Gigaset : Quarterly Statement for the third quarter 2021

Klaus Wessing, CEO of Gigaset AG

KEY FIGURES

KEY FACTS

			1/1 -			1/1 -
EUR millions			9/30/2021			9/30/2020
Consolidated revenues			153.9			133.5
EBITDA (Earnings before interest, taxes, depreciation and			11.0			-3.0
amortization)
EBIT (Earnings before interest and taxes)			0.2			-14.3
Consolidated net loss for the year			-1.2			-10.6
Free cashflow			-19.0			-8.51
Earnings per share (diluted) in EUR			-0.01			-0.08

			9/30/2021			12/31/2020
Total assests			188.5			204.51
Consolidated equity			9.2			1.9
Equity ratio (in %)			4.9			0.91
Number of employees			865			893

The Gigaset Share		Q3 2021		Q3 2020
Closing price in EUR (at the end of the period)		0.36		0.23
Highest price in EUR (in the period)		0.42		0.27
Lowest price in EUR (in the period)		0.30		0.20
Number of shares in circulation (at the end of the period)		132,455,896		132,455,896
Market capitalization in EUR million (at the end of the period)		47.7		30.5

• The year-ago comparison figures were adjusted to account for the changed presentation of restricted cash as of September 30, 2021 in order to ensure comparability. For details on this subject, please refer to Chapter 4 Change in the accounting treatment of restricted cash

• Consolidated revenues for the first nine months up 15%
• Exceedingly positive performance of the Smartphones and Professional segments
• EBIT for the first nine months turns positive again, EBITDA is likewise clearly positive, but coronavirus impacts are still noticeable
• Raw material supply bottleneck situation requires adjustment of forecast for 2021

"In view of the disruptions caused by the coronavirus pandemic last year, we are encouraged by the current numbers for the first nine months of this year. They clearly prove that we adopted the right strategy, made the right decisions and took the right measures to bring us through the crisis. Although the final end of the coronavirus pandemic and its many primary and secondary repercussions are still uncertain, we believe that Gigaset is well equipped to meet future challenges. We intend to benefit from the trend of increasing digitalization by continually investing in innovative products and prevail against the competition by entering into new, long-term cooperation ventures with strong partners."

"The company's order situation is excellent and we have increased both revenues and earnings on a year-to-date basis. For this reason, the revenue decline in the third quarter was especially disappointing. As a consequence of the coronavirus pandemic, many companies are currently contending with supply problems - and Gigaset is no exception. We must face this challenge because these bottlenecks are expected to continue into next year. We are especially encouraged by the performance of the Smartphones and Professional segments. However, the recent,

unusually strong increase in demand for fixed-line telephony is gradually normalizing. We remain confident about" our nearer-term prospects. We see a real opportunity for further growth in the trend of increasing digitalization.

Thomas Schuchardt, CFO of Gigaset AG

General economic environment

GIGASET QUARTERLY REPORT Q3 2021

1 GENERAL ECONOMIC ENVIRONMENT

Despite a resurgence of the coronavirus pandemic, the world economy continued to recover in the autumn of 2021, although the strength of the recovery has varied widely from one country to another, according to a study1 by the International Monetary Fund (IMF) from October 2021. Consumer demand has been boosted by the easing of coronavirus restrictions.

According to Statista,2 consumer spending in Germany increased considerably by 5.3% (price- adjusted) in the second quarter of 2021 for the first time after having declined across the board in all of 2020 and in the first quarter of 2021. The same trend was observed in the countries of the European Union, where consumer spending increased by an impressive 12.2% in the second quarter of 2021 after five straight quarters of declines. The trend in the third quarter of 2021 also appears to be positive.

However, the supply and availability of goods have reacted more slowly to the increased demand, particularly as a result of problems in international supply chains. These imbalances between supply and demand caused by the pandemic, as well as higher prices for raw materials compared to the previous year, have fueled substantial price pressures. The IMF experts expect that this increase in overall inflation will peak in the last months of 2021, but will revert to pre-pandemic levels in most economies by the middle of 2022.

In consideration of these factors, the IMF experts expect that worldwide economic output will expand by 5.9% in the full year 2021. Developed economies are predicted to grow by 5.2%, emerging-market and developing countries by 6.4%. In the Eurozone region, which is especially relevant for Gigaset, economic output is expected to expand by 5.0%. According to the IMF, the following growth rates

are expected in the company's relevant markets in 2021: Germany +3.1%, France +6.3%, Italy +5.8%, Spain +5.7%, Netherlands +3.8%, and Switzerland +3.7%.

Against this background, Gigaset is still faced with two key uncertainty factors: the actual further course of the coronavirus pandemic and the indirect effects of the pandemic. In particular, the supply of materials is a major challenge for the company. The disruptions caused by production stoppages and the reduced transportation options owing to the coronavirus crisis are still affecting numerous industries.

• IMF (2021) - World Economic Outlook 10/2021

• https://de.statista.com/statistik/daten/studie/917310/umfrage/veraenderung-der-konsumausgaben-in-deutschland/

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Business developments

GIGASET QUARTERLY REPORT Q3 2021

2 BUSINESS DEVELOPMENTS

The worldwide recovery described in the section entitled General economic environment continued in the third quarter of 2021. However, the growth momentum has weakened and the uncertainty created by supply disruptions has increased. The most relevant aspect of this problem for Gigaset is the global chip shortage triggered by the pandemic, which will last into the first half of 2022 according to the analysis firm Gartner.3

Overall, Gigaset's business exhibited a highly positive development in the first nine months of 2021, with revenue growth of 15.3%. Gigaset increased its online sales both via its own platforms and via platforms operated by third parties and continued to benefit from a certain renaissance of the fixed- line network that began with the outbreak of the coronavirus pandemic in early 2020, as well as the continuing shift to working from home.

The Phones segment will continue to address demographic trends such as the ageing of society with an appropriate product portfolio (Gigaset life series) and further upgrade its portfolio of universal handsets (Gigaset HX) by way of continuous product updating.

2.2 Smartphones

In 2020, the Smartphones segment was hit particularly hard in all sales markets by the measures put in place to contain the coronavirus. In the first nine months of 2021, by contrast, the Smartphones segment performed very well, tripling its revenues compared to the first nine months of last year.

2.1 Phones

After a strong performance in the first half of 2021, the revenues of the Phones segment exhibited a modest decline in the third quarter of 2021 due to a worsening of the semiconductor shortage in the world market. As a result, segment revenues in the first nine months of the year were slightly lower, by 0.7%, than the corresponding figure for the year-ago period. Like other market participants, moreover, Gigaset is having to contend with a shortage of materials that is currently having an adverse impact on the company's production and is extraordinarily volatile.

• https://www.handelsblatt.com/technik/it-internet/globale-knappheit-marktforscher-chip-engpaesse-bremsen-pc-absatz/27697846.html?ticket=ST-3080269-R5jaYhZCSlvxiayNf4SC-cas01.example.org

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Business developments

2.3 Smart Home

The situation in the Smart Home segment remains challenging. On the one hand, the markets have not developed overall as forecast by third parties; on the other hand, consumers are mainly purchasing smart home products for the purpose of convenience and entertainment. Smart TVs and robot vacuum cleaners, which are also included in the outlooks of market research institutes, are being preferred to security or energy management solutions of the kind offered by Gigaset. Accordingly, the Smart Home segment generated considerably lower revenues than in the year-ago comparison period.

2.4 Professional

The Professional segment recovered substantially in the current 2021 financial year compared to the crisis-plagued previous year, benefitting from catch-up effects after companies had postponed projects and orders in 2020. In addition, the demand for the Professional segment's products and solutions recovered considerably, as reflected in the impressive 50% increase in revenues in the first nine months of 2021.

GIGASET QUARTERLY REPORT Q3 2021

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