Uzin Utz SE is listed on the Frankfurt Stock Exchange in the General Standard segment. The parent company of the Group is Uzin Utz Societas Europaea, European Company, (hereinafter also referred to as Uzin Utz SE) with its registered office in Ulm, Dieselstr. 3, Germany. The company is entered in the Commercial Register of the Ulm Local Court under the number HRB 745224. The financial year of the Uzin Utz Group corresponds to the calendar year.

As a full-service provider to the trade, the Uzin Utz Group is personally and reliably dedicated to meeting the local and international requirements and needs of its customers. The company offers its customers what it considers to be a unique range of products for floor treatment, from construction chemical product systems and surface finishes to machinery. Almost all of the products offered are developed by the Group companies themselves and reflect the high premium standards, from production to distribution to the customer.

The Uzin Utz Group is represented in 53 countries, of which 20 have production and/or sales companies (as of March 2024).

The main areas of business are in Germany, the Netherlands and Switzerland. These countries form the core markets of the Uzin Utz Group. Growth markets are located in the USA, Great Britain and France. Emerging markets, which may gradually develop into growth or core markets, are located in Europe, for example in Belgium and Poland.

The reporting currency is EUR thousand. Due to the fact that the consolidated financial statements are prepared in EUR thousand, rounding differences may occur in the addition of figures, as the calculations of the individual items are based on figures in EUR. All previous year's figures are in brackets.

The Management Board of Uzin Utz SE has released the consolidated financial statements for forwarding to the Supervisory Board. The Supervisory Board has the task to review the consolidated financial statements and to declare whether it approves the consolidated financial statements. The approval will take place on March 27, 2024.

Application of the International Financial Reporting Standards

The consolidated financial statements for 2023 were prepared in accordance with the International Financial Reporting Standards (IFRS), Inter-national Accounting Standards (IAS) and the interpretations of the Standing Interpretations Committee (SIC), the International Financial Reporting Interpretations Committee (IFRIC), as well as the supplementary provisions of German commercial law pursuant to Section 315e (1) of the German Commercial Code (HGB), which were mandatory in the European Union on the reporting date.

In the 2023 financial year, the following standards and interpretations relevant for the business activities of the Group, which were mandatory for the first time in the financial year, were applied in the consolidated financial statements of Uzin Utz SE:

As at January 1, 2023, the Group applied deferred taxes relating to assets and liabilities arising from a single transaction for the first time as a result of the amendments to IAS 12. As a result of the adjustment, deferred tax assets are recognized in relation to lease liabilities and deferred tax liabilities in relation to right-of-use assets. The amendment to the initial recognition exemption and the first-time application of the revised standard did not result in any material changes to the income statement. Further information from the first-time application of the amendments (IAS 12) can be found in section 15 Deferred taxes.

The application of the standards and their interpretations has no material impact on the Uzin Utz Group.

The following standards and interpretations have been published as of December 31, 2023, but their application is not yet mandatory in the consolidated financial statements of Uzin Utz SE:

The option of early adoption has not been used to date and is not expected to be used in the future.

The impact of the standards and their interpretations published as of December 31, 2023 and not yet applied in the Group in the financial year 2023 is not considered to be material at the time of preparing the consolidated financial statements.

The consolidated financial statements have been prepared in euros using the functional currency principle in accordance with IAS 21. The statement of comprehensive income follows the nature of expense method.

Consolidation Methods

Consolidation Group

The consolidated financial statements include the financial statements of the parent company Uzin Utz SE and those entities in which the parent company controls the investee. It controls an investee when it has power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. These controlled entities are fully consolidated from the date of acquisition, i.e. from the date on which the Group obtains control. If control by the parent company ceases, the subsidiary concerned is deconsolidated.

The following overview shows the number of companies included depending on the type of consolidation.

Changes in the Group of consolidated companies

In the financial year 2023 an intragroup restructuring measure and a liquidation took place, which impacted the number of fully consolidated companies (indication of the percentage of interest in parentheses):

• COFOBO Holding B.V. (100 %).

In the 2022 financial year, Uzin Utz Nederland B.V. held 70% of COFOBO Holding B.V.. With effect from January 20, 2023, the remaining 30% of COFOBO Holding B.V. was acquired by Uzin Utz Nederland B.V., making Uzin Utz Nederland B.V. the sole shareholder since then. As COFOBO Holding B.V. holds 100% of INTR. B.V., the shareholding of Uzin Utz Nederland B.V. in INTR. B.V. has thus risen to 100%. The purchase price of the shares, including incidental acquisition costs, amounted to EUR 3,250 thousand, of which the buyer made a payment of EUR 2,539 thousand to the seller by bank transfer. The remaining amount of EUR 711 thousand results from a loan agreement dated December 5, 2017 between the seller, HEK Holding B.V., and the buyer, Uzin Utz Nederland B.V., which has now been offset against the purchase price. This is an intragroup transaction for which no significant transaction costs were incurred and which has no impact on the Group's net assets, financial position and results of operations.

COFOBO Holding B.V. was founded on February 7, 2018 as a holding company for the acquisition of the former companies Bosgoed Groothandel B.V. and Forinn B.V.. These were two wholesalers that made the logistics of the Uzin Utz Group more efficient with their wide range of products and their two pick-up warehouses. On April 1, 2019, the two wholesalers Bosgoed Groothandel B.V. and Forinn B.V. were merged and the new company INTR. B.V. was founded. COFOBO Holding B.V. has been fully consolidated since its first-time inclusion in the consolidated financial statements in 2018. The acquisition of the remaining 30% of the shares did not result in any change to the inclusion in the consolidated financial statements in the form of full consolidation.

Associated companies and jointly controlled companies

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the entity in which the investment is held. This possibility generally exists for an ownership interest of 20.0% or more, unless this can be clearly demonstrated not to be the case. In this case, there is neither control nor joint management of the decision-making processes.

Due to the significant influence, artiso solutions GmbH, Germany, in which the parent company directly holds 50.0% of the shares, is included as an associate using the equity method.

A joint venture is defined as a joint arrangement whereby the parties that have joint control have rights to the net assets of the entity in which they have an interest. Joint control is the contractually agreed, jointly exercised management of an entity. This is only the case when decisions about the relevant activities require the unanimous consent of the parties involved in joint control.

P.T. Uzin Utz Indonesia, Indonesia, which is attributable to the parent company with 49.0% of the shares, is included as a joint venture using the equity method.

Under the equity method, investments in associates or joint ventures are included in the consolidated balance sheet at cost, adjusted for changes in the Group's share of profit or loss and other comprehensive income and any distributions from the associate or joint venture after the acquisition date. Losses of an associated company or joint venture that exceed the Group's share in this associated company or joint venture are not recognized. They are only recognized if the Group has entered into legal or constructive obligations to assume losses or makes payments in place of the associated company or joint venture.

Non-consolidated companies

Companies that individually or collectively are not material for the presentation of a true and fair view of the net assets, financial position and results of operations of the Group and whose inclusion is not justified under the cost-benefit constraint are not consolidated. They are generally recognized in the consolidated financial statements at the lower of cost or fair value. The sales revenue per non-included company is less than 1.0% of consolidated sales. Total assets per non-included company are less than 1.0% of the consolidated balance sheet total. The companies not included in the consolidated financial statements are as follows:

• Artiso AG (shareholding 50%)
• Uzin Utz Tools Verwaltungs GmbH shareholding 100%)
• codex Verwaltungs GmbH (shareholding 100%)
• Servo 360° GmbH (shareholding 100%)
• Netzwerk Boden GmbH (shareholding 50%)

A list of the shareholdings of the Group companies can be found in the section "Other information" under the subheading "Group companies".

Consolidation Principles

The consolidated financial statements are based on the financial statements of Uzin Utz SE and the consolidated subsidiaries, which were prepared in accordance with uniform Group accounting policies. Where necessary, the annual financial statements of the subsidiaries were adjusted to the uniform group accounting and valuation methods. The basis for the adjustments were the IFRS accounting guidelines prepared by the parent company.

Capital consolidation is performed using the purchase method in accordance with IFRS 3.4 ff. for all business combinations after the transition to IFRS as of January 01, 2004. Under this method, the cost of a business combination is allocated to the identifiable assets acquired and identifiable liabilities and contingent liabilities assumed, based on their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of the investment over the Group's share of the net fair values of the identifiable assets, liabilities and contingent liabilities is recognized as goodwill. Non-controlling interests are measured at the proportionate fair value of the assets acquired and liabilities assumed (partial goodwill method).

Negative goodwill is recognized in the statement of comprehensive income after reassessment and measurement of the identifiable assets, liabilities and contingent liabilities in accordance with IFRS 3.34.

The shares in the equity of subsidiaries not attributable to the parent company are presented within consolidated equity as "non-controlling interests.

Expenses and income, liabilities and assets, equity, intercompany profits and losses, and cash flows between consolidated Group companies are eliminated in consolidation.

Deferred taxes are recognized on consolidation adjustments in accordance with IAS 12.

Currency translation

The financial statements of consolidated foreign companies prepared in foreign currencies are translated in accordance with the functional currency concept (IAS 21). The functional currency is the currency in which a foreign company predominantly generates its funds and makes payments. In the Uzin Utz Group, this is the respective local currency for almost all foreign companies. Since the companies conduct their business independently, the items in the balance sheet, including goodwill, are translated at the mean rate of exchange on the balance sheet date, equity is translated at historical rates, and expenses and income in the statement of comprehensive income are translated at weighted average rates for the year. In accordance with IAS 21.27 ff., translation differences are recognized in other comprehensive income or in profit or loss, depending on the circumstances. Comprehensive income is transferred to the statement of financial position at the values determined in the statement of comprehensive income. It was not necessary to adjust the accounting in accordance with the rules of IAS 29 in conjunction with IFRIC 7, as the Uzin Utz Group does not have any subsidiaries based in hyperinflationary economies.

The consolidated financial statements are prepared and presented in euros, the functional currency of the parent company.

In the individual financial statements included, foreign currency transactions are recorded at the exchange rates prevailing at the time of the transaction. Resulting foreign currency receivables and payables are valued at the mean rate of exchange on the balance sheet date. Exchange gains or losses resulting from the valuation or settlement of foreign currency items are recognized in the statement of comprehensive income. Exchange rate differences arising from the translation of Group companies not reporting in euros are recognized in other comprehensive income.

The main exchange rates for the Uzin Utz Group developed as follows:

The total currency impact on Group sales was -0.4% (2.3).

General accounting and valuation principles

Assumptions and estimates

In preparing the consolidated financial statements, judgments, estimates and assumptions are made that affect the reported amounts of assets and liabilities, income and expenses, and contingent assets and liabilities. The assumptions and estimates mainly relate to the determination of uniform useful lives of non-current assets throughout the Group, the recognition and measurement of provisions, including for pensions, discount rates and the realizability of future tax benefits. The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years are discussed in the relevant sections.

The Group's assumptions and estimates are based on parameters that existed at the time the consolidated financial statements were prepared. However, assumptions about future developments may change due to market movements and conditions beyond the Group's control. Such changes are only reflected in the assumptions when they occur. Among other things, the war in Ukraine had a significant impact on the energy market and raw material supplies and prices. This led to major challenges. More detailed information on the impact of the war on the fiscal year can be found in the management report.

Actual figures may differ from estimates. If actual developments differ from those expected, the assumptions and - where necessary - the carrying amounts of the relevant assets and liabilities are adjusted accordingly. The assumptions and estimates made at the time of preparing the consolidated financial statements are subject to certain risks arising primarily from general macroeconomic developments.

The fair value is not always available as a market price. It often has to be determined on the basis of various valuation parameters. Depending on the availability of observable parameters and the significance of these parameters for the determination of the fair value as a whole, the fair value is assigned to levels 1, 2 or 3.

The subdivision shall be made in accordance with the following:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
• Level 2 inputs are inputs other than quoted prices included within Level 1 that are either directly observable for the asset or liability or can be indirectly derived from other prices.
• Level 3 inputs are unobservable inputs for the asset or liability.

The Group recognizes reclassifications between levels of the fair value hierarchy at the end of the reporting period in which the change occurs.

If the Group is affected by climate-related impacts, these are explained in the relevant sections of the notes.

Sales revenues

Sales revenues from contracts with customers

Revenues in the Uzin Utz Group are generated by the sale of goods to wholesalers, craftsmen and contractors and by the provision of services. Across all types of revenue, no financing component is recognized. In no case is there a significant financing component, as there are no payment terms that exceed a term of one year. For this reason, the option under IFRS 15.63 was used, which means that a financing component need not be recognized.

The payment terms underlying the types of revenue are explained in the following three sections. Since the customer does not have a legal claim to consideration until the net payment target has expired, no cash discount periods were taken into account when determining the payment targets.

Sales of goods to wholesalers, craftsmen and contractors

The Group manufactures and distributes products and machinery for the new installation, renovation and maintenance of value of all types of floor coverings. The products are mainly produced for the anonymous market and subsequently sold on this market. The customers of the products are wholesalers, craftsmen and contractors.

The point in time at which control is transferred to the customer is decisive for revenue recognition. In the case of the sale of goods, control is transferred to the customer after delivery has taken place in accordance with the agreed delivery terms.

Revenue is recognized at different times depending on the national company. As soon as the revenue is recognized, a corresponding receivable is recognized. The receivable can be settled by the customer within the net payment target stated on the invoice. A net payment target of 30 days is the most common in the Group. The second most common payment term is immediate payment. The third and fourth most important payment terms are a net payment target of 14 days and 45 days. The remaining sales are distributed over a large number of payment terms, which, however, only account for a small share of the sales of the Uzin Utz Group.

For foreign shipments with longer delivery times, the delivery condition EXW (Ex Works) is mainly used. Within the countries in which the national companies are located, short delivery times of between one and three days can often be guaranteed. In addition, in a majority of the companies, last loading or shipping dates are specified. Depending on the company, the last shipment takes place between one and two weeks before the end of the fiscal year. As a result of the facts explained, only goods to which an insignificant amount is allocated in comparison to annual sales are on their way to the customer as of the balance sheet date, if at all.

For the remaining national companies, the delivery date stated on the delivery bill is decisive for revenue recognition. This is determined on the basis of the date of shipment and includes the regular delivery times to the customer. The revenue recognition method also mainly involves short delivery times.

In particular, customers with large purchase volumes receive bonuses at the end of the year based on the purchase volume of the entire fiscal year. Revenue may only be recognized if it is highly unlikely that it will be reversed at a later date. In order to recognize bonuses that are expected to be granted in the recognized revenues, bonus accruals based on experience are recognized during the year. When calculating the reported net sales, these are adjusted for the provisions. As a result, revenue is recognized to the extent that it is highly probable that no significant cancellation will occur.

License sales revenues

License revenues are generated in the form of usage-based license fees. A license has been granted for the production of contractually defined products. The agreement specifies the royalty per product for one unit produced. The amount of the royalty per quarter is derived from the amount of production of the respective products, in addition to a contractually agreed minimum amount per quarter in which licensed products are produced. In accordance with IFRS 15.B63, usage-based license fees are to be recognized at the time the license is used. This is the case when a product for which the license was granted has been produced. There are no license revenues in the Group in fiscal year 2023.

Provision of services

Services provided within the Group include maintenance and repair of machinery for floor covering removal, floor covering installation and subfloor preparation. This is a performance fulfillment at one point in time. The Group's performance has been fulfilled when the maintenance has been performed or the machine has been repaired. At this point in time, the sales revenue is recognized and a receivable is booked. Depending on the company performing the work, the receivable is settled either on the basis of a generally applicable payment term of 14 days or on the basis of the payment term defined for the respective customer. In this case, the receivables from repairs and maintenance of machines are essentially to be settled after 10 or 30 days.

In addition to the maintenance and repair of machinery, a small number of national companies provide services on construction sites in which all activities associated with the installation of a new floor covering are performed. In this case, it is necessary to check whether there is a performance of services over a period of time. This would mean that it would have to be determined at the reporting dates which part of the service obligation has already been fulfilled and thus revenue recognized. In the case of services at construction sites, the work performed to date can be used to determine the extent to which the service has already been rendered and the amount of revenue recognized as of the reporting date. If the service is recognized before a reporting date, revenue is recognized when the service has been fully rendered. The confirmation from the project manager on the customer's side serves as proof of this. Revenue is not recognized until the customer has accepted the project and confirmed that the service has been fully performed. In the same step, a receivable is recognized which, in the case of the largest project customer, must generally be settled within 14 days. For the remaining project customers, the regularly agreed payment terms apply. In the national companies that are active in the project business, the payment terms agreed are mainly cash in advance, 30 days and 60 days.

The following disclosures on contract assets and liabilities relate to all types of revenue, which have been explained.

Contract assets

A contract asset is a legal entitlement to consideration for goods or services transferred to a customer, provided that this entitlement is not linked solely to the passage of time. Contract assets exist, for example, when the fulfillment of a performance obligation is not sufficient for the existence of a legal claim, but another performance obligation must first be fulfilled.

Contract liabilities

A contract liability is defined as an obligation of a company to transfer goods or services to a customer for which it has already received consideration. Contractual liabilities exist in the Uzin Utz Group in the form of advance payments received on orders. At the end of the financial year 2023, contract liabilities amounted to EUR 125 thousand (10). Of the amount of EUR 10 thousand reported in contract liabilities at the beginning of the financial year, EUR 10 thousand (18) was recognized as revenue in 2023.

There was no difference resulting from exchange rate effects EUR 0.0 thousand (0). The period between receipt of the advance payment and provision of the service is on average 1.9 days (1.9) in the Uzin Utz Group. Likewise, the share of the payment term "cash in advance" in the total sales revenue has an influence on the amount of advance payments received on orders and thus on the contract liabilities. In 2023, prepayment was used for 1.3% (1.2) of the Uzin Utz Group's sales revenues.

As permitted by IFRS 15, no information is provided on the remaining performance obligations as of December 31, 2023, which have an expected original term of one year or less.

Research and development costs

According to IAS 38, research costs may not be capitalized. Costs for research activities are recognized as an expense in the period in which they are incurred. An internally generated intangible asset arising from development activities or from the development phase is capitalized if certain specified criteria are met. Accordingly, capitalization is always required if the development activity is expected to generate future economic benefits and cash inflows that exceed the normal costs and also cover the corresponding development costs. In addition, various criteria must be met cumulatively with regard to the development project or the project or process to be developed.

These requirements are predominantly not met in the Uzin Utz Group, as the nature and dimension of the characteristic research and development risks mean that the functional and economic risk of products under development can generally only be estimated with sufficient reliability when

- the development of the products or processes in question has been completed and

- after completion of development, it is demonstrated that the products meet the necessary technical and economic requirements of the market.

The Group's research and development expenses in 2023 amounted to EUR 13,652 thousand (12,814).

Taxes

Income taxes comprise both current and Deferred taxes and are recognized in the income statement. Deferred taxes are also recognized directly in other comprehensive income if they relate to items that are recognized directly in other comprehensive income.

The current income taxes reported relate to corporation tax and trade tax in Germany. In the case of the foreign companies, this mainly relates to income-related taxes calculated in accordance with the national tax regulations applicable to the individual companies.

Current tax assets and liabilities for current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The calculation of the expected tax payments or refunds is based on the tax rates and tax laws applicable at the balance sheet date.

Deferred taxes are recognized using the liability method on temporary and quasi-temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. In accordance with IAS 12.21, deferred taxes are not recognized for goodwill that cannot be amortized for tax purposes.

In addition, deferred tax assets are recognized for all deductible temporary differences, unused tax loss carryforwards and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the unused tax loss carryforwards and unused tax credits can be utilized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and a valuation allowance is recognized to the extent that it is not probable that the expected benefits from the loss carryforwards will be realized. The assessment made may be subject to change over time, which may result in a reversal of the valuation allowance in subsequent periods.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the temporary differences are expected to reverse or the tax loss carryforwards are expected to be utilized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets and deferred tax liabilities are offset in accordance with IAS 12 if the Group has a legally enforceable right to set off current tax assets against current tax liabilities and these relate to income taxes levied by the same taxation authority on the same taxable entity.

Intangible assets

Intangible assets are initially recognized at cost, taking into account incidental acquisition costs. Amortization is recognized as an expense on a straight-line basis over the useful lives of the assets. The amortization period for industrial property rights and licenses as well as product know-how is a maximum of 20 years.

The acquisition costs of new software and the costs of implementation are capitalized and amortized over the expected useful life of three to five years.

In accordance with IAS 38, costs for internally generated intangible assets are recognized in profit or loss in the period in which they are incurred.

Goodwill

Goodwill arising from a business combination is measured at the excess of the cost of acquisition over the acquirer's interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the entity. In accordance with IAS 36, goodwill is not amortized on a scheduled basis, but is only written down on an unscheduled basis if impairment is identified. For the purpose of impairment testing, goodwill is generally allocated to cash-generating units that represent the lowest levels within the entity at which goodwill is monitored internally for management purposes and that are no larger than an operating segment as defined by IFRS 8 that has not yet been combined with other segments for segment reporting purposes.

Property, plant and equipment

Property, plant and equipment subject to wear and tear are stated at cost less accumulated depreciation and impairment losses. Production costs are determined on the basis of directly attributable individual costs and appropriate overheads. Cost comprises the purchase price, including any import duties and unpaid purchase taxes incurred in connection with the acquisition, and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the Group. Rebates, discounts and similar reductions in acquisition costs are deducted.

Assets under construction are stated at cost less any impairment losses recognized. Cost includes fees for external services and, in the case of qualifying assets, borrowing costs that are capitalized in accordance with the Group's accounting policies. These assets are assigned to an appropriate category within property, plant and equipment when completed and ready for their intended use. Depreciation of these qualifying assets begins on the same basis as for other property, plant and equipment when the asset is ready for use.

Depreciation is generally calculated on a straight-line basis over the estimated useful lives of the assets. The following values serve as a guideline for determining the useful life:

Land and assets under construction are not depreciated.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from the continued use or sale of the asset.

Gains or losses resulting from the disposal of assets are recognized in profit or loss in the period of disposal.

Impairment

The carrying amounts of the assets of the Uzin Utz Group, with the exception of investment properties (see Investment properties), deferred tax assets (see Taxes on income) and financial assets of a financing nature (see Financial assets, securities and derivatives), are reviewed on the balance sheet date to determine whether there are any indications of impairment. The carrying amounts of goodwill and non-depreciable intangible assets must be tested for impairment at least once a year. In addition, in accordance with IAS 36.9 in conjunction with IAS 36.12, an impairment test must be carried out at each reporting date using certain triggering events. If there are indications of possible impairment of the asset, an event-related impairment test must also be carried out despite the mandatory annual test.

As part of the impairment test, the carrying amount of an asset is compared with its recoverable amount in order to test the asset for impairment.

The recoverable amount is the higher of net realizable value and value in use. Net realizable value is the amount obtainable from the sale of an asset in an arm's length transaction, less the costs of disposal. The value in use corresponds to the present value of estimated future cash flows from continued use of the cash-generating units with subsequent perpetual annuitization of the cash flows. The value in use must be determined using a present value calculation.

If neither the fair value less costs to sell nor the value in use is equal to the carrying amount, the asset must be written down by the difference and recognized in profit or loss. If goodwill has been allocated, this must be written down first. The carrying amounts of the individual assets of the cash-generating unit are written down pro rata in accordance with their carrying amounts by the amortization amount or residual amortization amount (in the case of allocated goodwill), thus reducing the balance sheet items. If the reason for an impairment loss recognized in previous years no longer applies, the impairment loss is reversed up to a maximum of the amortized cost, with the exception of goodwill.

The concept of the impairment test relates primarily to the principle of individual valuation.

Due to existing compound effects and thus non-independent cash flows, the recoverable amount for the Uzin Utz Group is determined on the basis of cash-generating units. The cash-generating units generally represent the legal units of the consolidated financial statements. At the Uzin Utz Group, the recoverable amount corresponds to the value in use, which is determined using the discounted cash flow method. The basis for determining future cash flows is the data from the detailed corporate planning for each individual cash-generating unit. This corporate planning relates to the financial years 2024 to 2028. Following this five-year planning period, a change is made to a perpetual annuity.

The projections - regarding market potential and purchasing behavior - are updated taking into account the previous course of business and expected future developments.

There are estimation uncertainties with regard to the assumptions on which the calculation of the value in use of the cash-generating units is based. Specifically, this relates to the estimation of growth assumptions and discount rates. In particular, the growth assumptions and thus the expected sales are estimated on the basis of empirical values and individual assessments of the respective opportunities in the respective markets.

Under the current macroeconomic conditions, these estimates are subject to increased uncertainty. If these assumptions and estimates are not confirmed, this could lead to impairment losses being recognized for individual cash-generating units in the future.

For the past financial year, the Uzin Utz Group carried out impairment tests in accordance with IAS 36 on the basis of the value in use of cash-generating units as of September 30, 2023 for goodwill. Using the parameters as at the reporting date of September 30, 2023, the cash-generating units have risk-equivalent capitalization rates of between 9.9 % (December 31, 2022: 9.2 %) and 14.7 % (December 31, 2022: 12.1 %). The capitalization interest rate assumes growth of 1.0 %. The basis for calculating the capitalization interest rates is a beta factor of 0.9
( December 31, 2022 1.0 %). These are pre-tax interest rates. The previous year's figures were reported as at December 31, 2022 due to the existence of a triggering event in accordance with IAS 36.9 in December 2022 as a result of the turnaround in interest rates. Nevertheless, the impairment tests are carried out annually as at September 30 for reasons of consistency, which is why the figures as at September 30 are being published again this year.

Investment Properties

According to IAS 40.5, investment property is property held to earn rentals or for capital appreciation. Such property is initially recognized at cost, including transaction costs. Subsequent measurement in the Uzin Utz Group is based on the fair value model. If there are significant changes in fair value, the resulting gains and losses are recognized in profit or loss.

Investment property is derecognized upon disposal or when the property is permanently withdrawn from use. If no further economic benefit is expected from a future disposal, the property is also derecognized. Gains and losses resulting from the derecognition of an investment property are recognized as income or expense in the income statement.

Financial instruments

"IFRS 9 Financial Instruments" requires the measurement of financial assets, financial liabilities and some contracts to buy or sell non-financial contracts.

Financial instruments are contracts that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. These include both primary financial instruments (e.g. trade receivables or trade payables), derivative financial instruments (e.g. forward transactions to hedge against the risk of changes in value) and derivative financial instruments in the context of a hedging relationship (e.g. forward exchange purchase/sale for foreign currency liabilities).

Financial assets and financial liabilities are generally not offset. They are only offset if there is a legal right to offset and the intention is to settle on a net basis.

Classification and measurement of financial assets

If a reclassification takes place, all affected assets must be adjusted on the first day of the reporting period following the change in the business model. The Uzin Utz Group mainly recognizes financial assets in the form of trade receivables, which continue to be measured at amortized cost when the business model (hold) and cash flow conditions are met. The same applies to trade payables and other liabilities.

Income is recognized on financial assets on the basis of the effective interest rate. This does not apply to instruments classified as at fair value through profit or loss.

Depreciation in value

The standard IFRS 9 requires an impairment model, which is based on adequate risk provisioning to ensure expected losses.

In the Uzin Utz Group, the application of an impairment model according to IFRS 9 is only required for trade receivables. The Uzin Utz Group does not have any financial guarantees or active contract assets in accordance with IFRS 15 that fall under the application of IFRS 9. As a rule, lease receivables in the Uzin Utz Group are short-term in nature. These are tested for individual impairment if necessary.

Impairment losses in accordance with IFRS 9 are shown in the statement of comprehensive income under the item "other operating expenses".

As the trade receivables in the Uzin Utz Group are current and therefore do not contain a significant interest component, they are measured using the simplified impairment model (IFRS 9.5.5.15f.). Under this simplified approach, changes in credit risk do not have to be tracked. For credit risks, an individual impairment loss is recognized if necessary. Possible risks in connection with credit commitments are explained in more detail under "Credit risks". Instead, a risk provision is recognized both at initial recognition and at each subsequent reporting date in the amount of the expected default risks.

Explanations of the impairment matrix and the associated default risks in accordance with IFRS 9 can also be found under the heading "Credit risks.

Explanations on financial risk management can be found both under the corresponding item in the notes to the consolidated financial statements and in the risk reporting section of the Group management report.

IAS 36, on the other hand, governs the recognition of impairment losses on assets. The Group assesses whether the carrying amount of an asset exceeds its fair value and determines the impact of write-ups or write-downs of assets on the statement of comprehensive income.

An impairment loss may be required to be recognized for a financial asset or group of financial assets as part of the impairment test. The minimum set of factors to be used in assessing whether there is potential for impairment is set out in IAS 36.12 a) - g). An entity shall assess at least at each balance sheet date whether there is objective evidence that an asset may be impaired.

If there is an indication that an asset may be impaired, the recoverable amount of the asset must be estimated (IAS 36.9).

The recoverable amount according to IAS 36.18 is defined as the higher of an asset's fair value less costs to sell and its value in use. If either of these amounts exceeds the carrying amount of the asset, the asset is not considered impaired and it is not necessary to estimate the other amount (IAS 36.19).

If the fair value less costs to sell cannot be determined, the recoverable amount is the asset's value in use (IAS 36.20). For assets that are held for sale and there is no reason to believe that the value in use significantly exceeds the fair value less costs to sell, the recoverable amount may be considered to be the fair value less costs to sell (IAS 36.21).

Adequate allowance is always made for all identifiable default risks.

Financial assets are derecognized when the contractual rights to payments from the financial assets expire or a transfer of the financial assets with all material opportunities or risks takes place. Financial liabilities are derecognized when the contractual obligations are discharged, cancelled or expire.

The net gains and losses mainly comprise the effects of impairment losses and foreign currency measurement recognized in the operating result and interest expense and income recognized in the financial result.

Non-current financial assets and investments accounted for using the equity method

The item "Non-current financial assets" includes shares in affiliated companies and investments that are not included in the consolidated financial statements. Companies for which the fair values cannot be reliably determined are recognized at cost. Investments accounted for using the equity method are measured in accordance with IAS 28 "Investments in Associates and Joint Ventures".

Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of raw materials and supplies and of merchandise is determined using the first-in, first-out (FiFo) method.

In accordance with IAS 2 "Inventories", the cost of work in progress and finished goods includes - in addition to production material and direct labor - a proportion of material and production overheads based on the assumption of normal capacity utilization, including depreciation on production equipment, as well as production-related social costs. Interest on borrowings is not capitalized under inventories.

Write-downs for significant inventory risks are made to an appropriate and sufficient extent. The principle of loss-free valuation is observed at all times.

Trade receivables

Trade receivables are initially measured and recognized at fair value plus directly attributable transaction costs. Subsequent measurement is generally based on classification in the measurement category "amortized cost" using the effective interest method.

Impairment losses in accordance with IFRS 9 are taken into account, see section "Impairment".

Other assets

The item "Other assets" comprises financial and non-financial assets including derivative financial instruments. Financial assets - with the exception of derivative financial instruments - are allocated to the measurement category "at amortized cost. Initial recognition is at fair value, including directly attributable transaction costs. Subsequent measurement is generally at amortized cost using the effective interest method. Non-financial assets are carried at the lower of nominal value or amortized cost. With some exceptions, the carrying amounts of the Group's non-financial assets are reviewed annually for indications of Impairment. For further details in connection with the impairment test, please refer to the section "Impairment".

Cash and cash equivalents

This item includes cash on hand, bank balances and checks. Cash in hand and bank balances are allocated to the category "amortized cost" in accordance with IFRS 9 and measured at fair value at the time of initial recognition, including directly attributable transaction costs. Subsequent measurement is generally at amortized cost using the effective interest method. Foreign currency balances are measured at the closing rate at the balance sheet date.

Assets held for sale

If the carrying amount of a non-current asset is recovered principally through a sale transaction rather than through continuing use, the asset is classified as held for sale in accordance with IFRS 5.

This is the case if the asset is available for immediate sale and the sale is highly probable.

As soon as the criteria for classifying a non-current asset as "held for sale" are met, the asset must be reclassified as a current asset. The asset must be recognized at the lower of its carrying amount and fair value less costs to sell, with certain exceptions specified in IFRS 5.5. Gains and losses arising from initial classification or subsequent remeasurement are recognized in profit or loss.

Non-current and current financial liabilities

The non-derivative financial instruments reported under this item comprise financial liabilities to banks and derivative financial instruments. In accordance with IFRS 9, non-derivative financial liabilities are initially recognized at fair value. For financial liabilities not recognized at fair value through profit or loss, directly attributable transaction costs are taken into account. In subsequent periods, they are generally measured at amortized cost using the effective interest method.

Derivative financial instruments and hedge accounting

In accordance with the option, hedging relationships continue to be measured in accordance with IAS 39 even after the application of IFRS 9. The Group enters into derivative financial instruments only as hedging instruments. These hedging transactions are used to manage interest rate and currency fluctuations and serve to reduce earnings volatility. No derivatives are held for trading purposes. Derivatives that do not meet the requirements of IAS 39 for hedge accounting are assigned to the "financial instruments held for trading" category. Derivative financial instruments are recognized as financial assets if their fair value is positive and as financial liabilities if their fair value is negative. At inception, derivative transactions are recognized at cost, which is generally their fair value. In subsequent years, they are also recognized at their fair values. Gains and losses arising from changes in the fair value of financial instruments held for trading are recognized immediately in profit or loss.

Hedging relationships that meet the requirements of IAS 39 for hedge accounting are classified as cash flow hedges, as they involve hedging the exposure to variability in cash flows from a highly probable forecast transaction. Gains and losses resulting from effective cash flow hedges are recognized in other comprehensive income, net of deferred tax effects. If gains and losses result from ineffective portions of the hedge, they are recognized in profit or loss or recycled to the statement of comprehensive income.

Recycling to the consolidated statement of comprehensive income takes place in the period in which the hedged item affects profit or loss or is no longer expected to occur.

Non-current and current lease liabilities

In accordance with IFRS 16, lease liabilities are initially recognized at the present value of the lease payments to be made. Subsequent measurement is generally based on the lease payments made during the term of the lease as a reduction of the carrying amount. Changes in the lease may result in a change in the lease liability. For more information, please refer to the section "General accounting policies > Leases".

Provisions

In accordance with IAS 37 "Provisions, Contingent Liabilities and Contingent Assets", provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the provision. Non-current provisions are discounted if the interest effect resulting from discounting is material.

For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with an actuarial valuation performed at each reporting date. The revaluations recognized in other comprehensive income are part of retained earnings and are no longer reclassified to the statement of comprehensive income. Past service cost is recognized as an expense when the plan amendment occurs.

The net interest is calculated by multiplying the discount rate by the net liability (pension obligation less plan assets) or the net asset value, which results if the plan assets exceed the pension obligation. The defined benefit cost includes the following components:

• Service cost (including current service cost, past service cost and any gain or loss on plan amendment or curtailment)
• Net interest expense or income on the net liability or asset
• Revaluation of net liability or net asset value

The Group reports the first two components in the income statement under "Personnel expenses". Gains or losses on curtailments are recognized as past service cost. The defined benefit obligation recognized in the consolidated statement of financial position represents the current under- or overfunding of the Group's defined benefit plans. Any surplus arising from this calculation is limited to the present value of future economic benefits available in the form of refunds from the plans or reduced future contributions to the plans.

Payments to defined contribution plans are recognized as an expense when the employees have rendered the service that entitles them to the contributions.

Obligations similar to pensions of the foreign companies are measured analogously.

Trade accounts payable

Trade accounts payable are initially measured and recognized at fair value plus directly attributable transaction costs. Subsequent measurement is generally based on classification in the measurement category "amortized cost" using the effective interest method.

Leasing

Leases exist if two defining criteria are met. Firstly, a lease must be based on an identified asset. This is the case if the asset is specified in the contract and the lessor does not have a substantial right to exchange the asset during the term of the contract. Furthermore, the lessor must transfer to the lessee the right to control the use of the identified asset. The lessee has the right to use an asset if it can control the use of the asset throughout its useful life. In addition, the lessee must be able to obtain, directly or indirectly, substantially all of the economic benefits embodied in the asset.

If a contract is a lease in accordance with IFRS 16, the lease must be recognized in the balance sheet. To determine the liability to be recognized, the payments to be made over the term of the contract are discounted at the beginning of the term of the contract. If no interest rate can be determined on the basis of the contract, the incremental borrowing rate is used for discounting. At the same time as the liability is recognized, the so-called right-of-use asset is capitalized. The basis for the amount to be capitalized is the present value of the payments to be made over the term of the contract. In addition, the right of use includes costs that can be directly allocated to the contract. Subsequent to initial recognition in the balance sheet, the liability recognized is extinguished by the lease payments and the capitalized right-of-use asset is depreciated using the straight-line method. If adjustments are made to existing leases, for example, the term is extended or the lease payment increased, the liability and the right-of-use asset are adjusted. For this purpose, the payments to be made as of the change are discounted and compared with the liability existing immediately before the change. The right-of-use asset is adjusted accordingly, depending on whether the change in the contract results in a reduction or an increase in the liability.

Future increases in the lease payments resulting from a change in an index under the lease agreement are not taken into account when recognizing the liability and the right of use. The right-of-use asset and the lease liability are adjusted only after the relevant index has changed. Therefore, when the lease is recognized for the first time, the lease rate applicable at that time is decisive.

The Uzin Utz Group has opted to use the option available for leases of minor value (EUR 4,500.00) or short-term lease term (up to twelve months). As a result, leases for items of minor value and leases with a short-term lease term are not recognized in the statement of financial position. Payments for these contracts are recognized in full as expenses in the statement of comprehensive income. Further options in connection with IFRS 16 are not used.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets (assets that necessarily take a substantial period of time to get ready for their intended use or sale) are added to the cost of those assets in accordance with IAS 23 until the assets are substantially ready for their intended use. Income earned from the temporary investment of borrowed capital specifically raised until it is spent on qualifying assets is deducted from the capitalizable cost of these assets.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

Government grants

The Uzin Utz Group recognizes government grants in accordance with IAS 20 "Accounting for Government Grants and Disclosure of Government Assistance" only when there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. The grants are recognized in the income statement in the periods in which the related expenses, which are intended to compensate for the government grants, are incurred.

The Group received government grants. One of the grants it received in 2015 amounted to EUR 289 thousand. These grants are tied to the condition that a manufacturing company is active on the property for 15 consecutive years. The production facility became operational in mid-2015. In addition, an employment subsidy of EUR 129 thousand was granted in 2018 on the condition that 18 full-time employees are employed between January 15, 2019 and December 31, 2023. This condition is deemed to have been met and the grant was recognized as other income.

In addition, the Group was granted a subsidy of around EUR 441 thousand in 2021 for a plot of land on which another production facility is being built. The grant has been recognized in the balance sheet under "Property, plant and equipment" since the completion of the construction project. The condition for the grant was that the land in question was purchased by February 8, 2021. In addition to this grant, there are further grants amounting to around EUR 1,324 thousand, which are subject to further conditions. A minimum investment of around EUR 17,226 thousand in real estate, a minimum investment of around EUR 8,415 thousand in personal property, obtaining a certificate of occupancy for a facility with an area of at least 125,000 m² and the creation of 42 jobs by December 31, 2024, whereby the place of residence for these jobs must be specified, must be met. Due to supply bottlenecks caused by the COVID-19 pandemic, the deadline for the certificate of occupancy was extended to June 30, 2023. The US company received the certificate of occupancy in the 2023 reporting year and has therefore fulfilled this condition. The remaining grants will be made available to the Group when all obligations have been cumulatively fulfilled. Contingent liabilities and other financial obligations.

The benefit of a government loan at a below-market interest rate is treated as a government grant and measured at the difference between the payments received and the fair value of a loan at the market interest rate. The Uzin Utz Group has a first-class credit rating, which is reflected in low bank margins on current overdraft facilities and long-term loans. In 2023, a development loan from KFW was utilized, which complies with the de minimis principle and was almost fully utilized.

Liquidity resources and management in the Uzin Utz Group were always ensured for the entire year 2023.

Contingent liabilities and contingent assets

Contingent liabilities are not recognized in the balance sheet. They are disclosed in the notes unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the balance sheet. However, they are disclosed in the notes if the inflow of economic benefits is probable.

Subsequent events after the balance sheet date

Events after the balance sheet date that provide additional information on the situation of the company at the balance sheet date (reportable events) are recognized in the financial statements. Events after the balance sheet date that do not require recognition are disclosed in the notes to the financial statements if they are material.