Bilfinger : Annual Report 2023

ANNUAL REPORT BILFINGER SE

2023

Bilfinger SE	Contents	2
Annual Report 2023

Contents

A

B

C

D

	To our shareholders	4
A.1	Letter to shareholders	5
A.2	Executive Board of Bilfinger SE	9
A.3	Report of the Supervisory Board	10
A.4	Corporate governance	22
A.5	Bilfinger in the capital market	46

	Combined management report	50
B.1	The Bilfinger Group	52
B.2	Economic report	58
B.3	Opportunity and risk and report	93
B.4	Outlook	115
B.5	Non-financial Group declaration	122
B.6	Takeover-relevant information pursuant to Sections 289a	180
	and Section 315a of the German Commercial Code (HGB)

	Consolidated financial statements	184
C.1	Consolidated income statement	185
C.2	Consolidated statement of comprehensive income	186
C.3	Consolidated balance sheet	187
C.4	Consolidated statement of changes in equity	188
C.5	Consolidated statement of cash flows	189
C.6	Notes to the consolidated financial statements	190

	Explanations and additional information	261
D.1	Responsibility statement	262
D.2	Reproduction of the auditor's report	263
D.3	Practitioner's Report on Non-financial Reporting	273
D.4	Return-on-capital-employed controlling	273
D.5	Boards of the company	276
	Ten-year overview	284
	Financial calendar	286
	Imprint	287

Bilfinger SE

Bilfinger is an international industrial services provider. The aim of the Group's activities is to increase the efficiency and sustainability of customers in the process industry and to establish itself as the number one partner in the market for this purpose. Bilfinger's comprehensive portfolio covers the entire value chain from consulting, engineering, manufacturing, assembly, maintenance and plant expansion to turnarounds and digital applications.

The company delivers its services in two service lines: Engineering & Maintenance and Tech- nologies. Bilfinger is primarily active in Europe, North America and the Middle East. Process industry customers come from sectors that include energy, chemicals & petrochemicals, pharma & bi- opharma and oil & gas. With its ~30,000 employees, Bilfinger upholds the highest standards of safety and quality and generated revenue of €4.5 billion in financial year 2023. To achieve its goals, Bilfinger has identified two strategic thrusts: repositioning itself as a leader in increasing efficiency and sustainability, and driving operational excellence to improve the organizational performance.

Bilfinger SE	A To our shareholders	4
Annual Report 2023

A To our shareholders

A.1	Letter to shareholders	5
A.2	Executive Board of Bilfinger SE	9
A.3	Report of the Supervisory Board	10
A.4	Corporate governance	22
A.4.1	Declaration of corporate governance and corporate governance report	22
A.5	Bilfinger in the capital market	46

Bilfinger SE	A To our shareholders	5
Annual Report 2023	A.1 Letter to shareholders

A.1 Letter to shareholders

Dear Shareholders,

Ladies and Gentlemen,

2023 was a good year for Bilfinger. Given the current global political situation, this may sound unusually clear, but for Bilfinger it is simply true. Nor was it a chance outcome. It was the reward for our revised strategy and focus on our goal of becoming the No. 1 in enhancing efficiency and sustainability for our customers in industry.

Annual targets in part exceeded

Bilfinger benefited from good demand for its services across all regions and industries. Against the backdrop of wars and conflicts in Europe and elsewhere in the world, coupled with inflation that only came back down toward the year-end, companies faced the challenge of producing as efficiently as possible against high energy and input costs - while at the same time minimizing the environmental impacts. Notably in Europe, companies are laboring under the lack of skilled personnel, ever-increasing bureaucracy as well as the growing complexity in both production and digitalization. In response, they are looking to outsource to specialized industrial services provid- ers, which opens up new opportunities for Bilfinger.

Our success is measurable. Orders received rose organically in 2023 by 5 percent to more than €4.7 billion, while revenue went up 7 percent to €4.5 billion. The EBITA margin climbed from

1.8 to 4.3 percent. Free cash flow came to €122 million. In terms of EBITA and free cash flow, we exceeded our forecast for financial year 2023. Net profit stood at €181 million, which translates to earnings per share of €4.84. Adjusted for special items and calculated using a normalized tax rate, net profit increased from €82 million to €117 million, corresponding to earnings per share of €3.12. At the Annual General Meeting on May 15, the Executive Board and Supervisory Board will there- fore be proposing an increase in the dividend from €1.30 to €1.80 per share. The payout ratio equates to approximately 58 percent of adjusted net profit, putting it at the upper end of the range under the company's dividend policy, which targets payouts of between 40 percent and 60 percent of adjusted net profit.

As a result of this positive development, Bilfinger shares are promoted from the SDAX to the MDAX effective March 18, 2024, marking a return to the 50-sharemid-cap index after a good six years.

Technologically advanced reference projects with major international customers

Enhancing efficiency and sustainability for our customers and actively shaping the energy transition are the focus of our business activities. This is illustrated by three standout customer con- tracts:

Bilfinger is the first company to have successfully sealed a strategic engineering alliance with chemical company INEOS at the latter's site in Cologne, Germany. This is a three-year contract with the objective of expansion into a long-term cooperation. The primary focus is to increase quality and

Bilfinger SE	A To our shareholders	6
Annual Report 2023	A.1 Letter to shareholders

efficiency by pooling all engineering services with one alliance partner, thus eliminating the need to coordinate a large number of smaller service providers. What clinched the decision in favor of Bilfinger was our comprehensive portfolio of solutions and expertise as a multidisciplinary engineering service provider.

Bilfinger is making a major contribution to the progress of the new Hinkley Point C nuclear power plant in the UK. The highlight in 2023 was delivering and assembling the core melt stabilization system. This key component of the safety concept for the new nuclear power plant comprises a number of structural elements weighing several tons that act as a safeguard beneath the reactor block.

In Lithuania, Bilfinger is supporting energy company Ignitis Gamyba in the expansion of a pumped storage hydroelectric power plant. Executed in collaboration with the Voith technology group, the contract aims to strengthen Lithuania's green and independent energy supply. The expansion of the hydroelectric power plant is part of the Baltic states' plans to be integrated into the European power grid by the end of 2025 as well as to reduce their dependence on energy imports and to systematically make greater use of renewable energy sources.

Strategy: implementation on track to achieve mid-term targets

Our Capital Markets Day 2023 saw us present our revised strategy, which met with widespread approval. In implementing it, we focused in 2023 on three main levers to improve the Group's growth, profitability and cash flow. We put these strategic levers into place quickly and effectively

• and to a large extent have already activated them.

1. The efficiency program launched at the end of 2022 was fully completed in 2023. Focusing on administrative functions within the Group, it provides for cost savings of approximately €55 mil- lion, which will be fully effective from financial year 2024. By means of lean management and streamlined administrative structures as well as by bundling administrative tasks, the program aims for systematic improvements in organizational efficiency. Some of the savings will be rein- vested in training and education. For instance, this includes establishing training centers such as Bilfinger Education GmbH, launched in October 2023.
2. We are improving operational excellence to enhance the performance of our organization. A key touchpoint here is increased standardization and bundling of the Group's various service lines. To this end, nine product centers were defined in the reporting year. Their task is to standardize products that will be offered by the operating companies in all the Group's markets. A standardized contract selection process continues to serve the purpose of operational derisking. Here, too, we have already made significant progress with a fundamental repositioning of our US business. While this resulted in lower revenue and orders received in the USA. for the reporting year, it will make our business significantly more robust and above all more profitable going forward.
3. Bilfinger is targeting additional growth and higher profitability by positioning itself even better in its markets. The aim is to offer all products and serve all prospective customers in established markets. Alongside organic growth, selective acquisitions can also contribute here. In this context,

Bilfinger SE	A To our shareholders	7
Annual Report 2023	A.1 Letter to shareholders

an agreement was signed in September 2023 to acquire parts of the Stork Group, previously part of Fluor Corporation (USA). The transaction mainly encompasses the operating units in the Netherlands and Belgium as well as some entities in Germany and in the US, with more than 2,700 permanent employees and revenue of around €500 million.

Sustainability at Bilfinger

Having a business model based on enhancing customers' efficiency and sustainability means we have to demonstrate our own credibility in these disciplines. In financial year 2024, Bilfinger will expand its sustainability reporting to even better reflect the company's own ambition in terms of efficiency and sustainability. Despite the revenue growth, our Scope 1 and 2 (market-based) carbon emissions in accordance with the GHG Protocol have been reduced significantly by 9 percent from 50 to 45 ktCO2. Upstream Scope 3 emissions were recorded for the first time for the financial year 2023. These comprise carbon emissions caused at our suppliers as a result of our activities in the upstream value chain. Downstream Scope 3 emissions - those generated at customers as a result of our services or the use of our products in the downstream value chain - will be tracked from 2024. This will provide greater transparency for customers, investors and the general public. Bilfinger's commitment is similarly borne out by the latest rating from EcoVadis. The world's largest provider of corporate sustainability ratings has once again presented Bilfinger with a Gold Award for its sustainable, ethical and responsible practices. This puts Bilfinger in the top 5 percent of all companies assessed.

Strategic priorities in 2024

We are continuing to implement our strategy this year. One area of focus will be on the transformation from project business to product business. By standardizing and offering our expertise across all markets and regions, we are actively derisking and increasing our sustainable profitable growth. We will set about integrating Stork immediately after the closing, which is planned for the first half of 2024, thus substantially strengthening the Bilfinger Group. This transaction additionally serves as a blueprint for our acquisition strategy. We wish to grow primarily in markets we already serve and with products we already offer as a way of systematically expanding our core business.

Financial outlook for 2024

For 2024, Bilfinger anticipates revenue of between €4,500 million and €4,800 million. The Group's profitability will continue to rise, with an EBITA margin of 4.9 percent to 5.2 percent. This increase will stem from the positive effects of the efficiency program as well as growth and continued de- risking. The forecast does not include the acquisition of Stork expected for the first half of the year.

Bilfinger SE	A To our shareholders	8
Annual Report 2023	A.1 Letter to shareholders

Thanks to our shareholders and employees

Bilfinger is making very good progress. Our strategy is delivering and our products and services are addressing growing industry demand. We would like to thank you, our shareholders, for your continued trust and support. And we would like to express our gratitude to our employees for their outstanding commitment to Bilfinger. It is they who have made our recent progress and successes possible. To all our stakeholders who have supported us with constructive criticism, suggestions and productive dialogue, we pledge to remain open to discussion. Together, we will continue on our path of profitable growth in 2024 and make Bilfinger the No. 1 in efficiency and sustainability for our customers in industry.

Dr. Thomas Schulz	Matti Jäkel
CEO	CFO

Executive Board
of Bilfinger SE
Dr. Thomas,	Schulz
Matti Jäkel		, CEO

CFO

Bilfinger SE	A To our shareholders	9
Annual Report 2023	A.2 Executive Board of Bilfinger SE

A.2 Executive Board of Bilfinger SE

2022

2013 - 2022

2001 - 2013

1998 - 2001

Dr. Thomas Schulz (CEO)

Born 1965 in Saarland, Germany Professional career

Chief Executive Officer at Bilfinger SE, Mannheim (Germany) FLSmidth A/S, Copenhagen (Denmark), Group Chief Executive Officer

Sandvik AB, Stockholm (Sweden), most recently President SANDVIK Construction

Svedala Industri AB, Malmö (Sweden), Business Area Manager Academic career

Engineering studies and doctorate in mining at RWTH Aachen University, Germany

Matti Jäkel (CFO)

Born 1961 in Düsseldorf, Germany

Professional career

2022	Chief Financial Officer Bilfinger SE, Mannheim (Germany)
1989 - 2022	Bilfinger SE, Mannheim
2020 - 2022	Executive President Division Other Operations
2017 - 2019	Finance Director Region MMO Continental Europe
2014 - 2016	Finance Director Division Industrial Maintenance
2010 - 2013	CFO Bilfinger Industrial Services GmbH
2007 - 2010	CFO Bilfinger Berger Ingenieurbau GmbH
2006 - 2007	CFO Bilfinger Berger Hochbau GmbH
2000 - 2006	CFO Fru-Con Construction Corp.
1997 - 2000	Finance Director Civil Engineering Division Baulderstone Hornibrook Pty. Ltd.
	and Finance Director BHBB M5 East Joint Venture
From 1989	various technical and commercial positions at
	Bilfinger Berger Bauaktiengesellschaft
	Academic career

Civil Engineering studies, TU München

Business Administration studies, Henley Management College /

Brunel University

Bilfinger SE	A To our shareholders	10
Annual Report 2023	A.3 Report of the Supervisory Board

A.3 Report of the Supervisory Board

Dr. Eckhard Cordes

Chairman

of the Supervisory Board

Dear Shareholders,

Financial year 2023 was both a challenging and, at the same time, successful year for Bilfinger. Despite a host of external influences and uncertainties as well as internal reorganization, Bilfinger was able to achieve and exceed all the targets set and communicated to the capital market in the reporting year. Orders received increased to €4.7 billion (previous year: €4.6 billion) and revenue climbed to just under €4.5 billion (previous year: €4.3 billion). Bilfinger achieved reported EBITA of €191 million in 2023 (previous year: €75 million, whereby the previous year´s amount was influenced by provisions for the efficiency program in the amount of €62 million); this corresponds to an EBITA margin of 4.3 percent (previous year: 1.8 percent). In addition to operational improve- ments, this increase resulted from the completion of the efficiency program, de-risking in the project business and the sale of properties. The adjusted EBITA margin was 4.0 percent (previous year:

3.0 percent). Reported free cash flow totaled €122 million (previous year: €136 million). In addition to the sound operating result and a normal level of investment, free cash flow was influenced by special items, consisting primarily of cash inflows from the sale of properties and cash outflows in connection with the efficiency program. Around €40 million in liquidity outflows from the efficiency program will be incurred in 2024. In operational and strategic terms, Bilfinger maintained its growth trajectory in the reporting year. The efficiency program, which aims to optimize workflows and processes, simplify structures and reduce costs, was completed on schedule at the end of the fi- nancial year and will take full effect from 2024. This is expected to save around €55 million per year, of which around a quarter will be reinvested in employee training and development. The ac- quisition of Fluor Cooperation's industrial services business Stork, which was agreed in the report- ing year, will further implement the growth strategy. The transaction is scheduled to close in the first half of 2024. The acquisition strengthens Bilfinger's core business in a market in which the Group is already well positioned. In particular in the Netherlands and Belgium region, Bilfinger is