Marley Spoon : Annual financial report 2023

ANNUAL REPORT 2023

IMPORTANT INFORMATION:

Marley Spoon Group SE is a European company (Société Européenne, SE), incorporated under the laws of the Grand Duchy of Luxembourg having its registered office at 9, rue de Bitbourg, L-1273 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés de Luxembourg) under number B257664.

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MARLEY SPOON GROUP KEY PERFORMANCE INDICATORS (KPIs)	2
FROM THE CEO	4
FROM THE CHAIRMAN	6
GROUP MANAGEMENT REPORT OF MARLEY SPOON GROUP SE	8
1 Overview	8
2 Business Combination	8
3 Business Model & Strategy	8
4	Economic Position & Position of the Group	11
5	Risk and Opportunities Report	16
6	Outlook	............................................................................................................................................................................................................................	21
OTHER REPORTING ITEMS	22
2		Directors' Report	22
3		Corporate Governance Statement	24
GROUP CONSOLIDATED FINANCIAL STATEMENTS	25
1		Financial Statements	25
2		Description of the business & segment information	29
3		Revenue	31
4		Other income and expense items	32
5		Income tax expense	33
6		Financial assets and financial liabilities	33
7		Non-financial assets and liabilities	40
8		Equity	46
9		Critical estimates and judgements	50
10	Financial risk management	51
11	Group structure	53
12	Contingencies & commitments	54
13	Related party transactions	54
14	Earnings per share	56
15	Assets pledged as security	56
16	Chefgood acquisition	56
17	Goodwill	59
18	Summary of significant accounting policies	60
19	Subsequent events	69
RESPONSIBILITY STATEMENT	70
REMUNERATION REPORT	71
1		GENERAL	71
2		THE REMUNERATION SYSTEM OF THE COMPANY	71
3		REMUNERATION OF THE MEMBERS OF THE MANAGEMENT BOARD	72
4		REMUNERATION OF THE MEMBERS OF THE SUPERVISORY BOARD	73
5		COMPARATIVE PRESENTATION OF THE ANNUAL CHANGES IN BUSINESS DEVELOPMENT OF MARLEY SPOON GROUP SE	74
INDEPENDENT AUDITORS' OPINION	75

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MARLEY SPOON GROUP KEY PERFORMANCE INDICATORS (KPIs)

Group Financial KPIs

	Group		2023		2022			+/- (%)
	€ millions
	Net revenue	328.5		401.2		(18.1)%
	Net revenue on a constant currency basis	343.6		401.2		(14.4)%
	CM %	31.6%		28.7%				2.9 pts
	Operating EBITDA	(3.6)		(8.8)		58.8%
	Operating EBITDA %	(1.1%)		(2.2%)				1.1 pts
	Cash flow from change in net working capital	(4.7)		(6.6)		29.4%
	Cash flow from operating activities (CFOA)	(13.2)		(18.7)		29.5%
	Cash & cash equivalents	12.7		19.0		(32.9)%
Segment Financial KPI
	Australia	2023		2022				+/- (%)
	€ millions
	Net revenue	136.0		154.3		(11.8)%
	Net revenue on a constant currency basis	146.6		154.3		(5.0)%
	Contribution margin (CM)	41.8		47.8		(6.0)
	CM %	30.7%		31.0%				(0.3 pts)
	Operating EBITDA	7.9		8.8		(0.9)
	Operating EBITDA %	5.8%		5.7%				0.1 pts
	United States	2023		2022				+/- (%)
	€ millions
	Net revenue	158.8		197.4		(19.6)%
	Net revenue on a constant currency basis	163.4		197.4		(17.3)%
	Contribution margin (CM)	53.9		57.8		(3.9)
	CM %	33.9%		29.3%				4.6 pts
	Operating EBITDA	11.7		11.9		(0.2)
	Operating EBITDA %	7.4%		6.0%				1.4 pts

Europe

• millions
  Net revenue Contribution margin (CM)
  CM %
  Operating EBITDA

Operating EBITDA %

Operating EBITDA excluding headquarter costs

2023	2022
33.7	49.5
8.1	9.7
23.9%	19.7%
(22.6)	(29.5)
(67.2%)	(60.0%)
(2.5)	(7.5)

+/- (%)

(32.0%)

(1.6)

4.2 pts

6.9

(7.2) pts

5.0

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Other KPIs
	2023	2022	+/- (%)
Active customers (thousands)*	245		313		(21.7%)
Active subscribers (thousands)*	193		249		(22.5%)
Average order value (EUR, net)	59.07		55.78		5.9%
Average order value (EUR, net) at constant	61.79		55.78		10.8%
currency
Total orders (millions)	5.6	7.2	(22.7%)
Meals sold (millions)	50.5		62.8		(19.6%)
Average meals per order (thousands)	9,080		8,729		4.0%
Cost per acquisition (CAC, EUR)**	87.12	66.71	30.6%
% revenue from repeat customers	95%		95%		-

*As at Q4 2023

**New methodology applied in FY 2023 that considers an acquisition at time of delivery, not sign-up. On a like-for-like basis, 2023 CAC would be EUR 76.01, representing a 13.9% increase versus FY 2022.

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FROM THE CEO

Luxembourg, April 2024

Dear Shareholders,

2023 was a challenging year for Marley Spoon SE, Marley Spoon Group's operating subsidiary, with inflation and economic uncertainty impacting customer sentiment, which led to lower consumer spending for groceries in general and meal kits in particular. The team at Marley Spoon SE responded by keeping their heads down and focusing so we could continue to do what we love: helping our customers and their loved ones to live healthy lives through delicious and nutritious food.

While the soft consumer demand led to a reduction in revenue, Marley Spoon SE was able to expand contribution margin and improve Operating EBITDA year over year, ending with a profitable fourth quarter.

Marley Spoon offers a convenient and competitively priced alternative to grocery shopping that satisfies customers' ambitions to serve tasty and healthy meals at home. The ongoing direct relationship with customers and the data collected about their recipe choices and food preferences allow Marley Spoon to continuously improve its service offering, which in turn further strengthens customer loyalty. With customers at the center of everything Marley Spoon does, we intend to continue to innovate and evolve our business model.

Revenue contraction due to challenging consumer environment

In 2023 Marley Spoon's business contracted by 14.4% in constant currency. This was driven on the one hand by lower order frequency of the existing customer base stemming from budget and value-for-money concerns in H1 and on the other hand by lower marketing efficiency through the first three quarters of the year that caused Marley Spoon to reduce marketing spend y-o-y by 13%.

Strong expansion of contribution margins

Despite the lower revenue Marley Spoon expanded margins by 290 basis points, reaching record contribution margin of 31.6% for the full year driven by operational improvements, especially in our US and European business, as well as pricing changes across our brands.

Cost reduction programs and improved Operating EBITDA

In order to improve Operating EBITDA y-o-y despite the softer revenue, the Company looked for ways to operate more leanly and effectively which resulted in two cost reduction initiatives, one in Q1 and the other in Q4 of 2023. Consequently, G&A adjusted for one- off restructuring costs and non-recurring costs associated with the business combination (transaction costs and listing fee), was reduced by 11% y-o-y and Marley Spoon SE entered the new year with a lower fixed cost base which should contribute to its financial performance in 2024.

Menu expansion and expanded customer value proposition

We have learned that an attractive and personalized recipe offering improves customer loyalty and increases average order value. Consequently, over the years we have been a leader in recipe choice and flexibility in all regions in which we operate. In 2023 we maintained this leadership as we continued to aspire to offer a personalized meal solution that serves each of our customers based on their individual preferences. Furthermore, in reaction to the economic environment we expanded our offering of saver recipes to provide a solution to budget-conscious customer segments. The continuous improvement of our product offering throughout last year led to an increase in meals per order which led to higher basket sizes as our customers were able to find more choices that suit their families' tastes and preferences.

Sustainability

Marley Spoon SE's business model has an advantage compared to the traditional supermarket retail model. Whereas supermarkets are facing food waste due to the short shelf life of perishable items they have in stock, Marley Spoon's made-to-order supply chain avoids most food waste. Additionally, according to a 2019 study by the University of Michigan, cooking with a meal kit reduces greenhouse gas emissions on average by one-third, compared to a traditional supermarket's emissions. In 2023 Marley Spoon SE published our third Sustainability Report to share our commitment to building an ever more sustainable business.

Strategic focus and 2024 outlook

In 2024 Marley Spoon SE will sharpen its strategic product focus to continue to meet the mealtime needs of our customers, be it through our meal kit or our ready-to-heat brands. We believe that such a value proposition can support organic growth. At the same time we see the opportunity to drive growth through market consolidation, leading to increased scale and efficiency.

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We began the year by seeing a stabilization of consumer demand as inflation rates have come down and consumers seem to have adapted their purchasing allocations. We therefore will continue to focus on attracting new subscribers at favorable unit economics and acquisition costs. At the same time we will drive the integration of our newly acquired brand bistroMD while developing our strategic asset-light manufacturing and fulfillment partnership for the US with FreshRealm.

As we are entering now the 10th year since we started Marley Spoon SE, I believe we are still at the beginning of our journey to be a global leader providing meals to customers in a healthy and sustainable way. I appreciate your continued trust and support on this ongoing journey and would also like to thank the team at Marley Spoon for their hard work and dedication.

Fabian Siegel

Founder & Chief Executive Officer

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FROM THE CHAIRMAN

Luxembourg, April 2024

Dear Shareholders,

I am pleased to present to you the Annual Report for the fiscal year 2023, a year that was very successful, driven by the closing of the Business Combination with Marley Spoon SE allowing for the SPAC to invest in an innovative and well-positioned food tech business. The combined business was nevertheless challenged by its macroeconomic environment.

I would like to share our achievements, setbacks, and the strategic direction we are charting for the future.

Highlights of the year:

• Completion of a business combination with Marley Spoon SE, a leading global subscription-basedmeal kit provider
• Equity raise by Marley Spoon SE of EUR 35 million, a sign of support of the business combination and in the Company's new subgroup;
• Tender offer by the Company in late 2023 with our shareholding in Marley Spoon SE reaching 95% upon settlement of the offer; delisting of Marley Spoon SE from the ASX intended in 2024;
• Growing contribution margin despite inflationary pressures and a volatile operating environment, with significant year-over- year improvement, especially in the US, Marley Spoon's largest market, but also in Europe with efficiency gains.

We continued to drive innovation in Marley Spoon's service offerings by expanding and personalizing menu choice while offering additional convenience grocery items to existing customers, thereby expanding basket size. Average order value increased 6% for the full year and meals per order increased 4%, suggesting that customers were adding more to their boxes.

Financial overview

In 2023, Marley Spoon faced significant macroeconomic headwinds as did many others in the industry, with high inflation followed by rising interest rates leading to uncertain buying behavior, most notably in Europe, with Germany in particular falling into recession. However, despite these challenges, I am proud to report that Marley Spoon demonstrated resilience and adaptability, with the Company further strengthening its focus on profitability and cash preservation. Key results for the period included:

• Net revenue: EUR 328.5 million, reflecting a decrease of 18.1% compared to the previous year, mainly driven by the macroeconomic situation. In constant currency terms, the decline was a bit more moderate at (14.4%);
• Contribution margin: we saw a notable improvement of 2.9 percentage points compared to the previous year to 31.6%. This positive shift was a result of strategic cost management and implementing operational efficiencies across the organization;
• Operating EBITDA: despite the challenges and the revenue decrease, we achieved an Operating EBITDA of EUR (3.6) million, an improvement of EUR 5.2 million compared to the previous year. This positive trajectory is indicative of our commitment to boosting profitability and operational effectiveness across the overall business.

The Management Board

In April 2023, Ms. Jennifer Bernstein, member of the Management Board (Vorstand) and Chief Financial Officer of Marley Spoon SE, extended her Marley Spoon SE service agreement to 31 March 2026 and in July 2023 became a member of the Management Board of Marley Spoon Group. In October 2023, we announced the appointment of Mr. Daniel Raab as member of the Management Board (Vorstand) and Chief Operating Officer of Marley Spoon SE, succeeding Mr. Rolf Weber as Management Board member of Marley Spoon SE and joining the Management Board of the Marley Spoon Group SE. Finally, we extended the appointment of Mr. Fabian Siegel as Chairman of the Management Board (Vorstand) and Chief Executive Officer to 31 August 2028 for both Marley Spoon SE as well as Marley Spoon Group SE.

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Supervisory Board composition

In H2 2023, on the back of the business combination agreement and the subsequent tender offer with the intent to ultimately delist Marley Spoon from the ASX, a new board was installed:

• Mr. Christian Gisy became Chairman of the Company's Supervisory Board on 30 June 2023. He is also Chairman of the
  Supervisory Board of Marley Spoon SE;
• Mr. Alexander Kudlich (formerly director of 468 SPAC II SE) was appointed as a member of the Supervisory Board on 30 June 2023. He also joined the Supervisory Board of Marley Spoon SE as non-executive Director, effective 11 September 2023;
• Mr. Yehuda Shmidman was appointed as a member of the Supervisory Board on 30 June 2023.
• Ms. Judith Jungmann and Ms. Erika Söderberg Johnsson, Chair of the Nominations and Remunerations Committee and Chair of the Audit and Risk Committee, respectively, of Marley Spoon SE, act as board observers for Marley Spoon Group SE.

Sustainability

Our sustainability goals are based on where Marley Spoon can make a difference. We prioritize the most material, environmental, social, and governance issues. The CEO, with the support of the Head of Sustainability, has the accountability for defining and meeting our goals and ensuring progress throughout the organization while the Supervisory Board oversees the progress against sustainability targets and the application of the relevant standards. The Company's 2023 Non-Financial Report (formerly the Sustainability Report) will be published independently of the Annual Report.

Marley Spoon's environmental goals focus on management and reduction of carbon emissions, reduction of waste and food waste

and development of more sustainable exclusive packaging, while our social goals focus on building a diverse and inclusive global company culture and caring for our team members' overall well-being, health, and safety.

Areas of focus

The Supervisory Board anticipates that as in 2023 the business will continue to benefit from the following in 2024:

• focusing intensely on the core operations of the business, simplifying and investing where possible;
• act as market consolidator where opportunities arise;
• disrupting with innovation in production and fulfillment, thereby redefining the core operating model;
• a focus on our people, building internal capabilities, leadership and accountability;
• reviewing options to refinance the Company's debt as the underlying profitability and cash position improve.

In the meantime, we remain passionate about the potential of the business to meet the daily mealtime needs of our customers in a healthy and sustainable way.

Acknowledgments:

I extend my heartfelt gratitude to our dedicated team whose hard work and resilience have been crucial during these difficult times.

Thank you, our valued shareholders, for your trust and confidence in Marley Spoon. We are resolute in our dedication to delivering long- term value and ensuring transparency in our communication with you.

In conclusion, I am optimistic about the future of our Company. We are confident that the strategic decisions made under the business combination, and the lessons learned in 2023 will pave the way for a more prosperous and resilient future.

Christian Gisy

Chairman/Vorsitzende

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GROUP MANAGEMENT REPORT OF MARLEY SPOON GROUP SE

1 Overview

Marley Spoon Group SE (formerly 468 SPAC II SE and hereinafter "the Company") was incorporated on 26 July 2021 (date of incorporation per the deed of incorporation as agreed between shareholders in front of the notary) in Luxembourg as a European company ("Société Européenne" or "SE") based on the laws of the Grand Duchy of Luxembourg. The Company is registered with the Luxembourg Trade and Companies Register under the number B257664 since 4 August 2021. The Company is a listed entity with its class A shares traded in the regulated market of Frankfurt Stock Exchange under the symbol "SPV2" since 20 January 2022. Effective 11 July 2023, the Class A shares of the Company are trading on the Frankfurt Stock Exchange under the new trading symbol "MS1". Likewise, the Company's Class A warrants are also traded on the open market of the Frankfurt Stock Exchange under the symbol "SPVW".

The Company has been originally established for the purpose of acquiring one operating business with principal business operations in a member state of the European Economic Area or the United Kingdom or Switzerland that is based in the technology and technology- enabled sector with a focus on the sub-sectors consumer technology and software & artificial intelligence through a merger, capital stock exchange, share purchase, asset acquisition, reorganization or similar transaction (the "Business Combination").

2 Business Combination

On 25 April 2023, the Company has signed a Business Combination Agreement with Marley Spoon SE (formerly Marley Spoon AG and hereinafter "Marley Spoon" and together with the Company and its subsidiaries "the "Group"), a leading global subscription-based meal kit provider. Marley Spoon is a European company (Societas Europaea, SE), established under EU law (EC Regulation 2157/2011 and Directive 2001/86/EC) in conjunction with German law (SE Introductory Act of 2004 and the German Stock Corporation Act (Aktiengesetz, AktG)) with its headquarters in Berlin, Germany, registered with the Commercial Register of the local court (Amtsgericht) Charlottenburg under HRB 250627 B. Marley Spoon is also listed on the Australian Securities Exchange (ASX) and trades in securities called CHESS Depositary Interests (CDIs).

On 6 July 2023, the Company successfully completed its Business Combination with Marley Spoon SE. The Company acquired shares representing 84% of the Marley Spoon in exchange for the Company's issuance of 7,912,290 Class A shares without nominal value for an aggregate subscription price of EUR 79,122,900.

The transaction was accounted for as a reverse acquisition in accordance with IFRS. Under this method of accounting, the Company was treated as the "acquired" company for financial reporting purposes. Therefore, for accounting purposes, the Business Combination is treated as if Marley Spoon issued shares to the Company in exchange for the net assets of the Company. Consistent with the guidance in IFRS 2, Marley Spoon has determined the difference between the fair value of the consideration paid and the fair value of net assets acquired and recognized an expense of EUR 60.4 million. The financial statements of the Group represent a continuation of the financial statements of the accounting acquirer i.e. Marley Spoon SE (please refer to note 8.1 to the financial statements).

3 Business Model & Strategy

3.1 How it works

Marley Spoon's meal kit and ready-to-heat options are provided to its customers through a simple four-step process:

Step 1: Our culinary team designs a range of varied recipes

• Each week chefs and nutritionists select recipes for each market and brand. These recipes may be existing or new recipes which have been developed in-house.
• Recipes are selected:

1. with regard to the availability of seasonal fresh produce and proteins;

1. to provide a variety of meal options to meet different dietary requirements, tastes and preferences; and o to offer different cuisine options.

Step 2: Customers decide what to cook and when

• Customers sign up for weekly deliveries unless they skip a delivery or cancel their subscription.
• Up to 6 days before the delivery day (the 'order cutoff'), the customer selects the following, submitted through the Marley Spoon, Dinnerly or Chefgood websites or their mobile applications:
  o the number of meals from meal kits in the coming week(s) - generally between 2 and 6 meals per week; o the desired recipes the customer wishes to make;

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