TELES Informationstechnologien : Annual Financial Statements 2023

Translation - the German version is authoritative

Annual Report

and

Combined management report

for the

Fiscal year 2023

Translation - the German version is authoritative

Table of contents
Combined management report	4
Basic information on the TELES Group	4
Control system	6
Research & Development	6
Economic report	7
Human Resources	13
Risk report	14
Opportunities Report	26
Financing the continuation of the company	26
Forecast report	27
Key figures of the TELES Group (IFRS)	30
Key figures of TELES AG (HGB)	30
Information in accordance with Section 289a of the German Commercial Code
(HGB), Section 315a	31
Declaration of compliance with corporate governance and declaration of
corporate governance	34
Declaration by the legal representatives in accordance with Section 289
Paragraph 1 Sentence 5 HGB and Section 315 Paragraph 1 Sentence 6 HGB	39
Annual financial statements of TELES Aktiengesellschaft for the 2023 fiscal year	40
Balance sheet	41
Statement of comprehensive income	43
I. General information	44
II. Accounting and valuation methods	44
III.Individual information on the items on the balance sheet and the profit and
loss statement	47
A.	Fixed assets	47
B.	Current assets	47
C.	Deferred income	48
D.	Equity	48
E.	Provisions	49
F.	Liabilities	50
G.	Deferred tax liabilities	51
H. Sales revenue, other operating income	51
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I. Personnel expenses

52

1. Other operating expenses, interest expenses, depreciation on financial assets 52

IV.Contingent liabilities and other financial obligations	53
V. Information about transactions with related parties and companies in
accordance with Section 285 No. 21 HGB	54
VI.Supplementary information	54
A.	Number of employees	54
B.	Management Board	54
C.	Supervisory Board	54
D.	Subsequent events	55
E.	Services of the auditing company	55
F.	Declaration of Compliance	55
G.	List of shareholdings according to § 285 No. 11 HGB	56

1. Information on the scope of consolidation in accordance with Section 285 Nos.

14/14a/15a HGB	56
J. Use of results	56
K. Reports according to AktG and WpHG	56
Asset overview	59
Independent auditor's report	60
Report of the Supervisory Board on the financial year from the 1st of January to
the 31st of December 2023	69

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Combined management report

In addition to the TELES Group (hereinafter "TELES Group", "TELES Group" or "TELES"), the combined management report also includes the parent company, TELES AG, based in Ber- lin, Germany. It is prepared in accordance with the provisions of the German Commercial Code (HGB) and the German Accounting Standard (DRS) No. 20.

TELES AG prepares the annual financial statements in accordance with the accounting principles of the HGB and the consolidated financial statements in accordance with the accounting principles of the International Financial Reporting Standards (IFRS). The management report and the group management report are summarized. The asset, financial and earnings situation as well as the statements on risk, opportunity and forecast reporting are each presented separately.

Basic information on the TELES Group

Since October 1, 2023, TELES has only been active in the pharmaceutical segment. The telecommunications segment with the areas of development, service, and order management for existing customers (partial operations) was sold as part of an asset deal on Oc- tober 1, 2023. The employees in the part of the business have also been transferred to the purchaser. This meant that TELES AG was transformed into a pure financial holding company with responsibility for group accounting and group IT.

In the Pharma segment, TELES focuses on the growth area of Specialty Pharma in Ger- many and Europe. Specialty Pharma usually includes high-priced drugs for chronic, com- plex, or rare diseases, such as those sold by TELES. The TELES group focuses on six indication areas: oncology, neurology, autoimmune diseases, ophthalmology, hemophilia, and infectious diseases.

The Pharma segment combines pharmaceutical supply with a focus on digitalization and process optimization along the pharmaceutical value chains and the management of large data volumes in the pharmaceutical industry.

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In the telecommunications segment, TELES Carrier Solutions delivered digitalization solutions for the development and maintenance of telecommunications networks to national or international carriers (fixed or mobile network operators). TELES migrated traditional TDM/SDH networks to all-IP networks and offered cloud-based Unified Communication as a Service.

EURO RX Arzneimittel GmbH, Wedemark (EURO RX) is a specialized pharmaceutical supplier that uses a digitalized supply chain to ensure reliable pharmaceutical care for patients across Europe. Due to the elevated level of automation, the EURO RX can deliver medications for cancer, autoimmune deficiencies, and combination therapies for personalized medicine (specialty pharma) quickly and reliably. EURO RX holds a 19.04% stake in IVF International of the German Clinic for Reproductive Medicine GmbH, Bad Münder.

GVL Rechenzentrum GmbH, Berlin (GVL) is a specialized pharmacy computing center that focuses on the implementation of electronic prescriptions (e-prescriptions). This will enable simpler billing options between pharmacies and health insurance companies in the future, which will also support healthcare research for the pharmaceutical industry. GVL holds a 50% stake in EISIG Health GmbH, Berlin. EISIG Health GmbH currently does not conduct any operational business and is therefore only of minor importance for the consolidated financial statements.

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Control system

The operational business of the TELES Group and TELES AG is controlled using significant financial performance indicators.

Pharma segment	TELES AG
Sales volume	Sales volume
Gross profit margin	Operating result (EBIT)
Operating result (EBIT)	Order receipt
Order receipt

The gross profit margin relates the gross profit to the sales achieved.

Order intake in the Pharma segment is the indicator that determines sales with a smalltime lag. The order intake of TELES AG or in the telecommunications segment is an important indicator of sales with a small-time lag (project business) or, with a higher time lag (maintenance contracts), for sales in the next 12 months.

Non-financial performance indicators do not play a significant role in the management of the group. The Group Management Board has established an extensive group reporting system for the significant performance indicators of the group companies and conducts regular reviews (corporate planning with plan-actual analyzes) with the group companies.

In addition, liquidity is monitored daily to be able to react early to deviations from the planned cash flows.

Research & Development

Until the telecommunications segment is sold on October 1, 2023, TELES AG has focused its research and development on quickly developing and introducing new marketable products, constantly optimizing development processes, and reducing the costs of developing and producing high-quality new ones and more reliable products. In the 2023 fiscal year, research and development expenses primarily reflect the further development of the soft switch (Carrier Solutions' main product) for mobile network operators and virtual mobile network operators. In the past fiscal year, six employees (previous year: 6) worked

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in research and development until September 30, 2023. Expenses in the fiscal year amounted to EUR 330 thousand.

Economic report

Overall economic situation

The global economy slowed significantly again in almost all-important economic areas in 2023. According to the International Monetary Fund (IMF), real gross domestic product (GDP) in industrialized countries grew by only 1.5% in 2023 compared to the previous year and growth will slow to 1.4% in 20241. Global GDP growth is estimated at three percent in 2023 and growth of 2.9% is forecast for 20242.

According to the IMF, the economic outlook has changed since the April 2023 update as follows: "Global growth forecasts have remained the same since the April 2023 update. However, global growth is still well below the historical average growth of 3.8 percent (between 2000 and 2019). The war in Ukraine and the immense outbreak of Covid-19 in China in 2020 had a negative impact on growth. The inflation rate was at a long-term high at the end of 2022. Although the IMF expects inflation rates to fall in the current year 2023, inflation will still be well above pre-Corona crisis levels."3

Industry-related framework conditions for pharma

According to Statista, sales in the pharmacy market in Europe reached a value of around EUR 265.3 billion in 2023. In 2024, sales are expected to be EUR 316.6 billion and there will be an annual growth rate (CAGR 2024-2028) of 3 .26% expected, leading to a forecast market volume of EUR 360.0 billion in 2028.4

According to the Classic market report from IQVIA, pharmacies in Germany recorded slight sales growth (+1.9%) in the first nine months of 2023 with a moderate decline in sales (-2.7%). These slightly fewer medication packs were delivered to patients compared

1. Statista 02.01.2024:IWF Prognose: Wachstum des BIP nach Ländergruppen bis 2024
2. Statista 02.01.2024:IWF Prognose: Wachstum des BIP nach Ländergruppen bis 2024
3. Statista 02.01.2024:IWF Prognose: Wachstum des BIP nach Ländergruppen bis 2024
4. Statista:Marktprognose Apotheken - Europa

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to the same period last year, achieving a value of 35.1 billion euros (at the pharmaceutical company's selling price, including vaccines and test diagnostics).5

The market segment for prescription preparations (Rx) will grow cumulatively by 2.4% in terms of sales and +1.9% in terms of sales in the first nine months of 2023. This corresponds to a market volume of around 30.6 billion euros or 587 million packs.6

Business development of the TELES Group

As part of the following analysis of business development, it should be noted that the comparative information was adjusted due to the sale of the telecommunications segment on October 1, 2023.

The TELES Group's sales in the reporting year were EUR 59.3 million (previous year: EUR

73.4 million). In the Pharma segment, sales amounted to EUR 59.3 million (previous year: EUR 73.4 million), which consists of the sale of prescription drugs (important are special drugs for cancer, autoimmune deficiencies, and combination therapies for personalized medicine). The decline in sales is due to a significant price increase in purchasing for a cancer drug that will be successful in Germany in 2022. The telecommunications segment was sold on October 1, 2023. No sales are reported for the years 2022 and 2023. Only the result from discontinued operations is shown. In the Pharmaceuticals segment, the cost of materials was EUR 56.0 million (previous year: EUR 70.2 million).

Personnel expenses fell to EUR 2.1 million due to the sale of the telecommunications segment (previous year: EUR 2.7 million). No stock options were issued in 2023. In the previous year, the proportion of share-based payments was EUR 0.5 million. Depreciation was EUR 1.0 million (previous year: 16.5 million), of which EUR 0.4 million was depreciation of the customer base and brand (Previous year EUR 0.7 million) and depreciation of rights of use from leasing contracts EUR 0.4 million (previous year EUR 0.3 million). The decrease in depreciation results from the impairment of goodwill, customer base and brand in the previous year of EUR 15.5 million. A detailed presentation of the depreciation can be found in the notes to the consolidated financial statements. Other operating income was

1. IQVIA:IQVIA Marktbericht Classic - 3. Quartal 2023
2. IQVIA:IQVIA Marktbericht Classic - 3. Quartal 2023

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EUR 0.2 million (previous year: EUR 0.1 million). Other operating expenses rose to EUR 2.8

million (previous year: EUR 1.7 million), of which closing and auditing costs amounted to

EUR 1.0 million (previous year: EUR 0.3 million), costs of goods delivery amounted to EUR

0 .6 million (previous year: EUR 0.5 million), losses on receivables of EUR 0.3 million (pre-

vious year: EUR 0), legal and consulting costs of EUR 0.2 million (previous year: EUR 0.2

million) , repairs and maintenance EUR 0.1 million (previous year: EUR 0.1 million), Super-

visory Board EUR 0.1 million (previous year: EUR 0.1 million). The operating result (EBIT)

was EUR -2.4 million (previous year: EUR -17.7).

The financial result of the TELES Group was EUR -0.6 million (previous year: EUR -0.3 mil-

lion). The tax income was EUR 0.1 million (previous year: EUR 1.0 million). The result after

taxes from continuing operations is EUR -2.9 million (previous year: EUR -16.9 million) and

the result after taxes from discontinued operations is EUR 0 (previous year: EUR 0, 3 mil- lion). In the consolidated financial statements of the TELES Group, the annual loss amounts to EUR 2.9 million (previous year: EUR 16.6 million).

The TELES Group's balance sheet total decreased by EUR 2.5 million compared to the previous year. Non-current assets increased by EUR 0.2 million to EUR 3.4 million. Current assets decreased by EUR 2.7 million to EUR 8.4 million. This is due to the reduction in trade receivables by EUR 2.9 million.

The fully paid-up share capital consists of 6,233,418 no-par value shares with a calculated value of EUR 1.00 each. The consolidated loss carried forward was EUR 21.5 million (pre- vious year: EUR 4.9 million). The group equity amounted to EUR -5.1 million (previous year: EUR -2.2 million).

Long-term liabilities amounted to EUR 2.6 million (previous year: 2.2 million). Of these,

long-term loans for the picking system at EURO RX of EUR 0.9 million (previous year: EUR

0.9), long-term leasing liabilities of EUR 1.7 million (previous year: EUR 1.1 million). Current

liabilities amounted to EUR 14.3 million (previous year: EUR 14.4 million). Of these, short-

term loans for the working capital of EURO RX of EUR 8.5 million (previous year: EUR 8.8

million), other liabilities of EUR 3.4 million (previous year: EUR 3.4 million) and current

leasing liabilities of EUR 0.4 million (previous year: EUR 0.3 million). Other liabilities include a purchase price liability for an existing call option to acquire the remaining shares in EURO RX Arzneimittel GmbH of EUR 3.0 million (previous year: EUR 3.0 million).

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In the cash flow statement, the operating cash flow amounts to EUR 0.2 million (previous year: EUR 0.3 million), especially considering the decrease in trade payables and other liabilities of EUR 0.2 million (previous year: Increase of EUR - 0.6 million). The TELES Group was able to always meet its financial obligations in the past fiscal year. The financial resources amounted to EUR 0.3 million as of December 31, 2023 (previous year: EUR 1.5 million). Further details can be found in the detailed cash flow statement. As of December 31, 2023, there were no derivative financial instruments at TELES. As part of the realignment of the TE-LES Group, no dividends will be paid out soon. There is a credit line for working capital in the amount of EUR 8.5 million, which was drawn down at 100% as of December 31, 2023.

The telecommunications segment was sold in 2023. In the Pharmaceuticals segment, order intake and thus sales fell short of expectations. However, it was pleasing to see a significant and sustained increase in the gross profit margin. Overall, the past fiscal year was not satisfactory for the TELES Group.

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