Consolidated management report 2023

SUMMARIZED MANAGEMENT REPORT AS OF 31 DECEMBER 2023

EQS GROUP AG

Munich

• General information on the

Summarized Management Report

This Summarized Group Management Report of EQS Group AG (hereinafter: 'we', 'EQS', 'the company', 'the Group', 'you', 'EQS Group') and Management Report of EQS Group AG has been drawn up in accordance with Sections 289 and 315 of the German Commercial Code (HGB).

Since financial year 2023, the Management Report of the parent company EQS Group AG is presented as a combined report with the Group Management Report. The congruent contents are summarized and the Economic and Forecast Reports for the Group and EQS Group AG are presented separately.

Unless otherwise stated, all information in this report relates to the 31 December 2023 or to the financial year ending on this date.

Percentages are commercially rounded without decimal places. Millions (million) are shown with two decimal places and thousands ( thousand €) without decimal places.

This Management Report contains forward-looking statements and information that are based on the opinions and assumptions of Management. These for its parts are based on the information currently available to Manage- ment. Such forward-looking statements are the result of our current expectations, assumptions and forecasts with regard to future circumstances and events. Consequently, these forward-looking statements and information are subject to various risks and uncertainties, many of which are beyond our control. Should one or more of these risks and uncertainties materialize, or should Management's assumptions prove incorrect, our actual results could differ materially from those described in or implied by the forward-looking statements and infor- mation.

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• Foundations of the Group

2.1 Goals, vision, business model

2.1.1 The EQS Group at a glance

The EQS Group AG was founded in Munich in 2000. It is a leading international cloud software provider in the areas of Corporate Compliance, Investor Relations and ESG Reporting. In addition to its headquarters in Munich, the company has a total of 13 locations in various financial centres around the world as well as a technology centre in Kochi (India). With over 500 employees, we serve customers in many countries. Geographically, the markets are divided into domestic (Germany) and foreign. Where appropriate, we establish new subsidiaries or acquire companies in order to achieve our goal and our vision. No new subsidiaries were established or companies acquired in the financial year 2023.

2.1.2 Business model

Thousands of companies around the world use products of the EQS Group. EQS Group products are bundled in the cloud-based software EQS COCKPIT. This allows compliance processes in the areas of whistleblower protection and case management, policy management and authorization processes to be managed just as professionally as business partner management, insider list management and reporting obligations.

We generate extensive SaaS revenues1 from the provision of cloud software. In addition, we generate recurring revenue for report conversion and submission of financial information (filing), for the realization of video and audio webcasts as well as ongoing subscription revenue from the hosting and maintenance of these applications. In the area of the distribution of corporate communications, we generate revenue per message depending on the selected distribution network. Non-recurring revenues result from the setup of websites, apps, charts, tools or digital reports.

2.1.3 Goals, strategy and vision

In recent years, we have continuously expanded our range of services and consolidated our position as the market leader in digital investor relations in the German-speaking region (DACH). Almost all DAX40 companies currently use the EQS IR COCKPIT. We are also one of the leading providers in this area in Switzerland and Austria.

There are three key trends in the economy that have a strong influence on EQS's business: Digitalisation, regulation and sustainability. In particular, the regulatory requirements for groups and SME companies in the areas of compliance and governance have continuously expanded. This gives EQS great potential to introduce innovative products and grow as a result. We are convinced that transparency is a company's most important asset: Trust.

Our goal is to become the leading European cloud provider for global investor relations & corporate compliance solutions. We see great potential in particular in the expansion of European regulations and their local implementation in the EU member states.

1 Software as a Service

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We derive our product portfolio from our strategy. In Investor Relations, we pursue a profitability strategy based on our market coverage. The aim here is to achieve sustainable, constant earnings and high cash flows with the scalable business. In the area of compliance, we want to utilize the increasing legal requirements. The Compliance COCKPIT offers a standardised platform for this. The aim is to fulfil the requirements as comprehensively as possible. The resulting recurring revenues should expand the stable basis of our business model.

2.1.4 Values and mission

Since its foundation, EQS has continuously developed into a leading European software company. This was only possible thanks to our culture, values and principles.

Our 'Creating trusted companies' mission drives us in our daily work. We believe that transparency creates the most important capital, trust. As pioneers in the digitalization of work processes, our passion is to improve Investor Relations and Corporate Compliance. To this end, we provide digital solutions to minimise risks by complying with local regulations, involving stakeholders and thus saving time by managing work processes digitally.

To this end, we live by the following company values and working principles, which are very important to us, in our day-to-day work:

• Passion: We love what we do and want to be successful with it.
• Team spirit: We have mutual empathy and respect.
• Entrepreneurial: We take responsibility for our activities.
• Open corporate culture: We are transparent and trust each other.
• Flat hierarchies: We are disciplined in our actions and thoughts.

Values such as openness, transparency and trusting cooperation are the guidelines that employees and managers always follow. They are an essential part of our daily cooperation, both internally as well as with customers, business partners, suppliers and investors.

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2.2 Product strategy, customers and investments

Product strategy

In the area of compliance, we offer a holistic platform (Compliance COCKPIT), that enables companies to implement effective compliance programs and manage them digitally and efficiently. Within the platform, different modules are available that represent the essential core elements of an effective compliance program: The 'Policies ' module for managing and communicating regulations and guidelines, 'Approvals' for approval and disclosure processes, 'Integrity Line' as a digital whistleblowing system, and 'Third Parties' as a module for recording and evaluating sustainability-related risks in the supply chain. The functional scope of the Compliance COCKPIT is constantly being expanded, both within existing modules and by adding new modules. The launch of the new 'Risks' module is planned for 2024, which will enable companies to record and assess their compliance risks and assign measures to them. The existing modules are to be further enhanced in terms of product maturity and the efficiency of compliance processes is to be increased through the use of artificial intelligence across the entire

COCKPIT.

In the area of Investor Relations, growth is to be enabled through scaling via the extensive offering in our IR COCKPIT. The IR COCKPIT will also become a 360-degree corporate communications platform. We enable IR managers to seamlessly create and edit dynamic factsheets in real time using user-generated IR content.

Our products are developed in line with market requirements (laws, regulations, trends or ideas) and new technological possibilities. Providing innovative solutions that are tailored to customer needs is the core task of our product managers and software developers. To achieve this, they are guided by the state of the art and the latest findings on usability (user experience UX). As part of the 'continuous discovery' process, our product managers are in close contact with customers - either directly or via departments such as customer support and sales - and find out about their needs and challenges. The combination of customer proximity and an understanding of the market is crucial for reflecting current requirements or legal innovations in the products. Through rapid and practical implementation, we in turn help our customers to efficiently fulfil their obligations, for example as a listed company, or other legal requirements.

In dialogue with our customers, we strive for fast feedback cycles and proactive product management.

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Customers

Thousands of companies around the world use EQS Group products, regardless of industry, sector or company size. Our customers also include institutions (local authorities and state organizations).

In the Investor Relations segment, our clients are public interest companies that we help to implement statutory and voluntary transparency requirements. Our customer base in the Compliance segment is significantly broader, as regulations in this area, particularly in Europe, are gradually affecting more and more companies and institu- tions.

Due to standardized European regulations, we focus on the countries of the European Union. However, we are also gaining customers in other global markets, especially where legislation is already more advanced and where there are links to European markets.

Research and development

The ongoing refinement of existing products and the development of new cloud solutions ensures that the applications meet the current and future requirements of our customers. They form the basis for our future growth. To this end, we maintain development centres in Germany and India.

At the centre of product development is the EQS COCKPIT, our central, cloud-based platform that is being developed for all business units. To do this, we use software development methods that comply with current technology standards.

In the Segment Compliance segment, development activities focused on the Go Live of the Compliance COCKPIT . To this end, our whistleblowing solution Integrity Line was fully integrated into the Compliance COCKPIT and key functions were added to the existing Approval Manager and Policy Manager applications. Finally, the development of the Third Parties module, an application that is particularly relevant for monitoring supply chain risks, was continued. This will significantly expand the product range in the area of compliance and adopt the platform approach from the Investor Relations division.

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In the Investor Relations segment, the further development of the existing CRM, Mailing and Investors applications in the IR COCKPIT was driven forward.

In the financial year 2023 internally generated intangible assets totalling €1.89 million (previous year: €2.16 mil- lion) were capitalized in the Group, of which €0.78 million in the Compliance segment and €1.12 million in the Investor Relations segment. This is 28% of research and development costs totalling €6.85 million. This also includes programming services from the Group's internal development service provider EQS Webtechnologies Pvt. Ltd. in India totalling €1.00 million. The amortization of internally generated intangible assets amounted to €1.47 million (previous year: €916 thousand) in the reporting period.

In future, we want to focus even more on product discovery. The most important customer needs and requirements should be identified at an early stage in order to address them as quickly as possible. These may be new laws or guidelines that customers have to fulfil, new challenges in collaboration, communication or processes, or other requirements in our specialist areas that can be solved by software. In addition, we continuously invest in the user-friendliness of our applications. In future, this is to be supplemented by offers such as how-to articles, video tutorials, product updates and guided tours.

2.3 Employees

Our employees are a key success factor for the EQS Group. We have established a structured HR process that ensures that suitable employees are selected, optimally positioned and continuously developed through training.

An important topic in the context of employee satisfaction is the compatibility of private life and work. We want to enable our employees to have a good balance and have been continuously expanding the measures for years.

In 2023, the number of permanent employees in the Group declined by -3% to 562 (previous year: 579) as a result

of the reluctance to recruit new employees. In Germany, the number reduced slightly to 360 (previous year: 366).

The technology site in Kochi had an average of 88 employees in 2023 (previous year: 94). The number of full-time

equivalents (FTE) as at the reporting date was 522 (previous year: 538).

2.4 Macroeconomic and Regulatory Environment

In 2023, the world economy is expected to have grown by +3.0% (previous year: +2.9%) in a difficult environment (real GDP). In addition to geopolitical developments, the effects of monetary policy with rising interest rates and the effects of overall inflation also have an impact here. The existing problems in the supply chains, high inflation and the associated key interest rate hikes as well as the ongoing war in Ukraine and the Middle East are dampening expectations for 2024 and leading to a reluctance to invest in many sectors. The global economy is expected to grow by 2.4% in 2024.

Persistently high inflation rates, restrictive monetary policy, challenging competitive conditions and the relocation of investments to non-European countries are also impacting the export-dependent region of Europe. The economic situation in Germany in 2023 was characterised accordingly. The energy crisis, geo-economic tensions and shortage of skilled labor are also impacting the German economy. All this at a time when many changes needed to ensure the transition to climate neutrality and sustainability. Real GDP in Germany is expected to fall slightly by 0.3% in 2023 (previous year: +1.9%). In line with the global economy, the outlook for the German economy in 2024 is significantly weaker. GDP growth is expected to be 1.3%.

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In the first half of 2023, the German benchmark index DAX recovered from a low of 11,000 points in 2022 to over 16,000 points and was trading at historic highs at the end of 2023. This reflects the positive outlook for investors despite high inflation, rising interest rates and the ongoing war in Ukraine.

The European regulation in the Compliance segment is being implemented step by step. The European Whistle- blower Directive (EU Directive 2019/1937) came into force in October 2019. The purpose of the directive is to protect whistleblowers, who are to be valued in a standardized and better way. The directive prescribes uniform standards for the reporting of grievances and the protection of reporters. The directive was expected to be implemented by 2021. However, this was delayed in many EU member states. The directive has only been transposed into national law in all European countries in the last two years. After several delays, the Whistleblower Protection Act came into force in Germany in July 2023. The directive was implemented in key other European countries such as Italy, France and Spain in 2022 and 2023.

2.5 Management system

We use financial and non-financial performance indicators to measure our corporate success at Group and company level.

The most important financial performance indicators are revenues (growth) and EBITDA2.

The most important non-financialperformance indicators are number of new customers and new ARR as well as customer satisfaction and employee satisfaction. We measure customer satisfaction on the basis of the Net Promoter Score, the difference between the customer recommendation rate and the rejection rate, using online questionnaires. The survey is aimed in particular at Group customers worldwide and asks about satisfaction with services, new products and customer service. Employee satisfaction is measured using a global survey in which employees vote on their satisfaction with their employer on a scale of 1 to 5 in an online questionnaire. The survey focuses on measuring employee satisfaction with pay, working hours, internal collaboration, internal communication and development opportunities.

These performance indicators favor the creation of value, including an adequate return on capital. Ultimately, however, committed employees are crucial for the satisfaction and loyalty of our customers and the success of the company.

• EBITDA as the result from total operating performance less operating expenses

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• Group economic report

3.1 Review and analysis

Outlook and results for 2023

The outlook for the 2023 financial year from the Management Report for the 2022 financial year is compared below with the actual results for the financial year 2023:

Strategic goal	Key figure	Result 2023	Outlook 2023
		Revenue*	€69.40 million	€71 to 74 million
	Revenue Compliance*	+18%	+20 to +25%
Growth		Revenue Investor Rela-
tions*	+3%	+0 to +10%
	New customers	3,415	2,000 to 3,000
		New ARR	€12.01 million	€9 to 12 million
Profitability	EBITDA*	€3.28 million	€9 to 12 million
Customer satisfaction	Net Promoter Score	41	Stable
Employee satisfaction			3.97	Stable

*from continued operations.

EQS Group's earnings position is significantly influenced by the trend towards increasing regulations in the area of Compliance for companies and organisations. In order to optimally position EQS Group for this and to achieve the leading market position, we began early on to consolidate the European market for digital whistleblowing systems. We acquired Integrity Line AG, Zurich, in January 2018 and Got Ethics A/S, Copenhagen, in January 2021. In July 2021, we then acquired Business Keeper GmbH, Berlin, a leading provider of electronic whistleblowing systems on the German market.

The transposition (adoption and entry into force) of the Whistleblower Directive into national legislation in our key markets of Spain, Italy, Austria and most important in Germany had positive effects, particularly starting in the second half of 2023.

The challenging economic conditions, such as high inflation and the associated key interest rate increases as well as the war in Ukraine and the conflict in the Middle East, led to a deterioration in economic expectations and a reluctance to invest among companies, resulting in longer sales cycles. The capital market environment deteriorated further compared to 2022, which was felt in the Investor Relations segment.

The discontinuation of business activities in Russia and Serbia and the liquidation of EQS Financial Markets & Media GmbH, Munich, results in the presentation as a discontinued operation (see statement of comprehensive income).

3.2 Group financial performance

The Group's revenue3 increased 2023 by +15% to €69.40 million (previous year: €60.30 million), or including discontinued operations by +13% to €69.57 million and were therefore below the expectations at the beginning of the year (+15% to +20%). Most of the revenue growth is derived from the Compliance segment, as legislation on whistleblower protection came into force in several important markets in the EU in mid-2023. The deviation from plan is the result of delayed revenue effects due to a delayed implementation of the directive.

In 2023, 3,415 new SaaS customers were acquired through marketing and sales activities, more than ever before. The original target of 2,000 to 3,000 new customers was exceeded. The sales activities by our partners in the area of small and medium-sized enterprises (SMEs) were just as successful as planned. The total number of customers increased significantly to 8,258 (previous year: 5,054). In 2023, 3,349 new customers were acquired for the whistleblowing systems area. At 4.2%, the annualised churn rate4 was below the previous year's level (previ- ous year: 5.4%).

The total operating performance5 increased by +11% to €71.81 million (previous year: €64.43 million). At €1.89 million, the own cost capitalized included in this figure was slightly below the previous year's level (previous year: €2.16 million). The development of further applications in the COCKPIT cloud platform is associated with an expansion of subscription revenue and an increase in the share of recurring revenue. At €315 thousand (previous year: €835 thousand), other income for the Group as a whole was significantly lower than in the previous year. In the previous year, earn-out obligations from an acquisition were derecognized through profit or loss at the beginning of 2021.

For 'New ARR', we were able to achieve the upper end of the target formulated at the beginning of the year (€9 million to €12 million) at €12.01 million. Based on the share of recurring revenue in 2023 of €61.15 million, the growth of the ARR was +20%. The share of recurring revenue in total revenue remained constant at 88% (previous year: 88%).

The operating expenses6 from continued operations increased in line with revenues growth by +15% to €68.91 million (previous year: €59.86 million).

The largest expense position, personnel expenses, increased by +8% to €41.88 million (previous year: €38.84 million). This also includes costs of €562 thousand for the settlement of the employee participation programs as a result of the public takeover bid by financial investor Thoma Bravo. The Group employed an annual average of 566 people (previous year: 576).

The cost of services decreased by -6% to €8.52 million (previous year: €9.08 million). This was due to declining revenues in the Investor Relations Cloud Services, LEI and Filing area, for which extensive external services were procured.

Other expenses increased significantly by +52% to €17.89 million (previous year: €11.79 million). The main reason for this is the increase in consultancy costs of €4.71 million as part of the public takeover bid by the financial investor Thoma Bravo. By contrast, IT and marketing expenses increased as planned as a result of the expansion of business activities following the implementation of the Whistleblower Directive in key European markets.

The valuation allowance on trade receivables increased to €622 thousand (previous year: €150 thousand). This is the result of increased receivables from a high level of new business in the 2023 financial year.

• From continued operations

• The churn rate is measured as the percentage of inactive or lost customers in the last 12 months. revenue plus own cost capitalized and other income

• Total of purchased services, personnel expenses, other expenses and expenses from valuation allowances on trade receivables

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