Varta : Joint report of Management Board of VARTA AG and Management of VARTA Micro Production GmbH on profit and loss transfer agreement acc. to §293a AktG

Joint Report

pursuant to Section 293a of the German Stock Corporation Act (AktG)

of the Executive Board of

VARTA AKTIENGESELLSCHAFT, Ellwangen/Jagst,

and

the management of

VARTA Micro Production GmbH, Nördlingen,

on the draft profit and loss transfer agreement

between

VARTA AKTIENGESELLSCHAFT

and

VARTA Micro Production GmbH

I. Preamble

VARTA AKTIENGESELLSCHAFT ("VARTA"), headquartered in Ellwangen/Jagst and registered in the commercial register of the Local Court of Ulm (Amtsgericht) under HRB 728059, and VARTA Micro Production GmbH ("VARTA Micro Production"), registered in the commercial register of the Local Court of Augsburg (Amtsgericht) under HRB 32477, intend to enter into a profit and loss transfer agreement (also "Agreement"). For the information of the shareholders/partners of the two companies, the Executive Board of VARTA and the management of VARTA Micro Production jointly issue the following report in accordance with Section 293a of the German Stock Corporation Act ("AktG").

II. Conclusion and date of effectiveness of the profit and loss transfer agreement

The Agreement shall be concluded in writing and requires the approval of the Annual General Meeting of VARTA and the Shareholders' Meeting of VARTA Micro Production as well as registration in the commercial register of VARTA Micro Production in order to be effective under civil law. The following board approvals have been obtained:

• Resolution of the VARTA Executive Board dated March 30, 2021,
• Resolution of the VARTA Supervisory Board dated March 25, 2021.

The draft profit and loss transfer agreement will be submitted to the Ordinary General Meeting of VARTA on June 17, 2021 for approval as an inter-company agreement pursuant to Section 293 AktG. The Executive Board and the Supervisory Board of VARTA shall propose to the Annual General Meeting of VARTA that it approve the draft profit and loss transfer agreement with VARTA Micro Production.

Pursuant to Section 293 (1) sentence 2 AktG, the approval resolution of the Annual General Meeting of VARTA requires a majority of at least three-quarters of the voting share capital represented at the time of passing the resolution. The Shareholders' Meeting of VARTA Micro Production is expected to be asked to approve the Agreement after the Ordinary General Meeting. The Agreement is then to be concluded after the approvals have been granted and filed for entry in the commercial register of the headquarters of VARTA Micro Production.

1. Legal and economic reasons for concluding the profit and loss transfer agreement 1. Corporate and economic situations
   1.1. VARTA AKTIENGESELLSCHAFT

VARTA AKTIENGESELLSCHAFT is a listed stock corporation under German law headquartered in Ellwangen/Jagst. The business address is VARTA-Platz 1, 73479 Ellwangen/Jagst. VARTA is registered in the commercial register of the Local Court of Ulm under HRB 728059. VARTA is the holding company of the VARTA Group. The fiscal year is the calendar year.

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VARTA's share capital, which is registered in the commercial register, amounts to EUR 40,421,686.00 and is divided into 40,421,686 no-par value shares (bearer shares), each representing EUR 1.00 of the share capital.

As at December 31, 2020, the VARTA Group had 4,300 employees and generated a consolidated profit of approximately EUR 95.5 million in the 2020 fiscal year.

The purpose of the Company is the acquisition, holding, management and disposal of participating interests, in particular in the area of the development, manufacture and distribution of energy systems and energy storage systems, the provision of services of all kinds, in particular services for companies and/or on behalf of companies in which the Company has a shareholding, as well as the development, manufacture and distribution of selected energy systems and energy storage systems. The purpose of the Company is also the management of its own assets, in particular the exploitation and management of assets, contracts, liabilities and participating interests relating to the businesses formerly operated by the Company and its subsidiaries.

The Company is authorized to take all direct or indirect measures suitable for serving the purpose of the Company. The Company may establish, acquire, dispose of or take an equity stake in branches and other enterprises in Germany and abroad. In addition, the Company may also limit its activities to a part of the field of operation referred to in the above paragraph.

1.2. VARTA Micro Production GmbH

VARTA Micro Production is a limited liability company under German law headquartered in Nördlingen. The business address is Nürnberger Straße 64-65, 86720 Nördlingen. VARTA Micro Production is registered in the commercial register of the Local Court of Augsburg under HRB 32477. The share capital of VARTA Micro Production amounts to EUR 100,000.00 and is divided into 100,000 shares each with a nominal value of EUR 1.00 with serial numbers 1 to 100,000. All shares in the Company are held by VARTA. The fiscal year is the calendar year.

The annual financial statements of VARTA Micro Production are included in the consolidated financial statements of VARTA. As at December 31, 2020, VARTA Micro Production had 845 employees and generated an annual net profit of approximately EUR 4.06 million in the 2020 fiscal year.

The purpose of the company is the manufacture, distribution and development of chemical, electro- chemical, electro-technical, metallurgical and other industrial products of all kinds, in particular batteries, the manufacture and distribution of products in the field of mechanical and apparatus engineering, the manufacture, installation, management and exploitation of plants and facilities and trade in third-party products in the above-mentioned fields.

VARTA Micro Production is authorized to take all measures and conduct all business suitable for promoting the Company's purpose. This also includes the establishment of branches as well as the acquisition and establishment of other companies and the participation in such enterprises in Germany and abroad. The Company is also authorized to divest parts of its business to associated companies, including joint ventures with third parties.

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2. Reasons for concluding the profit and loss transfer agreement

By concluding the profit and loss transfer agreement, it is possible for VARTA to achieve tax optimization. The conclusion of an effective and implemented profit and loss transfer agreement is a prerequisite for the establishment of a fiscal unit for corporation tax and trade tax purposes. These consolidated income tax groups ensure that the tax burden of the companies belonging to the tax group is pooled. The fact that positive and negative results of VARTA and VARTA Micro Production can be simultaneously offset enables tax-deductible loss compensation within the Group.

IV. Explanation of the profit and loss transfer agreement

The main provisions of the profit and loss transfer agreement are explained below:

1. Profit transfer

According to Section 1 of the profit and loss transfer agreement, VARTA Micro Production is obliged to transfer its entire profit to VARTA during the term of the Agreement in accordance with all the provisions of Section 301 AktG, as amended from time to time. Section 301 AktG limits the amount of profit transfer. According to Section 301 sentence 1 AktG, the profit to be transferred is the annual net profit accruing prior to such profit transfer, after deducting any loss carried forward from the previous year and the amount blocked from distribution pursuant to Section 268 (8) of the German Commercial Code (HGB). According to Section 1.2 of the profit and loss transfer agreement, the allocation of amounts from the annual net profit to other revenue reserves pursuant to Section 272 (3) HGB is possible, provided that this is permissible under commercial law and justified on the basis of a reasonable commercial assessment, and VARTA agrees. According to Section 1.3 of the profit and loss transfer agreement, other revenue reserves formed during the term of the Agreement in accordance with Section 272 (3) HGB shall - as far as legally permissible - be reversed at the request of VARTA and appropriated as compensation for an annual net loss or losses carried forward or transferred as profit. Other reserves and amounts from the reversal of profits carried forward and revenue reserves that were formed or arose from profits generated prior to the fiscal year in which the profit and loss transfer agreement becomes effective as well as amounts from the reversal of capital reserves according to Section 272 (2) no. 1 to 4 HGB (regardless of whether they were formed before or after the profit and loss transfer agreement entered into force) may not be transferred to VARTA as profit.

The claim to the transfer of profit arises at the end of the fiscal year of VARTA Micro Production and is due and payable at this date.

2. Assumption of losses

Pursuant to Section 2 of the Agreement on the assumption of losses, VARTA is obliged to assume losses in accordance with the provisions of Section 302 AktG, as amended from time to time. VARTA is therefore obliged to compensate any annual net loss of VARTA Micro Production accruing during the term of the Agreement in accordance with the provisions of Section 302 AktG, as amended from time to time. This obligation to compensate losses is a mandatory consequence of a profit and loss transfer agreement. Reference to the provisions of Section 302 (1) AktG ensures that only such loss must be compensated that

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is not compensated by withdrawals from other revenue reserves formed during the term of the Agreement. The reference to Section 302 (2) to (4) AktG relates in particular to the statutory waiver and settlement option with regard to the claim and to the statutory limitation provision.

3. Preparation of the annual financial statements

Section 3 of the profit and loss transfer agreement includes provisions on the preparation of the annual financial statements of VARTA Micro Production. Pursuant to Section 3.1, the annual financial statements of VARTA Micro Production shall be submitted to VARTA for information, review and approval prior to their adoption. Section 3.2 stipulates that the annual financial statements of VARTA Micro Production shall be prepared and adopted before the annual financial statements of VARTA. Pursuant to Section 3.3, the profit or loss of VARTA Micro Production to be assumed shall be taken into account in the annual financial statements of VARTA for the same fiscal year even if the fiscal year of VARTA Micro Production ends at the same time as the fiscal year of VARTA.

4. Date of effectiveness and duration

Section 4 of the profit and loss transfer agreement contains provisions on the date of effectiveness and duration of the profit and loss transfer agreement.

Firstly, Section 4.1 of the Agreement quotes the statutory provision of Section 293 AktG for VARTA and Section 293 AktG analogously for VARTA Micro Production as well as Section 294 AktG analogously. The Agreement is namely subject to approval by the Shareholders' Meeting of VARTA Micro Production and approval by the Annual General Meeting of VARTA (see the Preamble) as well as entry in the commercial register of the Subsidiary Company.

In addition, Section 4.1 sentence 2 stipulates the retroactive validity of the Agreement from the beginning of the fiscal year of VARTA Micro Production in which it is entered in the commercial register of the headquarters of VARTA Micro Production. The profit and loss transfer agreement shall therefore apply retroactively to the beginning of the current fiscal year of VARTA Micro Production if the entry in the commercial register of the headquarters of VARTA Micro Production takes place in the current fiscal year in order to already be able to use the advantages of the consolidated tax filing arrangement for income tax for the 2021 fiscal year.

Section 4.2 of the Agreement contains a provision on the duration of the Agreement. The profit and loss transfer agreement shall be concluded for a fixed period of five years. This minimum term shall commence at the beginning of the fiscal year for which the legal consequences of the tax pooling arrangements intended by the Agreement (see III.2 "Reasons for concluding the profit and loss transfer agreement") arise for the first time. If these five years end during a current fiscal year of VARTA Micro Production, the minimum term shall be extended until the end of that fiscal year. If the Agreement is not terminated by one of the parties three months before its expiry, it shall be extended for another year. The term of the Agreement is chosen in such a way that the tax law requirements for a corporate tax group are met with regard to the minimum tax term pursuant to Section 14 (1) sentence 1 no. 3 and Section 17 of the German Corporate Income Tax Act (KStG).

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