SYZYGY : 9-Month Report 2023

Key financial figures

50.33 %

100 %

Bank deposits and overnight

A compelling digital experience makes all the difference, creating sustainable added value and boosting competitiveness. That is precisely what the SYZYGY GROUP's services focus on, enabling it to maintain its above-averagegrowth rate in its German core market.

34.04 %

9.57 %

6.06 %

WPP plc., St. Helier Private investors/others Institutional investors

HANSAINVEST

Shareholder structure

deposits

Portfolio structure of cash and marketable securities

46 %

54 %

76 %

24 %

Equity

Liabilities

Non current assets

Current assets

Balance sheet structure

32% Services

21% Automotive

20 % Finance/insurances 16 % Consumer goods

5 % Telecommunication/IT 6 % Others

Sales allocation by vertical markets

Sales by employee annualised (in kEUR)

32 %

17 %

51 %

Top 5

Top 6-10

Others

Sales by clients' volume

19 % Technology

18 % Strategy/consulting 17 % Performance marketing 16 % Project management 16 % Design

14 % Administration

Employees by function

Business development

and Group Management Report

1. General

The following Group Management Report provides information on the performance of the SYZYGY GROUP (hereinafter referred to as "SYZYGY", the "Group" or the "Company"). The consolidated financial statements on which the Group Management Report is based have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial year corresponds to the calendar year.

2. Group profile

For information on the SYZYGY GROUP's structure, strategy and management, please refer to the explanatory notes in the 2022 management report (2022 Annual Report, page 56 ff.).

The Group consists of SYZYGY AG as the holding company and seven subsidiaries:

• Ars Thanea S.A.
• diffferent GmbH
• SYZYGY Deutschland GmbH
• SYZYGY Digital Marketing Inc.
• SYZYGY Performance Marketing GmbH
• SYZYGY UK Ltd.
• Unique Digital Marketing Ltd.

2.1. Employees

The following table shows the distribution of permanent employees by region:

09/30/2022

112

The headcount at the SYZYGY GROUP increased in the period covered by the report. The SYZYGY GROUP had a total of 627 permanent employees as at September 30, 2023. This represents an increase of 23 employees compared with December 31, 2022, and a rise of 39 compared with September 30, 2022. The number of employees in the German companies rose by 57 people compared with the prior-year quarter, while there was a

09/30/2022

442

83

55

8

588

111

104

96

90

75

588

decrease of 18 employees in the international companies.

Employees by region

The proportion of employees in each function/work area has not changed significantly and breaks down as follows:

19 % Technology

18 % Strategy/consulting 17 % Performance marketing 16 % Project management 16 % Design

14 % Administration

Employees by function

On average over the period, 619 employees plus around 43 freelancers worked for the SYZYGY GROUP. Annualised sales per head were therefore EUR 110,000 (previous year: EUR 110,000).

2.2. Net assets, financial position and results of operations of the SYZYGY GROUP

2.2.1. Results of operations

Sales figures for the SYZYGY GROUP are arrived at by deducting media costs from billings. Media costs are incurred in the performance marketing companies as transitory items on the revenue and expenses side.

SYZYGY GROUP sales increased by 3 per cent in the 2023 reporting period to reach EUR 54.4 million. The share of sales generated in Germany rose to 81 per cent, with sales growth of 6 per cent being recorded. The UK & US segment accounted for 12 per cent of sales, while the Poland segment contributed 7 per cent to total SYZYGY GROUP sales.

Shifts in sales patterns gave rise to a number of changes compared to the previous year. Sales to clients in the services sector rose by 9 percentage points, while sales to companies in the automotive industry were down by 5 percentage points. There was a 1 percentage point decline in sales to telecom clients. Sales derived from companies that cannot be assigned to any of these five key areas were also down by 3 percentage points to 6 per cent.

32% Services

21% Automotive

20 % Finance/insurances 16 % Consumer goods

5 % Telecommunication/IT 6 % Others

Sales allocation by vertical markets

The Group generated 49 per cent of total sales with the ten largest clients. This corresponds to an increase of 4 percentage points compared with the same period in the previous year.

2.2.2. Operating expenses and depreciation

The cost of sales increased ahead of sales by 7 per cent to reach EUR 41.9 million (previous year: EUR 39.2 million). Gross margin decreased by 3 percentage points to 23 per cent due to the cost of sales rising faster than sales.

Sales and marketing costs and general administrative expenses fell by 4 and 2 per cent, respectively, to EUR 4.0 million (previous year: EUR 4.1 million) and EUR 6.6 million (previous year: EUR 6.8 million).

Depreciation of fixed assets increased by EUR 4.3 million (EUR 8.3 million compared to EUR 4.0 million in the previous year) due to an impairment of goodwill in the amount of EUR 4.2 million. Excluding the impairment of goodwill, depreciation and amortisation of EUR 4.1 million was almost flat compared to the previous year's figure of EUR 4.0 million.

2.2.3. Operating income and EBIT margin

The SYZYGY GROUP's operating profit after adjustment for goodwill write-downs and restructuring expenses fell to EUR 3.9 million compared with the prior-year period (previous year: EUR 4.8 million); the adjusted EBIT margin thus fell to 7.2 per cent (previous year: 9.0 per cent). In the first half of the year, impairment of goodwill amounting to EUR 4.2 million was recognised and restructuring expenses of EUR 0.5 million were incurred, resulting in negative EBIT (operating income) of EUR 0.7 million.

Operating income (in kEUR)

2.2.4. Financial income

The SYZYGY GROUP reported negative financial income of EUR 1.2 million for the first nine months of 2023 (previous year: EUR 0.9 million). Financial expenses chiefly comprise borrowing costs, losses realised on the sale of securities, and pro rata interest expense from long-term contracts in accordance with IFRS 16 (primarily leases).

Financial income (in kEUR)

2.2.5. Income taxes, net income, earnings per share Business performance at the SYZYGY GROUP is reflected in pre-tax income of EUR -2.0 million. In the same period of the previous year, the figure was EUR 4.1 million, meaning that pre-tax income is down by EUR 6.0 million. After income taxes of EUR 0.6 million, net income was EUR -2.6 million. Undiluted earnings per share were EUR -0.20, based on the average available 13,500,000 shares qualifying for participation in the profits and after deducting minority shares of EUR 141,000. This figure is EUR 0.42 below the level achieved in the prior-year period.

SYZYGY Performance Hamburg

Income before taxes (in kEUR)

Earnings per share undiluted (in EUR)

2.2.6. Segment reporting

In accordance with IFRS 8, which is based on the management approach, the SYZYGY GROUP is reporting segments differently from the previous year. The UK & US segment includes SYZYGY Digital Marketing in addition to the British companies, because it is managed from the UK. The original Other segment has been renamed Poland and comprises Ars Thanea. The Germany segment remains unchanged.

In the first nine months of 2023, the individual segments contributed to earnings as follows, compared with the same period in the previous year:

7 % Poland

12 % United Kingdom & US

Sales by segments

81 %

Germany

United Kingdom & US

2023 2022

6,327 7,480

657 868

10% 12%

409 868

6% 12%

12% 12%

Poland

2023 2022

4,718 4,718

800 828

17% 18%

800 828

17% 18%

7% 8%

2.2.7. Financial position

The SYZYGY GROUP had liquidity reserves totalling EUR

1. million as at the balance sheet date, corresponding to a decline of EUR 6.7 million compared with December 31, 2022. Liquid funds decreased by EUR 5.7 million to EUR

1. million. The securities portfolio was liquidated, with no securities now being held. The change in liquid funds is largely due to the dividend paid to shareholders and the repayment of debt capital items.

A total of 100 per cent of the funds was accounted for by bank deposits as at September 30, 2023.

Cash flow from business operations was slightly positive in the period under review. This is largely due to depreciation and amortisation of EUR 8.3 million, while total net income (EUR -2.6 million) and payments of liabilities (EUR -3.1 million) adversely affected cash flow.

Total cash flow of the SYZYGY GROUP was negative EUR 5.2 million as at the reporting date.

Operating cash flow (in kEUR)

Negative cash flow from investment operations of EUR

0.3 million was recorded. Changes in non-current assets of EUR 0.5 million, interest payments for lease obligations according to IFRS 16 of EUR 0.4 million and investments in intangible assets and fixed assets of EUR 0.2 million adversely affected cash flow. The sale of securities was a positive factor, generating EUR 0.8 million.

The main items in the cash flow from financing activities included payment of a dividend to SYZYGY AG shareholders amounting to EUR 3.0 million and the repayment of lease liabilities of EUR 2.8 million. Cash flow from financing activities thus amounted to EUR -6.4 million.

2.2.8. Asset situation

Total assets of the SYZYGY GROUP decreased by EUR

11.8 million to EUR 87.4 million in the period under review compared to December 31, 2022, representing a fall of 12 per cent.

Non-current assets declined by EUR 5.5 million to EUR 66.2 million compared to the balance sheet date of December 31, 2022 (EUR 71.6 million). The key factor in this respect was the EUR 3.9 million decline in goodwill and the decrease of EUR 1.9 million in fixed assets (due to depreciation).

Ars Thanea Warsaw

Current assets of EUR 21.2 million were below the level as at December 31, 2022 (EUR 27.6 million). This was primarily due to the fall in liquidity reserves, which were down EUR

6.8 million. In contrast, other current assets increased slightly to EUR 2.8 million (previous year EUR 2.5 million).

At EUR 40.0 million, equity was down by EUR 5.1 million compared to December 31, 2022. In addition to total net income of EUR -2.6 million, the dividend distribution of EUR 3.0 million reduced retained earnings. This was partly offset by a positive change in other comprehensive income of EUR 0.6 million. The latter is due to currency translation adjustment from foreign business operations. The equity ratio increased by 1 percentage point to 46 per cent due to the relatively larger drop in total assets.