SMG Hospitality SE

Annual / Quarterly Financial Statement • May 3, 2023

SMG EUROPEAN RECOVERY SPAC SE SMG European Recovery SPAC SE Société européenne ANNUAL ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2022 AND REPORT OF THE REVISEUR D’ENTREPRISES AGREE Registered office: 9, rue de Bitbourg L - 1273 Luxembourg R.C.S. Luxembourg: B255839 Table of contents Page(s) Management report 1-4 Corporate governance statement 5 Auditor’s report 6 - 9 Balance sheet 10-14 Profit and loss account 15-16 Notes to the annual accounts for the year ended 31 December 2022 17-32 SMG European Recovery SPAC SE Management Report for the year ended 31 December 2022 The Management Board (the “Board”) of SMG European Recovery SPAC SE (hereafter the “Company”) submit its management report with the annual accounts of the Company for the year ended 31 December 2022. 1. Overview The Company is a special purpose acquisition company (otherwise known as a blank cheque company) incorporated in Luxembourg on 11 June 2021 and registered with the Luxembourg Trade and Companies Register on 17 June 2021. The Company’s corporate purpose is the acquisition of one operating business with a principal business operations in a member state of the European Economic Area or the United Kingdom or Switzerland that is based in the real estate-related hospitality sector with a focus on the sub-sector lodging and leisure through a merger, capital stock exchange, share purchase, asset acquisition, reorganization or similar transaction (the “Business Combination”). The Company intends to complete the Business Combination using cash from the proceeds of the private placement of the class A shares and class A warrants (see below). 2. Review and development of the Company’s business and financial position The Company completed its Private Placement (the “Private Placement”) on 30 May 2022 through the issuance of 11.500.000 redeemable class A shares with a par value of EUR 0,0417 (the “Public Shares”) and 5.750.000 class A warrants (the “Public Warrants”). The Public Shares are admitted to trading on the Frankfurt Stock Exchange under the symbol “RCVR” on 1 June 2022. Likewise, the Public Warrants are also admitted to trading on the Frankfurt Stock Exchange under the symbol “RCVRW”. One Public Share and one-half (1/2) of a Public Warrant (each, a “Unit”), were sold at a price of EUR 10 per unit representing a total placement volume of EUR 115 million. The sponsor and the co-sponsor of the Company, as well as certain members of the supervisory board (the “Supervisory Board Investors”) of the Company have subscribed to 2.875.000 class B shares amounting to EUR 120.000,00. On 25 May 2022, the sponsor, co-sponsors and Supervisory Board Investors also subscribed to an aggregate 6.199.999 class B warrants (the “Sponsor Warrants”) at a total price of EUR 9.300.000,00. The class B shares and Sponsor Warrants are not publicly traded securities. The sponsor, co-sponsors and Supervisory Board Investors have agreed to a lock-up period running at least until the Business Combination, subject to customary exceptions described in the Company’s prospectus (the “Prospectus”). Financial performance highlights As a blank cheque company, the Company currently does not have an active business. The Company did not generate revenue during the year ended 31 December 2022 and is not expected to generate any operating revenues until after the completion of the Business Combination. The Company’s activities for the year ended 31 December 2022 were those necessary to prepare for the Private Placement and the subsequent listing on the Frankfurt Stock Exchange, and, after the listing, to identify a target company for a Business Combination and the potential acquisition, described below. The Company incurred expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance). The net loss of the Company for the year ended 31 December 2022 was EUR 6.617.580,55 (2021: EUR 1.897.022,26 net loss), due to the operating expenses, and finance costs. 1 Financial position highlights The Company’s main asset accounts refer to the investment in shares in affiliated undertakings for its holdings in three German subsidiaries. The balance sheet also has a significant capital and reserves in relation to the issuance of its redeemable class A shares and class A and B warrants as described above. 3. Principal risk and uncertainties The Company has analysed the risks and uncertainties to which its business is subject, and the Management Board of the Company has considered their potential impact, their likelihood, controls that the Company has in place and steps the Company can take to mitigate such risks. The Company’s principal risks and uncertainties can be summarised as follows: Risk Likelihood Mitigating factors Benefits not achieved & the Medium to High The Company believes that the long- liquidation of the Company standing presence, reputation, visibility, There is no assurance that the operational experience and extensive Company will identify suitable network of relationships of the Managing Business Combination opportunities Directors and Supervisory Directors, by the Business Combination provides the Company with an Deadline, which would ultimately advantage in accessing Business lead to the liquidation of the Combination opportunities and allow Company. therefore unique access to off-market transactions (i.e. transactions that involve a target business that is not widely known in the market to be available for acquisition) prior to the Business Combination Deadline. The Company is in dialogue with numerous candidates and anticipates concluding a letter of intent in advance of the Business Combination Deadline. Going concern risk in case of no Low to Medium The Company is undertaking business combination continuous control and monitoring of The Company has incurred fees and expenses incurred in view of its expenses associated with preparing available funding and has engaged and completing the Business reputable service providers to assist Combination. The Company may with this monitoring. As at the date of need to arrange third-party financing this report the Board believes that the and there can be no assurance that Company has sufficient funds to meet it will be able to obtain such the fees and expenditures required for financing, which could compel the operating its business prior to the Company to restructure or abandon closing of the Business Combination. the Business Combination. The Company has access to third-party financing via a shareholder loan facility. Accruing third-party financing Medium The Managing Directors and The Company may need to arrange Supervisory Directors believe that the third-party financing and there can long-standing experience, reputation be no assurance that it will be able and extensive network as entrepreneurs to obtain such financing, which could and professional investors has proven compel the Company to restructure the ability to acquire significant funding or abandon a particular proposed volumes. Additionally, management is in Business Combination. close consultation with investment banks on the feasibility of an equity raise prior to proposing the Business Combination opportunity to its shareholders. 2 Risk Likelihood Mitigating factors Legal and regulatory Low The Company is undertaking The Company may be adversely continuous control and monitoring affected by changes to the measure of the ongoing legal and regulations, law, account and regulatory landscape. Moreover, the general tax environment in management and the supervisory board Luxembourg and Germany as well is supported by leading service as the jurisdiction which the target providers on the respective legal, business is subject to. accounting and tax domains. Market conditions Low The Company believes that the real Adverse events and market estate-related hospitality sector in conditions, such as the COVID-19 the European Economic Area (the “EEA pandemic and the conflict between Member States”), the United Kingdom or Russia and Ukraine, might prevent Switzerland has not been materially the completion of the Business negatively disrupted by the COVID-19 Combination. pandemic. But will incorporate external market condition (including the conflict between Russia and Ukraine) in the selection process of a potential target business. The other risks surrounding the Company are further disclosed in the Prospectus. 4. Risk management, internal control and corporate governance The Company’s approach to risk management, internal control and corporate governance is consistent with that applied to affiliates in the SMG European Recovery SPAC SE Group and are detailed in the Group Management Report sections 7 and 8. Non-financial information required by regulation is provided in section 3. 5. Financial risk management objectives and policies As at 31 December 2022, the Company had EUR 2.881,75 in cash at bank and in hand. The Company had a net equity of EUR 116.605.396,69 as at 31 December 2022. The Management Board believes that the funds available to the Company are sufficient to pay costs and expenses incurred by the Company prior to the completion of the Business Combination. The Company has conducted no operations and currently generated no revenue. Beside the above, the Company identified the related financial risks and has considered their potential impact, their likelihood, and controls in place to mitigate such risks. The applicable risks to the Company are liquidity risks and credit risks. 6. Annual Accounts of SMG European Recovery SPAC SE The Annual Accounts of SMG European Recovery SPAC SE are shown on page 11 to page 32. These were prepared in accordance with Luxembourg’s legal and regulatory requirements and using the going concern basis of accounting described above. The loss for the year ended 31 December 2022 was EUR 6.617.580,55 and is mainly due to the operating expenses. It is proposed that the loss for the year ended 31 December 2022 be allocated to profit and loss brought forward at 1 January 2023. Distributable amounts At 31 December 2022, the Company had no distributable amounts, as defined by Luxembourg law. 3 7. Related party transactions Please see Notes 4, 7, 12 and 13 to the annual accounts. 8. Research and development The Company did not have any activities in the field of research and development during the financial year ended 31 December 2022 and 2021. 9. Transactions in own shares The Company has not acquired or held any of its own shares during the period ended as at 31 December 2022 and 2021. 10. Outlook The Management Board is confident that a suitable target for the Business Combination will be found before the Business Combination Deadline, i.e. within the 15-month period from the date of the admission to trading of the Public shares and Public warrants. Luxembourg, 26 April 2023 Dr. Stefan Petrikovics George Aase Chief Executive Officer Chief Financial Officer Member of the Management Board Member of the Management Board 4 SMG European Recovery SPAC SE Corporate Governance Statement by the Management Board for the year ended 31 December 2022 The Management Board of the Company reaffirm their responsibility to ensure the maintenance of proper accounting records disclosing the financial position of the Company with reasonable accuracy at any time and ensuring that an appropriate system of internal controls is in place to ensure that the Company’s business operations are carried out efficiently and transparently. In accordance with Article 3 of the law of 11 January 2008 on transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, the Company declares that, to the best of our knowledge, the audited annual accounts for the year ended 31 December 2022, prepared in accordance with Luxembourg legal and regulatory requirements, give a true and fair view of the assets, liabilities, financial position as of that date and results for the year then ended. In addition, management’s report includes a fair review of the development and performance of the Company’s operations during the year and of business risks, where appropriate, faced by the Company, as well as other information required by Article 68 of the law of 19 December 2002 on the commercial companies register and on the accounting records and financial statements od undertakings, as amended. Luxembourg, 26 April 2023 Dr. Stefan Petrikovics George Aase Chief Executive Officer Chief Financial Officer Member of the Management Board Member of the Management Board 5 DocuSign Envelope ID: 788FCB67-CE62-439E-9C80-A1E7AD4254D8 Mazars Luxembourg 5, rue Guillaume J. Kroll L-1882 Luxembourg Luxembourg Tel: +352 27 114 1 Fax: +352 27 114 20 www.mazars.lu To the Shareholders of SMG European Recovery SPAC SE Société européenne R.C.S. Luxembourg B255839 9, rue de Bitbourg L-1273 Luxembourg REPORT OF THE REVISEUR D’ENTREPRISES AGREE Report on the Audit of the Financial Statements Opinion We have audited the financial statements of SMG European Recovery SPAC SE (the “Company”), which comprise the balance sheet as of 31 December 2022 and the profit and loss for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 2022, and of the result of its operations for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements. Basis for Opinion We conducted our audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 on the audit profession (“Law of 23 July 2016”) and with International Standards on Auditing (“ISAs”) as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (“CSSF”). Our responsibilities under the EU regulation No 537/2014, the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further describedin the « Responsibilities of “réviseur d’entreprises agréé” for the Audit of the Financial Statements » section of our report. We are also independent of the Company in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Mazars Luxembourg – Cabinet de révision agréé Société Anonyme – RCS Luxembourg B 159962 – TVA intracommunautaire : LU24665334 6 DocuSign Envelope ID: 788FCB67-CE62-439E-9C80-A1E7AD4254D8 Key Audit Matters Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of the audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Based on the result of our audit procedures no Key Audit Matter was identified for the audit of the financial statements as of 31 December 2022. Other information The Management Board is responsible for the other information. The other information comprises the information stated in the management report and the Corporate Governance Statement but does not include the financial statements and our report of the “réviseur d’entreprises agréé” thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard. Responsibilities of the Management Board and Those Charged with Governance of the Company for the Financial Statements The Management Board is responsible for the preparation and fair presentation of the financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements, and for such internal control as the Managment Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Managment Board is also responsible for presenting the financial statements in compliance with the requirements set out in the Delegated Regulation 2019/815 on European Single Electronic Format, as amended (“ESEF Regulation”). In preparing the financial statements, the Management Board is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Managment Board either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. 7 DocuSign Envelope ID: 788FCB67-CE62-439E-9C80-A1E7AD4254D8 Responsibilities of the “réviseur d’entreprises agréé” for the Audit of the Financial Statements The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of the “réviseur d’entreprises agréé” that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management Board. • Conclude on the appropriateness of Management Board’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the “réviseur d’entreprises agréé” to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of the “réviseur d’entreprises agréé”. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Assess whether the financial statements have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 8 DocuSign Envelope ID: 788FCB67-CE62-439E-9C80-A1E7AD4254D8 We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our report unless law or regulation precludes public disclosure about the matter. Report on Other Legal and Regulatory Requirements We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of Shareholders on 7 July 2022 and the duration of our uninterrupted engagement, including previous renewals and reappointments, is 2 years. The management report is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. The Corporate Governance Statement is included in the management report. The information required by Article 68ter paragraph (1) letters c) and d) of the law of 19 December 2002 on the commercial and companies register and on the accounting records and financial statements of undertakings, as amended, is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. We have checked the compliance of the financial statements of the Company as at 31 December 2022 with relevant statutory requirements set out in the ESEF Regulation that are applicable to the financial statements. For the Company, it relates to financial statements prepared in valid xHTML format; In our opinion, the financial statements of the Company as at 31 December 2022 have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation. We confirm that the audit opinion is consistent with the additional report to the audit committee or equivalent. We confirm that the prohibited non-audit services referred to in EU Regulation No 537/2014 were not provided and that we remained independent of the Company in conducting the audit. Luxembourg, 28 April 2023 For Mazars Luxembourg, Cabinet de révision agréé 5, rue Guillaume J. Kroll L-1882 Luxembourg Fabien DELANTE Réviseur d’entreprises agréé 9 BEULSGP20230309T14373501_002 Page 1/5 RCSL Nr. : B255839 Matricule : 2021 8400 176 Annual Accounts Helpdesk : eCDF entry date : Tel. : (+352) 247 88 494 Email : centralebilans@statec.etat.lu BALANCE SHEET Financial year from to 01/01/2022 31/12/2022 EUR (in ) 03 01 02 SMG European Recovery SPAC SE 9, rue de Bitbourg L-1273 Luxembourg ASSETS Reference(s) Current year Previous year A. Subscribed capital unpaid 1101 101 102 I. Subscribed capital not called 1103 103 104 II. Subscribed capital called but unpaid 1105 105 106 B. Formation expenses 1107 107 108 C. Fixed assets 119.058.744,05 23.441,04 1109 109 110 I. Intangible assets 1111 111 112 1. Costs of development 1113 113 114 2. Concessions, patents, licences, trade marks and similar rights and assets, if they were 1115 115 116 a) acquired for valuable consideration and need not be shown under C.I.3 1117 117 118 b) created by the undertaking itself 1119 119 120 3. Goodwill, to the extent that it was acquired for valuable consideration 1121 121 122 4. Payments on account and intangible assets under development 1123 123 124 II. Tangible assets 1125 125 126 1. Land and buildings 1127 127 128 2. Plant and machinery 1129 129 130 The notes in the annex form an integral part of the annual accounts 10 BEULSGP20230309T14373501_002 Page 2/5 RCSL Nr. : B255839 Matricule : 2021 8400 176 Reference(s) Current year Previous year 3. Other fixtures and fittings, tools and equipment 1131 131 132 4. Payments on account and tangible assets in the course of construction 1133 133 134 III. Financial assets 3 119.058.744,05 23.441,04 1135 135 136 1. Shares in affiliated undertakings 119.058.744,05 23.441,04 1137 137 138 2. Loans to affiliated undertakings 1139 139 140 3. Participating interests 1141 141 142 4. Loans to undertakings with which the undertaking is linked by virtue of participating interests 1143 143 144 5. Investments held as fixed assets 1145 145 146 6. Other loans 1147 147 148 D. Current assets 435.649,08 212.957,19 1151 151 152 I. Stocks 1153 153 154 1. Raw materials and consumables 1155 155 156 2. Work in progress 1157 157 158 3. Finished goods and goods for resale 1159 159 160 4. Payments on account 1161 161 162 II. Debtors 4 432.834,24 157.062,78 1163 163 164 1. Trade debtors 64.120,99 1165 165 166 a) becoming due and payable within one year 64.120,99 1167 167 168 b) becoming due and payable after more than one year 1169 169 170 2. Amounts owed by affiliated undertakings 134.868,89 1171 171 172 a) becoming due and payable within one year 134.868,89 1173 173 174 b) becoming due and payable after more than one year 1175 175 176 3. Amounts owed by undertakings with which the undertaking is linked by virtue of participating interests 1177 177 178 a) becoming due and payable within one year 1179 179 180 b) becoming due and payable after more than one year 1181 181 182 4. Other debtors 233.844,36 157.062,78 1183 183 184 a) becoming due and payable within one year 233.844,36 157.062,78 1185 185 186 b) becoming due and payable after more than one year 1187 187 188 The notes in the annex form an integral part of the annual accounts 11 BEULSGP20230309T14373501_002 Page 3/5 RCSL Nr. : B255839 Matricule : 2021 8400 176 Reference(s) Current year Previous year III. Investments 1189 189 190 1. Shares in affiliated undertakings 1191 191 192 2. Own shares 1209 209 210 3. Other investments 1195 195 196 IV. Cash at bank and in hand 2.814,84 55.894,41 1197 197 198 E. Prepayments 5 111.550,68 1199 199 200 TOTAL (ASSETS) 119.605.943,81 236.398,23 201 202 The notes in the annex form an integral part of the annual accounts 12 BEULSGP20230309T14373501_002 Page 4/5 RCSL Nr. : B255839 Matricule : 2021 8400 176 CAPITAL, RESERVES AND LIABILITIES Reference(s) Current year Previous year A. Capital and reserves 6 116.605.396,69 -1.777.022,26 1301 301 302 I. Subscribed capital 600.000,00 120.000,00 1303 303 304 II. Share premium account 114.562.500,00 1305 305 306 III. Revaluation reserve 1307 307 308 IV. Reserves 9.957.499,50 1309 309 310 1. Legal reserve 1311 311 312 2. Reserve for own shares 1313 313 314 3. Reserves provided for by the articles of association 600.000,00 1315 315 316 4. Other reserves, including the fair value reserve 9.357.499,50 1429 429 430 a) other available reserves 1431 431 432 9.357.499,50 b) other non available reserves 1433 433 434 V. Profit or loss brought forward -1.897.022,26 1319 319 320 VI. Profit or loss for the financial year -6.617.580,55 -1.897.022,26 1321 321 322 VII. Interim dividends 1323 323 324 VIII. Capital investment subsidies 1325 325 326 B. Provisions 1331 331 332 1. Provisions for pensions and similar obligations 1333 333 334 2. Provisions for taxation 1335 335 336 3. Other provisions 1337 337 338 C. Creditors 7 3.000.547,12 2.013.420,49 1435 435 436 1. Debenture loans 1437 437 438 a) Convertible loans 1439 439 440 i) becoming due and payable within one year 1441 441 442 ii) becoming due and payable after more than one year 1443 443 444 b) Non convertible loans 1445 445 446 i) becoming due and payable within one year 1447 447 448 ii) becoming due and payable after more than one year 1449 449 450 2. Amounts owed to credit institutions 11,50 1355 355 356 a) becoming due and payable within one year 11,50 1357 357 358 b) becoming due and payable after more than one year 1359 359 360 The notes in the annex form an integral part of the annual accounts 13 BEULSGP20230309T14373501_002 Page 5/5 RCSL Nr. : B255839 Matricule : 2021 8400 176 Reference(s) Current year Previous year 3. Payments received on account of orders in so far as they are not shown separately as deductions from stocks 1361 361 362 a) becoming due and payable within one year 1363 363 364 b) becoming due and payable after more than one year 1365 365 366 4. Trade creditors 2.821.239,42 937.583,06 1367 367 368 a) becoming due and payable within one year 2.821.239,42 937.583,06 1369 369 370 b) becoming due and payable after more than one year 1371 371 372 5. Bills of exchange payable 1373 373 374 a) becoming due and payable within one year 1375 375 376 b) becoming due and payable after more than one year 1377 377 378 6. Amounts owed to affiliated undertakings 34.933,12 980.826,38 1379 379 380 a) becoming due and payable within one year 34.933,12 980.826,38 1381 381 382 b) becoming due and payable after more than one year 1383 383 384 7. Amounts owed to undertakings with which the undertaking is linked by virtue of participating interests 1385 385 386 a) becoming due and payable within one year 1387 387 388 b) becoming due and payable after more than one year 1389 389 390 8. Other creditors 144.374,58 94.999,55 1451 451 452 a) Tax authorities 44.137,50 1393 393 394 b) Social security authorities 1395 395 396 c) Other creditors 100.237,08 94.999,55 1397 397 398 i) becoming due and payable within one year 100.237,08 94.999,55 1399 399 400 ii) becoming due and payable after more than one year 1401 401 402 D. Deferred income 1403 403 404 TOTAL (CAPITAL, RESERVES AND LIABILITIES) 119.605.943,81 236.398,23 405 406 The notes in the annex form an integral part of the annual accounts 14 BEULSGP20230309T14373501_003 Page 1/2 RCSL Nr. : B255839 Matricule : 2021 8400 176 Annual Accounts Helpdesk : eCDF entry date : Tel. : (+352) 247 88 494 Email : centralebilans@statec.etat.lu PROFIT AND LOSS ACCOUNT Financial year from to 01/01/2022 31/12/2022 EUR (in ) 03 01 02 SMG European Recovery SPAC SE 9, rue de Bitbourg L-1273 Luxembourg Reference(s) Current year Previous year 1. Net turnover 1701 701 702 2. Variation in stocks of finished goods and in work in progress 1703 703 704 3. Work performed by the undertaking for its own purposes and capitalised 1705 705 706 4. Other operating income 1713 713 714 5. Raw materials and consumables and other external expenses -5.337.615,66 -1.859.508,11 1671 671 672 a) Raw materials and consumables 1601 601 602 b) Other external expenses 8 -5.337.615,66 -1.859.508,11 1603 603 604 6. Staff costs 1605 605 606 a) Wages and salaries 1607 607 608 b) Social security costs 1609 609 610 i) relating to pensions 1653 653 654 ii) other social security costs 1655 655 656 c) Other staff costs 1613 613 614 7. Value adjustments 4 -64.120,99 1657 657 658 a) in respect of formation expenses and of tangible and intangible fixed assets 1659 659 660 b) in respect of current assets -64.120,99 1661 661 662 8. Other operating expenses 9 -774.647,36 -30.075,00 1621 621 622 The notes in the annex form an integral part of the annual accounts 15 BEULSGP20230309T14373501_003 Page 2/2 RCSL Nr. : B255839 Matricule : 2021 8400 176 Reference(s) Current year Previous year 9. Income from participating interests 1715 715 716 a) derived from affiliated undertakings 1717 717 718 b) other income from participating interests 1719 719 720 10. Income from other investments and loans forming part of the fixed assets 1721 721 722 a) derived from affiliated undertakings 1723 723 724 b) other income not included under a) 1725 725 726 11. Other interest receivable and similar income 13.198,51 1727 727 728 a) derived from affiliated undertakings 7 12.033,47 1729 729 730 b) other interest and similar income 1.165,04 1731 731 732 12. Share of profit or loss of undertakings accounted for under the equity method 1663 663 664 13. Value adjustments in respect of financial assets and of investments held as current assets 3 6.559,96 -7.058,96 1665 665 666 14. Interest payable and similar expenses 10 -460.420,01 -380,19 1627 627 628 a) concerning affiliated undertakings -11.707,09 -326,38 1629 629 630 b) other interest and similar expenses -448.712,92 -53,81 1631 631 632 15. Tax on profit or loss 1635 635 636 16. Profit or loss after taxation -6.617.045,55 -1.897.022,26 1667 667 668 17. Other taxes not shown under items 1 to 16 -535,00 1637 637 638 18. Profit or loss for the financial year -6.617.580,55 -1.897.022,26 1669 669 670 The notes in the annex form an integral part of the annual accounts 16 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) 1. GENERAL SMG European Recovery SPAC SE (the “Company” or “Parent”) was incorporated on 11 June 2021 (date of incorporation per the deed of incorporation as agreed between shareholders in front of the notary) in Luxembourg as a European company (Société Européenne or “SE”) based on the laws of the Grand Duchy of Luxembourg (“Luxembourg”) for an unlimited period. The Company is registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés, in abbreviated “RCS”) under the number B255839 since 17 June 2021. The Company is a listed entity with its class A shares traded in the regulated market of Frankfurt Stock Exchange under the symbol “RCVR” since 1 June 2022. Likewise, the Company’s class A warrants are also traded on the open market of the Frankfurt Stock Exchange under the symbol “RCVRW”. The Company also has 2.875.000 class B shares and 6.199.999 class B warrants issued and outstanding as at 31 December 2022 that are not listed on a stock exchange. The registered office of the Company is located at 9, rue de Bitbourg, L-1273 Luxembourg. The Company completed its Private Placement (the “Private Placement”) on 30 May 2022 through the issuance of 11.500.000 redeemable class A shares with a par value of EUR 0,0417 (the “Public Shares”) and 5.750.000 class A warrants (the “Public Warrants”). The Public Shares are admitted to trading on the Frankfurt Stock Exchange under the symbol “RCVR” on 1 June 2022. Likewise, the Public Warrants are also admitted to trading on the Frankfurt Stock Exchange under the symbol “RCVRW”. One Public Share and one-half (1/2) of a Public Warrant (each, a “Unit”), were sold at a price of EUR 10 per unit representing a total placement volume of EUR 115 million. The sponsor and the co-sponsor of the Company, as well as certain members of the supervisory board (the “Supervisory Board Investors”) of the Company have subscribed to 2.875.000 class B shares amounting to EUR 120.000,00. On 25 May 2022, the sponsor, co-sponsors and Supervisory Board Investors also subscribed to an aggregate 6.199.999 class B warrants (the “Sponsor Warrants”) at a total price of EUR 9.300.000,00. The class B shares and Sponsor Warrants are not publicly traded securities. The sponsor, co-sponsors and Supervisory Board Investors have agreed to a lock-up period running at least until the Business Combination, subject to customary exceptions described in the Company’s prospectus (the “Prospectus”). The Company’s governing bodies are the Management Board, the Supervisory Board and the shareholders’ meeting, The Company is managed by its Management Board under the supervision and control of the Supervisory Board. This two-tier governance structure was resolved by an extraordinary shareholders’ meeting of the Company held on 13 September 2021. The Management Board is composed of Dr. Stefan Petrikovics (Chief Executive Officer), George Aase (Chief Financial Officer), Liam Doyle (Chief Operating Officer), Werner Weynand (Chief Administration Officer) and René Geppert (“Management Board”). The Supervisory Board members appointed consists of Anand Tejani, Paul Johnson and Benoît de Belder (the “Supervisory Board”). The Company has been established for the purpose of acquiring one operating business with principal business operations in a member state of the European Economic Area (the “EEA Member States”), the United Kingdom or Switzerland in the form of a merger, capital stock exchange, share purchase, asset acquisition, reorganization or similar transactions (the “Business Combination”). The Company will not conduct operations or generate operating revenue unless and until the Company consummates the Business Combination. The Company intends to seek a suitable target for the Business Combination in the real estate-related hospitality sector with a focus on the sub-sector lodging and leisure. The Company has 15 months from the date of the admission to trading to consummate a Business Combination. This period may be extended up to two times in total (for a maximum of 21 months), provided that (i) the period shall extend automatically by three months if the Company signs a letter of intent with a potential seller of a target within the initial 15 months (the “Automatic Extension”) and (ii) may be extended, in each case by three 17 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) months, by resolutions of the Company’s general shareholders’ meeting (those initial 15 months plus any Extension thereof is referred to as the “Business Combination Deadline”). If no Business Combination is completed before the Business Combination Deadline, the Public Shares will redeemed to the public shareholders and the Company will be liquidated. Upon closing of the Business Combination, the above Company’s purpose shall cease to apply and the Company's purpose shall as from such time be the creation, holding, development and realisation of a portfolio, consisting of interests and rights of any kind and of any other form of investment in entities in the Grand Duchy of Luxembourg and in foreign entities, whether such entities exist or are to be created, especially by way of subscription, by purchase, sale, or exchange of securities or rights of any kind whatsoever, such as equity instruments, debt instruments as well as the administration and control of such portfolio. 18 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) The Company may further grant any form of security for the performance of any obligations of the Company or of any entity in which it holds a direct or indirect interest or right of any kind or in which the Company has invested in any other manner or which forms part of the same group of entities as the Company and lend funds or otherwise assist any entity in which it holds a direct or indirect interest or right of any kind or in which the Company has invested in any other manner or which forms part of the same group of companies as the Company. The Company may borrow in any form and may issue any kind of notes, bonds and debentures and generally issue any debt, equity and/or hybrid securities in accordance with Luxembourg law. The Company may carry out any commercial, industrial, financial, real estate or intellectual property activities which it may deem useful in accomplishment of these purposes. Unlike other forms of companies, a Société Européenne only exists from the date of publication of its statutes with the RCS. Accordingly, the comparative period on these annual accounts was prepared in accordance with Luxembourg legal and regulatory requirements from 17 June 2021 (date of registration of the Company with the RCS) to 31 December 2021. Any act performed and any transaction carried out by the Company between the date of incorporation and the date of registration is considered to emanate from the Company and is therefore included in the annual accounts. The Company’s financial year runs from 1 January to 31 December. The Company also prepares consolidated financial statements under International Financial Reporting Standards as adopted by the European Union. The consolidated financial statements are published in accordance with the European Single Electronic Format regulation on the Company’s website (https://www.smg-spac.com). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1. Basis of preparation These annual accounts have been prepared in accordance with the Luxembourg legal and regulatory requirements under the historical cost convention. The accounting and valuation methods are determined and implemented by the Board of Directors, apart from the regulations of the law of 19 December 2002. The preparation of these annual accounts requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise significant judgment in the process of applying the accounting policies. Changes in assumptions may have a significant impact on the annual accounts in the period in which the assumptions changed. The Board of Directors believes that the underlying assumptions are appropriate and that the annual accounts therefore present fairly the financial position and results. The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities in the next financial year. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 2.2. Significant accounting policies The following are the significant accounting policies and valuation rules adopted by the Company in the preparation of these annual accounts. 19 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) 2.2.1. Foreign currency translation The Company maintains its books and records in Euro (“EUR”). The balance sheet and the profit and loss account are expressed in EUR. Translation of foreign currency transactions Foreign currency transactions are translated into EUR using the exchange rates prevailing at the dates of the transactions. Translation of foreign currency balances as at the balance sheet date  Financial assets denominated in currencies other than EUR are translated at the historical exchange rates;  Other assets denominated in currencies other than EUR are translated at the lower between the exchange rate prevailing at the balance sheet date and historical exchange rate;  Debts denominated in currencies other than EUR are translated at the higher between the exchange rate prevailing at the balance sheet date and historical exchange rate; and  Cash at bank and in hand denominated in currencies other than EUR are translated at the exchange rates prevailing at the balance sheet date. As a result, realized exchange gains and losses and unrealized exchange losses are recorded in the profit and loss account. Unrealized exchange gains are not recognized unless they arise from cash at bank and in hand. 2.2.2. Formation expenses Formation expenses include costs and expenses incurred in connection with the incorporation of the Company and subsequent capital increases. Formation expenses are charged to the profit and loss account of the year in which they were incurred. 2.2.3. Financial assets Shares in affiliated undertakings are valued at acquisition cost including the expenses incidental thereto. In case of durable decline in value according to the opinion of the Management Board, value adjustments are made in respect of financial assets so that these are valued at the lower figure to be attributed at the balance sheet date. These value adjustments are not continued if the reasons for which the value adjustments were made ceased to apply. 2.2.4. Cash at bank and in hand Cash at bank and in hand comprise cash at banks and on hand and short-term highly liquid deposits with a maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. 2.2.5. Debtors Debtors are recorded at their nominal value. These are subject to value adjustments where their recovery is compromised. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply. 20 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) 2.2.6. Prepayment Prepayments include expenditure items incurred during the financial year but relating to a subsequent financial year. 2.2.7. Provisions Provisions are intended to cover losses or debts which originate in the financial year under review or in the previous financial year, the nature of which is clearly defined and which, at the date of the balance sheet, are either likely to be incurred or certain to be incurred but uncertain as to their amount or the date they will arise. Provisions for taxation Provisions for taxation corresponding to the tax liability estimated by the Company for the financial years for which the tax return has not yet been filed are recorded under the caption “Creditors becoming due and payable within one year”. The advance payments are shown in the assets of the balance sheet under the “Debtors becoming due and payable within one year” item. 2.2.8. Creditors Creditors are recorded at their reimbursement value. Where the amount repayable of a financial liability is higher than the amount of cash received upfront, the related repayment premium is shown in the balance sheet as an asset and is amortized over the period of the related debt on a straight-line method. 2.2.9. Expenses Expenses are accounted for on an accrual basis. 2.2.10. Income tax The Company is subject to income taxes in Luxembourg. 2.2.11. Warrants The Company has issued class A warrants and class B warrants, which under Luxembourg legal and regulatory requirements relating to the preparation and presentation of the financial statements are recorded as equity. When such warrants are expected to be equity settled, the Company does not book any provision to cover any surplus of the fair value of those warrants compared to the amounts booked in Other non-available reserves, as the Company will not suffer any loss in relation to those warrants in the future. 21 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) 3. FINANCIAL ASSETS Movements in financial assets during the year are as follows: Shares in affiliated undertakings EUR 2022 Gross book value – opening balance 30.500,00 Additions for the year 119.435.500,00 Repayments for the year -406.756,95 119.059.243,05 Gross book value – closing balance Accumulated value adjustment – opening balance -7.058,96 Allocation of value adjustments for the year -499,00 Reversals of value adjustments for the year 7.058,96 Accumulated value adjustment – closing balance -499,00 Net book value – opening balance 23.441,04 119.058.744,05 Net book value – closing balance On 30 May 2022, the Company contributed proceeds from the class A shares subscription, Additional Sponsor Subscription and Overfunding Sponsor Subscription (Note 6) totaling to EUR 119.435.000,00 into SMG SPAC Advisors GmbH & Co. KG. These monies are held in an escrow account by SMG SPAC Advisors GmbH & Co. KG. During the year, EUR 406.756,95 was repaid to the Company relating to the Additional Sponsor Subscription. The Additional Sponsor Subscription refers to the monies used to cover the negative interest on the escrow account, and any amounts in excess are returned to the Company. On 18 August 2022, the Company incorporated SMG SPAC Issuance GmbH & Co. KG for an amount of EUR 500,00. For the year ended 31 December 2022, the Management Board have recognized an impairment on the Company’s investment in shares in affiliated undertakings amounting to EUR 499,00, and an income of EUR 7.058,06 from the reversal of value adjustments made in prior periods. Shares in affiliated undertakings as at 31 December 2022 consist of the following: Profit / (Loss) Name of Registered Ownership %/ Cost of Last balance Net equity as at as at undertakings office Contribution acquisition sheet date 31/12/2022 31/12/2022 EUR EUR EUR 100% 28.500,00 31/12/2022 28.836,16 5.395,16 SMG SPAC Advisors Gneisenaustr. Verwaltungs GmbH 112, 10961 Berlin, Germany SMG SPAC Advisors Gneisenaustr. 100% 119.030.243,05 31/12/2022 119.221.326,09 196.291,44 GmbH & Co. KG 112, 10961 Berlin, Germany SMG SPAC Issuance Gneisenaustr. 100% 500,00 31/12/2022 -2.410,85 -2.910,85 GmbH & Co. KG 112, 10961 Berlin, Germany Unaudited 22 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) 4. DEBTORS Debtors balances due within one year are composed of the following: Total Total 31/12/2022 31/12/2021 EUR EUR Amounts due from affiliated undertakings 134.868,89 - Other debtors 297.965,35 157.062,78 432.834,24 157.062,78 Total Amounts due from affiliated undertakings Amounts due from affiliated undertakings as at 31 December 2022 refer to payments of invoices the Company made on their behalf. This also includes EUR 78.331,56 receivable from the sponsor arising from the subscription of class B warrants (Note 6). Other debtors On 5 July 2021, the Company provided an interest-free loan to the Chief Executive Officer for an amount of EUR 119.500,00. The balance of the loan amounted to EUR 100.500,00 as at 31 December 2021 and was fully repaid during the financial year. Other debtors as at 31 December 2022 relate to payments of invoices on behalf of other related entities for an amount of EUR 296.082,33, overpayments to a supplier for an amount of EUR 64.120,99, a negative value adjustments on other receivables for an amount of EUR -64.120,99, and a receivable from a Director for an amount of EUR 1.883,02. A negative value adjustments amounting to EUR -64.120,99 was recognized during the year due to doubts on the recoverability of an overpayment made to a supplier. Receivable from a Director for an amount of EUR 1.883,02 relate to an overpayment made to a Director, to be recovered. 5. PREPAYMENTS Prepayments in the amount of EUR 111.550,68 pertain to prepaid insurance premium to be deferred over the following accounting period (2021: nil). 23 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) 6. CAPITAL AND RESERVES Movements during the year are as follows: Reserves Other Subscribed Shares premium provided for by Profit or loss Profit or loss for non-available Total capital account the articles of brought forward the year reserves association EUR EUR EUR EUR EUR EUR EUR Opening balance 120.000,00 - - - - -1.897.022,26 -1.777.022,26 Conversion of 12.000.000 class B shares to 1.437.500 class B1 shares - - - - - - - and 1.437.500 class B2 shares Issuance of 11.500.000 class A shares 480.000,00 114.462.500,00 - 57.500,00 - - 115.000.000,00 and 5.750.000 class A warrants Issuance of 6.199.999 class B warrants - - - 9.299.999,50 - - 9.299.999,50 Equity contribution in cash without - 700.000,00 - - - - 700.000,00 issuance of shares Allocation of prior year’s results to profit - - - - -1.897.022,26 1.897.022,26 - or loss brought forward Allocation to warrant reserve - -600.000,00 600.000,00 - - - - Results for the financial year - - - - - -6.617.580,55 -6.617.580,55 Closing balance 600.000,00 114.562.500,00 600.000,00 9.357.499,50 -1.897.022,26 -6.617.580,55 116.605.396,69 24 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) Share capital – Class B shares As at 31 December 2021, the subscribed share capital amounts to EUR 120.000,00 consisting of 12.000.000 class B shares without nominal value. On 23 May 2022, following the extraordinary general meeting of shareholders the Company created two share classes within the class B shares and converted the existing 12.000.000 class B shares into 1.437.500 class B1 shares without nominal value and 1.437.500 class B2 shares without nominal value. Subject to the completion of the Business Combination, all class B shares are automatically converted into Class A shares at a ratio of one Class A share for one class B share following the day of expiration of the sponsor lock-up (the “Promote Conversion”). The class B shares will only have nominal economic rights (i.e., reimbursement of their par value, at best, in case of liquidation). The class B shares were not part of the private placement and are not listed on a stock exchange. Share capital – Class A shares On 30 May 2022, the Company issued 11.500.000 Units (each a “Unit”), each Unit consisting of one redeemable class A shares with a par value of approximately EUR 0,042 and one half of a class A warrant for an aggregate price of EUR 10,00 per Unit, the nominal subscription price per Class A warrant being EUR 0,01. The total proceeds amounted to EUR 114.942.500,00 of which EUR 480.000,00 were allocated to class A shares and EUR 114.462.500,00 to the share premium account. Class A Shareholders may request redemption of all or a portion of their Class A shares in connection with the Business Combination, subject to the conditions and procedures set forth in the Articles of Association of the Company. Each Class A share that is redeemed shall be redeemed in cash for a price equal to the aggregate amount on deposit in the escrow account related to the proceeds from the private placement of the Class A shares and class A warrants, divided by the number of the then outstanding Class A Shares, subject to (i) the availability of sufficient amounts on the escrow account and (ii) sufficient distributable profits and reserves of the Company. In the event that no Business Combination would be completed before the Business Combination Deadline, the Class A shares would also be redeemed to the shareholders before the Company went into liquidation. Share premium On 25 May 2022, the sponsor made an additional equity contribution in cash without issuance of new shares in the amount of EUR 700.000,00. On 27 May 2022, the Management Board resolved to allocate EUR 600.000,00 from the share premium, in accordance with the articles of association, to the warrant reserve. On 30 May 2022, EUR 114.462.500,00 have been allocated to the share premium account as described in “Share capital – Class A shares”. Authorised capital The authorized capital, excluding the issued share capital, of the Company is set at EUR 6.520.002,24 consisting of 156,208,387 shares without nominal value. 25 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) Legal reserves In accordance with Luxembourg law, the Company is required to allocate a minimum of 5% of its net profits for each financial year to a legal reserve. This requirement ceases to be necessary once the balance on the legal reserve reaches 10% of the subscribed capital. The legal reserve is not available for distribution to the shareholders. Reserves provided for by the articles of association - Warrant reserve Pursuant to Article 31 of the amended Articles of Association, the Management Board shall create a specific reserve in respect of the exercise of any class A warrants or class B warrants issued by the Company (the "Warrant Reserve") and allocate and transfer sums contributed to the share premium and/or any other distributable reserve of the Company to such Warrant Reserve. The Management Board may, at any time, fully or partially convert amounts contributed to such Warrant Reserve to pay for the subscription price of any class A Shares to be issued further to an exercise of class A warrants or class B warrants issued by the Company. Only in case of failure by the Company to secure a Business Combination before the expiry of the Business Combination Deadline, the Warrant Reserve may be used for redemption of class A shares, in case where other available reserves are not sufficient. The Warrant Reserve is not distributable or convertible prior to the exercise, redemption or expiration of all outstanding class A warrants and class B warrants and may only be used to pay for the class A shares issued pursuant to the exercise of such class A warrants and class B warrants; thereupon, the Warrant Reserve will become a distributable reserve. As at 31 December 2022, EUR 600.000,00 has been allocated to warrant reserve from Share premium. Other non-available reserves Other non-available reserves refer to the class A and B warrants. - Class A warrants: On 30 May 2022, the Company issued 5.750.000 class A warrants (the “Class A warrants”) together with the 11.500.000 Class A shares, the nominal subscription price per Class A warrant being EUR 0,01. Hence, the total proceeds in relation to the issue of the warrants amount to EUR 57.500,00. Class A warrants has International Securities Identification Number (“ISIN”) LU2380751656. Each Class A warrant entitles its holder to subscribe for one Class A share, with a stated exercise price of EUR 11,50, subject to customary anti-dilution adjustments. Holders of Class A warrants can exercise the warrants on a cashless basis unless the Company elects to require exercise against payment in cash of the exercise price. As at 31 December 2022, the value of the other non-available reserves related to class A warrants is EUR 57.500,00. The class A warrants are traded on the open market of the Frankfurt Stock Exchange under the symbol “RCVRW”. As at 31 December 2022, the fair value of Class A warrants was estimated to be EUR 5.290.000 (EUR 0,92 per warrant) using a combination of Monte Carlo and Binomial Tree valuation model. The significant inputs to the valuation model include the contractual terms of the warrants (i.e. exercise price, maturity), risk-free rates of German government bonds, volatility of the Company’s potential target peers and volatility of the warrants by reference to traded warrants issued by similar listed special purpose acquisition companies. 26 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) Class A warrants may only be exercised for a whole number of class A shares. Class A warrants will become exercisable 30 days after the completion of a Business Combination. Class A warrants will expire five years from the date of the consummation of the Business Combination, or earlier upon redemption or liquidation. The Company may redeem Class A warrants upon at least 30 days’ notice at a redemption price of EUR 0,01 per Class A warrant if (i) the closing price of its Class A shares for any 20 out of the 30 consecutive trading days following the consummation of the Business combination equals or exceeds EUR 18,00 or (ii) the closing price of its Class A shares for any 20 out of the 30 consecutive trading days following the consummation of the Business Combination equals or exceeds EUR 10,00 but is below EUR 18,00, adjusted for adjustments as described in the section of redemption of warrants in the prospectus. Holders of Class A warrants may exercise them after the redemption notice is given. - Class B warrants: On 25 May 2022, the sponsor, co-sponsor and the Company entered into a Sponsor Warrant Purchase Agreement. The sponsor and the co-sponsor agreed, to initially subscribe to class B warrants (the “Class B warrants”) as follows:  3.243.333 Class B warrants at a price of EUR 1,50 per warrant or EUR 4.865.000,00 in total for the sponsor capital at-risk (the “Sponsor Capital At-Risk”);  656.666 Class B warrants at a price of EUR 1,50 per warrant or EUR 985.000,00 in total for the additional sponsor subscription (the “Additional Sponsor Subscription”) and;  2.300.000 Class B warrants at a price of EUR 1,50 per warrant or EUR 3.450.000,00 in total for the overfunding sponsor subscription (the “Overfunding Sponsor Subscription”). On the same date, the sponsor transferred 1.302.000 Class B warrants to the Supervisory Board Investors. The sponsor agreed to set off EUR 2.497.668,00 of the loan (Note 7) against the subscription price of the Class B warrants under the Sponsor Capital-At-Risk. The Sponsor Capital At-Risk is used to finance the Company’s working capital requirements (including due diligence costs in connection with the Business Combination) and private placement and listing expenses, except for the deferred listing commission which will be paid from the escrow account. The Additional Sponsor Subscription is used to cover the negative interest on the escrow account. The Overfunding Sponsor Subscription will be used to provide additional funds to cover the liquidation of the Company after the expiry of the Business Combination Deadline or in case of redemptions of Class A shares in the context of a Business Combination, for a redemption per Class A share of up to (i) EUR 10,30 in case no extension has occurred, (ii) EUR 10,40 in case one extension has occurred and (iii) EUR 10,50 in case two extensions have occurred. For any excess portion of the Additional Sponsor Subscription or Overfunding Sponsor Subscription remaining after the consummation of the Business Combination and the redemption of Class A shares, the sponsor may elect to either (i) request repayment of the remaining cash portion of the Additional Sponsor Subscription or the Overfunding Sponsor Subscription by redeeming the corresponding number of Class B warrants subscribed for under the Additional Sponsor Subscription or the Overfunding Sponsor Subscription or (ii) not to request repayment and to keep the Class B warrants subscribed for under the Additional Sponsor Subscription or the Overfunding Sponsor Subscription. Furthermore, with respect to the Additional Sponsor Subscription, if the negative interest payable under the escrow account has been reduced due to a change in the interest rate on deposits set by European Central Bank, the sponsor may request from the escrow agent that a portion of the proceeds from the Additional Sponsor Subscription reflecting the amount by which the negative interest has been overfunded in respect of such period shall either be (i) repaid to the sponsor against redemption of the corresponding number of class B warrants subscribed for under the Additional Sponsor Subscription or (ii) paid to the Company for working capital purposes. Each Class B warrant entitles its holder to subscribe for one Class A share, with a stated exercise price of EUR 11,50. 27 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) As at 31 December 2022, the total value of the other non-available reserves related to Class B warrants is EUR 9.299.999,50. As at 31 December 2022, the fair value of Class B warrants is determined to be EUR 1,35 per warrant using a combination of Monte Carlo and Binomial Tree valuation model (level 3). The breakdown are as follows:  Class B warrants issued as Sponsor Capital At-Risk is valued at EUR 4.378.500,00;  Class B warrants issued as Additional Sponsor Subscription is valued at EUR 886.500,00; and  Class B warrants issued as Overfunding Sponsor Subscription is valued at EUR 3.105.000,00. The significant inputs to the valuation model include the contractual terms of the warrants (i.e. exercise price, maturity), risk-free rates of German government bonds, volatility of the Company’s potential target peers and volatility of the warrants by reference to traded warrants issued by similar listed special purpose acquisition companies. Class B warrants are identical to the Class A warrants underlying the Units sold in the private placement, except that the Class B warrants are not redeemable and may always be exercised on a cashless basis while held by the sponsor or their Permitted Transferees (defined in the prospectus). Class B warrants are not part of the private placement and are not listed on a stock exchange. 7. CREDITORS Creditors due and payable within one year are composed of the following: Total Total 31/12/2022 31/12/2021 EUR EUR Trade creditors and accruals 2.821.239,42 937.583,06 Amounts owed to affiliated undertakings 34.933,12 980.826,38 Other creditors 144.374,58 94.999,55 Bank overdraft - 11,50 Total 3.000.547,12 2.013.420,49 Trade creditors and accruals Current and previous year Trade creditors and accruals are related to outstanding amounts due on legal and other professional fees received by the Company during the financial year. Amounts owed to affiliated undertakings The Company as the borrower concluded a loan agreement with the sponsor with effect on 17 June 2021 (“Loan”). A loan amount of up to EUR 1.000.000,00 has been granted to the Company. Interest accrues at the rate of 2,00% per annum on the outstanding principal amount of the Loan from the date of the agreement, until the Loan is fully repaid. The Loan was expected to be repayable one year after the end of the availability period, as defined in the agreement, or any other date on which the parties may mutually agree on writing. An addendum to the original Loan contract has been signed on 18 February 2022 to increase its amount to EUR 1.500.000,00 and further amended on 3 May 2022 to increase the Loan to EUR 2.500.000,00. 28 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) On 25 May 2022, the outstanding balance of the Loan amounted to EUR 2.497.668,00. Total interest expense and accrued during the year amounted to EUR 11.707,09 (Note 10). The outstanding balance was set off against the subscription price of the Class B warrants. Consequently, the loan agreement was terminated and any interest accrued on the loan amounting to EUR 12.033,47 was waived by the sponsor and is presented as part of Other interest receivable and similar income derived from affiliated undertakings (2021: EUR 980.826,00). Amount owed to affiliated undertakings as at 31 December 2022 refer to the payments made by the related parties on behalf of the Company. Other creditors Other creditors as at 31 December 2022 relate to directors’ fees payable for an amount of EUR 84.890,08, withholding tax payable for an amount EUR 44.137,50, and other miscellaneous payables for an amount of EUR 15.347,50. 8. OTHER EXTERNAL EXPENSES Other external expenses are composed of: From 01/01/2022 From 17/06/2021 to 31/12/2022 to 31/12/2021 EUR EUR Legal fees -1.407.300,42 -828.440,66 Listing fee (Note 14) -1.004.050,00 0,00 Other capital raising fees -937.527,00 0,00 Other professional fees -770.967.23 -15.493,14 Consultancy fees -498.119,00 -642.661,35 Accounting and corporate fees -235.083,21 -63.686,73 Insurance expense -169.249,32 0,00 Audit fees -155.345,00 -300.470,00 Travel and entertainment expenses -99.406,88 -3.099,60 Rental expense -21.067,68 0,00 Bank fees -19.011,73 -5.435,50 Notary fees -11.363,15 0,00 Other expenses -9.125,04 -221,13 Total -5.337.615,66 -1.859.508,11 29 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) The total audit fees paid breaks down as follows: From 01/01/2022 From 17/06/2021 to 31/12/2022 to 31/12/2021 EUR EUR Statutory audit of the annual accounts 173.260 73.710 Audit-related fees (17.915) 226.760 Total 155,345 300,470 *Negative cost of EUR 17,915 is due to the reversal of an over-accrual made in the previous financial period. 9. OTHER OPERATING EXPENSES Other operating expenses are composed of: From 01/01/2022 From 17/06/2021 to 31/12/2022 to 31/12/2021 EUR EUR Directors fees -717.672,36 -7.575,00 CSSF fees -56.975,00 -22.500,00 Total -774.647,36 -30.075,00 10. INTEREST PAYABLE AND SIMILAR EXPENSES Interest payable and similar expenses are composed of: From 01/01/2022 From 17/06/2021 to 31/12/2022 to 31/12/2021 EUR EUR Interest payable to affiliated undertakings -11.707,09 -326,38 Banking interest on current accounts -11.208,32 -53,81 Other financial charges -437.504,60 - Total -460.420,01 -380,19 30 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) Other financial charges Other financial charges comprise of an arrangement fee of EUR 437.500,00 incurred for the obtention of financing under the form of a loan facility provided by ELF Fund (Note 14). The remaining balance pertains to foreign currency exchange losses. 11. STAFF The Company did not employ any staff during the year ended 31 December 2022 (2021: nil). 12. EMOLUMENTS GRANTED TO THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES AND COMMITMENTS IN RESPECT OF RETIREMENT PENSIONS FOR FORMER MEMBERS OF THOSE BODIES The Company did not grant any emoluments to and has no commitments in respect of retirement pensions towards members of its Management Board and Supervisory Board during the year ended 31 December 2022, except for those disclosed in Note 9 (2021: nil). 13. ADVANCES AND LOANS GRANTED TO THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES The Company did not grant any advances or loans to members of its Management Board and Supervisory Board during the year ended 31 December 2022, except as disclosed in Note 4 to the annual accounts (2021: EUR 100.500,00). 14. OFF-BALANCE SHEET COMMITMENTS The following agreements were entered by the Company in the context of the private placement: a. On 24 May 2022, the Company entered into a fee letter with ELF European Lending Fund I SCSp SICAV-RAIF (“ELF Fund”) for facilitating the loan facility. Under this agreement, the Company paid a fee of 1,75% of the amount invested by SMG SPAC Investment S.à r.l.., a class A shareholder, (the “Sponsor Investment”), on the date of the completion of the private placement. This fee was paid from the Sponsor Capital At-Risk. On the date of the consummation of the Business Combination, the Company will pay ELF Fund a fee of 3,5% on the Sponsor Investment. b. On 25 May 2022, the Company entered into an underwriting agreement with Barclays Bank Ireland PLC (“Barclays”) as the Sole Global Coordinator and Joint Bookrunner, and ABN AMRO Bank N.V. (“ABN AMRO”) as Joint Bookrunner. Under this agreement, the Company paid a Listing Fee of 1,75% of the gross proceeds from the Private Placement raised from investors initially contacted by Barclays and ABN AMRO on the date of the completion of the Private Placement and a Deferred Listing Commission of 3,5% on the gross proceeds from the private placement raised from investors initially contacted by Barclays and ABN AMRO on the completion of the Business Combination. c. On 25 May 2022, the Company entered into a fee letter with Alpine Consulting B.V.. Under this agreement, the Company paid a fee of 1,75% of the gross proceeds from the private placement raised from investors initially contacted by Alpine Consulting on the date of the completion of the private placement. This fee was paid from the Sponsor Capital At-Risk. On the date of the consummation of the Business Combination, the Company will pay a fee of 3,5% on the gross proceeds from the private placement raised from investors initially contacted by Alpine Consulting. 31 SMG European Recovery SPAC SE Notes to the annual accounts for the year ended 31 December 2022 (Expressed in EUR) The Company has no other commitments and contingencies as at 31 December 2022 (2021: nil). 15. SUBSEQUENT EVENTS There are no other significant subsequent events after balance sheet date, other than those disclosed herein. 32