respect of the top-up tax under the Pillar Two legislation.

Revenue from the sale of goods and services is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. Revenue is recognised to the extent that it is highly probable that there will not be a significant reversal of revenue in future periods. If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled at inception and limits the recognition of revenue subject to the variability, until it is highly probable that a significant reversal of cumulative revenue recognised will not occur. The Group does not recognise the impact of financing for payment terms as the average credit terms is currently 60 days. At contract inception, the Group identifies the goods or services promised in the contract and assesses which of the promised goods or services shall be identified as separate performance obligation. Promised goods or services give rise to separate performance obligations if they are capable of being distinct. Revenue is recognised as control is transferred, either over time or at a point of time. Control is defined as the ability to direct the use of and obtain substantially all of the economic benefits from an asset.

Unless refractory products are delivered under specific customer contracts, whose transaction price depends on the customer's production output, revenue from the delivery of refractory products is recognised at a point in time, i.e. at the time of transfer of control. Control of the refractory products is typically passed to the customer when physical possession has been transferred.

The transport service does not give rise to a separate performance obligation to which a part of revenue would have to be allocated, as this service is usually performed before control of the products is transferred to the customer.

In consignment arrangements, the Group retains control of the goods generally until a withdrawal of the products from the consignment occurs. Most of the products within consignment arrangements have a high stock turnover rate.

The Group provides services (e.g. supervision, installation) that are either sold separately or bundled together with the sale of products to a customer. Contracts for bundled sales of products and installation services usually comprise of two performance obligations being (i) the promise to transfer products and (ii) provide services which are capable of being distinct and separately identifiable in the context of the contract. Accordingly, the transaction price is allocated based on the relative stand-alone selling prices of the product and service. Revenue from services is recognised over time using an input method to measure progress towards completion of the service as the customer simultaneously receives and consumes the benefits provided by the Group.

Contracts for bundled sales of refractory products and non-refractory products (e.g. machines) provided to the customer free of charge comprise two performance obligations that are separately identifiable. Consequently, the Group allocates the transaction price based on the relative stand-alone selling prices of these performance obligations and allocates revenue to the non-refractory product which is delivered free of charge.

Expected penalty fees from guaranteed durabilities on refractory products are considered as a variable consideration in the form of a contract or a refund liability. However, the estimation of the variable consideration is not subject to a constraint as the Group has significant experience with promising durabilities and as a consequence does not expect significant reversal of revenue recognised in prior periods. All other product warranties issued by the Group guarantee that the transferred products correspond to the contractually agreed specifications and are classified as assurance type warranties. Consequently, no separate distinct performance obligation to the customer exists.

If transfer of goods or services to a customer is performed before the customer pays consideration or before payment is due and is conditional on something other than the passage of time, a contract asset, excluding any amounts presented as a receivable, is recognised.

If a customer pays consideration before the entity transfers a good or service to the customer, the entity shall present the contract as a contract liability when the payment is made.

Contract costs, which are defined as the incremental costs of obtaining a contract, are recognised as an asset where the Group expects to recover those costs, except for those costs which are expected to be recovered within 12 months.

As the term of customer contracts is less than one year, the Group adopted the practical expedient not to disclose performance obligations for contracts with original expected duration of less than one year.

Cost of sales comprises the production cost of goods sold as well as the purchase price of merchandise sold. In addition to direct material and production costs, it also includes overheads including depreciation of production equipment as well as impairment losses and reversals of impairment losses of inventories. Moreover, cost of sales also includes the costs of services provided by the Group or services received.

This line item includes personnel expenses for the sales staff as well as depreciation and other operating expenses related to the market and sales processes. In addition, it includes personnel expenses for the administrative functions, legal, IT and other consulting costs. 

This line item includes expenses for research and non-capitalisable development costs.

This line item includes amortisation of purchased and internally generated intangible assets.

Interest income and expenses are recognised in accordance with the effective interest method.

The Consolidated Financial Statements are presented in Euro, which represents the functional and presentation currency of RHI Magnesita N.V..

Consolidated subsidiary financial information is based on the currency of the primary economic environment in which it operates (functional currency).

Financial Statements of subsidiaries which operate in a country whose functional currency is considered hyperinflationary are restated for the changes in the general purchasing power before translation to the reporting currency of the Group and before consolidation in order to reflect the same value of money for all items. Currently only the Financial Statements of the subsidiary operating in Argentina, Refractarios Argentinos S.A, Industrial Comercial Y Minera (I.C.M.), are restated for hyperinflation effects.

The closing balances of the non-monetary items as well as all items of the Statement of Profit or Loss are restated for the changes in the general purchasing power of its functional currency as follows. All non-monetary items recognised in the Statement of Financial Position which are not measured at the measuring unit applicable on the reporting date are restated for the changes in the general price index from the later of the transaction date or the first-time application date to the reporting date. Non-monetary items include property, plant and equipment, intangible assets, inventories, and allocated goodwill. Monetary items are not restated. All items of the Statement of Profit or Loss are restated for the changes in the general price index from the date of initial recognition to the reporting date. Gains or losses resulting from the net monetary position are reported in the Consolidated Statement of Profit or Loss in net expense on foreign currency effects. The Financial Statements of Refractarios Argentinos S.A, Industrial Comercial Y Minera (I.C.M.) are therefore reported at the applicable measuring unit on the reporting date.

The price index, IPIM (Internal Index Wholesale Prices), published by the Argentinian National Institute of Statistics and Censuses is applied to determine the changes in the general purchasing power. The following table provides the level and changes of the price index for the current and the previous reporting period:

In individual subsidiaries, joint ventures and associates, transactions in foreign currency are translated into the functional currency at the rate of exchange prevailing on the dates of the transaction. Gains and losses resulting from the settlement of such transactions and the translation of monetary assets and liabilities denominated in foreign currencies into the respective functional currency at the closing rate are recognised in the Consolidated Statement of Profit or Loss as net expense on foreign currency effects. In deviation from this, the Group designates certain intragroup monetary assets and liabilities denominated in foreign currencies such as non-current receivables or loans as part of a net investment in a foreign operation if the corresponding balances are not expected to be settled. In accordance with IFRS Accounting Standards, gains or losses from the translation of these intragroup monetary assets and liabilities into the respective functional currency are recognised in OCI. Non-monetary items, other than those measured at fair value, are carried at historical rates and not retranslated subsequent to initial recognition.

Financial information of foreign subsidiaries with a functional currency different to the Euro are translated as follows:

Assets and liabilities of foreign subsidiaries outside the scope of hyperinflation accounting are translated at the closing rate on the reporting date, while monthly income and expenses as presented in the Statement of Profit or Loss are translated at the respective closing rates of the previous month. Differences resulting from this translation process and differences resulting from the translation of amounts carried forward from the prior year are recorded in OCI without impact on profit or loss. Monthly cash flows are translated at the respective closing rates of the previous month. Goodwill and adjustments to the fair value of assets and liabilities related to the purchase price allocations of a subsidiary outside the European currency area are treated as assets and liabilities of the respective subsidiary and translated at the closing rate.

Following the restatements in accordance with hyperinflation accounting, the assets and liabilities of foreign subsidiaries in the scope of hyperinflation accounting, as well as their income and expenses, are translated at the respective closing rate on the reporting date.

On disposal of a non-Euro functional currency subsidiary, joint venture or associate, the related accumulated foreign currency gains and losses recognised in equity are reclassified to the Consolidated Statement of Profit or Loss. In addition, when monetary items cease to form part of a net investment in a foreign operation or when the foreign operation is disposed, the currency translation differences previously recognised in OCI are reclassified to the Consolidated Statement of Profit or Loss.

The Euro exchange rates of the currencies of the Group's significant operations are shown in the following table:

1) Arithmetic mean of the monthly closing rates.

4. Climate change and energy transition

In 2025 the Group announced its commitment to reduce Scope 1, 2 and 3 (raw materials) CO2 emissions intensity by 10% per ton of production by 2030, compared to a 2024 baseline. The Group has published a theoretical decarbonisation pathway which sets out a potential route to substantially remove all CO2 emissions by 2060. The decarbonisation pathway is not aligned with a 1.5°C temperature goal of the Paris Agreement. Consequently, the Group does not currently have a climate transition plan for mitigation that is consistent with limiting global warming to 1.5°C. However, the Group has a climate transition plan for climate mitigation that is aligned with the Paris Agreement's objective of holding the increase in global average temperature to well below 2°C, based on feasible and available technologies. The below describes how the Group has considered climate related impacts in key areas of the Consolidated Financial Statements and how this translates into the valuation of its assets and measurement of liabilities.

Note (3) includes the significant accounting estimates, judgements and key sources of estimation uncertainties and how those uncertainties have the potential to have a material effect on the Consolidated Statement of Financial Position in the next 12 months. This note describes the key areas of climate impacts that may have longer-term effects on amounts recognised at 31 December 2025.

As disclosed in the Sustainability Statement, climate-related risks faced by the Group include physical and transitional risks. The most material transitional risk impact is expected to be higher operating costs due to an increase in the level or scope of carbon pricing. This risk is most prominent in Europe where the existing system of certificates is to be replaced by the Carbon Border Adjustment Mechanism ('CBAM'), with all free CO2 emission certificates currently expected to be progressively phased out by 2034.

The Group is currently already subject to the first phase ('Transitional Period') of the CBAM. Currently, the Group fully complies with the CBAM regulation on imported consumables made from steel. Management is pursuing a number of strategies to accommodate the additional impact of CBAM to its EU assets, such as considering carbon pricing in our financial planning, actively managing a hedging program to fix future prices related to the forward purchase of emission rights, increasing the use of secondary raw materials, investing in fuel switching, renewable energy and focusing on energy efficiency.

The Group has also identified climate-related opportunities, such as increased demand for its products arising from the transition by its customers to lower-carbon emitting industrial processes and increased demand for refractory products that are produced with a lower-carbon footprint.

The Consolidated Financial Statements are based on reasonable and supportable assumptions that represent management's current best estimate of the range of economic conditions that may exist in the foreseeable future. The Group has decided to use Paris-aligned Mitigation and Hot House World Limited mitigation scenarios to assess the potential impact of climate change on its Consolidated Financial Statements. The largest impact from higher carbon prices as contained in these scenarios is from 2026 onwards. The negative impacts are concentrated within the Group's assets located in Europe whilst opportunities are expected to be global in nature.

The Group is investing in the research and development of new technologies for the manufacturing of refractories which may enable it over the long term to avoid or capture its CO2 emissions and thereby mitigate the impact of higher carbon prices.

The nominal growth rate used in the value in use determination per CGU represents the long-term growth rate of the respective region.

The expected CO2 emission costs are considered in the 2026 Budget and in the Long-Term Plan, insofar as CO2 emissions are taxed in the respective jurisdictions, and at fixed prices, insofar as fixed price forward contracts to purchase emission rights have been contracted. In the terminal value, these CO2 emission costs are recognised at the same level as assumed in the last year of the Long-Term Plan. Due to planning uncertainty inherent in the Group's climate transition phase which includes the extent to which CBAM will be relevant to the Group's operations, no additional carbon emission costs have been included in the terminal value; that is to say, the phasing out of the free CO2 emission certificates is not included.

Management expects an adverse impact on the recoverability of the assets included in the Europe & CIS CGU as soon as the CBAM regulation becomes effective. This adverse impact comprises a production shift from Europe & CIS to other sales regions in addition to a corresponding shift of customer demand to other sales regions. As far as foreseeable, it is already considered in the Long-Term Plan and value in use of the Europe & CIS CGU.

The Sustainability Statement outlines the theoretical path to complete decarbonisation of the Group's business activities. To achieve this, the Group would need to make significant investments in property, plant and equipment that go far beyond the investments already considered in relation to the committed reduction in Scope 1, 2 and 3 emissions by 2030. At present, neither the investments needed to achieve complete decarbonisation, nor their potential positive effects have been included in the value in use determination since the Group has not committed to complete decarbonisation and alternatives to complete decarbonisation exist.

Additionally, management has assessed the useful lives of property, plant and equipment and these continue to be appropriate due to the limited refractory and other product alternatives available and considering that the customer industries that the Group serves, continue to play a significant part in the transition towards sustainable output and the transition to a green economy.

Management recognises liabilities that are expected to be incurred in relation to rehabilitation and restoration of the mining sites. As of the reporting date, the Group's mines have an expected life between 8 and 100 years. The introduction of more stringent legislation could result in our mining operations becoming uneconomical earlier than anticipated, thus affecting the timing of our restoration liabilities. The discounting period used to determine the present value of measure asset restoration provisions is between 8-37 years, applying risk-free rates as discount rates.

Management does not expect any reasonably possible change in the expected timing of restoration of our mines to have a material effect on the Group total provisions, assuming cash flows remain unchanged.

The Group has taken out loans from financial institutions based on terms which are linked to the Group's EcoVadis ESG rating performance. On the reporting date the carrying amount of such ESG-linked financial liabilities amounts to ?1,102 million (31.12.2024: ?1,383 million). The financing costs may increase or decrease depending on future changes in the Group's ESG rating. The ESG rating is determined by multiple criteria covering not only the climate-related aspects but also sustainability and governance related aspects. A downgrading of the Group's ESG rating below a certain target ESG rating would lead to higher financing costs. Such a downgrade is currently not foreseen due to sufficient headroom.

5. Segment reporting

The Group's business activities are organised by region based on its sales markets and the customer industries it serves. The regions comprise Europe & CIS, North America, Latin America, China & East Asia, India and Middle East, Türkiye and Africa (META). Customer industries are internally grouped into two categories: Steel and Industrial. The latter category aggregates multiple customer industries other than Steel, including Cement & Lime, Non-Ferrous Metals, and Process Industries which comprises several customer industries addressing industrial applications.

In 2025, RHIM reassessed its operating segments, driven by significant progress in its local-for-local production strategy, the integration of the acquired Resco Group and a comprehensive restructuring of profit centres. This acquisition is considered a milestone in the development of the local-for-local production strategy, resulting in the reassignment of certain sales markets to the regions and the associated establishment of the new META region. These events shifted the focus of internal reporting for the purpose of resource allocation and performance monitoring to the regions. Resource allocation decisions are taken both globally and at regional level but always concern the entire region. Financial budgets are prepared at regional level and budget variances are monitored at the same level. Each region has an assigned segment manager, i.e. regional president, responsible for managing the 'day-to-day' business, executing RHIM's strategy in the respective region and meeting the budgeted targets. The segmentation of the business activities by region reflects the internal control structure, the management structure and the internal performance reporting to the Chief Operating Decision Maker (CODM). Taking these factors into account, the reassessment resulted in the establishment of the regions as RHIM's new operating segments. The six regional operating segments and the business activities subsumed into the organisational unit 'Minerals', which is designated as a reportable segment, result in seven reportable segments.

Each regional segment provides shaped refractory products, including bricks in various shapes and chemical compositions, as well as unshaped refractory products, including mixes, mortars and castables, and functional refractory products summarising specialised refractory products. Depending on the type of refractory product, some types are used for lining customer industry specific furnace types and aggregates, while other types are used in the final stages of the steel production process. In addition to refractory products, the Group provides services such as refractory engineering solutions (drawings or design of a linings concept), installation, supervision, maintenance and recycling. Beyond traditional refractory solutions, a growing portfolio of advanced technologies is also offered to customers, including systems, sensors, machinery and digital products.

In addition, the Group sells internally produced raw materials, such as magnesite ore, dead-burned magnesia and fused magnesia to external customers to the extent that these are not utilised internally. These business activities are subsumed into the organisational unit 'Minerals', which is designated as a reportable segment.

The Chief Executive Officer is responsible for the allocation of resources and for evaluating the performance of each operating segment and is therefore the CODM at Group level. Revenue and Gross Profit are the key internal performance measures provided to and used by the CODM to evaluate performance on operating segment level and allocate resources. These measures are prepared using the same accounting policies as the Consolidated Financial Statements and are reported after elimination of any inter-segment transactions.

The reassessment of the operating segments resulted in a change of the Group's segment reporting structure from customer industry-based segments to regional segments. The comparative figures have been restated in accordance with IFRS 8 to reflect the new segment reporting structure.

The following tables present the financial information for the reportable segments for the year 2025 and the previous year:

The following table shows the depreciation of property, plant and equipment per reportable segment: