TELES Informationstechnologien : Annual Financial Statements 2022

Translation -the German version is authoritative

Annual Report

and

Combined management report

for the

Fiscal year 2022

Translation -the German version is authoritative

Translation -the German version is authoritative

1. Other operating expenses, interest expenses, depreciation on financial assets

1. Information on the scope of consolidation in accordance with Section 285 Nos.

1. Explanations to the cash flow statement - non-cash transactions in the cash

Translation -the German version is authoritative

Combined management report

In addition to the TELES Group (hereinafter "TELES Group", "TELES Group" or "TELES"), the combined management report also includes the parent company, TELES AG, based in Ber- lin, Germany. It is prepared in accordance with the provisions of the German Commercial Code (HGB) and the German Accounting Standard (DRS) No. 20.

TELES AG prepares the annual financial statements in accordance with the accounting principles of the HGB and the consolidated financial statements in accordance with the accounting principles of the International Financial Reporting Standards (IFRS). The management report and the group management report are summarized. The asset, financial and earnings situation as well as the statements on risk, opportunity and forecast reporting are each presented separately.

TELES AG has prepared consolidated financial statements in accordance with IFRS for the financial years up to and including 2018. There was no legal obligation to prepare consolidated financial statements in accordance with IFRS for the financial years 2019 up to and including 2021. Given the existing obligation to prepare consolidated financial statements in accordance with IFRS for the 2022 financial year, the individual financial statement values in accordance with IFRS of TELES AG at the level of the consolidated financial statements are used as comparative figures for the previous year. Accordingly, there is only limited comparability with the previous year.

Basic information on the TELES Group

TELES operates in the pharmaceutical and telecommunications segments.

The Pharma segment is the growth area for the TELES Group. The telecommunications segment was sold with the areas of development, service, and order management for existing customers (partial operations) on October 1, 2023, as part of an asset deal. The employees in the part of the business have also been transferred to the purchaser. This meant that TELES AG was transformed into a pure financial holding company with responsibility for group accounting and group IT.

In the Pharma segment, TELES focuses on the growth area of Specialty Pharma in Ger- many and Europe. Specialty Pharma usually includes high-priced drugs for chronic,

Translation -the German version is authoritative

complex, or rare diseases, such as those sold by TELES. The TELES group focuses on six indication areas: oncology, neurology, autoimmune diseases, ophthalmology, hemophilia, and infectious diseases.

The Pharma segment combines the management of large data volumes in the pharmaceutical industry and pharmaceutical supply with a focus on digitalization and process optimization along the pharmaceutical value chains.

In the telecommunications segment, TELES Carrier Solutions supplies digitalization solutions for the development and maintenance of telecommunications networks to national or international carriers (fixed or mobile network operators). TELES migrates traditional TDM/SDH networks to all-IP networks and offers cloud-based Unified Communication as a Service.

EURO RX Arzneimittel GmbH, Wedemark (EURO RX) is a specialized pharmaceutical supplier that uses a digitalized supply chain to ensure reliable pharmaceutical care for patients across Europe. Due to the high level of automation, the EURO RX can deliver medications for cancer, autoimmune deficiencies, and combination therapies for personalized medicine (specialty pharma) quickly and reliably. EURO RX holds a 19.04% stake in IVF International of the German Clinic for Reproductive Medicine GmbH, Bad Münder.

GVL Rechenzentrum GmbH, Berlin (GVL) is a specialized pharmacy computing center that focuses on the implementation of electronic prescriptions (e-prescriptions). This will enable simpler billing options between pharmacies and health insurance companies in the

Translation -the German version is authoritative

future, which will also support healthcare research for the pharmaceutical industry. GVL holds a 50% stake in EISIG Health GmbH, Berlin. EISIG Health GmbH currently does not conduct any operational business and is therefore only of minor importance for the consolidated financial statements.

Control system

The operational business of the TELES Group and TELES AG is essentially controlled using significant financial performance indicators.

The gross profit margin relates the gross profit to the sales achieved.

In contrast to the previous year, the downstream measures of order backlog and costs/ex- penses are no longer used, as the most significant financial performance indicators mentioned here are now of greater relevance for the management of TELES and thus for the addressee of the balance sheet from the perspective of management.

Order intake in the Pharma segment is the indicator that determines sales with a smalltime lag. The order intake of TELES AG or in the telecommunications segment is an important indicator of sales with a small-time lag (project business) or, with a higher time lag (maintenance contracts), for sales in the next 12 months.

Non-financial performance indicators do not play a significant role in the management of the group. The Group Executive Board has established an extensive group reporting system for the significant performance indicators of the group companies and carries out regular reviews (corporate planning with plan-actual analyzes) with the group companies.

In addition, liquidity is monitored daily to be able to react early to deviations from the planned cash flows.

Translation -the German version is authoritative

Research & Development

In the area of research and development, TELES AG focuses on quickly developing and introducing new marketable products, constantly optimizing development processes, and reducing the costs of developing and manufacturing high-quality, new, and reliable prod- ucts. In the 2022 financial year, research and development expenses primarily reflect the further development of the soft switch (Carrier Solutions' main product) for mobile network operators and virtual mobile network operators. In the past financial year, six employees (previous year: 6) worked in research and development.

Economic report

Overall economic situation

The global economy slowed significantly again in almost all-important economic areas in 2022. According to the International Monetary Fund (IMF), global gross domestic product (GDP) rose just 3.0% year-on-year and growth will slow to 1.7% in 20231. The Kiel Institute for the World Economy (IfW) estimated the increase in 2023 to be 3.0% (2022: 3.3%)2.

The slowdown in the global economy is due to the Russia-Ukraine crisis and the corona- virus pandemic, which has not yet been overcome. As a result of these developments, uncertainties and challenges for the global economy have increased and have led to significant increases in energy and food prices. At the same time, international supply chains have come under further pressure. With the global inflation rate rising from 4.7% to 8.8%, it was well above the inflation targets of the international central banks, which responded by tightening monetary policy. As a result of the gradual increase in key interest rates, financing costs became significantly more expensive and led to a noticeable reluctance to invest, which also had a negative impact on the development of GDP.

Industry-related framework conditions for pharma

1. Statista 10.10.2023:IWF senkt Prognose fürWeltwirtschafts-Wachstum
2. IfW September 2023:Bruttoinlandsprodukt Weltwirtschaft

Translation -the German version is authoritative

The healthcare market recovered from the effects of the corona pandemic in 2022. According to a study by the US company IQVIA, pharmaceutical spending in the ten largest high-income countries (USA, Japan, Germany, France, Italy, Spain, Great Britain, Canada, Australia, South Korea) was around EUR 930 billion by 5 .7% above the level of the previous year (2021: EUR 879 billion)3.

According to the Classic market report from IQVIA, pharmacies in Germany sold around

1.8 billion packs last year, 8.0% more than in 2021. The largest segment was over-the- counter preparations, with a share of 55.6% of those sold packs. Prescription medicines accounted for 44.4%.4

The pharmacy market in Germany increased its sales in 2022 compared to the previous year by 5.5% to EUR 46.6 billion, calculated using the selling price of the pharmaceutical companies. Due to the high share of sales of 86.4%, the growth drivers were prescription drugs, with a sales increase of 5.3%. Non-prescription preparations grew by 7.0%, accounting for 13.5% of total pharmacy sales5.

According to IQVIA, spending on pharmaceuticals in Europe reached a value of around EUR 188.4 billion in 2022. This means that it has increased by around 35% over the last five years (2017: EUR 139.4 billion).6. The main growth drivers were generics and biosimi- lars7.

Industry-related framework conditions for telecommunications

The demand for fast broadband - fixed-line and mobile - continues unabated. According to Statista, landline data traffic increased by 21% worldwide in 20228, mobile data traffic increased by 38%9.

1. IQVIA:The Global Use of Medicines 2023. Outlook to 2027
2. IQVIA:IQVIA Marktbericht Classic - Jahr 2022
3. IQVIA:IQVIA Marktbericht Classic - Jahr 2022
4. Medios Geschäftsbericht: IQVIA
5. Wikipedia: A biosimilar (plural: biosimilars) is a copycat product of a biopharmaceutical, for exa- mple a biotechnologically produced protein, that is approved after the patent period of the original active ingredient has expired.
6. Statista:Entwicklung des Datenvolumens im stationären Internetverkehr im Festnetz
7. Statista:Durchschnittliches Datenvolumen im Monat pro Mobilfunkanschluss

Translation -the German version is authoritative

In February 2023, the European Commission set the goal of having all households in the European Union (EU) have a gigabit connection by 203010 and all populated areas should be covered with 5G networks. On December 15, 2022, the EU institutions agreed on the "European Declaration on Digital Rights and Principles for the Digital Decade"11, which, among other things, stipulates that all actors who benefit from digital change should make an appropriate contribution to the costs of the network infrastructure.

Deutsche Telekom explains the competition in its 2022 annual report12: "The telecommunications industry continues to be characterized by high levels of competition. Consumers benefit from a wide selection of offers. In the fixed network, established telecommunications companies face intense competition from cable network operators, city network operators and resellers, who primarily use regulated wholesale products. Financial investors are increasingly investing in the expansion of regional and national fiber optic networks. Finally, Internet companies are also practicing with OTT (over-the-top, OTT) communication services13 increasing competitive pressure."

Business development of the TELES Group

In October 2021, TELES took over 75.2% of GVL Rechenzentrum GmbH, Berlin. The acquired voting rights in GVL can be exercised from January 1, 2022. TELES has an acquired call option for the remaining shares of GVL (see (3)). In November 2021, TELES took over 58% of the voting shares in EURO RX Arzneimittel GmbH, Wedemark, (EURO RX) against the issue of 1,863,792 newly created shares in TELES AG. The acquired voting rights in EURO RX can be exercised from January 1, 2022. TELES has a purchased call option for the shares of EURO RX (see (3)).

The TELES Group's sales in the reporting year were EUR 75.1 million. In the Pharmaceuticals segment, sales were EUR 73.4 million, which essentially consists of the sale of prescription drugs (important are special drugs for cancer, autoimmune deficiencies, and combination therapies of personalized medicine). In the telecommunications segment, there was a 25% decline in sales to EUR 1.8 million (previous year: EUR 2.4 million) due to

1. Europäische Kommission:Kommission legt Vorschläge fürGigabit-Konnektivitätbis 2030 vor
2. Kommission International:Europäische Erklärung zu den digitalen Rechten und Grundsätzen für die digitale Dekade unterzeichnet
3. Deutsche Telekom annual report: Page 54
4. OTT communication services offer users opportunities to express themselves and share with others. Services: e.g. Skype, WhatsApp or Threema

Translation -the German version is authoritative

significantly less project business than in 202114. The cost of materials in the reporting year was EUR 70.5 million. In the Pharmaceuticals segment, the cost of materials was EUR

70.2 million and, in the Telecommunications segment, it was EUR 0.3 million (previous year: EUR 0.5 million).

Personnel expenses increased to EUR 3.7 million (previous year: EUR 1.4 million) due to the new Pharma segment and the granting of stock options for selected employees. Due to the new pharmaceutical segment, other operating expenses increased to EUR 1.8 million (previous year: EUR 0.6 million), of which costs of goods delivery amounted to EUR

1. million (previous year: EUR 0), closing and Audit costs EUR 0.3 million (previous year EUR 0.1 million), legal and consulting costs EUR 0.2 million (previous year EUR 0.1 million) additional rental costs EUR 0.2 million (previous year EUR 0. 1 million). Depreciation amounted to EUR 16.5 million (previous year: 0.2 million), including depreciation on good- will, customer base and brand in the amount of EUR 16.5 million. EUR 16.1 million (previ- ous year: EUR 0) and depreciation of rights of use from leasing contracts of EUR 0.3 million (previous year: EUR 0.1 million). A detailed presentation of depreciation can be found in the notes to the consolidated financial statements. The operating result (EBIT) was EUR -

1. million (previous year: EUR -0.2), of which EUR -16.0 million was recorded in the phar- maceuticals segment and EUR -1.3 million (previous year: EUR -1.3 million) in the Telecom- munications segment. EUR -0.2 million).

The financial result of the TELES Group was EUR -0.3 million (previous year: EUR -0.0 mil- lion). In the consolidated financial statements of the TELES Group, the annual loss amounts to EUR 16.6 million (previous year: EUR 0.2 million), of which EUR 15.5 million in the pharmaceuticals segment and EUR 1.1 million in the Telecommunications segment. (PY: 0.2 million).

The tax income of EUR 1.0 million (previous year: EUR 0.0 million) results from the release of deferred tax liabilities because of value adjustments for the customer base and brand.

14 The differences in the profit and loss statement, in sales revenue and the cost of materials, be- tween segment reporting in the TELES Group according to IFRS and the annual financial statements of TELES AG according to the HGB result from the gross accounting for the onward billing of ser- vices or expenses incurred in the HGB annual financial statements and the net accounting of these items in the IFRS consolidated financial statements.