Report from the Chair of the Advisory Board

Market euphoria faded - campany results increased

Hans-Jürgen Adorf - Chairman of the Advisory Board

In 2023, the Advisory Board performed its duties in a timely and proper manner in accordance with the Articles of Association and the prevailing Advisory Board regulations. It carefully monitored the Management Board and provided advice on all strategic and important operational issues.

The Advisory Board was always fully represented and quorate at all meetings. The composition of the Advisory Board remained unchanged in 2023. The meetings took place on 23rd March, 15th June and 7th December. The results of the meetings were minuted and unanimously approved. The Management Board provided the Advisory Board with comprehensive documents and presentations for all meetings and explained them in detail, so that that the Advisory Board was always informed about all significant economic and strategic developments.

To ensure prompt reporting, the Advisory Board also received timely quarterly reports on the development of the trading volume and the respective quarterly consolidated financial statements. There were also no extraordinary events and/or developments in 2023 that would have given rise to a special meeting or an ad hoc announcement to the Advisory Board. The Chairman of the Advisory Board also remained in regular contact with the Management Board. Questions were answered comprehensively and requested documents were delivered promptly.

Declining sector development in 2023

The downturn in sector development that began in the second half of 2022 continued throughout 2023. After two years of unusually strong growth and previously cautious budget planning, the product business had to cope with a significant double-digit percentage decline. The budget figures were not achieved. In the Financial Services segment, the planned growth was almost achieved. This represented an increase of roughly 30 per cent.

The downward trend in the product business prompted the Advisory Board to focus, in particular, on risk potential, cost trends, the earnings situation and liquidity trends. The focus was also on countermeasures.

The Management Board had already presented several scenario calculations for 2023 with the budget submission. Simultaneously, a comprehensive package of measures to secure the earnings of the Management Board was developed and presented to the Advisory Board. The Advisory Board expressly supported the numerous measures and regularly monitored their impact.

The Advisory Board also focussed, in particular, on the ETRIS BANK’s receivables management. Fortunately, despite the economic uncertainty, there were no exceptional problem cases. A tight receivables management system contributed to this development. On balance, the Advisory Board believes that the strict regulations prescribed by BaFin and the Bundesbank have proven to be crisis-proof and beneficial for all parties involved.

Results for 2023 and budget for 2024

The Advisory Board meeting on 7th December 2023 was used to present the preliminary company results and to review and approve the budget for 2024. The unanticipated (and sharp) decline in the product business had a significant negative impact on gross profit. The unplanned (and hugely positive) financial result due to the interest rate trend and the effect of the package of measures compensated for the deficits. The consolidated net income for the year increased to EUR 23.5 million and the cash flow remained above the EUR 30 million mark. In view of the general conditions, this is ultimately a remarkable company result. Details can be found in the annual report.

The budget for 2024 drawn up by the Management Board envisages a total trading volume of over EUR 9 billion. The consolidated net profit is expected to reach EUR 24.6 million and the cash flow EUR 30.8 million. The Advisory Board considers these targets to be very ambitious once again, and advises strict cost discipline and consistent implementation of the packages of measures.

The Managing Director announced age-related changes in the Management Board of the E/D/E GmbHfor 2024 and explained the process of personnel changes. The Advisory Board approved the plans.

The Advisory Board would like to expressly congratulate the Management Board and the employees on the results achieved in 2023.