WashTec AG — Annual Report 2023

Apr 22, 2024

Annual Report 2023

Sustainable success with our integrated system.

New revenue record and significant 10.3% increase in EBIT with significant rise in free cash flow to €46.1m

Q1–Q4		Jan 1 to Dec 31, 2023	Jan 1 to Dec 31, 2022	Change
				absolute	in %
Revenue	€m	489.5	482.2	7.3	1.5
EBIT	€m	41.9	38.0	3.9	10.3
EBIT margin	%	8.6	7.9	0.7	–
EBT	€m	38.4	37.3	1.1	2.9
Net income	€m	28.0	26.4	1.6	6.1
Number of shares in circulation	units	13,382,324	13,382,324	–	–
Earnings per share	€	2.09	1.97	0.12	6.1
Free cash flow	€m	46.1	16.2	29.9	184.6
Net cash outflow from investing activities	€m	–15.7	–6.5	–9.2	–141.5
Equity ratio	%	31.6	31.0	0.6	–
ROCE	%	21.5	20.2	1.3	–
Employees at reporting date	persons	1,687	1,824	–137	–7.5

Figures in this report are rounded. Because of this, individual figures may not add up to the stated totals and percentages may not precisely correspond to the absolute figures they relate to.

New revenue record

With revenue of €489.5m, WashTec set a new record in fiscal year 2023 (prior year: €482.2m). This was mainly due to the chemicals business, where new customers were acquired, while revenue performance was stable in Equipment and Service.

Significant increase in EBIT

Mainly as a result of the implemented price increases and active cost management, the EBIT of €41.9m was significantly higher than the prior year (€38.0m). The EBIT margin improved to 8.6% (prior year: 7.9%).

Significant rise in free cash flow

Free cash flow increased significantly to €46.1m (prior year: €16.2m) despite the €9.5m acquisition of the site occupied by the American subsidiary.

The EBIT margin increased to 11.3% in the fourth quarter

Q4		Q4 2023	Q42022	Change
				absolute	in %
Revenue	€m	132.8	143.7	–10.9	–7.6
EBIT	€m	15.0	15.4	–0.4	–2.6
EBIT margin	%	11.3	10.7	0.6	5.6
EBT	€m	14.2	15.2	–1.0	–6.6
Net income	€m	11.1	11.6	–0.5	–4.3
Number of shares in circulation	units	13,382,324	13,382,324	–	–
Earnings per share	€	0.83	0.87	–0.04	–4.3

Revenue down in fourth quarter

Revenue of €132.8m was 7.6% down on the record prior-year quarter (€143.7m).

EBIT at high prior-year level with higher EBIT margin

Despite the lower revenue, the EBIT of €15.0m was on the same high level as in the prior year (€15.4m). The EBIT margin increased to 11.3% (prior year: 10.7%). The implemented cost increases and active cost management contributed to this positive outcome.

Contents

WashTec

Report of the Management Board 7
Members of the Management Board . 10
Report of the Supervisory Board . 11
"Sustainable success with our integrated system." . 17
Separate combined non-financial report . 30
The WashTec Share . 51

Combined Management Report of WashTec AG and the Group

2023 at a glance . 55
General information about the Group . 56
Report on economic position . 65
Report on subsequent events81
Outlook, opportunities and risk report . 82
Internal control system and risk management system93
Risk reporting in relation to the use of financial instruments . 94
Takeover-related disclosures . 95
Corporate governance statement . 97

Annual and Consolidated Financial Statements of WashTec AG

Consolidated Income Statement 111
Consolidated Statement of Comprehensive Income 112
Consolidated Balance Sheet 113
Consolidated Statements of Changes in Equity 115
Consolidated Cash Flow Statement 116
Notes to the Consolidated Financial Statements 117
Responsibility statement 172

Further Information

Independent Auditor's Report 174
WashTec AG Annual Financial Statements (HGB Short Version) 181
Glossary 183
WashTec worldwide 185
Group Level Key Performance
Indicators (KPIs)
2019 through 2023 186 . .

WashTec

Report of the Management Board .	7
Members of the Management Board .	10
Report of the Supervisory Board .	11
"Sustainable success with our integrated system." .	17
Separate combined non-financial report .	30
The WashTec Share	51

Full service all around sustainable carwash

Services Wash tunnels

Report of the Management Board

Dear Shareholders, Ladies and Gentlemen,

For WashTec, as for many other companies, the past reporting period once again presented a wide variety of challenges. Persistently high inflation and the resulting key interest rate hikes, coupled with a generally high level of economic uncertainty, significantly slowed consumption and investment. Tensions with China, the ongoing war in Ukraine and the Middle East conflict also had a noticeable impact on economic development. The German economy has cooled significantly since the end of last year. Contrary to expectations last summer, a recovery failed to materialize in the second half of the year. This ongoing crisis mode has led to increased general economic uncertainty and also made our customers cautious about investing.

WashTec responded to these successive crises in the fiscal year, among other things by adjusting its strategy. In the summer, together with the Supervisory Board, we defined and confirmed the following priorities for the years ahead:

• Total customer care: We continue to focus on maximum customer benefit in everything we do. Based on our portfolio of superior equipment and biodegradable wash chemicals and on our advanced digital platform, we offer carwash operators and consumers the most profitable and most sustainable carwash. With the coordinated, integrated system of carwash equipment, water treatment and chemicals, we enable our customers to achieve the best possible wash results. We see the integration of our entire product and service portfolio – equipment, service and chemicals, embedded in digital solutions – as a source of major growth potential.
• In regional terms, we will primarily focus on our core regions of Europe and North America in order to better exploit the market potential available there.

Following the changes on the Supervisory Board and the Management Board in the new fiscal year, the implementation of this strategic direction will be accelerated in 2024.

In connection with the regional focus on our defined core markets, we sold the majority of our Chinese subsidiary to the existing management at the end of 2023. The Chinese market will continue to be developed as a distributor market.

Our focus in the ongoing expansion of our digital capabilities is on systematically implementing additional customer benefits. To this end, WashTec entered into a cooperation on in-car payment with Ryd Wash in January 2024. In February 2024, we announced a strategic partnership with Superoperator. This partnership will embed the most advanced digital subscription solution for consumers into our digital service portfolio.

These realignments will lead to a strengthening of our profitable business growth. The Service and Chemicals business lines will have above-average growth and will benefit from digitalization.

The WashTec Group achieved a new revenue record of €489.5m in fiscal year 2023, an increase of€7.3m or 1.5% on the prior year (€482.2m). At constant exchange rates, the growth in revenue was 3.4%.

The revenue growth compared to the prior year was mainly due to a larger contribution from the aftersales business with service and chemicals. Revenue with our chemical products especially developed very positively due to the acquisition of new customers, increasing by 15.6% year on year.

Due to an improvement in gross profit, EBIT rose by 10.3% to €41.9m (prior year: €38.0m). The EBIT margin was 8.6% (prior year: 7.9%). We have therefore delivered, and met our guidance for 2023.

Orders received were lower in the reporting year than in the prior year due to the drop in demand in the market as a whole. The lower level of orders received meant that the order backlog at the end of December 2023 was down on the prior year, but it is still high overall compared to the long-term average and secures capacity utilization for the first few months of the new fiscal year.

In Europe, the equipment business was mainly affected by the general economic uncertainty and by changes in strategic orientation at major customers – such as Total Energies selling all of its service stations in Germany and the Netherlands to Couche-Tard. Renewal of the product portfolio involves start-up and ramp-up costs. Measures such as training for our service employees and design-to-cost issues were addressed in the fourth quarter and are having an impact in the new fiscal year. The good service business and, above all, the very good chemicals business helped to compensate for these issues. In total, EBIT in Europe remained at the prior year's level of €36.2m.

Revenue in North America was maintained at the same level in US dollars as in the prior year. The WashTec Group's business in this region was also adversely affected by the generally subdued demand. Earnings in North America increased significantly by €4.3m to €5.7m. This is mainly due to the efficiency improvement projects launched and successfully implemented in fiscal year 2023, particularly in the areas of supply chain and service.

Despite the uncertain overall economic situation described above, we achieved our targets in 2023 and met our guidance in all respects. With the more sharply focused strategy and accelerated execution, we have laid the basis for further profitable growth.

We will be helped here not only by the collaborations with digital service partners described above, but also by the high level of research and development expenditure maintained in fiscal year 2023. The focus of this R&D was on developing additional features and functions for the new gantry carwash platform. The new competition-beating digital gantry carwash offers outstanding washing and drying performance at maximum process speed. At the same time,

we are continuously reducing the ecological footprint. We have made further improvements here through a better understanding of the biological and chemical interrelationships in water treatment, further reducing the amount of fresh water needed and thus helping to address the water shortages caused by climate change in many regions. Another focus was the successful introduction of a modular system for the new JetWash generation, which ensures fast assembly and easy commissioning at customers' sites. As of December 31, 2023, around 70 people were employed in research and development. This represents 4.1% of the workforce and illustrates the importance of innovation to our future success.

Focusing on the entire integrated system of equipment, water treatment and biodegradable chemicals places an increased emphasis on sustainability. Consumers want to wash their cars in the most environmentally friendly way possible, and our own customers – the operators of carwash equipment – are also increasingly concerned about sustainable and cost-effective use of resources. We address this need. With our automated carwashes, water treatment and Green Car Care chemicals, we provide customers with the products they require for this purpose. It is our corporate responsibility to continuously improve and further develop the sustainability aspects of our business model.

Sustainability is also an integral part of our business processes. This is very important to us. We therefore continued our extensive reporting in fiscal year 2023, compiling our second voluntary Sustainability Report, the WashTec Sustainability Policy and the WashTec Group Environmental Policy. These documents can be viewed at any time on the Company website at https://ir.washtec.de/en/sustainability/. They provide information on our activities and goals in the areas of economic, environmental and social sustainability.

None of this would have been possible without our employees and their tireless commitment to WashTec. In challenging times like these, it is all the more important that we at WashTec pull together and demonstrate on a daily basis that drive and solidarity are core elements of our corporate culture. On behalf of my colleagues on the Management Board and myself, I would like to thank all our employees for their dedication and hard work in 2023.

Fiscal 2023 was not an easy year. Nevertheless, we have steered our company well through these challenging times and worked intensively on our future direction. By adjusting our strategy, we have laid the groundwork for our company to return to a double-digit EBIT margin in the coming years, and our consistent focus on maximizing customer benefit will lead to increasing earnings contributions. We are sure that we have taken the action needed.

Thank you very much for your trust and loyalty.

Andreas Pabst CFO/Member of the Management Board

Members of the Management Board

Sebastian Kutz (*1979)

CSO/Member of the Management Board

Global Sales and Service, Key Account Management, Marketing, Business Units/Product Management, Service Support, WashTec Carwash Management GmbH

Interim (from February 22, 2024): R&D, Quality, AUWA-Chemie GmbH

Sebastian Kutz holds a degree in business administration. After holding various positions in national and international sales and marketing at RATIONAL AG until 2019, he was most recently Executive Vice President Sales and Service DACH at WashTec. Sebastian Kutz has been Member of the Management Board of WashTec AG since March 2023.

Andreas Pabst (*1973)

CFO/Member of the Management Board

Finance/Controlling, IT, Procurement, Investor Relations, Legal and Compliance, Risk Management, Internal Audit, Insurance, WashTec Financial Services GmbH

Interim (from February 22, 2024): Corporate Culture, Communication and Philosophy, HR, Supply Chain, Sustainability

Andreas Pabst holds a business degree and is a qualified tax adviser (Steuerberater). After beginning his professional career at KPMG and various positions in accounting at listed companies, he moved to KUKA. There, he held various commercial positions of increasing responsibility and was Group CFO from 2018 to 2021. Mr. Pabst most recently worked for Midea. Andreas Pabst has been Member of the Management Board of WashTec AG since October 2022.

The past fiscal year was again characterized by many and varied negative geopolitical and economic influences. Our Company nevertheless succeeded in showing resilience and presenting compelling business results in the circum-

What has become a long series of crisis-ridden years and the relatively uncertain global outlook have prompted the Supervisory Board to enter into an intensive discussion with the management team of WashTec AG about our future strategic direction. We plan to drive the implementation of the resulting adjusted strategy with the necessary

Report of the Supervisory Board

Ulrich Bellgardt Chairman of the Supervisory Board

Work of the Supervisory Board

During the reporting year, the Supervisory Board adhered diligently and conscientiously to the responsibilities imposed on it by law, the Company's Articles of Association and the Board's own internal rules of procedure. The Supervisory Board was directly involved in all decisions of fundamental significance to the Company. It regularly obtained updates on the condition of the Group throughout fiscal year 2023.

dynamism and conviction.

Ladies and Gentlemen,

stances.

The Supervisory Board also supervised the managerial activities of the Management Board of WashTec AG. This work was based on timely written and verbal reporting by the Management Board to the Supervisory Board. Among other things, the Management Board reported each month in writing to the Supervisory Board about the development of the business. As needed, the Supervisory Board also requested additional reports from the

Management Board and inspected other relevant Company documentation. Any departure of the actual business development from plans and targets was explained to the Supervisory Board in detail and examined by the Supervisory Board based on the documents presented. The Management Board notably coordinated with the Supervisory Board with regard to the Company's strategic orientation. The Supervisory Board extensively discussed transactions of importance to the Company on the basis of the reports issued by the Management Board.

The Supervisory Board voted on all reports and draft resolutions submitted by the Management Board wherever required by law, the Company's Articles of Association or rules of procedure, after thorough examination and discussion. Beyond the extensive work conducted during the Supervisory Board meetings, the Chairman of the Supervisory Board maintained constant contact with the Management Board and consulted between Supervisory Board meetings in numerous one-on-one discussions with the Management Board on the Company's strategy, planning, business development, risk situation, risk management and compliance. The remaining Supervisory Board members also exchanged information with the Management Board outside of meetings. All members of the Supervisory Board reported in detail to the remaining members on their one-on-one consultations with the Management Board. In fiscal year 2023, notably in light of the ongoing global macroeconomic crises, the plenary Supervisory Board held a total of thirteen meetings (five in-person meetings and eight hybrid meetings, i.e. in-person with virtual attendance option).

The Supervisory Board and its committees held at least one meeting in each quarter. In addition, various resolutions were adopted outside of meetings by circulation. In plenary meetings, the committee chairpersons regularly informed the Supervisory Board about the work of the committees. A separate report on the work of the committees is provided below. All members of the Supervisory Board and the Management Board additionally convened for a two-day strategy workshop. The Supervisory Board also regularly met without the Management Board.

Alongside Management Board and Supervisory Board matters, topics of regular Supervisory Board consultations included market trends, the competitive situation, product development, the development of revenue, earnings and human resources, finances, capital allocation, the main Group companies, the risk management system and the strategic orientation and development of the WashTec Group. The Management Board reported regularly and comprehensively to the Supervisory Board about corporate planning, the course of business, strategic development and the current situation of the Group. The Supervisory Board consequently had a detailed understanding of all major business events and developments at the WashTec Group at all times.

Furthermore, the Supervisory Board examined transactions and actions of the Management Board requiring approval and decided upon the granting of such approval. The current business situation and the Company's financial performance, financial position and cash flows were discussed on a regular basis in comparison to budgeted figures.

In the first quarter of 2024, the Supervisory Board also addressed succession planning for the Management Board. On February 28, 2024, the Supervisory Board appointed Mr. Michael Drolshagen as the Company's new Chief Technology Officer (CTO) and Chief Executive Officer (CEO) with effect from May 1, 2024. He succeeds Dr. Ralf Koeppe, whose membership of the Management Board ended by mutual agreement on February 29, 2024.

Other individual topics addressed in meetings were as follows:

• Discussion, audit and adoption of the annual and consolidated financial statements, the combined management report and the non-financial statement of WashTec AG for fiscal year 2022 (first quarter)
• Use of net profit (first quarter)
• Resolution on the agenda for the Annual General Meeting (first quarter)
• Strategy workshop (second quarter)
• Consultation on the quarterly statements (second and fourth quarters)
• Consultation on the half-year report (third quarter)
• Selection and proposal procedure for auditor from 2024
• Supervisory Board matters (ongoing)
• Management Board matters (ongoing)
• Changes on the board
• Management Board and Supervisory Board remuneration
• Review and approval of the non-financial statement and the diversity policy
• Declaration of Conformity and regular compliance update
• Sales and marketing strategies and projects; global service
• Digital transformation
• Sustainability/ESG
• WashTec Obeya Initiative
• Status, strategy and processes in North America and China
• Product development, processes and projects, in particular with regard to SmartCare
• Annual planning for 2024 and medium-term planning

Key topics at the March 25, 2024 meeting for adoption of the financial statements comprised discussion of the annual financial statements of WashTec AG, of the consolidated financial statements for fiscal year 2023 together with adoption and approval of the annual and consolidated financial statements, and of the combined management report. It also addressed the Remuneration Report for fiscal year 2023.

Composition of the Supervisory Board

In accordance with the Articles of Association of WashTec AG, the Supervisory Board consists of six members elected by the Annual General Meeting.

The Chairman of the Company's Supervisory Board, Dr. Günter Blaschke, notified the Company's Management Board on November 8, 2023 that he would be stepping down from the Supervisory Board effective December 31, 2023. The decision was made for personal reasons and by mutual agreement with the Supervisory Board and the Management Board.

On December 19, 2023, the Supervisory Board unanimously elected Ulrich Bellgardt – member of the Supervisory Board since 2014 and Deputy Chairman of the Supervisory Board – as the new Chairman of the Supervisory Board of WashTec AG effective January 1, 2024. Peter Wiedemann, member of the Supervisory Board since 2022, was elected as the new Deputy Chairman of the Company's Supervisory Board effective January 1, 2024.

Following Dr. Blaschke's departure from the Supervisory Board, a resolution on the election of a new member of the Supervisory Board will be adopted at the 2024 Annual General Meeting.

Report on the work of the committees

In the reporting year, there were six committees (Audit Committee, Personnel Committee, Nomination Committee, Innovation and Production Committee, Sales Strategy Committee and Corporate Strategy and Sustainability Committee) whose primary purpose was to prepare Supervisory Board meetings and resolutions for the plenary Supervisory Board. The committees can also be assigned decision-making powers within the scope of mandatory statutory provisions. The composition of the committees is shown on page 101. A brief overview of the work of the committees in the reporting year is provided in the following.

The Audit Committee convened six times in the fiscal year under review. Four meetings of the committee were held in person, while one was held as a hybrid meeting and one as a virtual meeting by video conference. Two meetings were held in the presence of the auditor. The Committee primarily consulted on the annual financial statements of WashTec AG and the consolidated financial statements along with the combined management report, the non-financial statement, supervision of the financial reporting process and the effectiveness of the internal control system, risk management system, the work of Internal Audit and capital allocation. Other topics of the meetings were the upcoming change of auditor for fiscal year 2024 together with the selection and proposal procedure required by law for this purpose. Based on the proposal of the Audit Committee, the entire Supervisory Board will propose KPMG AG Wirtschaftsprüfungsgesellschaft to the Annual General Meeting as the auditor for 2024.

Without exception, the Audit Committee discussed the Group's quarterly reports and halfyear financial report in detail prior to publication. It also defined the focal points of the audit for the reporting year, issued the audit engagement to the auditor, addressed new accounting and reporting requirements (EU taxonomy) and consulted on compliance matters.

The Personnel Committee met ten times during the reporting year. Four meetings of the committee were held in person and six meetings were held as virtual meetings by video conference. Its meetings focused on changes on the Management Board, Management Board remuneration and long-term succession planning.

The Nomination Committee met twice during the reporting year held as a virtual meeting. One meeting was held in connection with the expiration of the Supervisory Board mandates for Dr. Blaschke and Mr. Bellgardt at the end of the 2023 Annual General Meeting. The Nomination Committee decided to recommend that the Supervisory Board should nominate Dr. Blaschke and Mr. Bellgardt for re-election at the 2023 Annual General Meeting. The committee also met in connection with the resignation of Dr. Blaschke.

The Innovation and Production Committee convened three times in the fiscal year under review, in one case for a two-day meeting. All meetings of the committee were held in person. The focus was primarily on organization, processes, strategic product development projects, digitalization and product sustainability.

The Sales strategy committee met twice during the reporting year, both times in person. The main focus was on sales and marketing activities, developments in a number of core markets and the outlook and targets for sales and marketing activities, primarily in the North America region.

The Corporate Strategy and Sustainability Committee met twice during the reporting year, with one meeting held in person and one in hybrid form. In addition to the continuous improvement of sustainability reporting, key topics included the preparation of the annual strategy workshop and the further development of WashTec's sustainability strategy.

Good collaborative working relationships were assured at all times.

Individualized disclosure of meeting attendance

Members' attendance at the meetings of the Supervisory Board and its committees was 99% in fiscal year 2023. The attendance of the members of the Supervisory Board at the meetings of the Supervisory Board and of the committees in fiscal year 2023 is disclosed on an individual basis in the following:

Meetings attended/total number of meetings	Supervisory Board		Audit Committee		Personnel Committee		Nomination Committee		Innovation and Production Committee		Sales Strategy Committee		Corporate Strategy and Sustainability Committee
	Number	in %	Number	in %	Number	in %	Number	in %	Number	in %	Number	in %	Number	in %
Dr. Günter Blaschke (Chairman)¹	13/13	100%			10/10	100%	1/1	100%	3/3	100%	2/2	100%	2/2	100%
Ulrich Bellgardt (Deputy Chairman)¹	13/13	100%			10/10	100%	1/1	100%	3/3	100%	2/2	100%	2/2	100%
Dr. Hans Liebler	13/13	100%	6/6	100%			2/2	100%
Heinrich von Portatius	13/13	100%	6/6	100%							2/2	100%
Dr. Alexander Selent	13/13	100%	6/6	100%	9/10	90%							2/2	100%
Peter Wiedemann	13/13	100%					2/2	100%	3/3	100%
		100%		100%		97%		100%		100%		100%		100%

¹ Dr. Blaschke was a member and the Chairman of the Nomination Committee until November 13, 2023; Mr. Bellgardt has been a member and the Chairman of the Nomination Committee since November 14, 2023.

Conflicts of interest

In accordance with Recommendation E.1 of the German Corporate Governance Code 2022, each member of the Supervisory Board must disclose any conflicts of interest to the Chairman of the Supervisory Board without delay. No such conflicts of interest were disclosed in the reporting period.

Corporate governance

The Management Board and the Supervisory Board regard corporate governance as an ongoing process and regularly address compliance with the stipulations of the German Corporate Governance Code. They have conducted a joint review of corporate governance. On December 19, 2023, the Management Board and Supervisory Board submitted an updated Declaration of Conformity, which is reprinted beginning on page 97. The Audit Committee also consulted in-depth on the compliance organization and corporate audits. Compliance updates are a regular topic of Audit Committee meetings. The new members also had the opportunity to have discussions with senior management.

The Company subscribed to a specialist periodical on apprenticeship training and professional development on behalf of the Supervisory Board in the 2023 reporting year. Supervisory Board members also took part in various internal and external professional development events. As a fundamental part of the onboarding process for the newly elected members of the Supervisory Board, the Company provides onboarding information and personal discussions are held with members of the Management Board.

Remuneration system for the Management Board

In its meeting of March 24, 2021, the entire Supervisory Board updated and adopted the Management Board remuneration system. The remuneration system for the Management Board was approved by the 2021 Annual General Meeting.

The Management Board remuneration system is geared to the responsibilities and performance of the Management Board members and to the situation of the Company. The overall remuneration of members of the Management Board is made up of monetary and non-mon-

etary as well as fixed and variable components and is linked overall to sustained growth of the Company.

All remuneration components are structured in such a way that they are appropriate, both individually and in the aggregate, and do not encourage the taking of unreasonable risks. The remuneration of Management Board and Supervisory Board members is described in greater detail in the Remuneration Report, which is available on the Company's website.

Audit of the 2023 annual and consolidated financial statements

In accordance with the resolution of the Annual General Meeting on May 15, 2023, the Audit Committee engaged PricewaterhouseCoopers GmbH, Munich, to audit the annual financial statements of WashTec AG and the consolidated financial statements and combined management report of WashTec AG and the Group.

The auditor audited the annual financial statements for fiscal year 2023 prepared in accordance with the German Commercial Code (HGB), the consolidated financial statements prepared in accordance with the International Financial Reporting Standards (IFRS) applicable in the EU and the combined management report of WashTec AG and the Group, and issued an unqualified audit opinion in each case. In the process, the auditor addressed in depth the focal points of the audit specified by the Audit Committee for the reporting period in the audit engagement. No material weaknesses were reported in the internal control and risk management systems.

PricewaterhouseCoopers also audited the annual financial statements of the main Group companies of WashTec AG.

The Audit Committee verified and monitored the independence and qualification of the auditor and addressed audit quality both before and during the course of the audit.

In addition, the auditor verified and confirmed that the Management Board has established an appropriate monitoring system in accordance with Section 91 (2) of the German Stock Corporation Act (AktG) that is capable of identifying, at an early stage, any developments that might affect the Company's ability to continue as a going concern.

The Supervisory Board examined in detail the annual financial statements, the consolidated financial statements, the combined management report, the non-financial statement of WashTec AG and the Group and the Management Board's proposal on the appropriation of distributable profit. The auditor's audit reports were made available to all members of the Supervisory Board in good time and were discussed in detail both by the Audit Committee at its meeting on February 29, 2024 and at the Supervisory Board meeting for adoption of the financial statements on March 25, 2024. Both meetings were attended by the auditor. All questions posed by members of the Supervisory Board were answered in detail. During preparation and performance of the audit, the Supervisory Board and the Audit Committee regularly exchanged information with the auditor without the involvement of the Management Board. The Chairman of the Audit Committee regularly discussed the progress of the audit with the auditor and reported on this to the Audit Committee.

No objections were raised during the Supervisory Board's review. At its meeting for adoption of the financial statements, the Supervisory Board approved the annual financial statements of WashTec AG and the consolidated financial statements prepared by the Management Board. The annual financial statements of WashTec AG are thus formally adopted. The Management Board's proposal on the appropriation of distributable profit was approved by the Supervisory Board following in-depth review.

On behalf of the Supervisory Board, I would like to thank the members of the Management Board and all of our employees for their active commitment and constructive teamwork during the past fiscal year. The Supervisory Board would also like to thank Dr. Günter Blaschke, our long-standing Chairman of the Supervisory Board, who stepped down on December 31, for his unwavering commitment and dedicated service. In his almost 10 years as Chairman of the Supervisory Board, he has defined an era.

The Supervisory Board would also like to thank Dr Koeppe for his great commitment, with which he has positioned WashTec well in economically challenging times, and wishes him all the best for the future, both professionally and personally.

Augsburg, March 2024

On behalf of the Supervisory Board

Ulrich Bellgardt Chairman of the Supervisory Board

Sustainable success with our integrated system.

The integrated WashTec system

SmartCare The integrated WashTec system

More success with our sustainable products and services

WashTec offers the leading car wash systems for every need and requirement. The unique integrated system of innovative washing technology, efficient water recycling, custom-tailored service solutions, digital modules and environmentally friendly washing chemicals leads to perfect washing results with minimum resource consumption.

Our main products on which our business is based are car washes. Alongside these, we market numerous supplementary product groups, enabling us to provide operators with everything they need for efficient and sustainable carwash operation from a single source.

mywashtec.com

Smart Machines – the key to digital platform business Service

SmartCare ARAL Filling Station Bohnet, Winsen

"Our customers are totally satisfied with our WashTec equipment and AUWA chemicals and so we are too. WashTec – what else?"

Thomas Bohnet

Water recovery

Our innovative solutions can recover a large proportion of your washing water.

Remote-Service Innovative car wash systems

More success with innovative and environmentally friendly washing technology

As a leading supplier of modern and sustainable car wash systems, WashTec offers car washes for every need and requirement, from gantry car washes to conveyor tunnel systems and self-service car washes through to commercial vehicle washing systems.

Gantry car washes

Suitable for every requirement and designed for maximum success.

Commercial vehicle washing systems

Robust, durable technology for an optimum wash outcome in the shortest time.

Self-service car washes

For every size of station and every requirement: Innovative ideas turn every self-service car wash into an experience.

Conveyor tunnel systems

Maximum throughput coupled with minimum system length thanks to linear technology.

my.shop

More success by reducing fresh water consumption

WashTec's innovative solutions can reduce fresh water consumption during vehicle washing by up to 90% by recovering the service water. This saves money while actively helping to preserve the environment.

Water Recycling Fresh water consumption (in liters per wash)

180 l to 220 l Hand wash

180 l to 220 l High pressure gantry without water recovery

120 l to 170 l Brush gantry without water recovery

14 l to 30 l Brush gantry with water recovery

my.shop Cansa, Wildeshausen

"If I were to build another car wash, it would always be with WashTec – no if's or but's about it. Their technology and AUWA's chemicals are simply very, very good."

Muhammed Shakir Cansa and Hayri Cansa

AUWA Green Car Care

More success by reducing fresh water consumpton

AUWA is the market leader for washing chemicals in Europe with over 50 years of experience. All AUWA formulations meet the strictest green criteria and far exceed the legal requirements. And even better, they are perfectly tuned with WashTec system technology to ensure the best paint protection and brilliant results.

Car washing today has to be sustainable and environmentally friendly. Green Car Care is a completely innovative product range – sustainable along the entire value chain.

• Environmentally friendly and easily biodegradable products
• No colorants, polyphosphates or microplastics
• Environmentally friendly production processes
• Highly concentrated for optimized consumption
• Zero-waste strategy
• Eco-friendly transport packaging

AVIA Oest, Freudenstadt

"WashTec and AUWA have provided us with a custom-tailored and perfectly coordinated solution. This has enhanced the attractiveness of our AVIA station and continues to generate additional sales."

Ann-Cheryl Römpp, AVIA Oest

Florian Maser, AUWA Chemicals, Ann-Cheryl Römpp, AVIA Oest, Stefan Wager, AVIA filling station, Freudenstadt

To receive the "Sustainable Car Wash" certification, a car wash must fulfil a number of strict criteria:

Sustainable washing chemicals Green Car Care washing chemicals are made from renewable raw materials and without environmentally harmful substances, independently certified by the Fresenius Institute.

Efficient washing operation A WashTec car wash for low-emission and carbon-saving operation has to be used.

Water recovery

A resource-efficient wash saves up to 90% fresh water per wash cycle thanks to a water recovery system.

Certified sustainable car wash

More success with our certification as a sustainable car wash site

At WashTec, we are committed to ensuring that vehicle owners can make transparent and environmentally conscious decisions when it comes to cleaning their cars. As a leading supplier of modern and sustainable car wash systems and washing chemicals, we do everything we can to make vehicle cleaning environmentally friendly and resource-saving. For this reason, we have created an information platform where vehicle owners can find certified car washes that use efficient systems and sustainable detergents to keep vehicles and the environment clean.

Waschwerk, Kemnath

"The advice and technical implementation from WashTec were great. We are very proud of our certification as a sustainable car wash location."

Michael Graf

From left to right: Christian Wolf, AUWA Chemie Michael Graf, Waschwerk Kemnath Mario Romio, AUWA Chemie

Remote services

More success from day one with our remote services

When operating carwash systems, rapid assistance in the event of malfunction is crucial for maintaining an efficient carwash business, because continuous operation is the only way to achieve maximum equipment utilization and productivity. With our remote services, we drive the future of carwash.

Digital modules and tools such as smart remote services and digitally equipped technicians with video functionality ensure higher system availability, more sales and hence even higher customer satisfaction. Many cases can be solved with the support of service center personnel.

Lang self-service carwash, Altensteig

"I trust the market leaders and their products. WashTec's all-round service package and original manufacturer's service are very important to me. I am totally satisfied."

Anja Lang

Separate Non-financial Report

With this "Separate Non-financial Report" WashTec AG complies with the reporting obligation under the German CSR Directive Implementation Act (Section 289b (1) and (3) and Section 315b (1) and (3) of the German Commercial Code (HGB)). In addition to financial aspects, supplementary disclosures must also be provided on certain non-financial aspects to the extent that they are material within the meaning of Section 289c (3) HGB. The non-financial aspects on which information must be provided comprise environmental, employee-related and social matters, respect for human rights, and combating corruption and bribery. It is stated in the report whether each aspect is material to the Company and the general public. The reporting obligations under Article 8 of the Taxonomy Regulation can be found under "Disclosures on Article 8 of the EU Taxonomy Regulation."

Preparation of the "Separate Non-Financial Report" was based on the Global Reporting Initiative Sustainability Reporting Standards (GRI Standards, 2016 version). Policies are described in accordance with the requirements of GRI 103: "Management Approach".

A detailed report on risk management and a description of prevailing risks that could have a material impact on the further development of the WashTec Group can be found in the Combined Management Report in Section 4 "Outlook, opportunities and risk report" starting on page 82. No material risks from the Company's business activities, business relationships, products and services have been identified that are highly likely to have, or will have, severe adverse impacts on the foregoing aspects. The impacts of climate-related matters on the business model and the financial position, financial performance and cash flows of the WashTec Group are explained in the Combined Management Report under section 1, "General information about the Group" starting on page 56 and in Note 2 of the Notes to the Consolidated Financial Statements.

The WashTec Group began implementing the Corporate Sustainability Reporting Directive (CSRD) in fiscal year 2023. This includes developing a project plan for implementation and reporting in accordance with the CSRD from fiscal year 2024 and analyzing the requirements of the European Sustainability Reporting Standards (ESRS). Work has also begun on the materiality analysis. In addition, a voluntary sustainability report was once again prepared for fiscal year 2022, providing information about activities and goals in terms of economic, environmental and social sustainability. This is based on the Global Reporting Initiative (GRI) standards, 2021 version, and is available on the Company's website at https://ir.washtec.de/en/sustainability.

The content of the Separate Non-financial Report is reviewed by the Supervisory Board. The Supervisory Board is supported in this by Internal Audit.

Description of the business model and diversity policy

Descriptions of the business model, external factors influencing the business, strategy, and research and development activities can be found in the Combined Management Report in section 1 "General information about the Group," starting on page 56.

The diversity policy is described in the Combined Management Report in section 8.1 "Declaration of Conformity" starting on page 97.

Human rights and anti-corruption

In a thorough revision of the WashTec Code of Conduct (previously the WashTec Code of Ethics) in 2023, WashTec further developed the clear guidelines for law-abiding conduct and compliance with high ethical standards that the Company has had in place since 2005 and adapted them to new requirements such as the German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz). The WashTec Code of Conduct includes key guidance on how employees are expected to interact both with each other and with customers, suppliers,

consultants and authorities. All WashTec Group managers and employees in sensitive areas such as Sales, Procurement, Human Resources and Finance receive regular training, which concludes with a test and certification.

Among other things, the WashTec Code of Conduct also sets out rules for combating corruption and bribery. WashTec expects employees and business partners worldwide to comply with all legal requirements. The WashTec Code of Conduct for Suppliers, which likewise underwent thorough revision in the reporting year, requires business partners to comply with high ethical standards, including clear requirements regarding respect for human rights and the environment.

The project to implement the Supply Chain Act at WashTec included not only a thorough revision and update of the WashTec Code of Conduct and WashTec Supplier Code of Conduct, but also a review and adjustment of internal structures and processes in order to fully comply with the requirements for responsible supply chain management, even though WashTec does not reach the thresholds for application of the Supply Chain Act as of January 1, 2024.

As a machinery and mechanical engineering company, the WashTec Group is subject to numerous international rules and regulations, all of which are directed towards transparent and responsible supply chains. Most suppliers are located in Europe and America. WashTec thus largely operates with its production and supply chain in countries that maintain high standards in terms of respect for human rights.

With their legally binding signature on the WashTec Supplier Code of Conduct, WashTec obtains the commitment of all material business partners to comply with the principles and rules it contains. Any deviation from the rules on responsibility and integrity in corporate governance is identified in audits – such as supplier audits – that are an integral part our business activities.

In further support of the compliance system, a whistleblower system introduced in 2016 allows employees and others to raise concerns – anonymously if they prefer – and to report circumstances that may indicate a violation of the law or Company policies. Any such indications are investigated and appropriate action taken if grounds for suspicion or violations are found. As part of the implementation of the Supply Chain Act, the existing whistleblower system was supplemented with options for reporting human rights and environmental violations. In addition, processes were reviewed and adjusted as needed for implementation of the EU Whistleblower Directive (Directive EU 2019/1937) and the national implementing legislation in all countries where WashTec has subsidiaries.

The processes in place are considered to be appropriate and viable for the identification and elimination of questionable ethical and human rights matters.

Environmental matters

The Separate Combined Non-Financial Report 2022 assessed environmental matters as material. This assessment remains valid for the present report. In fiscal year 2023, water consumption was assessed as a new material aspect alongside the reduction of carbon emissions.

In addition, planning continued as to when and under what conditions the WashTec Group can become climate-neutral in the countries where it has production sites (including service and sales). The largest source of energy consumption and carbon emissions at WashTec is the vehicle park. Technological developments with regard to how vehicles are powered and the related infrastructure are therefore crucial to the achievement of climate neutrality. A further factor is the implementation of projects of our own. These include projects to further reduce energy consumption, convert heating systems, modernize the equipment and technologies used and expand photovoltaic electricity generation. Conditions in each country and region also influence the achievement of climate neutrality. This includes charging infrastructure and a country's general philosophy with regard to climate-friendly transportation. Another, primarily regional factor is utilities' energy mix and CO2 equivalent in the supply of heat and power.

The goal of environmental compatibility in business activities is based on awareness of social responsibility and the aim of making WashTec even more sustainable. In addition, the Company is subject to legal requirements with respect to environmentally relevant activities and takes appropriate measures to ensure compliance.

Long before the energy crisis forced companies to actively address the issues of energy economy and sustainability, WashTec established a cross-site and cross-functional environment and energy team. This team continued in 2023 to help identify matters of relevance to the environment and energy and to implement related improvement measures. This contributed to improvements in sustainability and reductions in energy demand, resource consumption and waste. The necessary human, financial and capital resources were quantified and allocated in budget planning. On a higher level, country organization and cluster management teams are informed at regular meetings about the various environment-related projects and their status and outcomes. The full Management Board is regularly briefed on environment-related measures and approves budget-relevant measures.

Lessons were also learned from last year's energy crisis and suitable action was taken. Among other things, the energy task force established in response to the crisis was retained and now remains in place alongside the existing energy and environment team. The energy task force develops, evaluates, coordinates and monitors the implementation of various energy-saving measures, primarily during the heating periods.

Objective/policy

WashTec targets a sustained 30% reduction in carbon emissions in the countries with production sites by 2025 relative to the 2019 baseline. The emission figures for 2023 amounted to 5,779t CO2e* (prior year: 7,008t CO2e*). This figure is calculated from energy use in production, administration and the service units and includes all Scope 1 and Scope 2 emissions according to the Greenhouse Gas Protocol (GHG) in Germany, the Czech Republic, USA and China. In the period from 2019 to 2023, the WashTec Group reduced carbon emissions by 2,746t CO2e* or 32%*. The prior-year figure, for the period from 2019 to 2022, was a reduction in carbon emissions by 1,519t CO2e* or 18%*.

The sale of the Chinese subsidiary in 2023 has virtually no impact on the above target for reducing carbon emissions. In recent years, the Chinese company's carbon emissions constantly accounted for around 1% of the total carbon emissions of the production sites included in the target.

Measures

As part of the Environment and Energy Roadmap 2025, an array of measures are being implemented to reduce the WashTec Group's carbon footprint. The focus is on the electrification of the entire fleet. The current car policy, which includes a system of incentives via mobility budgets, a car allowance and all-electric vehicles, provides the basis for needs-based personal mobility. With regard to motor vehicles, additional hybrid and all-electric vehicles were procured in 2023. In addition, the car policy was revised so that only all-electric vehicles can be ordered alongside diesel vehicles. The proportion of electric vehicles increased significantly in 2023 compared to the prior year. A further increase in the share of electric vehicles in the fleet is expected by 2024. Charging infrastructure for electric vehicles and

^*Full billing data is not yet available for 2023 as some providers do not bill WashTec until later in the year. The figures are therefore partly based on the prior year, extrapolation or self meter readings. The carbon emissions for 2022 have been restated for the same reason as the necessary billing data was not available at the time.

electric industrial trucks has been installed at all production sites in Germany. Specific challenges related to fleet electrification include the market availability of efficient and economically viable electric vehicles, the expansion of the charging network and the differing tax treatment of electric vehicles in the countries where subsidiaries operate. Full conversion to electric forklifts in Augsburg was planned for 2023. This cannot be completed until 2024 due to delivery delays by manufacturers.

As planned, WashTec conducted an initial analysis of opportunities to reduce carbon emissions in the US in 2023 as part of a project under the Environment and Energy Roadmap 2025. Particularly important factors include local conditions such as vehicle size requirements, long distances compared to European countries and available infrastructure. The biggest challenges here are the lack of nationwide charging infrastructure for electric vehicles and the lacking widespread availability of diesel fuel, which is far more efficient than gasoline. In addition, how the companies are supplied with energy depends on the local conditions. This means that carbon-neutral energy is not universally available due to a lack of infrastructure. There is expected to be further potential for reducing the Group's carbon emissions in the US, as the US subsidiary is one of the Company's largest single carbon emitters. Depending on fleet replacement cycles and delivery lead times for more efficient vehicles, improvements may not be fully realized until subsequent years.

Cars, vans and forklifts are only part of the Company's mobility. Accordingly, WashTec continues to work on implementing the mobility policy for the Augsburg plant. This aims to optimize mobility throughout the plant and includes national and international travel as well as on-site transportation. Its recommendations and measures are designed to realize the available potential for improvement in the carbon footprint. All aspects of intermodal mobility – the use of different modes of transport for a single trip – must be considered here in accordance with legal requirements. In addition, the dialog on mobility solutions is being continued with city center businesses and the City of Augsburg.

Implementation of the zero-emission strategy that follows from the operational mobility management policy has already begun and will make the vehicle fleet in Germany 100% carbon-neutral by 2030. Across Europe, the WashTec Group vehicle fleet is to consist of over 80% alternative propulsion vehicles by 2030. Trials are underway within the scope of what is technically feasible.

The production plants in Germany have been supplied exclusively with certified green electricity since the beginning of 2021. Moreover, the extension of district heating to additional buildings at the Augsburg site continued in 2023. The heating in the production facilities was replaced with radiant heating panels. These are significantly more energy-efficient and make for less carbon-intensive heating. Their installation at other locations and in other buildings is currently being examined. This contributes significantly to reducing the WashTec Group's carbon footprint.

Data transparency and validity are crucial to ensuring continuous reductions in energy consumption. For this purpose, WashTec implemented energy data software in 2021. The software was supplemented to include additional meters in 2023. This makes it possible to analyze, for example, the specific electricity consumption of each building at the Augsburg site or the main energy consumers. The resulting transparency enables even more detailed consumption analysis in order to identify further potential energy savings and take action to realize them. This led to a 23% reduction in energy requirements (power and heat) compared to 2022 at the production plants in Germany and the Czech Republic. WashTec plans to install more meters on an ongoing basis. The possibility is currently being examined of metering other significant energy forms (heat, compressed air, etc.).

Employees are continually educated and motivated with regard to the importance of environmentally conscious conduct. Suggestions for energy savings and environmentally conscious conduct have been received through the employee suggestion scheme.

Processes/due diligence

The global carbon footprint analysis for the WashTec Group covers all global production sites, meaning those in Germany, the Czech Republic, the United States and China, including their sales and service activities. Calculation of the data is done on the basis of the Greenhouse Gas Protocol (GHG) and, among other things, with the aid of databases such as "GEMIS" and "DEFRA". The categories covered are, in Scope 1 ("Direct GHG emissions and removals") and in Scope 2 ("Indirect GHG emissions from imported energy"). Specifically, these comprise emissions from in-house heat generation, the corporate vehicle fleet, air conditioning, purchased district heat and purchased electricity.

The company is working on optimizing the processes for data collection, data validation and completeness for the determination of Scope 3 emissions for Germany according to the GHG. This process is at an advanced stage but has not yet been concluded. For this reason, information on Scope 3 emissions is not published.

Outcomes

Multi-year comparison of carbon emissions in the countries with production sites (Germany, Czech Republic, USA and China):

The main factors contributing to the year-on-year reduction in carbon emissions in fiscal year 2023 were the ongoing conversion of the heating systems in Augsburg to district heating, maintaining the new lower indoor temperature level, vehicle fleet optimization (such as the use of alternative powertrains) and temperature optimization in the painting process. These measures were already partially implemented by the end of 2022 in connection with the acute energy crisis and reached the targeted savings potential in 2023. Replacing additional LPG forklifts with electric forklifts, active use of waste heat and investment in

*Full billing data is not yet available for 2023 as some providers do not bill WashTec until later in the year. The figures are therefore partly based on the prior year, extrapolation or self meter readings. The carbon emissions for 2022 have been restated for the same reason as the necessary billing data was not available at the time.

energy-efficient production machinery and infrastructure such as LED lighting, lighting sensors and compressors contributed to a further reduction in carbon emissions. The latter measures apply to all sites in Germany and the Czech Republic. As they were implemented over the course of the year, their full contribution to carbon reduction will not be realized until 2024.

Water consumption

The most important resource for the operation of WashTec vehicle wash equipment is water – primarily the water used in carwashes operated by customers. Automated wash equipment, especially when operated in combination with water treatment, contributes significantly to reducing water consumption associated with washing vehicles. By recycling process water, our water treatment systems can significantly reduce the consumption of fresh water.

Depending on the carwash configuration, the dimensioning of the water treatment system, the selected wash programs, the number of washes and the types of vehicles, significant volumes of fresh water can be saved. A WashTec gantry carwash with a water treatment system uses only about one-fifth as much water as manual washing.

Objective/policy

WashTec aims to promote the resource-efficient operation of vehicle wash equipment by minimizing the water consumption of systems in use with customers. The goal is for customers to be convinced by the sustainability approach of WashTec water treatment systems by 2025.

Measures

One key measure to convince customers of the sustainability approach of WashTec water treatment systems is to promote such systems more prominently in sales activities.

Following activities in 2022 to define sales targets and communication measures, produce information material and conduct mailing campaigns, WashTec launched an international certification program for sustainable carwash sites in June 2023.

The certification program aims to provide consumers with additional transparency for carwash purchase decisions and to help operators to successfully publicize their commitment to sustainable vehicle washing.

Certification as a sustainable carwash site requires the satisfaction of three criteria: the use of sustainable washing chemicals from the AUWA Green Car Care product range, efficient operation through the use of modern WashTec carwash equipment and the deployment of a water treatment system.

This prominent positioning of water treatment systems as one of three key factors for certification as a sustainably operated carwash site creates additional incentives for our customers to invest in water treatment equipment.

The digital integration of WashTec water treatment systems into the mywashtec platform introduced in 2023 and the resulting benefits for operators in terms of transparency, monitoring and convenience with regard to water provide extensive additional scope for convincing new and existing customers of the sustainability approach in our water treatment systems.

Processes/due diligence

The Group monitors the proportion of the installed base of WashTec automatic vehicle wash equipment in the field that is equipped with a water treatment system. An increase in this proportion reflects the extent to which our customers are convinced by the sustainability approach of our water treatment systems.

The proportion of the installed base of WashTec automatic vehicle wash equipment in the field that is equipped with a water treatment system increased slightly in 2023 compared to the prior year.

Employee-related matters

The Separate Combined Non-Financial Report 2022 assessed employee-related matters as material. This assessment remains valid for the present report. Close teamwork with our employees and related matters are key factors in our corporate success. In particular, workplace safety and health are a high priority that WashTec is committed to ensuring for employees. This also reflects the Company's responsibility towards employees.

Objective/policy

Attractive human resources policies are a basis of the WashTec Group's business success and key to holding our market position. Our social contribution includes providing and creating a secure supply of jobs and apprenticeships. This is done in compliance with the respective national legal requirements. In Germany, these include:

• W Collective bargaining agreements at each site and minimum wage requirements
• W Equal treatment laws and anti-discrimination regulations (in Germany, the General Act on Equal Treatment)
• W Rules on the assignment of management positions, on employee rights and on leadership positions in the private and public sectors
• W Workplace regulations
• W Requirements of employers' liability insurance institutions.

The main objective in occupational safety and health is to protect the health of employees. This is ensured by maintaining the highest possible safety standards throughout the business. Reducing accidents, accident severity and injuries is the goal of all managers and employees. Despite all preventive measures, there is still a residual risk that unfortunately cannot be completely eliminated. WashTec is nevertheless committed to a vision zero philosophy based on the conviction that every accident is avoidable.

Measures

Regular review of potential or existing hazards leads to a reduction in incidents, near misses and accidents. On the basis of the identified potential hazards, measures are derived, planned and implemented. A further aim alongside occupational safety is to identify and implement aids that reduce physical effort as part of health management. These analyses are supported by training courses and workplace-specific instruction provided on a mandatory schedule in our training tool.

Processes/due diligence

All activities for maintaining high standards of occupational safety are managed using the WashTec Message app. This integrates the entire reporting chain and has the standard features for reporting accidents and near misses. On the basis of the reported incidents, scope for improvement and risks are identified in order to take targeted action to enhance occupational safety. In addition, all accidents are analyzed in terms of the type of accident and injury. This makes it possible to identify accident blackspots and counteract them with training, instruction, or additional personal protective equipment. The WashTec Message app can also be used to carry out workplace inspections and report vehicle accidents. A digital solution is used to prepare risk assessments. The entire process for ensuring high occupational safety standards is part of our Integrated Management System.

Outcomes

One of the most important metrics in management reviews is the accident rate. This is determined for the entire Group. Continuous improvement of HSE processes and management systems over the years has ensured that the number of occupational accidents is consistently below the industry average reported by the employers' liability insurance association. There were no occupational accidents in fiscal year 2023 with fatal or serious injuries, meaning with lasting injury or resulting in a pension entitlement.

The number of occupational accidents per million hours worked, at 4.2 in the 2023 reporting year as in the prior year, was well below the industry average for 2022 (20.4) reported by the employers' liability insurance association.

Social matters

All activities surrounding responsible management of the working relationship with employees fit together in a closely interlocking package of measures. Factors shaping the human resources strategy include the globalization of the business activities, rapid adaptation of work processes, workforce age structure and needs relating to digitalization and new ways of working. In collaboration with management at our individual operating sites, this results in a detailed picture of the measures needed.

Successful corporate development is rooted in detailed awareness of the needs and potential of our workforce at all locations. The Human Resources (HR) function, which is under the direction of the CEO, coordinates cross-cutting measures. These are implemented by local HR managers. The principles guiding the development of our HR strategy are based on the Corporate Philosophy, the Corporate Guidelines and national legal requirements at our operating locations.

In 2021, a diversity policy was formulated for WashTec in close collaboration with the diversity team. This sets out rules for respectful interaction. Activities to promote respectful interaction among the workforce are headed by the diversity team, which is made up of two

diversity officers and three additional members from the Management Board, the Works Council and HR. In addition, diversity ambassadors disseminate the subject of diversity together with related guidance across all corporate units and levels.

The development of our employee and social program is based in particular on:

• W Participative working methods, such as cross-departmental teams
• W A consistent and long-term employment policy
• W Constructive communication between employer and employees
• W Intensified training and professional development
• W Equal treatment, equal opportunities and diversity.

In addition to our employee development activities, the Company has also selected a number of social projects for support, primarily involving local non-profit organizations.

Disclosures on Article 8 of the EU Taxonomy Regulation

General disclosures/principles

With its Sustainable Finance Action Plan, the European Commission pursues the goal of channeling capital flows into environmentally sustainable activities. One measure towards this goal is the introduction of a uniform classification system for environmentally sustainable economic activities (under the EU Taxonomy Regulation). Under delegated acts and pronouncements by the European Commission supplementing Article 8 of the EU Taxonomy Regulation (Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088), companies that are subject to an obligation to publish non-financial information pursuant to the CSR Directive (EU Directive 2014/95/EU) are required to comply with continuously increasing reporting obligations.

They are required to disclose, with reference to six specified objectives (Article 9 of the EU Taxonomy Regulation), how and to what extent their business activities are associated with economic activities that qualify as environmentally sustainable. In particular, non-financial reporting must include the following performance indicators:

• W The proportion of turnover (i.e., revenue) derived from products or services associated with economic activities that qualify as environmentally sustainable under the Taxonomy Regulation.
• W The proportion of capital expenditure (CapEx) and the proportion of operating expenditure (OpEx) related to assets or processes associated with economic activities that qualify as environmentally sustainable under the Taxonomy Regulation.

The six environmental objectives in the EU Taxonomy Regulation are:

• I. Climate change mitigation
• II. Climate change adaptation
• III. Sustainable use and protection of water and marine resources
• IV. Transition to a circular economy
• V. Pollution prevention and control
• VI. Protection and restoration of biodiversity and ecosystems

Economic activities are Taxonomy-eligible if they fall under the economic activities listed in Annex I and II and the associated amendments of the Climate Delegated Act or Annex I to IV of the Environmental Delegated Act (referred to in the following as the "Delegated Acts issued in this connection").

Under Article 3 of the EU Taxonomy Regulation, economic activities are Taxonomy-aligned if they:

• W Make a substantial contribution to one or more of the six objectives in accordance with Articles 10 to 16 of the EU Taxonomy Regulation,
• W Do no significant harm ("DNSH") with regard to any of the five additional objectives in accordance with Article 17 of the EU Taxonomy Regulation,
• W Are carried out in compliance with the minimum safeguards (for occupational safety and health and human rights) laid down in Article 18 of the EU Taxonomy Regulation and
• W Comply with technical screening criteria established by the European Commission.

Reporting in fiscal year 2023

For fiscal year 2023, with regard to the two climate objectives, it is necessary to report on the proportion of turnover, CapEx and OpEx associated both with economic activities that are Taxonomy-eligible and those that are not Taxonomy-eligible and with economic activities that are Taxonomy-aligned and those that are not Taxonomy-aligned. With regard to the four remaining environmental objectives, it is necessary to report for fiscal year 2023 on the proportion of turnover, CapEx and OpEx associated with economic activities that are Taxonomy-eligible and those that are not Taxonomy-eligible. Qualitative explanations must additionally be provided for all six objectives.

The EU Taxonomy Regulation contains language and terms that remain subject to interpretation and could lead to changes in reporting if clarified by the EU at a later date. There is a risk that this would change the assessment of the reported figures. Our interpretation is presented below.

Economic activities

On the basis of its business model, the WashTec Group has assessed all economic activities listed for the six objectives listed in the Delegated Acts issued in this connection.

The WashTec Group's economic activities are based on the aggregation of product groups. These comprise:

• W The development, manufacture and sale of vehicle wash equipment, including peripherals, and water recovery systems together with related services (hereafter "Equipment and Service")
• W The development, manufacture and sale of carwash chemicals (hereafter "Chemicals")

A detailed assessment of the WashTec Group's business activities has shown that they fall partly within the scope of the Delegated Acts issued in this connection.

The climate objectives – "climate change mitigation" and "climate change adaptation" – primarily relate to those economic activities and sectors which have the greatest potential to reduce greenhouse gas emissions. The business model of the WashTec Group does not fall under these sectors.

The Equipment and Service business activity is partially Taxonomy-eligible with regard to the environmental objective "Transition to a circular economy." The water recovery systems product corresponds to economic activity 2.2 "Production of alternative water resources for purposes other than human consumption" listed in Annex II of the Environmental Delegated Act.

The water recovery systems manufactured by WashTec enable the collection and treatment of grey water* and, by thus producing an alternative water resource, reduce the fresh water consumption of the equipment in operation on customer sites.

The three remaining environmental objectives – "Sustainable use and protection of water and marine resources," "Pollution prevention and control" and "Protection and restoration of biodiversity and ecosystems" – primarily relate to those economic activities and sectors which have the greatest potential for significant improvements in environmental protection in relation to these three objectives. The WashTec Group's business model does not fall under these sectors.

The WashTec Group does not engage in any economic activity related to energy generation from fossil gas or nuclear energy. Accordingly, templates 2 to 5 under the Regulation are not presented. Template 1 is provided on p. 50.

*Grey water includes waste water from bathtubs, showers, bathroom sinks, clothes washing machines and laundry sinks.

W Other

Accounting policy

The WashTec Group has determined the key performance indicators under the EU Taxonomy Regulation, comprising turnover, CapEx and OpEx, in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) in force as of the reporting date together with the interpretations of the IFRS IC (IFRIC) as adopted by the European Union. The disclosures on the performance indicators relate to the companies fully consolidated in the WashTec Group's financial statements.

With regard to the climate targets, the WashTec Group's business activities are not Taxonomy-eligible and not Taxonomy-aligned. For this reason, no disclosures are provided in the following for categories (a) and (b) of points 1.1.2.2 and 1.1.3.2 of Annex I of the Disclosures Delegated Act. The measures set out in the following relate to the purchase of intermediate products and services from potentially Taxonomy-aligned economic activities that lead to greenhouse gas reductions (category (c) of points 1.1.2.2 and 1.1.3.2 of Annex I of the Disclosures Delegated Act). The measures were identified on the basis of the WashTec Group's Environment and Energy Roadmap 2025 (see also under "Environmental matters") and the climate change mitigation objective.

The WashTec Group reports in this regard on the Taxonomy eligibility of purchased intermediate products and services. It was not possible to assess their Taxonomy alignment because verification of compliance with the technical screening criteria resides with the suppliers and service providers and not with WashTec. This applies in particular to the "DNSH" criteria and compliance with the minimum safeguards.

With regard to the environmental objective "Transition to a circular economy," the Equipment and Service business activity is partially Taxonomy-eligible. The water recovery systems product corresponds to economic activity 2.2 "Production of alternative water resources for purposes other than human consumption" listed in Annex II of the Environmental Delegated Act.

Double counting in the allocation of turnover, CapEx and OpEx in the numerator to economic activities is avoided by allocating the various measures to the individual activities and objectives. In addition, no separate CapEx or OpEx has been identified for the climate change adaptation objective that contributes to this objective in particular.

Performance indicators

For fiscal year 2023, the three key performance indicators turnover, CapEx and OpEx must be disclosed in relation to Taxonomy-eligible and Taxonomy-non-eligible economic activities (all objectives) and in relation to Taxonomy-aligned and Taxonomy-non-aligned economic activities (climate objectives) (Article 5 (2) of the Environmental Delegated Act).

The turnover key performance indicator is calculated as the proportion of revenue derived from products or services associated with economic activities that qualify as Taxonomyeligible or Taxonomy-aligned under the Taxonomy Regulation (numerator), divided by the consolidated revenue in fiscal year 2023 (denominator) (point 1.1.1 of Annex I of the Disclosures Delegated Act).

The water recovery systems product is assigned to the "Equipment and Service" business activity. This business activity corresponds to economic activity 2.2 "Production of alternative water resources for purposes other than human consumption" under the environmental objective "transition to a circular economy" and is thus Taxonomy-eligible (Annex II of the Environmental Delegated Act). Turnover from water recovery systems has been determined on the basis of revenue from the individual product groups. Turnover generated with water recovery systems amounted to €8,209k in fiscal year 2023.

The numerator for Taxonomy-eligible revenue from contracts with customers in accordance with the EU Taxonomy Regulation is €8,209k.

The denominator is net turnover within the meaning of Article 2 (5), of Directive 2013/34 and is €489,468k (see "Revenue" in the Consolidated Income Statement).

The CapEx key performance indicator is calculated as the proportion relating to assets or processes that are associated with economic activities that qualify as Taxonomy-eligible or Taxonomy-aligned under the Taxonomy Regulation (numerator), divided by the total additions to property, plant and equipment, intangible assets and right-of-use assets in fiscal year 2023 (denominator) (point 1.1.2 of Annex I of the Disclosures Delegated Act).

The WashTec Group has invested in two laser welding systems to improve the energy efficiency of the metalworking processes at its plants in Augsburg and the Czech Republic. The new systems reduce electricity consumption. They also reduce compressed air consumption, which further reduces electricity consumption. This measure aims for a significant reduction in greenhouse gas emissions. The final payment amounted to €111k and was recognized in the technical equipment and machinery asset category. This qualifies as a measure in accordance with category (c) of point 1.1.2.2 of Annex I of the Disclosures Delegated Act. The economic activity to which the measure is allocated under the "climate change mitigation" objective in accordance with Annex I of the Climate Delegated Act is 3.6 "Manufacture of other low carbon technologies".

In the area of industrial trucks, LPG forklifts have begun to be replaced with electric forklifts. This measure aims for a significant reduction in greenhouse gas emissions. The associated CapEx amounted to €144k and was recognized in the "right-of-use assets: other plant, fixtures and fittings" asset category. This qualifies as a measure in accordance with category (c) of point 1.1.2.2 of Annex I of the Disclosures Delegated Act. The economic activity to which the measure is allocated under the "climate change mitigation" objective in accordance with Annex I of the Climate Delegated Act is 3.6 "Manufacture of other low carbon technologies".

The new car policy in particular contributes to the further electrification of the Company vehicle fleet and thus to the reduction of carbon emissions. The CapEx associated with the leasing of category M1 and N1 electric vehicles amounted to €244k and was recognized in the "right-of-use assets: other plant, fixtures and fittings" asset category. This qualifies as a measure in accordance with category (c) of point 1.1.2.2 of Annex I of the Disclosures Delegated Act. The economic activity to which the measure is allocated under the "climate change mitigation" objective in accordance with Annex I of the Climate Delegated Act is 6.5 "Transport by motorbikes, passenger cars and light commercial vehicles".

In connection with the electrification of the fleet, charging infrastructure for electric vehicles and electric industrial trucks has been installed at all production sites in Germany. The CapEx associated with the installation of charging stations for electric vehicles amounted to €34k and was recognized in the "Land, land rights and buildings" asset category. This qualifies as a measure in accordance with category (c) of point 1.1.2.2 of Annex I of the Disclosures Delegated Act. The economic activity to which the measure is allocated under the "climate change mitigation" objective in accordance with Annex I of the Climate Delegated Act is 7.4 "Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)".

The numerator of the total Taxonomy-eligible CapEx for the economic activity 3.6 "Manufacture of other low carbon technologies" is €255k.

The numerator of the total Taxonomy-eligible CapEx in accordance with the EU Taxonomy Regulation is €533k. Of this amount, €145k relates to additions to property, plant and equipment and €388k to right-of-use assets.

The denominator comprising CapEx consists of additions to property, plant and equipment, intangible assets and right-of-use assets in fiscal year 2023 and is €26,969k (see Notes to the Consolidated Financial Statements, Note 14, under additions to cost, and Note 15, Right-of-use assets).

The OpEx key performance indicator is calculated as the proportion relating to assets or processes that are associated with economic activities that qualify as Taxonomy-eligible or Taxonomy-aligned under the Taxonomy Regulation (numerator), divided by OpEx for fiscal year 2023 in accordance with point 1.1.3 of Annex I of the Disclosures Delegated Act (denominator). This covers direct non-capitalized costs that relate to research and development, building renovation measures, short-term leases, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment that are necessary to ensure their continued and effective functioning.

In fiscal year 2023, in order to reduce energy consumption and thus improve the environmental performance of its operations, the WashTec Group continued the project launched in fiscal year 2021 for the gradual conversion of the German sites to energy-efficient LED lighting. The attributable OpEx amounted to €4k and was recognized in the consolidated income statement under "cost of sales". It was determined on the basis of the costs recorded in the relevant account. This qualifies as a measure in accordance with category (c) of point 1.1.3.2 of Annex I of the Disclosures Delegated Act. The economic activity to which the measure is allocated under the climate change mitigation objective in accordance with Annex I of the Climate Delegated Act is 7.3 "Installation, maintenance and repair of energy efficiency equipment, category (d) installation and replacement of energy efficient light sources".

The numerator of the total Taxonomy-eligible OpEx in accordance with the EU Taxonomy Regulation is €4k.

The denominator comprising OpEx as defined above is €16,837k.

The templates presented in the following correspond to the requirements in Annex V of the Environmental Delegated Act.

Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023

Financial year 2023					Substantial contribution criteria						DNSH criteria ("Does not Significantly Harm")
Economic Activities	Code(a)		Turnover Proportion of Turnover 2023	Climate Change Mitigation	Climate Change Adaptation	Water	Pollution	Circular Economy	Bio diversity	Climate Change Mitigation	Climate Change Adaptation	Water		Pollution Circular Economy	Bio diversity	Minimum Safeguards	Proportion of Taxonomy aligned (A.1) or eligible (A.2) turnover 2022	Category enabling activity	Category transitional activity
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)	(15)	(16)	(17)	(18)	(19)	(20)
		€k	%	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	%	E	T
A. Taxonomy-eligible activities
A.1 Enviromentally sustainable activities (Taxonomy-aligned)
n/a	n/a	0	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%	n/a	n/a
Turnover of environmentally sustainable activities (Taxonomy aligned) (A.1)		0	0%	0%	0%	0%	0%	0%	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%
Of which enabling		0	0%	0%	0%	0%	0%	0%	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%	E
Of which transitional		0	0%	0%						n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%		T
A.2 Taxonomy-eligible but not enviromentally sustainable activities (not Taxonomy-aligned activities)
					EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d)
Production of alternative water resources for purposes other than human consumption	CE 2.2	8,209	2%	N/EL	N/EL	N/EL	N/EL	EL	N/EL								n/a
Turnover of Taxonomy-eligible but not enviromentally sustainable activities (not Taxonomy-aligned activities) (A.2)		8,209	2%	0%	0%	0%	0%	2%	0%								0%
A. Turnover of Taxonomy-non-eligible activities (A.1 + A.2)		8,209	2%	0%	0%	0%	0%	2%	0%								0%

B. Taxonomy-non-eligible activities

Turnover of non-taxonomy activities	481,259	98%
Total	489,468	100%

• (a) The Code constitutes the abbreviation of the relevant objective to which the economic activity is eligible to make a substantial contribution, as well as the section number of the activity in the relevant Annexcovering the objective, i.e:
• Climate Change Mitigation: CCM
• Climate Change Adaptation: CCA
• Water and Marine Resources: WTR
• Circular Economy: CE
• Pollution Prevention and Control: PPC
• Biodiversity and ecosystems: BIO
• (b) Y Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective.
• N No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environ mental objective.
• N/EL Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective.

(c) Where an economic activity contributes substantially to multiple environmental objectives, non-financial undertakings shall indicate, in bold, the most relevant environmental objective for the purpose of computing the KPIs of financial undertakings while avoiding double counting. In their respective KPIs, where the use of proceeds from the financing is not known, financial undertakings shall compute the financing of economic activities contributing to multiple environmental objectives under the most relevant environmental objective that is reported in bold in this template by non-financial undertakings. An environmental objective may only be reported in bold once in one row to avoid double counting of economic activities in the KPIs of financial undertakings. This shall not apply to the computation of Taxonomy-alignment of economic activities for financial products defined in point (12) of Article 2 of Regulation (EU) 2019/2088. Non-financial undertakings shall also report the extent of eligibility and alignment per environmental objective, that includes alignment with each of environmental objectives for activities contributing substantially to several objectives, by using the template below:

(d) EL Taxonomy-eligible activity for the relevant objective N/EL Taxonomy-non-eligible activity for the relevant objective

Prior-year information in relation to the Climate Delegated Act; for the Environmental Delegated Act, prior-year information is to be provided for the first time for reporting on fiscal year 2024.

Proportion of turnover/Total turnover
	Taxonomy-aligned per objective	Taxonomy-eligible per objective
CCM	0%	n/a
CCA	0%	n/a
WTR	0%	n/a
CE	n/a	2%
PPC	0%	n/a
BIO	0%	n/a

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023 / 1 (continued on next page)

Financial year 2023					Substantial contribution criteria						DNSH criteria ("Does not Significantly Harm")
Economic Activities	Code(a)	CapEx	Proportion of CapEx 2023	Climate Change Mitigation	Climate Change Adaptation	Water	Pollution	Circular Economy	Bio diversity	Climate Change Mitigation	Climate Change Adaptation	Water	Pollution	Circular Economy	Bio diversity	Minimum Safeguards	Proportion of Taxonomy aligned (A.1) or eligible (A.2) CapEx 2022	Category enabling activity	Category transitional activity
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)	(15)	(16)	(17)	(18)	(19)	(20)
		€k	%	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	%	E	T
A. Taxonomy-eligible activities
A.1 Enviromentally sustainable activities (Taxonomy-aligned)
n/a	n/a	0	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%	n/a	n/a
CapEx of enviromentally sustainable activities (Taxonomy-aligned) (A.1)		0	0%	0%	0%	0%	0%	0%	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%
Of which enabling		0	0%	0%	0%	0%	0%	0%	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%	E
Of which transitional		0	0%	0%						n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%		T

Financial year 2023	Substantial contribution criteria							DNSH criteria ("Does not Significantly Harm")
Economic Activities	Code(a)	CapEx	Proportion of CapEx 2023	Climate Change Mitigation	Climate Change Adaptation	Water	Pollution	Circular Economy	Bio diversity	Climate Change Mitigation	Climate Change Adaptation	Water	Pollution	Circular Economy	Bio diversity	Minimum Safeguards	Proportion of Taxonomy aligned (A.1) or eligible (A.2) CapEx 2022	Category enabling activity	Category transitional activity
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)	(15)	(16)	(17)	(18)	(19)	(20)
		€k	%	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	%	E	T

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023 / 2 (continued from page 45)

A.2 Taxonomy-eligible but not enviromentally sustainable activities (not Taxonomy-aligned activities)

						EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d)
Manufacture of other low-carbon technologies	CCM 3.6	255	1%	EL	N/EL	N/EL	N/EL	N/EL	N/EL
Transport by motorbikes, passenger cars and light commercial vehicles	CCM 6.5	244	1%	EL	N/EL	N/EL	N/EL	N/EL	N/EL
Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)	CCM 7.4	34	0%	EL	N/EL	N/EL	N/EL	N/EL	N/EL
Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings	CCM 7.5	0	0%	EL	N/EL	N/EL	N/EL	N/EL	N/EL
CapEx of Taxonomy-eligible but not enviromentally sustainable (not Taxonomy-aligned activities) (A.2)		533	2%	2%	0%	0%	0%	0%	0%
A. CapEx of Taxonomy-eligible activities (A.1 + A.2)		533	2%	2%	0%	0%	0%	0%	0%

B. Taxonomy-non-eligible activities

CapEx of Taxonomy-non-eligible activities	26,436	98%
Total	26,969	100%

• (a) The Code constitutes the abbreviation of the relevant objective to which the economic activity is eligible to make a substantial contribution, as well as the section number of the activity in the relevant Annexcovering the objective, i.e:
• Climate Change Mitigation: CCM
• Climate Change Adaptation: CCA
• Water and Marine Resources: WTR
• Circular Economy: CE
• Pollution Prevention and Control: PPC
• Biodiversity and ecosystems: BIO
• (b) Y Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective.
• N No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environ mental objective.
• N/EL Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective.

(c) Where an economic activity contributes substantially to multiple environmental objectives, non-financial undertakings shall indicate, in bold, the most relevant environmental objective for the purpose of computing the KPIs of financial undertakings while avoiding double counting. In their respective KPIs, where the use of proceeds from the financing is not known, financial undertakings shall compute the financing of economic activities contributing to multiple environmental objectives under the most relevant environmental objective that is reported in bold in this template by non-financial undertakings. An environmental objective may only be reported in bold once in one row to avoid double counting of economic activities in the KPIs of financial undertakings. This shall not apply to the computation of Taxonomy-alignment of economic activities for financial products defined in point (12) of Article 2 of Regulation (EU) 2019/2088. Non-financial undertakings shall also report the extent of eligibility and alignment per environmental objective, that includes alignment with each of environmental objectives for activities contributing substantially to several objectives, by using the template below:

(d) EL Taxonomy-eligible activity for the relevant objective N/EL Taxonomy-non-eligible activity for the relevant objective

Prior-year information in relation to the Climate Delegated Act; for the Environmental Delegated Act, prior-year information is to be provided for the first time for reporting on fiscal year 2024.

	Proportion of CapEx/Total CapEx
	Taxonomy-aligned per objective	Taxonomy-eligible per objective
CCM	0%	2%
CCA	0%	n/a
WTR	0%	n/a
CE	0%	n/a
PPC	0%	n/a
BIO	0%	n/a

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023

Financial year 2023				Substantial contribution criteria						DNSH criteria ("Does not Significantly Harm")
Economic Activities	Code(a)	OpEx	Proportion of OpEx 2023	Climate Change Mitigation	Climate Change Adaptation	Water	Pollution	Circular Economy	Bio diversity	Climate Change Mitigation	Climate Change Adaptation	Water	Pollution	Circular Economy	Bio diversity	Minimum Safeguards	Proportion of Taxonomy aligned (A.1) or eligible (A.2) OpEx 2022	Category enabling activity	Category transitional activity
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)	(15)	(16)	(17)	(18)	(19)	(20)
		€k	%	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y;N; N/EL(b) (c)	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	Y/N	%	E	T
A. Taxonomy-eligible activities
A.1 Enviromentally sustainable activities (Taxonomy-aligned)
n/a	n/a	0	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%	n/a	n/a

OpEx of enviromentally sustainable activities (Taxonomy-aligned) (A.1)	0	0%	0%	0%	0%	0%	0%	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%
Of which enabling	0	0%	0%	0%	0%	0%	0%	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%	E
Of which transitional	0	0%	0%						n/a	n/a	n/a	n/a	n/a	n/a	n/a	0%		T

A.2 Taxonomy-eligible but not enviromentally sustainable (not Taxonomy-aligned activities)

						EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d) EL; N/EL(d)
Installation, maintenance and repair of energy efficiency equipment	CCM 7.3	4	0%	EL	N/EL	N/EL	N/EL	N/EL	N/EL
OpEx of Taxonomy-eligible but not enviromentally sustainable 4 (not Taxonomy-aligned activities) (A.2)		0%	0%	0%	0%	0%	0%	0%
A. OpEx of Taxonomy eligible activities (A.1 + A.2)		4	0%	0%	0%	0%	0%	0%	0%

B. Taxonomy-non-eligible activities

OpEx of Taxonomy-non-eligible activities	16,883	100%
Total	16,837	100%

• (a) The Code constitutes the abbreviation of the relevant objective to which the economic activity is eligible to make a substantial contribution, as well as the section number of the activity in the relevant Annexcovering the objective, i.e:
• Climate Change Mitigation: CCM
• Climate Change Adaptation: CCA
• Water and Marine Resources: WTR
• Circular Economy: CE
• Pollution Prevention and Control: PPC
• Biodiversity and ecosystems: BIO
• (b) Y Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective.
• N No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environ mental objective.
• N/EL Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective.

(c) Where an economic activity contributes substantially to multiple environmental objectives, non-financial undertakings shall indicate, in bold, the most relevant environmental objective for the purpose of computing the KPIs of financial undertakings while avoiding double counting. In their respective KPIs, where the use of proceeds from the financing is not known, financial undertakings shall compute the financing of economic activities contributing to multiple environmental objectives under the most relevant environmental objective that is reported in bold in this template by non-financial undertakings. An environmental objective may only be reported in bold once in one row to avoid double counting of economic activities in the KPIs of financial undertakings. This shall not apply to the computation of Taxonomy-alignment of economic activities for financial products defined in point (12) of Article 2 of Regulation (EU) 2019/2088. Non-financial undertakings shall also report the extent of eligibility and alignment per environmental objective, that includes alignment with each of environmental objectives for activities contributing substantially to several objectives, by using the template below:

(d) EL Taxonomy-eligible activity for the relevant objective N/EL Taxonomy-non-eligible activity for the relevant objective.

Prior-year information in relation to the Climate Delegated Act; for the Environmental Delegated Act, prior-year information is to be provided for the first time for reporting on fiscal year 2024.

Proportion of OpEx/Total OpEx
	Taxonomy-aligned per objective	Taxonomy-eligible per objective
CCM	0%	0%
CCA	0%	n/a
WTR	0%	n/a
CE	0%	n/a
PPC	0%	n/a
BIO	0%	n/a

Nuclear and fossil gas related activities under the Delegated Regulation as regards economic activities in certain energy sectors

Nuclear energy related activities
1.	The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.	NO
2.	The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.	NO
3.	The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.	NO
4.	The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.	NO
5.	The undertaking carries out, funds or has exposures to construction, refurbish ment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.	NO
6.	The undertaking carries out, funds or has exposures to construction, refurbish ment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.	NO

The WashTec Share

Stock market performance in 2023

After the challenges of 2022, when almost all forecasts had to be revised significantly during the year, 2023 proved to be a calmer year overall. Global economic growth in 2023 was thus around 3%. The nevertheless moderate overall growth of the global economy in 2023 was mainly due to the still high (though declining) inflation rates and to restrictive central bank monetary policies. Germany's economy contracted by 0.3% in 2023 according to the

Price performance of WashTec shares 2023/2024 compared to the SDAX (indexed)

German Federal Statistical Office and the German government forecasts that it will grow by just 0.2% year on year in 2024. Business sentiment has deteriorated above all in the mechanical engineering, automotive and electrical industries. While supply chain problems gradually eased as the year progressed – which made it possible to work off existing order backlogs – the business environment deteriorated with a decline in new orders.

Despite a large number of negative factors, such as the terrible wars on or near Europe's doorstep, weak economic growth in many European countries and also in China as a key sales market, together with high inflation rates, most stock markets recovered much the previous year's losses over the course of 2023. Falling inflation rates in particular fueled hopes of interest rate cuts in the near future and thus boosted the performance of shares in the technology sector especially. The DAX recovered most of all towards the year-end and gained 20% in value over the year as a whole. The more defensively oriented STOXX Europe 50 showed a somewhat smaller gain of 16%. Both the mid-cap MDAX and the small-cap SDAX had a successful year with increases of 8% and around 17% respectively.

WashTec AG share performance in 2023

The WashTec share price began 2023 at €34.55 and marked its high for the year at €41.75 on April 6. On October 27, 2023, the share price reached its low of €29.75. The end-of-year share price was €32.00. This was 7.4% down on the prior year-end closing price. The share thus underperformed the SDAX (+15.5%). These figures relate to closing prices on the Xetra trading platform.

As of February 29, 2024, WashTec shares were trading at €36.40 per share.

Attractive dividend policy

Pursuant to a resolution adopted by the Annual General Meeting on May 15, 2023, the Company paid its shareholders a dividend of €2.20 per share for fiscal year 2022. Dividend distributions thus totaled €29.4m in 2023. Based on the year-end share price, the dividend yield was 6.88%. This places WashTec among the strongest performers on the German stock market in terms of dividend yield.

WashTec aims to maintain an attractive dividend policy under which shareholders duly participate in the Company's success.

The Management Board and Supervisory Board are proposing a dividend of €2.20 per share for fiscal year 2023.

Changes in shareholder structure

The majority of WashTec AG shares are held by institutional investors. WashTec AG received the following voting rights notifications under the Securities Trading Act (Wertpapierhandelsgesetz) in fiscal year 2023. All changes or secondary offerings were price-neutral without any material impact on the share price:

Union Investment Privatfonds GmbH, Frankfurt am Main, Germany, notified WashTec AG that its share of voting rights on January 18, 2023 was 5.53% instead of previously 4.79%.

Alantra EQMC ICAV, Dublin, Ireland, notified WashTec AG that its share of the voting rights on February 7, 2023 was now 15.14% instead of previously 10.06%.

Shareholder structure as of December 31, 2023

	15.14% EQMC ICAV ¹
	9.60% Kempen Oranje Participaties N.V.
	6.82% Dr. Kurt Schwarz ²
	5.43% Investment AG für langfristige Investoren TGV
	4.99% Axxion S.A.
	4.79% Union Investment Privatfond GmbH
	4.58% Paradigm Capital Value Fund SICAV
	4.25% Treasury shares
	4.00% Diversity Industrie Holding AG
40.40% Other

Source: Notifications pursuant to WpHG

¹ Alantra EQMC Asset Management, SGIIC, S.A. as investment manager of EQMC ICAV ² Leifina GmbH & Co. KG et al.

Four investors consequently currently each hold at least 5.00% of the voting rights. To the knowledge of the Management Board, 40.40% of the Company's shares are held by shareholders whose stakes are below the notification threshold.

The following managers' transactions were reported to the Company under the WpHG:

• W Mr. Andreas Pabst, member of the Management Board, acquired 500 shares on February 6, 2023 and a further 2500 shares on June 28, 2023
• W Mr. Sebastian Kutz, member of the Management Board, acquired 750 shares on June 22, 2023
• W Dr. Ralf Koeppe, member of the Management Board, acquired 800 shares on June 28, 2023

Active investor relations work

The Management Board communicated with shareholders, journalists and the financial community on an ongoing basis through the year. The Company held financial press conferences and conference calls for analysts and investors on publication of results. At the Annual General Meeting on May 15, 2023, the Management Board shared its detailed position on the current market situation, business development and strategy and discussed these matters with the shareholders. Shareholders were also kept up to date in a timely manner about all notable events. Management participated in investor relations events including the Hamburg Investor Days (HIT), the Equityforum spring conference, the Warburg Highlights conference, a multi-day roadshow in Zurich and Paris and the Deutsches Eigenkapitalforum in Frankfurt.

In addition, numerous virtual investor calls were held in order to give individual investors and interested parties an impression of WashTec. These met with strong interest.

WashTec shares are currently covered, with up-to-date analyses, by Berenberg, Hauck & Aufhäuser and MM Warburg. The price targets given by analysts are between €43 and €62 (as of February 2024).

Key data on WashTec shares

	2023	2022	2021
Closing price1 €	32.00	34.50	55.00
High €	41.75	53.54	61.10
Low €	29.75	32.00	42.81
Opening price €	34.55	53.54	42.95
Number of shares as of Dec. 312 million	13.4	13.4	13.4
Free float as of Dec. 313 %	40.40	44.74	45.95
Market capitalization as of Dec. 31 €m	428.3	461.7	736.0
Performance over the year %	–7.4	–36.26	29.07
SDAX (for comparison) %	15.5	–27.35	11.17
Earnings per share €	2.18	1.97	2.32
Dividend per share €	2.204	2.204	2.90

1 Based on Xetra closing prices

2 Excluding 594,646 treasury shares

3 Held by shareholders whose stakes are below the notification threshold under the Securities Trading Act (WpHG)

4 Dividend proposal to the Annual General Meeting 2023

Further information and contact

Current data regarding the WashTec shares and detailed information about the WashTec Group and its products can be found on the Company's website at www.washtec.de.

Anyone interested in the Company and its shares may also contact the Investor Relations Department at WashTec AG:

Telephone +49 821 5584-5555 E-mail ir@washtec.com

Combined Management Report of WashTec AG and the Group

2023 at a glance	55
General information about the Group	56
Report on economic position	65
Report on subsequent events	81
Outlook, opportunities and risk report	82
Internal control system and risk management system	93
Risk reporting in relation to the use
of financial instruments .	94
Takeover-related disclosures . .	95
Corporate governance statement	97

Overview: Group and regions

WashTec Group*

• W Revenue of €489.5m, up 1.5% on prior year (€482.2m); 3.4% at constant exchange rates
• W EBIT at €41.9m, up 10.3% on prior year (€38.0m); EBIT margin of 8.6%(prior year: 7.9%)
• W Free cash flow of €46.1m, up 184.6% on prior year (€16.2m)

Europe

• W Revenue of €378.9m, up 2.0% on prior year (€371.6m)
• W EBIT at €36.2m, down 0.5% on prior year (€36.4m); EBIT margin of 9.6% (prior year: 9.8%).

North America

• W Revenue of €102.9m, down 4.5% on prior year (€107.7m); 0.6% at constant exchange rates
• W EBIT at €5.7m, up 307.1% on prior year (€1.4m); EBIT margin of 5.5%(prior year: 1.3%)

Asia/Pacific

• W Revenue of €19.2m, up 9.1% on prior year (€17.6m)
• W EBIT at €0.6m, up 50.0% on prior year (€0.4m); EBIT margin of 3.1%(prior year: 2.3%)

2023 at a glance Key financial performance indicators by quarter

^* Regional data without cross-segment consolidation

General information about the Group 1

1.1 Business model

WashTec is the leading provider of innovative solutions for carwash worldwide. The WashTec product range comprises all types of vehicle wash equipment as well as the associated peripheral components, washing chemicals and water recovery systems. As a specialist, the Group develops a constant stream of innovations for environment-friendly carwash. WashTec also offers comprehensive servicing packages and digital smart service solutions spanning the entire product life cycle. These include digital systems that allow operators to remotely monitor and control system parameters, equipment maintenance, chemicals, equipment return, financing arrangements and operator management. The main revenue driver is the Equipment and Service product range.

Revenue by product

Equipment and Service

• Machinery
  • Gantry carwashes
  • Self-service carwashes
  • Commercial vehicle wash equipment
• Conveyor tunnel systems
• Water recovery systems
• Spare parts
• Service
  • Full maintenance agreements
  • On-call service agreements
  • Service projects and upgrades
  • Digital solutions
    • my.carwash
    • my.service
    • my.CarWashShop
    • my.EasyCarWash
    • my.SmartSite

€418.5m

(prior year: €420.0m)

Chemicals

• AUWA Green Car Care product range
• Sustainable cleaning, care and specialty products
• TecsLine premium Green Car Care product line
• Product range for Scandinavia with Nordic Swan Ecolabel

€65.8m

(prior year: €56.9m)

Other

• WashTec Carwash Management
• WashTec Financial Services (financing and leasing solutions)

€5.2m (prior year: €5.3m)

Group structure

The consolidated financial statements of WashTec AG as of December 31, 2023 include the parent company and the Group companies shown below. WashTec AG directly or indirectly owns 100% of these companies.

¹ Control and profit (loss) pooling agreement

3 Including subsidiary WashTec Bilvask AS, Norway 4 WashTec Cleaning Technology GmbH 90%, WashTec Holding GmbH 10%

5 Including subsidiary WTMVII Cleaning Technologies Canada,

2 Profit transfer agreement

Inc., Canada

WashTec AG

As the ultimate parent company of the Group, WashTec AG is responsible for the strategic management and control of all subsidiaries.

Since the Company does not have any operations of its own, its results of operations, financial position and cash flows are determined by the business performance of its subsidiaries. The information set out below therefore mainly relates to the Group. WashTec AG is discussed separately in section 2.6. The direct subsidiaries of WashTec AG are AUWA-Chemie GmbH, WashTec Holding GmbH and WashTec Carwash Management GmbH. WashTec AG has control and profit (loss) pooling agreements with AUWA-Chemie GmbH and WashTec Carwash Management GmbH and a profit transfer agreement with WashTec Holding GmbH.

WashTec Holding GmbH

With the exception of AUWA-Chemie GmbH and WashTec Carwash Management GmbH, the WashTec Group's ownership interests in operating companies are held by WashTec Holding GmbH, based in Augsburg, Germany. WashTec Holding GmbH has control and profit (loss) pooling agreements with WashTec Financial Services GmbH and WashTec Cleaning Technology GmbH.

WashTec Cleaning Technology GmbH

The bulk of the operating business is conducted by WashTec Cleaning Technology GmbH, Augsburg, Germany. This is where the main products of the WashTec Group are developed, manufactured, sold and serviced. WashTec Cleaning Technology GmbH also supplies and supports the subsidiaries and independent foreign distributors.

AUWA-Chemie GmbH

AUWA-Chemie GmbH produces chemical products for carwash equipment. Distribution is via WashTec subsidiaries and independent distributors in Germany and Europe.

Foreign subsidiaries

The WashTec Group is represented, and WashTec products are sold and serviced, by the Company's own subsidiaries in the Netherlands, France, Denmark, Norway, Italy, Spain, the United Kingdom, Austria, Poland, the United States, Canada, Australia and New Zealand. In the reporting year, WashTec also still had a subsidiary in China. The Chinese market will be developed in the future as a distributor market. In addition, the previously independent distributor in New Zealand was taken over in 2023 in order to commence direct sales and service activities there. An overview of the production locations is provided under the heading "Production, sourcing and logistics."

WashTec Financial Services GmbH and WashTec Carwash Management GmbH

WashTec Financial Services GmbH and WashTec Carwash Management GmbH provide services relating to the sale and operation of carwashes, such as brokering individual financing arrangements and services in connection with the operation of carwash equipment.

60

The WashTec Group's global footprint is a clear competitive advantage. WashTec has around 1,700 employees worldwide and subsidiaries in all major markets.

In addition, WashTec has a broad network of independent distributors and is thus on the map in over 80 countries throughout the world.

Production, sourcing and logistics

WashTec has a global procurement and production network with production facilities in Germany, the Czech Republic and the USA. Most of the equipment for worldwide distribution is assembled at the main plant in Augsburg, Germany. Gantry carwashes are produced for the North American market in Denver (USA). Much of the sheet metal production takes place in the Nyrany (Czech Republic), where components are also preassembled and the basic gantry carwash system is assembled. The Company has two other sites in Germany producing control units for the entire Group (Recklinghausen) and wash chemicals (Grebenau).

Segments

The WashTec Group's global business is divided into three geographical regions. European business activities and exports to other countries are combined in the Europe region. The North America region comprises the activities in the USA and Canada. The Asia/Pacific region mainly includes the business activities of the subsidiaries in Australia and China.

Management and control

As an Aktiengesellschaft (a German stock corporation), WashTec AG has a two-tier management and supervisory structure comprising the Management Board and the Supervisory Board. The Management Board is responsible for managing the Company, sets the strategic direction and pursues the goal of sustained growth in shareholder value. The Supervisory Board, which consists of six members in accordance with the Articles of Association, advises and supervises the Management Board.

As the Group parent company, WashTec AG determines corporate strategy and overall control, resource allocation and communication with key stakeholder groups in the business environment, primarily comprising the capital market and shareholders. The Company's internal management and control is based on a value-oriented management system. This encompasses an integrated planning and control strategy, target ratios for management of the Company as well as measures for ensuring sustained and profitable growth, efficiency improvements and efficient capital management. The Company's Management Board and Supervisory Board define corporate strategy and related targets, which are implemented at all business units across all of levels of responsibility in the Group.

Monitoring is performed by way of regular meetings involving all reporting units. These include fortnightly Management Board meetings at which the divisional heads report, monthly meetings with the main divisional heads, regular international management meetings with heads of the operating companies, strategic and annual planning including capital expenditure, production and capacity planning, regular reporting and forecasting, ongoing market analysis, and regular analyses of revenue, sales, order backlog and market share. All capital expenditure projects are continuously reviewed and monitored in the same connection.

External factors influencing the business

Mobility transition

The major economic and social trend toward individualization is a key driver of continued growth in demand for mobility. The resulting traffic volumes are still largely based on individual travel. In line with the need to decarbonize and the global mobility trends, this is resulting in changes in vehicle fleets. While autonomous driving and shared mobility mean a reduction in the vehicle fleet, they also lead to increasing passenger mileage with shorter vehicle life cycles.

In addition to the size of the fleet, the type and intensity of vehicle use will also determine carwash demand in the future. Vehicles need to be cleaned no matter how they are powered and regardless of the ownership model. "Shared mobility" vehicles tend to be washed more frequently.

Decarbonization and sustainability

Companies' sustainability performance is crucially important to all stakeholders, creating a growing need for information and transparency. As well as the environmental compatibility of products, this also includes companies' carbon footprint.

The use of recirculating water recovery systems in automated vehicle washing significantly reduces the consumption of mains water compared to hand washing or to a carwash without a water recovery system. In wash chemicals, the Green Car Care product range uses biogenic detergents without any fossil resources. These are agents that reduce the surface tension of the water for improved wetting performance.

With a binding commitment to reduce its own carbon footprint, WashTec is contributing to the global efforts to limit global warming (for further information, please see under "1.2 Corporate objective and strategy").

Economy

A key factor influencing the uptake of automated vehicle washing is a country's average per capita income. As this increases, it creates sustainable market potential worldwide, especially in regions that are transitioning from manual to automated washing. Progress here is being slowed down, however, by various factors such as inflation and the resulting high interest rates, and global crises such as the war in Ukraine and the Middle East.

Customer expectations

Customer expectations continue to focus on optimal wash results while conserving resources. Customers also expect the equipment to be easy to use. Automated carwashes are far more environment-friendly than manual washing because they use less water and chemicals. This is especially true of carwashes with water treatment systems. Modern digital systems allow operators to conveniently access and remotely monitor and control plant parameters anytime, anywhere. For the end user, speed, convenience, quality and the wash experience remain key factors.

Accordingly, the Company continues to operate on the basis that clean cars will remain a key quality criterion and hence a driver of the business model. The WashTec Group nevertheless expects changes in the operating environment, in particular with regard to the future importance and conceptual design of existing operator sites. At the same time, these developments also harbor opportunities, most of all from the provision of digital, environment-friendly solutions for carwash.

The Company closely monitors the development of external factors affecting the business in order to respond to changes in a timely manner and make the appropriate strategic choices.

1.2 Corporate objective and strategy

The focus of our activities is on offering the maximum possible benefit to people who wash cars professionally. This requires not only specialization to meet customer needs, but also product and service leadership to ensure the best possible technology and quality for our products. The environmental and economic sustainability of our products is a further strategic and operational focus.

Our strategy is based on four main pillars:

• W Total customer care
• W Optimum integrated system for carwash
• W Primary focus on the core regions of Europe and North America
• W Sustainability

Total customer care

With total customer care, the WashTec Group places the focus on maximum customer benefit and, based on the superior equipment and wash chemicals portfolio and advanced digital platform, offers car wash operators and consumers the most profitable carwash. Integrating the entire product and service portfolio – equipment, service and chemicals, embedded in digital solutions – is a source of major growth potential.

Optimum integrated system for carwash

With the integrated system of equipment, water treatment and biodegradable chemicals, carwash operators and consumers are ensured the most sustainable carwash. The coordinated components of the washing process also enable our customers to achieve the best possible wash.

Focus on core regions

In regional terms, the focus is on Europe and North America in order to better exploit the market potential available there.

Environmental sustainability

Environmental sustainability is a high priority for WashTec and relates both to our operations and to the environmental impact of our products. This strategy includes reducing the carbon emissions of our own production facilities, together with their sales and service operations, as well as reducing the amount of water used at customer carwashes.

1.3 Control system

Financial and non-financial key performance indicators

The key financial and non-financial performance indicators used by the Company for planning and control are as follows:

Key financial performance indicators

• W Revenue
• W EBIT
• W Free cash flow
• W ROCE

The free cash flow performance indicator is defined as cash inflow from operating activities less cash outflow from investing activities.

Return on capital employed (ROCE) is defined as the ratio of EBIT to capital employed. We define capital employed as non-current assets (non-current assets including goodwill and right-of-use assets) plus net operating working capital (NOWC), calculated as the average of the reporting date figures for the last five quarters. NOWC is defined as the sum of inventories and trade receivables less trade payables and prepayments on orders.

Key non-financial performance indicator

The following non-financial performance indicator is used at Group level:

W Accident rate: Work accidents/million hours worked

The Separate Non-financial Report contains a detailed description of the accident rate as WashTec's key non-financial performance indicator (see "Separate Non-financial Report" beginning on page 30).

Separate non-financial report in accordance with Sections 289b (3) and 315b (3) HGB

The Separate Non-financial Report in accordance with Sections 289b (3) and 315b (3) HGB is published on the Company's website at https://ir.washtec.de/en/financial_reports/ as a separate section of the Annual Report 2023, beginning on page 30.

Opportunities and risk management

Responsible management of business risk is one of the basic principles of good corporate governance. The Management Board has at its disposal comprehensive Group-wide and Company-specific reporting and management systems that permit it to identify, assess and manage such risk. These systems are continuously developed and adapted to changes in the operating environment. The Management Board regularly informs the Supervisory Board about existing risks, any measures taken and their development.

Details of risk management are found in the risk report, which is part of the management report. The management report contains the report required under Sections 289 and 315a of the German Commercial Code (HGB) on the internal monitoring and risk management system.

1.4 Research and development

A major thrust of research and development during the year related to the development of additional SmartCare features and functions. The focus was on improvements in washing and drying quality and in process speed and on further reducing the environmental footprint. Further progress was made here through a better understanding of the biological and chemical interrelationships in water treatment, further reducing the amount of fresh water needed and thus helping to address the drought periods caused by climate change in many regions. Another focus was the successful introduction of a modular system for the new JetWash generation, which ensures fast assembly and easy commissioning at customers' sites.

In total, some 70 employees work in research and development at the WashTec headquarters in Augsburg on solutions that maximize modularity and reusability. International patents secure the future solution space for WashTec.

Total operating research and development expenditure in the WashTec Group amounted to approximately €14.2m in 2023 (prior year: €14.2m). The Group's capitalized development costs came to €1.6m in fiscal year 2023 (prior year: €2.0m) and mainly related to the development of software for the digitalization and service platform.

Report on economic position 2

2.1 Overall economic and industry-specific environment and conditions

Overall economic development

Global economic development

Development of the gross domestic product*
	Forecast 2023	Actual 2023	Forecast 2024
Germany	0.1%	–0.3%	0.5%
Eurozone	0.7%	0.5%	0.9%
USA	1.4%	2.5%	2.1%
China	5.2%	5.2%	4.6%
Developing and emerging markets	4.0%	4.1%	4.1%
World	2.9%	3.1%	3.1%

*International Monetary Fund (IMF) World Economic Outlook, January 30, 2024

In fiscal year 2023, the global economy was hit hard by persistently high inflation and the resulting interest rate hikes, which noticeably slowed consumption and investment. Inflation peaked in 2023 as a result of monetary policy tightening and began to fall as the year progressed, but is still above the target levels aimed at by central banks. Uncertainties and tensions in relation to China, the war in Ukraine and the Middle East conflict also had a notable impact on economic development.

In its forecast for 2024, the International Monetary Fund (IMF) believes that the high interest rate levels maintained by central banks to curb inflation and the scaling back of fiscal support in the face of mounting debt will weigh on economic activity and that underlying

productivity growth will remain low. The IMF nevertheless expects positive impetus, particularly from the USA and several large emerging and developing countries, as these are developing more resiliently than initially expected and the Chinese economy is receiving fiscal support. Accordingly, the IMF expects global economic growth in 2024 to be at the same level as in 2023.

Industry development (mechanical engineering and chemicals)

The German economy has cooled significantly since the end of last year. Inflation eased over the course of the year and wage increases picked up compared to the prior year. Contrary to expectations in the summer, however, a recovery failed to materialize in the second half of the year. According to the German Mechanical Engineering Industry Association (VDMA), the persistently weak global economy and low domestic investment in particular led to a year-on-year decline in incoming orders in the German machinery and mechanical engineering sector throughout the year. Private consumption also failed to recover.

According to forecasts by the ifo Institute, the German economy will slowly recover from last year's recession in 2024. The German government's forecast is significantly more cautious with growth of 0.2%. At present, the main factors holding back economic growth are weak foreign demand in industry, the higher borrowing costs for investment as a result of monetary policy tightening, and sluggish private consumption. These issues should become gradually less important with exports expected to increase as foreign markets rebound and private consumption anticipated to rise on the back of higher wages and a stable labor market.

Market for carwash equipment

Customer groups

WashTec's customers are predominately operators of filling stations that offer on-site carwashes, with which they generate a substantial part of their earnings. These customers include multinational petroleum companies, retailers (convenience stores), individual filling station operators and operator chains. Additional key customer groups include carwash operators, automobile repair shops, supermarket chains, road freight companies and public transport operators.

Competition

WashTec is the global market leader with an installed base of over 50,000 units. In Europe – a developed market with intense competition – WashTec's own research shows the Company to lead the market by a wide margin in terms of market coverage and market share. The North American market, with a large proportion of conveyor tunnel carwashes, is more fragmented on the customer and supplier side than Europe. European and American competitors contend for a developed market in Australia and New Zealand.

Sales markets

Germany and the rest of Europe remain the largest sales markets. Based on the Group strategy, North America in particular is targeted to account for a higher percentage of the Group's total revenue in the medium to long term. In addition, the aftersales business with service and chemicals should contribute to the overall growth of the WashTec Group through new products and stronger focus on this area of business.

2.2 Group business performance

The following section examines the WashTec Group's business performance. WashTec AG is discussed separately in section 2.6.

The general economic environment has not changed significantly in fiscal year 2023 compared to the International Monetary Fund (IMF) forecasts presented in the Annual Report 2022. High inflation and higher interest rates in particular dampened consumption and investment.

The German economy has been contracting since the end of last year. In the German machinery and mechanical engineering sector, the downward trend in order intake that set in at the beginning of the fiscal year continued throughout the year. Supply bottlenecks continued to ease and the ongoing high level of orders on hand supported the development of the economy. However, investment was held back significantly by higher financing costs. This also affects the WashTec Group.

		2022	Guidance 2023	2023	Change year
					on year
Revenue	€m	482.2	±3%	489.5	1.5%
EBIT	€m	38.0	≥10%	41.9	10.3%
Free cash flow	€m	16.2	≥10%	46.1	184.6%
			≥1 percentage		1.3 percentage
ROCE	%	20.2	point	21.5	points
Accident rate
(work accidents/million hours worked)		4.2	<4.2	4.2	0.0

The WashTec Group achieved a new revenue record of €489.5m in fiscal year 2023, an increase of €7.3m or 1.5% on the prior year (€482.2m). The target communicated in the Annual Report 2022 of revenue in the range of ±3% of the prior year was thus met. Adjusted for exchange rate effects, the growth in revenue was 3.4%.

The year-on-year revenue growth was mainly due to the very positive performance in the chemicals business, where new customers were acquired. At €418.5m, Equipment and Service revenue was level with the prior year (€420.0m). Revenue was reduced mainly due to the weaker sales figures for equipment as a result of the difficult market conditions. The price increases implemented in response to the rising price of materials – primarily last year – were unable to fully compensate for the overall market trend. Revenue was also impacted by negative currency effects, particularly in relation to the Norwegian krone and the US dollar.

As forecast, revenue in the Europe region was on a par with the prior year. Revenue growth on an exchange rate adjusted basis was not achieved in North America due to the general decline in market demand. In US dollars, revenue amounted to USD 111.1m (prior year: USD 112.0m). In the Asia/Pacific region, the forecast of revenue growth at constant exchange rates was met.

Largely due to an improvement in gross profit, EBIT rose by 10.3% to €41.9m (prior year: €38.0m). The EBIT margin was 8.6% (prior year: 7.9%). In its guidance, the Company forecast a significant increase in EBIT by ≥10%, which was thus achieved.

The forecast made at the beginning of the year of a significant EBIT increase of ≥10% in the Europe region was not met. EBIT in North America increased significantly and met the forecast improvement in EBIT compared to the prior year. The same applies to the Asia/Pacific region.

In the final quarter of the year, revenue fell by 7.6%to€132.8m (prior year:€143.7m). Revenue in Europe and North America in particular was down on the record prior-year quarter, mainly due to lower output volumes. EBIT in the fourth quarter, at €15.0m, was on the same high level as in the prior year (€15.4m). Active cost management made it possible in this period to generate a double-digit EBIT margin of 11.3% (prior year: 10.7%).

Free cash flow increased due to significantly reduced net operating working capital to €46.1m (prior year: €16.2m). Performance was positively impacted in particular by the measures initiated at the beginning of the year to reduce the amount of capital tied up in inventories. This means that the forecast of a significant increase in free cash flow by ≥10% was clearly exceeded.

ROCE stood at 21.5% (prior year: 20.2%). The target of a significant improvement in ROCE by ≥1 percentage point was thus achieved, mainly due to the significantly higher EBIT. The denominator, capital employed, increased by €6.3m or 3.3% year on year. This increase is mainly due to the rise in non-current assets on the acquisition of the site occupied by the American subsidiary.

The accident rate, at 4.2 as in the prior year, was significantly below the industry average reported for recent years by the employers' liability insurance associations (Berufsgenossenschaften). The target set for 2023 of an accident rate less than 4.2 was not met. WashTec continues to target further reductions in the number of occupational accidents.

Overall, the difficult economic environment and the resulting reluctance of customers to invest had a significant negative impact on the WashTec Group's business development in the reporting year. By way of active cost management throughout the year, the company successfully responded to changing market conditions and significantly improved earnings despite the challenges.

Order backlog

Orders received in the reporting year were down year on year due to the drop in demand in the market as a whole. Due to the lower level of orders received, the order backlog at the end of December 2023 was significantly down on the prior year, but is still high overall compared to the long-term average.

2.3 Group financial position and cash flows

2.3.1 Results of operations

Income statement

The following table shows the income statement of the WashTec Group:

2023 2022		Change
		absolute	in %
489.5	482.2	7.3	1.5
–352.9	–352.8	–0.1	–0.0
136.5	129.4	7.1	5.5
27.9	26.8	1.1	–
–14.2	–14.2	0.0	0.0
–62.5	–62.1	–0.4	–0.6
–18.6	–17.1	–1.5	–8.8
0.5	2.0	–1.5	–75.0
41.9	38.0	3.9	10.3
8.6	7.9	0.7	–
–3.5	–0.7	–2.8	–400.0
38.4	37.3	1.1	2.9
–10.4	–10.9	0.5	4.6
28.0	26.4	1.6	6.1
2.09	1.97	0.12	6.1

Group revenue

The WashTec Group generated revenue of €489.5m in the year ending December 31, 2023, an increase of €7.3m or 1.5% on the prior-year figure (€482.2m). This is a new annual record.

Revenue in €m, multi-year comparison 2019 436.5 2020 378.7 2021 430.5 2022 482.2 2023 489.5

Adjusted for exchange rate effects, full-year revenue was €498.8m, an increase of 3.4% on the prior year (€482.2m). The negative exchange rate effects relate to movements in the Norwegian krone, the US dollar and the Australian dollar. Detailed discussion of the development of the individual regions is provided under "Reporting by region" in section 2.3.2.

Revenue by product
In €m	2023	2022	Change
			absolute	in %
Equipment and Service	418.5	420.0	–1.5	–0.4
Chemicals	65.8	56.9	8.9	15.6
Others	5.2	5.3	–0.1	–1.9
Total	489.5	482.2	7.3	1.5

Equipment and Service revenue fell slightly by €1.5m compared to the prior year, mainly due to the general decline in demand in the market as a whole. Both key account business and the direct sales business were down on the prior year. Chemicals revenue grew very strongly. New customer wins made it possible to achieve significant revenue growth of 15.6% despite a mainly weather-related fall in carwash volumes.

Other revenue, mainly from the arrangement of financing and the operations business, accounts for around 1.1% of the WashTec Group's total revenue and was stable relative to the prior year.

Further information on the income statement

Gross profit

At€136.5m, gross profit was 5.5%higher than the prior-year figure of€129.4m. Gross profit thus increased at a higher rate than revenue. The gross profit margin improved from 26.8%in the prior year to 27.9%. This improvement was mainly due to the price increases implemented in response to material price rises, primarily last year, and to a favorable product mix. Price rises for purchased parts and wage cost increases were partly offset by reduced prices of raw materials.

Research and development expenses

At €14.2m, research and development expenses were on a par with the prior year (€14.2m). New product development costs of€1.6m were capitalized in the reporting year (prior year: €2.0m) and will be amortized in subsequent periods. Amortization of research and development expenditure capitalized in prior years totaled €0.2m (prior year: €0.3m). The capitalization ratio was 11.3% (prior year: 14.1%). The focus was on developing additional features and functions for SmartCare. This included improvements to washing and drying quality and to process speed, and further reducing the ecological footprint, particularly with regard to the quantity of fresh water required. As of December 31, 2023, around 70 employees (prior year: around 70 employees) worked in research and development. This represents 4.1% (prior year: 3.8%) of the workforce.

Selling expenses

Selling expenses, at €62.5m, were on the same level as in the prior year (€62.1m). Freight costs in this function area increased by €1.1m, due partly to higher costs for freight forwarders and partly to the higher proportion of business accounted for by chemicals. In contrast, advertising and trade fair costs went down by €0.7m. The prior-year figure here was significantly increased, primarily due to the resumption of trade fairs skipped during the pandemic.

Administrative expenses

Administrative expenses in the reporting year, at €18.6m, were€1.5m higher than in the prior year (€17.1m). The increase was mainly due to expenditure for cost optimization on the new product generation. Other than this, the item mainly includes personnel expenses and other costs of recruitment, professional development, communication and auditing.

Other income and expenses

Other income and expenses were significantly lower than the prior year at €0.5m (prior year: €2.0m). The reduction in this item is mainly due to lower proceeds from the sale of non-current assets (€−0.5m) and the effects, recognized in this item, of the deconsolidation of the subsidiary in China (€−0.5m).

EBIT

Earnings before interest and taxes (EBIT) were up 10.3% to €41.9m (prior year: €38.0m).

EBIT in €m, multi-year comparison

A presentation of EBIT by regions is provided under "Reporting by region" in section 2.3.2.

EBIT margin

The EBIT margin decreased due to the improved gross profit margin to 8.6% (prior year: 7.9%).

Financial result

The financial result was €−3.5m (prior year: €−0.7m). The significant change is mainly due to higher expense on interest-bearing loans as a result of higher interest rates. In addition, average total debt was higher than in the prior year, partly due to borrowing to acquire the site of the US subsidiary.

Analysis of financial result
In €m	2023	2022
Other interest income	0.2	0.5
Financial income	0.2	0.5
Interest-bearing loans	2.8	0.7
Interest expense from discounting lease liabilities	0.4	0.2
Other interest expense	0.5	0.4
Financial expense	3.7	1.3
Financial result	–3.5	–0.7

EBT

Earnings before tax (EBT) increased to €38.4m (prior year: €37.3m).

Income taxes

The income taxes of €10.4m (prior year: €10.9m) consist of current taxes and deferred taxes mainly relating to temporary differences. The tax rate (relative to EBT) was 27.2%, slightly lower than in the prior year (29.3%). The lower tax rate compared to the prior year is primarily due to the utilization of loss carryforwards in the US and higher earnings contributions from foreign subsidiaries, which tend to have lower tax rates.

Net income

Net income improved by €1.6m to €28.0m (prior year: €26.4m). On the basis of the average number of shares (13,382,324), earnings per share (basic = diluted) increased by 6.1% to €2.09 (prior year: €1.97).

Net income in €m, multi-year comparison

Use of funds/dividend proposal

WashTec will continue to pursue an attractive dividend policy going forward. The Management Board and Supervisory Board intend to recommend to the Annual General Meeting, which is scheduled for May 14, 2024, to appropriate the distributable profit of €30,073,713.43 shown in the Company's annual financial statements for fiscal year 2023 as follows: Distribution of €2.20 per eligible share, totaling €29,441,112.80, with the remaining distributable profit of €632,600.63 to be carried forward.

2.3.2 Reporting by region

* cross-segment consolidation eects are disregarded.

EBIT by regions in €m*

* cross-segment consolidation eects are disregarded.

Europe

Europe region key figures
		2023	2022	Change
Revenue	€m	378.9	371.6	2.0%
EBIT	€m	36.2	36.4	–0.5%
EBIT margin	%	9.6	9.8	–0.2
Employees (as of Dec. 31)	persons	1,398	1,486	–88

Market environment

Alongside North America, the wash equipment market in Europe is one of the most developed vehicle wash markets in the world. It has the highest number of installed carwashes and well-developed provider services and distribution structures.

WashTec's customers in Europe are predominately operators of filling stations that offer on-site carwashes, with which they generate a substantial part of their earnings. These customers include multinational petroleum companies, retailers (convenience stores), individual filling station operators and operator chains. Additional key customer groups include carwash operators, supermarket chains, car dealerships and repair shops, road freight companies and public transport operators.

Competition in Europe is intense and limited to only a small number of manufacturers. A key factor is a market-wide service network and installed base. New competitors face correspondingly high barriers to entry. According to its own research, WashTec is the clear market leader in terms of market coverage and market share, and has by far the most well-established sales and service network and by far the largest installed base of gantry carwashes in Europe's core markets.

Business performance in the reporting year was negatively impacted by the ongoing difficult economic situation, particularly in Germany, which is the region's most important market.

Revenue

In Europe, revenue increased by 2.0% to €378.9m (prior year: €371.6m). At constant exchange rates, the revenue increase was 2.9%, mainly due to the development of the Norwegian krone. Equipment and Service revenue remained level with the prior year. While equipment revenue was down, there was an increase in service revenue. Of particular note, the Chemicals division achieved strong double-digit growth in the region thanks to the acquisition of new key accounts.

Conclusion

EBIT in the Europe region, at €36.2m, was on the same level as the prior year (€36.4m). The EBIT margin was 9.6% (prior year: 9.8%). In this region in particular, lower revenues from equipment sales and the resulting inability to cover fixed costs led to challenges in terms of earnings performance.

North America

North America region key figures
		2023	2022	Change
Revenue	€m	102.9	107.7	–4.5%
EBIT	€m	5.7	1.4	307.1%
EBIT margin	%	5.5	1.3	4.2
Employees (as of Dec. 31)	persons	243	282	–39

Market environment

New registrations of cars and light trucks have increased significantly in North America in recent years. Slight population growth and growth in the number of vehicles continue to be expected for the years ahead.

The key customer groups in North America – alongside a number of major customers – are independent small or medium-size carwash chains and retailers (convenience stores). The share of conveyor tunnel carwashes relative to gantry carwashes and growth in this product segment are above the global average.

Revenue

Revenue in North America decreased from €107.7m in the prior year to €102.9m. In US dollars, revenue was USD 111.1m and thus at the same level as in the prior year (prior year: USD 112.0m). The WashTec Group's business in this region was also adversely affected by the generally subdued demand in the market as a whole.

Conclusion

Earnings in North America increased significantly by €4.3m to €5.7m (prior year: €1.4m). This is mainly due to the efficiency improvement projects launched last year and successfully implemented in fiscal year 2023, particularly in the areas of supply chain and service efficiency.

Asia/Pacific

Asia/Pacific region key figures
		2023	2022	Change
Revenue	€m	19.2	17.6	9.1%
EBIT	€m	0.6	0.4	50.0%
EBIT margin	%	3.1	2.3	0.8
Employees (as of Dec. 31)	persons	46	56	–10

Market environment

To further expand the WashTec Group's market position in the Asia/Pacific region and commence direct sales and service activities in New Zealand, WashTec New Zealand Limited was established in fiscal year 2023 as a wholly-owned subsidiary of WashTec Cleaning Technology GmbH. The previously independent distributor was taken over as of December 1, 2023.

WashTec has a good market position in Australia and New Zealand. There, the major American and European manufacturers are in direct competition.

As described in the Annual Report 2022, the Company reviewed its market approach in China over the course of the year. As a result, the WashTec Group decided on a strategic realignment in the Asia/Pacific region and sold 90% of the shares in its Chinese subsidiary. The Chinese market will be developed in the future as a distributor market. This will enable WashTec to continue providing strong local customer support while maintaining the same high level of service for all WashTec carwash equipment installed in the Chinese market.

Revenue

At €19.2m, revenue in the Asia/Pacific region was higher than in the prior year (€17.6m). €6.4m is accounted for by China (prior year: €4.4m) and €0.3m by New Zealand (prior year: €0m). Adjusted for exchange rates, revenue in the region was €20.7m. The growth in the region in fiscal year 2023 is primarily due to increased volume with local oil companies in China. Business performance there in the prior year was notably impacted by measures in connection with the COVID-19 pandemic. Revenue in Australia was on a par with the prior year.

Conclusion

As in previous years, the positive EBIT of€0.6m (prior year: €0.4m) was mainly due to the earnings contribution from Australia.

2.3.3 Net assets

Asset and capital structure

Condensed consolidated balance sheet: assets
In €m	Dec 31,	Dec 31,	change
	2023	2022	absolute	in %
Non-current assets (incl. right-of-use assets)	102.9	91.9	11.0	12.0
Receivables and other assets	93.5	102.8	–9.3	–9.0
Inventories	54.8	71.6	–16.8	–23.5
Deferred tax assets	3.5	3.9	–0.4	–10.3
Cash and cash equivalents	16.7	14.2	2.5	17.6
Total assets	271.3	284.5	–13.2	–4.6

In €m	Dec 31,	Dec 31,	change
	2023	2022	absolute	in %
Equity	85.8	88.1	–2.3	–2.6
Interest-bearing loans	39.1	41.4	–2.3	–5.6
Liabilities and provisions	115.6	117.0	–1.4	–1.2
of which provisions (including income taxes)	27.1	28.3	–1.2	–4.2
of which trade payables	24.0	22.7	1.3	5.7
Contract liabilities	29.1	36.4	–7.3	–20.1
Deferred tax liabilities	1.7	1.6	0.1	6.3
Total equity and liabilities	271.3	284.5	–13.2	–4.6

Condensed consolidated balance sheet: equity and liabilities

The WashTec Group's balance sheet total went down from €284.5m to €271.3m.

Assets

The goodwill included in the WashTec Group's non-current assets amounted to €43.3m (prior year: €42.3m). The increase compared to the prior year is due to the acquisition of the New Zealand distributor. Property, plant and equipment primarily consists of the items land and buildings in the amount of €21.7m (prior year: €12.5m) and technical equipment and machinery in the amount of €8.9m (prior year: €8.4m). The increase in the land and buildings item is mainly due to the acquisition of the site occupied by the US subsidiary for €9.5m in January 2023. Also included are right-of-use assets in the amount of €18.4m (prior year: €17.3m). This increase is mainly due to the extension of a contract with a logistics service provider.

Receivables and other assets went down from €102.8m in the prior year to €93.5m. This is mainly due to the reduction in trade receivables compared to the prior year following the record revenue in the fourth quarter of 2022.

At €54.8m, inventories were significantly lower at the end of the year than in the prior year (€71.6m). The decrease is mainly due to planned inventory optimization, as the considerable uncertainties on procurement markets in recent years have now cleared.

Deferred tax assets totaling €3.5m (prior year: €3.9m) mainly relate to temporary differences between the tax base and IFRS carrying amounts.

Cash and cash equivalents went up from €14.2m in the prior year to €16.7m.

Equity went down from €88.1m to €85.8m. Details regarding income and expenses recognized directly in equity in accordance with IFRS are shown in the Statement of Changes in Consolidated Equity (p.115). The equity ratio increased to 31.6% (prior year: 31.0%) because of the lower balance sheet total compared to the prior year, primarily due to the reduction in working capital.

Interest-bearing loans fell slightly compared to December 31, 2022 from €41.4m to €39.1m. This includes a long-term loan in the amount of €5.2m taken out in the fiscal year to finance the acquisition of the site occupied by the American subsidiary. The €7.5m yearon-year decrease in short-term interest-bearing loans resulted from the significant improvement in cash flow.

Lease liabilities amounted to €19.4m as of the reporting date (prior year: €18.1m).

Net financial debt (cash and cash equivalents less financial liabilities) stood at €41.9m as of December 31, 2023 (prior year: €45.2m). The decrease by €3.3m is mainly due to the increase in cash and cash equivalents and the reduction in interest-bearing loans.

Provisions (including income tax provisions) in the amount of €27.1m (prior year: €28.3m) primarily consist of provisions for personnel, partial retirement obligations and warranties.

Trade payables rose slightly from €22.7m to €24.0m.

Contract liabilities decreased to €29.1m (prior year: €36.4m). This item includes prepayments on orders from customers, although these have fallen significantly compared to the prior year, and deferred income for full maintenance, extended guarantees and prepaid service agreements.

At€1.7m, deferred tax liabilities were at the same level as the prior year (€1.6m). They relate to temporary differences between the tax base and IFRS carrying amounts.

Unrecognized internally generated intangible assets and off-balance sheet financial instruments

The main unrecognized internally generated intangible assets benefiting WashTec's business are the immense experience and expertise of the workforce. Know-how about the wash process and the ability to deploy that expertise in research and development constitute a key competitive advantage. Another key success factor for the WashTec Group is the sales and service network built up over many years.

There are no off-balance sheet financial instruments.

2.3.4 Financial position

Capital structure

As part of centralized financial management, the companies of the WashTec Group are financed through WashTec Cleaning Technology GmbH. The Company's liabilities are denominated in euros and US dollars. The base interest rate on the loans is variable and linked to EURIBOR, €STR and SOFR. As of December 31, 2023, the Group had one credit line for a total amount of €99.7m (prior year: €92.8m). The increase was in connection with borrowing to finance the acquisition of the site occupied by the US subsidiary.

The undrawn amount of the credit line available for future operating activities and to meet obligations was €56.5m as of the reporting date (prior year: €46.1m).

Capital expenditure, depreciation and amortization, and impairments

As planned, capital expenditure, at €14.7m, was higher in the reporting year than in the prior year (€7.5m), mainly due to the acquisition of the site occupied by the American subsidiary in the amount of €9.5m (prior year: €0.1m). The focus of capital expenditure, accounting for €4.8m (prior year: €7.2m) was on Europe. Capital expenditure in Asia/ Pacific amounted to €0.5m (prior year: €0.2m).

In addition, there was an addition of €1.4m from the acquisition of the New Zealand distributor.

Depreciation and amortization of non-current assets is applied in accordance with statutory requirements and WashTec's accounting policies. Assets are generally depreciated or amortized on a straight-line basis over their economic useful life.

Goodwill is not amortized but is tested annually for impairment. The impairment test is based on the Group-level internal planning for 2024 to 2029.

Recognized intangible assets were tested for impairment. The impairment testing did not lead to the recognition of any impairment losses.

Cash flow statement

In €m	2023	2022	Change
			absolute	in %
EBT	38.4	37.3	1.1	2.9
Net cash inflow from operating activities	61.8	22.7	39.1	172.2
Net cash outflow from investing activities	–15.7	–6.5	–9.2	–141.5
Free cash flow	46.1	16.2	29.9	184.6
Net cash outflow from financing activities	–34.4	–48.5	14.1	29.1
Net change in cash funds	11.8	–32.2	44.0	136.6
Net foreign exchange difference	–0.2	0.6	–0.8	–133.3
Cash funds as of Jan. 1	–27.1	4.5	–31.6	–702.2
Cash funds as of Dec. 31	–15.6	–27.1	11.5	42.4

The net cash inflow from operating activities increased significantly by €39.1m to €61.8m (prior year: €22.7m). This was mainly due to the reduction in net operating working capital by €21.6m to €83.5m (prior year: increase by €18.3m to €105.1m). The improvement is mainly due to the lower level of trade receivables following the record revenue in the fourth quarter of 2022. Inventories were also reduced by €16.8m compared to the prior year. This was due to a significant decrease in uncertainty in the procurement markets.

The net cash outflow from investing activities was €−15.7m in fiscal year 2023 (prior year: €−6.5m). The increase in the cash outflow is mainly due to the acquisition of the site occupied by the US subsidiary. This was purchased effective January 2, 2023 following the termination of the previous lease agreement. The purchase price was USD10.3m. This was financed by long-term, five-year US dollar bank loans in the same amount. The cash inflows and outflows in connection with the sale of the Chinese subsidiary and the acquisition of the New Zealand subsidiary amounted to €−1.2m.

Free cash flow (cash inflow from operating activities – cash outflow from investing activities) increased significantly to €46.1m (prior year: €16.2m).

Free cash flow in €m, multi-year comparison

The net cash outflow from financing activities was €−34.4m (prior year: €−48.5m). The cash outflow was €43.8m (prior year: €48.6m) and mainly consisted of the dividend payout of €29.4m (prior year: €38.8m) and the repayment of lease liabilities. That was offset by a €9.5m cash inflow from taking out interest-bearing loans (prior year: €0.1m).

Cash funds increased overall, mainly due to the higher free cash flow as a result of significantly improved working capital management, to €−15.6m as of December 31, 2023 (prior year: €−27.1m). The Company was able to meet its payment obligations at all times.

2.4 Non-financial performance indicator

Accident rate
	2022	Guidance	2023	Change
		2023		absolute
Work accidents/million hours worked	4.2	<4.2	4.2	0.0

WashTec uses the number of work accidents per million hours worked as a key non-financial performance indicator. As in the prior year, the figure of 4.2 for 2023 was below the industry average reported for recent years by the employers' liability insurance associations (Berufsgenossenschaften). This meant that the target set for 2023 of an accident rate less than 4.2 was not met. WashTec targets further reductions in the number of occupational accidents.

2.5 Employees

Average number of employees by year, multi-year comparison

The number of employees fell by 137 to 1,687 as of December 31, 2023 (prior year: 1,824). When comparing with the prior year, it should be noted that the December 31, 2022 figure included 50 employees of the subsidiary in China. Seven employees were added as of

December 31, 2023 on the initial consolidation of the New Zealand subsidiary. The average number of employees at WashTec during the year was 1,768 (prior year: 1,806).

The WashTec Group ensures that its employees receive appropriate remuneration. In Germany in particular, with the exception of AUWA-Chemie GmbH, the WashTec Group is subject to collective agreements with trade union IG Metall. Collective agreements with trade union IG Bergbau, Chemie, Energie serve as benchmarks at AUWA-Chemie GmbH.

2.6 WashTec AG

WashTec AG has its registered place of business in Augsburg and is the ultimate parent company of the WashTec Group. As such, it is responsible for the strategic management and control of all its subsidiaries. Since the Company does not have any operations of its own, its results of operations, financial position and cash flows are determined by the business performance of its subsidiaries.

The business performance of WashTec AG to a large extent corresponds to that of the WashTec Group, which is described in detail under "Business performance". The forecast for WashTec AG of a significant increase in net income for the period by ≥10% in fiscal year 2023 was not achieved. This is mainly due to the effects of the disposal of the Chinese subsidiary.

2023
	2022	Change
		absolute	in %
3.5	2.7	0.8	29.6
2.0	2.1	–0.1	–4.8
3.8	2.8	1.0	35.7
37.2	40.4	–3.2	–7.9
29.7	28.3	1.4	4.9
0.4	1.5	–1.1	–73.3
30.1	29.8	0.3	1.0

Earnings

Revenue at WashTec AG – HGB-basis, meaning as measured in accordance with the German Commercial Code – increased to €3.5m (prior year: €2.7m) and related to management costs charged on to subsidiaries.

WashTec AG's personnel expenses (HGB-basis) of €2.0m (prior year: €2.1m) include Management Board remuneration and personnel expenses for the Legal and Investor Relations functions.

Other operating expenses (HGB-basis), at €3.8m, were up on the prior year (€2.8m). The increase was partly due to consulting services related to the cost optimization of the new product generation.

The investment result (HGB-basis) comprises income under control and profit (loss) pooling agreements and a profit transfer agreement in the total amount of €24.1m (prior year: €35.8m) and interest income in the total amount of €0.2m (prior year: €0.1m). In addition, WashTec Holding GmbH paid a dividend in the amount of €13.0m (prior year: €4.5m).

Net income for the period (HGB-basis) increased to €29.7m (prior year: €28.3m).

Balance Sheet of WashTec AG (condensed)
In €m	Dec 31,	Dec 31,	Change
	2023	2022	absolute	in %
Non-current assets	128.2	128.2	0.0	0.0
Receivables and other assets	39.0	40.9	–1.9	–4.6
Equity	159.2	158.9	0.3	0.2
Provisions	4.9	7.9	–3.0	–38.0
Liabilities	3.1	2.3	0.8	34.8
Balance sheet total	167.2	169.1	–1.9	–1.1

Financial position and cash flows

Non-current assets (HGB-basis) mainly consist of shares in affiliated companies in the amount of €128.1m (prior year: €128.1m). Management tests the shares in affiliated companies annually for impairment. No impairment has been identified.

The receivables and other assets (HGB-basis) in the amount of €39.0m (prior year: €40.9m) primarily resulted from general clearing transactions with affiliated companies under control and profit (loss) pooling agreements and a profit transfer agreement.

Equity (HGB-basis) was €159.2m (prior year: €158.9m). This yields an equity ratio of 95.2% (prior year: 94.0%).

Provisions (HGB-basis) stood at €4.9m (prior year: €7.9m) and mainly related to taxes, legal and consulting expenses, auditing costs, Management Board remuneration and Supervisory Board remuneration. The decrease is mainly due to the lower provisions for income taxes.

WashTec AG is financed by means of cash pooling with WashTec Cleaning Technology GmbH.

Opportunities and risk report

WashTec AG's opportunities and risks as the Group's ultimate parent company are derived from the opportunities and risks of its operating subsidiaries. WashTec AG is integrated into the Group-wide risk management system. Further information is provided in the opportunities and risk report. That section also provides a description of the internal control system as required under Section 289f (1) HGB.

WashTec AG's main risks relate to the recoverability of the carrying amount of investments. In addition, there are risks associated with the amount of the profits and losses from subsidiaries under the control and profit (loss) pooling agreements and the profit transfer agreement.

Other

The salient features of the remuneration system for the Management Board and the Supervisory Board are explained in the Notes to the Consolidated Financial Statements (Note 37). In addition, detailed descriptions of the remuneration system and the remuneration of the Management Board and Supervisory Board are contained in the Remuneration Report, which is published on the Company's website under "Remuneration of Board of Management and Supervisory Board."

The Corporate Governance Statement is reprinted in section 8 and published on the website https://ir.washtec.de.

Guidance

The expectations described under "WashTec business development" in the Outlook for the WashTec Group (section 4.1) also apply to the business development of WashTec AG as the ultimate Group parent company. The financial performance indicator for the business development of WashTec AG is net income for the period.

Report on subsequent events

3

Significant events after the balance sheet date

On February 28, 2024, the Supervisory Board of WashTec AG appointed Mr. Michael Drolshagen as the Company's new Chief Technology Officer (CTO) and Chief Executive Officer (CEO) with effect from May 1, 2024. He succeeds Dr. Ralf Koeppe, whose membership of the Management Board ended by mutual agreement on February 29, 2024.

4

Outlook, opportunities and risk report

4.1 Outlook

This outlook report takes into account the facts and events that were known at the time of preparation and that could impact the expected development and business performance of the WashTec Group.

Business policy and strategy

In fiscal year 2024 and beyond, the WashTec Group will continue to pursue its strategy of profitable, largely organic growth. The focus is on maximum possible benefit to people who wash cars professionally. To strengthen its market and technology leadership in carwash, the Company will step up investment in products and digitalization in the short term.

Markets and products

The Company intends to further increase its presence and market share in the Group's main sales regions and product and service segments worldwide. This applies to all markets in which WashTec intends to occupy a leading position in every customer, product and service segment. Special emphasis is placed on Europe and North America. WashTec generates a significant portion of revenue in Europe and aims to further extend its market position there. In addition, North America in particular is planned to account for a higher share of the Group's revenue in the medium to long term.

General economic conditions

A detailed description of the overall economic development can be found in section 2.1 of the management report. The WashTec Group has prepared its outlook against the general backdrop of a continuing uncertain economic and geopolitical environment and expects global economic growth in 2024 to be on a similar level to 2023. Uncertainties and tensions in relation to China, the war in Ukraine and the Middle East conflict may also have a negative impact on economic development.

WashTec business development

The outlook for fiscal year 2024 is subject to uncertainties that could have a material effect on the planned development of key performance indicators.

When specifying the planning assumptions, it was assumed in particular that interest rates would decline slightly over the course of the year. Inflation rates will remain high, weighing on consumption and investment. Against this backdrop, the WashTec Group expects low economic growth this year. The forecast does not incorporate any significant increase in tensions with China or any significant escalation of the war in Ukraine or the conflict in the Middle East, or the possibility of these conflicts spreading to other countries.

Based on a largely stable price level on the sales side and a solid order backlog at the end of 2023, the Company expects business to remain stable in 2024. The cost optimization measures initiated for the new product generation will contribute to a further increase in profitability. With regard to material prices, the WashTec Group expects the costs of purchased parts and labor to remain at their current high level and anticipates a lower price level for raw materials than in the prior year.

The Management Board aims to actively further the development of the Group's strategy together with the entire workforce and to continuously improve operating performance. The focus for 2024 will be on further optimizing existing processes, product optimization, and investing in the development of digital solutions and products. We see the integration of our entire product and service portfolio – equipment, service and chemicals, embedded in digital solutions – as a source of major growth potential. In regional terms, we will focus on our core regions of Europe and North America in order to better exploit the market potential available there.

To accelerate this process, the Company will incur additional capital expenditure in the low single-digit million range in 2024.

In summary, the Management Board expects in its guidance that the Group-level key performance figures will develop as follows:

For fiscal year 2024, WashTec expects Group revenue on a similar level to the prior year (2023: €489.5m), with an increase in EBIT in the mid-single-digit percentage range (2023: €41.9m).

Revenue and EBIT in Europe and North America are expected to develop in line with the targeted Group performance.

The Company expects net operating working capital to further normalize in 2024, particularly with regard to trade receivables/payables and inventories. As a result, the Company expects a free cash flow of between €30m and €40m (2023: €46.1m).

WashTec aims to employ the capital available to it profitably and efficiently. Return on capital employed (ROCE) is our central measure of capital efficiency. In the medium term, the WashTec Group aims for ROCE of over 25%. For the coming year, the Company expects ROCE to remain at the prior-year level (±1%).

The accident rate (work accidents/million hours worked), which is already low compared with the industry average, is expected to fall further in fiscal year 2024 (2023: 4.2).

Earnings in the separate financial statements of WashTec AG depend to a substantial extent on the profit transfers from subsidiaries. The key financial performance indicator is net income for the period. The forecast described for the WashTec Group therefore also applies to the business development of WashTec AG as the ultimate Group parent company.

Revenue on a similar level to the prior year	±3%
Increase in EBIT	Mid single-digit percentage range
Free cash flow	€30m–€40m
ROCE	±1 percentage point
Accident rate	<4.2

4.2 Opportunities and risk report

Risks are possible future developments or events that could lead to negative variation from projections or targets for the Company. Risk is intrinsic to any business venture.

Opportunities are possible future developments or events that could lead to positive variation from projections or targets for the Company. A potential favorable outcome of a risk is also referred to as an opportunity.

The WashTec Group's international business activities give rise to opportunities and risks that are inextricably linked with its business. To address these opportunities and risks in a timely and controlled manner, the Company's key business processes are subject to an internal monitoring and control system. This enables timely action to be taken as necessary.

4.2.1 Opportunities and risk management

Risk management

Risks are identified, analyzed, assessed, managed, documented and communicated, and these activities monitored, using a uniform, Group-wide, multi-level risk management system. The purpose of this system is to identify risks posed by future events on the basis of short-term and mid-term planning (with both a 12-month and a two-to-three-year planning horizon) and to initiate any action needed to adequately address them. The aim of including risk analysis beyond the next twelve months is to aid in timely identification of potential future risks even if their impact is not material for the coming fiscal year. In the opinion of the Management Board, this risk early warning system is capable of suitably identifying all material and going-concern risks. The risk management system used by the Group allows systematic risk recording, documentation, assessment and aggregation on the basis of recognized statistical methods.

All identified risks are reported by divisional heads and analyzed within the risk management system on a semi-annual basis. Risks are assessed for EBIT impact – either as an absolute maximum impact figure or as a three-point estimation of a best-case, expected and worst-case impact figure – and for probability of occurrence and the effectiveness of possible countermeasures. Risks are assessed using uniform criteria. The EBIT impacts are presented in a gross/net analysis. The gross figure is the amount before any measures taken. Risk mitigation measures may comprise, for example, existing provisions, insurance policies, or planned projects and activities for preventive risk minimization. They are specified, implemented and monitored for effectiveness by divisional managers. The risk management system is also audited annually by Internal Audit.

In the risk analysis, all net individual risks are simulated using Monte Carlo simulation. They are simulated and aggregated both at Group level and at risk category level. Any correlations are taken into account. The simulation is used to determine both the expected loss (net) and value-at-risk with a confidence level of 95%. Value-at-risk represents the WashTec Group's overall potential risk and is used to determine risk-bearing capacity. Risk-bearing capacity is assessed in relation to Group liquidity, equity and operating earnings (EBIT). This is done by comparing value-at-risk with the corresponding risk coverage potential.

In individual risk analysis, individual risks and opportunities that have a similar cause-effect relationship are aggregated in the risk analysis.

The simulated expected loss (net) per risk category is classified according to financial impact and probability of occurrence as follows:

W Financial impacts on Group EBIT in €k:
1	Insignificant	<499
2	Minor	500–4,999
3	Material	5,000–9,999
4	Serious	10,000–19,999
5	Existential threat	>20,000

W The probability of occurrence is indicated as follows:

1	Very unlikely	1–15%
2	Unlikely	15–40%
3	Possible	40–60%
4	Likely	60–85%
5	Very likely	85–99%

There were no changes in risk classification compared with the prior year.

Based on the combination of these two factors, all risks, aggregated by risk categories, are classified by threat potential as negligible (N), relevant (R), major (M) or threat to survival (S). This forms the basis for the subsequent management of risks.

W Risk matrix	Probability of occurrence
Impacts	1–15%	15–40%	40–60%	60 –85%	85–99%
Existential threat	R	M	M	S	S
Serious	R	R	M	M	M
Material	R	R	M	M	M
Minor	N	R	R	R	M
Insignificant	N	N	R	R	R

Opportunity management

The purpose of opportunity management is to identify, assess and manage positive future potential at an early stage and to take suitable measures for the implementation of new strategies and innovations. The identification and exploitation of opportunities (opportunity management) is an ongoing task of business geared to securing the long-term success of the Company and capitalizing on short-run advantages.

Opportunities are collated, assessed and, to the extent possible, materialized for all divisions in regular budget planning and update sessions as well as in management meetings.

4.2.2 Opportunities and risks

The opportunities and risks that could have a material impact on the development of the WashTec Group as of the December 31, 2023 balance sheet date are described in the following.

Uncertainties in financial markets and in overall economic development

Risks

Uncertainties and unforeseeable changes in the global economy, financial markets and the political landscape could adversely affect capital spending patterns in individual customer groups. Access to markets and terms of delivery can also change at short notice.

In view of the current economic situation, including the geopolitical tensions and economic uncertainties, there continues to be uncertainty with regard to material prices and availability. The situation has eased compared to the last few years, which is why these risks are rated lower in terms of probability of occurrence and financial impact for the coming fiscal year.

Persistently high interest rates and high construction costs give rise to a risk of further market contraction and may lead to a further weakening of investment behavior, particularly in the direct sales segment. The difficult market environment and instability in Central and

Eastern Europe due to the war in Ukraine may also have a negative impact on customer investment behavior.

In addition, the current Middle East conflict could lead to various risks for the Group. Supply conditions could become more difficult as a result. This could lead to higher logistics costs or reduced availability of materials, which in turn could be reflected in rising material prices. As little revenue is generated in this region, the direct impact on the Group's business development is considered to be non-material.

Opportunities

The easing of inflation and interest rates observed at the end of the year could continue in the coming fiscal year and lead to greater customer demand.

The general economic slowdown and the associated decline in demand could result in lower procurement prices for the Group.

Climate and environmental risks

Risks

Climate change, regional droughts and water scarcity, increasing road congestion, rising fuel costs, the proliferation of inner-city vehicle-free zones and greater general environmental awareness could all lead to fewer vehicles on the road in order to protect the environment or comply with regulations. Such a trend could diminish carwash use and, accordingly, reduce capital spending on vehicle wash equipment.

Car washing bans due to droughts, as seen in Southern Europe during past years, could have a negative effect on the Group's service and chemicals business. The impacts of climate change may also result in such bans on car washing being enshrined in law in the near future.

The WashTec Group does not currently consider shifts in consumer preferences towards low-emission or zero-emission products to be significant with regard to the carwash business model, as more conscious consumer behavior only affects the choice of means of propulsion and is of secondary importance for how frequently cars are washed.

Potential changes in the way vehicles are utilized in the future, such as the increase in car-sharing models, will not materially affect WashTec's business model in the short term. In the medium term, such changes could lead to a shift from individual washing in gantry carwashes to autonomous washing in conveyor tunnel systems.

New mobility concepts could lead in the future to increased use of the existing vehicle fleet. In addition to the size of the fleet, the nature and intensity of vehicle use would then determine carwash demand. Vehicles need to be cleaned no matter how they are powered and regardless of the ownership model.

Opportunities

The scarcity and rising cost of fresh water as a resource could lead to an increase in automated vehicle washing. This is far more environment-friendly if the carwash has a water treatment system. According to the system, wash program and vehicle type, water recovery systems that recirculate wash water can reduce mains water consumption by up to 90%.

Additional countries adopting stricter legislation could drive a rise in demand for carwash systems with water recovery equipment. Similarly, rules and regulations such as the prohibition of hand car washing could have a positive effect on demand for carwash equipment.

WashTec contributes significantly to environmental sustainability as a pioneer in the development of eco-friendly carwash chemicals.

Customers, competition and market

Risks

A freeze on capital spending by individual major customers or the listing of other suppliers due to major customers launching new bid requests for framework supply agreements could lead to a decrease in revenue and/or to losses of market share for WashTec in virtually all regions. These risks could affect revenue performance in the North America region in particular in the years ahead.

Given the intensive competition in the industry, there are potential risks associated with price-based competition that could lead to increased price pressure in certain markets or market segments. WashTec has implemented a comprehensive and systematic market tracking system. Revenue risks that could arise from a potential decline in demand are monitored on an ongoing basis. Appropriate measures are taken as necessary to adapt products, optimize the product range and adjust capacity.

Reduced supply and higher prices for fossil fuels are driving demand for electric vehicles. This could lead to reduced use of filling stations as they exist today. At present, however, it is not possible to predict which recharging model will prevail for electric vehicles. However, our major customers believe that due to the existing vehicle fleet, this option will not have a significant impact on the number and use of filling stations over the next five to ten years.

A further risk can arise if major customers sell some or all of their (filling station) networks. If stations or networks are then acquired by more than one purchaser, then this could lead to higher selling effort and render existing long-term contacts with decision makers obsolete. Similarly, the termination of partnerships with distributors or service providers could lead to increased costs for sales, service or installation.

Opportunities

The trend towards high-quality automated car washing will continue, including in regions outside of the developed markets. The Company's solid structure also allows it to invest in new products and markets. Local presence with the Company's own production plant in the North America region could lead to a positive outcome above the internally budgeted figures in the mid-term. The increasingly global procurement activities could enable further efficiency potential to be realized in the future procurement and production of individual components.

Closer collaboration with our independent distributors in countries where WashTec does not have subsidiaries of its own could increase sales volumes in growth regions.

Capital expenditure

Capital expenditure decisions are based among other things on assumptions and estimates about future developments. The assessment of risks and opportunities plays a significant role when reviewing potential capital expenditure.

Risks

There is a risk of the assumptions or estimates made about future market developments not materializing as expected, leading to a misallocation of investment spending or development projects not resulting in the expected contributions to earnings. Such misallocation could have a negative impact on the financial position, financial performance and cash flows of the WashTec Group due to interest expense for tied-up capital and/or due to impairments. A significant increase in the duration of investment projects can also have a negative impact on the Company's earnings as a result of tied-up resources and/or cost overruns. To adequately address such risk, the Company has a detailed policy for approving capital expenditure and related spending.

Opportunities

Capital expenditure offers numerous opportunities. Depending on the type of capital expenditure, these include opportunities to strengthen WashTec's market and competitive position and/or to improve earnings. Investment in digitalization in particular could open up new opportunities in terms of products and solutions for our customers and thus generate a competitive advantage. Smart technology optimizes carwash operation, for example, and allows operators to precisely meet customer needs. Remote services can also be used to increase machine availability and enhance carwash profitability.

Innovations and patents

Risks

Product innovations carry the risk of not being taken up by the market as expected. This could result in innovations not performing and generating revenue as expected and in them falling short of market expectations. To avoid this, WashTec keeps a close watch on new market launches and tests product effectiveness at an early stage.

For any company, launching new products on the market involves additional effort and risks. As well as the additional product placement effort and the aforementioned customer acceptance risk, there is further risk potential in managing the phase-out of existing products and in quality-related problems that only become apparent after market launch.

Increasing requirements for compliance with technical and country-specific standards result in higher financial and technical expense, but this is currently not considered material to the Group's business.

Innovations by competitors, developments in the automotive industry and the emergence of new substitute technologies in related industries can have a significant and long-term impact on demand for WashTec products. However, the associated risks are primarily seen in the medium to long term and are therefore of secondary importance to risk assessment for the coming fiscal year.

Opportunities

The WashTec Group's research and development activities are aimed at adding to the existing product range, developing new wash systems and quickly and efficiently meeting individual customer requirements. WashTec innovations have received numerous past awards at industry trade fairs and have been successfully launched on the market.

Innovative products could outperform customer expectations, generate new demand and win new customer groups or lead to a shift in market share among existing customer segments.

WashTec has a large number of patents and licenses that are highly important to the Group's business and can therefore confer a competitive advantage.

IT security, quality and processes

Risks

Cyber risks are all risks to which computer and information networks and all IT-assisted business and production processes are exposed. The use of IT inevitably entails risks, which cannot ultimately be ruled out, for the stability of business processes and for the availability, confidentiality and integrity of information and data. Cyberattacks and ransomware attacks continue to grow in number and professionalism around the world. The risk in the context of cybercrime is classified as relevant overall.

IT security, quality and process risks can arise in connection with new product launches and with improvements in internal processes and the introduction of new IT systems. The Company's operating processes critically depend on continuous availability of all technical systems. Were this to be at risk, it would have an overall negative impact on WashTec.

WashTec has taken appropriate measures (training, implementing improved safety systems, etc.) to reduce these risks as far as possible. In the opinion of the Company, the stability of the IT systems in recent years indicates that they are robust. Significant effort and continuous investment will nevertheless be made in the coming year to further reduce these risks.

Quality problems in the development or production of carwash equipment can result in subsequent costs for the Group. Any defects or problems are continuously recorded, monitored and corrected by quality assurance.

Opportunities

Continuous improvement of business processes and the use of new technologies can have a positive impact on customer satisfaction. In addition, it may lead to process efficiency gains that have not been taken into account in normal planning.

Suppliers

Risks

The purchase of raw materials, components or services involves risks related to delivery delays, insufficient product availability, quality defects and price fluctuations.

Given the current economic situation, including the geopolitical tensions and economic uncertainties, there continues to be uncertainty regarding material prices and availability.

In addition, rising diesel prices and road tolls, a shortage of skilled logistics workers, unsafe transportation conditions and trade route disruption of the kind being caused by the Middle East conflict can lead to rising transportation and logistics costs.

Opportunities

Competition among suppliers and their innovation potential makes it possible to achieve both technical and price improvements for the procurement of products or services.

The increasingly global procurement activities could enable further efficiency potential to be realized in the future procurement and production of individual components.

Capacity risks

Demand fluctuations and varying production capacity utilization over the course of the year require corresponding capacity adjustments. The fact that sales volumes are higher in the final months of the year creates particular challenges in production planning.

Absences of production personnel due to illness can result in a sudden loss of production capacity for several days.

On the basis of internal sales volume planning, capacity risks at the production sites are identified as far as possible and mitigated by the deployment of temporary workers and flexible annual working time arrangements or, in the event of extreme fluctuations, by short time working. A significant shift in the course of the fiscal year could result in sales risks due to potential difficulties in adjusting capacity with temporary workers.

Demand growth is met by continuous improvement of production processes and by timely capital expenditure on capacity expansion.

Takeover risks or changes in ownership structure

If its stock market valuation fails to sufficiently reflect the Company's long-term intrinsic value or the WashTec Group's performance sparks the interests of new investors, then this could lead to significant changes in ownership structure or a takeover.

Such events may lead to changes in the WashTec Group's established strategy, the composition of its executive bodies and its previously communicated expectations. Some of the WashTec Group's contractual agreements (such as loans agreements) include a change of control clause.

Financial and legal risks

The base interest rate on the existing financing arrangements is variable. Further interest rate rises could negatively impact the WashTec Group's earnings. However, given the increases in recent years, the Company does not anticipate any further significant interest rate hikes. Increased utilization of the credit lines, combined with the current high level of interest rates, poses the risk of higher financing costs.

WashTec is also exposed to risks arising from different product-specific and country-specific rules, regulations and laws that affect its business activities and processes. There is a possibility that new litigation may arise and that existing litigation with contracting parties may be resolved. The Group manages these risks by involving the legal department in critical legal transactions at an early stage, by engaging external experts as necessary and by recognizing appropriate provisions.

Exchange rate changes

Risks

Due to transactions with subsidiaries, exchange rate changes could affect operating performance. In addition, exchange rate fluctuations may affect the Group's income statement through the measurement of open foreign currency positions. To mitigate such effects when necessary, WashTec hedges against major risk with derivatives. The operational risk arising from individual transactions in foreign currencies is immaterial to the Group due to the small volume of such transactions.

Opportunities

A weakening of the euro could lead to positive currency effects on revenue in the North America or Asia/Pacific regions.

Liquidity risk

Ensuring that the subsidiaries are solvent at all times is essential for WashTec. The implemented cash management systems enable potential shortfalls to be identified in good time and appropriate action to be taken. Undrawn credit lines ensure the supply of liquidity.

A liquidity risk could arise in that there might not be adequate cash to discharge financial obligations as they fall due, for example due to payments not factored into cash planning.

Existing credit lines can be extended in the event that the development of the business results in additional financing requirements.

The company considers itself well positioned with regard to liquidity risks. With the currently available credit lines, the Company has sufficient liquid resources and borrowing lines to be able to be flexible and also to invest in future growth.

Credit and default risks

The WashTec Group exclusively conducts business with creditworthy third parties. To minimize credit risk, order limits are imposed in cases where customers do not have first-class credit standing. For new regional customers, the Company requests evidence of credit standing or financing. The recognized allowances for trade receivables are considered sufficient to cover the actual default risk. There is no material credit risk concentration within the Group. For selected customers, insolvency coverage is taken out with reputable credit insurers when receivables exceed a certain level.

Tax risks

The WashTec Group mostly recognizes deferred taxes in relation to temporary differences. Changes in tax legislation that affect the tax rate could result in expense from the remeasurement of recognized deferred tax assets and thus adversely affect consolidated equity and/or earnings per share.

Further risks could arise due to ongoing pending tax audits at Group companies. Due to the international nature of the WashTec Group's business activities, tax risks cannot be ruled out until tax audits have been concluded.

Employee risks

WashTec is highly dependent on qualified employees and specialists, especially in development, customer care and carwash equipment programming and operation. The unexpected loss of employees, changes in the age structure of the workforce or difficulties finding qualified employees could have an adverse effect on WashTec's development. This is notably exacerbated by the current shortage of skilled labor.

4.2.3 Overview of corporate risks

The following table shows the risks aggregated by risk category:

	Probability of occurrence	Change
Overall economic development	relevant
Climate and environmental risks	relevant
Customers, competition and market	relevant
Capital expenditure risks	relevant
Innovations and patents	relevant
IT security, quality and process risks	relevant
Supplier risks	relevant
Capacity risks	relevant
Takeover risks	negligible
Financial and legal risks	relevant
Currency risks	negligible
Liquidity risks	negligible
Credit and default risks	negligible
Tax risks	relevant
Employee risks	relevant

4.2.4 Overall risk assessment

The established risk management system is appropriate in the assessment of the Management Board and is subject to continuous improvement. The solid business model also limits business risks and opens up additional opportunities. Aggregation of the most significant individual risks across all corporate divisions and functions provides an indication of the Group's overall risk assessment, even though it is considered unlikely that the individual risks will materialize simultaneously. The cumulative expected loss (net) across all individual risks is €22.7m as of the end of 2023 (prior year: €25.9m) and is thus slightly down on the prior year, mainly due to the lower material price risks.

Based on the individual risks set out above, the overall assessment is as follows:

The total number of risks that have a material impact on the WashTec Group is at the same level as in the prior year. Risks related to material prices and availability decreased in the reporting year, but continue to apply in view of the current economic situation, including the geopolitical tensions and economic uncertainties. In the long term in particular, ongoing conflicts in the Middle East could complicate transportation conditions and thus lead to rising material and logistics costs. The Group does not currently expect this to have any material impact on business development in the coming year. Risks associated with overall economic development are classified as lower than in the prior year. However, a continuation of the high interest rates and high construction costs could lead to a further contraction of the overall market, resulting in lower revenue, particularly in the direct customer business. The

difficult market environment and instability in Central and Eastern Europe due to the Ukraine war may also have a negative impact on customer investment behavior. Given the intensive competition in the industry, the risks in relation to customers, competition and market remain unchanged. As in the prior year, the number of ransomware attacks and cyberattacks continues to increase, as a result of which IT security risks continue to be relevant for WashTec. However, this risk is considered to be lower than in the prior year due to improvements in the IT security system and other measures.

Based on the findings of the risk management process, the Management Board is not currently aware of any risks that could cast doubt on the Company's ability to continue as a going concern.

In accordance with Section 317 (4) HGB, the risk early warning system set up in accordance with Section 91 (2) AktG is audited by the auditor as part of the audit of the annual financial statements. The audit showed that the Management Board has taken the measures required in accordance with Section 91 (2) of the German Stock Corporation Act (AktG), in particular for the establishment of a monitoring system in suitable form. In all material respects, the monitoring system is capable of ensuring, with reasonable assurance, timely identification of any risks that may raise doubt about the Company's ability to continue as a going concern. Risk reporting is also provided to the Supervisory Board.

5

WashTec's risk management system (RMS) is described in the Risk Report under 4.2. Opportunities and risk report.

The internal control system (ICS) comprises all systematically defined controls and monitoring activities. It monitors principles and procedures using preventive and detective controls.

An effective and efficient internal control system is critical to the successful management of risk in business processes. The ICS covers all WashTec companies. The scope of activities to be performed by each entity varies, depending among other things on the entity's materiality to the consolidated financial statements and the specific risks associated with it. Overall responsibility for the ICS lies with the Management Board. In the manner of a compliance management system, the purpose of WashTec's ICS is to ensure effectiveness and efficiency in business activities, orderly and reliable accounting, and compliance with the legal provisions and requirements relevant to the WashTec. Accordingly, WashTec's internal control system covers all key business processes and goes beyond controls in the accounting process.

In the accounting process, various monitoring measures and controls help to ensure, for example, that the annual financial statements and the consolidated financial statements are prepared in accordance with requirements. WashTec uses a uniform Group consolidation system to ensure consistency. This also minimizes the risk of misstatements in accounting and external reporting. Adequate functional segregation and application of the dual control principle reduce the risk of fraudulent conduct. The coordinated processes, systems and controls provide sufficient assurance that the accounting process complies with IFRS, the

German Commercial Code (HGB) and other accounting-related requirements and laws. Group-wide accounting policies ensure the uniformity of accounting throughout the WashTec Group. New accounting requirements and changes in existing accounting requirements are examined for their impact on the WashTec Group and applied on a timely basis.

WashTec regularly performs system backups in the case of relevant IT systems in order to prevent data loss and system downtime as far as possible. The security policy also includes in-built system controls, manual spot checks by experienced staff, role-based permissions and physical access restrictions.

WashTec continuously develops the requirements for the internal control system and adapts the control landscape to changing processes. Internal Audit is involved in the entire process and regularly reviews the effectiveness of the internal control system as part of the riskbased annual audit plan.

Note: The following paragraph was not subject to an audit by the auditor.

WashTec's Management Board evaluates the output of the RMS and the ICS at Management Board meetings and conducts an annual assessment of their appropriateness and effectiveness. The Management Board has no indication that the RMS and ICS (including the CMS), taken as a whole, were not adequate or effective in any material respect as of December 31, 2023. However, as part of a continuous improvement process, the Management Board recognizes the need for ongoing optimization to ensure effectiveness and efficiency. Irrespective of this, there are inherent limitations to the effectiveness of any RMS or ICS. No system considered to be adequate and effective is guaranteed to identify all risks or rule out process or control violations in all circumstances. The Audit Committee is systematically integrated into WashTec's RMS and ICS (including the CMS). In particular, the Audit Committee monitors accounting and the accounting process as well as the appropriateness and effectiveness of the ICS and the RMS.

Risk reporting in relation to the use of financial instruments 6

The main risks for the WashTec Group arising from derivative financial instruments comprise credit, liquidity and market price risks. Company policy is to avoid or limit such risk as far as possible. The management of interest rate, currency, liquidity, credit and default risk has already been described in the risk report. When necessary, the Company also considers the use of derivative financial instruments to hedge market price risks. Interest rate and currency risks are the main market price risks. At the inception of a hedging relationship, both the hedging relationship and the Group's risk management objectives and strategies with regard to the hedge are formally designated and documented. This is described in detail in the Notes to the Consolidated Financial Statements. In accordance with Group policy, there is no trading in derivatives for speculative purposes.

Takeover-related disclosures

Disclosures in accordance with Section 289a and 315a HGB: Explanatory report by the Management Board

The following text contains the disclosures required under Section 289a and 315a HGB.

Subscribed capital

7

The Company's subscribed capital of €40,000,000 is divided into 13,976,970 no-par-value bearer shares that each grant the same rights and obligations, including the same voting rights. There are no different classes of shares. The Management Board is not aware of any restrictions regarding voting rights or the transfer of shares. There are no shares carrying special rights granting their holders a power of control.

Restrictions regarding voting rights and the transfer of shares

In accordance with Section 71b of the German Stock Corporation Act (AktG), the Company has no rights in respect of treasury shares it acquires. In all other respects, each share has one vote. To the Management Board's knowledge, there are no restrictions regarding voting rights or the transfer of shares.

Direct and indirect shareholdings

To the knowledge of the Management Board, 40.40% of the Company's shares (as of December 31, 2023) are held by shareholders whose stakes are below the notification threshold. According to the notifications filed under the German Securities Trading Act (WpHG), a direct shareholding above 10% of voting rights is held by EQMC ICAV (formerly EQMC Europe Development Capital Fund plc.), Ireland (15.14%). According to the notifications filed under the WpHG, an indirect shareholding above 10% of voting rights is held by Alantra EQMC Asset Management, SGIIC, S.A., Spain (15.12%) as the investment management function of EQMC ICAV.

According to the notifications filed under the WpHG, a direct shareholding close to but below 10% of voting rights is held by Kempen Oranje Participations N.V., Netherlands (9.60%).

Shareholder structure as of December 31, 2023

	15.14% EQMC ICAV ¹
	9.60% Kempen Oranje Participaties N.V.
	6.82% Dr. Kurt Schwarz ²
	5.43% Investment AG für langfristige Investoren TGV
	4.99% Axxion S.A.
	4.79% Union Investment Privatfond GmbH
	4.58% Paradigm Capital Value Fund SICAV
	4.25% Treasury shares
	4.00% Diversity Industrie Holding AG
40.40% Other

Source: Notifications pursuant to WpHG

¹ Alantra EQMC Asset Management, SGIIC, S.A. as investment manager of EQMC ICAV ² Leifina GmbH & Co. KG et al.

Holders of shares with special control rights

There are no holders of shares with special control rights.

System of control of any employee share scheme

To the Company's knowledge, there are no employees participating in the capital who do not directly exercise their control rights.

Appointment and removal of Management Board members and amendments of the Articles of Association

The appointment and removal of members of the Management Board is governed by Section 84 and 85 AktG and by Section 7 of the Company's Articles of Association. Under Section 7.1 of the Articles of Association, the Management Board consists of one or more members. The number of members of the Management Board is determined by the Supervisory Board.

In accordance with the Company's Articles of Association read in conjunction with the current Management Board rules of procedure, the Management Board currently comprises three members. The Articles of Association do not lay down any special requirements with respect to the appointment and removal of one or all of the members of the Management Board. The Supervisory Board is responsible for appointments and removals. Members may be reappointed to the Management Board or have their term of office extended.

Amendments to the Articles of Association are made pursuant to Section 179 and 133 AktG and to Sections 9.14 and 9.15 of the Articles of Association. The Company has not made use of the option to lay down further requirements for amendments to the Articles of Association.

Section 9.14 of the Articles of Association reduces the statutory minimum requirements to the extent permitted by law. The Supervisory Board is authorized to make solely formal amendments to the Articles of Association.

Powers of the Management Board to issue or buy back shares

Authorized Capital (Section 5.1 of the Articles of Association of WashTec AG)

By resolution of the Annual General Meeting on May 16, 2022, the Management Board is authorized, subject to the consent of the Supervisory Board, to increase the registered share capital on one or more occasions on or before June 30, 2025 by a total amount of up to €8,000,000 (Authorized Capital) by issuing new no-par-value bearer shares in exchange for cash and/or non-cash contributions. The shareholders must be granted preemptive rights in

this connection unless otherwise stipulated. The new shares may also be underwritten by one or more banks designated by the Management Board with the obligation to offer them to the shareholders for subscription (indirect subscription right). However, the Management Board is authorized (subject to the approval of the Supervisory Board) to exclude shareholders' preemptive rights in certain cases as set out in Section 5.1 of the Articles of Association of WashTec AG. The Management Board has not made use of these authorizations to date. The authorized capital is intended to enable the Company to act rapidly and flexibly as needed in order to raise equity capital on favorable terms.

Share buy-back

Unless expressly permitted by law, the Company cannot acquire or make use of treasury shares except with authorization from the Annual General Meeting. By resolution of the Annual General Meeting of May 16, 2022, the Company is authorized to acquire, on or before June 30, 2025 and for purposes other than to trade in the Company's own shares, the Company's own shares in the amount of up to 10% of the share capital of €40,000,000 at the time of the resolution or – if lower – at the time the authorization is exercised. The Management Board may opt to acquire such shares on the stock exchange, by means of a public purchase offer to all shareholders or by means of a public invitation directed at all shareholders to tender shares for sale. The precise terms and conditions for the purchase and use of treasury shares are set out in item 8 of the agenda in the 2022 Invitation to the Annual General Meeting of WashTec AG. Following completion of the share buyback offer in September 2015, and including shares previously held, WashTec AG now holds a total of 594,646 of treasury shares, representing approximately 4.25% of its registered share capital.

Significant agreements subject to a change of control of the company following a takeover bid

Individual contractual agreements entered into by the WashTec Group (such as loan agreements) provide for the option of extraordinary termination in the event of a takeover (change of control). In that event there may also be a change of management.

Corporate Governance Statement

In accordance with Sections 289f and 315d of the German Commercial Code

The Management Board and Supervisory Board of WashTec AG operate in accordance with the principles of good and responsible corporate governance. In this Corporate Governance Statement in accordance with Sections 289f and 315d of the German Commercial Code (Handelsgesetzbuch, or HGB), the Management Board reports on corporate governance at WashTec AG and in the WashTec Group. The Corporate Governance Statement also includes the declaration on the German Corporate Governance Code (the "Code") in accordance with Section 161 of the German Stock Corporation Act (Aktiengesetz, or AktG).

8.1 Declaration of Conformity

8

The Management Board and Supervisory Board of WashTec AG identify with the objectives of the Code, which encourage responsible, transparent corporate management and supervision directed at sustained growth in shareholder value.

The Management Board and Supervisory Board regularly direct their attention to satisfying the Code's requirements, which comprise principles, recommendations and suggestions. The recommendations of the Code are largely complied with.

The Declaration of Conformity in accordance with Section 161 AktG as submitted jointly by the Management Board and Supervisory Board on December 19, 2023 is reprinted below. All submitted declarations are published in the Investor Relations section of the Company's website at www.washtec.de.

"WashTec AG, Augsburg

Declaration of Conformity of December 19, 2023 under Section 161 AktG

The Management Board and Supervisory Board submitted the last Declaration of Conformity on December 15, 2022.

The Management Board and Supervisory Board hereby declare that since submission of the last Declaration of Conformity on December 15, 2022, WashTec AG has complied with the recommendations of the German Corporate Governance Code (the "Code") issued by the Government Commission on the German Corporate Governance Code as amended on April 28, 2022, and will continue to comply with those recommendations in the future, with the following exceptions:

In the first sentence of Recommendation G.10, the Code recommends predominantly share-based variable remuneration for the Management Board. The long-term variable remuneration under the Long Term Incentive Program (LTIP) contains significant share price-based components. These include the total shareholder return target weighted at 30% under the LTIP, which is used to assess the share price performance over the duration of the three-year incentive period. In light of this, the Management Board and Supervisory Board, as a purely precautionary measure, declare an exception from the first sentence of Code Recommendation G.10. It should be noted in this connection that the LTIP provides for the possibility, subject to fulfillment of specified conditions, of increasing the remuneration under the LTIP by up to a maximum of twofold by means of a corresponding personal investment in WashTec AG shares. This option provides a clear incentive for members of the Management Board to take a stake in the risks and rewards of the share price performance.

Furthermore, the second sentence of Code Recommendation G.10 recommends that granted long-term variable remuneration amounts should be accessible to Management Board members only after a period of four years. The incentive period under the LTIP is three years and is based on the regular term of Management Board contracts, which is likewise three years. In view of this three-year cycle, the Management Board and the Supervisory Board consider a three-year period under the LTIP to be appropriate. Accordingly, the Supervisory Board and Management Board declare an exception from the second sentence of Code Recommendation G.10. The Code is complied with to the extent that one-sixth of the final cash award from the personal investment LTIP component is subject to an obligation to purchase shares with a three-year holding period.

The remuneration system for the remuneration of members of the Management Board of WashTec AG adopted by the Supervisory Board in its meeting of March 24, 2021 and approved by the Annual General Meeting of WashTec AG of May 18, 2021 applies to all Management Board contracts entered into or renewed after the Annual General Meeting on May 18, 2021. The applicable LTIP 2021– 2023 for the Management Board, which includes a negative bonus/clawback arrangement, was adopted effective January 1, 2021 and applies to all members of the Management Board. This is intended to be retained in the subsequent LTIP 2024-2026. With regard to the Management Board contracts current at the time of the 2021 Annual General Meeting, these have continued or will continue to apply under the conditions there specified. Recommendations G.11 sentence 2 (retention and reclaiming of variable remuneration) and G.13 sentence 2 of the Code (severance payment taken into account against compensation payments in the event of a post-contractual non-compete clause) are not implemented in these Management Board contracts. This is due to the fact that the Management Board

contracts current at the time of the 2021 Annual General Meeting were entered into on the basis of the previous remuneration system adopted by resolution of the Supervisory Board on December 19, 2019.

The second sentence of Code Recommendation G.18 specifies that any performance-related remuneration for the Supervisory Board should be geared to the long-term development of the Company. The Supervisory Board of WashTec AG is granted annual performance-based remuneration under the Articles of Association and long-term performance-based remuneration in accordance with the resolution of the 2021 Annual General Meeting ("Supervisory Board LTIP"). The current Supervisory Board LTIP applies for the period January 1, 2022 to December 31, 2024. The Management Board and the Supervisory Board are proceeding on the assumption that the recommendation will be complied with and, as a precautionary measure, declare that the maximum achievable cash award under the Supervisory Board LTIP, broken down pro rata for each year, will generally exceed the maximum achievable annual performance-based remuneration.

Augsburg, December 19, 2023

Management Board and Supervisory Board"

Further information about corporate governance can be found on the Internet at www.washtec.de. Corporate governance statements, corporate governance reports and declarations of conformity that are no longer current remain accessible on the website for a period of at least five years.

8.2 Remuneration report/remuneration system

The remuneration system for members of the Management Board in accordance with Section 87a (1) and (2) sentence 1 AktG, which was adopted by the Annual General Meeting of May 18, 2021, and the resolution on remuneration for the members of the Supervisory Board adopted in accordance with section 113 (3) AktG by the Annual General Meeting of May 18, 2021 are publicly available online in the Investor Relations section of the website www.washtec.de.

The remuneration report and the auditor's report in accordance with Section 162 AktG are publicly available at the same Internet address.

8.3 Management Board

Procedures and composition

The Management Board of WashTec AG is responsible for the management of the Company. As the Company's executive body, it is required to act in the Company's best interests, in furtherance of which it seeks to deliver sustained growth in shareholder value. It is responsible for establishing the principles of the Company's corporate policies in consultation with the Supervisory Board. The Management Board is also responsible for the strategic direction of the Company, the planning and setting of the Company's budget, the allocation of resources and the oversight of the business units. In addition, the Management Board is responsible for ensuring compliance with legal and regulatory requirements and with internal corporate guidelines or directives, and it works to ensure compliance by all Group companies. It reports to the Supervisory Board regularly, promptly and comprehensively on all issues of relevance to the Company and the Group relating to strategy and strategy implementation, planning, the financial position, results of operations and cash flows, compliance, risks and risk management.

The work of the Management Board is governed by rules of procedure for the Management Board, which are issued by the Supervisory Board. In particular, the rules of procedure define the portfolios of the members of the Management Board, specify the matters reserved for decision by the full Management Board, determine the matters requiring the approval of the Supervisory Board and establish the majority voting requirements for Management Board resolutions.

The members of the Management Board in the reporting period were Dr. Ralf Koeppe, Mr. Sebastian Kutz, Mr. Andreas Pabst and Mr. Stephan Weber.

The Management Board membership of Dr. Koeppe was terminated by mutual agreement on February 29, 2024. He will be succeeded by Mr. Michael Drolshagen, who the Supervisory Board has appointed as new the Chief Technology Officer (CTO) and Chief Executive Officer (CEO) with effect from May 1, 2024.

Name	Period	Portfolio
Dr. Ralf Koeppe (CEO & CTO)	January 1 to December 31, 2023	Corporate Culture, Communication and Philosophy, HR, R&D, Supply Chain, Production, Quality, Sustainability, AUWA-Chemie GmbH
Sebastian Kutz (CSO)	March 1 to December 31, 2023	Global Sales and Service, Key Account Management, Marketing, Business Units/Product Management, Service Support, WashTec Carwash Management GmbH
Andreas Pabst (CFO)	January 1 to December 31, 2023	Finance/Controlling, IT, Procurement, Investor Relations, Legal and Compliance, Risk Management, Internal Audit, Insurance, WashTec Financial Services GmbH
Stephan Weber (CSO)	January 1 to February 28, 2023	Global Sales and Service, KAM/CWM, Marketing and Product Units/Product Management

Succession planning and diversity policy

Together with the Management Board, the Supervisory Board ensures that long-term succession planning is in place for the Management Board. The CEO and the Chairman of the Supervisory Board hold regular discussions on this topic as part of such planning. This issue is also regularly addressed by the Supervisory Board in its meetings. Long-term succession planning is based in particular on discussions between the Supervisory Board and the members of the Management Board and on contacts with senior executives of the Company. Terms of office and renewal options for current Management Board members are discussed along with potential successors.

WashTec aims as a matter of policy for the composition of the Management Board to be based on qualification.

The Supervisory Board pays particular attention to diversity as part of the selection process for new Management Board members. In connection with filling vacancies on the Management Board, the Supervisory Board prepares a requirements profile and conducts interviews with suitable candidates. When making appointments to the Management Board, efforts are made to ensure that candidates have experience in the same or a similar industry. Based on this, the Supervisory Board decides on appointments to fill vacant Management Board positions taking into account the requirements profile and specific qualification requirements. Where necessary, the Supervisory Board and the Personnel Committee are assisted by external consultants in the preparation of requirements profiles and the selection of candidates.

Given suitable experience, people of all age groups can be members of the Management Board. In accordance with recommendation B.5 of the Code, the Supervisory Board has set a standard age limit of 65 for members of the Management Board. Information on targets for the percentage of women on the Management Board is provided under heading 8.6 on page 106.

8.4 Supervisory Board

Supervisory Board procedures

The Supervisory Board of WashTec AG advises and monitors the Management Board in its management of the Company, including the management of the Group. Management Board decisions of major significance – for example, acquisitions, divestments and financing measures – are subject to Supervisory Board approval. The Supervisory Board regularly discusses business development and planning, as well as the Company's strategy and its implementation. The Supervisory Board reviews the Company's quarterly statements and half-year report and approves the annual financial statements of WashTec AG and the consolidated financial statements. As there is no resolution of the Annual General Meeting pursuant to Section 172 AktG, the annual financial statements of WashTec AG are adopted on approval by the Supervisory Board. The Supervisory Board monitors the Company's compliance with the law, regulatory requirements and internal corporate guidelines. Its scope of responsibilities also includes appointing the members of the Management Board and defining their portfolios. In addition, the Supervisory Board adopts resolutions on, among other things, the remuneration system for the Management Board (cf. section 87a AktG), on the basis of which the specific remuneration of individual Management Board members is determined. The Supervisory Board submitted a revised remuneration system for members of the Management Board to the 2021 Annual General Meeting of WashTec AG for approval, which was granted by the Annual General Meeting.

The work of the Supervisory Board is governed by internal rules of procedure, in particular pertaining to the convocation and conduct of meetings, the adoption of resolutions and the manner in which any conflicts of interest are handled. The rules of procedure are available on the Company's website at: Rules of Procedure for the Supervisory Board – WashTec AG.

The Supervisory Board regularly reviews the efficiency of its work in a self-assessment. The self-assessment is based on a questionnaire that is regularly updated and revised in accordance with the requirements of the Code. The most recent self-assessment was carried out in the first quarter of 2023. The results of the assessment were also presented and discussed in depth in the first quarter of 2023. Those findings confirm a professional, constructive working relationship characterized by a high degree of trust and openness both within the Supervisory Board and in its dealings with the Management Board. A number of suggestions were also taken up and put into practice during the course of the year. No notable deficits were identified.

The Management Board and Supervisory Board work closely together in the best interests of the Company. No conflicts of interest requiring disclosure to the Supervisory Board arose on the part of members of the Management Board or Supervisory Board. The independent advice and monitoring of the Management Board by the Supervisory Board has been and continues to be ensured at all times.

Composition of the Supervisory Board and of Supervisory Board committees

In accordance with the Articles of Association of WashTec AG, the Supervisory Board consists of six members elected by the Annual General Meeting.

The Chairman of the Company's Supervisory Board, Dr. Günter Blaschke, notified the Company's Management Board on November 8, 2023 that he would be stepping down from the Supervisory Board effective December 31, 2023. The decision was made for personal reasons and by mutual agreement with the Supervisory Board and the Management Board.

On December 19, 2023, the Supervisory Board unanimously elected Ulrich Bellgardt – member of the Supervisory Board since 2014 and Deputy Chairman of the Supervisory Board – as the new Chairman of the Supervisory Board of WashTec AG effective January 1, 2024. Peter Wiedemann, member of the Supervisory Board since 2022, was elected as the new Deputy Chairman of the Company's Supervisory Board effective January 1, 2024.

Following Dr. Blaschke's departure from the Supervisory Board, a resolution on the election of a new member of the Supervisory Board will be adopted at the 2024 Annual General Meeting on May 14, 2024.

In order to perform its duties efficiently and in accordance with the requirements of the Code, the Supervisory Board has established an Audit Committee, a Personnel Committee, a Nominating Committee, a Corporate Strategy and Sustainability Committee, a Sales Strategy Committee, and an Innovation and Production Committee.

Committee composition until December 31, 2023

	Audit Committee	Personnel Committee	Nomination Committee	Innovation and Production Committee	Sales Committee	Corporate Strategy and Sustainability Committee
Dr. Günter Blaschke (until December 31, 2023)		C	C (until November 13, 2023)	M	C	M
Ulrich Bellgardt		M	C (from November 14, 2023)	M	M	C
Dr. Hans Liebler	M		M
Heinrich von Portatius	M				M (from May 15, 2023)
Dr. Alexander Selent	C	M				M
Peter Wiedemann			M	C

C: Committee chairperson M: Committee member

Committee membership from January 1, 2024

	Audit Committee	Personnel Committee	Nomination Committee	Innovation and Production Committee	Sales Strategy Committee	Corporate Strategy and Sustainability Committee
Ulrich Bellgardt		C	C	M	M	C
Dr. Hans Liebler	M		M		M
Heinrich von Portatius	M	M		M	C
Dr. Alexander Selent	C	M				M
Peter Wiedemann			M	C		M

C: Committee chairperson M: Committee member

The primary purpose of the committees is to prepare Supervisory Board meetings and resolutions for the plenary Supervisory Board. Their responsibilities are set out in detail in section 10 onwards of the Rules of Procedure for the Supervisory Board. Within the scope of the overall responsibility of the Supervisory Board, each member performs certain duties on the committees based on the member's expertise. The committee chairpersons each report regularly to the Supervisory Board on the work of the committees.

The membership of the Supervisory Board, meeting attendance and details of the Supervisory Board's work together with that of its committees in the reporting year are presented in the Report of the Supervisory Board beginning on page 11.

In March 2022, taking into account the legal requirements and the recommendations of the Code, the Supervisory Board of WashTec AG adopted specific objectives for its composition, including a profile of skills and expertise and a diversity policy for the Supervisory Board.

Independence

The Supervisory Board is required to include what it considers to be an appropriate number of independent members within the meaning of the Code. For this purpose, more than half of the shareholder representatives are required to be independent from the company and the Management Board. If the company has a controlling shareholder, at least one of these shareholder representatives is also required to be independent from the controlling shareholder. The Chair of the Supervisory Board, the Chair of the Audit Committee, as well as the Chair of the Personnel Committee, are required to be independent from the company and the Management Board. The Chair of the Audit Committee is also required to be independent from any controlling shareholder.

Diversity policy

Diversity contributes to a broad range of experience, perspectives, knowledge and skills within the Supervisory Board. The Supervisory Board therefore seeks to ensure sufficient diversity in terms of personality, gender, internationality, educational or professional background, expertise, experience and age distribution, taking particular account of the following criteria for its composition:

• W The Supervisory Board as a whole is required to have a balanced age structure, including both younger professionals and older members with greater professional and life experience.
• W In elections to the Supervisory Board, the aim is to ensure that, in addition to suitability in terms of personal and professional skills and expertise, the Supervisory Board includes both male and female members. The composition of the Supervisory Board must be based on the applicable legal requirements and on the target quotas established on the basis of the Act on Equal Participation of Women and Men in Leadership Positions (Führungspositionengesetz).
• W The Supervisory Board is composed of individuals who, in addition to their personal and professional skills and expertise, preferably also have different educational and occupational backgrounds – such as engineering, business, law or the humanities.

The guiding principle for the composition of the Supervisory Board is to ensure professional monitoring and advice of the Management Board of WashTec AG. Its members as a whole are required to possess the knowledge, skills and professional expertise necessary to properly perform the duties of the Supervisory Board of WashTec AG as an internationally operating listed company in the mechanical engineering sector.

Candidates proposed for election to the Supervisory Board are required to have the personality, knowledge and experience to properly perform the duties of a member of the Supervisory Board of WashTec AG as an internationally operating listed company in the mechanical engineering sector. Each member of the Supervisory Board is required to possess the integrity and independence of judgment to fulfill his or her responsibilities of oversight and control. For the purpose of advising and monitoring the Management Board, each member of the Supervisory Board is also required to have appropriate experience from management functions or to have otherwise acquired the necessary skills.

Members of the Supervisory Board are each responsible for ensuring that they have sufficient time at their disposal to properly perform their duties. It is necessary to take into account in this connection that at least four ordinary Supervisory Board meetings are held each year, each of which requires adequate preparation, that sufficient time must be available for the review of the annual and consolidated financial statements, and that membership of one or more Supervisory Board committees requires additional time.

Supervisory Board members are required to comply with the limit on the number of supervisory board offices held as recommended by the Code.

The normal age limit for membership of the Supervisory Board, as laid down in the rules of procedure for the Supervisory Board, is 75 years.

The Supervisory Board as a whole is required to possess all skills and expertise considered material in view of WashTec's activities. This includes, in particular, knowledge and experience in the following areas of expertise:

Area of expertise	Description
Leadership experience/management	Leadership/management experience through holding an executive position or as a member of a supervisory board or similar body in a (listed) company
Technology and innovations (including engineering and digitalization)	Knowledge and experience in the areas of technology and innovations (including engineering and digitalization)
Production, sales and marketing	Knowledge and experience in the areas production, sales and marketing
Finance	Knowledge and experience in the application of accounting principles and the application of internal control procedures and auditing
Risk management and compliance	Knowledge and experience in risk management and in the area of general corporate compliance
Human resources	Knowledge and experience in personnel leadership, personnel management and personnel development
Sustainability (ESG)	Knowledge and experienced of ESG factors and their significance and of sustainability issues of importance to the WashTec Group, and knowledge of corporate governance in listed companies (German Corporate Governance Code, Market Abuse Regulation, etc.)
Internationality	Knowledge and experience (including non-native language skills) in international business activities
Capital market and investor relations	Knowledge and experience (including non-native language skills) in international business activities

In addition, in view of the requirements in Section 100 (5) AktG, at least one member of the Supervisory Board must have expertise in the field of accounting and at least one other member of the Supervisory Board must have expertise in the field of auditing. According to the Code, the expertise in the field of accounting consists of special knowledge and experience in the application of accounting principles and internal control and risk management systems, and the expertise in the field of auditing consists of special knowledge and experience in the auditing of financial statements. Accounting and auditing also include sustainability reporting and its audit and assurance. The chairman of the audit committee is required to have appropriate expertise in at least one of the two areas. The members as a whole must be familiar with the sector in which the company operates.

Implementation/composition of the Supervisory Board

The Supervisory Board of WashTec AG in the reporting period was composed in accordance with its objectives and the above requirements. All members of the Supervisory Board in office in the reporting period have diverse professional and educational backgrounds, international experience and many years of management experience. The members as a whole are familiar with the sector in which the Company operates and have the knowledge, skills and experience that are material to WashTec. The expertise of the Supervisory Board and the Corporate Strategy and Sustainability Committee on sustainability issues relevant to the Company enables the Supervisory Board, in its monitoring and advisory capacity, to monitor the inclusion of environmental and social sustainability in corporate strategy and planning. Following Dr. Blaschke's departure from the Supervisory Board on December 31, 2023, the Supervisory Board will submit a nomination for the election of a new member of the Supervisory Board to the 2024 Annual General Meeting and will take the aforementioned objectives for the composition of the Supervisory Board and the profile of skills and expertise for the entire Supervisory Board into account in that nomination.

The Supervisory Board and its Audit Committee each have at least one member with expertise in accounting in the person of Dr. Liebler and at least one additional member with expertise in auditing in the person of Dr. Selent. Dr. Selent, the Chairman of the Audit Committee, has expertise, special knowledge and experience in the fields of accounting and auditing, notably by virtue of his professional training as auditor and tax advisor and his many years of service as Chief Financial Officer of Fuchs Petrolub AG.

Dr. Liebler has special knowledge and experience in the field of accounting, in particular due to his academic qualifications and his many years as managing director of various international companies.

Dr. Selent and Dr. Liebler consequently qualify as financial experts within the meaning of Section 100 (5) AktG and Recommendation D.3 of the Code.

In addition, during the reporting period, the Supervisory Board had what it considers to be an appropriate number of independent members, as it considers all six members of the Supervisory Board to be independent within the meaning of the Code.

Based on the requirements for members of the Supervisory Board, the following qualification matrix shows the expertise present and the status of implementation of the profile of skills and expertise and of the diversity policy as of December 31, 2023:

	Dr. Günter Blaschke	Ulrich Bellgardt	Dr. Hans Liebler	Heinrich von Portatius	Dr. Alexander Selent	Peter Wiedemann
Member of the Supervisory Board since	June 4, 2014 to December 31, 2023	June 4, 2014	May 10, 2012	May 16, 2022	May 3, 2017	May 16, 2022
Independence*	x	x	x	x	x	x
Year of birth	1949	1957	1969	1978	1952	1959
Gender	Male	Male	Male	Male	Male	Male
Nationality	German	German/Swiss	German	German	German	German
Areas of expertise
Leadership experience/management						
Technology and innovations (including engineering and digitalization)						
Production, sales and marketing						
Finance					
Risk management and compliance					
Human resources						
Sustainability (ESG)						
Internationality						
Capital market and investor relations					

* Within the meaning of the German Corporate Governance Code 2022

Based on a self-assessment by the Supervisory Board (a check mark indicates at least good and in-depth knowledge, exceeding the minimum legal requirements for Supervisory Board members, on the basis of existing qualifications or acquired in the course of service as a Supervisory Board member, such as through many years of service on the Audit Committee or regular participation in professional development measures).

When selecting and nominating candidates for the Supervisory Board, the Supervisory Board and the Nomination Committee take into account, in addition to the requirements of the law and the Code, the above-mentioned objectives for the composition of the Supervisory Board and strive to fulfill the profile of skills and expertise for the Supervisory Board as a whole. The selection process is also required to consider the diversity aspect at an early stage. The Supervisory Board's decision on election nominations to the Annual General Meeting is always based on the interests of the Company, taking into account all circumstances of the individual case.

8.5 Shareholders and the Annual General Meeting

WashTec AG regularly provides detailed information on the Company's business development, financial position, financial performance and cash flows and on non-financial subject matter to its shareholders in the form of reporting, in individual discussions and at investor conferences.

The shareholders exercise their rights at the Annual General Meeting. The Annual General Meeting of WashTec AG is generally held in the second quarter of the year. The Annual General Meeting adopts resolutions regarding, among other things, the appropriation of distributable profit, ratification of the acts of the Management Board and Supervisory Board, and election of the auditor. Amendments to the Articles of Association and the granting of authorization to take measures that have the effect of changing the share capital are decided exclusively by resolution of the Annual General Meeting and implemented by the Management Board. Absent shareholders may have their voting rights exercised by proxies.

WashTec AG held the Annual General Meeting in person in the 2023 reporting year. All documents of relevance to its Annual General Meeting were published online in German and in English. The WashTec AG website thus provides an information platform for both national and international investors, including with regard to the Annual General Meeting.

8.6 Targets for the percentage of women on the Boards

The Supervisory Board is required to set targets for the percentage of women on the Company's Management Board and Supervisory Board, together with dates for their achievement. In the fiscal year 2018, the Supervisory Board set targets for the percentage of women in the Management Board and Supervisory Board, to be achieved by June 30, 2023. On July 26, 2018, the Supervisory Board resolved to set a target of at least 25% as the female quota for the Management Board. This target was not met by the June 30, 2023 target date. The reasons are as follows: Following the departure of Dr. Reden from the Management Board, there were no female members of the Management Board from September 1, 2022 onward. Based on this, in the Company's interests, the Supervisory Board decides on appointments to vacant Management Board positions taking into account the requirements profile and specific qualification requirements. When doing so, the Supervisory Board considers diversity in terms of factors such as age, gender and educational or professional background. In appointing the current members of the Management Board, the Supervisory Board decided on the basis of a careful and structured selection process on the best candidates for each position.

On July 26, 2018, the Supervisory Board resolved to set a target of 0% as the female quota for the Supervisory Board for the period until June 30, 2023. This decision was intended to create the greatest possible flexibility for constituting the Board on the basis of qualification. There were no women members of the Supervisory Board as of the June 30, 2023 target date.

In fiscal year 2023, the Supervisory Board set new targets for the number of women on the Management Board and Supervisory Board from July 1, 2023 for achievement by June 30, 2028. The Supervisory Board has set the target figure for the number of women on the Management Board at zero (0) and the target figure for the number of women on the Supervisory Board at one (1) person.

The Supervisory Board's reasoning for setting the target for the Management Board in this way was as follows: The setting of a target of zero for the Management Board is intended to retain the greatest possible flexibility for constituting the Management Board on the basis of qualification. The Supervisory Board decides on appointments to Management Board positions in the interests of the Company based on qualifications, experience and professional and personal suitability. The Supervisory Board pays particular attention to diversity as part of the selection process for new Management Board members. Elements of the diversity policy with regard to the composition of the Management Board include factors such as

age, educational and professional background and gender. In the interests of maximum flexibility, however, no priority is to be given to gender in future appointments to the Management Board. With the Management Board in its new composition since last year, WashTec AG has a highly motivated and dynamic management team. Accordingly, in the interest of future-oriented and sustainable management of the Company and of confidence in the current composition of the Management Board, the Supervisory Board does not wish to send out the wrong signals by setting a higher target, nor does it wish by setting such a target to commit itself in advance – or give the impression of committing itself in advance – with regard to its appointment decisions for the next five years. The Supervisory Board's decision on appointments to Management Board positions will always continue to be based on the interests of the Company, taking into account all circumstances of the individual case.

Irrespective of the statutory targets for the percentage of women on the Management Board and Management Board and Supervisory Board, the WashTec Group attaches great importance to equal treatment, equal opportunities and diversity in when filling management positions and all other positions in the Company. In particular, the goal of further promoting the percentage of women in leadership positions within the WashTec Group continues to apply for the future.

The Management Board considers diversity when making appointments to executive positions. In fiscal year 2022, the Management Board of WashTec AG set itself the goal of further promoting the percentage of women in leadership positions within the WashTec Group and decided to set a voluntary female quota for one management level across the entire Group. The target is 18% (equivalent to 32 people); the date for achievement of the target is June 30, 2027. The need to set targets for the percentage of women at levels of management within WashTec AG does not arise, because WashTec AG as the Group parent has no such levels due to the very small number of employees.

8.7 Corporate governance practices

Transparency and communication

Providing comprehensive and timely information to shareholders and stakeholders is a high priority for WashTec. WashTec reports on its business situation and its results of operations through financial reporting, the annual press conference and conference calls. Once annually, WashTec voluntarily publishes a comprehensive sustainability report, which is available in the Investor Relations section of the Company's website, www.washtec.de. WashTec also publishes press releases and ad-hoc disclosures. All notices and disclosures, the Articles of Association of WashTec AG, all Declarations of Conformity and further documents concerning corporate governance (such as the WashTec Code of Conduct) are available for downloading from the Investor Relations section of the Company's website, www.washtec.de.

Under Article 19 of the Market Abuse Regulation (EU) No 596/2014, members of the Management Board and Supervisory Board, as well as persons closely associated with them, are required to disclose any purchase or sale of securities in WashTec AG or of related financial instruments once the purchase and sale transactions reach a total amount of €20,000 within a calendar year. The reportable securities transactions reported to WashTec AG in the reporting period (managers' transactions) have been duly published and are available in the Investor Relations section of the Company's website, www.washtec.de under News – Managers' Transactions.

Compliance

WashTec has established a Group-wide compliance organization to ensure that all relevant requirements are observed. The compliance organization is subject to continuous development and improvement. The Management Board and Supervisory Board regard the compliance organization as a major element of WashTec's management and control structure. Detailed reporting on compliance is thus a regular subject of meetings of the Supervisory Board and the Audit Committee. A detailed compliance report is also prepared each year.

The strategic guidelines and the WashTec AG Code of Conduct form the basis of the Company's compliance program. The Code of Conduct was thoroughly revised in the reporting year. It contains binding rules on legally compliant conduct as well as precise directions on matters such as compliance with competition law and anti-corruption law, handling donations, avoiding conflicts of interests, complying with the prohibition on insider trading, and protecting the Company's assets, as well as requirements for the protection of human and environmental rights within the meaning of the German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz). The Code of Conduct is binding for all employees of the WashTec Group worldwide and for the members of the Management Board. It is regularly reviewed and updated to reflect social and regulatory changes.

The members of the Supervisory Board observe the rules to the extent that they apply to them. All WashTec Group managers and employees in sensitive areas such as Sales, Procurement, Human Resources and Finance receive regular online training on the Code of Conduct, with a concluding test and certification. Regular online training, likewise with a concluding test, is also provided on the General Data Protection Regulation, especially for new employees. As part of the compliance system, a whistleblower system in place since 2016 allows employees and others to raise concerns – anonymously if they prefer – and flag circumstances that may indicate a violation of the law or Company policies. This has also been updated in connection with the changes in the law. Any such indications are investigated and action taken as appropriate if grounds for suspicion or violations are identified. The WashTec Group Grievance and Reporting Procedure is available in the Investor Relations – Corporate Governance section of the Company website, www.washtec.de.

The insider list to be drawn up under Article 18 of the Market Abuse Regulation (EU) No 596/2014 is updated in accordance with the law. The individuals recorded in the insider list are informed of the duties entailed.

Opportunities and risk management

Responsible management of opportunities and risks is part of good corporate governance. The Management Board has established an internal control system and risk management system that is appropriate and effective having due regard to the scope of the Company's business activities and its risk situation. The Management Board and the Supervisory Board regularly discuss existing opportunities and risks, their development and action to be taken. The internal control system and the risk management system are subject to continuous development and adaptation to changing conditions. Details are presented in the opportunities and risk report starting on page 82.

Augsburg, March 22, 2024

Sebastian Kutz CSO/Member of the Management Board

Andreas Pabst CFO/Member of the Management Board

Consolidated Financial Statements of WashTec AG

Consolidated Income Statement .	111
Consolidated Statement of Comprehensive Income . 112
Consolidated Balance Sheet . 113
Consolidated Statement of Changes in Equity . 115
Consolidated Cash Flow Statement . 116
Notes to the Consolidated Financial Statements	117
Responsibility statement . 172

Consolidated Income Statement

in €k Note	Jan 1 to Dec 31, 2023	Jan 1 to Dec 31, 2022
Revenue 7	489,468	482,239
Cost of sales 8	–352,934	–352,826
Gross profit	136,534	129,413
Research and development expenses 8	–14,154	–14,150
Selling expenses 8	–62,452	–62,136
Administrative expenses 8	–18,570	–17,124
Other income 9	5,360	7,169
Other expenses 9	–4,832	–5,164
Earnings before interest and taxes (EBIT)	41,886	38,009
Financial income	213	529
Financial expenses	–3,688	–1,275
Financial result 10	–3,475	–746
Earnings before taxes (EBT)	38,411	37,263
Income taxes 11	–10,439	–10,909
Net income	27,972	26,355
Average number of shares in units	13,382,324	13,382,324
Earnings per share (basic = diluted) in € 12	2.09	1.97

Further information on the Consolidated Income Statement is provided in the Notes to the Consolidated Financial Statements.

Consolidated Statement of Comprehensive Income

in €k	Jan 1 to Dec 31, 2023	Jan 1 to Dec 31, 2022
Net income	27,972	26,355
Actuarial gains/losses from defined benefit obligations and similar obligations	318	1,373
Deferred taxes	–75	–383
Items that will not be reclassified to profit or loss	243	990
Changes in fair value of financial instruments used for hedging purposes recognised in equity	–9	0
Adjustment item for currency translation of foreign subsidiaries and currency changes	–1,241	1,111
Exchange differences on net investments in subsidiaries	139	163
Deferred taxes	3	–171
Items that may be subsequently reclassified to profit or loss	–1,108	1,103
Other comprehensive income	–865	2,093
Total comprehensive income	27,108	28,448

Further information on the Consolidated Statement of Comprehensive Income is provided in the Notes to the Consolidated Financial Statements.

Consolidated Balance Sheet Assets

in €k	Note	Dec 31, 2023	Dec 31, 2022
Property, plant and equipment	14	33,725	25,268
Goodwill	14	43,289	42,312
Intangible assets	14	7,447	7,032
Right-of-use assets	15	18,413	17,337
Non-current trade receivables	19	4,113	3,430
Other non-current financial assets	20	201	277
Other non-current non-financial assets	20	556	538
Deferred tax assets	16	3,478	3,856
Non-current assets		111,222	100,051
Inventories	17	54,766	71,647
Current trade receivables	19	68,193	78,801
Tax receivables	18	16,640	16,028
Other current financial assets	20	1,643	1,486
Other current non-financial assets	20	2,170	2,255
Cash and cash equivalents	21	16,673	14,215
Current assets		160,084	184,432
Assets		271,306	284,483

Further information on the Consolidated Balance Sheet is provided in the Notes to the Consolidated Financial Statements.

Consolidated Balance Sheet Equity and Liabilities

in €k Note	Dec 31, 2023	Dec 31, 2022
Subscribed capital 22	40,000	40,000
Capital reserves 23	36,463	36,463
Treasury shares 24	–13,177	–13,177
Other reserves and currency translation effects 25	–3,834	–2,942
Profit carried forward	–1,660	1,426
Net income	27,972	26,355
Equity	85,765	88,125
Non-current interest-bearing loans 28	5,204	0
Non-current lease liabilities 29	11,576	10,166
Provisions for pensions 26	8,113	8,528
Other non-current provisions 27	2,671	3,199
Other non-current financial liabilities 30	55	168
Other non-current non-financial liabilities 30	80	1,522
Non-current contract liabilities 31	1,297	1,738
Deferred tax liabilities 16	1,741	1,600
Non-current liabilities	30,737	26,920
Current interest-bearing loans 28	33,916	41,362
Current lease liabilities 29	7,863	7,936
Trade payables 30	23,951	22,711
Income tax liabilities	4,699	7,514
Other current financial liabilities 30	19,117	20,597
Other current non-financial liabilities 30	25,818	25,606
Other current provisions 27	11,641	9,087
Current contract liabilities 31	27,799	34,625
Current liabilities	154,805	169,437
Equity and liabilities	271,306	284,483

Further information on the Consolidated Balance Sheet is provided in the Notes to the Consolidated Financial Statements.

Consolidated Statement of Changes in Equity

in €k	Number of shares (in units)	Subscribed capital	Capital reserves	Treasury shares	Other reserves and currency translation effects	Profit carried forward	Total
As of January 1, 2022	13,382,324	40,000	36,463	–13,177	–5,074	40,235	98,448
Income and expenses recognized directly in equity					2,647		2,647
Taxes on transactions recognized directly in equity					–554		–554
Share-based payment					39		39
Dividend						–38,809	–38,809
Net income						26,355	26,355
As of December 31, 2022	13,382,324	40,000	36,463	–13,177	–2,942	27,781	88,125

Further information on the Consolidated Consolidated Statement of Changes in Equity is provided in the Notes to the Consolidated Financial Statements.

As of January 1, 2023	13,382,324	40,000	36,463	–13,177	–2,942	27,781	88,125
Income and expenses recognized directly in equity					–792		–792
Taxes on transactions recognized directly in equity					–72		–72
Share-based payment					–27		–27
Dividend						–29,441	–29,441
Net income						27,972	27,972
As of December 31, 2023	13,382,324	40,000	36,463	–13,177	–3,834	26,312	85,765

Consolidated Cash Flow Statement

in €k Note	Jan 1 to Dec 31, 2023	Jan 1 to Dec 31, 2022
EBT	38,411	37,263
Amortization, depreciation and impairment	14,692	14,690
Gain from disposals of non-current assets	–120	–621
Other gains/losses	–1,337	39
Financial income	–213	–529
Financial expenses	3,688	1,275
Movements in provisions	2,024	–3,122
Income tax paid	–13,462	–5,534
Gross cash flow	43,682	43,460
Increase/decrease in trade receivables	9,987	–10,694
Increase/decrease in inventories	15,355	–13,987
Increase/decrease in trade payables	1,255	6,577
Increase/decrease in prepayments on orders	–6,081	327
Increase/decrease in net operating working capital	20,517	–17,777
Changes in other net working capital	–2,389	–2,939
Net cash inflow from operating activities	61,809	22,744
Purchase of property, plant and equipment (without leases)	–14,726	–7,528
Proceeds from sale of property, plant and equipment	228	1,011
Cash and cash equivalents disposed of on the sale of subsidiaries	–396	0
Payments for the acquisition of subsidiaries less acquired cash and cash equivalents	–769	0
Net cash outflow from investing activities	–15,664	–6,516
Free cash flow	46,145	16,228
Assumption of interest-bearing loans	9,308	0
Repayment of interest-bearing loans	–2,476	0
Dividend payout	–29,441	–38,809
Interest received	152	132
Interest paid	–3,547	–937
Repayment of lease liabilities	–8,372	–8,861
Net cash outflow from financing activities	–34,376	–48,476
Net increase/decrease in cash funds	11,769	–32,248
Net foreign exchange difference	–236	563
Cash funds at January 1	–27,147	4,538
21 Cash funds at December 31	–15,614	–27,147

Further information on the Consolidated Cash Flow Statement is provided in the Notes to the Consolidated Financial Statements.

Notes to the Consolidated Financial Statements of WashTec AG (IFRS) for Fiscal Year 2023

General

1. General information on the Group

The consolidated financial statements of the WashTec Group for the fiscal year January 1 to December 31, 2023 were prepared and submitted to the Supervisory Board for review on March 22, 2024. They were approved at the Supervisory Board meeting on March 25, 2024 and subsequently released for publication by the Management Board. The consolidated financial statements and Group Management Report may be accessed via the Bundesanzeiger (Federal Gazette) and the Unternehmensregister (Company Register) and downloaded from our website at https://ir.washtec.de/en/financial_reports/.

The ultimate parent company of the WashTec Group is WashTec AG, which is entered in the commercial register of the Local Court of the City of Augsburg, Germany, under registration number HRB 81.

The Company's registered office is located at Argonstrasse 7, 86153 Augsburg, Germany.

The Company's shares are in free float and are listed on the Open Market in the Prime Standard segment of Frankfurt stock exchange.

The purpose of the WashTec Group comprises the development, manufacture, sale and servicing of carwash products and washing chemicals, as well as leasing and all related services and financing solutions required in order to operate carwash equipment.

2. Basis of preparation of the consolidated financial statements

The consolidated financial statements of WashTec AG have been prepared in accordance with the International Financial Reporting Standards (IFRSs) of the International Accounting Standards Board (IASB) in force as of the balance sheet date together with the interpretations of the IFRS IC (IFRIC). They comply with the accounting standards applicable in the European Union for fiscal year 2023 and are also supplemented by additional information required under section 315e of the German Commercial Code (Handelsgesetzbuch, or HGB) and by the Group Management Report.

The requirements under section 315e HGB are met, exempting the Company from the preparation of consolidated financial statements in accordance with German commercial law.

The consolidated financial statements are prepared on a historical cost basis except with respect to non-current trade receivables, share-based payment and derivative financial instruments, which are measured at fair value. The consolidated financial statements are presented in euros. Unless otherwise indicated, all figures are rounded to the nearest thousand (€k); this may result in rounding differences. The fiscal year is the calendar year.

The WashTec Group's business development in fiscal year 2023 was influenced by the macroeconomic environment. Persistently high interest rates resulted in higher interest expenses on drawn credit lines. The WashTec Group therefore used derivative financial instruments in the form of interest rate swaps to manage interest rate risk in the reporting year. In addition, the higher level of interest rates compared to the prior year was taken into account accordingly when determining the discount rates for non-current balance sheet items and the measurement parameters used in goodwill impairment testing. Impairment testing did not reveal any need for adjustment in the reporting period.

Climate-related issues affect the financial position, financial performance and cash flows of the WashTec Group as follows:

• W Measures by the Company to reduce carbon emissions in Germany focus on capital expenditure on electric charging infrastructure, energy efficiency improvements in heating systems and the purchase of green electricity for production sites. In addition, the Company has adopted the target of making fleet operations in Germany 100% carbon-neutral by 2030.
• W The property, plant and equipment and intangible assets of relevance for replacement investment are fully depreciated or amortized as of fiscal year 2023. Consequently, there is currently no indication of any impact on useful lives or residual values.
• W With regard to the recoverability of inventories, order-based production and procurement make it possible to minimize any impairment risks going beyond those arising in the normal course of business.
• W It is not currently necessary to recognize provisions for environmental or asset retirement obligations or to recognize contingent liabilities or contingent assets due to climate-related obligations.
• W All climate-related factors that could affect value in use have been assessed in goodwill impairment testing. The impairment testing included possible impacts on the WashTec Group's business model and sales markets, changes in the regulatory environment and changes in the intended use of assets due to climate-induced obligations. This did not reveal any need for adjustment in the reporting period.
• W Overall, no significant impacts on the financial position, financial performance and cash flows of the WashTec Group were identified on the basis of estimates, assumptions or judgments.

3. Basis of consolidation and consolidated group

Basis of consolidation

The The consolidated financial statements include the financial statements of WashTec AG and its subsidiaries as of December 31 of each fiscal year. The financial statements of the subsidiaries are prepared for the same reporting period as those of the parent company, using uniform accounting policies.

Subsidiaries are fully consolidated as of the acquisition date, which is the date when the Group obtains control. WashTec AG controls an investee from the point in time when WashTec AG is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries cease to be consolidated when the parent company no longer has control.

All intragroup balances, transactions, income, expenses as well as unrealized gains and losses resulting from intragroup transactions are eliminated in full.

Consolidated group

In addition to the parent company, the consolidated financial statements of WashTec AG also contain the following group entities as of December 31, 2023 (shareholdings in accordance with 315e in conjunction with section 313 (2) HGB). Figures for companies in Germany are based on annual financial statements prepared in accordance with German commercial law; for foreign companies they are generally based on IFRS financial statements before consolidation.

Consolidated entities as of December 31, 2023	Shareholding in %	Parent	Business activity	Equity at Dec 31, 2023 in €k	Profit/loss for 2023 in €k
German entities
WashTec Cleaning Technology GmbH, Augsburg, Germany 1) 3)	100	A	I	29,846	0
WashTec Holding GmbH, Augsburg, Germany 2) 3)	100	B	II	38,122	0
WashTec Carwash Management GmbH, Augsburg, Germany 2) 3)	100	B	III	51	0
WashTec Financial Services GmbH, Augsburg, Germany 1) 3)	100	A	IV	62	0
AUWA-Chemie GmbH, Augsburg, Germany 2) 3)	100	B	V	537	0
Foreign entities
WashTec France S.A.S., Boigny sur Bionne, France	100	C	VI	15,027	2,439
Mark VII Equipment Inc., Arvada, USA	100	C	I	31,719	6,947
WashTec S.r.l., Casale, Italy	100	C	VI	2,079	195
WashTec UK Ltd., Great Dunmow, United Kingdom	100	C	VI	5,148	480
WashTec A/S, Hedehusene, Denmark	100	C	VI	3,195	1,144
WashTec Bilvask AS, Billingstad, Norway 4)	100	F	VI	4,371	1,633
WashTec Cleaning Technology GmbH, Vienna, Austria	100	C	VI	2,835	632
WashTec Spain S.A.U., Madrid, Spain	100	C	VI	3,639	517
WashTec Cleaning Technology s.r.o., Nyrany, Czech Republic	100	D	VII	6,003	395
WTMVII Cleaning Technologies Canada Inc., Burlington, Ontario, Canada 5)	100	E	VI	–5,212	633
WashTec Australia Pty Ltd., Sydney, Australia	100	C	VI	3,256	401
WashTec Benelux B.V., Zoertermeer, Netherlands	100	C	VI	2,036	548
WashTec Nordics AB, Bollebygd, Sweden	100	C	VI	658	–141
WashTec Polska Sp. z o.o., Warsaw, Poland	100	D	VI	732	215
WashTec New Zealand Limited, Auckland, New Zealand 6)	100	C	VI	1,332	44

1)	Profit/loss absorbed by WashTec Holding GmbH
----	----------------------------------------------	--	--	--	--	--

• 2) Profit/loss absorbed by WashTec AG
• 3) Companies that have made use of the simplification provisions pursuant to section 264 (3) of the German Commercial Code (HGB)
• 4) Indirect shareholding via WashTec A/S, Hedehusene, Denmark
• 5) Indirect shareholding through Mark VII Equipment Inc., Arvada, USA
• 6) Initial consolidation as at December 1, 2023
• A) WashTec Holding GmbH
• B) WashTec AG
• C) WashTec Cleaning Technology GmbH
• D) 90% of interests held by WashTec Cleaning Technology GmbH, 10% by WashTec Holding GmbH
• E) Mark VII Equipment Inc., Arvada, USA
• F) WashTec A/S, Hedehusene, Denmark
• I) Production, sales and service entity
• II) Holding company
• III) Carwash rental
• IV) Arrangement of finance for carwash equipment
• V) Development, production and sale of chemical products
• VI) Sales and service entity
• VII) Production entity

Changes in the consolidated group

Acquisition of subsidiaries

WashTec New Zealand Limited was established on June 23, 2023 as a subsidiary of WashTec Cleaning Technology GmbH, with 100% of the voting rights, in order to commence direct sales and service activities in New Zealand. The New Zealand subsidiary was consequently consolidated for the first time in fiscal year 2023.

WashTec New Zealand Limited took over the assets and liabilities of the previously independent New Zealand sales partner, Car Kleen New Zealand Ltd. as of December 1, 2023. This investment in the New Zealand market is intended to reinforce the WashTec Group's presence in the Asia/Pacific region and strengthen cooperation with local customers.

The purchase price for the acquisition was €1,624k. Of this amount, €797k was paid by the December 31, 2023 reporting date. Payment of the balance is subject to the satisfaction of certain contractual conditions and is expected to be made in the first half of 2024. Incidental acquisition costs were not material and were accounted for in other expenses in the income statement.

The acquired net assets were measured at a fair value of €649k, resulting in goodwill of €974k. The goodwill mainly relates to the expected synergies based on Car Kleen New Zealand Ltd.'s proven track record in vehicle wash technology and the team's many years of experience.

The following table shows the assets and liabilities recognized at the acquisition date:

in €k	Fair value
Non-current assets (including right-of-use assets)	642
Receivables and other assets	340
Inventories	607
Cash and cash equivalents	28
Assets acquired	1,617
Liabilities and provisions	647
Contract liabilities	322
Liabilities assumed	969
Net assets	649
Goodwill	974
Consideration	1,624

The fair value of the acquired trade receivables was €335k at the acquisition date. This corresponds to the gross amount of the trade receivables. No impairment was recognized at the acquisition date.

Consolidated net income as of December 31, 2023 includes revenue of €310k and net income of €44k.

Had the acquisition been made as of January 1, 2023, revenue of €3,969k and net income of €379k would have contributed to the consolidated net income of the WashTec Group in fiscal year 2023.

As of December 14, 2023, WashTec sold 90% of the shares in its Chinese subsidiary, WashTec Car Cleaning Equipment (Shanghai) Co., Ltd., to the existing management. The sale was registered by the competent authorities in China effective December 19, 2023. It took place as part of a strategic realignment by the WashTec Group in the Chinese market, which will now continue to be developed as a distributor market. This will ensure the best possible market position for the future while maintaining and further intensifying longstanding customer relationships. WashTec will retain a 10% stake in the company.

€–504k was recognized as expense in the consolidated income statement in connection with the deconsolidation of the Chinese subsidiary. The sale of the subsidiary resulted in a disposal of assets in the amount of €2,764k, mainly comprising inventories and trade receivables. It also resulted in the disposal of €2,107k in liabilities, mainly to suppliers and employees.

Up to the deconsolidation date, revenue of €6,446k and operating profit (EBIT) of €–738k were recognized in the consolidated income statement of the WashTec Group in 2023.

4. Effects of new financial reporting standards

New or amended financial reporting standards entered into force in the reporting period. The WashTec Group applied the following new and revised International Financial Reporting Standards (IFRS) and Interpretations in fiscal year 2023.

Deconsolidation of subsidiaries Standards applied and amendments to existing standards

Standard/ inter pretation	Title	Mandatory application	EU endorse ment	Material effects on the Group
IFRS 17	Insurance Contracts including amendments to IFRS 17	January 1, 2023	November 23, 2021	None
IFRS 17	Amendments to IFRS 17 – Initial Application of IFRS 17 and IFRS 9 – Comparative Information	January 1, 2023	September 9, 2022	None
IAS 1	Amendments to IAS 1 – Disclosure of Accounting Policies	January 1, 2023	March 3, 2022	None
IAS 8	Amendments to IAS 8 – Definition of Accounting Estimates	January 1, 2023	March 3, 2022	None
IAS 12	Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction	January 1, 2023	August 12, 2022	This does not have any impact on the WashTec Group, as the approach was already adopted on the implementation of IFRS 16.
IAS 12	Amendments to IAS 12 – International Tax Reform – Pillar Two Model Rules	Immediate ly/January 1, 2023	November 9, 2023	None

The International Accounting Standards Board (IASB) and the IFRS Interpretations Committee have also issued additional standards, interpretations and amendments as listed below that did not yet have to be applied in fiscal year 2023 and/or have not yet been endorsed by the European Union.

The WashTec Group had not elected early application of these standards as of December 31, 2023. Initial application of the standards is planned when they are recognized and endorsed by the European Union.

		Standards and amendments not yet applied
--	--	------------------------------------------

Standard/ inter pretation	Title	Mandatory application	EU endorse ment	Material effects on the Group
IAS 1	Amendments to IAS 1 – Classification of Liabilities as Current or Non-Current	January 1, 2024	December 20, 2023	None
IAS 1	Amendments to IAS 1 – Non-current Liabilities with Covenants	January 1, 2024	December 20, 2023	None
IFRS 16	Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback	January 1, 2024	November 21, 2023	None
IAS 7	Amendments to IAS 7 and IFRS 7 – Supplier Finance Agreements	January 1, 2024	Yet to be determined	None
IAS 21	Amendments to IAS 21 – Lack of Exchangeab ility	January 1, 2025	Yet to be determined	None

5. Accounting policies

The adopted accounting policies are (unless otherwise specified below) consistent with those applied in prior years. For the accounting policies applied in the prior year, please see the prior-year Notes to the Consolidated Financial Statements.

Currency translation

The consolidated financial statements are presented in euros, the euro being the Group's functional and reporting currency.

Foreign currency annual financial statements of subsidiaries are translated by applying the functional currency approach. The functional currency of a foreign company is normally its national currency. The items in the separate financial statements of each entity are measured in the entity's functional currency.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the reporting date exchange rate. All exchange differences are recognized in profit or loss with the exception of exchange differences relating to net investments in a foreign operation and adjustment items for currency translation. These are recognized in other comprehensive income until disposal of the net investment, when they are recognized as income or expense in the period. Deferred taxes arising from such exchange differences are likewise recognized in other comprehensive income.

Non-monetary items measured at historical cost in a foreign currency are translated using the exchange rate at the transaction date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of resulting assets and liabilities are accounted for as assets and liabilities of the foreign operation and translated at the reporting date exchange rate.

Assets and liabilities of subsidiaries that do not report in euros are translated at the reporting date exchange rate, and their income and expenses are translated at the average exchange rate for the fiscal year. Resulting exchange differences are accounted for separately in other comprehensive income. On disposal of a foreign operation, the cumulative amount recognized in other comprehensive income relating to that foreign operation is reclassified to profit or loss.

Property, plant and equipment

Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item when the cost is incurred, if the recognition criteria are met. In addition to directly attributable costs, the cost of self-constructed assets also includes an allocation of material and production overheads and depreciation. Repair and maintenance costs are immediately recognized in profit or loss. Depreciation is applied pro rata temporis on a straight-line basis over the estimated useful life of the asset.

Property, plant and equipment is mostly depreciated using the following useful lives:

: Property, plant and equipment	Useful life
Buildings	20 to 50 years	Intangible assets are mostly amortized using the following useful lives:
Technical plant and machinery	5 to 14 years
Other plant, fixtures and fittings	3 to 8 years	Intangible assets	Useful life

An item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising from derecognition (measured as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the item is derecognized. At the end of each fiscal year, an asset's residual value, useful life and method of depreciation are reviewed and, if necessary, adjusted.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. For this purpose, the cost of the acquisition is determined as the fair value of the consideration transferred, meaning the sum of the assets transferred, equity instruments issued and liabilities assumed at the acquisition date. Acquisition-related costs are normally accounted for as expense.

Goodwill is initially measured at cost. It is measured as the excess of the cost of the business combination over the acquirer's share in the fair value of the acquiree's identifiable assets, liabilities and contingent liabilities. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. It is not amortized but is tested for impairment at least annually and whenever there is an indication that it may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is allocated, from the acquisition date, to the Group's cash generating units (segments) that are expected to benefit from the synergies of the business combination.

Intangible assets

Intangible assets mainly comprise acquired patents, technologies, capitalized development costs, licenses and software.

Acquired patents and technologies	8 years
Licenses and software	3 to 8 years
Capitalized development costs	6 to 8 years

Intangible assets not acquired in a business combination are measured at cost on initial recognition and subsequently measured at cost less any accumulated amortization and impairment losses.

A distinction is made between intangible assets with finite useful lives and those with indefinite useful lives. In the reporting period, the Group exclusively held assets with finite useful lives.

Intangible assets with finite useful lives are amortized over their economic useful life. The amortization period and amortization method are reviewed at the end of each fiscal year and adjusted accordingly if expectations have changed. There were no changes in fiscal year 2023.

Internally generated intangible assets (research and development costs)

Research costs are recognized as expense in the period in which they are incurred. Development costs for a given project comprise all directly attributable costs (mainly personnel expenses) as well as allocated overheads. They are capitalized as an intangible asset only if the asset can be identified, a future economic benefit is expected and the cost can be measured reliably during development. In addition, development costs are only capitalized if completion of development and subsequent use or sale are technically and financially feasible and intended.

After initial recognition of development costs as an asset, the cost model is applied, meaning that the asset is carried at cost less any accumulated amortization and accumulated impairment losses. Amortization begins when development is complete and the

asset is available for use. The asset is amortized over the period of the expected future economic benefits. During the development phase, when the useful life is indefinite, the asset is tested annually for impairment.

Impairment of non-financial assets

Assets with a finite useful life are tested as of each balance sheet date for indications of impairment. If there is such an indication, the Group estimates the asset's recoverable amount. An asset's recoverable amount is fair value less costs of disposal or value in use, whichever is higher. Value in use is determined by applying an appropriate valuation model. For this purpose, the expected future cash flows are discounted to present value using a pre-tax discount rate that reflects market expectations concerning the time value of money and the risks specific to the asset. Recoverable amount is estimated for each individual asset or, if it cannot be estimated for an asset, for the cash-generating unit to which the asset belongs. If the carrying amount of an asset exceeds its recoverable amount, the asset is impaired and the carrying amount is reduced to the recoverable amount. An impairment loss recognized in earlier reporting periods is reversed to income if there has been a change in the estimates used to determine the recoverable amount. The increased carrying amount may not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized in the past. Impairment reversals are recognized in profit or loss.

Intangible assets with an indefinite useful life and goodwill are tested for impairment annually and if there are events or circumstances that indicate that an asset may be impaired.

Goodwill is tested for any impairment by estimating the recoverable amount of the cash generating unit to which the goodwill has been allocated. The Group's cash generating units correspond to the operating segments identified in accordance with IFRS 8. These are divided into the regions Europe, North America and Asia/Pacific.

If the recoverable amount of a cash generating unit is less than its carrying amount, an impairment loss is recognized. Impairment losses recognized for goodwill cannot be reversed in subsequent reporting periods. The Group performs annual impairment testing of goodwill after completing the budgeting process.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Initial recognition takes place when the Company becomes a party to the contractual provisions of the financial instrument.

All regular way purchases and sales of financial assets are accounted for at the trade date, which is the date when the Group commits itself to purchase or sell the asset. Regular way purchases or sales require delivery of the asset within the timeframe established by regulation or convention in the marketplace.

Financial assets

Financial assets primarily comprise cash and cash equivalents, trade receivables, derivatives with a positive market value and other financial assets.

Financial assets are classified as at amortized cost (AC), at fair value through other comprehensive income (FVthOCI) or at fair value through profit or loss (FVthP/L). They are categorized on initial recognition on the basis of the company's business model for managing financial assets and of the contractual cash flow characteristics of each financial asset, and are measured at fair value. Financial assets not subsequently measured at fair value through profit or loss are initially measured at fair value plus transaction costs directly attributable to the acquisition or issue of the financial asset.

Financial assets at amortized cost (AC):

This category comprises financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows where the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, the financial assets are measured at amortized cost less any accumulated impairment losses. Receivables with a significant financing component are discounted at current market interest rates if the effect is material. Such receivables are subsequently measured at amortized cost using the effective interest method less any accumulated impairment losses. Gains and losses on derecognition or impairment of the financial assets are recognized in profit or loss.

Cash and cash equivalents comprise cash on hand and bank balances that have a term of less than three months from the date of acquisition and are carried at face value. For the purposes of the consolidated cash flow statement, cash funds consist of cash and cash equivalents as defined above plus any utilized bank overdrafts.

Financial assets at fair value through other comprehensive income (FVthOCI): This category comprises financial assets held within a business model whose objective is both to hold financial assets in order to collect contractual cash flows and to sell financial assets where the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at fair value through other comprehensive income.

Financial assets at fair value through profit or loss (FVthP/L):

Financial assets not measured at amortized cost (AC) or at fair value through other comprehensive income (FVthOCI), and derivatives not designated as hedging instruments for which hedge accounting is applied, are measured at fair value through profit or loss (FVthP/L). In addition, financial assets can be voluntarily designated in certain circumstances as at fair value through profit or loss (FVthP/L). The Group does not currently make use of this option. All changes in fair value are recognized in profit or loss.

Impairment of financial assets:

The Group tests financial assets, and groups of financial assets not at fair value through profit or loss, for impairment as of each balance sheet date.

A risk allowance is normally recognized on the basis of the general approach using a three-stage model in relation to changes in the default risk on a financial asset. On initial recognition, all financial assets are normally classified in stage 1 and their 12-month expected credit loss determined. If the credit risk on a financial asset has significantly increased since the previous reporting date, the asset is transferred to stage 2. WashTec assumes a significant increase in credit risk if the financial asset is more than 30 days past due. Where there is additionally objective evidence of impairment, a financial asset is transferred to stage 3. Objective evidence of impairment includes the initiation of legal action and receivables past due by more than one year. In stage 2 and 3, the risk allowance is recognized in the amount of the lifetime expected credit losses.

Impairment losses on trade receivables without a significant financing component are accounted for using the simplified approach. In addition, an entity can likewise elect to apply the simplified approach to trade receivables with a significant financing component. For this purpose, the risk allowance is recognized in the amount of the lifetime expected credit losses. The Group makes use of this election for trade receivables with a significant financing component and calculates the impairment losses on the basis of an impairment table.

Trade receivables have similar credit risk characteristics. For the measurement of lifetime expected credit losses, trade receivables are grouped based on days past due. The impairment rates are based on credit loss rates over the past three years and are adjusted for forward-looking macroeconomic factors affecting customer solvency.

The risk allowance for other financial assets and cash and cash equivalents is recognized using the general approach. Expected credit losses on other financial assets and on cash and cash equivalents are immaterial and are not recognized.

Derecognition of financial assets:

A financial asset (or a part of a financial asset or a part of a group of similar financial assets) is derecognized when contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer meets the criteria for derecognition under IFRS 9. In the event of objective evidence that a receivable is impaired, an impairment loss is recognized. If a receivable is classified as uncollectible, it is derecognized.

Financial liabilities

The financial liabilities mainly comprise liabilities to credit institutions, trade payables, derivatives with a negative market value and other financial liabilities. Financial liabilities are classified as non-current if their remaining term is more than twelve months; they are classified as current if their remaining term is less than twelve months.

Financial liabilities are classified as at amortized cost (FLAC) or at fair value through profit or loss (FVthP/L).

Financial liabilities are normally initially recognized at fair value and subsequently measured at amortized cost (FLAC) using the effective interest method. Financial liabilities at fair value through profit or loss, derivatives with a negative market value and financial liabilities designated on initial recognition at fair value through profit or loss are subsequently measured at fair value through profit or loss (FVthP/L). Financial liabilities not subsequently measured at fair value through profit or loss are initially measured at fair value less transaction costs.

Derecognition of financial liabilities:

A financial liability is derecognized when the obligation specified in the contract is discharged, canceled or expires.

Derivative financial instruments and hedging

The WashTec Group used derivative financial instruments in the form of interest rate swaps to manage interest rate risk in the reporting year. Derivative financial instruments are initially recognized and subsequently measured at fair value and, according to their market value, are accounted for as other financial assets or other financial liabilities. Changes in fair value are accounted for according to whether a derivative financial instrument is designated in an effective hedge. Derivatives without hedge accounting are recognized through profit or loss (FVthP/L).

The fair value of a derivative financial instrument is accounted for in full in other non-current financial assets or other non-current financial liabilities if the remaining term of the derivative is more than twelve months. It is accounted for in full in other current financial assets or other current financial liabilities if the remaining term of the derivative is less than twelve months.

At the inception of a hedging relationship, both the hedging relationship and the Group's risk management objectives and strategies with regard to the hedge are formally designated and documented. The documentation includes the identification of the hedging instrument, the hedged item, the nature of the hedged risk and how the entity assesses whether the hedging relationship meets the hedge effectiveness requirements (including an analysis of the reasons for any hedge ineffectiveness and how the hedge ratio is determined).

A hedging relationship meets all hedge effectiveness requirements if there is an economic relationship between the hedged item and the hedging instrument, the effect of credit risk does not dominate the value changes that result from that economic relationship and the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.

Cash flow hedges

A cash flow hedge is the hedge of exposure to variability to cash flows that is attributable to a particular risk associated with all, or a component of, a recognized asset or liability or a highly probable forecast transaction and could affect profit or loss.

The effective portion of changes in the fair value of derivative financial instruments designated as hedging instruments in cash flow hedges is recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. The amounts recognized in equity are reclassified to profit or loss in the period during which the hedged transaction affects profit or loss, such as when hedged financial income or expense is recognized or a forecast sale occurs.

If a hedging instrument expires or is sold or terminated, or if the hedging relationship no longer meets the criteria for hedge accounting, any cumulative deferred amounts at that time remain in equity for as long as the hedged item continues to exist. If the hedged transaction is no longer expected to occur, the cumulative amounts recognized in equity are reclassified to profit or loss.

Net investments in foreign operations

A monetary item in the form of an outstanding receivable from a foreign operation for which settlement is neither planned nor likely is a part of the net investment in that foreign operation. Such monetary items are non-current receivables from foreign subsidiaries of the Group. Exchange differences arising on a monetary item that forms part of a net investment in a foreign operation are recognized in profit or loss in the separate financial statements of the subsidiary. In the consolidated financial statements, such exchange differences are recognized in other comprehensive income and reclassified to profit or loss on disposal of the subsidiary.

Inventories

Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated proceeds from a sale in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

The cost of raw materials, consumables and supplies is determined on a rolling average basis. The cost of finished goods and work in progress includes directly attributable costs as well as a reasonable allocation of material and production overheads on the basis of normal capacity utilization. Borrowing costs are not included in the cost of inventories.

Treasury shares

The cost of any treasury shares purchased by WashTec AG is accounted for as a single adjustment in equity. Purchases, sales and retirements of treasury shares are not recognized in profit or loss.

Provisions

Other provisions

Other provisions are recognized for all legal or constructive obligations to third parties as of the balance sheet date whose timing or amount is uncertain. They are measured at the present value of the best estimate of the expenditures required to settle the obligations. If the Group expects reimbursement of some or all of a provision (such as through an insurance policy), the reimbursement is recognized as a separate asset if it is virtually certain. Non-current provisions are discounted at current pre-tax market rates if the effect is material. The effect of the time value of money is accounted for in the financial result. Provisions are normally reversed to the same item in the income statement for which they were recognized.

Provisions for pensions are measured using the projected unit credit method (IAS 19 revised). This takes into account the pensions known and vested as of the balance sheet date as well as expected future increases in salaries and pensions. Actuarial gains and losses are recognized immediately in their entirety in other comprehensive income net of deferred taxes. Service cost and interest are accounted for in the operating result. For further details, please see Note 26.

Provisions for partial retirement arrangements

Partial retirement arrangements are primarily based on the block model. They result in two types of obligations that are measured at present value in accordance with actuarial principles and are accounted for separately: The first type of obligation relates to the accumulated outstanding settlement amount, which is recognized pro rata over the active/working phase. The accumulated outstanding settlement amount is based on the difference between the compensation earned by an employee prior to the partial retirement arrangement (including the employer's share of social security contributions) and the compensation for the part-time employment (including the employer's share of social security contributions, but not including top-up payments). The second type of obligation relates to the employer's obligation to pay the top-up payments plus an additional amount towards statutory pension insurance. In accordance with IAS 19 (revised), this is recognized as a provision pro rata over the working phase.

Share-based payment

IFRS 2 distinguishes between equity-settled share-based payments and cash-settled share-based payments. For their service, the Management Board and Supervisory Board of WashTec AG receive cash-settled share-based remuneration comprising both components.

In the case of cash-settled share-based remuneration, the resulting liability is recognized at fair value through profit or loss over the period of time in which the service is performed. Fair value is estimated using a suitable option price model. Conditions relating to the WashTec AG share price (market conditions) are included in measurement. Performance-related exercise conditions are also included. The equity-settled sharebased payment component is recognized directly in equity. Obligations from cash-settled share-based payment are recognized in other liabilities at fair value taking into account the remaining duration of the program. Please see Note 37 for further details.

Leases

A lease is a contract that conveys the right to control the use of an asset (the underlying asset) for a certain period of time in exchange for consideration. For all leases, the Group normally recognizes a right-of-use asset and a lease liability for the lease payments. Leases are recognized as a right-of-use asset and a corresponding lease liability at present value from the time the underlying asset is made available to the Group.

Lease liabilities comprise fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate and are initially measured using the index or rate as at the commencement date, amounts expected to be payable by the lessee under residual value guarantees, the exercise price of a purchase option if it is reasonably certain to be exercised and payments of penalties for terminating the lease if the lease term reflects the lessee exercising an option to terminate the lease.

Lease payments are discounted at the lessee's incremental borrowing rate. The lessee's incremental borrowing rate is determined over various maturities on the basis of a riskfree interest rate plus a margin and a country-specific risk premium. Each lease payment is separated into principal and interest components. The interest expense is recognized in profit or loss in each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the lease liability.

Right-of-use assets are measured at cost comprising the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date, less any lease incentives received, any initial direct costs incurred by the lessee and the estimated cost relating to dismantling obligations.

Most leases are entered into for fixed terms of one to three years. Some leases of office and warehouse buildings are for longer terms. Leases may also include implicit extensions or extension and termination options. The Group makes use of such arrangements to obtain maximum operational flexibility. Either party can exercise the existing extension and termination options. The notice periods agreed for the termination options are sufficient for alternatives to be found in good time where necessary.

When determining the lease term for buildings, Management considers all facts and circumstances that create an economic incentive to exercise any options to extend or not to exercise any option to terminate. The main factors considered are the terms, satisfaction with the working relationship with the lessor and logistical considerations in connection with the Group's forward strategy. If the Group is satisfied with the working relationship and these factors are also expected to be compatible with the corporate strategy looking ahead, it is considered reasonably certain that the leases will be extended/not terminated. Changes in the lease term due to the exercise of options to extend or options to terminate are only included in the lease term if it is reasonably certain that the option to extend will be exercised or the option to terminate will not be exercised.

This is reassessed upon the occurrence of any significant event or any significant change in circumstances that affects the previous assessment and is in the control of the lessee. Lease terms are negotiated individually and include a large variety of different conditions.

In the subsequent measurement of lease liabilities, the carrying amount is increased by the interest expense for the lease liability and reduced by the lease payments made. For potential future increases in variable lease payments that depend on an index or rate, the lease liability and the right-of-use asset are remeasured when the adjustment to the lease payments takes effect.

Right-of-use assets are subsequently measured at amortized cost. They are depreciated on a straight-line basis over the shorter of useful life and lease term. If a purchase option is reasonably certain to be exercised, they are depreciated over the useful life of the asset underlying the lease.

In the case of leases that include an extension or termination option, the lease liability is remeasured and the right-of-use asset adjusted if a significant event or significant change in circumstances occurs that is within the Group's control and was assessed differently on initial measurement.

The Group makes use of the exemptions for short-term leases and for leases of lowvalue assets that are not short-term leases and recognizes their lease payments on a straight-line basis as an expense in profit or loss. In addition, the provisions of IFRS 16 are not applied to leases of intangible assets.

In order to provide customers, and in particular large operator groups or oil companies, with equipment as part of the carwash management business in return for compensation based on the number of washes, equipment manufactured by WashTec is sold to a leasing company and repurchased under sale and leaseback transactions or hire purchase agreements. For these transactions, a right-of-use asset and a lease liability are recognized for the equipment concerned. No revenue is recognized from the sale of the equipment. Under the contracts with the customers, revenue is realized on the basis of the number of washes and the right-of-use asset is depreciated.

Please refer to Notes 10, 15 and 29 for information on right-of-use assets, lease liabilities, depreciation and interest expense.

Contract liabilities

Performance obligations that are satisfied over time are recognized as contract liabilities in the balance sheet (see also Revenue Recognition). The items presented as contract liabilities in the Group are prepayments on orders and deferred income, which mostly relate to full maintenance, extended guarantees and prepaid service agreements.

Income taxes

The current income tax charge is calculated for the consolidated financial statements on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where subsidiaries operate and generate taxable net income. For recognized tax provisions, the expected tax payment is used as a best estimate. Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to

apply to the period when the asset is realized or the liability is settled, based on the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Current and deferred taxes are recognized in profit or loss unless tax relates to transactions that are recognized in other comprehensive income or directly in equity.

Deferred taxes are recognized for temporary differences at consolidated entities between IFRS-basis carrying amounts of assets or liabilities and their tax base and for consolidation adjustments in profit or loss.

Deferred tax assets are recognized for unused tax loss carryforwards and unused tax credits to the extent that it is probable that taxable profit will be available against which the unused tax losses and unused tax credits can be utilized.

Deferred tax liabilities are not recognized for temporary differences arising from the initial recognition of goodwill. Deferred taxes are also not recognized for temporary differences if the temporary differences arise from the initial recognition of an asset or liability in a transaction which at the time of the transaction affects neither IFRS-basis accounting profit (before income taxes) nor taxable profit and which is not a business combination. Deferred taxes are recognized for transactions in which equal deductible and taxable temporary differences arise.

Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in subsidiaries unless the entity holding the investment is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future ("outside basis differences").

Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax balances relate to the same taxation authority.

Revenue recognition

Revenue is recognized when a performance obligation has been satisfied by transfer of a promised good or promised service (i.e., an asset) to a customer. An asset is transferred when the customer obtains control of the asset.

Performance obligations from the sale of equipment, accessories, merchandise and services are satisfied at a point in time when the promised asset has been transferred and/or the customer has obtained control of the asset. This is normally the case when finished goods or merchandise are delivered, sent or collected and when equipment is installed. The payment period usually granted is 30 days.

For financing components, the Group makes use of the practical expedient of not taking into account the effects of a financing component if the period between when the goods or services are transferred and when the customer pays for them is one year or less or if the financing component is not material in both absolute and relative terms.

Performance obligations mainly arising from full maintenance agreements, extended guarantees and prepaid service agreements are satisfied over time and accounted for as contract liabilities. The customer simultaneously receives and consumes the benefits provided by performance as it is performed. The WashTec Group determines progress towards completion using an output method based on elapsed time. Satisfaction of performance obligations is dependent on contract terms and is usually on a monthly basis. This provides a faithful depiction of the output. The revenue is recognized and billed when the performance obligation is satisfied. Contract liabilities are reversed to profit or loss accordingly. The payment period usually granted is 30 days, although some service agreements are prepaid.

Revenue from the carwash management business is not recognized until a carwash is completed. This also applies if a carwash is first sold to an independent leasing company.

WashTec also sells equipment to leasing companies that lease it on to customers. This revenue is recognized at the time of the sale. In rare cases, these transactions include contracts containing repurchase agreements and WashTec must repurchase the equipment at the customer's request. Revenue from the sale of the equipment is recognized in such cases in the amount of the service performed, meaning that revenue is reduced by the amount of the right of return. Additionally, a corresponding adjustment is made to the cost of the service performed, which is accounted for in other current financial assets in the amount of the net investment in the lease.

The amount recognized as revenue corresponds to the transaction price and comprises the consideration that the WashTec Group is expected to receive in exchange for the transfer of the promised goods or services to a customer. It does not include value added tax or sales tax. Deductions such as rebates, discounts and bulk discounts are accounted for as variable consideration in determination of the transaction price if it is highly probable that the revenue will not be reversed. They are estimated on the basis of expected value. Bulk discounts are accounted for as other financial liabilities.

The transaction price is allocated to the individual performance obligations on the basis of the relative stand-alone selling price. Any discount is normally allocated proportionately to all performance obligations in a contract unless there is evidence that all or part of the discount relates to one or more, but not all, performance obligations in the contract. As there are no directly observable prices at which the WashTec Group would sell a promised good or promised service separately in similar circumstances and to similar customers, the stand-alone selling price is estimated at contract inception using the expected cost plus a margin approach.

The WashTec Group makes use of the practical expedient of recognizing those costs of obtaining a contract and costs to fulfill a contract when incurred if the amortization period of the asset that would otherwise have been recognized is one year or less. This applies at WashTec to all such costs.

Interest income is recognized on an accrual basis in profit or loss using the effective interest method.

Cost of sales

Cost of sales comprises the cost of producing or providing sold products and services. In addition to directly attributable material, labor and energy costs, this also includes production and service overheads. Overheads include depreciation of property, plant and equipment and inventory write-downs.

Earnings per share

Earnings per share is calculated by dividing consolidated net income by the weighted average number of shares outstanding.

Basic earnings per share is calculated by dividing net income attributable to the ordinary shareholders of the parent by the weighted average number of ordinary shares outstanding during the year.

For the calculation of diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to account for all potentially dilutive shares.

Segment reporting

In accordance with IFRS 8, operating segments are identified using the management approach. Under that approach, external segment reporting is based on the internal group organizational and management structure and on internal reporting to the Management Board as the entity's chief operating decision maker. Where the aggregation criteria are met, operating segments are aggregated into reportable segments.

A geographical segment is a distinguishable component of an entity that is engaged in providing products or services within a particular economic environment and is subject to risks and generates returns that differ from those of components operating in other economic environments.

6. Significant estimates, assumptions and judgments

In preparing the consolidated financial statements, it is necessary to make certain assumptions, estimates and judgments that may affect the presentation of the net assets, financial position and results of operations. These primarily relate to the determination of economic useful lives, the measurement of provisions, the realizability of deferred tax assets and assumptions about future cash flows and discount rates. All judgments are continually reassessed and are based in each case on historical experience and current knowledge with regard to future events. Actual amounts may differ from the assumptions and estimates in individual cases. Changes are taken into account when better knowledge becomes available and can lead in future periods to material adjustments to the carrying amounts of affected assets or liabilities.

Impairment of non-financial assets

In connection with impairment testing of goodwill, intangible assets with indefinite useful lives and other non-financial assets, it is necessary to estimate future cash flows from each asset or cash generating unit in order to determine value in use. An appropriate discount rate must also be selected in order to determine the present value of the cash flows. Estimating future cash flows requires long-term income forecasts to be made in light of general economic conditions and the development of the industry. For further details, please see Note 5.

Depreciation of property, plant and equipment and amortization of intangible assets require estimates and assumptions to be made in order to determine uniform Group-wide economic useful lives and methods of depreciation and amortization.

Impairment of financial assets

In application of the simplified approach for trade receivables without a significant financing component and for trade receivables with a significant financing component, lifetime expected credit losses are determined. For this purpose, trade receivables are grouped based on days past due. The impairment rates are based on credit loss rates over the past three years and are adjusted for forward-looking macroeconomic factors affecting customer solvency.

Deferred tax assets

Deferred tax assets are recognized to the extent that it is probable that sufficient taxable profits will be available against which they can be utilized. Management estimates relate to the amount of taxable net income and the expected timing. For further details, please see Note 16.

Pensions, other post-employment benefits and partial retirement benefits

The costs of pension and partial retirement obligations are determined using actuarial methods. Actuarial valuation involves assumptions about discount rates, future wage and salary increases, pension increases and life expectancy. Due to the long-term nature of the pension plans, such estimates are subject to considerable uncertainty. Further details are provided in Notes 26 and 27.

Share-based payment

Cash-settled share-based payment is recognized at fair value at each balance sheet date. In order to estimate the fair value of shared-based payment, it is necessary to determine the most suitable valuation technique, which is dependent on the granting conditions. It is also necessary to determine suitable input parameters for the valuation technique, notably volatility of the share price and the risk-free rate of interest for the remaining term. The assumptions and techniques used are shown in Note 37.

Provisions

Provisions for termination benefits and guarantee provisions are recognized on the basis of expectations, estimates of the probability of occurrence, and planned measures. The size of potential payment obligations is estimated on the basis of an assessment of the situation.

Development costs

Development costs are capitalized in accordance with the accounting policies described in Note 5. Their initial recognition is based on management's assessment that technical and financial feasibility is demonstrated. This is usually the case when a product development project has reached a specific milestone in an established project management model.

Income from repurchase agreements

WashTec also sells equipment to leasing companies that lease it on to customers. In rare cases, these transactions include contracts containing repurchase agreements. Under such an agreement, WashTec undertakes to repurchase the equipment at the end of the contract term at the customer's request. The provision for contracts with repurchase agreements comprises the expected expenses from contractual obligations to repurchase the equipment sold and is measured on a rolling basis. Measurement of the provision involves estimation of the probability that the equipment will have to be repurchased at the end of the contract term. The right of return is accounted for in other current financial assets and in the amount of the net investment in the lease. This is based on an estimation of the probability that the equipment will have to be repurchased at the end of the contract term and is measured on a rolling basis.

Notes to the Consolidated Income Statement

7. Segment reporting

Segmentation within the Group using the management approach is by sales territories. Reflecting market conditions, the sales territories are defined as the regions Europe, North America and Asia/Pacific and correspond to the respective domiciles of the Group companies. The individual segments are controlled on the basis of revenue and EBIT. Segment results consist of income and expenses directly attributable to each reporting segment and to Group charges for Group-wide functions. The Consolidation column contains consolidation adjustments to eliminate transactions in profit or loss between operating segments. This mainly relates to the elimination of intercompany income from sales of goods. The sum of the reportable segments corresponds, after consolidation adjustments, to consolidated net income. Transfer prices between individual Group entities are established on an arm's length basis. They take into account market-specific and economic conditions in the individual segments. The measurement principles for segment reporting are based on the IFRS principles used in the consolidated financial statements.

The Group's segments are business units that generate their revenue primarily through the sale of machines, spare parts, service and chemical products.

By segment 2023	Europe	North	Asia/Pacific	Consolidation	Group
in €k		America
Revenue	378,852	102,885	19,174	–11,442	489,468
of which with third parties	367,617	102,667	19,174	0	489,468
of which with other segments	11,235	208	0	–11,442	0
Earnings before interest and taxes (EBIT)	36,220	5,709	645	–687	41,886
EBIT margin (in %)	9.6	5.5	3.4	–	8.6
Financial income					213
Financial expenses					–3,688
Earnings before taxes (EBT)					38,411
Income taxes					–10,439
Net income					27,972
Capital expenditure on intangible assets, property, plant and equipment and right-of-use assets	13,617	10,913	2,440	0	26,970
Amortization, depreciation and impairment of intangible assets, property, plant and equipment and
right-of-use assets	12,584	1,413	694	0	14,692

By segment 2022	Europe	North	Asia/Pacific	Consolidation	Group
in €k		America
Revenue	371,625	107,662	17,624	–14,672	482,239
of which with third parties	357,423	107,191	17,624	0	482,239
of which with other segments	14,201	471	0	–14,672	0
Earnings before interest and taxes (EBIT)	36,415	1,448	422	–276	38,009
EBIT margin (in %)	9.8	1.3	2.4	–	7.9
Financial income					529
Financial expenses					–1,275
Earnings before taxes (EBT)					37,263
Income taxes					–10,909
Net income					26,355
Capital expenditure on intangible assets, property, plant and equipment and right-of-use assets	13,251	1,021	436	0	14,708
Amortization, depreciation and impairment of intangible assets, property, plant and equipment and
right-of-use assets	12,418	1,583	689	0	14,690

Disaggregation of revenue from contracts with customers by satisfaction of the performance obligation and recognition of revenue:

2023 in €k	Europe	North America	Asia/ Pacific	Consolida tion	Group
Recognition at a point in time	376,684	101,498	19,174	–11,442	485,914
Recognition over time	2,168	1,387	0	0	3,555

2022 in €k	Europe	North America	Asia/ Pacific	Consolida tion	Group
Recognition at a point in time	370,414	106,534	17,624	–14,672	479,899
Recognition over time	1,211	1,128	0	0	2,339

The consolidated revenue was generated in the following products:

in €k	2023	2022
Equipment and Service	418,459	419,957
Chemicals	65,788	56,917
Others	5,221	5,365
Total	489,468	482,239

The Group generates approximately 75.1% (prior year: approximately 74.1%) of external sales in European countries. Germany and France make up the largest share of total revenue. After consolidation, Germany accounts for 25.1% (prior year: 26.6%) of consolidated revenue, relating to the products Equipment and Service, Chemicals and Others. France accounts for 12.9% (prior year: 13.8%) of consolidated revenue. External sales outside of Europe are primarily generated in North America and are mostly attributable to the United States. As in the prior year, transactions with one major customer in the Europe and North America segments marginally exceeded 10% of total revenue.

The allocation of Group assets to segments is based on the geographical location of the assets. Sales to external customers shown for each geographical segment are assigned to the segments based on customers' geographical location. The Group has no assets in other countries because it does not have its own sales organizations in other countries. Revenue with other countries is generated through exports to independent dealers.

Analysis of Group assets by geographical location:

2023 in €k	Germany	Europe	North America	Asia/ Pacific	Group
Property, plant and equipment	20,015	3,822	9,392	496	33,725
Capital expenditure on property, plant and equipment	2,076	828	9,467	488	12,859
Intangible assets including goodwill	45,325	4,087	0	1,324	50,736
Capital expenditure on intangible assets	1,868	37	0	1,313	3,218
Right-of-use assets	7,042	8,351	2,259	761	18,413
Capital expenditure on right-of-use assets	5,328	3,480	1,446	638	10,892
2022 in €k	Germany	Europe	North America	Asia/ Pacific	Group
Property, plant and equipment	20,343	4,213	306	407	25,268
Capital expenditure on property, plant and equipment	2,085	2,314	126	215	4,741
Intangible assets including goodwill	45,264	4,066	0	14	49,344
Capital expenditure on intangible assets	2,787	0	0	0	2,787
Right-of-use assets	5,521	8,975	1,991	850	17,337
Capital expenditure on right-of-use assets	2,666	3,399	895	221	7,180

8. Cost of sales, research and development expenses, selling and administrative expenses

Analysis of cost of sales, research and development expenses, and selling and administrative expenses:

	Cost of sales		Research and development expenses		Selling expenses		Administrative expenses		Group
in €k	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
Cost of materials	220,591	221,063	383	370	15,779	14,675	0	0	236,753	236,107
Personnel expenses	92,942	91,470	9,683	9,227	34,460	34,547	9,234	9,758	146,319	145,002
Depreciation and amortization	10,894	10,752	953	681	1,900	2,314	945	943	14,692	14,690
Other costs	28,507	29,541	3,135	3,872	10,313	10,600	8,391	6,424	50,346	50,437
Total	352,934	352,826	14,154	14,150	62,452	62,136	18,570	17,124	448,110	446,236

Other costs mainly comprise vehicle costs, costs of temporary workers and purchased services, maintenance and energy, and travel expenses. They also include costs of recruitment, professional development, office supplies, communication expenses, local taxes, and patent and storage costs.

Personnel expenses are directly allocated to functions. For a detailed presentation of personnel expenses and the average number of employees by function, please refer to Note 13.

9. Other income and expenses

Other income and other expenses comprise all income and expenses that are not directly attributable to functions.

Other income

in €k	2023	2022
Income from derecognized receivables	8	2
Income from exchange rate differences	2,387	3,023
Income from insurance settlements	815	70
Income from the disposal of non-current assets	192	682
Income from the sale of scrap	811	997
Other income	1,146	2,396
Total	5,360	7,169

Other expenses

in €k	2023	2022
Expense from loss allowances on trade receivables	40	–61
Expense from exchange rate differences	2,761	3,542
Insurance expenses	1,247	1,147
Losses from the disposal of non-current assets	72	61
Expenses from claims	324	427
Other expenses	388	47
Total	4,832	5,164

10. Financial result

in €k	2023	2022
Other interest income	152	529
Income from financial instruments	62	0
Financial income	213	529
Expense from interest-bearing loans	2,819	653
Interest expense from discounting lease liabilities	368	234
Other interest expense	501	388
Financial expenses	3,688	1,275
Financial result	–3,475	–746

Other interest income in the reporting year includes interest of €84k (prior year: €337k) relating to tax refunds.

Other interest expense includes interest of €141k (prior year: €333k) for the discounting of trade receivables and interest of €280k for a back tax payment.

Of the interest income and interest expense, a total of €–3,064k (prior year: €–512k) is classified in the categories financial assets at amortized cost (AC), financial liabilities at amortized cost (FLAC) and financial assets or liabilities at fair value through profit or loss (FVthP/L).

Analysis of interest income and interest expenses by IFRS 9 categories:

in €k	IFRS 9 category	2023	2022
	AC	152	332
Interest income	FLAC	0	197
	FVthP/L	62	0
	AC	3	333
Interest expense	FLAC	3,317	708

11. Income taxes

The income taxes item relates to both current and deferred taxes.

The following table shows a reconciliation of expected to actual income taxes. To calculate the expected tax expense, earnings before taxes were multiplied by the Group tax rate of 32.2% (prior year: 31.9%). The Group tax rate is based on the tax rate faced by the parent company. The WashTec Group's effective tax rate is 27.2% (prior year: 29.3%).

in €k	2023	2022
Expected income taxes	12,384	11,898
Differences from foreign tax rates	–1,160	–677
Non-deductible expenses	940	1,232
Non-recognition of deferred taxes on temporary differences and tax loss carryforwards	103	605
Utilization of loss carryforwards from for which no deferred tax assets recognized	–896	–583
Recognition of deferred taxes on temporary differences and tax loss carryforwards	–27	225
Adjustment for taxes from prior years	–944	–1,706
Other	39	–86
Total	10,439	10,909

in €k	2023	2022
Current tax expense	10,055	10,296
Deferred tax expense	384	613
Total	10,439	10,909

Income taxes are made up as follows:

The current tax expense includes prior-period tax income at domestic and foreign subsidiaries in the amount of €1,118k (prior year: €1,883k).

12. Earnings per share

Calculation of basic earnings per share for 2023 and 2022:

		2023	2022
Net income	in €k	27,972	26,355
Weighted average number of shares outstanding	units	13,382,324	13,382,324
Earnings per share (basic = diluted)	in €	2.09	1.97

The Management Board and Supervisory Board will recommend to the Annual General Meeting, which is due to be held on May 14, 2024, to appropriate the distributable profit of €30,073,713.43 shown in the Company's annual financial statements for fiscal year 2023 as follows: Payment of a dividend in the amount of €2.20 per eligible share, totaling €29,441,112.80, with the remaining distributable profit of €632,600.63 to be carried forward.

13. Personnel expenses

Personnel expenses consist of the following:

in €k	2023	2022
Wages and salaries	123,746	121,184
Social security contributions	10,573	11,756
Employer share of statutory and voluntary pension insurance (defined contribution)	9,417	9,479
Pension and partial retirement	2,583	2,583
Total	146,319	145,002

The average number of employees by function is as follows:

Average number of employees	2023	2022
Sales, marketing and servicing	1,033	1,067
Production, technology and development	567	573
Finance and administration	169	166
Total	1,768	1,806

Notes to the Consolidated Balance Sheet

14. Property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets developed as follows:

in €k	Cost							Depreciation and amortization								Carrying amount
	Jan 1, 2023	Changes in consolidated group	Additions	Disposals	Reclassifi cations	Currency translation effects	Dec 31, 2023	Jan 1, 2023	Changes in consolidated group	Additions	Disposals	Reclassifi cations	Currency translation effects	Dec 31, 2023	Jan 1, 2023	Dec 31, 2023
Land, land rights and buildings	47,724	–384	9,945	20	186	–102	57,349	35,198	–385	923	20	0	–103	35,613	12,526	21,736
Technical plant and machinery	33,795	–312	1,548	2,546	1,380	–173	33,693	25,412	–276	2,134	2,479	170	–150	24,811	8,383	8,882
Other plant, fixtures and fittings	16,683	–228	769	1,430	–68	–206	15,520	13,648	–202	1,143	1,391	0	–184	13,014	3,035	2,506
Prepayments and construction in progress	1,325	–1	560	2	–1,252	–28	601	0	0	0	0	0	0	0	1,325	601
Property, plant and equipment	99,527	–925	12,821	3,997	246	–510	107,163	74,258	–864	4,200	3,890	170	–437	73,438	25,268	33,725
Internally generated development costs	23,476	0	1,616	0	0	2	25,094	19,026	0	813	0	43	2	19,884	4,450	5,210
Licenses and software acquired	17,724	–146	247	75	44	–11	17,783	15,607	–141	931	75	–43	–10	16,269	2,116	1,514
Patents, technologies and other intangible assets	3,600	339	0	0	0	–3	3,935	3,596	0	4	0	0	–4	3,595	4	340
Goodwill	84,740	974	0	0	0	–654	85,061	42,429	0	0	0	0	–657	41,772	42,312	43,289
Prepayments and development projects in progress	462	0	41	0	–120	0	383	0	0	0	0	0	0	0	462	383
Intangible assets (incl. Goodwill)	130,001	1,168	1,905	75	–76	–667	132,256	80,657	–141	1,748	75	0	–669	81,520	49,344	50,736
Total fixed assets	229,528	243	14,726	4,072	170*	–1,177	239,419	154,916	–1,005	5,948	3,965	170*	–1,106	154,958	74,612	84,461

* the counter-item results from transfers in connection with right-of-use assets

in €k	Cost							Depreciation and amortization								Carrying amount
	Jan 1, 2022	Changes in consolidated group	Additions	Disposals	Reclassifi cations	Currency translation effects	Dec 31, 2022	Jan 1, 2022	Changes in consolidated group	Additions	Disposals	Reclassifi cations	Currency translation effects	Dec 31, 2022	Jan 1, 2022	Dec 31, 2022
Land, land rights and buildings	47,450	0	316	200	63	95	47,724	34,575	0	728	200	0	96	35,198	12,875	12,526
Technical plant and machinery	34,368	0	2,222	3,402	467	141	33,795	26,621	0	2,018	3,354	0	126	25,412	7,746	8,383
Other plant, fixtures and fittings	18,432	0	1,138	3,119	0	232	16,683	15,103	0	1,390	3,064	0	219	13,648	3,329	3,035
Prepayments and construction in progress	1,016	0	1,064	287	–451	–18	1,325	0	0	0	0	0	0	0	1,016	1,325
Property, plant and equipment	101,265	0	4,741	7,008	79	450	99,527	76,299	0	4,136	6,618	0	441	74,258	24,966	25,268
Internally generated development costs	21,564	0	1,973	0	0	–62	23,476	18,569	0	519	0	0	–62	19,026	2,995	4,450
Licenses and software acquired	17,744	0	352	493	126	–4	17,724	15,090	0	1,010	494	4	–3	15,607	2,654	2,116
Patents, technologies and other intangible assets	3,716	0	0	19	–4	–93	3,600	3,706	0	7	19	–4	–93	3,596	11	4
Goodwill	83,642	0	0	0	0	1,098	84,740	41,331	0	0	0	0	1,098	42,429	42,312	42,312
Prepayments and development projects in progress	552	0	462	0	–552	0	462	0	0	0	0	0	0	0	552	462
Intangible assets (incl. Goodwill)	127,219	0	2,787	513	–431	940	130,001	78,695	0	1,535	513	0	940	80,657	48,524	49,344
Total fixed assets	228,484	0	7,528	7,521	–353*	1,390	229,528	154,994	0	5,671	7,131	0	1,382	154,916	73,490	74,612

* the counter-item results from transfers in connection with right-of-use assets

Intangible assets

Intangible assets amounted to €7,447k (prior year: €7,032k). Research and development costs in the amount of €1,688k (prior year: €2,389k) were not capitalized as the criteria for capitalization under IAS 38 were not met.

There were no material contractual obligations such as obligations to purchase property, plant and equipment or intangible assets as of the reporting date.

Goodwill

The total goodwill with a carrying amount of €43,289k (prior year: €42,312k) is allocated as follows to the operating segments identified in accordance with IFRS 8: Europe in the amount of €42,305k (prior year: €42,305k) and Asia/Pacific in the amount of €984k (prior year: €7k). The increase in goodwill is due to the acquisition of the New Zealand sales partner, Car Kleen New Zealand Ltd.; for details, please refer to Note 3.

The goodwill allocated to the operating segments is routinely tested for impairment by determining value in use.

In accordance with the approach described in Note 5, Accounting policies, goodwill is tested for impairment on the basis of the Group-level planning for 2024 through 2029.

Planning is primarily based on the following assumptions based on the longstanding experience of management and the medium-term strategies for the individual markets. Further information was available to management in the form of external market studies. The key assumptions are as follows:

• W Revenue growth averaging approximately 4.7% p.a. in the Europe segment and between 3.6% and 6.7% in the remaining segments.
• W Cost increases of 2–3% p.a.
• W Wage and salary cost increases of approximately 3–4% p.a.

Assumptions made for discounting purposes were a pre-tax discount rate of 9.6% (prior year: 10.5%) and a long-term growth rate in perpetuity of 1.0% (prior year: 1.0%).

The discount rate is based on a weighted cost of debt of 4.0% (prior year: 4.4%), the weighted cost of equity and the capital structure. The cost of equity is based on a riskfree rate of return averaging 2.2% (prior year: 2.5%) and a beta of 1.3 (prior year: 1.3).

No indications of impairment were identified for goodwill in the WashTec Group in the reporting year. Nor would a 50 basis point increase in the discount rate and a 20% reduction in the future cash flows result in recognition of an impairment loss.

15. Right-of-use assets

The recognized leases primarily relate to rented buildings and leasing of service vehicles. They are included in right-of-use assets for other equipment, furniture and fixtures, and office equipment. The right-of-use assets for machinery relate to equipment manufactured by WashTec and sold to leasing companies and repurchased under sale and leaseback transactions or hire purchase agreements.

The table below shows the right-of-use assets recognized for leased assets:

in €k	Dec 31, 2023	Dec 31, 2022
Right-of-use assets – land and buildings	10,834	9,595
Right-of-use assets – other plant, fixtures and fittings	7,136	7,031
Right-of-use assets – machinery	442	712
Total	18,413	17,337

Additions to right-of-use assets in the fiscal year amounted to €10,892k (prior year: €7,180k) and disposals and reclassifications to €–957k (prior year: €–218k). Currency translation effects account for €–115k (prior year €119k).

Depreciation of right-of-use assets is made up as follows:

in €k	2023	2022
Right-of-use assets – land and buildings	3,928	4,500
Right-of-use assets – other plant, fixtures and fittings	4,532	4,190
Right-of-use assets – machinery	283	328
Total	8,744	9,018

Please see Note 29 for further information on lease liabilities.

16. Deferred Taxes

There are deferred tax assets in the amount of €3,478k (prior year: €3,856k) and deferred tax liabilities in the amount of €1,741k (prior year: €1,600k) relating to temporary differences.

Deferred tax liabilities are not recognized for outside basis differences as the entity holding the investment is able to control the timing of the reversal of the temporary differences and it is not probable that the temporary differences will reverse in the foreseeable future. The tax base of the unrecognized deferred tax liabilities is €1,476k (prior year: €1,028k).

Loss carryforwards and temporary differences have been recognized as deferred tax assets to the extent it is probable that the loss carryforwards or the temporary differences will be utilized on the basis of the internal planning for 2024 through 2029.

To the extent that it is not probable that loss carryforwards will be able to be utilized against future taxable net income, no deferred tax assets are recognized for them. Deferred tax assets were therefore not recognized in the reporting year in relation to loss carryforwards in the amount of €3,710k (prior year: €10,621k) and temporary differences in the amount of €6,038k (prior year: €9,716k). This corresponds to €942k (prior year: €2,650k) in deferred tax assets not recognized for loss carryforwards and €1,520k (prior year: €2,470k) in deferred tax assets not recognized for temporary differences.

The loss carryforwards have no time restrictions with regard to their utilization.

The deferred tax assets and liabilities relate, prior to offsetting, to the following material balance sheet items:

		Deferred tax assets	Deferred tax liabilities
in €k	Dec 31, 2023	Dec 31, 2022	Dec 31, 2023	Dec 31, 2022
Tax loss carryforwards	248	702	0	0
Property, plant and equipment	329	336	–1,220	–1,202
Goodwill	0	0	–967	–913
Intangible assets	0	0	–1,680	–1,421
Right-of-use assets	0	0	–4,443	–3,947
Inventories	2,077	1,365	–169	–92
Trade receivables	293	175	–6	–55
Other assets	4	1	–308	–285
Non-current interest
bearing loans	0	0	–133	0
Lease liabilities	4,508	3,814	0	0
Provisions	1,755	1,829	0	–2
Other liabilities	881	1,680	–2	–31
Contract liabilities	570	303	0	–1
Total	10,665	10,205	–8,928	–7,949
of which non-current	5,050	5,406	–6,219	–5,744
of which current	5,615	4,799	–2,709	–2,205

Deferred tax receivables and liabilities totaling €7,187k (prior year: €6,349k) were offset in accordance with the offsetting rules in IAS 12.

€–72k (prior year: €–555k) in deferred taxes were recognized in equity in the reporting year. The aggregate amount of deferred taxes recognized in equity is consequently €1,222k (prior year: €1,294k).

The following table shows the income and expenses recognized directly in other comprehensive income together with the changes in deferred taxes relating to them:

in €k	Dec 31, 2023			Dec 31, 2022
	Change before tax	Change in deferred taxes	Change after tax	Change before tax	Change in deferred taxes	Change after tax
Adjustment item for currency translation of foreign subsidiaries	–1,229	0	–1,229	1,112	0	1,112
Exchange differences on net investments in subsidiaries	139	0	139	164	–172	–8
Changes in actuarial gains and losses	318	–75	243	1,373	–383	990
Change in share-based payment	–27	0	–27	38	0	38
Fair value of derivative financial instruments used for hedging purposes	–9	3	–6	0	0	0
Changes recognized directly in other comprehensive income	–808	–72	–880	2,687	–555	2,132

17. Inventories

in €k	Dec 31, 2023	Dec 31, 2022
Raw materials, consumables and supplies, including merchandise	28,917	33,079
Work in progress	21,287	25,966
Finished goods	4,228	12,227
Prepayments	334	374
Total	54,766	71,647

The decrease is mainly due to planned inventory optimization, as the considerable uncertainties on procurement markets in recent years have now cleared.

Additions to write-downs on inventories came to €1,375k in the reporting year (prior year: €1,551k).

18. Tax receivables

in €k	Dec 31, 2023	Dec 31, 2022
Current tax receivables	16,640	16,028
Total	16,640	16,028

The tax receivables are primarily claims against the tax authorities based on deductible investment withholding tax and the German solidarity surcharge and on corporate income tax and trade tax.

19. Trade receivables

in €k	Dec 31, 2023	Dec 31, 2022
Non-current trade receivables	4,113	3,430
Current trade receivables	68,193	78,801
Total	72,306	82,231

The payment period usually granted for current trade receivables is 30 days. Noncurrent receivables relate to payment plans with customers.

The gross carrying amounts of trade receivables total €76,115k (prior year: €86,713k). This includes €586k (prior year: €615k) in gross carrying amounts on credit-impaired trade receivables as of the balance sheet date. The gross carrying amounts, likewise included in the total, of trade receivables for which loss allowances are measured at an amount equal to the lifetime expected credit losses are as follows:

in €k
Year	Not past due	Over 30 days	Over 60 days	Over 120	Over 180	Over 365	Total
		past due	past due	days	days	days
				past due	past due	past due
Dec 31, 2023	60,106	3,209	2,559	850	3,188	5,617	75,529
Dec 31, 2022	71,033	3,230	2,251	1,429	2,295	5,860	86,097

Impairments of trade receivables are as follows:

in €k	2023	2022
As of January 1	4,481	5,768
Changes in consolidated group	–147	–
Change in impairment for credit losses recognized in profit or loss	548	413
Amounts written off as uncollectible in the fiscal year	–352	–1,147
Unused amount reversed	–720	–552
As of December 31	3,810	4,481

20. Other assets

in €k	Dec 31, 2023	Dec 31, 2022
Other non-current financial assets	201	277
Other non-current non-financial assets	556	538
Other current financial assets	1,643	1,486
Other current non-financial assets	2,170	2,255
Total	4,570	4,556
of which non-financial prepaid expenses	1,703	1,750

Prepaid expenses are recognized in order to account for prepayments of servicing fees and prepayments of insurance premiums.

Other non-current and current financial assets include only items for which the counterparty has a high credit rating.

21. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and bank balances, with banks of impeccable credit standing, that have a term of up to three months from the date of acquisition. Credit balances held at banks earn interest at variable interest rates based on daily bank account rates. There was no objective evidence of impairment of cash and cash equivalents in the reporting year.

The carrying amount of the cash and cash equivalents is €16,673k (prior year: €14,215k) and approximates their fair value.

The cash flow statement shows how cash funds held by the WashTec Group changed in the reporting year. Cash flows are classified for this purpose in accordance with IAS 7 as cash flow from operating activities, cash flow from investing activities and cash flow from financing activities.

For the purposes of the consolidated cash flow statement, cash funds comprise the following as of the end of the year:

in €k	Dec 31, 2023	Dec 31, 2022	from discounting lease liabilities, please see Note 10.
Cash and cash equivalents	16,673	14,215
Overdrafts	–32,287	–41,362
Cash funds	–15,614	–27,147

Lease liabilities changed as follows:

in €k	2023	2022
As of January 1	18,102	20,248
Repayment of lease liabilities	–8,372	–8,861
Assumption of lease liabilities	10,627	7,180
Disposal of lease liabilities	–682	–571
Adjustment item from currency translation	–237	107
Other changes
Interest expense from discounting lease liabilities
(presented as operating cash flow)	368	234
Interest paid	–368	–234
As of December 31	19,439	18,102

The cash change in lease liabilities amounts to €8,740k (prior year: €9,095k); the noncash change amounts to €10,077k (prior year: €6,950k).

For information regarding interest-bearing loans, see Note 28. For the interest expense

Equity

22. Subscribed capital

The subscribed capital of WashTec AG is €40,000k. It is divided into 13,976,970 no-parvalue bearer shares (prior year: 13,976,970 shares) and is fully paid in. Each share has a single voting right and is entitled to dividends according to the share's percentage of the registered share capital.

	Dec 31, 2023	Dec 31, 2022
Ordinary shares (thousand)	13,977	13,977
Share capital per share (€)	2.86	2.86

As of December 31, 2023, the average weighted number of issued and outstanding shares was 13,382,324 (prior year: 13,382,324 shares).

The Annual General Meeting of May 15, 2023 resolved, among other things, for the distributable profit of €29,804,169.57 shown in the Company's annual financial statements for fiscal year 2022 to be appropriated for payment of a dividend of €2.20 per eligible no-par value share, totaling €29,441,112.80, and for the remaining distributable profit of €363,056.77 to be carried forward.

Authorized capital

The Authorized Capital currently existing under subsection 5.1 of the Company's Articles of Association, which has not been used to date, would have expired on June 30, 2022. In order that the Company may continue to act rapidly and flexibly as needed in order to raise equity capital on favorable terms, the existing Authorized Capital is to be revoked and the Management Board is once again to be authorized to increase the share capital by the issue of new no-par-value bearer shares.

By resolution of the Annual General Meeting of May 16, 2022, which is available in the Investor Relations section of the Company website at www.washtec.de, the Authorized

Capital under subsection 5.1 of the Articles of Association resolved as agenda item 7 of the Annual General Meeting of April 29, 2019 was revoked. At the same time, the Management Board was authorized, subject to the consent of the Supervisory Board, to increase the registered share capital on one or more occasions on or before June 30, 2025 by a total amount of up to €8,000,000 (Authorized Capital) by issuing new no-par-value bearer shares in exchange for cash and/or non-cash contributions. The shareholders must normally be granted preemptive rights in this connection.

The Management Board is authorized, subject to the consent of the Supervisory Board, to exclude the preemptive rights of shareholders:

• W for fractional amounts;
• W if the new shares are issued in exchange for a non-cash contribution, including in connection with the acquisition of companies, parts of companies or interests in companies;
• W in the event of capital increases in exchange for cash contributions if at the time of the final fixing of the issue price by the Management Board the issue price of the new shares is not significantly lower, within the meaning of section 203 (1) and (2) and section 186 (3) sentence 4 AktG, than the stock market price of existing publicly listed shares of the same class and with the same features, and the pro rata amount of the share capital attributable in total to the new shares on which preemptive rights are excluded does not exceed 10% at the time the authorization becomes effective or, if the pro rata amount is then lower, at the time the authorization is exercised;
• W to the extent necessary in order to grant the holders of warrant-linked and/or convertible bonds issued by the Company or its subsidiaries a right to subscribe for new shares in the scope to which they would be entitled if they exercised their option or conversion right or fulfilled their conversion or option obligations.

The pro rata amount of the share capital attributable to shares issued against cash or non-cash contributions under the above stipulations with shareholders' preemptive rights excluded may not exceed a total of 10% of the Company's share capital at the time of the resolution by the Annual General Meeting. To be deducted from this amount – subject to any further authorization to exclude shareholders' preemptive rights that may be resolved by a subsequent Annual General Meeting – are those shares which are issued during the term of the Authorized Capital under another authorization with shareholders' preemptive rights excluded or to which warrant-linked or convertible bonds with conversion or warrant rights or with conversion or warrant obligations relate that are issued during the term of the Authorized Capital with shareholders' preemptive rights excluded.

The Management Board is authorized, subject to the consent of the Supervisory Board, to stipulate further details concerning the capital increase and its implementation, including the features of the share rights and the terms and conditions of issue.

The Supervisory Board is authorized to revise the text of the Articles of Association after full or partial implementation of the capital increase from Authorized Capital.

23. Capital reserves

Capital reserves primarily consist of the contribution of California Kleindienst Holding GmbH to the capital of WashTec AG as of January 1, 2000 in the amount of €26,828k, and €18,019k, less €1,774k in costs relating to capital increases, from the premium paid in connection with the capital increase in August 2005. Capital reserves were reduced in 2009 when treasury shares were retired in the amount of €9,464k.

24. Treasury shares

As in the prior year, WashTec AG held treasury shares in the amount of €13,177k as of December 31, 2023. This corresponds to 594,646 shares or 4.25%. The treasury shares were acquired in fiscal years 2012, 2013 and 2015.

Purchase and use of treasury shares

Unless expressly permitted by law, the Company cannot acquire or make use of treasury shares except with authorization from the Annual General Meeting. As the authorization

to purchase and use treasury shares in accordance with section 71 (1) no. 8 AktG granted by resolution of the Annual General Meeting of April 29, 2019 would have expired on June 30, 2022, it was resolved at the Annual General Meeting of May 16, 2022 to revoke the previous authorization and to grant the Company renewed authorization to purchase and make use of treasury shares. The resolution of the Annual General Meeting is available in the Investor Relations section of the Company website at www.washtec.de.

Authorization to acquire treasury shares

The Company is authorized pursuant to section 71 (1) 8 AktG, on or before June 30, 2025 and for purposes other than to trade in the Company's own shares, to acquire the Company's own shares in the amount of up to 10% of the share capital at the time of the resolution or – if lower – at the time the authorization is exercised.

The Management Board may opt to acquire such shares on the stock exchange, by means of a public purchase offer to all shareholders or by means of a public invitation directed at all shareholders to tender shares for sale.

If the shares are acquired on the stock exchange, the consideration per share paid by the Company (excluding incidental acquisition costs) may not be more than 10% higher or lower than the average stock exchange price of the Company's shares in the XETRA closing auction (or a comparable successor system) on Frankfurt Stock Exchange over the last five trading days prior to the acquisition of the shares.

If the shares are acquired by means of a public purchase offer to all shareholders or by means of a public invitation directed at all shareholders to tender shares for sale, the purchase price offered or the limits of the purchase price range per share (excluding incidental acquisition costs) may not be more than 10% higher or lower than the average stock exchange price of the Company's shares in the XETRA closing auction (or a comparable successor system) on Frankfurt Stock Exchange over the last five trading days prior to the date of the public announcement of the offer or of the public invitation to tender shares for sale.

If the public offer is oversubscribed, or if not all of a plurality of equivalent offers are accepted in the case of an invitation to tender shares for sale, then acceptance must be based on quotas. Provision may be made for preferential acquisition or preferential acceptance of small quantities of up to 100 shares in the Company offered for acquisition per shareholder. Additional conditions may be stipulated in the public offer or in the invitation to tender shares.

Use of treasury shares; exclusion of shareholders' preemptive rights

Other than by way of sale on the stock exchange or by way of an offer to all shareholders, the Management Board is authorized, subject to the consent of the Supervisory Board, to make use of treasury shares acquired on the basis of the authorization granted at the Annual General Meeting on May 16, 2022 or on the basis of a previously granted authorization as follows:

They may

• W be offered and transferred to third parties as consideration in connection with the direct or indirect acquisition of companies, parts of companies or interests in companies or in connection with business combinations;
• W be used to service options issued in a stock option program to members of the management of companies affiliated with the Company and to employees of the Company or of companies affiliated with the Company; or
• W be used in other ways provided that the Company's treasury shares are utilized against cash payment and at a price that is not significantly lower than the stock exchange price of the Company's shares at the time of disposal. This authorization is additionally restricted to shares with a pro rata amount of the share capital that may not exceed a total of 10% of the share capital at the time the authorization becomes effective or, if lower, at the time the authorization is exercised.

The Supervisory Board is authorized to use the treasury shares acquired on the basis of this authorization to service options issued in a stock option program to members of the Management Board of the Company.

The aforementioned authorizations for use other than by way of sale on the stock exchange or by way of an offer to all shareholders may be exercised in whole or in part and on one or more occasions. The use made may be for one or more of the aforementioned purposes. Shareholders' preemptive rights to treasury shares are excluded to the extent that, in accordance with the above authorizations, the shares are used other than by way of sale on the stock exchange or by way of an offer to all shareholders.

To the extent that shares are used, with shareholders' preemptive rights excluded, to service options issued in a stock option program to members of the Management Board of the Company, to members of the management of companies affiliated with the Company and to employees of the Company or of companies affiliated with the Company, use may only be made of the authorization up to a total maximum amount of 5% of the share capital at the time of the resolution by the Annual General Meeting. To be deducted from this 5% limit is the pro rata share of the share capital attributable to shares issued or sold in exchange for cash or non-cash contributions during the term of the authorization or under another authorization, with shareholders' preemptive rights excluded, to members of the Management Board of the Company, to members of the management of companies affiliated with the Company and to employees of the Company or of companies affiliated with the Company.

Cancellation of treasury shares

The Management Board is authorized, subject to the consent of the Supervisory Board, to cancel shares acquired on the basis of the above authorization or a previously granted authorization, in whole or in part, without the cancellation or its execution requiring a further resolution of the Annual General Meeting. Cancellation results in a reduction in capital. In departure from this, the Management Board may stipulate that instead of a reduction in capital, the pro rata share of the share capital attributable to each remaining share is increased. In this event, the Management Board is authorized to revise the number of shares in the Company's Articles of Association.

Utilization in partial amounts

All of the aforementioned authorizations may be exercised by the Company in whole or in part, on one or more occasions, and for one or more purposes. The authorizations – with the exception of the authorization to cancel treasury shares – may also be exercised by subsidiaries of the Company or by third parties for the account of the Company or for the account of subsidiaries of the Company. The authorizations for the use of treasury shares, for the exclusion of subscription rights and for the cancellation of treasury shares also include the use of shares in the Company acquired on the basis of section 71d sentence 5 AktG.

25. Other reserves and currency translation effects

income and deferred taxes share-based expenses payment recognized directly in equity Exchange differences on net investments in subsidiaries –1,694 139 0 0 Actuarial gains/losses –2,830 318 –75 0 134 0 0 –27 Share-based payment Fair value of derivative financial instruments used for 0 –9 3 0 hedging purposes Other reserves –4,390 448 –72 –27 Currency translation effects 1,448 –1,241 0 0 Total –2,942 –793 –72 –27 in €k Jan 1, 2022 Change in Change in Change in income and deferred taxes share-based expenses payment recognized directly in equity Exchange differences on net investments in subsidiaries –1,686 164 –172 0 Actuarial gains/losses –3,820 1,373 –383 0 Share-based payment 96 0 0 38 Other reserves 5,410 1,537 –555 38 Currency translation effects 336 1,112 0 0 Total –5,074 2,649 –555 38	in €k	Jan 1, 2023	Change in	Change in	Change in	Dec 31, 2023
						–1,555
						–2,587
						107
						–6
						–4,041
						207
						–3,834
						Dec 31, 2022
						–1,694
						–2,830
						134
						–4,390
						1,448
						–2,942

26. Provisions for pensions

The provisions relate mainly to WashTec Cleaning Technology GmbH and WashTec Holding GmbH, Augsburg, Germany, and have been recognized in order to reflect obligations, arising from future and current benefit entitlements, to current and former employees and their surviving dependents. The pension plan provides for retirement benefits (from the age of 63), early retirement benefits and invalidity benefits. Employees must have served the Company for at least 10 years in order to be entitled to the benefits, with years of service taken into account only after an employee has reached the age of 30. The monthly retirement benefit is derived from a fixed amount multiplied by the number of pension-qualifying years of service. In addition, individual contractual terms and conditions apply.

The amount of the provision was determined using actuarial methods at a discount rate of 3.45% (prior year: 3.1%). The annual salary and cost-of-living increases were measured at 2.0% (prior year: 2.0%). The return from reimbursement claims due to the existing pension liability insurance policies amounts to 3.45% (prior year: 3.1%). The Prof. Dr. Klaus Heubeck 2018 G mortality tables were used as the biometrical basis of calculation. Staff turnover ratios were estimated according to age and sex and taken from standard tables.

The number of pension beneficiaries as of December 31, 2023 was 219 employees (prior year: 223 employees), and the total number of all persons to whom there is a pension commitment is 290 employees (prior year: 312 employees). The new valuations include the effects of experience adjustments in the amount of €47k (prior year: €–303k).

All actuarial gains and losses have been recognized in other comprehensive income. Actuarial gains and losses before deferred taxes in the fiscal year under review were €318k (prior year: €1,373k). In total, actuarial gains and losses (before deferred taxes) of €–3,867k (prior year: €–4,185k) have been recognized in other comprehensive income as of December 31, 2023.

The present value of the defined benefit obligation developed as follows in fiscal years 2022 and 2023:

in €k	2023	2022
As of January 1	8,528	10,196
Pensions paid	–456	–483
Service cost for the reporting period	107	98
Interest expense	250	76
Actuarial gains and losses	–316	–1,359
As of December 31	8.113	8,528

Details of changes in actuarial gains and losses:

in €k	Provisions for pensions at present value	Reimbursement rights at fair value	Total
Return	0	2	2
Gains and losses from changes in financial assumptions	304	0	304
Gains and losses from portfolio changes	12	0	12
Total	316	2	318

The claims against the relief fund and the employer's liability insurance policies taken out on the lives of qualifying employees are of the nature of reimbursement rights.

Pension obligations are exclusively covered by pension liability insurance. There is no investment in real estate, equities or similar. The development of reimbursement rights is shown in the following table:

in €k	2023	2022
Fair value of reimbursement rights as of January 1	538	520
Expected return	19	18
Fair value of reimbursement rights as of December 31	557	538

Sensitivity analysis for pension obligations in accordance with IAS 19

Risks under pension obligations mostly arise from an increase in the life expectancy of pension beneficiaries and changes in the discount rate, which lead to a decrease in the pension provision.

The following table shows the sensitivities (calculated on the basis of the projected unit credit method) in relation to current assumptions regarding potential changes in discount rates, cost-of-living increases and life expectancy. All other variables are held constant. There has been no change relative to the prior year in the assumptions and methods applied in the sensitivity analysis.

		Effect on the defined benefit obligation (DBO)
Assumptions	Changes	2023	2022
Life expectancy	Increase by one year	5.4%	5.2%
Increase in living costs	Increase by 0.25%	1.6%	3.1%
Interest rate	Increase by 0.25%	–1.9%	–1.9%
Interest rate	Decrease by 0.25%	1.9%	2.0%

The average remaining duration of the pension obligations is approximately 8 years (prior year: approximately 8.5 years).

The following table shows the expected payments for pension benefits:

in €k	< 1 year	1–5 years	> 5 years	Total
Pension benefits	549	2,531	6,907	9,986

27. Other provisions

in €k		Jan 1, 2023	Additions	Utilization	Reversals	Interest	Exchange	Changes in	Dec 31, 2023	of which	of which	Provisions Dec 31, 2022
						effects	rate effects	consolidated		current	non-current	of which	of which
								group				current	non-current
Partial retirement		2,395	618	–604	0	0	0	0	2,409	788	1,621	687	1,707
Warranty		6,033	6,315	–4,303	–939	0	–48	–94	6,963	6,879	85	5,962	71
Contracts with rights of return		1,728	0	–585	0	48	0	0	1,192	610	581	718	1,010
Legal and consulting fees		717	1,043	–118	–152	0	0	0	1,490	1,490	0	717	0
Termination benefits		914	1,545	–440	–241	0	0	0	1,778	1,778	0	914	0
Other		501	160	–11	–168	0	0	0	481	96	385	90	411
	Dec 31, 2023	12,286	9,681	–6,061	–1,499	48	–48	–94	14,312	11,641	2,671	–	–
Total	Dec 31, 2022	15,200	6,205	–7,215	–1,889	4	–18	0	12,286	–	–	9,087	3,199

The provision for partial retirement was measured in accordance with IAS 19 (revised). The calculation was based on an interest rate of 3.7% (prior year: 2.7%) and annual salary increases of 2.25% (prior year: 2.25%).

The provision for warranty obligations is recognized based on experience. The assumptions used in calculating the provision for warranty obligations were based on current sales levels and on the currently available information about repairs and returns for sold products during the warranty period. It is expected that the costs will be incurred during the warranty period after the balance sheet date.

The provision for contracts with rights of return comprises the expected expenses from contractual obligations to take back equipment previously sold to leasing companies and is measured on a rolling basis. In general, these obligations are secured by bank guarantees.

The provision for termination benefits in the amount of €1,778k (prior year: €914k) relates to measures for workforce reductions.

The other provisions totaling €481k (prior year: €501k) mainly relate to provisions for potential claims in the amount of €384k (prior year: €401k).

28. Interest-bearing loans

The WashTec Group's financing is based on bilateral agreements with various banks. The borrower is WashTec Cleaning Technology GmbH and has credit lines totaling €99,690k (prior year: €91,500k) at its disposal, consisting of demand facilities totaling €60,000k (prior year: €60,000k) and facilities with remaining terms as of December 31, 2023 of nine to 48 months totaling €39,690k (prior year: €31,500k). The facilities with a remaining term of nine months are credit lines that are normally provided for a term of 24 months and are extended on a regular basis. Talks for the upcoming extension are on track. All banks involved have already confirmed their willingness to continue the working relationship. The credit lines may be drawn on both as credit and as guarantee facilities. The increase in the credit lines is mainly due to the acquisition of the site occupied by the US subsidiary. This was purchased effective January 2, 2023 following the termination of the previous lease agreement. The purchase price was USD 10.3 million. This

was financed by long-term, five-year US dollar bank loans in the same amount. In addition, the guarantee facility was drawn in the amount of €4,075k (prior year: €5,251k). The undrawn amount of the credit line available for future operating activities and to meet obligations was €56,496k as of the reporting date (prior year: €46,137k).

Interest-bearing loans at the WashTec Group are made up as follows:

in €k	Dec 31, 2023	Dec 31, 2022
Non-current interest-bearing loans	5,204	0
Current interest-bearing loans	33,916	41,362
Total	39,120	41,362

The current interest-bearing loans are made up of overdraft borrowings in the amount of €32,287k (prior year: €41,362k) and interest-bearing loans in the amount of €1,629k (prior year: €0k).

The facilities provided by the banks are not tied to any financial covenants. The interest rate on the credit lines is variable and linked to changes in EURIBOR, €STR and SOFR plus a contractually agreed margin. The credit lines carry interest according to the applicable conditions of the relevant banks at the time they are utilized. The interest rates ranged between 2.7% and 5.3% in the reporting year (prior year: between 0.2% and 2.6%).

29. Leases

in €k	Dec 31, 2023	Dec 31, 2022
Current lease liabilities	7,863	7,936
Non-current lease liabilities	11,576	10,166
Total	19,439	18,102

To obtain a low fixed cost base, some leases for Group locations feature variable lease payments that rise incrementally on attainment a specified volume of carwashes or revenue. The lease payments are recognized in profit or loss in the period in which the condition that triggers them occurs. As in the prior year, there are no future cash outflows that are not reflected in the measurement of lease liabilities as of December 31, 2023.

A number of property leases contain extension and termination options. No lease payments related to these as the optional periods are in the future. Potential future cash outflows in the amount of €3,097k (prior year: €3,100k) were not included in the lease liabilities as the leases are not reasonably certain to be extended.

Total cash outflows for leases were €8,740k in fiscal year 2023 (prior year: €9,095k). Future cash outflows arising from leases not yet commenced to which the WashTec Group committed in fiscal year 2023 amount to €256k (prior year: €50k). As in the prior year, there were no gains from sale-and-leaseback transactions.

The other rental expenses include €346k (prior year: €310k) in expenses for leases of low-value assets that are not short-term leases. Low-value assets mainly comprise IT equipment. As in the prior year, no expenses were recognized for variable lease payments not taken into account in the measurement of lease liabilities.

For the right-of-use assets recognized for leased assets and the related depreciation, please see Note 15. For the interest expense from discounting lease liabilities, please see Note 10.

30. Other liabilities

in €k	Non-current (> 1 year)		Current (< 1 year)
	Dec 31, 2023	Dec 31, 2022	Dec 31, 2023	Dec 31, 2022
Accrued liabilities	0	0	11,841	14,243
Liabilities to trading partners	0	0	4,846	4,556
Debtors with credit balances	0	0	1,020	886
Other	55	168	1,410	912
Total other financial liabilities	55	168	19,117	20,597
Liabilities to employees and board members	45	1,495	16,139	15,092
Taxes and levies	0	0	6,455	6,588
Liabilities for social security	0	0	1,431	2,254
Other	35	26	1,794	1,671
Total other non-financial liabilities	80	1,522	25,818	25,606
Total	136	1,690	44,935	46,202

The accrued liabilities in the amount of €11,841k (prior year: €14,243k) mainly relate to outstanding invoices for service already rendered and for credit notes yet to be issued in the Service business. The liabilities for taxes and levies primarily consist of unremitted value added tax.

The fair value of the interest rate swaps as of December 31, 2023 is €9k (prior year: €0k) and is included in other non-current financial liabilities.

31. Contract liabilities

Liabilities relating to contracts with customers:

in €k	Dec 31, 2023	Dec 31, 2022
Prepayments on orders	19,584	25,939
Deferred income for full maintenance, extended guarantees and prepaid service agreements	9,512	10,424
Total	29,096	36,362

Management expects that 95.5% (prior year: 95.2%) of these unsatisfied (or partially unsatisfied) performance obligations will be recognized as revenue in fiscal year 2024. The remaining 4.5% (prior year: 4.8%) are expected to be recognized as revenue in fiscal year 2025. The amount stated does not include any variable consideration components that are constrained.

Revenue recognition in relation to contract liabilities:

in €k	2023	2022
Revenue recognized in the fiscal year included in the balance of contract liabilities at the beginning of the period
Prepayments on orders	25,939	25,555
Deferred income for full maintenance, extended guarantees and
prepaid service agreements	8,686	8,033

This disclosure does not include contracts in which the right to consideration from the customer is in an amount that corresponds with the value of the performance obligation satisfied to date by the WashTec Group and/or whose original expected duration is one year or less.

32. Financial risk management objectives and methods

The risks for the Group arising from derivative financial instruments comprise credit and liquidity risk along with market price risk in the form of interest and currency risk. Company policy is to avoid or limit such risk as far as possible. Substantially all hedging is coordinated and undertaken centrally. For example, the Group regularly identifies all items that are subject to interest rate and currency risk, assesses the probability of occurrence of negative developments and makes any decisions required to avoid or reduce variation in the corresponding interest rate and/or currency positions. No trading in derivatives is undertaken as a fundamental rule in accordance with internal Group policy.

All risk types to which the Group is exposed, and the strategies and procedures for managing the risks, are described below.

Credit risk

The Group conducts business exclusively with creditworthy third parties. To minimize credit risk, order limits are imposed where customers do not have first-class credit standing. For new regional customers, the Company requests evidence of credit standing or financing. Impairments recognized on receivables are expected to be sufficient to cover actual risk. Please see Note 19 for further information.

For some trade receivables, the WashTec Group in some cases requires collateral in the form of guarantees or letters of credit to which the Group can have recourse under the contract terms in the event of payment default by the counterparty.

There is presumed to be a concentration of credit risk if a single customer or oil company makes up more than 10% of revenue. Revenue with one major customer marginally exceeded 10% of consolidated revenue in fiscal years 2023 and 2022. The development of receivables is monitored on a monthly basis as part of receivables management. If there are indications of an increase in credit risk, insolvency insurance may be taken out with reputable credit insurers. There is therefore no enhanced credit risk in this regard.

With respect to credit risk arising from the Group's remaining financial assets – such as cash and cash equivalents and other financial assets – the maximum credit risk in the event of a default by a counterparty is the carrying amount of the instruments. No credit losses are expected on such instruments.

Liquidity risk

A key business objective is to ensure that Group companies are solvent at all times. The implemented cash management systems enable the Group to identify potential shortfalls in good time and take appropriate action. The current and future liquidity situation is controlled in a timely manner on an annual basis based on a monthly rolling consolidated liquidity plan. Undrawn credit lines ensure the supply of liquidity. The credit lines have been granted under bilateral agreements between WashTec Cleaning Technology GmbH and various banks subject to joint and several liability on the part of WashTec AG. Further information is provided in Note 32.

The table below shows all contractually agreed undiscounted payments of principal and interest on financial liabilities recognized as of December 31, 2023 for future fiscal years.

The table includes all instruments held as of the balance sheet date for which payments were already agreed. Foreign currency amounts are translated at closing rates. Variable interest payments on the financial instruments, primarily on loans, are calculated at expected interest rates. Financial liabilities that are repayable at any time are always included in the earliest repayment category.

in €k	Carrying Cash flows amount
	Dec 31, 2023	2024	2025–2028	2029 ff.
Interest-bearing loans	39,120	35,649	5,787	0
Lease liabilities	19,439	8,226	11,609	344
Trade payables	23,951	23,951	0	0
Other financial liabilities	19,172	19,117	55	0

in €k	Carrying amount	Cash flows
	Dec 31, 2022	2023	2024–2027	2028 ff.
Interest-bearing loans	41,362	6,483	47,748	0
Lease liabilities	18,102	8,197	9,604	751
Trade payables	22,711	22,711	0	0
Other financial liabilities	20,765	20,597	168	0

Market price risk

The main sources of market price risk facing the Group relate to exchange rate movements between the euro and other currencies and to interest rate movements on the international money and capital markets.

Currency risk

Movements in the USD/EUR, CAD/USD and EUR/NOK (and in the prior year also CNY/ EUR) exchange rates could have a material effect on consolidated net income because a portion of the operating business is conducted in the North America segment and a portion in the Asia/Pacific segment. American subsidiary Mark VII Equipment Inc., Arvada, USA, has a long-term CAD loan receivable against its Canadian subsidiary, which is designated as a net investment in a foreign operation in the amount of CAD 7,800k (prior year: CAD 7,800k). The translation effect of the loan receivable, which is attributable to the net investment in a foreign operation, is recognized in other comprehensive income.

The following sensitivity analysis shows how EBT and equity would change had the currencies identified as price risk variables moved differently as of the balance sheet date. All other variables are held constant.

2023 in €k	Impact on EBT	Impact on equity
Currency: USD
+5%	–79	0
–5%	79	0
Currency: CAD
+5%	131	–315
–5%	–131	315
Currency: NOK
+5%	158	0
–5%	–158	0

2022 in €k	Impact on EBT	Impact on equity
Currency: USD +5% –5%	90 –90	0 0
Currency: CAD +5% –5%	163 –163	–306 306
Currency: CNY +5% –5%	290 –290	0 0

Operational risks arising from other individual transactions in foreign currencies are immaterial to the Group due to their small volume.

Interest rate risk

Interest rate hedging

Interest rate risk in the Group is primarily connected with the drawn interest-bearing loans as the variable base interest rate for the credit lines is based on EURIBOR, €STR and SOFR.

At the inception of a hedging relationship, both the hedging relationship and the Group's risk management objectives and strategies with regard to the hedge are formally designated and documented. The documentation includes the identification of the hedging instrument, the hedged item, the nature of the hedged risk and how the entity assesses whether the hedging relationship meets the hedge effectiveness requirements (including an analysis of the possible reasons for any hedge ineffectiveness and how the hedge ratio is determined). In accordance with Group policy, there is no trading in derivatives for speculative purposes.

To hedge these interest rate exposures, derivative financial instruments in the form of interest rate swaps were held for hedging purposes during the reporting year. Credit risk relating to the counterparties to the interest rate derivatives could result in hedge ineffectiveness. As of December 31, 2023, no ineffectiveness was identified and the hedging relationships are classified as effective.

Hedging instruments as of December 31, 2023 comprised two interest rate swaps, which serve to hedge the loan for the acquisition of the site occupied by the American subsidiary.

Start	End	Nominal amount in USDk	Reference rate	Interest rate (%)	Hedge relationship	Hedge ratio (%)
Jan. 3, 2023	Dec. 31, 2027	5,100	SOFR	4.15	1:1	100
Jan. 3, 2023	Dec. 31, 2027	1,975	SOFR	4.11	1:1	50

The cash flow hedge reserve changed as follows in the fiscal year:

in €k
As of January 1	0
Change in fair value of hedging instruments recognized in other comprehensive income	27
Gain or loss reclassified to other comprehensive income	–36
Deferred taxes	3
As of December 31	–6

Impact of changes in interest rates

The following table shows the sensitivity of consolidated earnings before taxes to a reasonably possible change in the interest rate on the variable-rate loans. All other variables are held constant.

	2023		2022
Increase/decrease in basis points	100	–100	100	–100
Impact on EBT in €k	–291	291	–515	515
Impact on equity in €k	118	–139	0	0

Capital management

The Group's capital management activities are primarily directed at maintaining a high credit rating and a good equity ratio in order to support operations and maximize shareholder value. The Group manages its capital structure and makes adjustments in response to changes in economic conditions. The Group monitors its capital using appropriate financial ratios. Net financial liabilities comprise interest-bearing loans and lease liabilities less cash and cash equivalents. At the end of 2023, net financial liabilities amounted to €41,886k (prior year: €45,249k). The facilities provided by the banks are not tied to any financial covenants.

33. Financial instruments

The table below shows the carrying amounts, measurement and fair values of relevant balance sheet items by measurement category.

in €k	IFRS 9	Carrying	Measurement under IFRS 9			Measurement	Fair value	IFRS 13
	category	amount	Amortized	At fair value	At fair value	under IFRS 16	Dec 31, 2023**	level
		Dec 31, 2023	cost	through other	through profit
				comprehensive income	or loss
Assets
Non-current trade receivables	AC*	4,206	4,206	–	–	–	4,113	2
Other non-current financial assets	AC*	201	201	–	–	–	–	–
Current trade receivables	AC*	68,193	68,193	–	–	–	–	–
Other current financial assets	AC*	1,643	1,643	–	–	–	–	–
Cash and cash equivalents	AC*	16,673	16,673	–	–	–	–	–
Equity and liabilities
Non-current interest-bearing loans	FLAC*	5,204	5,204	–	–	–	5,104	2
Non-current lease liabilities	n/a	11,576	–	–	–	11,576	–	–
Other non-current financial liabilities	FLAC*	47	47	–	–	–	47	2
Non-current derivative financial liabilities	n/a	9	–	9	–	–	9	2
Current interest-bearing loans	FLAC*	33,916	33,916	–	–	–	–	–
Current lease liabilities	n/a	7,863	–	–	–	7,863	–	–
Trade payables	FLAC*	23,951	23,951	–	–	–	–	–
Other current financial liabilities	FLAC*	19,117	19,117	–	–	–	–	–
Aggregated presentation by measurement category in accordance with IFRS 9
Financial assets measured at amortized cost	AC*	90,915	90,915	–	–	–	4,113	–
Financial liabilities measured at amortized cost	FLAC*	82,234	82,234	–	–	–	5,150	–

*AC: financial assets at amortized cost; FLAC: financial liabilities at amortized cost

** For current financial instruments at amortized cost, the carrying amount at the reporting date is assumed to approximate fair value.

in €k	IFRS 9 category	Carrying	Measurement under IFRS 9		Measurement	Fair value	IFRS 13
		amount	Amortized	At fair value	under IFRS 16	Dec 31, 2022**	level
		Dec 31, 2022	cost	through profit
				or loss
Assets
Non-current trade receivables	AC*	3,767	3,767	–	–	3,430	2
Other non-current financial assets	AC*	277	277	–	–	–	–
Current trade receivables	AC*	78,801	78,801	–	–	–	–
Other current financial assets	AC*	1,486	1,486	–	–	–	–
Cash and cash equivalents	AC*	14,215	14,215	–	–	–	–
Equity and liabilities
Non-current lease liabilities	n/a	10,166	–	–	10,166	–	–
Other non-current financial liabilities	FLAC*	168	168	–	–	168	2
Current interest-bearing loans	FLAC*	41,362	41,362	–	–	–	–
Current lease liabilities	n/a	7,936	–	–	7,936	–	–
Trade payables	FLAC*	22,711	22,711	–	–	–	–
Other current financial liabilities	FLAC*	20,597	20,597	–	–	–	–
Aggregated presentation by measurement category in accordance with IFRS 9
Financial assets measured at amortized cost	AC*	98,547	98,547	–	–	3,430	–
Financial liabilities measured at amortized cost	FLAC*	84,838	84,838	–	–	–	–

*AC: financial assets at amortized cost; FLAC: financial liabilities at amortized cost

** For current financial instruments at amortized cost, the carrying amount at the reporting date is assumed to approximate fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If there is no active market, fair value is established using valuation techniques.

In the IFRS 13 fair value hierarchy, financial instruments are classified into three levels on the basis of the input factors used. Level 1 input factors have the highest priority and unobservable inputs the lowest. The three levels are explained in the following.

Level 1: The fair value of financial instruments traded in active markets (such as listed derivatives and equity instruments) is based on quoted market prices at the end of the reporting period. The quoted market price of financial assets held by the Group is the current bid price. These instruments are classified in level 1.

Level 2: The fair value of financial instruments not traded in an active market (such as OTC derivatives) is determined using valuation techniques that maximize the use of observable market data and minimize the use of company-specific estimates. If all significant inputs for measurement of an instrument at fair value are observable, the instrument is classified in Level 2. The derivative financial liabilities in Level 2 in fiscal year 2023 comprise interest rate swaps, which are measured at the fair value of the estimated future cash flows based on observable yield curves.

Level 3: If one or more of the significant inputs are not observable, the instrument is classified in Level 3.

There were no reclassifications of recurring fair value measurements between the individual levels during the fiscal year. Reclassifications into and out of levels in the fair value hierarchy are made at the end of the reporting period.

Due to their short terms, the fair values of current trade receivables, trade payables and cash and cash equivalents as well as other financial assets, other financial liabilities and interest-bearing loans generally match their carrying amounts. The fair value of noncurrent trade receivables and lease liabilities is determined by discounting the expected future cash flows at current market interest rates. The fair value of long-term interestbearing loans is based on the discounted cash flows using the current market interest rate for such loans.

Derivative financial instruments in the form of long-term interest rate swaps have been entered into during the year. These are used to hedge the interest rate risk on the bank loans taken out to finance the purchase price of the site of the US subsidiary. They are valued on the basis of the banks' market valuation.

Net gains and losses by category

The following table shows the net gains and losses on financial instruments based on the IFRS 9 categories:

in €k	2023	2022
Financial assets at amortized cost (AC)	192	–19
Financial liabilities at amortized cost (FLAC)	–4,112	–1,210
Financial assets or liabilities measured at fair value through profit or loss (FVthP/L)	62	0

The net gains or losses in the financial assets at amortized cost (AC) category are primarily attributable to foreign currency measurement and those in the financial liabilities at amortized cost (FLAC) category are primarily attributable to interest expenses and foreign currency measurement. The assets and liabilities at fair value through profit or loss (FVthP/L) category relates to interest income on derivative financial instruments.

Other information

34. Declaration of Conformity under section 161 AktG

WashTec AG has issued the declaration required under section 161 AktG for fiscal year 2023 and has made it available at https://ir.washtec.de/en/corporate-governance/, under "Declaration of Conformity".

The Management Board prepared the annual and consolidated financial statements on March 22, 2024 and presented them directly to the Supervisory Board for review.

The separate financial statements are to be adopted and the consolidated financial statements of WashTec AG approved at the Supervisory Board meeting on March 25, 2024.

35. Auditor's fees

The following fees were incurred in the reporting year for services rendered by the auditor (PricewaterhouseCoopers GmbH, Wirtschaftsprüfungsgesellschaft, Munich, Germany):

in €k	2023	2022
Annual accounts auditing	709	624
Tax consulting services	0	0
Other services	0	16
Total	709	640

The annual accounts auditing fees relate to the audit of the annual and consolidated financial statements of WashTec AG and a subsidiary. The other services in the prior year related to the disclosures on Article 8 of the EU Taxonomy Regulation.

36. Information about the Company's governing bodies

Management Board

Dr. Ralf Koeppe	(until February 29, 2024)
Profession, place of residence	CEO and CTO, Augsburg
Management Board portfolio	Corporate Culture, Communication and Philosophy, HR, R&D, Production, Quality, Service Support, Sustainability
Sebastian Kutz	(since March 1, 2023)
Profession, place of residence	CSO, Landsberg am Lech
Management Board portfolio	Global Sales and Service, Key Account Management, Marketing, Business Units/Product Management, Service Support, WashTec Carwash Manage ment GmbH
	Interim (from February 22, 2024): R&D, Quality, AUWA-Chemie GmbH

Andreas Pabst
Profession, place of residence	CFO, Bobingen
Management Board portfolio	Finance/Controlling, IT, Procurement, Investor Relations, Legal and Com pliance, Risk Management, Internal Audit, Insurance, WashTec Financial Services GmbH
	Interim (from February 22, 2024): Corporate Culture, Communication and Philosophy, HR, Supply Chain, Sustainability
Stephan Weber	(until February 28, 2023)
Profession, place of residence	CSO, Werther
Management Board portfolio	KAM/CWM, Global Sales and Service, Marketing, Business Units/ Product Management

Supervisory Board

Dr. Günter Blaschke	(until December 31, 2023)
Profession, place of residence	Chairman of the Supervisory Board, Buchloe, Germany
Memberships in other statutory supervisory boards	Leifheit AG, Nassau (Chairman of the Supervisory Board)
Memberships in comparable domestic and international supervisory bodies of business enterprises	None

Ulrich Bellgardt	(Chairman of the Supervisory Board since January 1, 2024)
Profession, place of residence	Diplom degree in engineering, Hubersdorf, Switzerland
Memberships in other statutory supervisory boards	KROMI Logistik AG, Hamburg (Chairman of the Supervisory Board)
Memberships in comparable domestic and international supervisory bodies of business enterprises	None

Dr.Hans-Friedrich Liebler
Profession, place of residence	Managing Director of Credit Solutions Partner GmbH, Munich, Germany
Memberships in other statutory supervisory boards	None
Memberships in comparable domestic and international supervisory bodies of business enterprises	autowerkstattgroup N.V., Amsterdam, Netherlands (Member of the Supervisory Board)

Heinrich von Portatius
Profession, place of residence	Member of the Management Board, Paradigm Capital AG, Grünwald, Germany
Memberships in other statutory supervisory boards	None
Memberships in comparable domestic and international supervisory bodies of business enterprises	Schaltag AG, Effretikon, Switzerland (Member of the Board of Directors) Paradigm Capital North America ICAV, Dublin, Ireland (Member of the Board of Directors) Paradigm Capital North America Feeder ICAV, Dublin, Ireland (Member of the Board of Directors)

Dr. Alexander Selent
Profession, place of residence	Supervisory Board, Limburgerhof, Germany
Memberships in other statutory supervisory boards	None
Memberships in comparable domestic and international supervisory bodies of business enterprises	None

Peter Wiedemann	(Deputy Chairman of the Supervisory Board since January 1, 2024)
Profession, place of residence	Member of the Executive Board, Rational AG, Germaringen, Germany
Memberships in other statutory supervisory boards	None
Memberships in comparable domestic and international supervisory bodies of business enterprises	None

37. Related party disclosures

Management Board remuneration (HGB)

The Management Board remuneration system is geared to promoting the corporate strategy and the long-term development of the Company and its affiliates. This is achieved among other things by means of a simple and clear incentive structure in Management Board remuneration. The remuneration system and the uniform remuneration structure for all Management Board functions are designed to prevent inappropriate incentives, both from outside and from within the Company. In particular, they aim to prevent Management Board decision-making that is calculated to maximize remuneration in the short term but is not conducive to the long-term success of the business.

At its meeting on March 24, 2021, the Supervisory Board, after due deliberation, adopted the system for the remuneration of the members of the Management Board of WashTec AG in accordance with the requirements of the German Stock Corporation Act resulting from the German Act Implementing the Second Shareholder Rights Directive (ARUG II) and taking into account the German Corporate Governance Code dated December 16, 2019 (the "2020 Code"). The amended version of the German Corporate Governance Code dated April 28, 2022 (the "2022 Code") has no effect in this regard. With regard to the recommendations of the German Corporate Governance Code, reference is made to the Declaration of Conformity published in the combined management report, section 8.1.

This remuneration system was approved by the 2021 Annual General Meeting pursuant to section 120a (1) AktG and applies to all Management Board contracts entered into or renewed after the Annual General Meeting on May 18, 2021. Those contracts are the Management Board contracts of CEO Dr. Ralf Koeppe, who was reappointed in fiscal year 2022, CFO Andreas Pabst, who was newly appointed in fiscal year 2022, and CSO Sebastian Kutz, who was newly appointed in fiscal year 2023. In accordance with the 2022 Code and section 26j of the Introductory Act to the Stock Corporation Act (EGAktG), all Management Board contracts current at the time of the 2021 Annual General

Meeting continued to be subject to the previous remuneration system (see also the Declaration of Conformity of December 15, 2022 submitted by the Management Board and Supervisory Board in accordance with section 161 AktG). The long-term variable remuneration in the form of the Long Term Incentive Program (LTIP) 2021-2023 for the Management Board was adopted effective January 1, 2021 and applies to all members of the Management Board. With regard to the Management Board contracts current at the time of the 2021 Annual General Meeting, these have continued or will continue to apply under the conditions specified in the respective contract.

The total remuneration of members of the Management Board is made up of non-performance-based and performance-based remuneration components and is linked overall to sustained growth of the Company. The non-performance-based remuneration components consist of fixed remuneration and incidental benefits, notably comprising the provision of company cars and insurance coverage. The performance-based remuneration components include both a short-term and a long-term component.

The short-term variable remuneration is based in equal parts on Company targets and individual performance targets. The Company targets relate to the WashTec Group's financial key performance indicators. These are revenue, EBIT, free cash flow and return on capital employed (ROCE). For each fiscal year, the Supervisory Board sets the Company targets relevant to remuneration. The individual performance targets comprise operational or strategic targets, including non-financial targets, primarily from the areas of product innovation, sustainability, process optimization, digitalization and customer benefit.

The long-term variable remuneration is structured as share-based payment with a onetime cash award (LTIP) and has a term from January 1, 2021 to December 31, 2023. The LTIP ensures long-term performance and sustainability under the corporate strategy with the two performance targets return on capital employed (ROCE) and total shareholder return (TSR). For a detailed description of the LTIP rules, please refer to the section headed "Share-based payment (IFRS 2)".

Total remuneration granted in fiscal year 2023 to the Management Board (DRS 17) amounted to €1,442k (prior year: €1,164k). €985k (prior year: €936k) of this total consisted of non-performance-related components and €457k (prior year: €228k) of performance-related components.

The members of the Management Board active in each reporting year were granted total remuneration as follows (HGB):

in €k	2023	2022
Fixed remuneration	940	890
Incidental benefits	45	46
Total (fixed)	985	936
Single-year variable remuneration	457	228
Total (variable)	457	228
Total	1,442	1,164

Management Board shareholdings developed as follows:

units	Dec 31, 2023	Dec 31, 2022
Dr. Ralf Koeppe (until February 29, 2024)	4,400	3,600
Sebastian Kutz (since March 1, 2023)	4,750	–
Andreas Pabst	3,500	102
Stephan Weber (until February 28, 2023)	–	4,330

Remuneration of former members of the Management Board

There are pension obligations to a former Management Board member and to surviving dependants of a former Management Board member in the amount of €237k (prior year: €240k), which are covered by a relief fund.

A former member of the Management Board received payments of €256k (prior year: €0k) during the remaining term of the Management Board contract following termination of office. This consisted of €250k in fixed remuneration and €6k in incidental benefits.

Supervisory Board remuneration (HGB)

Supervisory Board remuneration is specified in section 8.16 of the Articles of Association of WashTec AG and comprises fixed and variable remuneration components. The fixed remuneration for an ordinary member of the Supervisory Board is €35,000 for each full fiscal year of membership of the Supervisory Board. The Deputy Chairman receives fixed remuneration of €70,000 for each full fiscal year, and the Chairman receives €100,000 for each full fiscal year of his membership of the Supervisory Board.

Each member of a committee (with the exception of the Audit Committee) receives additional fixed remuneration of €2,500. The chairperson of a committee (with the exception of the Audit Committee) receives additional fixed remuneration of €5,000. Each member of the Audit Committee receives an additional fixed remuneration of €5,000, and the Chairman receives remuneration of €10,000.

In addition, each Supervisory Board member receives an attendance fee of €1,500 for each meeting of the Supervisory Board and its committees that they attend. The Chairman of the Supervisory Board receives double the attendance fee.

Every Supervisory Board member also receives €500 for each cent by which consolidated earnings per share (IFRS-basis) exceeds the equivalent amount for the prior fiscal year.

The fixed and variable remuneration and attendance fees are limited to a maximum total of €75,000 for each regular Supervisory Board member, while the remuneration for the Chairman of the Audit Committee is limited to maximum total of €100,000, that for the Deputy Chairman of the Supervisory Board to a maximum total of €150,000 and that for the Chairman of the Supervisory Board to a maximum total of €200,000. The long-term variable remuneration is added to the remuneration in accordance with the Articles of Association.

Any Supervisory Board members who have served on the Supervisory Board for only part of a fiscal year receive proportionately reduced fixed and variable remuneration. The General Meeting may resolve to establish one or more long-term variable remuneration components for the Supervisory Board that are added to the remuneration under the Articles of Association.

The Company did not pay any remuneration or grant any benefits to members of the Supervisory Board in fiscal year 2023 for services provided individually, including for consulting or referral services.

The Annual General Meeting 2021 resolved long-term variable remuneration in the form of a Long Term Incentive Program (LTIP) for the Supervisory Board with an incentive period running from January 1, 2022 to December 31, 2024. The stipulated performance targets were an EPS target, a ROCE target and a free cash flow target. Supervisory Board members Mr. Bellgardt, Dr. Liebler, Dr. Selent and Mr. Wiedemann participate in the LTIP. For a detailed description of the LTIP rules, please refer to the section headed "Share-based payment (IFRS 2)."

The total remuneration granted to the Supervisory Board members for fiscal year 2023 amounted to €667k (prior year: €621k). €379k (prior year: €376k) of this total related to fixed remuneration, €15k (prior year: €0k) to variable remuneration and €273k (prior year: €245k) to attendance fees.

Supervisory Board shares are made up as follows:

units	Dec 31, 2023	Dec 31, 2022
Dr.Günter Blaschke (until December 31, 2023)	52,060	52,060
Ulrich Bellgardt	31,000	31,000
Dr.Hans-Friedrich Liebler	5,500	5,500
Heinrich von Portatius	0	0
Dr. Alexander Selent	2,000	2,000
Peter Wiedemann	2,000	2,000

Management Board and Supervisory Board remuneration (IAS 24)

In relation to fiscal year 2023, the Group is affected by the disclosure obligations under IAS 24 solely as they pertain to business transactions with members of the Management Board and Supervisory Board and with former members of the Management Board. The terms and conditions of the transactions correspond to those of arms-length transactions.

The total expense recognized for Management Board remuneration in accordance with IFRS was €1,135k (prior year: €1,885k). €985k (prior year: €936k) consisted of fixed remuneration and €457k (prior year: €228k) to single-year variable remuneration. An amount of €307k was recognized as income in relation to long-term share-based payment for fiscal years 2021 to 2023 (prior year: expense of €584k). A total of €1,143k (prior year: €1,421k) was recognized in other liabilities and €100k (prior year: €129k) directly in equity for the future disbursement of long-term share-based payment for the members of the Management Board active as of December 31, 2023. In addition, the total expenses include €0k (prior year: €138k) relating to early termination of a Management Board contract.

The total expense recognized for remuneration of the Supervisory Board in accordance with IFRS was €678k (prior year: €652k). The expense recognized for fixed remuneration was €379k (prior year: €376k) and that recognized for single-year variable remuneration was €15k (prior year: €0k). Other remuneration, predominantly attendance fees, amounted to a total of €273k (prior year: €245k). An amount of €11k (prior year: €32k) was recognized as expense for long-term share-based payment for fiscal years 2022 to 2024 adopted by the 2021 Annual General Meeting. In addition, €35k (prior year: €26k) was recognized in other liabilities and €7k (prior year: €5k) directly in equity for future disbursements.

Share-based payment (IFRS 2)

There are contracts in place with the members of the Management Board that provide for share-based payment in the form of a Long Term Incentive Program (LTIP). A sharebased payment arrangement in the form of an LTIP for the Supervisory Board was established by resolution of the 2021 Annual General Meetings and is made use of by Supervisory Board members Mr. Bellgardt, Dr. Liebler, Dr. Selent and Mr. Wiedemann. This is intended to give members of the Management Board and Supervisory Board additional incentives to secure the business success of the Company in the medium and long term and to seek to deliver sustained growth in shareholder value.

In order to enable the Supervisory Board to participate in WashTec AG's long-term development, the Annual General Meeting of May 18, 2021 adopted a share-based payment arrangement for the Supervisory Board with an incentive period from January 1, 2022 to December 31, 2024. In order to participate in the new share-based payment arrangement, a Supervisory Board member is required to already have held a personal investment in shares in the Company or to have made such an investment by July 31, 2022 (Chairman: 4,000 shares maximum; all others: 2,000 shares maximum). A Supervisory Board member can also participate in the LTIP with shares already purchased by the member prior to the Company's Annual General Meeting in fiscal year 2021. In that case, invested shares can also be shares with which the Supervisory Board member participated in LTIP 2018 and 2015. The amount paid out depends on percentage target attainment of certain performance targets over the term and on personal investment in Company shares. The stipulated performance targets were an EPS target, a ROCE target and a free cash flow target. The reference base for the targets comprises the key performance indicators for fiscal year 2021. Depending on whether one, several or all of the targets are fulfilled, a different multiplier applies for the cash award. This is calculated by multiplying a multiplier with the number of invested shares multiplied by the reference share price. Entitlement to the bonus payment is conditional on the Supervisory Board member still being on the Supervisory Board and still holding shares in the Company. A Supervisory Board member who is elected to the Supervisory Board after

the beginning of the incentive period may participate in the LTIP. In order to do so, the member must make a personal investment in shares in the Company, with the invested shares purchased at the latest three months after the entry into effect of the member's election to the Supervisory Board. Payment is made on the day following the Company's Annual General Meeting in fiscal year 2025. Entitlement to payment is subject to the resolutive condition that one-sixth of the cash award received under the LTIP is reinvested in shares in the Company by the eligible Supervisory Board member within three months subsequent to the Company's Annual General Meeting in fiscal year 2025 and the Supervisory Board member holds those shares for at least three years after acquiring them. The requirement to hold the shares ends if the eligible Supervisory Board member leaves the Supervisory Board during the three-year holding period.

The current share-based payment arrangement for the Management Board has an incentive period from January 1, 2021 to December 31, 2023 and consists of two components: a non-personal-investment component and an optional personal investment component.

Under the non-personal-investment component, a Management Board member can obtain a maximum cash award, at 100% target achievement, of 100% of their respective short-term variable annual target remuneration for each year of the LTIP.

An additional personal investment component provides a Management Board member with the opportunity to increase – up to a maximum of double (cash award multiplier = 2) – their cash award under the non-personal-investment component by personal investment in WashTec AG shares. Doubling the cash award requires a personal investment in the amount of 100% of the 2021 short-term variable target annual remuneration in euros by a specified cut-off date. If the personal investment is lower, the personal investment component is proportionately smaller (cash award multiplier < 2). Personal investment for the purposes of the LTIP means (euro) amounts invested in shares in the Company held personally by the Management Board member on the June 30, 2023 cut-off date. This includes any shares that the Management Board member acquired under previous LTIP programs and still holds. If a Management Board member is appointed after the start of the incentive period, the rule for the personal investment in shares of the Company required to double the entitlement under the non-personal-investment component is that the Management Board member must make a personal investment amounting to 100% of the variable target income in euros for the year in which the Management Board member takes office. A personal investment for the purposes of this program means (euro) amounts, amounting to up to 100% of the variable target income for the year in which the Management Board member takes office, invested in shares in the Company held personally by the Management Board member on June 30, 2023 (the cut-off date). The long-term share-based payment is paid at the end of the incentive period. The amount paid depends on the achievement of agreed performance targets for return on capital employed (ROCE) and total shareholder return (TSR). The two performance targets must each reach the minimum threshold of 81% set by the Supervisory Board in order to count. The ROCE target has a weighting of 70% and the TSR target has a weighting of 30% in determination of the cash award. If the Management Board member makes use of the personal investment component, payment is subject to the resolutive condition that one-sixth of the gross cash award under the LTIP with personal investment is reinvested in shares in the Company by the Management Board member within three months of the cash award falling due and that the Management Board member remains invested with that quantity of shares for at least three years after acquiring them. There are exemptions to the reinvestment requirement and the holding period in the event of the Management Board member leaving office.

These obligations were measured at fair value as required for share-based payment in accordance with IFRS 2. The long-term share-based compensation for the Management Board expires as of December 31, 2023. It is paid out after the Supervisory Board meeting adopting the financial statements in March 2024. The grant date for the Supervisory Board share-based payment arrangement with the incentive period from January 1, 2022 to December 31, 2024 is the date of the Annual General Meeting in fiscal year 2021.

Both programs constitute equity-settled share-based payment transactions in the amount of the required reinvestment of one sixth of the cash award, with the remaining portion comprising cash-settled share-based payment transactions. The equity-settled share-based payment component is recognized directly in equity. The portion comprising a cash-settled share-based payment transaction is recognized in other liabilities. The obligations from share-based payment are recognized in non-current other liabilities at fair value taking into account the remaining duration of the program.

The obligations recognized in other liabilities for the LTIP are as follows:

in €k	Dec 31, 2023	Dec 31, 2022
LTIP obligations	1,178	1,447
Total	1,178	1,447

The obligations recognized directly in equity for the LTIP are as follows:

in €k	Dec 31, 2023	Dec 31, 2022
Portion of LTIP obligation recognized directly in equity	107	134
Total	107	134

The expenses recognized for the LTIP are as follows:

in €k	2023	2022
LTIP expenses	1,285	1,582
Total	1,285	1,582

38. Events after the balance sheet date

On February 28, 2024, the Supervisory Board of WashTec AG appointed Mr. Michael Drolshagen as the Company's new Chief Technology Officer (CTO) and Chief Executive Officer (CEO) with effect from May 1, 2024. He succeeds Dr. Ralf Koeppe, whose membership of the Management Board ended by mutual agreement on February 29, 2024.

Augsburg, March 22, 2024

Sebastian Kutz
CSO/Member of the
Management Board

Andreas Pabst CFO/Member of the Management Board

Responsibility Statement

"To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the group Management Report includes a fair review of the development and performance of the business and the position of the group, together with a description of the material opportunities and risks associated with the expected development of the group."

Augsburg, March 22, 2024

Sebastian Kutz CSO/Member of the Management Board

Andreas Pabst CFO/Member of the Management Board

Further Information

Independent Auditor's Report	174
WashTec AG Annual Financial Statements (HGB Short Version) .	181
Glossary .	183
WashTec Worldwide .	185
Group Level Key Performance Indicators (KPIs) 2019 through 2023 .	186

Independent Auditor's Report

To WashTec AG, Augsburg

Report on the Audit of the Consolidated Financial Statements and of the Group Management Report

Audit Opinions

We have audited the consolidated financial statements of WashTec AG, Augsburg, and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2023, and the consolidated statement of comprehensive income, consolidated statement of profit or loss, consolidated statement of changes in equity and consolidated statement of cash flows for the financial year from 1 January to 31 December 2023, and notes to the consolidated financial statements, including material accounting policy information. In addition, we have audited the group management report of WashTec AG for the financial year from 1 January to 31 December 2023. In accordance with the German legal requirements, we have not audited the content of the statement on corporate governance pursuant to § [Article] 289f HGB [Handelsgesetzbuch: German Commercial Code] and § 315d HGB.

In our opinion, on the basis of the knowledge obtained in the audit,

• W the accompanying consolidated financial statements comply, in all material respects, with the IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to § 315e Abs. [paragraph] 1 HGB and, in compliance with these requirements, give a true and fair view of the assets, liabilities, and financial position of the Group as at 31 December 2023, and of its financial performance for the financial year from 1 January to 31 December 2023, and
• W the accompanying group management report as a whole provides an appropriate view of the Group's position. In all material respects, this group management report is consistent with the consolidated financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development. Our audit opinion on the group management report does not cover the content of the statement on corporate governance referred to above.

Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the consolidated financial statements and of the group management report.

Basis for the Audit Opinions

We conducted our audit of the consolidated financial statements and of the group management report in accordance with § 317 HGB and the EU Audit Regulation (No. 537/2014, referred to subsequently as "EU Audit Regulation") in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are further described in the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements and of the Group Management Report" section of our auditor's report. We are independent of the group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the consolidated financial statements and on the group management report.

Key Audit Matters in the Audit of the Consolidated Financial Statements

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the financial year from 1 January to 31 December 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon; we do not provide a separate audit opinion on these matters.

In our view, the matter of most significance in our audit was as follows:

1 Recoverability of goodwill

Our presentation of this key audit matter has been structured as follows:

1 Matter and issue

2 Audit approach and findings

3 Reference to further information

Hereinafter we present the key audit matter:

1 Recoverability of goodwill

1 In the Company's consolidated financial statements Goodwill amounting in total to EUR 43,289 thousand (16,0 % of total assets) is reported. Goodwill is tested for impairment by the Company once a year or when there are indications of impairment to determine any possible need for write-downs. Impairment testing is carried out at the level of the groups of cash-generating units to which the relevant goodwill has been allocated. The carrying amount of the relevant cash-generating units, including goodwill, is compared with the corresponding recoverable amount in the context of the impairment test. The calculation of the recoverable amount generally employs the value in use. The present value of the future cash flows from the respective group of cash-generating units normally serves as the basis of valuation. Present values are calculated using discounted cash flow models. For this purpose, the adopted medium-term business plan of the Group forms the starting point for future projections based on assumptions about longterm rates of growth. Expectations relating to future market developments and assumptions about the development of macroeconomic factors on the business activities of the Group are also taken into account. The discount rate used is the weighted average cost of capital for the relevant group of cash-generating units. The im-pairment test determined that no write-downs were necessary.

The outcome of this valuation exercise is dependent to a large extent on the estimates made by the executive directors with respect to the future cash inflows from the respective group of cash-generating units, the discount rate used, the rate of growth and other assumptions, and is therefore subject to considerable uncertainty. Against this background and due to the complex nature of the valuation, this matter was of particular significance in the context of our audit.

2 As part of our audit, we assessed the methodology employed for the purposes of performing the impairment test, among other things. After matching the future cash inflows used for the calcu-lation against the adopted medium-term business plan of the Group, we assessed the appropri-ateness of the calculation, in particular by coordinating it with general and sector-specific market expectations. We discussed and examined supplementary adjustments to the medium-term business plan for the purposes of the impairment test with the members of the Company's staff responsible. We also assessed whether the basis for including the costs of Group functions was accurate. In the knowledge that even relatively small changes in the discount rate applied can have a material impact on the value of the entity calculated in this way, we focused our testing in particular on the parameters used to determine the discount rate applied, and evaluated the measurement model. In order to reflect the uncertainty inherent in the projections, we assessed the sensitivity analyses performed by the Company and carried out our own sensitivity analyses with respect to those groups of cash-generating units whose carrying amount was only slightly greater than the recoverable amount. Taking into account the information available, we determined that the carrying amounts of the cash-generating units, including the goodwill, were adequately covered by the discounted future cash flows.

Overall, the measurement inputs and assumptions used by the executive directors are in line with our expectations and are also within the ranges considered by us to be reasonable.

³ The Company's disclosures on the "Goodwill" balance sheet item are contained in sections 5, 14 in the notes to the consolidated financial statements. Other Information

The executive directors are responsible for the other information. The other information comprises the following non-audited parts of the group management report:

• W the statement on corporate governance pursuant to § 289f HGB and § 315d HGB included in section "8 Corporate Governance Declaration" of the group management report
• W the information contained in section "5 Internal control system and risk management system" of the group management report that is marked as unaudited

The other information comprises further

• W the separate non-financial report to comply with §§ 289b to 289e HGB and with §§ 315b to 315c HGB
• W all remaining parts of the annual report excluding cross-references to external information – with the exception of the audited consolidated financial statements, the audited group management report and our auditor's report

Our audit opinions on the consolidated financial statements and on the group management report do not cover the other information, and consequently we do not express an audit opinion or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the other information mentioned above and, in so doing, to consider whether the other information

• W is materially inconsistent with the consolidated financial statements, with the group management report disclosures audited in terms of content or with our knowledge obtained in the audit, or
• W otherwise appears to be materially misstated.

Responsibilities of the Executive Directors and the Supervisory Board for the Consolidated Financial Statements and the Group Management Report

The executive directors are responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to § 315e Abs. 1 HGB and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial position, and financial performance of the Group. In addition, the executive directors are responsible for such internal control as they have determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.

In preparing the consolidated financial statements, the executive directors are responsible for assessing the Group's ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.

Furthermore, the executive directors are responsible for the preparation of the group management report that, as a whole, provides an appropriate view of the Group's position and is, in all material respects, consistent with the consolidated financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a group management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the group management report.

The supervisory board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated financial statements and of the group management report.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements and of the Group Management Report

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether the group management report as a whole provides an appropriate view of the Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor's report that includes our audit opinions on the consolidated financial statements and on the group management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with § 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material misstatement. 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 consolidated financial statements and this group management report.

We exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• W Identify and assess the risks of material misstatement of the consolidated financial statements and of the group management report, 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 audit opinions. 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 controls.
• W Obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and measures (systems) relevant to the audit of the group management report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an audit opinion on the effectiveness of these systems.
• W Evaluate the appropriateness of accounting policies used by the executive directors and the reasonableness of estimates made by the executive directors and related disclosures.
• W Conclude on the appropriateness of the executive directors' 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 Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are inadequate, to modify our respective audit opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.
• W Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to § 315e Abs. 1 HGB.
• W Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express audit opinions on the consolidated financial statements and on the group management report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinions.
• W Evaluate the consistency of the group management report with the consolidated financial statements, its conformity with German law, and the view of the Group's position it provides.
• W Perform audit procedures on the prospective information presented by the executive directors in the group management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the executive directors as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate audit opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information.

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.

We also provide those charged with governance with a statement that we have complied with the relevant independence requirements, and communicate with 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 consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.

Other legal and regulatory requirements

Report on the Assurance on the Electronic Rendering of the Consolidated Financial Statements and the Group Management Report Prepared for Publication Purposes in Accordance with § 317 Abs. 3a HGB

Assurance Opinion

We have performed assurance work in accordance with § 317 Abs. 3a HGB to obtain reasonable assurance as to whether the rendering of the consolidated financial statements and the group management report (hereinafter the "ESEF documents") contained in the electronic file WashTec_AG_KA_KLB_ESEF_2023-12-31.zip and prepared for publication purposes complies in all material respects with the requirements of § 328 Abs. 1 HGB for the electronic reporting format ("ESEF format"). In accordance with German legal requirements, this assurance work extends only to the conversion of the information contained in the consolidated financial statements and the group management report into the ESEF format and therefore relates neither to the information contained within these renderings nor to any other information contained in the electronic file identified above.

In our opinion, the rendering of the consolidated financial statements and the group management report contained in the electronic file identified above and prepared for publication purposes complies in all material respects with the requirements of § 328 Abs. 1 HGB for the electronic reporting format. Beyond this assurance opinion and our audit opinion on the accompanying consolidated financial statements and the accompanying group management report for the financial year from 1 January to 31 December 2023 contained in the "Report on the Audit of the Consolidated Financial Statements and on the Group Management Report" above, we do not express any assurance opinion on the information contained within these renderings or on the other information contained in the electronic file identified above.

Basis for the Assurance Opinion

We conducted our assurance work on the rendering of the consolidated financial statements and the group management report contained in the electronic file identified above in accordance with § 317 Abs. 3a HGB and the IDW Assurance Standard: Assurance Work on the Electronic Rendering, of Financial Statements and Management Reports, Prepared for Publication Purposes in Accordance with § 317 Abs. 3a HGB (IDW AsS 410 (06.2022)) and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further described in the "Group Auditor's Responsibilities for the Assurance Work on the ESEF Documents" section. Our audit firm applies the IDW Standard on Quality Management: Requirements for Quality Management in the Audit Firm (IDW QMS 1 (09.2022)).

Responsibilities of the Executive Directors and the Supervisory Board for the ESEF Documents

The executive directors of the Company are responsible for the preparation of the ESEF documents including the electronic rendering of the consolidated financial statements and the group management report in accordance with § 328 Abs. 1 Satz 4 Nr. [number] 1 HGB and for the tagging of the consolidated financial statements in accordance with § 328 Abs. 1 Satz 4 Nr. 2 HGB.

In addition, the executive directors of the Company are responsible for such internal control as they have considered necessary to enable the preparation of ESEF documents that are free from material non-compliance with the requirements of § 328 Abs. 1 HGB for the electronic reporting format, whether due to fraud or error.

The supervisory board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.

Group Auditor's Responsibilities for the Assurance Work on the ESEF Documents

Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material non-compliance with the requirements of § 328 Abs. 1 HGB, whether due to fraud or error. We exercise professional judgment and maintain professional skepticism throughout the assurance work. We also:

• W Identify and assess the risks of material non-compliance with the requirements of § 328 Abs. 1 HGB, whether due to fraud or error, design and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide a basis for our assurance opinion.
• W Obtain an understanding of internal control relevant to the assurance work on the ESEF documents in order to design assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these controls.
• W Evaluate the technical validity of the ESEF documents, i.e., whether the electronic file containing the ESEF documents meets the requirements of the Delegated Regulation (EU) 2019/815 in the version in force at the date of the consolidated financial statements on the technical specification for this electronic file.
• W Evaluate whether the ESEF documents provide an XHTML rendering with content equivalent to the audited consolidated financial statements and to the audited group management report.

W Evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Articles 4 and 6 of the Delegated Regulation (EU) 2019/815, in the version in force at the date of the consolidated financial statements, enables an appropriate and complete machine-readable XBRL copy of the XHTML rendering.

Further Information pursuant to Article 10 of the EU Audit Regulation

We were elected as group auditor by the annual general meeting on 15 May 2023. We were engaged by the supervisory board on 9 December 2023. We have been the group auditor of the WashTec AG, Augsburg, without interruption since the financial year 2008.

We declare that the audit opinions expressed in this auditor's report are consistent with the additional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).

Reference to an other matter – use of the auditor's report

Our auditor's report must always be read together with the audited consolidated financial statements and the audited group management report as well as the assured ESEF documents. The consolidated financial statements and the group management report converted to the ESEF format – including the versions to be filed in the company register – are merely electronic renderings of the audited consolidated financial statements and the audited group management report and do not take their place. In particular, the "Report on the Assurance on the Electronic Rendering of the Consolidated Financial Statements and the Group Management Report Prepared for Publication Purposes in Accordance with § 317 Abs. 3a HGB" and our assurance opinion contained therein are to be used solely together with the assured ESEF documents made available in electronic form.

German public auditor responsible for the engagement

The German Public Auditor responsible for the engagement is Jürgen Schumann.

Munich, March 22 2024

PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft

Jürgen Schumann ppa. Stefan Postenrieder Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German Public Auditor)

Financial Statements of WashTec AG – Balance Sheet (HGB)

Assets		Dec 31, 2023	Dec 31, 2022
in €k
A. Non-current assets
I. Intangible assets
	Purchased concessions, industrial and similar rights and assets,
and licenses in such rights and assets		27	38
II. Property, plant and equipment
Fixtures and fittings		89	95
III. Financial assets
Shares in affiliated companies		128,049	128,049
		128,164	128,181
B. Current assets
I. Receivables and other assets
1.	Receivables from affiliated companies	22,492	29,717
2. Other assets		16,466	11,222
		38,958	40,939
C. Prepaid expenses		39	3
Assets		167,161	169,122

Equity and Liabilities	Dec 31, 2023	Dec 31, 2022
in €k
A. Equity
I. Subscribed capital	40,000	40,000
Treasury shares (notional amount)	–1,702	–1,702
	38,298	38,298
II. Capital reserves	90,845	90,845
III. Retained earnings	30,074	29,804
	159,217	158,947
B. Provisions
1. Tax provisions	1,165	4,675
2. Other provisions	3,716	3,244
	4,880	7,919
C. Liabilities
1. Trade payables	816	33
2. Liabilities to affiliated companies	1,573	1,612
3. Other liabilities	676	611
of which taxes €673k (prior year: €608k)
of which liabilities to shareholders €2k (prior year: €2k)
	3,064	2,256
Equity and liabilities	167,161	169,122

Financial Statements of WashTec AG – Income Statement (HGB)

in €k	2023	2022
1. Revenue	3,544	2,723
2. Other operating income	193	190
of which from affiliated companies €160k (prior year: €141k)
of which from currency translation €0k (prior year: €1k)
	3,737	2,912
3. Cost of materials (cost of sales)
Cost of purchased services	–45	–52
4. Personnel expenses
a) Wages and salaries	–1,956	–2,038
b) Social security, pension and other benefit costs	–67	–52
of which for pensions €–6k (prior year: €–8k)
	–2,023	–2,090
5. Amortization, depreciation and impairment of intangible assets and property, plant and equipment	–32	–30
6. Other operating expenses	–3,849	–2,786
of which from currency translation € 0k (prior year: €–4k)
	–5,948	–4,958
	–2,211	–2,045
7. Income from profit and loss pooling agreements	24,208	35,818
8. Expenses from profit and loss pooling agreements	–76	0
9. Income from participating interests	13,000	4,500
of which from affiliated companies €13,000k (prior year: €4,500k)
10. Other interest and similar income	157	130
of which from affiliated companies €151k (prior year: €99k)
11. Interest and similar expenses	–40	–69
of which to affiliated companies €–18k (prior year: €–31k)
	37,248	40,379
12. Income taxes	–5,323	–10,016
13. Profit after tax	29,714	28,318
14. Other taxes	–3	–12
15. Net income for the period	29,711	28,307
16. Profit carried forward	363	1,498
17. Distributable profit	30,074	29,804

Glossary

AB	Aktiebolag (Swedish company form)
Accident rate	Work accidents/million hours worked
AG	Aktiengesellschaft (German company form)
AktG	Aktiengesetz (German Stock Corporation Act)
AS	Aksjeselskap (Norwegian company form)
A/S	Aktieselskab (Danish company form)
B.V.	Besloten Vennootschap met beperkte aansprakelijkheid (Dutch company form)
CAD	Canadian dollar
CAGR	Compound annual growth rate
Capital employed	Non-current assets including goodwill and right-of-use assets + NOWC, calculated as the average over five quarters
Cash flow	Total inflows and outflows of cash and cash equivalents in a period
Cash funds	Cash and cash equivalents plus bank overdrafts and interest-bearing short-term loans
CMS	Compliance Management System
CNY	Chinese renminbi yuan
Code	German Corporate Governance Code
Conveyor tunnel system	In conveyor tunnel systems, the vehicle is transported by a conveyor past fixed washing and drying equipment; this makes for increased vehicle throughput per hour compared with a gantry carwash
Corporate governance	Framework for responsible corporate management and control geared to sustainability
CSR	Corporate social responsibility
CSRD	Corporate Sustainability Reporting Directive (CSRD); new EU directive for sustainability reporting with first-time application from fiscal year 2024 onwards

Dividend yield	Distributed dividend as a percentage of the quoted stock price at the time. The dividend yield indicates shareholders' yield on an investment in the shares.
Earnings per share (EPS)	Net income/weighted average shares outstanding
EBIT	Earnings before interest and taxes
EBIT margin	EBIT/revenue
EBT	Earnings before taxes
Equity	Funds made available to the entity by owners by paying in and/or by contribution or from retained earnings
Equity ratio	Equity/total assets
EU	European Union
EURIBOR	Euro Interbank Offered Rate; reference rate for euro term deposits in interbank business
€STR	Euro Short-Term Rate; the European Central Bank's reference rate for euros, based on Eurosystem money market statistics
Financial covenants	Requirements to be complied with in connection with a loan
Financial liabilities	Financial liabilities are calculated as follows: interest-bearing loans + lease liabilities
Free cash flow	Free cash flow available for dividend distributions, debt repayment or reinvestment; free cash flow is calculated as follows: net cash inflow from operating activities – net cash outflow from investing activities
Gantry carwash	In a gantry carwash, washing and drying is performed by a railed gantry that moves back and forth several times over the stationary vehicle
GmbH	Gesellschaft mit beschränkter Haftung (German company form)
GRI	Global Reporting Initiative; standard setter and standards for the preparation of sustainability reports

Glossary

Gross profit	Revenue less cost of sales
Gross profit margin	Gross profit/revenue
HGB	Handelsgesetzbuch (German Commercial Code)
HSE	Health, safety and environment
IAS	International Accounting Standards
IASB	International Accounting Standards Board
ICS	Internal control system
IFRIC	International Financial Reporting Interpretations Committee
IFRS	International Financial Reporting Standards; internationally harmonized and applied financial reporting standards compiled by the International Accounting Standards Board (IASB)
IMF	International Monetary Fund
Inc.	Incorporated (United States company form)
LPR	Loan Prime Rate; the Chinese central bank's reference rate for one-year loans
Ltd.	Limited (United Kingdom company form)
LTIP	Long-term incentive program; long-term share-based remuneration
Managers' transactions	Managers' own transactions
Net financial debt	Net financial debt is calculated as follows: cash and cash equivalents less financial liabilities
NOWC	Net operating working capital (NOWC) is calculated as follows: trade receivables + inventories – trade payables + prepayments on orders

Pty Ltd.	Proprietary limited (Australian company form)
RMS	Risk management system
ROCE	Return on capital employed is the ratio of EBIT to capital employed and is calculated as follows: EBIT/capital employed
S.A.S.	Société par actions simplifiée (French company form)
S.A.U.	Sociedad Anónima Unipersonal (Spanish company form)
S.r.I.	Società a responsabilità limitata (Italian company form)
s.r.o.	Společnost s ručením omezeným (Czech company form)
Self-service carwash	Self-service wash bays, single or multiple-bay wash systems where customers wash their vehicles themselves using a high-pressure lance or brush
SOFR	Secured Overnight Financing Rate; Reference interest rate for the US dollar currency, which is based on the transactions of the US dollar repo market
SP. z.o.o.	Spółka z ograniczoną odpowiedzialnością (Polish company form)
Total shareholder return	Total shareholder return (TSR) is the total return achieved by a shareholder on an investment in a share over a specified period of time and is expressed as a percent age of the invested capital. It is calculated as follows: [(final share price– initial share price) + dividend]/initial share price
USA	United States of America
USD	US dollar
WashTec	WashTec refers to the WashTec Group unless it is expressly indicated that it refers to a specific company
WpHG	Wertpapierhandelsgesetz (German Securities Trading Act)

WashTec worldwide – Subsidiaries

Australia

WashTec Australia Pty. Ltd. Suite 6.03, 25 Restwell Street, Bankstown NSW 2200 PO Box 268 Bankstown NSW 1885 Australia 2044 Tel. +61 2 8394 5000 info@washtec.com.au

Austria

WashTec Cleaning Technology GmbH Wehlistraße 27 b A-1200 Wien Phone +43 1 358 6574 office@washtec.at

Canada

WTMVII Cleaning Technologies Canada, Inc. 5035 North Service Road, Unit D11-13 Burlington, Ontario L7L 5V2 Phone +1 8666 589 274 markvii@markvii.net

Czech Republic WashTec Cleaning Technology s. r. o. Prumyslová zòna Mexiko U Mexika 1309

33023 Nýrany Phone +42 0373 737 610 Info-cz@washtec.eu

Denmark

WashTec A/S Guldalderen 10 DK-2640 Hedehusene Phone +45 46 8987 5539 mdale@washtec.no

France

WashTec France S.A.S. 200 rue du Grand Bouland FR-45760 Boigny sur Bionne Phone +33 252 8800 43 washtec@washtec.fr

Italy

WashTec S.r.l. Via Achille Grandi 16/E I-15033 Casale Monferrato Phone +39 0142 5253 08 info@washtec.it

Netherlands

WashTec Benelux Industrieterrein Laansinghage Radonstraat 9 NL-2718 SV Zoetermeer Phone +31 798 080 157 info@washtec.nl

New Zealand WashTec New Zealand Limited 2 Te Apunga Place, Mount Wellington, Auckland New Zealand 1060 Phone +64 800 507 790 finance@washtec.com.au

Norway

WashTec Bilvask Slependveien 6 N-1396 Billingstad Phone +47 22 918 180 md@washtec.no

Poland WashTec Polska Sp. z o.o. ul. Sienna 73 PL-00-833 Warsaw Phone +48 782 402 999 biuro@washtec.de

Sweden WashTec Nordics AB Box 61 SE-51781 Bollebygd Phone +46 33 7002600 mdale@washtec.no

Spain

WashTec Spain, S.A.U. C/Isla Graciosa, 1 Edificio Ancora ES-28703 San Sebastián de los Reyes Madrid Spain Phone +34 91 6636 070 info@washtec.es

United Kingdom

WashTec UK Ltd. Unit 14A Oak Industrial Park Chelmsford Rd. Great Dunmow Essex CM6 1XN, UK Phone +44 1371 8788 00 enquiries@washtec-uk.com

USA

Mark VII Equipment Inc. 5981 Tennyson Street CO-80003 Arvada, USA Phone +1 303 4324 910 markvii@markvii.net

Distributors

An up-to-date list of our international sales partners can be found online at www.washtec.de

Group Level Key Performance Indicators (KPIs) 2019 through 2023

	2019	2020	2021	2022	2023
€m	436.5	378.7	430.5	482.2	489.5
€m	36.3	20.1	45.7	38.0	41.9
%	8.3	5.3	10.6	7.9	8.6
€m	35.7	18.8	44.8	37.3	38.4
€m	22.3	13.3	31.1	26.4	28.0
€	1.66	0.99	2.32	1.97	2.09
€	–	2.30	2.90	2.20	2.201
€m	15.0	45.6	42.3	16.2	46.1
€m	274.9	244.0	267.0	284.5	271.3
€m	84.5	96.2	98.4	88.1	85.8
people	1,880	1,798	1,767	1,806	1,768

1 Dividend proposal to the Annual General Meeting 2024

2 Average for the year

Mar 27, 2024	Annual Report 2023
May 06, 2024	Quarterly statement Q1 2024
May 14, 2024	Annual General Meeting 2024
Aug 05, 2024	Q2 Report 2024
Nov 06, 2024	Quarterly statement Q1–3 2024

Financial Calendar Publishing Information Contact

Publisher	WashTec AG Argonstraße 7 D-86153 Augsburg
Design/Layout	Büro Benseler
Text	WashTec AG
Photo	altro – die Fotoagentur, mocean movies e.K., WashTec AG

www.washtec.de

washtec@washtec.com

WashTec AG Argonstrasse 7 86153 Augsburg Germany Phone +49 821 5584-0 www.washtec.de washtec@washtec.com

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