Mutares : Annual Report 2023 of Mutares Group (including consolidated financial statements, combined management report and group management report, explanatory report of Mutares Management SE on the disclosures pursuant to Section 289a, Section 315a of the German Commercial Code (HGB))

Leading Global

Private Equity

Special Situations

Investor

HOLDING

REVENUES

EUR 103.6 million

PORTFOLIO INCOME

EUR 102.5 million

HOLDING NET INCOME

EUR 352.7million

PORTFOLIO COMPANIES (12/31/2023)

GROUP

REVENUES

EUR 4,689.1 million

EBITDA

EUR 756.9 million

ADJUSTED EBITDA

EUR 3.5 million

DIVIDEND

EMPLOYEES (12/31/2023)

HOLDING 1

>  200

GROUP

>  27,000

GUIDANCE

Cover motif: Danny Fiers

1

MUTARES ANNUAL REPORT 2023

ca. EUR 10billion

GROUP REVENUES BY 2028

1 incl. Mutares subsidiaries

2 Return on Invested Capital

01

ABOUT MUTARES

Mutares­ is specialized on the acquisition of companies in special situations. Mutares­ pursues the aim of leading the acquired companies onto a stable path of profitable growth through intensive operational cooperation. Our transaction teams at twelve locations worldwide identify suitable companies. After the acquisition, our own operational team, together with the management of the portfolio companies, develops a comprehensive improvement program along the entire value chain and supports its implementation. Our objective is to return the company to sustainable and long-term success and to support its value. This can also be done through add-on acquisitions.

Extensive operational industry and turnaround experience, combined with transactional and operational support, build the foundation for mastering the challenges involved in developing our portfolio companies.

01

ABOUT MUTARES

02 PORTFOLIO

03

TO OUR SHAREHOLDERS

04

CORPORATE GOVERNANCE

05

FINANCIAL INFORMATION

06

FURTHER INFORMATION

MUTARES SE & CO. KGAA

Founded in 2008, Mutares acquires mid- sized companies to develop them long-term-­ oriented and sustainably.

MUTARES GROUP

As at December 31, 2023, the Mutares Group comprised 30 operating companies.

PORTFOLIO COMPANIES

The portfolio companies operate independently and are managed on their own reporting­

responsibility­. They are integrated into the ­Mutares Group reporting.

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MUTARES ANNUAL REPORT 2023

New growth impulses through fourth segment and global expansion

EUR million

102.5

Mutares Holding

net income in FY 2023

EUR million

4,689

Mutares Group

­revenues in FY 2023

01

ABOUT MUTARES

02 PORTFOLIO

03

TO OUR SHAREHOLDERS

04

CORPORATE GOVERNANCE

05

FINANCIAL INFORMATION

06

FURTHER INFORMATION

DEAR SHAREHOLDERS,

LADIES AND GENTLEMEN,

­Mutares SE & Co. KGaA can look back on a successful fiscal year 2023 in what continues to be a challenging economic environment. It is precisely in such an environment that the adaptability and expertise of the entire ­Mutares team and, in particular, the resilience of our business model are impressively demonstrated, enabling us to celebrate successes and make progress in many respects over the course of the fiscal year 2023.

Key financial figures for the fiscal year 2023

The revenues of Mutares Holding (Mutares­ SE & Co.KGaA), resulting from consulting services to affiliated companies and management fees, increased by 46 % to EUR 103.6 million in the fiscal year 2023 (previous year: EUR 71.1 million). The increase is a result of the expansion of the operational consulting business. Sales revenues and dividends from the portfolio result in the so-called "portfolio income", which amounted to EUR 112.1 mil- lion for the fiscal year 2023 (previous year: EUR 139.8 million). As a result, the Mutares­ Holding Company generated a net income under commercial law of EUR 102.5 million for the fiscal year 2023, compared with EUR 72.9 million in the previous year. The successful sale of Special Melted Products ("SMP") made a significant contribution to this result.

The MutaresGroup generated revenues of EUR 4,689.1 million in the fiscal year 2023 (previous year: EUR 3,751.7 million). Group EBITDA (earnings before interest, taxes, depreciation and amortization) in accordance with IFRS amounted to EUR 756.9 million in fiscal year 2023 (previous year: EUR 181.5 million), boosted by gains from bargain purchases of EUR 727.2 million (previous year: EUR 262.0 million) and the positive contribution from exits in the fiscal year. Adjusted EBITDA, adjusted in particular for the effects of regular changes in the composition of the portfolio, amounted to EUR 3.5 mil- lion for the fiscal year 2023 (previous year: EUR -32.7 million) and reflects the encouraging progress made in restructuring and developing parts of the portfolio.

Operational and strategic progress

In a challenging environment, we have further developed the ­Mutares portfolio in a pleasing manner. With 16 completed acquisitions in the fiscal year 2023, we were able to further drive our growth and expand the portfolio with additional promising invest- ments. The results of our implemented transformation and restructuring programs are also pleasing. SFC ­Solutions (part of Amaneos), Terranor, Ganter, Steyr Motors and keeeper Group in particular have made significant progress.

In a persistently dynamic environment in the Automotive & Mobility segment, we pressed ahead with the consolidation of our supplier business in the fiscal year 2023: The expertise of various portfolio companies in the field of metallic components and systems for the automotive industry was bundled under the FerrAl United Group brand and strengthened in a targeted manner with four add-on acquisitions. Finally, at the beginning of the fiscal year 2024, we merged KICO Group and ISH Group with the newly renamed HILO Group, together with the add-on acquisitions High Precision Components Witten and Prinz Kinematics, which were recently completed for these two investments, to form a global supplier business for hinges and locking systems for OEMs.

Early refinancing of the bond and international expansion

In March 2023, we issued a senior secured bond with a term until March 2027, which was increased by EUR 50 million in June 2023 and by a further EUR 100 million after the 2023 reporting date to a volume of EUR 250 million as part of an existing increase option due to the high level of investor interest. The inflow of liquidity from the issue was used both to refinance the bond issued in the fiscal year 2020 in the total amount of EUR 80 million, which was redeemed in full ahead of schedule with the issue of the new bond, and for general corporate financing. We therefore believe that Mutares­ is well equipped to take maximum advantage of the opportunities that arise on the acquisition side and to continue its international expansion. We expect the volume of transactions in the current year 2024 to be on par with the fiscal year 2023. A large number of projects in our core European regions, but increasingly also in China,­ are currently being examined in detail. By opening an office in Shanghai, China,­ we have taken the next step towards further international expansion. We are firmly convinced that local deal sourcing in this globally important region offers diverse and attractive opportuni- ties. At the same time, we also offer solutions for sellers of European investments in

China­ . For the current fiscal year 2024, we are also planning to open an office in Chicago, USA, as well as prospectively opening offices in other core regions of the world.

In light of the strong portfolio growth in recent years and with the strategic intention of expanding the target universe relevant to ­Mutares, we added a fourth segment to the previous three segments in the fiscal year 2023: Lapeyre, keeeper Group and FASANA were carved out of the Goods & Services segment and included in the new independent Retail & Food segment. We reached the first milestone in strengthening this new segment by signing an agreement to acquire Gläserne Molkerei from the Emmi Group in July 2023. The acquisitions of Prénatal and TeamTex followed in the course of the fiscal year 2023, as well as the acquisition of Temakinho in March 2024 after the reporting date.

Record exit shows the potential for value creation

In the fiscal year 2023, Mutares­ also increasingly focused on the exit side: we were able to complete a total of seven sales of portfolio companies. Particularly noteworthy is the sale of Special Melted Products ("SMP"), which represents the most successful exit in the Company's history to date with a cash inflow for the Mutares­ Holding Company of around EUR 150 million. After the reporting date, we also successfully completed the sale of Frigoscandia to Dachser, for which an agreement was signed in December 2023. With gross proceeds of around EUR 66 million (for 100 % of the shares), this also rep-

resents an extraordinary success in terms of value creation for Mutares­ . Overall, thanks to the portfolio growth of recent years and the successful restructuring and optimization work, ­Mutares has a promising and mature portfolio where further lucrative exit transactions are possible in the coming years.

Growth-oriented minimum dividend of EUR 2.00 per share

We attach great importance to the sustainable and substantial participation of our shareholders in the success of ­Mutares. In the fiscal year 2023, we paid out EUR 1.75 per share (consisting of a base dividend of EUR 1.00 plus a performance dividend of EUR 0.75). Our dividend policy, which was updated in the fiscal year 2023, now provides for a minimum annual dividend of EUR 2.00 per dividend-bearing share. In exceptionally successful fiscal years, the Company will also consider in its proposal for the appropriation of profits in the future to what extent the remaining net income will also be distributed in the form of a possible bonus dividend to be reported separately in the future. For the fiscal year 2023, the Management Board and Supervisory Board will propose to the Annual General Meeting to be held on June 4, 2024, that a dividend totaling EUR 2.25 per share be distributed.

01

ABOUT MUTARES

02 PORTFOLIO

03

TO OUR SHAREHOLDERS

04

CORPORATE GOVERNANCE

05

FINANCIAL INFORMATION

06

FURTHER INFORMATION

Outlook

We communicated our new medium-term targets at our Capital Markets Day 2023. For the fiscal year 2028, we want to achieve Group revenues of EUR 10.0 billion and a net income of EUR 200 million for the ­Mutares Holding Company. This target is based on the opportunities we see for the further expansion of our portfolio in the coming years. We have set a further course for this in the fiscal year 2023: With the further internationalization of our business towards Asia in the fiscal year 2023 and to the US and other regions in the fiscal year 2024, we are creating further international expansion oppor- tunities, while we have expanded our sector focus with the new Retail & Food segment.

Against the background of the transactions concluded and signed in the fiscal year 2023, the assumptions regarding further intended transactions in the course of the year and the plans for the individual portfolio companies, the Management Board expects revenues for the ­Mutares Group to increase to between EUR 5.7 billion and EUR 6.3 billion in the fiscal year 2024.

The annual net income of ­Mutares SE & Co. KGaA should regularly be in a range of 1.8 % to 2.2 % of the consolidated revenues of the ­Mutares Group. Based on expected revenues

for the Mutares­ Group of EUR 6.0 billion on average, the Management Board therefore expects a net income of EUR 108 million to EUR 132 million in the fiscal year 2024. All sources from which the net income of ­Mutares SE & Co. KGaA is generally fed, namely revenues from the advisory business on the one hand and dividends from portfolio companies and, in particular, exit proceeds from the sale of investments on the other, are expected to contribute to this.

On behalf of the Management Board, we would like to thank our employees in particular, but also our investors, partners, suppliers and other stakeholders for their commitment and trust. We look forward to continuing ­Mutares' exciting and successful growth story with all of you in the fiscal year 2024 and beyond.

Sincerely,

The Management Board of ­Mutares Management SE,

General Partner of ­Mutares SE & Co. KGaA

01

ABOUT MUTARES

02 PORTFOLIO

03

TO OUR SHAREHOLDERS

04

CORPORATE GOVERNANCE

05

FINANCIAL INFORMATION

06

FURTHER INFORMATION

7

ABOUT MUTARES

Our Business Model

OUR BUSINESS MODEL

Taking calculated risks and turning losses into opportunities, ultimately creating successful turnarounds.

04

01

ABOUT MUTARES

02 PORTFOLIO

03

TO OUR SHAREHOLDERS

04

CORPORATE GOVERNANCE

05

FINANCIAL INFORMATION

06

FURTHER INFORMATION

01

ACQUISITION

Taking calculated risks of loss-making companies

After the acquisition, ­Mutares initiates an extensive operational improvement program within the portfolio compa- nies. The projects jointly defined with the company are implemented by ­Mutares consultants in close cooperation with the employees on site.

02

REALIGNMENT

Requesting cash financing

from the seller

Mutares­ develops their companies in a successful and strategic way until the long-term reorganization is achieved. On completion of the improvement program, the company will have reestablished itself as an independent, profitable company in its respective market.

03

OPTIMIZATION

Investing in a

successful turnaround

Mutares­ pursues an active investment management that reviews the company for further business opportunities and strengthens it in the growth phase through focused, strategic acquisitions (buy-and-build approach). For these add-on acquisitions, the strategic fit is decisive.

HARVESTING

Turnaround & profit

from a profitable company

The objective of Mutares­ is to actively promote the company's value poten- tial, by establishing the basis for a profitable sale of the company to ensure the sustainable development of the portfolio in the long term.

Learn more about the Mutares business model: www.mutares.com/en/company

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MUTARES ANNUAL REPORT 2023

16 acquisitions and 7 exits in 2023

01

ABOUT MUTARES

02 PORTFOLIO

03

TO OUR SHAREHOLDERS

04

CORPORATE GOVERNANCE

05

FINANCIAL INFORMATION

06

FURTHER INFORMATION

01 JANUARY

Mutares compensates CO2-emissions of all travels

of the Mutares­ Holding of the past fiscal year. The climate protection contribution benefits the organization atmosfair, which thereby promotes the expansion of renewable energies.

Mutares­ is awarded for the second year in a row the label "Company of the Year 2023" by Focus Money in the category holding companies.

Mutares successfully sells its portfolio company JAPY Tech to the company's management.

Mutares­ successfully completes the acquisition of Peugeot Motocycles from Mahindra & Mahindra.

The company produces two- and three-wheeled03 scooters and strengthens the Automotive & Mobility segment as a new platform.

02 FEBRUARY

Mutares successfully completes the acquisition of Palmia from the City of Helsinki. The new platform

strengthens the Goods & Services segment and is a Finnish public sector service provider.

04

MARCH

Mutares­ successfully completes the acquisition of a plant of the automotive supplier Magna in

­Bordeaux. The company manufactures transmissions for the automotive industry and now operates ­under the name MMT-B and belongs to the FerrAl United Group of the Automotive & Mobility segment.

Mutares­ portfolio company Ganter Group sells French subsidiary to Malvaux Group.

Mutares successfully sells its portfolio company Lacroix + Kress to Superior Essex.

Mutares positions newly formed Amaneos as a global Tier 1 automotive supplier with more than

7,500 employees and revenues of EUR 1 billion. 05 The wholly-owned subsidiary Amaneos acts as a

new holding company for Light Mobility Solutions,­ MoldTecs, and SFC Group.

Mutares successfully sells its portfolio company FDT Flachdach Technologie to Holcim Group.

Successful placement of a new EUR 100 million senior secured floating rate bond and early

redemption­of the existing EUR 80 million senior secured bond.

APRIL

Publication of Annual Report 2022: Net income

of the Mutares­ Holding rises to record level of EUR 72.9 million in 2022.

­Mutares successfully completes the majority

­acquisition of BEW-Umformtechnikfrom Marigold Capital. The add-oninvestment strengthens the FerrAl United Group.

MAY

Successful integration of NEM Energy and Balcke-Dürrinto one group to materialize

synergies.

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MUTARES ANNUAL REPORT 2023