Vossloh : Financial statements of Vossloh AG 2020

Combined management report

• 4 Business and market environment

• 7 Economic report

• 7 Macroeconomic and industry-specific conditions

• 8 Results of operations

• 11 Financial position and investing activities

• 14 Asset and capital structure

• 15 General statement on the economic situation

• 16 Business performance of Core Components

• 18 Business performance of Customized Modules

• 20 Business performance of Lifecycle Solutions

• 21 Vossloh AG - Analysis of the separate financial statements

• 23 Remuneration report

• 29 Statuary takeover-related disclosures pursuant to Section 289a (1) and Section 315a (1) HGB

• 32 Workforce

• 33 Research and development

• 37 Risk and opportunity management

• 46 Reference to the Declaration on Corporate Governance pursuant to Section 289f HGB and Section 315d HGB

• 47 Outlook

• 50 Nonfinancial Group statement

3

Business and market environment

Segmentation and competitive position

Vossloh is active in rail infrastructure markets worldwide. Its business activities are organized into three divisions - Core Components, Customized Modules and Lifecycle Solutions. The Core Components division is made up of two business units, Fastening Systems and Tie Technologies. The two other divisions encompass one business unit each: Vossloh Switch Systems belongs to Customized Modules, and Vossloh Rail Services belongs to Lifecycle Solutions. You can find detailed descriptions of the individual divisions on page 16 et seq. Vossloh Locomotives was the last business unit in the Transportation division and was part of the Group until the end of May 2020. The legal representatives of Vossloh AG signed a contract on August 26, 2019, for the sale of this business unit to CRRC Zhuzhou Locomotive Co., Ltd., Zhuzhou, China (CRRC ZELC), a subsidiary of CRRC Corporation Ltd. The transaction was completed on May 31, 2020 after it was approved by the relevant authorities.

Vossloh holds the following competitive positions in the rail infrastructure sector:

• - Vossloh is a leading global supplier and technological leader in rail fastening systems.

• - Vossloh is a global market and technology leader in the switches and crossings segment.

• - In Germany, Vossloh is a leading supplier of innovative technologies and services for the entire lifecycle of rails and switches.

• - In North America and Australia, Vossloh is a leading manufacturer of concrete ties.

  Strategic decisions

In mid-2020, Vossloh completed the transformation of the Group and transitioned into a company focused on its core business of rail infrastructure. Vossloh's unique selling point is its comprehensive range of track-related products and services. Vossloh manufactures all significant track components. The associated knowledge of the technical and physical properties of the rail track forms the basis for understanding the systemic interaction of all components.

Improving track availability will play a significant role in transporting more people and goods by environmentally friendly rail. Vossloh contributes to this in two different areas: The company is continuing to enhance its rail infrastructure products to make them more durable, easier to maintain and more reliable. Vossloh is also playing its part in making the process of maintaining rail networks more efficient. Digitalization will be at the heart of this, as it enables the processing and evaluation of ever larger amounts of data. Vossloh brings its comprehensive and systemic understanding of rail infrastructure to bear to derive relevant information and maintenance recommendations from the collected data. This is the foundation for meeting the specific needs of publicly and privately owned regional, freight and long-distance transport operators and offering them tailored condition-based maintenance solutions.

Vossloh's existing business with products and conventional services forms the basis for the development and expansion of the digital service business. The conventional hardware business and the constantly growing service business form an inseparable unit. The new possibilities afforded by digitalization and, most importantly, the efficient processing and analysis of large amounts of data serve as the link that joins the business models.

4