Va Q tec : Management report for va-Q-tec Group for the financial year 2023 (convenience translation only)

Contents

1 Group management report	1
1.1 Basis of the va-Q-tec Group	1
	1.1.1 Business model, target markets, and strategic orientation	1
		1.1.1.1	Business model and target markets in the 2023 financial year 1
		1.1.1.2	Strategic orientation	2
	1.1.2	Research and development	4
	1.1.3	Corporate structural changes	5
1.2	Business report	..................................................................................................	9
	1.2.1 Macroeconomic environment and Group-specific conditions	9
	1.2.2	Business trends	10
	1.2.3 Group business results and analysis of the financial position and performance13
	1.2.4	Non-financial performance indicators	25
1.3	Forecast	25
	1.3.1	Outlook	................................................................................................	25
	1.3.2 Macroeconomic environment and Group-specific trends	26
	1.3.3	Forward-looking statements	30
1.4 Report on opportunities and risks	30
	1.4.1 Risk management and internal control system	30
	1.4.2	Operating risks	31
	1.4.3	Future development opportunities	36
	1.4.4 Risk reporting on the deployment of financial instruments	38

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1 Group management report

1.1 Basis of the va-Q-tec Group

1.1.1 Business model, target markets, and strategic orientation

1.1.1.1 Business model and target markets in the 2023 financial year

va-Q-tec(va-Q-tec AG together with its consolidated subsidiaries referred to as "va-Q-tec" or "the Group") is a leading global technology provider of highly efficient products and total solutions in the area of vacuum insulation and TempChain logistics. va-Q-tec offers customers from a wide range of industries insulation solutions that enable them to significantly enhance their energy efficiency. The Group's offerings are divided into three divisions: "Products", "Systems", and "Services".

In the "Products" division, va-Q-tec develops, produces, and sells energy-efficient, thin vacuum insulation panels ("VIPs") for insulation as well as thermal energy storage components (Phase Change Materials - "PCMs") for the reliable and energy-efficient storage of thermal energy. The Group's "Systems" division develops, produces, and sells passive thermal packaging, containers, and boxes by combining VIPs and PCMs, which can constantly maintain a defined temperature range for up to 200 hours without the supply of external energy.

With its high-performance thermal transport solutions, va-Q-tec's"Services" division (Ser- viced Rental) ensures temperature stability during the transport, production, and storage of temperature-sensitive life science products. In order to realize temperature-sensitive logistics chains, the Group operates a fleet of rental containers and boxes that maintain secure TempChains worldwide.

Customers from the following target markets were addressed with the offerings in these three divisions in the reporting year:

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• Healthcare & Logistics, such as the transport and storage of medicines, vac- cines, investigational medicinal products, and clinical samples, as well as further pharmaceutical and biotechnological products of all kinds, including last-mile logistics
• Food, such as the dispatch of a wide variety of foods, such as dough pieces, fruit and vegetables, and meat and fish, at constant temperatures
• Building, such as building insulation (façades, roofs, floors)
• Technics and Industry, such as insulating water boilers, pipelines, and la- boratory equipment
• Mobility, such as insulation in refrigeration trucks, electric cars, trains, and aircraft
• Domestic and laboratory appliances, such as energy-saving measures in the refrigerator and freezer market

1.1.1.2 Strategic orientation

According to the Management's Board assessment, the Group operates in a dynamic, innovation -driven, and global market environment. In order to consolidate and expand its position as one of the world's leading providers of highly efficient products and solutions in the area of thermal insulation and TempChain logistics, va-Q-tec is pursuing the three strategic focus areas of technology leadership, growth, and profitability.

In order to be a technology leader, va-Q-tec is continuously working on innovative technol- ogies, process innovations, and new business models that can change or improve not only temperature chain logistics, but also thermal insulation in many industries, such as mobility and technology. The focus on growth is reflected in the efforts to align processes, the or- ganization, and the business model in such a way that economies of scale and growth opportunities can be leveraged. Operating EBITDA profitability, the third focus area, is a key

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factor in corporate management and is essential for the company's success and competi- tiveness.

In addition, in December 2022 the course was set for a strategic partnership with global investment company EQT Private Equity and Envirotainer AB ("Envirotainer"), a Swedish provider of temperature-controlled, active logistics solutions for the pharmaceutical indus- try. This strategic decision is intended to secure and leverage growth opportunities in the long term. To this end, the plan is to focus the Group's business activities in the areas of pharmaceutical TempChain and thermal energy efficiency within two independent companies (PharmaCo and va-Q-tec 2.0) during the course of the 2024 financial year. A detailed description of the background to the strategic decision and its strategic and corporate structural implications as well as the commercial and financial expectations for 2024 can be found in this report in the sections "Corporate structural changes" and "Forecast".

Group structure, employees, investments, and steering

A total of 12 companies formed the va-Q-tec Group as of the end of the reporting period, consisting of the German parent company (va-Q-tec ASG) and eleven foreign subsidiaries. The eleven foreign subsidiaries comprise va-Q-tec Ltd. (UK), va-Q-tec Ltd. (South Korea), va-Q-tec Inc. (USA), va-Q-tec Switzerland AG (Switzerland), va-Q-tec Japan G.K. (Japan), va- Q-tec Uruguay S.A. (Uruguay), va-Q-tec SG Pte. Ltd. (Singapore), VA-Q-TEC INDIA PRIVATE LIMITED (India), VA-Q-TEC DO BRASIL PARTICIPAÇÕES LTDA. (Brazil), va-Q-tec Shanghai Ltd. (China), and va-Q-tec France S.a.r.l. (France).

Group steering

During the reporting period, the Group was controlled and supervised by the management both individually and from an overarching Group perspective on the basis of detailed and regular reports. The management steers the allocation of resources based on this information and institutes countermeasures where performance falls short of target. A

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streamlined Group structure ensures the Group management can effectively control and coordinate the subsidiaries' important business decisions.

In the 2023 financial year, key performance indicators used by management for the management of the Group included revenues, earnings before interest, tax, depreciation, and amortization (EBITDA), as well as the equity ratio.

The following overview shows the changes in the relevant performance indicators.

kEUR unless stated otherwise	2023	2022	23/22
Revenues	106,124	111,833	-5 %
EBITDA (IFRS)	-1,724	7,736	-122%
EBITDA margin (IFRS)	-2%	6%	-8 pp
Equity ratio	36%	27%	+9 pp
Year-average number of employees	609	616	-7

The number of employees, including members of the Management Board, managing direc- tors, trainees, and interns, amounts to 646 (previous year: 649).

Adjusted for the transaction costs of kEUR 5,300 expensed in connection with the current takeover offer until 31 December 2023, the relevant performance indicators show the following changes:

kEUR unless stated otherwise	2023	2022	23/22
Revenues	106,124	111,833	-5%
EBITDA (IFRS)	3,576	15,692	-77%
EBITDA margin (IFRS)	3%	13%	-10 pp
Equity ratio	39%	34%	+5 pp
Year-average number of employees	609	616	-7

A detailed analysis of the key figures can be found in the section "Financial position and performance".

1.1.2 Research and development

The focus of va-Q-tec's business model is on developing and marketing a world-leading

technology portfolio in energy-efficient and space-saving VIPs, high-performance PCMs, 4

and thermal packaging systems. The research and development (R&D) area is of strategic importance to secure and further extend the company's technology leadership in the thermal insulation areas. This area operates on a cross-Group basis, developing technologies for future-viable products and solutions for the Group companies. To this end, va-Q-tec conducts internal and external research and development projects with partner companies and institutes. These projects are not only utilized for basic research on VIPs but are also geared towards the requirements of va-Q-tec's target markets. The past years' successful R&D activities have created a portfolio of patents which is reflected in the technology plat- form.

The company continued to invest in research and development in the year under review. Expenditure in this area amounted to kEUR 4,481, which corresponded to the previous year's level (kEUR 4,528). Research and development costs totaling kEUR 669 (previous year: kEUR 398) were capitalized in the reporting period.

1.1.3 Corporate structural changes

In 2022, va-Q-tec initiated a process with the aim of identifying potential options for the financing and implementation of the company's growth strategy in the long term. After completing a careful analysis of the options and weighing all related advantages and disad- vantages, va-Q-tec signed a Business Combination Agreement in December 2022 relating to the terms and conditions of a strategic partnership with Fahrenheit AcquiCo GmbH ("Bidder ") and its sole shareholder, each controlled by EQT X Fund (together with the Bidder "EQT Private Equity"), and in relation to a voluntary public takeover offer by EQT Private Equity.

With regard to the planned strategic partnership, the merger agreement provided, among other things, for the part of va-Q-tec's Services and Systems businesses focused on the pharmaceutical industry to be merged with Envirotainer AB ("Envirotainer") (together the "New Pharma Group"). Envirotainer is a Swedish provider of temperature-controlled, active logistics solutions for the pharmaceutical industry, in which EQT Private Equity already

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held an indirect majority interest at the time when the merger agreement was signed. With strategic and financial support from EQT Private Equity, va-Q-tec's business in the area of thermal energy efficiency and non-pharmaceutical thermal boxes is to be further developed in the long term within an independent, new company ("va-Q-tec 2.0") and expanded to include new applications for vacuum insulation technology.

In addition, the Business Combination Agreement provides that EQT Private Equity would subscribe to a cash capital increase from approved capital equivalent to 10% of the share capital without subscription rights at EUR 26.00 per share immediately after the successful completion of the takeover offer.

On 16 January 2023, EQT Private Equity, with the support of co-investors Mubadala Investment Company ("Mubadala") and the Sixth Cinven Funds ("Cinven"), published a voluntary public takeover offer to the shareholders of va-Q-tec AG to acquire all no-par-value registered shares of va-Q-tec AG against payment of a cash consideration of EUR 26.00 per va- Q-tec share. The takeover offer provided for standard market closing conditions, including a minimum acceptance rate of 62.5% and regulatory approvals. As of the end of the extended acceptance period on 7 March 2023, the acceptance rate amounted to 85.75% and on 30 June 2023 all necessary official approvals had been received, as a consequence of which all conditions for the completion of the takeover offer were met. The offer price was paid to the shareholders upon completion of the takeover offer on 6 July 2023. Following the completion of the takeover offer, EQT Private Equity subscribed for new va-Q-tec shares amounting to a total of 10% of the share capital at an issue price of EUR 26.00 per new va-Q-tec share as part of a capital increase in accordance with the Business Combination Agreement, thereby providing va-Q-tec with equity of around EUR 35 million.

Following the successful completion of the takeover offer, EQT Private Equity made a public delisting tender offer to the shareholders of va-Q-tec AG by publishing the offer document on 2 August 2023. On 25 August 2023, va-Q-tec was informed by the Frankfurt Stock Exchange that the revocation of the admission of va-Q-tec's shares to trading on the Regulated Market of the Frankfurt Stock Exchange and simultaneously in the sub-segment of

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the Regulated Market of the Frankfurt Stock Exchange with additional post-admission obligations (Prime Standard), as applied for by the company, would take effect at the end of 30 August 2023. The Bidder is convinced that long-term growth can best be achieved through a delisting and thereby within a private sector environment outside the short-term focus and volatility of the capital markets. The delisting will enable va-Q-tec to make decisions with a long-term perspective, regardless of the short-term expectations of the capital market. Due to the special regulations to which listed companies are subject, the delisting will also enable a reduction in the regulatory burden and administrative costs associated with maintaining the listing of va-Q-tec shares.

As described above, the Bidder intends to generate synergies in the relevant specific growth area of the New Pharmaceutical Group by combining va-Q-tec's pharmaceutical segment with the Envirotainer Group and to enable the New Pharmaceutical Group to provide a broader product offering for the benefit of its customers. Moreover, the Bidder intends to enable va-Q-tec 2.0 to realize, on both a better and more rapid basis, product improvements as well as volume, performance, and cost reductions in the remaining priority growth areas, especially in the development, production, and distribution of VIPs, PCMs, and temperature-controlled boxes, on both a better and more rapid basis. Furthermore, it is intended that the New Pharmaceutical Group and va-Q-tec 2.0 will enter into agreements for the exclusive supply of products (VIPs, PCMs, and boxes) and the provision of research and development services. The Bidder has undertaken to reasonably consider (i) providing va-Q-tec with back-up lines and (ii) otherwise providing sufficient additional liquidity if and to the extent that va-Q-tec requires additional funds for refinancing (in addition to the funds provided by the capital increase), or if additional funds are required for other reasons in connection with the Preceding Transaction, the carve-out, and/or the Business Combi- nation, and these funds cannot be obtained through debt financing on reasonable terms. For further information about the planned financing and further background information, please see the Bidder's offer document.

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At the Annual General Meeting on 29 August 2023, the conclusion of a domination and profit and loss transfer agreement between EQT Private Equity and va-Q-tec was approved, which came into force on 1 January 2024.

The Management and Supervisory boards of va-Q-tec AG intend to pass a resolution to implement a separation under corporate structural law of the "Products" division and production operations of va-Q-tec AG, and to spin these off into a newly formed company ("va-Q-tec 2.0") as part of this process. Following the spin-off, all shares in the subsidiary and all properties located in Germany that are relevant to the "Products" division and production operations are to be divested. The spin-off and the divestitures are to be completed by September 2024. These form part of the strategic partnership entered into with EQT Private Equity and Envirotainer AB in December 2022 as well as part of the plan to implement the Business Combination Agreement between va-Q-tec AG and EQT Private Equity dated December 2022. The "Systems" and "Services" divisions will remain with va- Q-tec. In the current 2024 financial year, the assets and liabilities associated with va-Q-tec 2.0 are to be reported as held for sale in accordance with IFRS 5.

The remarks about the business model relate to the period until the spin-off and divestiture of the "Products" division and production operations take effect in the current financial year.

Any effects of the takeover proceedings and the delisting of the va-Q-tec shares on the annual and consolidated financial statements of va-Q-tec AG for the 2023 financial year are presented in the section explaining the business results and analyzing the Group's financial position and performance.

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