Talgo, S.A. and Subsidiaries
Consolidated Financial Statements for the year ended 31 December 2025 and Consolidated Directors' Report, together with Independent Auditor's Report
Translation of a reporr originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain. In the event of a discrepancy, the Spanish-language version prevails.
Delo tte.
Deloitte Auditores, S.L. Plaza Pablo Ruiz Picasso, 1 Torre Picasso
28020 Madrid España
Tel: +34 915 14 50 00
https://www.deIoitte.es
Translation of a report originally issued in Spanish based on our work performed in accordance with the audit
regu/at/ons in force in Spain. In the event of a discrepancy* the Spanish.-language version prevails.
INDEPENDENT AUDITOR'S REPORT ON CONSOLIDATED FINANCIAL
STATEI'4ENTS
To the Shareholders of Talgo, S.A.,
Report on the Consolidated Financial StatementsWe have audited the consolidated financial statements of Talgo, S.A. (the Parent) and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2025, and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and notes to the consolidated financial statements for the year then ended.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated equity and consolidated financial position of the Group as at 31 December 2025, and its consolidated results and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (EU-lFRSs) and the other provisions of the regulatory financial reporting framework applicable to the Group in Spain.
Basis "or Opin on
We conducted our audit in accordance with the audit regulations in force in Spain. Our responsibilities under those regulations are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report.
We are independent of the Group in accordance with the ethical requirements, including those pertaining to independence, that are relevant to our audit of the consolidated financial statements in Spain pursuant to the audit regulations in force. In this regard, we have not provided any services other than those relating to the audit of financial statements and there have not been any situations or circumstances that, in accordance with the aforementioned audit regulations, might have affected the requisite independence in such a way as to compromise our independence.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Deloitte Auditores, S.L. Inscrita en el Registro Mercantil de Madrid, tomo 1 3.650, section 8', folio 188, hoja M-5441 4, inscription 96'. C.I.F.! B-791 08469 Domicilio social: Plaza Pablo Ruiz Picasso, 1, Torre Picasso, 28020, Madrid.
As detailed in Note 3.1, the Group has formalised various transactions aimed at strengthening its financial and equity position with a view to, inter alia, adapting its financial and production capacity to the projects in progress and those in the backlog.
This process resulted in, among other things: (i) a change in the shareholder structure of the Parent; (ii) a EUR 45 million capital increase subscribed and paid by the public entity Sociedad Española de Participaciones lndustriales (SEPI), and the arrangement, with
the aforementioned entity and with other I investors, of bonds convertible into shares of the Parent which, totalling EUR 105 million, were accounted for as equity instruments as
described in Notes 2.15 and 14.4, and (iii) the arrangement of a new line of guarantees and of syndicated financing, a portion of which was drawn down after the end of the reporting period once certain conditions precedent had been met, as detailed in Note 18.
As a result of the significance of these transactions vis-â-vis the equity and financial position of the Group, this matter was considered to be a key audit matter.
-2-
Our audit procedures to address this matter included, among others, obtaining and analysing all the documentation relating to these transactions, in order to:
Verify that the bonds convertible into shares had been accounted for appropriately in accordance with the financial reporting framework applicable to the Group.
Obtain sufficient appropriate evidence regarding compliance with the conditions precedent that must necessarily be met in order to draw down the syndicated financing, verifying the partial drawdowns made after year-end.
In addition, we obtained the cash forecasts for the coming year and the Group's projections, evaluating the reasonableness of the assumptions used in their preparation by comparing them with the projects in progress and in the Group's backlog, and we assessed the sufficiency of the available financial resources.
Lastly, we checked that the disclosures included in Notes 3.1, 14.4 and 18 to the accompanying consolidated financial statements were in conformity with the financia[ reporting framework applicable to the Group.
The Group engages mainly in the manufacture of railway transport materials, systems and equipment and, in relation to ong-term manufacturing contracts, it recognises the revenue and profit or loss thereon over time using the input percentage of completion method, based on the costs incurred as a percentage of the tota[ estimated costs of each contract.
Determination of the percentage of completion necessarily involves a high degree of complexity and estimation by the Parent's management and directors in relation to, inter alia, the estimation of the total costs to be incurred in each contract and the estimation of the margin taking into consideration the expected revenue and the estimated costs to be incurred.
These judgements and estimates are made by the persons in charge of the performance of the projects, are subsequently reviewed at the various levels of the organisation, and are submitted to controls designed to ensure the consistency and reasonableness of the criteria applied. In this regard, among other things, the project budgets require a significant degree of monitoring.
Accordingly, occurrence in the recognition of revenue from these contracts was considered to be a key matter in our audit.
Our audit procedures included, among others, the review of the design and implementation of the relevant contro[s that mitigate the risks associated with the process involved in recognising revenue over time, as well as tests to verify that the aforementioned controls operate effectively. In particular, we selected those performed by the persons in charge of each area, supervised by management of the Group, relating to the reviews of the cost variances and budgets of the projects and the estimated percentage of completion.
Also, we performed substantive audit procedures including, among others, a sample selection, based on both quantitative and qualitative criteria, of the contracts, and the in-depth analysis of these contracts and the clauses contained therein in order to obtain an appropriate understanding of the terms and conditions agreed upon. For those contracts we checked that the contract revenue was consistent with the contractual terms and conditions, verifying the price agreed on under those contracts, and analysed the reasonabeness of the percentage of completion and of the cost budgets.
In this regard, for the purpose of analysing the reasonableness of the estimates made by management, we analysed their reasonableness on the basis of comparable historical information, and evaluated the consistency of the estimates made in prior years with the actual data for the contracts in the current reporting period, analysing any possible variances and modifications reflected in the cost budgets.
Lastly, we checked that the disclosures included in Note 2.20 to the accompanying consolidated financial statements were in conformity with the applicable financial reporting framework.
Descriptior
As indicated in Note 4.1.b, when calculating the provision for income tax, the Group assesses whether there is an uncertainty as to the acceptability by the taxation authorities of the tax treatment afforded to any specific transaction or circumstance. For those cases in which it is considered unlikely that the tax treatment will be accepted, the Group recognises a provision based on its best estimate. In the other cases, no provision is recognised, and the possible contingencies or uncertainties are disclosed in the notes to the consolidated financial statements. The aforementioned assessment, and the determination, as the case may be, of the provision to be recognised, is subject to a significant level of judgement and, therefore, the directors and management are advised by experts in the subject.
As described in Note 26, in prior years the Group received tax assessments that it signed on a i contested basis and against which it filed economic-administrative appeals. It also ' assessed, together with its external tax advisers, the uncertainty associated with the various matters in dispute, recognising provisions of
EUR 11.5 million and derecognising deferred tax assets of EUR 8.3 million, and disclosing the other contingencies in the notes to the consolidated financial statements.
In 2022 the Spanish Centra[ Economic-Administrative Tribunal (TEAC) confirmed the conclusions of the aforementioned tax assessments, against which the Group filed an appeal for judicia[ review, a[though no new decisions have yet been handed down in this connection. The contingency was reassessed by management and the directors, concluding that the accounting po[icies applied and the disclosures made in prior years should be maintained in the same terms.
Procedures applied in the audit
Our audit procedures included, among others, the obtainment of the responses from the Group's tax advisers, on which management and the directors relied to reassess the uncertainty associated with the matters in dispute and to determine whether the impacts on the tax assets and tax provisions recognised in prior years remained valid.
In this connection, with the assistance of our internal specialists in the tax area, we:
Obtained an understanding of the matters in dispute, as well as of the opinions, on each of them, of the Group's tax advisers.
Conducted a review of the reasonableness of the conclusions reached by said experts on the possible outcomes.
Reviewed the method adopted by the Group (most likely amount) to determine the associated tax assets and liabilities, as well as the reasonableness of their quantification.
Lastly, we verified that the notes to the consolidated financial statements (Notes 4.1.b, 19, 20 and 26) contained the disclosures on these matters required by the applicable financial reporting framework.
- 4 -
Description
The significance of the associated tax contingencies and of the judgements and estimates made in the calculation of the aforementioned provision meant that this matter was considered to be a key matter in our audit.
Procedures applied in the audit
0 her Int › la on: C › soft a1 id Direc ors" 1 por
The other information comprises only the consolidated directors' report for 2025, the preparation of which is the responsibility of the Parent's directors and which does not form part of the consolidated financial statements.
Our audit opinion on the consolidated financial statements does not cover the consolidated directors' report. Our responsibility relating to the consolidated directors' report, in accordance with the audit regulations in force, consists of:
Solely checking that the consolidated non-financial information statement, certain information included in the Annual Corporate Governance Report and the Annual Directors' Remuneration Report, to which the Spanish Audit Law refers, have been furnished as provided for in the applicable legislation and, if this is not the case, reporting this fact.
Evaluating and reporting on whether the other information included in the consolidated directors' report is consistent with the consolidated financial statements, based on the knowledge of the Group obtained in the audit of those consolidated financial statements, as well as evaluating and reporting on whether the content and presentation of this section of the consolidated directors' report are in conformity with the applicable regulations. If, based on the work we have performed, we conclude that there are material misstatements, we are required to report that fact.
Based on the work performed, as described above, we observed that the information described in section a) above had been furnished as provided for in the applicable legislation and that the other information in the consolidated directors' report was consistent with that contained in the consolidated financial statements for 2025 and its content and presentation were in conformity with the applicable regulations.
Responsibilities of the Directors and Audit Committee of the Parent for the dated Financial Statements
The Parent's directors are responsible for preparing the accompanying consolidated financial statements so that they present fairly the Group's consolidated equity, consolidated financial position and consolidated results in accordance with EU-lFRSs and the other provisions of the regulatory financial reporting framework applicable to the Group in Spain, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Parent's directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
The Parent's audit committee is responsible for overseeing the process involved in the preparation and presentation of the consolidated financial statements.
Auc- Respor sibiities for the Audit of the Consoidated Fin ›nci-a S1 emei
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the audit regu[ations in force in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is included in the Appendix to this auditor's report. This description, which is included below, forms part of our auditor's report.
Report on Other Legal and Reguatory Requirements European Single Electronic Formaz
We have examined the digital files in European Single Electronic Format (ESEF) of Talgo, S.A. and
subsidiaries for 2025, which comprise the XHTML file including the consolidated financial statements for 2025 and the XBRL files with the tagging performed by the entity, which will form part of the annua financial report.
The directors of Talgo, S.A. are responsible for presenting the annual financial report for 2025 in accordance with the format and markup requirements established in Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 ("ESEF Regulation"). In this regard, the Annual Corporate Governance Report and the Annual Directors' Remuneration Report were included by reference in the consolidated directors' report.
Our responsibility is to examine the digital files prepared by the Parent's directors, in accordance with the audit regulations in force in Spain. Those regulations require that we plan and perform our audit procedures in order to ascertain whether the content of the consolidated financial statements included in the aforementioned digital files corresponds in full to that of the consolidated financial statements that we have audited, and whether those consolidated financial statements and the aforementioned files were formatted and marked up, in all material respects, in accordance with the requirements established in the ESEF Regulation.
In our opinion, the digital files examined correspond in full to the audited consolidated financial statements, and these are presented and have been marked up, in all material respects, in accordance with the requirements established in the ESEF Regulation.
Additional Report to the Parent*s Audit Committee
The opinion expressed in this report is consistent with the content of our additional report to the Parent's audit committee dated 26 February 2026.
The Annual General Meeting held on 1 August 2025 appointed us as the Group's auditors for a period of one year from the year ended 31 December 2024, i.e., for 2025.
Previously, we were designated pursuant to a resolution of the General Meeting for the period of one year and have been auditing the financial statements uninterruptedly since the year ended 31 December 2013 and, therefore, since the year ended 31 December 2015, the year in which the Parent became a Public Interest Entity.
DELOITTE A DITORES, S.L.
Registered OAC under no. S0692
Ignacio Lita ortés
Registered in OAC under no. 23.961
27 February 2026
Appendix to our auditor's report
Further to the information contained in our auditor's report, in this Appendix we include our responsibilities in relation to the audit of the consolidated financial statements.
Auditor's Responsibilities for the Audit of the Consoidated Fin nciat Stateme it
As part of an audit in accordance with the audit regulations in force in Spain, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve co[lusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Parent's directors.
Conclude on the appropriateness of the use by the Parent's directors of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Plan and perform the Group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the Group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Parent's audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Parent's audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and we have communicated with it all matters that may reasonably be thought to bear on our independence, and where applicable, the related safeguards applied to eliminate or reduce the corresponding threat.
From the matters communicated with the Parent's audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.
TALGO, S.A. AND SUBSIDIARIESConsolidated annual accounts prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, for the year ended 31 December 2025 and the consolidated directors' report
*Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with International Financial Reporting Standards (IFRS) (see Note 34). In the event of a discrepancy, the Spanish-language version prevails.
ASSETS
Non-current assets
Tangible fixed assets
6
56,475
56,393
Intangible assets
7
125,270
113,065
Goodwill
8
112,439
112,439
Investments accounted for using the equity method
2.3, 10
10
10
Deferred tax assets
19
19,958
22,768
Other financial assets
10
872
874
315,024
305,549
Current assets
Stock
12
213,959
219,984
Customers and other accounts receivable
11
738,639
631,454
Other financial assets
10
178
110
Short-term accruals and deferrals
10
19,103
20,706
Cash and cash equivalents
13
226,113
93,292
1,197,992
965,546
TOTAL ASSETS
1,513,016
1,271,095
Notes 1 to 34 form an integral part of the consolidated statement of financial position.
EQUITY
Capital and reserves attributable to the owners of the parent company
Share capital
14
40,469
37,282
Share premium
14
42,684
871
Treasury Stock
14
(3,264)
(4,901)
Other reserves
15
2,813
1,978
Retained earnings
15
35,216
135,377
Other equity instruments
14
105,411
-
223,329
170,607
Non-controlling interests
16
6,097
8,531
Total equity
229,426
179,138
LIABILITIES
Non-current liabilities
Borrowings
18
235,679
381,621
Deferred tax liabilities
19
8,379
8,391
Provisions for other liabilities and deferred incomes
20
181,875
181,888
Government grants
6,650
6,722
432,583
578,622
Current liabilities
Suppliers and other payables
17
406,896
346,075
Current tax liabilities
132
92
Borrowings
18
439,502
157,145
Provisions for other liabilities and charges
20
4,477
10,023
851,007
513,335
Total liabilities
1,283,590
1,091,957
TOTAL EQUITY AND LIABILITIES
1,513,016
1,271,095
Notes 1 to 34 form an integral part of the consolidated statement of financial position.
Note
31.12.2025
31.12.2024
Net turnover
5
618,169
669,216
Other income
2,877
2,956
Stock variation for work-in-progress and finished goods
12
(3,508)
(4,906)
Work performed and capitalised by the Group
6, 7
17,789
20,664
Procurement costs
23
(339,679)
(335,870)
Personnel costs
21
(217,206)
(199,389)
Other operating expenses
23
(81,647)
(201,400)
Amortization and depreciation charge
6, 7
(36,268)
(24,375)
Gains/(Losses) on disposal of fixed assets
(76)
(32)
Other results
24
277
1,712
Operating profit
(39,272)
(71,424)
Financial income
25
620
2,826
Financial expenses
25
(48,762)
(26,298)
Net financial cost
25
(48,142)
(23,472)
Profit before tax
(87,414)
(94,896)
Income tax charge
26
(13,254)
(12,971)
Profit for the year from continuing operations
(100,668)
(107,867)
Profit for the year
(100,668)
(107,867)
Attributable to:
Owners of the parent
27
(98,194)
(106,070)
Non-controlling interests
16
(2,474)
(1,797)
Basic earnings/(loss) per share attributable to the owners of the Company
Continuing operations
27
(0.79)
(0.86)
Total
(0.79)
(0.86)
Diluted earnings/(loss) per share attributable to the owners of the Company
Continuing operations
27
(0.76)
(0.86)
Total
(0.76)
(0.86)
Notes 1 to 34 form an integral part of this consolidated statement of comprehensive income.
31.12.2025
31.12.2024
Profit for the year
(100,668)
(107,867)
Other comprehensive income:
Direct assignment to equity:
Other income and expenses
-
(31)
Cash flow hedge, net of tax effect
-
(17)
Foreign currency translation differences
835
(995)
Total Other comprehensive income
835
(1,043)
Total comprehensive income for the year
(99,833)
(108,910)
Attributable to:
-Owners of the parent
(97,359)
(107,113)
-Non-controlling interests
(2,474)
(1,797)
Notes 1 to 34 form an integral part of this consolidated statement of recognised income and expense.
Balance at 31 December 2024 Comprehensive incomeShare capital
Share Premium
Treasury Stock
Other Reserves
Retained earnings
Other equity t Attributable co Non- ng Total equity
instruments o the owners ntrolli
of the parent interest
Note
14
15
14 16
37,282
871
(4,901)
1,978
135,377
-
170,607
8,531
179,138
-
-
-
-
(98,194)
-
(98,194)
(2,474)
(100,668)
-
-
-
835
-
-
835
-
835
-
-
-
835
-
-
835
-
835
-
-
-
835
(98,194)
-
(97,359)
(2,474)
(99,833)
14
-
-
1,637
-
-
-
1,637
-
1,637
14
3,187
41,813
-
-
-
-
45,000
-
45,000
3,187
41,813
1,637
-
-
-
46,637
-
46,637
21.2
-
-
-
-
(1,556)
-
(1,556)
-
(1,556)
14
-
-
-
-
(411)
105,411
105,000
-
105,000
-
-
-
-
-
-
-
40
40
40,469
42,684
(3,264)
2,813
35,216
105,411
223,329
6,097
229,426
Profit or loss
Other comprehensive IncomeForeign currency translation differences
Total other comprehensive income Total comprehensive Income Acquisition of treasury stockShare capital increase
Total transactions with shareholders or owners Other operations (compensation plan) Changes in the scope of consolidation Other movements Balance at 31 December 2025Notes 1 to 34 form an integral part of this consolidated statement of total changes in equity.
Premium Share capital Share Treasury Stock Other Reserves Retained earnings Attributable to the owners of the parent Non-controlling interest Total equityNote
14
15
16
Balance at 31 December 2023 Comprehensive income
Profit or loss
38,040
-
871
-
(13,924)
-
2,990
-
250,018
(106,070)
277,995
(106,070)
10,291
(1,797)
288,286
(107,867)
Other comprehensive Income
Foreign currency translation differences
-
-
-
(995)
-
(995)
-
(995)
Hedging Derivatives
-
-
-
(17)
-
(17)
-
(17)
Other income and expenses
-
-
-
-
(31)
(31)
-
(31)
Total other comprehensive income
-
-
-
(1,012)
(31)
(1,043)
-
(1,043)
Total comprehensive Income
-
-
-
(1,012)
(106,101)
(107,113)
(1,797)
(108,910)
Acquisition of treasury stock
14
-
-
(963)
-
-
(963)
-
(963)
Share capital decrease
14
(758)
-
9,986
-
(9,228)
-
-
-
Dividend distribution
14
-
-
-
-
-
-
-
-
Total transactions with shareholders or owners
(758)
-
9,023
-
(9,228)
(963)
-
(963)
Other operations (compensation plan)
21.2
-
-
-
-
800
800
-
800
Changes in the scope of consolidation
-
-
-
-
-
-
-
-
Other movements
-
-
-
-
(112)
(112)
37
(75)
Balance at 31 December 2024
37,282
871
(4,901)
1,978
135,377
170,607
8,531
179,138
Notes 1 to 34 form an integral part of this consolidated statement of total changes in equity.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEARS 2025 AND 2024 (Expressed in thousands of euros)Note
2025
2024
Cash flows from operating activities
28
(50,541)
(73,122)
Cash used in operations
(45,232)
(37,677)
Interest paid
(38,362)
(36,978)
Interest received
603
799
Tax paid
(7,473)
(1,498)
Net cash flow generated from operating activities
(95,773)
(110,799)
Cash flows from investing activities
Purchases of property, plant and equipment
6
(4,635)
(4,597)
Purchases of intangible assets
7
(39,882)
(43,973)
Net cash used in investing activities
(44,517)
(48,570)
Cash flows from financing activities
Cash outflows for loan repayments
18
(51,903)
(135,469)
Proceeds from borrowings
18
174,805
234,246
Acquisition of equity instruments
14
-
(1,231)
Issue of equity instruments
14
150,000
-
Net cash used / (generated) in financing activities
272,902
97,546
Effect of exchange rate variations
209
(645)
Net (decrease)/increase in cash, cash equivalents and bank overdrafts132,821
(62,468)
13
93,292
155,760
13
226,113
93,292
Cash, cash equivalents and bank overdrafts at the beginning of year
Cash, cash equivalents and bank overdrafts at the end of year
Notes 1 to 34 form an integral part of this consolidated statement of cash flows.
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE FINANCIAL YEAR 2025 (Expressed in thousands of euros)-
General Information
Talgo, S.A. (hereinafter the "Parent company") was constituted as a limited company in Spain on 30 September 2005. In the 2025 financial year, the Parent Company, following the completion of its shareholding change process (as explained in notes 3 and 14), changed its registered office, which is now located in Vitoria (Spain). As of the date of preparation of these annual accounts, the Madrid Commercial Registry has validated the deed formalising the change of registered office and has closed the Company's registry sheet, transferring the file to the Vitoria Commercial Registry for its new registration, which is still pending. The Company's tax domicile is located in Las Rozas, Madrid (Spain). On 28 March 2015, the change of the company name from Pegaso Rail International S.A. to Talgo S.A. was approved, and this change was registered at the Madrid Commercial Registry on 9 April 2015.
On 28 March 2015, the General Shareholder's Meeting of the Parent company approved the application for the admission to trading of the Parent company's shares on the Spanish stock exchange, as well as their inclusion in the Spanish Stock Exchange Interconnection System.
On 23 April 2015, the National Securities Market Commission (CNMV) approved the prospectus and registered the supporting documents, annual accounts and prospectus in the official registers, as provided for by Article 92 of Law 24/1988, dated 28 July 1988 governing the Securities Market, in relation to the share Sales Offer aimed at qualifying investors, for the subsequent admission to trading of Talgo, S.A. shares on the Stock Exchanges of Madrid, Barcelona, Valencia and Bilbao.
On 7 May 2015, an Initial Public Offering was made for 45% of the Parent Company's shares and they were admitted to trading on the aforementioned markets.
The main activity of the Parent company and its subsidiaries (the Group) is the design, manufacture and maintenance of railway rolling stock, along with auxiliary machinery for the maintenance of railway systems. According to Article 2 of the Company's by laws, Talgo,
S.A. has the following corporate purpose:
The manufacture, assembly, repair, conservation, maintenance, sale & purchase, import, export, representation, distribution and marketing of engines, machinery and parts and components thereof, intended for the electromechanical, iron & steel and transport industries.
The research and development of products and technologies relating to the previous two paragraphs, along with the acquisition, operation, assignment and disposal of patents and trademarks relating to the corporate activity.
The subscription, acquisition, disposal, possession and administration of stocks, shares, or interests, within the limits set forth by the regulations governing the stock market, collective investment companies and other regulations in force that may apply.
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE FINANCIAL YEAR 2025 (Expressed in thousands of euros)The purchase, restoration, redesign, construction, leasing, promotion, operation and sale of all types of real estate.
These activities may be carried out either wholly or partially by the Parent company, either directly or in any other way permitted by law, including through equity interests in other companies with an identical or similar corporate purpose.
TALGO, S.A. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE FINANCIAL YEAR 2025 (Expressed in thousands of euros)The Parent company holds direct or indirect interests in the following companies:
% of Ownership
Company name
Registered office
Activity
Direct
Indirect
Subsidiary companies
Patentes Talgo, S.L.U. (a)
C/ Cuchillería, 24, Casa del Cordón, 01001, Vitoria-Gasteiz (Álava)
Construction and maintenance of railway rolling stock
100%
-
Talgo Inc (b)
3533 27th Street, 53216 Milwaukee , WI
Construction and maintenance of railway rolling stock
-
100%
Talgo Deutschland, Gmbh (c)
Revaler Strasse 99, 10245, Berlin, Alemania
Maintenance of railway rolling stock
-
100%
Talgo Kazajstán, S.L.U. (b) (*)
C/ Paseo del Tren Talgo 2, Madrid, España
Construction and maintenance of railway rolling stock
-
100%
Talgo Demiryolu Aracli Üretim VE BA. A.S.(b) (**)
Istambul
Construction and maintenance of railway rolling stock
-
100%
Patentes Talgo Tashkent, LLC. (b) (**)
Mirabad region, Kadirov A., 64 street, Afrosiab service center, 100105 Tashkent, Uzbekistan
Construction and maintenance of railway rolling stock
-
100%
Talgo India Private Limited (b)
Business Center Avanta, office 406, World Mark 2, 110037 New Delhi, India
Construction and maintenance of railway rolling stock
-
100%
Tarvia Mantenimiento Ferroviario, S.A.(a)
C/ Paseo del Tren Talgo 2, Madrid, España
Maintenance of railway rolling stock
-
51%
Motion Rail, S.A.(b) (*)
C/ Paseo del Tren Talgo 2, Madrid, España
Railway operation
-
95%
Talgo Denmark, APS (b)
Herstedøstervej 27, 2620 Albertslund, Copenague, Dinamarca
Repair and installation of railway machinery and equipment
-
100%
Talgo Shanghai Railways Equipment Co. Ltd (b)
Unit 4236, Citic Square, West Nanjing Road 1168, Jing'an District, Shanghai 200000, China
Central purchasing
-
100%
Associated companies
Consorcio Español Alta Velocidad Meca-Medina, S.A.(d) Calle Velázquez 63, Madrid, Spain Construction, operation and maintenance of HS train Saudi Arabia
- 16,79%
Company audited by Deloitte Auditores, S.L.
Company non subject to Audit
Company audited by Deloitte, Gmbh.
Company audited by Kpmg Auditores, S.L.
(*) Companies with no activity.
(**)Companies without activity and in the process of dissolution
10
-
Summary of the main accounting policies
The principal accounting policies applied in the preparation of these consolidated annual accounts for 2025 are set out below. These policies have been applied consistently in all of the years presented, unless otherwise stated.
Basis of presentation
The Group's consolidated annual accounts for the financial year 2025, which have been prepared on the basis of the accounting records maintained by the Parent company and by the other entities that form part of the Group, were prepared by the Directors of the Parent company at the meeting of the Board of Directors held on 27 February 2026.
These consolidated annual accounts have been formulated by the Directors of the Parent company, in accordance with the International Financial Reporting Standards (IFRS) adopted by the European Union, taking into account all the accounting principles and rules and valuation criteria of mandatory application of the EU-IFRS, so that they give a true and fair view of the Group's consolidated equity and financial position at 31 December 2025 and of the overall results of its operations, changes in consolidated equity and consolidated cash flows that have occurred in the Group in the year then ended.
However, since the accounting principles and valuation criteria applied in the preparation of the Group's consolidated financial statements for 2025 may differ from those used by some of the Group's subsidiaries, the necessary adjustments and reclassifications have been made in the consolidation process to standardise such principles and criteria and to bring them into line with International Financial Reporting Standards.
In order to present the various items that comprise the consolidated annual accounts in a homogeneous way, the principles and valuation rules of the Parent company have been applied to each and every company that sits within the consolidation perimeter.
The consolidated annual accounts of the Group corresponding to 2024 were approved at the General Meeting of the Shareholders of the Parent company on 1 August 2025. The consolidated annual accounts of the Group and the annual accounts of the entities within the Group for the financial year 2025 are still pending approval by their corresponding Shareholders Meeting or Partners. Nevertheless, the Board of Directors of the Parent Company expects that such annual accounts will be approved without any amendments.
Changes in accounting criteria
During 2025, no changes were made in the accounting criteria with respect to the criteria applied in 2024.
Functional currency
These consolidated annual accounts are presented in thousands of euros, since the euro is the main currency in the economic environment in which the Group operates. Overseas transactions in foreign currency are registered in accordance with the policy described in the Note 2.5.
Adoption of International Financial Reporting Standards
The consolidated annual accounts of the Group corresponding to the financial year ended 31 December 2025 have been prepared in accordance with International Financial Reporting Standards (IFRS) and Regulation (EC) nº 1606/2002, issued by the European Parliament and the Board on 19 July 2002. In Spain, the obligation to file consolidated annual accounts in accordance with IFRS approved in the European Union, is regulated by the final eleventh provision of Law 62/2003, dated 30 December 2003 governing tax, administrative and social order measures.
During 2025, the following compulsory rules and interpretations came into force and have already been adopted by the European Union. Where appropriate, the Group has applied these rules in its preparation of these Consolidated Annual Accounts on 31 December 2025.
Mandatory standards, interpretations and amendments for financial years beginning on 1 January 2025:
New standards, modifications, and interpretations:
Approved for use in the European Union
Amendments
Amendment to IAS 21 Absence of Convertibility
This amendment establishes an approach that specifies when one currency can be exchanged for another and, when this is not the case, the determination of the exchange rate to be applied.
None of these standards, interpretations and amendments has been applied in advance. The application of these standards, interpretations and amendments has had no significant impact on these consolidated financial statements. The Group is applying the aforementioned standards and interpretations as from their entry into force on January 1, 2025.
At the date of preparation of these consolidated annual accounts, the most significant rules and interpretations that had been published by the IASB, but had not yet entered into force, either because their effective date is after the date of the consolidated annual accounts or because they have not yet been adopted by the European Union, are the following:
New standards, modifications, and interpretations:
Obligatory application for financial years starting on:
Approved for use in the European Union
Amendments
Amendment to IFRS 7 and IFRS 9
Classification and measurement of financial instruments.
This amendment clarifies the criteria for the classification of certain financial assets, as well as the criteria for the derecognition of financial liabilities settled through electronic payment systems. It also introduces additional disclosure requirements.
1 January 2026
Amendment to IFRS 7 and IFRS 9
Contracts that refer to electricity that depends on nature.
This amendment clarifies how electricity contracts should be accounted for, distinguishing between purchase/sale contracts and those that must be recognised as financial instruments.
1 January 2026
Annual improvements (vol. 11)
The objective of these improvements is to enhance the quality of the standards by amending existing IFRS to clarify or correct minor aspects
1 January 2026
Not approved for use in the European Union
New Standards
IFRS 18
Presentation and Disclosure of Financial Statements.
The purpose of this new Standard is to prescribe the presentation and disclosure requirements for financial statements, replacing IAS 1 currently in force.
1 January 2027
IFRS 19
Disclosures for subsidiaries without public accountability
The objective of this new standard is to provide details of the disclosures that a subsidiary may have as an option in the preparation of its financial statements.
1 January 2027
Amendments
Amendment to IFRS 19
Disclosures for subsidiaries without public accountability
This amendment aims to simplify disclosure requirements, facilitating the preparation of financial statements for such entities.
1 January 2027
Amendments to IAS 21
The Effects of Changes in Foreign Exchange Rates: Presentation Currency in a Hyperinflationary Economy.
This amendment clarifies how an entity should translate its financial statements when the presentation currency is hyperinflationary, even if its functional currency is not. It establishes a consistent translation method to enhance comparability and the usefulness of financial information.
1 January 2027
The Group's directors do not expect significant impacts from the application of the standards detailed above. The Group is currently assessing the impact on the presentation and disclosures of the financial statements arising from the future application of IFRS 18.
Consolidation principles
Subsidiaries
Subsidiaries are all the companies (including special purpose entities) over which the Group has the power to: govern the financial and operating policies exercise power over their significant activity, maintaining the exposure or right to receive the variable returns on investments and the capacity to use this power in such a way that it influences the amount of those returns, which generally results from holding a stake that exceeds half of the voting rights. When it comes to evaluating whether or not the Group exerts control over another entity, consideration is given to the existence and effect of potential voting rights that may currently be exercised or that are convertible. Subsidiaries are consolidated as of the date on which control is transferred to the
Group, and they are excluded from the consolidation from the date on which that control ceases.
The Group uses the acquisition method to account for the acquisition of subsidiaries. The consideration transferred for the acquisition of a subsidiary corresponds to the fair value of the transferred assets, liabilities assumed, and equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability that results from a contingent consideration arrangement. Acquisition expenses are recognized as expenses in the periods in which they are incurred. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date. For each business combination, the Group may choose between recognizing any non-controlling interest in the acquired company at fair value and recognizing the proportionate share of the non-controlling interest in the identifiable net assets of the acquired company.
Goodwill is measured as the excess of the sum of the consideration transferred the amount of any non-controlling interest in the acquired company and the fair value at the acquisition date of the stake previously held by the acquiring company in the net equity of the acquired company less the net value at the acquisition date of the identifiable assets acquired and liabilities assumed. If this amount is less than the fair value of the equity of the acquired subsidiary, in the event that it involves a bargain purchase, the difference is recognized directly as income in the income statement.
The annual accounts of the subsidiary companies are consolidated with those of the Parent Company under the full consolidation method, and all intercompany transactions, balances and unrealized gains on transactions between the Group companies are eliminated. All unrealized losses are also eliminated. Furthermore, the accounting policies of the subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group. All of the Group's subsidiaries have their accounting close date on 31 December.
Associates
Associates are those entities over which the Parent company has the capacity to exercise significant influence (i.e. not control or joint control). Significant influence is understood to exist when the Group holds a stake in a company and exerts power to intervene in decisions relating to the financial and operating policy of it, without exerting control. Usually, this influence is manifested by a shareholding (direct or indirect) equal to or greater than 20% of the voting rights of the associate company. Associate companies are consolidated under the equity method.
The company Consorcio Español Alta Velocidad Meca-Medina, S.A. was accounted for as an associate company as at 31 December 2025 and 2024. The members of the Board of Directors appointed by the Group are considered to exert significant influence over this consortium, but not control or joint control, since decisions are agreed in accordance with the shareholding rights of the consortium members and as a general rule, a majority of 75% is required.
The most significant financial information
presented below in thousand euros:
relating
to this associate
company is
2025
2024
Current assets
217,245
240,938
Non-current assets
94
94
Total Assets
217,339
241,032
Current liabilities Non-current liabilities
217,279
-
240,972
-
Total liabilities
217,279
240,972
Equity
60
60
Operating income
2,502
2,814
Operating expenses
(2,129)
(2,423)
Financial result
Net result
(357)
-
(455)
-
The auditor of this company is KPMG Auditores, S.L. The 2025 and 2024 figures included are under auditing process.
Associate companies are included in the consolidated accounts under the equity method, i.e. in accordance with the percentage of equity represented by the Group's stake in their share capital, after accounting for any dividends received from them and other equity eliminations. In the event of transactions with an associate, any resulting losses or gains are eliminated in accordance with the percentage stake held by the Group in its share capital.
When the equity method is applied for the first time, the Group's stake in the company is valued on the basis of the percentage that the amount of equity held by the Group's companies in the associate represents over the associate's total net equity, after adjustments have been made to its net assets to reflect their fair value on the date significant influence is acquired.
The difference between the net book value of the associate company in the individual accounts and the amount indicated in the previous paragraph represents the goodwill, which is reported within 'Investments in associates'. In the exceptional case that the difference between the amount at which the investment is recorded in the individual accounts and the investment in the fair value of the net assets of the company is negative, that difference is recognised in the income statement after reassessing the allocation of fair values to the assets and liabilities of the associate.
In general, unless a negative difference arises on the acquisition of significant influence, the investment is initially measured at cost.
The results generated by the company using the equity method are recognised from the date on which significant influence is acquired.
The carrying amount of the investment is adjusted (increased or decreased) in proportion to the Group companies' share of the changes in the investee's equity since the initial valuation, after eliminating the share of unrealised gains or losses resulting from transactions between the investee and the Group companies.
The highest value that may be assigned to a shareholding as a result of the application of the acquisition method is reduced in subsequent years and charged to the consolidated results or to the corresponding equity caption; and to the extent that they depreciate, they lead to the derecognition or disposal of the corresponding equity elements to third parties. Similarly, a charge is made against consolidated income when losses arise due to the impairment of the assets of the associate company, up to the limit of the gain allocated to them at the date when they are first accounted for under the equity method.
Changes in the value of associate companies that correspond to the results for the year of the associate company form part of the consolidated results and should appear within the caption 'Share of profit (losses) made by companies accounted for under the equity method'. However, if an associate company incurs losses, the reduction in the representative account of the investment shall be limited to the book value of the shareholding itself. If the shareholding is reduced to zero, any additional losses and corresponding liabilities shall be recognised to the extent that legal, contractual, implicit, or tacit obligations are incurred, or as if the Group had made payments on behalf of the investee company.
Changes in the value of the associate company corresponding to other changes in equity are shown in the relevant sections of equity, in accordance with their nature.
Valuation and timing homogenization applies to investments in associates in the same way as it does for subsidiary companies.
Joint ventures
Joint control is when the sharing of control is contractually agreed, which exists only when the decisions about the important activities require the unanimous consent of the parties that share the control. When a company in the Group carries out its business under a framework of joint ventures, the Group, as the joint operator will recognize a joint venture for its participation:
Its assets and liabilities, including its participation in the assets and liabilities held jointly.
Its participation in the income and expenses registered by the joint venture.
At the end of the financial years 2025 and 2024, the Group did not have any joint ventures.
Variations in the consolidation perimeter
During the 2025 financial year, there were no changes in the scope of consolidation. In the 2024 financial year, the company OOO Talgo, located in Russia, was dissolved.
Foreign currency transactions
Functional and reporting currency
The items included in the financial statements of each one of the Group's companies are measured using the currency of the main economic environment in which the company operates (functional currency). The consolidated annual accounts are presented in thousands of euros, unless indicated otherwise, which is the Parent company's functional and reporting currency.
Transactions and balances
Foreign currency transactions are converted into the functional currency using the exchange rates in force on the dates of the transactions. Foreign currency profit and losses resulting from the settlement of these transactions, and from the conversion of monetary assets and liabilities denominated in foreign currencies at closing exchange rates, are recognized in the income statement, except if they are deferred in other comprehensive income as qualifying cash flow hedges or qualifying net investment hedges.
Gains and losses arising from foreign exchange differences related to borrowings and to cash and cash equivalents are recognised in the income statement under 'Financial income' or 'Financial expenses'.
Group companies
The results and financial position of all Group companies (none of which has the currency of a hyperinflationary economy) whose functional currency differs from the presentation currency are translated into the presentation currency as follows:
The assets and liabilities in each statement of financial position presented are translated at the closing exchange rate at the date of the statement of financial position, while equity is translated at the historical cost;
The income and expenses in each income statement are translated at the average exchange rates for the financial year, unless such average rates are not a reasonable approximation of the cumulative effect of the exchange rates prevailing at the transaction dates, in which case income and expenses are translated at the dates of the transactions; and
The resulting translation differences arising from the translation of the financial statements as described above are recognised in equity.
Tangible fixed assets
Tangible fixed assets are recognised at acquisition cost less accumulated depreciation and the accumulated impairment losses recognised. The cost of property, plant and equipment includes expenditures directly attributable to the acquisition of the assets.
Internally generated items of property, plant and equipment are recognised at accumulated cost, which results from adding external costs to internal costs, determined on the basis of internal consumption of warehouse materials and production costs, calculated using hourly rates consistent with those applied in the measurement of manufacturing projects.
Subsequent costs relating to expansions, modernisation, improvements, or repairs and maintenance are included in the carrying amount of the asset or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of the replaced component is derecognised. All other repairs and maintenance are charged to the income statement in the financial year in which they are incurred.
Land is not depreciated. Depreciation of other assets is calculated systematically using the straight-line method to allocate their costs up to the amount of their residual values, over their estimated useful lives.Each component of an item of property, plant and equipment that has a cost that is significant in relation to the total cost of the item is depreciated separately. The estimated useful lives are as follows:
Years | % | |
Buildings | 50 - 33 | 2 - 3 |
Machinery | 8 | 12,5 |
Other facilities, Tools and Furniture | 3 - 14 | 33,3 - 7,14 |
Other tangible fixed assets | 4 - 12 | 25 - 8,3 |
The residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each statement of financial position date.
When the book value of an asset exceeds its expected recoverable amount, its carrying amount is written down immediately to reflect its expected recoverable amount.
Gains and losses on the disposal of property, plant and equipment are calculated by comparing the proceeds received with the carrying amount, and are recognised in the income statement under the line item 'Gain/Loss on disposal of non-current assets'.
Rights of use
As a result of the application of IFRS 16, the Group recognises, for leases that meet the criteria defined in that standard, a right-of-use asset and the corresponding lease liability