Vitesco Technologies : Annual financial report 2023

ANNUAL REPORT 2023

3	Vitesco Technologies Group

VITESCO TECHNOLOGIES GROUP 2023

〉 Sales at €9.2 billion

〉 Free cash flow at €84.9 million 〉 Equity ratio of 37.6%

KEY FIGURES

€ million	2023	2022	∆ ina %
Sales	9,233.2	9,070.0	1.8
EBITDA	748.1	703.3	6.4
As % of sales	8.1	7.8
EBIT	172.2	143.3	20.2
As % of sales	1.9	1.6
Net income	-96.4	23.6	-508.5
Basic earnings per share in €	-2.41	0.59
Diluted earnings per share in €	-2.41	0.59
Adjusted sales1	9,233.2	8,984.9	2.8
Adjusted operating result (adjusted EBIT)2	341.1	225.5	51.3
As % of adjusted sales	3.7	2.5
Free cash flow	84.9	123.2	-31.1
Net liquidity	337.0	333.4	1.1
Gearing ratio3 in %	-11.8	-10.9
Equity	2,851.3	3,061.7	-6.9
Equity ratio in %	37.6	40.3
Number of employees4 as at December 31	35,528	38,043	-6.6
Dividend per share5 in €	0.25	-
Stock price at year-end6 in €	78.20	54.25
Stock price 52-week high6 in €	96.20	59.50
Stock price 52-week low6 in €	54.75	25.65

1. Adjusted for changes in the scope of consolidation.
2. Adjusted for amortization of intangible assets from purchase price allocation, changes in the scope of consolidation, and special topics.
3. Defined as the ratio of net liquidity to equity.
4. Excluding apprentices/trainees.
5. Subject to approval at the Annual General Meeting on April 24, 2024.
6. Vitesco Technologies stock as quoted in the Deutsche Börse AG XETRA system.

Vitesco Technologies Group	4

OVERVIEW OF THE VITESCO GROUP AND 2023 KEY FIGURES

Vitesco Technologies Group

Sales: €9,233.2 million; employees: 35,528

Powertrain Solutions	Electrification Solutions
Sales: €6,118.8 million	Sales: €3,162.3 million
Employees: 20,391	Employees: 15,071
> Actuation	> Controls
> Aftermarket & Non-Automotive	> Electric Drive Systems
> Hydraulics & Turbocharger
> Sensorics & Controls

DIVISIONAL KEY FIGURES

	Powertrain Solutions	Electrification Solutions
€ million	2023	2022	∆ in %	2023	2022	∆ in %
Sales	6,118.8	6,372.3	-4.0	3,162.3	2,765.8	14.3
EBITDA	720.0	710.3	1.4	93.4	43.3	115.7
As % of sales	11.8	11.1		3.0	1.6
EBIT	343.6	343.1	0.1	-105.8	-149.4	29.2
As % of sales	5.6	5.4		-3.3	-5.4
Adjusted sales1	6,118.8	6,287.3	-2.7	3,162.3	2,765.6	14.3
Adjusted operating result (adjusted EBIT)2	464.6	345.3	34.5	-98.1	-93.1	-5.4
As % of adjusted sales	7.6	5.5		-3.1	-3.4

1. Adjusted for changes in the scope of consolidation.
2. Adjusted for amortization of intangible assets from purchase price allocation, changes in the scope of consolidation, and special topics.

To simplify the language and enhance readability, the masculine grammatical form is used in this report. It includes all genders.

TABLE OF CONTENTS

74

OUR SHAREHOLDERS		MANAGEMENT REPORT
KEY FIGURES FOR THE GROUP
	3	GLOSSARY OF FINANCIAL TERMS	75
GROUP OVERVIEW	4	CORPORATE PROFILE	77
LETTER FROM THE		GROUP STRATEGY	80
CHIEF EXECUTIVE OFFICER	9	BUSINESS MANAGEMENT	82
MEMBERS OF THE EXECUTIVE	10	RESEARCH
VITESCO TECHNOLOGIES STOCK	11	DEVELOPMENT	85
CORPORATE GOVERNANCE	16	SUSTAINABILITY AND
REPORT FROM THE	16	SUMMARIZED
STATEMENT ON		NON-FINANCIAL STATEMENT	88
CORPORATE GOVERNANCE	25	Notes on the Reporting	88
LEGAL COMPLIANCE	44	Sustainability Management	90
REMUNERATION REPORT	47	Sustainability Agenda - Material
		Topics	92
		Disclosures in Accordance with
		the EU Taxanomy Regulation	108
		ECONOMIC REPORT	121
		GENERAL CONDITIONS	121
		DEVELOPMENT OF KEY
		CUSTOMER INDUSTRIES AND
		SALES REGIONS	122
		EARNINGS, FINANCES, AND
		ASSETS	125
		Earnings	126
		Finances	135
		Assets	137
		POWERTRAIN SOLUTIONS	142
		ELECTRIFICATION SOLUTIONS	146

		178
		CONSOLIDATED
		FINANCIAL STATEMENTS
VITESCO TECHNOLOGIES		STATEMENT FROM THE
GROUP AG - SUMMARY	149	EXECUTIVE BOARD	179
OTHER DISCLOSURES	153	CONSOLIDATED STATEMENT
DEPENDENT COMPANY	153	OF INCOME	181
ADDITIONAL DISCLOSURES		CONSOLIDATED COMPREHENSIVE
AND NOTES		STATEMENT	182
PURSUANT TO HGB		CONSOLIDATED STATEMENT OF	183
§§ 289A AND 315A	153	CONSOLIDATED STATEMENT
REMUNERATION OF THE	155	OF CASH FLOWS	185
RISK AND		CONSOLIDATED STATEMENT
OPPORTUNITY REPORT	156	OF CHANGES IN EQUITY	186
RISK AND OPPORTUNITY		NOTES TO CONSOLIDATED	187
MANAGEMENT		GENERAL INFORMATION
AND INTERNAL		AND ACCOUNTING
CONTROL SYSTEM	156	POLICIES	194
MATERIAL RISKS	161	SEGMENT
Financial Risks	163	REPORTING	187
Market Risks	163	NEW ACCOUNTING
Operational Risks	165	POLICIES	202
Legal and Tax Risks	167	SCOPE OF CONSOLIDATION AND
MATERIAL OPPORTUNITIES	170	INFORMATION	204
STATEMENT ON OVERALL
RISK AND
OPPORTUNITIES	171
FORECAST REPORT	172
GENERAL CONDITIONS	172
OUTLOOK FOR THE GROUP	174

283

FURTHER INFORMATION

AFFIRMATION BY THE
EXECUTIVE BOARD	284
MEMBERS OF THE
EXECUTIVE BOARD	285
MEMBERS OF THE
SUPERVISORY BOARD	286
AUDITOR'S
OPINION	290
FIVE-YEAR REVIEW	299
FINANCIAL CALENDAR	300
PUBLICATION DETAILS	301

9	Vitesco Technologies Group

LETTER FROM THE CEO

Dear Shareholder,

The year 2023 was challenging. Russia's invasion of Ukraine continued, and alongside that there was a variety of further geopolitical conflicts impacting the earnings and prospects of many businesses. This makes me all the more pleased by Vitesco Technologies' ongoing positive business development. Our company was able to grow further, build up its order backlog, and position itself internationally as a leading provider of electrification solutions.

At the same time, we achieved measurable improvements on our journey to our strategic sustainability targets, which we will document in our third sustainability report due for publication in April. None of this would have been conceivable without th e fantastic dedication of our employees. Thanks to them, we are today able to present excellent annual results for 2023 and look back at the fiscal year 2023 with overall satisfaction.

Besides our entry to the MDAX in July 2023, the most important event last year was without a doubt the announcement of a public tender offer by Schaeffler in October. The conditions necessary for a successful merger are now largely established, and we are working as partners on the upcoming integration of the two companies. With the larger group of affiliated companies arising from it, we will be able to use and contribute our competencies even better - and take major steps toward cleaner mobility after joining forces.

We expanded our partnerships further over the past fiscal year, for example, through long -term supplier partnerships for silicon carbide with the companies Onsemi and ROHM. We are also proud of our new cooperation agreements with Baosteel and Infineon for high-quality silicon steel and microcontrollers respectively, which can be used to further improve the efficiency and system costs of electric vehicles. In addition, we unveiled a variant of our EMR4 integrated e-axle drive in April 2023. It uses no rare earths whatsoever, and that is just one of the many technological innovations in the previous fiscal year. In summer 2023, we also announced our entry into the independent aftermarket.

Since November, Sabine Nitzsche has been on board as Chief Financial Officer succeeding our appreciated colleague, Werner Volz. He has earned our deep gratitude combined with a great deal of respect for his achievements - as this report will demonstrate. The Vitesco Technologies Executive Board also added a dedicated role for Integrity and Legal in 2023, which was held by Stephan Rölleke.

Another major achievement in my view is our jump into the LinkedIn Top Companies ranking in France, India, and the US at the start of the year, after just three years under our new employer brand. This means that we rank among the most appealing employers on all three continents where Vitesco Technologies operates. We are honored by this and see it as confirmation of our efforts to make Vitesco Technologies a place where all employees find purpose in their work, namely, "Electrified. Emotion. Everywhere."

Thank you greatly for your trust.

Yours sincerely,

Andreas Wolf

Chief Executive Officer

Vitesco Technologies Group	10

MEMBERS OF THE EXECUTIVE BOARD

(Left to right: Ingo Holstein, Thomas Stierle, Sabine Nitzsche, Andreas Wolf, Stephan Rölleke, Klaus Hau)

Andreas Wolf, Chief Executive Officer	Stephan Rölleke, Member of the Executive Board for
Born in 1960 in Nordhorn, Germany	Integrity and Legal
Business Development & Strategy, Purchasing & Supplier	Born in 1968 in Bad Harzburg, Germany
Quality Management, Engineering, Information Technology,	Legal and Technical Compliance, Claim Management,
Communications, Operations, Quality & Environment,	Intellectual Property, and Legal
Semiconductor Supply, Technical Compliance Management,	Appointed until September 30, 2026
Technology & Innovation, Sales
Appointed until September 30, 2024	Klaus Hau, Executive Board member
	Born in 1964 in Würzburg, Germany
Sabine Nitzsche, Chief Financial Officer	Head of the Powertrain Solutions Division
Born in 1972 in Dresden, Germany	Appointed until September 30, 2024
Group Finance and Controlling
Appointed until September 30, 2026	Thomas Stierle, Executive Board member
	Born in 1969 in Leipzig, Germany
Ingo Holstein, Chief Human Resources Officer	Head of the Electrification Solutions Division
Born in 1966 in Hanover, Germany	Appointed until September 30, 2024
Group Human Relations, Director of Labor Relations,
Group Sustainability
Appointed until September 30, 2024