SYNLAB : Approved annual financial statements 2023

SYNLAB AG

STATUTORY FINANCIAL STATEMENTS December 31, 2023

SYNLAB AG

Content

1.	Preliminary remark	3
2.	Balance Sheet	4
3.	Income Statement	6
4.	Notes	7
	4.1	General	7
	4.2	Accounting and measurement principles	7
	4.3	Notes to the balance sheet	9
	4.4	Notes to the Income Statement	12
	4.5	Other mandatory information	13
	4.5.1	Contingencies	13
	4.5.2	Other financial commitments	13
	4.5.3 Governing bodies of SYNLAB AG	13
	4.5.4 Remuneration of governing bodies	15
	4.5.5	Auditor's fees	16
	4.5.6 Disclosures in accordance with section 160 (1) no. 8 AktG	16
	4.5.7	Minimum tax act	16
	4.5.8 Declaration of compliance with the German Corporate Governance Code	17
	4.5.9 Proposed appropriation of earnings	17
5.	Appendix to the notes	18
6.	Assurance of the legal representatives	29

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SYNLAB AG

1. Preliminary remark

The management report of SYNLAB AG and the Group management report are combined in accordance with Section 315 (5) HGB and published in the 2023 Annual Report.

The annual financial statements and the management report of SYNLAB AG for the 2023 financial year, which is combined with the Group management report, are submitted electronically to the office maintaining the company register for inclusion in the company register.

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SYNLAB AG

2. Balance Sheet

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SYNLAB AG

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SYNLAB AG

3. Income Statement

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SYNLAB AG

4. Notes

4.1 General

SYNLAB AG (hereinafter also referred to as the "company") has its registered office in Munich and is entered in the commercial register at Munich Local Court under commercial register number HRB 246540.

The company is a large corporation pursuant to Section 267 of the German Commercial Code (HGB). The annual financial statements of SYNLAB AG for the financial year from January 1 to December 31, 2023 were prepared in accordance with the accounting regulations for large corporations of the German Commercial Code (HGB) and taking into account the provisions of the German Stock Corporation Act (AktG).

The annual financial statements have been prepared in euros.1

The income statement is structured in accordance with the nature of expense method pursuant to Section 275 (2) HGB.

The accounting and valuation methods applied in the financial year were unchanged from the previous year.

As the ultimate parent company pursuant to Section 290 (1) HGB, SYNLAB AG prepares consolidated financial statements for the financial year from January 1 to December 31, 2023 in accordance with IFRS as adopted by the European Union and in compliance with the supplementary provisions pursuant to Section 315e (1) HGB.

The annual financial statements and consolidated financial statements are published by electronic transmission to the office maintaining the company register for entry in the company register.

4.2 Accounting and measurement principles

Financial assets

Shares in affiliated companies and loans to affiliated companies are recognized at the lower of cost or fair value if impairment is expected to be permanent. If the reasons for permanent impairment no longer exist, the value is written up to a maximum of the acquisition cost.

Receivables and other assets

Receivables and other assets are recognized at nominal value. Appropriate write-downs are made for receivables whose recoverability is subject to recognizable risks; uncollectible receivables are written off. Other assets are treated in the same way.

Cash in hand and bank balances

Cash in hand and bank balances are recognized at nominal or face value.

1 Amounts in the notes are stated in thousands of euros (K€) and are rounded to one decimal place unless otherwise stated. This may result in minor discrepancies in totals and in the calculation of percentages.

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SYNLAB AG

Prepaid expenses and deferred charges

Prepaid expenses include expenses prior to the balance sheet date if they represent expenses for a specific period thereafter.

Deferred taxes

Deferred taxes are recognized for temporary differences between the carrying amounts of assets, liabilities and prepaid expenses and deferred income under commercial law and tax law. Loss and interest carryforwards are taken into account if they are expected to be offset against taxable income within the next five years or if there is a surplus of deferred tax liabilities.

Deferred tax assets and liabilities are recognized after offsetting, i.e. as a balance. Any resulting overall tax burden is recognized as a deferred tax liability in the balance sheet. Any resulting overall tax relief can be recognized as deferred tax assets in the balance sheet, but this is not the case.

Other provisions

Other provisions take into account all uncertain liabilities and impending losses. They are recognized at the settlement amount required according to prudent business judgment. Provisions with a remaining term of more than one year are discounted at the interest rate published by the Bundesbank as at the reporting date to match the term. Provisions with a term of up to one year are not discounted.

Derivative financial instruments

Accounting is based on the general provisions of commercial law. Due to their status as pending transactions, derivative financial instruments are generally not recognized on initial recognition. Advance fees paid, on the other hand, are capitalized in the amount of their acquisition costs as other assets under current assets and amortized over the term of the contract or subjected to an annual lower of cost or market test. Premiums received are recognized as liabilities under other liabilities and treated accordingly. A provision for impending losses is recognized in the event of an excess of obligations.

The company does not form any valuation units in accordance with Section 254 HGB and IDW RS HFA 35.

Liabilities

Liabilities are recognized at the settlement amount.

Currency translation

Assets and liabilities in foreign currencies are measured at the mean spot exchange rate on the date of initial recognition. Receivables and liabilities in foreign currencies with a remaining term of up to one year are recognized at the mean spot exchange rate on the balance sheet date. Assets with a remaining term of more than one year are valued on the balance sheet date at the rate on the date of initial recognition or at the lower mean spot exchange rate on the balance sheet date. Liabilities with a remaining term of more than one year are recognized on the balance sheet date at the rate of initial recognition or at the higher mean spot exchange rate on the balance sheet date. Gains or losses from currency translation are recognized in profit or loss.

Share-based payment

Options granted that entitle the beneficiaries to acquire shares in the company after a certain period of service are exclusively transactions at shareholder level that do not burden the company. Consequently, neither an allocation to the capital reserve nor the recognition of personnel expenses takes place in the annual financial statements.

However, if there is an intention or constructive obligation to settle virtual option rights in cash, these are recognized in the balance sheet by creating other provisions, taking into account the personnel expenses attributable to the financial year.

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SYNLAB AG

Revenue and other operating income

Income from the provision of services is recognized under sales revenue after the service has been provided. Income that is not based on an exchange of services is recognized as other operating income.

Income from investments

Income from investments is recognized as soon as a legal claim exists and the necessary shareholder resolutions have been passed.

4.3 Notes to the balance sheet

Financial assets

The company Ellipsys SCA, Fleurus, Belgium, in which SYNLAB AG held a 99.99 % stake (carrying amount 55 M€), was dissolved on July 19, 2023. Its assets and liabilities were taken over by SYNLAB AG, including the 19 % stake in SYNLAB Belgium SRL, Heppignies, Belgium, in which SYNLAB AG already held an 81 % stake (carrying amount: 152 M€). The new carrying amount of the investment in SYNLAB Belgium SRL, which was thus increased to 100 % and amounted to 207 M€ was subjected to the annual impairment test. This resulted in an impairment loss of 19,113 K€ to the lower fair value on the reporting date. The value was determined using a generally recognized valuation method and took into account, in particular, a decline in the forecast number of COVID-19 tests. By contrast, the investment in the wholly owned subsidiary SYNLAB UK Limited, London, was written up by 25,600 K€, mainly due to the increase in underlying business. Loans to affiliated companies decreased by 75 M€ compared to the previous year.

Two of the three existing loans2 to SYNLAB Bondco PLC were partially (50 M€) and fully (120 M€) repaid early in the reporting year for a total amount of 170 M€. Two new loans totaling 95 M€ relate to SYNLAB Belgium SRL.

The development of financial assets is shown in the following statement of changes in non-current assets. Please also refer to the list of shareholdings in the appendix to the notes.

Receivables and other assets

As in the previous year, all receivables and other assets are due within one year.

Receivables from affiliated companies relate to management fees.

Other assets include the prepaid fee for the interest-related hedging transaction to be amortized over the term of the contract, VAT credits and a reimbursement claim for costs disbursed.

2 Interest rate 1.25% p.a., original maturity in the first half of 2026

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SYNLAB AG

Equity

The equity developed as follows in the 2023 financial year:

Subscribed capital

The company's issued capital after the issue of treasury shares3 to former participants in participation programs amounts to former participants in participation programs in the amount of 74 K€ (nominal amount) is 219,775 K€ (31.12.2022: 219,701) and is divided into 222,222,222 (31.12.2022: 222,222,222) ordinary bearer shares with no par value (no-par value shares). Each company share represents a notional interest of € 1.00 in the company's share capital. The shares were created in accordance with German law. Each share entitles the shareholder to one vote at the company's Annual General Meeting. There are no restrictions on voting rights and the shares are fully entitled to dividends.

Authorized capital

In accordance with section 4.3 of the company's Articles of Association4, the Management Board is authorized, with the approval of the Supervisory Board, to increase the company's share capital in the period up to 16 May 2028 by up to a nominal amount of € 111,111,111.00 on one or more occasions by issuing up to 111,111,111 new no-par value bearer shares against cash and/or non-cash contributions ("Authorized Capital 2023"), which corresponds to half of the subscribed capital.

Issue of treasury shares

In the 2023 financial year, a total of 74,2135 shares were issued to service participation programs, which reduced the notional amount of treasury shares in the share capital deducted from subscribed capital by 74 K€. The unallocated capital reserve (see below) increased by 129 K€ as a result.

Capital reserve

The company's capital reserves totaled 2,768,065 K€ as at the balance sheet date and are divided into unappropriated capital reserves of 2,390,287 K€ in accordance with Section 272 (2) No. 4 HGB and appropriated capital reserves of 377,778 K€ in accordance with Section 272 (2) No. 1 HGB.

The accumulated loss results from the net loss for the year and amounts to 346 K€.

Provisions

1. In the previous year, SYNLAB AG acquired treasury shares to service participation programs.
2. Amendment to the Articles of Association in accordance with the resolution of the Annual General Meeting on May 17, 2023
3. Total purchase price paid for this in the previous year 1.1 M€ (average price € 14.19)

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