SFC Energy : Report of the Management Board to the Annual General Meeting on the exclusion of subscription rights regarding agenda item 6 in accordance with sections 203 (2), 186 (3) sentence 4, (4) sentence 2 AktG

Report of the Management Board to the Annual General Meeting on the exclusion of subscription rights regarding agenda item 6 in accordance with sections 203 (2), 186 (3) sentence 4, (4) sentence 2 AktG

With regard to agenda item 6 (resolution on the cancellation of the existing authorised capital, the creation of new authorised capital with the possibility of excluding shareholders' subscription rights and corresponding amendment of the Articles of Association), the Management Board has submitted the following written report in accordance with section 203 (2), section 186 (4) sentence 2 about the

Reasons for the exclusion of subscription rights

pursuant to sections 203 (2), 186 (4) sentence 2 AktG:

The authorisation of the Management Board proposed under agenda item 6, with the consent of the Supervisory Board, to increase the share capital on one or several occasions on or before 27 April 2027 by up to a total of EUR 2,893,948.00 by issuing new no-par value registered shares against cash and/or non-cash contributions (Authorised Capital 2022) is intended to give the Management for the five following years the opportunity to quickly and flexibly procure equity if needed. The availability of financing instruments independent of the interval between the Annual General Meetings is of particular importance, since the date by which funds must be generated cannot always be predicted in advance. In addition, potential transactions may - in light of competition with other companies - only be successfully carried out if secured financial instruments are available at the commencing of the negotiations. Legislation has addressed the need of the companies arising from the foregoing and gives stock corporations the possibility to authorise the Management, for a fixed term and in a limited amount, to increase the registered share capital without any additional resolution by the General Meeting. Therefore, the administration proposes to the General Meeting that such authorisation be issued in the amount of 20% of the nominal share capital (calculated on the basis of the date of convocation of this General Meeting in the amount of EUR 14,469,743.00), i.e., EUR 2,893,948.00.

In utilising the authorisation to issue new shares, the shareholders are generally to be granted a subscription right. This allows all shareholders to participate in a capital increase in proportion to their participation and to maintain both their impact in terms of voting rights and the value of their ownership in the Company. This is particularly true if the new shares are not directly offered to the shareholders for subscription, but through one or more credit institutions, provided that these are obliged to offer the new shares to the shareholders for subscription by way of indirect subscription rights. The proposed resolution therefore provides for such provision.

The Authorised Capital 2022 furthermore comprises an authorisation of the Management Board, with the consent of the Supervisory Board, to decide on the exclusion of the subscription right both for fractional amounts and in a number of other cases.

The authorisation provided for under b) aa) to exclude subscription rights in the case of residual or fractional amounts serves to obtain a practicable subscription ratio with regard to the amount of the capital increase from time to time. Fractional amounts can result from a subscription ratio and no longer be equally distributed to all shareholders. The partial amounts that thus are excluded from the subscription right are of a minor scale only and shall be realised in the best interest of the Company/shareholder by selling them in the market or otherwise. To the extent subscription ratios in whole

numbers are readily possible, the shareholders' subscription rights for fractional amounts shall not be excluded.

The authorisation to exclude subscription rights according to b) bb) in order to grant subscription rights to holders of bonds or profit participation rights that provide for conversion and/or option rights or conversion obligations is necessary and appropriate to be able to protect the holders against dilution of their rights in the same extent as shareholders. In order to grant such dilution protection, it is necessary to grant a subscription right to new shares to the holders of conversion and/or option rights or conversion obligations to the same extent as they would be entitled to after the exercise of the option or conversion right or fulfilment of the conversion obligation. The granting of such a subscription right would obviate the otherwise existing need to reduce the conversion or option price for the shares that are to be issued in accordance with the conditions of the conversion or option bonds.

The further authorisation according to b) cc) to exclude subscription rights one or more times for a partial amount of the authorised capital in the case the new shares are issued against cash contributions if the proportionate amount of the share capital attributable to the new shares in total does not exceed 10% of the share capital neither at the time this authorisation takes effect nor at the time the authorisation is exercised, is based on section 186 (3) sentence 4 AktG. The limitation of the authorisation amount for such capital increase to 10% of the share capital as well as the requirement that the issue price of the new shares is not significantly below the stock exchange price of the Company's equally featured shares already listed within the meaning of section 203 (1) and (2) in conjunction with section 186 (3) sentence 4 AktG ensure that the scope of protection of the subscription right, namely the protection against loss of influence and dilution of value, is not affected or only affected to a reasonable extent. The influence of shareholders excluded from subscription can be safeguarded by supplementary buying on the stock market; the restriction of the exclusion of subscription rights to a capital increase against contribution in cash that does not exceed 10% of the share capital ensures that - in light of the liquid market in the Company's shares - such supplementary share buying on the stock exchange is indeed possible. For the Company, the capital increase free of subscription rights leads to the greatest possible creation of capital and optimal revenues. The Company is therefore enabled to respond quickly and flexibly to favourable stock market situations. While section 186 (2) sentence 2 AktG does permit the subscription price to be published not later than three days prior to expiration of the subscription period, in view of the volatility in the stock markets it must be borne in mind that even in this case there is still a significant market risk - namely that of price fluctuations extending over several days - which is likely to result in safety-margin deductions when determining the sales price and thus in terms that are not close to market. In addition, granting the subscription right would inhibit the Company from promptly responding to favourable market conditions due to the length of the subscription period. For this reason, the authorisation to exclude the subscription right is in the interest of the Company and its shareholders.

The proposed authorisation to exclude the subscription right under b) dd) should, in particular, enable the Company to acquire companies, company parts, shares in companies. claims or other assets that are appropriate or useful for the operation of the Company (such as patents, licences, rights of use and exploitation under copyright law as well as other intellectual property rights) in exchange for the granting of shares. This is a common form of acquisition. Practice has shown that, in many cases, the owners of attractive acquisition objects (also) demand shares in the acquiring company in return for the sale of their shareholding, a company or their assets. In order to also be able to acquire such acquisition objects, the Company must have the possibility of increasing its subscribed capital, if necessary very quickly, against a contribution in kind, while

excluding the subscription rights of the shareholders. In addition, it will enable the Company to acquire companies, company parts, shares in companies and other assets without having to overtax the Company's liquidity. This is also true for the contribution of claims or other assets. The Management Board will carefully examine in each individual case of a possible acquisition of companies, company parts, shares in companies or other assets if it should make use of the authorisation to increase the capital with subscription rights excluded and - in doing so - consider carefully whether the shares granted as consideration will wholly or partly stem from a capital increase or

• provided that the legal requirements for this are met - from the acquisition of own shares.

In order to protect the shareholders, the issue of new shares under the Authorised Capital 2022 excluding shareholders' subscription rights is only permitted up to a limit of 10% of the lower of the arithmetical portion of the share capital attributable to the shares at the time the authorisation becomes effective or of such value at the time the authorisation is exercised.

Other capital measures having the effect of a cash capital increase without subscription rights are to be counted against the amount up to which a cash capital increase is permitted to occur with exclusion of subscription rights. The authorisation therefore provides that the issuance of new shares or the disposition of shares that the Company has acquired during the term of the authorisation reduces the Maximum Amount just as much as a future issuance of warrant-linked and/or convertible bonds against cash contributions if shareholders' subscription rights were excluded in application of section 186 (3) sentence 4 AktG.

By way of qualification, the proposed resolution under agenda item 6 provides that a deduction made according to the preceding provision due to the exercise of authorisations (i) for the issuing of new shares pursuant to section 203 (1) sentence 1,

1. sentence 1, section 186 (3) sentence 4 AktG and/or (ii) for the selling of Company shares pursuant to section 71 (1) no. 8, section 186 (3) sentence 4 AktG and/or (iii) for the issuing of convertible bonds and/or warrant-linked bonds pursuant to section 221 (4) sentence 2, section 186 (3) sentence 4 AktG ceases to have effect for the future if and insofar as the relevant authorisation(s), the implementation of which caused the deduction, is/are reissued by the General Meeting in accordance with the legal regulations. In this case or in these cases, the General Meeting has again decided on the possibility of a simplified exclusion of subscription rights, so that the reason for the deduction no longer applies. If (i) new shares can be issued with simplified exclusion of the subscription right in accordance with another statutory authorised capital again, (ii) convertible bonds and/or option bonds can be issued with simplified exclusion of the subscription right again or (iii) own shares can be sold with simplified exclusion of the subscription right again, this possibility should also be in place for the Authorised Capital 2022. When the new power of a simplified exclusion of the subscription right takes effect, the barrier with regard to the Authorised Capital 2022 due to exercising the authorisation to issue new shares or to issue convertible bonds and/or option bonds or due to the sale of own shares ceases to exist. The majority requirements for such a resolution are identical to those for a resolution on generating authorised capital with the possibility of a simplified exclusion of the subscription right. Therefore, the resolution of the General Meeting on creating (i) a new authorisation to issue new shares pursuant to section 203

1. sentence 1, (2) sentence 1, section 186 (3) sentence 4 AktG (therefore, a new authorised capital), (ii) a new authorisation to issue conversion bonds and/or option bonds pursuant to section 221 (4) sentence 2, section 186 (3) sentence 4 AktG or (iii) a new authorisation to dispose of own shares in accordance with section 71 (1) no. 8, section 186 (3) sentence 4 AktG is a confirmation with respect to the resolution on the authorisation to issue new shares from authorised capital in accordance with section

203 (2) and section 186 (3) sentence 4, provided that the legal requirements are observed. If an authorisation to exclude subscription rights is exercised again in direct or analogous application of section 186 (3) sentence 4 AktG, the deduction is carried out again.

The Management Board will only exclude the subscription right if the acquisition against the issuing of shares in the Company is in the interests of the Company. The Supervisory Board will only give its required approval to the use of the authorised capital with the exclusion of the subscription right if the described and all legal requirements have been fulfilled.

The Management Board will report on the details of the use from time to time of the authorised capital to the General Meeting following any issue of shares of the Company from the authorised capital. In the light of the foregoing, the authorisation to exclude subscription rights is necessary in all four cases of b) aa) to b) dd) of section 5 (6) of the Articles of Association to the described extent and in the interests of the Company due to the preceding explanations.

In each case, the Management Board will inform the next Annual General Meeting of the extent to which use has been made of such authorisation granted under agenda item 6.