TELES Informationstechnologien : Annual Financial Statements 2020

Translation -the German version is authoritative

Annual Financial Statement 2020

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Translation -the German version is authoritative

Table of Content

Letter from the Management Board.....................................................................................	4
Management Report of TELES AG Informationstechnologien...........................................	5
TELES and the Market .............................................................................................................	5
Control system .........................................................................................................................	7
Economic situation of TELES AG Informationtechnologien ...............................................	8
Human Resources..................................................................................................................	10
Research & Development .....................................................................................................	10
Report on Opportunities and Risks .....................................................................................	11
Financing/Investors/Going Concern....................................................................................	16
Forecast...................................................................................................................................	17
Key Figures of TELES AG in Accordance with the German Commer-cial Code
(HGB)...................................................................................................................................	20
Internal Control System........................................................................................................	20
Legal Disputes ........................................................................................................................	21
Remuneration Report ...........................................................................................................	22
Disclosures Pursuant to Sec. 289 Para. IV,Sec. 315 Para. IV German Commercial
Code (HGB) .........................................................................................................................	25
Concluding Statement on the Dependency Report ..........................................................	27
Corporate governance report and corporate governance statement ...........................	28
Declaration by the legal representative .............................................................................	33
Financial statements of TELES Aktiengesellschaft Information Technologien for
2020.....................................................................................................................................	34
Balance sheet .........................................................................................................................	35
Profit and Loss Account ........................................................................................................	36
Notes to the annual financial statements for 2020 ..........................................................	37
I. General information .........................................................................................................	37
II. Accounting and valuation methods................................................................................	38
A.	Accounting methods .....................................................................................................	38
B.	Assessment methods ....................................................................................................	38
III.Details of the items on the balance sheet and the profit and loss account ............	40
A.	Capital assets ..................................................................................................................	40

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Translation -the German version is authoritative

B.	Current assets.................................................................................................................	40
C.	Prepaid expenses and deferred charges...................................................................	41
D.	Equity................................................................................................................................	41
E.	Accruals............................................................................................................................	42
F.	Liabilities..........................................................................................................................	42
G.	Deferred tax liabilities...................................................................................................	43
H.	Sales revenue..................................................................................................................	43
I.	Other operating income and other operating expenses.......................................	44
IV.Contingent liabilities and other financial obligations..................................................	44
V. Information about transactions with related parties and companies in
accordance with Section 285 No. 21 HGB ......................................................................	45
VI.Supplementary information............................................................................................	45
A.	Number of employees ..................................................................................................	45
B.	Management Board.......................................................................................................	45
C.	Supervisory Board..........................................................................................................	46
D.	Subsequent events ........................................................................................................	47
E.	Services of the auditing company ..............................................................................	47
F.	Declaration of Compliance...........................................................................................	47
G.	List of shareholdings in accordance with Section 285 No. 11 HGB .....................	47
H.	Appropriation of profits................................................................................................	48
Schedule of fixed assets ........................................................................................................	49
Development of Equity..........................................................................................................	50
Cash Flow Statement .............................................................................................................	51
Statement of legal representatives.....................................................................................	52
Independent auditor's report ..............................................................................................	53
Report of the Supervisory Board on the financial year from January 1 to
December 31, 2020............................................................................................................	64

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Translation -the German version is authoritative

Letter from the Management Board

Dear shareholders,

After around two years of very extensive restructuring measures, TELES is in a good starting position for growth. In the past financial year we were able to implement the targeted financial restructuring through the capital measures implemented (capital reduction and capital increase).

The year 2020 was mainly dominated by the corona pandemic. Since mid-March, 90% of TELES employees have been working in the home office, since the end of October even all employees. It will stay that way for the foreseeable future. The Corona situation led to an increase in global voice traffic since March 2020 and we were also able to provide our customers with additional licenses. The lockdown in Europe in April 2020 led to significant postponements of projects. Ultimately, however, we were able to make up for the delays.

The remaining Carrier Solutions business area has developed well. The very important service business could be expanded by 20%. Our long-standing customers MASMOVIL, Spain and mgi, Switzerland have invested six-figure figures in the development and expansion of their geo-redundant softswitch platforms. In 2021 we expect six-figure sales in the German-speaking environment for our TR Notruf software and internationally for our new transcoding software. TELES software transcoding helps our customers to respond to their customer needs without investing in additional hardware. We will keep the special focus for our maintenance business (in 2020 recurring sales of EUR 1.2 mil- lion) for 2021 and want to expand it further.

Thank you, our shareholders, for accompanying us during this time of change, and I am convinced that you will continue to do so in the future.

With best regards

Oliver Olbrich

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Translation -the German version is authoritative

Management Report of TELES AG Informationstechnologien

TELES and the Market

The trends of recent years have continued in our customer segment of telecommunications network operators in 2020.

• Cost pressure on the part of the network operator
• Further market consolidation
• Shutdown of outdated TDM infrastructure

In addition, changes in the world of work and organization that were already apparent earlier due to the corona pandemic have clearly gained momentum. The increased proportion of work from the home office leads to an increased need for communication solutions. In addition to the increased data volume, there is also a higher volume of traffic for the network operators.

In 2020 we were able to support our customers with needs-based solutions to increase capacity. This once again clearly underlines the fundamental importance of the classic fixed network operators who can offer a stable basic service. This is where we continue to see our long-term customer base in Europe.

Another trend, also driven by the corona pandemic, is the triumph of cloud-based communication solutions for business customers. The big winner here is Microsoft, which offers a high-performance complete package with its Office suite and MS Teams. With our partner Communi5 Technologies GmbH, we are well positioned to position our UCaaS solution as an alternative and supplement that can implement the complex requirements of an established telecommunications infrastructure. Integration with MS Teams enables heterogeneous installations and the use of the best of both worlds.

The takeover of our competitor Metaswitch by Microsoft in spring 2020 shows another trend. This enables Microsoft to position itself as a service provider in the medium term and further shorten the value chain of traditional network operators. It remains the task of the network operator and the supplier to find an adequate answer. According to the

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