Basler : Three-month Report 2024

3-Month-Report2024

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3-Month-Report 2024

Key Figures

			Changes to
in € m*	QI 2024	QI 2023	previous year
Sales revenues	43.5	56.3	-23 %
Incoming orders	44.0	54.1	-19 %
Gross results	19.4	25.1	-23 %
Gross profit margin	44.6 %	44.6 %	-
Full costs for research
and development	7.4	10.8	-31 %
Research and development
ratio	17.0 %	19.2 %	-2.2 Pp.
EBITDA	1.0	3.6	-72 %
EBIT	-3.3	-1.2	-
EBT	-3.6	-1.6	-
EBT Margin	-8.3 %	-2.8 %	-
Net income	-3.9	-2.2	-
Weighted average number
of shares	30,555,101	29,833,531	2 %
Result per share (€)	-0.13	-0.07	-
Cash flow from operating
activities	-1.2	-3.3	-
Cash flow from investing
activities	-2.2	-4.4	-
Free cash flow	-3.4	-7.7	-

			Changes to
in € m*	3/31/2024	12/31/2023	previous year
Total assets	246.7	255.8	-4 %
Long-term assets	135.2	136.7	-1 %
Equity	135.1	139.2	-3 %
Borrowed capital	111.7	116.6	-4 %
Equity ratio	54.8 %	54.4 %	0.4 Pp.
Net cash	-33.0	-29.0	-
Working capital	57.0	55.6	2 %
Average number
of employees over the year
(full time equivalents)	918	1,059	-13 %
Share price (XETRA) in €	10.80	11.64	-7 %
Number of shares
in circulation	30,736,812	30,736,812	0 %
Market capitalization	332.0	357.8	-7 %

*unless otherwise stated

Key Figures

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3-Month-Report 2024

Overview of the first three months of 2024:

• Incoming orders: € 44.0 million (previous year: € 54.1 million, -19 %)
• Sales: € 43.5 million (previous year: € 56.3 million, -23%)
• EBITDA: € 1.0 million (previous year: € 3.6 million, -72 %)
• EBT: € -3.6 million (previous year: € -1.6 million)
• Net result: € -3.9 million (previous year: € -2.2 million)
• Free cash flow: € -3.4 million (previous year: € -7.7 million)

Dear Shareholders,

Following the restructuring in 2023, we had an intensive first quarter, during which we refocused on the future in order to return to a profitable growth path as quickly as possible and to make decisive progress in our transformation into a full-range supplier and solutions provider. The Basler team worked with great commitment and gradually found its feet in the new structures. Our attention on the gross profit margin showed effects and we returned to the previous year's level. For the first time in many quarters, the ratio of new orders to sales is back in balance, albeit at a low level. However, weak markets, higher than normal inventory levels at our customers and geopolitical uncertainties prevented us from returning to profitability in the first quarter. With great cost discipline and passion, we continue to follow our path and are optimistic that market conditions will gradually improve as the year progresses.

With this compact three-month report we would like to give you a deeper insight into the developments in the first weeks of the fiscal year.

Your management board

Business Development

In total, incoming orders in the first three months of 2024 amounted to € 44.0 million (previous year: € 54.1 million). Compared to the previous quarter, incoming orders grew by 14 % and were slightly higher than sales. Compared to the same period of the previous year, sales decreased by 23 % to € 43.5 million (previous year: € 56.3 million). The reason for the low level of incoming orders and sales was the persistently weak demand from the equipment industries for consumer electronics, logistics and laboratory automation in Asia and North America. In contrast, demand in Europe was relatively robust in the first quarter. Increased customer inventories resulting from over-ordering during the chip crisis further dampened already low demand. High interest rates and geopolitical tensions continued to prevent the business climate in capital goods markets from improving at the end of the quarter.

Compared to the previous year, the German Engineering Federation (VDMA) reports a nominal year-on-year decline in sales of -19 % for German manufacturers of machine vision components as at the end of March 2024. During the same period, incoming orders decreased by -12 %.

Basler is thus falling behind the German industry for image processing components. This is mainly due to Basler's very Asian-oriented business. Basler group's business performance in the first three months of 2024 showed very strong regional differences. While sales in Europe and Germany were robust, business in the Americas and Asia remained weak.

Interim Group Management Report January - March 2024

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3-Month-Report 2024

Product Development & Product Launches

In the first three months of 2024, development activities were ongoing on a number of future-oriented projects. The full costs for development services in the first quarter amounted to € 7.4 million (March 31, 2023: € 10.8 million). Absolute R&D costs decreased significantly in the course of the restructuring, however, the R&D ratio of 17 % in the first quarter was still well above the target ratio of approximately 13 % due to the low level of sales. This is temporarily accepted in order to best support the transformation to a full-range supplier in terms of technology and products.

In the first quarter, the range for 3D image processing was further expanded and now complements the product portfolio with the industrial-grade camera series Basler Stereo visard. Robots equipped with Basler stereo cameras perceive their surroundings in high resolution. The five model variants are available in basic spacings of 65 millimetres and 160 millimetres, each in monochrome and color versions. All cameras are equipped with a pre-installed, modular onboard software package that is suitable for typical robotics applications such as object recognition or the so-called "reach into the box".

Furthermore, a new version of VisualApplets with numerous new functions was recently introduced to the market. VisualApplets is the integrated development environment for real-time applications on FPGA processors in image processing. This allows FPGAs to be programmed using a data flow model on a graphical user interface. The solution is used for industrial and non-industrial applications in a wide range of sectors. VisualApplets provides access to the FPGA processors of image processing hardware such as frame grabbers, industrial cameras and image processing devices in order to realize individual image processing applications.

With the new version of VisualApplets 3.4.0, Basler introduces numerous new features to enable the best FPGA graphics programming for programmable CoaXPress and Camera Link frame grabbers.

In March, the company presented a selection of its 2D and 3D vision portfolio for warehouse automation at the LogiMAT trade show in Stuttgart, Germany. Live demonstrations showed how Basler's machine vision solutions can be used to optimize intralogistics, material flow, and warehouse management processes.

Outlook

The restructuring program was largely completed by the end of 2023 and the break- even point was reduced to below € 200 million in sales. As all follow-up measures are running according to plan and a weak start to the year has been taken into account in the forecast; the forecast for 2024 published at the end of March is confirmed. According to this, the management expects to achieve sales of between € 190 - 210 million and a pre-tax margin of between 0 - 5 %.

The forecast takes into account the fact that excess inventories held by customers are expected to be largely reduced by the end of the second quarter and that the dampening effect on demand will continue to diminish until then. In terms of original demand, there are currently no signs of a positive turnaround in incoming orders, although this is expected in the second half of the year.

Interim Management Report including essential Supplementary Disclosures of the Consolidated Annual Financial Statement of December 31, 2023 according to IFRS

Report on profit, finance, and asset situation

Sales and incoming orders, costs of service provision

Compared to the same period of last year, sales decreased by 23 % to € 43.5 million (previous year: € 56.3 million). Incoming orders decreased to € 44.0 million (previous year: € 54.1 million), a decline of 19 % compared to the same period of the previous year. Although at a low level, the ratio of incoming orders to sales was balanced for the first time in six quarters.

Interim Group Management Report January - March 2024

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3-Month-Report 2024

Sales and Incoming Orders

Sales split by Regions

For the last five quarters (in € million)

56.3	54.1*	59.8					Basler Headquarters Germany	Basler Korea
				Basler, Inc. USA	Basler Italy	Basler O•ce Japan
					45.6	43.5 44.0*
		39.9*	41.5
			38.6*		Basler Co., Ltd. China
		34.3*

Basler Taiwan, Inc. Taiwan

Basler Asia, Ltd. Singapore

Q1	Q2	Q3	Q4	Q1
	2023			2024

• Revenue  Order entry

• order entry in 2023 excluding cancellations of orders placed in previous years; no significant amount of cancellations in 2024

Business development in the late-cycle European market was somewhat more robust than expected in the first three months, while the markets in America and Asia remained very weak and still showed no signs of recovery at the end of the quarter. The regional sales structure remained largely unchanged compared to the first quarter of the previous year - Europe 35 % (previous year: 37 %), America 15 % (previous year: 14 %) and Asia 50 % (previous year: 49 %).

Revenue Breakdown by Regions*:

15% 35% 50%

Americas EMEA Asia

*as of March 31, 2024

Interim Group Management Report January - March 2024

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3-Month-Report 2024

Gross Profit and Gross Margin

At 44.6 %, the gross profit margin recovered to the previous year's level in the first three months of 2024. The measures taken in recent quarters to increase the gross profit margin are having an effect. Higher material costs due to the chip crisis, weak currencies in China and Japan and low capacity utilization in production continue to temporarily impact the gross profit margin. Price pressure from intense competition, particularly in the Chinese market, is expected to continue.

44.6%	45.0%	38.2%	44.6%
	39.3%
25.1	26.9
	16.3	17.4	19.4

Earnings before Taxes

-2.8%	3.0%				-9.0%	-8.3%
		-39.3%
	1.8
-1.6			-6.0		-2.2
			-4.1		-3.6
		-16.3
Q1	Q2		Q3	Q4	Q1
		2023					2024

• EBT in %  EBT in € million  EBT before restructuring costs in € million

The after-tax result amounted to € -3.9 million (previous year: € -2.2 million).

Earnings per share amounted to € -0.13 (previous year: € -0.07).

Q1	Q2	Q3	Q4	Q1
2023				2024

• Gross Margin in %  Gross Profit Margin in € million

Despite improvements in the gross profit margin, the level of sales was not sufficient to return the group to profitability. Low development capitalization also had a negative impact on earnings. The pre-tax result for the first three months amounted to € -3.6 million (previous year: € -1.6 million).

Asset Situation

In comparison, non-current assets were slightly below the values as of Dec. 31, 2023.

Inventories were slightly reduced by € 0.2 million during the first three months. Significant inventory reductions are not expected until later in the year, when long-term supply commitments are fully phased out and demand picks up.

Development of Equity

Equity decreased to € 135.1 million in the first quarter (Dec. 31, 2023: € 139.2 million) due to the result. The equity ratio improved slightly to 54.8 % as at the reporting date of March 31, 2024, compared to 54.4 % on Dec. 31, 2023. The continued high equity ratio provides a solid foundation for financing the transition year ahead.

Interim Group Management Report January - March 2024

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3-Month-Report 2024

Cash Flow and Liquidity

CashFlow

The operating cash flow amounted to € -1.2 million (previous year: € -3.3 million) and is mainly characterized by the accumulated loss due to the low level of sales.

Cash flow from investing activities amounted to € -2.2 million (previous year: € -4.4 million). Compared to the previous year, the level was significantly reduced as a result of the restructuring program and ongoing strict cost and investment management.

Cash flow from financing activities amounted to € -3.1 million (previous year: € -2.0 million). The main factors influencing this item in the reporting period were the repayment of loans to banks, which overcompensated for the drawdown of funds from a KfW loan.

Overall, the cash flow amounted to € -6.5 million (previous year: € -9.7 million). Sub- sequently, cash and cash equivalents decreased from € 32.2 million (December 31, 2023) to € 25.7 million. Net debt after deduction of all bank liabilities amounted to € 33.0 million (December 31, 2023: € 29.0 million).

For the last five quarters (in € million)

					4.3
		2.3
	-3.3			1.0		1.9	-1.2
					-1.5
			-1.9	-2.5	-2.4			-3.4
					-2.2
		-4.2
		-7.7
	-4.4
	Q1	Q2		Q3	Q4		Q1
		2023					2024

• FCF
• OCF
• ICF

Interim Group Management Report January - March 2024

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3-Month-Report 2024

Events after the end of the interim reporting period

Employees

At the reporting date of March 31, 2024, the Basler group employed 918 (December 31, 2023: 942) employees (full-time equivalents). Compared to the previous year, the number of employees decreased by 221 full-time equivalents (March 31, 2023: 1,139).

Report on Significant transactions with related parties (entities and individuals)

There have been no new material related party transactions since the reporting date of December 31, 2023.

Opportunities and Risks Report

Regarding significant opportunities and risks of the probable development of the Basler group, we refer to the group management report as of December 31, 2023. In the first half of the year, an analysis was made of the risks that have arisen in the area of incoming orders and business development.

Notes to the interim statement according to IFRS

The interim statement of Basler was prepared according to the International Financial Reporting Standards (IFRS) as applicable within the European Union (EU), the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as well as the Standing Interpretations Committee (SIC). The interim statement was prepared according to the provision of the IAS 34. The interim financial statements as of March 31, 2024 are unaudited and have not been reviewed by an auditor. The interim financial statements have been prepared using generally the same accounting policies as those used in the annual financial statements as at December 31, 2023.

For significant changes of the consolidated balance sheet, the consolidated income statement as well as the consolidated cash flow statement, we refer to the report on the profit, finance, and asset situation. The statements on IFRS 9 made in the consolidated financial statements as at 31 December 2023 have not changed in the first quarter of the current financial year. To date, the Basler group has not been able to identify any changes in the payment behavior of customers that would have led to a different valuation of trade receivables. There were no findings that would have led to a revaluation of the lease accounting in accordance with IFRS 16 as at the reporting date.

Interim Group Management Report January - March 2024

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3-Month-Report 2024

Basler in the Capital Market

The course of business and the restructuring program as well as the general mood on the capital markets with regard to small and mid caps have been clearly reflected in the Basler share price over the past quarters. In addition to resolutely managing the restructuring program, the management has again intensified its active exchange with the capital market in recent months through conferences, roadshows and video calls. In the quarters ahead, the management will continue to report transparently on the market situation and the progress made in the transformation into a solution provider.

Shareholder Structure*

The share capital of Basler AG amounted to € 31.5 million at the end of the quarter on March 31, 2024, divided into 31.5 million no-par-value bearer shares at € 1.0 each.

5 %

3 %

INDEX			4 %	53 %
120.00			2 %
100.00
80.00			33 %	Norbert Basler Holding GmbH (53 %)
			Union Investment (5 %)
60.00				Universal Investment (3 %)
				Dr. Dietmar Ley (CEO) (4 %)
40.00				Treasury Shares (2 %)
			Free Float (33 %)
			*end of April 2024
20.00
 Basler Share	 TDXP Index
0.00		2024/03/01	2024/03/31
2024/01/01	2024/02/01

• 11.74 opening price on January 2, 2024

closing price on March 28, 2024 € 10.80

Interim Group Management Report January - March 2024

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3-Month-Report 2024

Shareholdings Management

Supervisory Board

Norbert Basler

Horst W. Garbrecht

Alexander Jürn

Tanja Schley

Lennart Schulenburg

Prof. Dr. Mirja Steinkamp

Management Board

Arndt Bake (until December 31, 2023)

Dr. Dietmar Ley

Hardy Mehl

Alexander Temme

03/31/2024	12/31/2023
Number of shares	Number of shares
in pieces	in pieces
0	0
10,000	10,000
0	0
0	0
0	0
12,793	12,793
7,311	7,311
1,143,669	1,143,669
36,683	36,683
3,400	3,400

German Corporate Governance Code

The current declaration of the management board and the supervisory board pursuant to § 161 of the German Stock Corporation Act (AktG) regarding the German Corporate Governance Code was made continually available to the shareholders on the company's website at www.baslerweb.com/Investoren/Corporate-Governance.

Declaration of the Legal Representatives

We affirm to the best of our knowledge that the interim consolidated financial state- ments, in accordance with the accounting principles applicable to interim reporting, provide a true and fair view of the group's asset, financial, and earnings situation and that the group's interim management report represents a true and fair picture of the course of business, including the operating result, and the group's financial situation as well as describing the essential opportunities and risks concomitant with the expected development of the group during the remainder of the fiscal year.

The management board

Treasury Shares

As at the reporting date of March 31, 2024, the company holds 763,188 treasury shares or 2.42 % of the share capital of 31.5 million shares based on the new authorization to acquire and use treasury shares in accordance with Section 71 (1) no. 8 AktG resolved at the Annual General Meeting on May 26, 2023 under agenda item 7.

Dr. Dietmar Ley	Hardy Mehl	Alexander Temme
CEO	CFO/COO	CCO

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