Einhell Germany : Half year report 2nd Quarter 2023,

Half year report as at 30 June 2023

Contents

At a glance Financial figures

Condensed Group management report

General economic conditions

Performance report

Personnel and HR services

Financial performance and net assets

Investments

Current assets and liabilities

Group structure

Investor relations

Financing

Note to the financial report

Corporate Governance Code

Risk report

Forecast

Consolidated statement of financial position Consolidated income statement Consolidated statement of cash flows Consolidated statement of changes in equity Condensed IFRS notes

Principles and methods used in preparing the consolidated financial statements

Notes to the statement of financial position Notes to the statement of income Segment reporting

Other notes

Events after the reporting date Statement of responsibility

Financial calendar and legal company information

At a glance

The financial report of the Einhell Group as at 30 June 2023 meets the requirements under the Securities Trading Act (WpHG) for preparing interim reports. It includes abbreviated Group interim statements, a condensed Group management report and a statement of responsibility by the legal representatives. The financial statements are consistent with the International Financial Reporting Standards (IFRS) and their interpretations, as published by the International Accounting Standards Board (IASB) and applicable in the European Union.

From January to June 2023, revenue declined from EUR 563.7 million to EUR 525.9 million. The business development in Germany is decisive for this decline in revenue. Due to the high inventories at customers, orders in Germany fell significantly compared to the prior-year period. Fortunately, demand outside of Germany was stable.

Responsible for the reduction in revenue are a number of currencies that dropped against the euro, highly. This applies in particular to the revenue of our companies in:

• Australia,
• Canada,
• UK,
• Turkey and
• Argentina.

Adjusted for currency effects, consolidated revenue fell by

4.2 % (before currency adjustment by 6.7 %) compared to the previous year.

Financial figures

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Half year report as at 30 June 2023

Condensed Group Management Report of Einhell Germany AG

1 General economic conditions

1.1 D/A/CH

The business climate in Germany has deteriorated considerably. The ifo business climate index dropped from 91.5 points in May to 88.5 points in June 2023. Furthermore, the sentiment among companies regarding their current situation has also deteriorated.

According to the Federal Statistical Office, the inflation rate stood at 6.4 % in Germany in June 2023. After having declined for three months in a row, it has thus risen again slightly.

Adjusted for seasonal and calendar effects, the gross domestic product (GDP) increased by 1.9 % compared to the previous quarter in the second quarter of 2023. The reason for the increase, however, is the rise in prices. Adjusted for seasonal, calendar and price effects, the GDP remained basically unchanged from the first to the second quarter of 2023. Compared with the same quarter in the previous year, the price-adjusted GDP declined by 0.6 %.

The number of unemployed persons has increased moderately in Germany. The German Federal Employment Agency stated in its labour market report that a total of 2.555 million persons were registered as unemployed in June. This corresponds to an increase of 11,000 unemployed persons since May and 192,000 since the prior-year period. The unemployment rate remained unchanged at 5.5 % but showed a slight increase of 0.3 % compared to the prior-year quarter.

In 2022, DIY and home improvement stores in Germany generated revenue in the amount of EUR 26.44 billion. This was above the prior-year level (+8.9 %). The chairman of the industry association expects growth above the inflation rate for the current year.

1.2 Western and Eastern Europe

The economy in the eurozone grew slightly again for the first time since the summer of 2022. Eurostat announced that the gross domestic product (adjusted for seasonal effects) grew by 0.3 % in the second quarter of 2023. When looking at the entire EU, it remained unchanged.

According to estimates by Eurostat, industrial production (adjusted for seasonal effects) rose by 0.5 % in the eurozone and by 0.4 % in the EU between May and June 2023. Compared to June 2022, industrial production dropped by 1.2 % in both the eurozone and the EU in June 2023.

The unemployment rate in the eurozone is still at an all- time low. According to the statistical authority Eurostat, the unemployment rate of 6.4 % in June remained stable compared to May (previous year: 6.6 %). This is the lowest level since the countries of the currency union started to

record this figure about 25 years ago. The unemployment rate in the entire European Union stood at 5.9 % in June (previous year: 6.0 %).

Inflation continues to decline in both the European Union and the eurozone. According to the figures published by Eurostat, the annual inflation rate in the eurozone dropped to 5.5 % in June 2023 from 6.1 % in May. In the European Union, the inflation rate dropped from 7.1 % in the previous month to 6.4 % in June. In June 2022, the inflation rates had still amounted to 8.6 % and 9.6 % respectively.

The harmonised index of consumer prices (HICP) for Germany, which is calculated for European purposes, amounted to 6.8 % in June 2023. In the previous month of May, it had still stood at 6.4 %.

1.3 Overseas

The Australian economy has grown impressively over the last 20 years and the economic performance is currently at an all-time high. However, even Australia's economy is impacted. In the wake of the Russian invasion of Ukraine, Australia recorded the highest inflation rate in more than 30 years. Prices rose by an average of 6.6 %. However, inflationary pressure is expected to ease in the course of 2023. According to forecasts, the inflation rate has decreased to 5.3 % this year.

2 Performance report

2.1 Einhell Group revenue

From January to June 2023, the Einhell Group generated revenue of EUR 525.9 million (previous year: EUR 563.7 million). The decrease in revenue in the first half of 2023 thus amounted to EUR 37.8 million or -6.7 % compared to the previous year.

As reported before, the first quarter of 2023 was clearly below the exceptionally strong prior-year quarter (-14.5 %). In the second quarter of 2023, revenue was at the prior-year level, meaning that Group revenue managed to catch up considerably in the course of the year. The margins of the Einhell Group outside of Germany showed a positive development. All in all, the second quarter was satisfactory for the Einhell Group.

The Einhell Group expects the second half of the year to exceed the previous year's comparable period as its customers will have reduced their high inventories by then, causing revenue to pick up again. However, revenue has still been relatively weak in July and August so far.

As at 30 June 2023, the share of Power X-Change products sold in total Group revenue stands at 46 % (previous year: 43 %).

In the D/A/CH region (Germany, Austria, Switzerland), revenue dropped to EUR 227.0 million (previous year: EUR 244.5 million).

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Half year report as at 30 June 2023

Due to the high inventories built up in the previous year, the customers did not place as many orders in the first half of 2023. Customers in Germany in particular show a very reluctant order behaviour, while Einhell has already manufactured the goods.

This also led to a decline in earnings in this region.

In Western Europe, revenue of EUR 102.9 million (previous year: EUR 107.0 million) was slightly below the prior-year level. The largest sales markets in the region include France, Italy and the UK.

The subsidiaries in the Western Europe region were able to keep their revenue more or less stable in the first half of 2023. The share of Power X-Change products in total revenue has also risen in Western Europe. In the UK, the share already amounts to 57 % (previous year: 50 %).

Earnings in the Western Europe region were slightly above the prior-year level in the first half of 2023. The companies in France and Italy were able to improve their earnings performance compared to the prior-year period. The subsidiaries in Portugal and Spain faced a difficult market environment that weighed on revenue and earnings. The business in Scandinavia is also falling short of expectations.

In Eastern Europe, revenue of EUR 51.0 million is at the previous year's level (EUR 50.5 million). The strongest companies in this region in terms of revenue were our subsidiaries in Turkey, Croatia and Poland.

EBT declined in nearly all of the companies in the Eastern Europe region. This was due to high inflation and the related increase in prices. In addition, higher financing costs due to the increase in interest rates were felt here.

In the Overseas region, revenue decreased by 4.9 % from EUR 124.7 million to EUR 118.6 million. The Einhell subsidiary with the highest revenue in this region is the Australian company Einhell Australia (formerly Ozito).

Performance of the subsidiaries in the Overseas region was uneven in financial year 2023. While Einhell Australia was able to achieve earnings growth despite declining revenue, nearly all of the South American subsidiaries were struggling with difficult market conditions. The Canadian subsidiary acquired last year showed a strong performance.

In the Other Countries including Asia, revenue has also declined year-on-year to EUR 26.4 million (previous year: EUR 37.0 million).

The Other countries region, and here the Asian subsidiaries in particular, did not manage to increase their revenue compared to the prior-year period. This is attributable to highly reluctant buying activities of FOB direct customers.

2.2 Earnings development

From January to June 2023, the Einhell Group generated profit before income taxes of EUR 44.3 million (previous year: EUR 48.2 million). The pre-tax margin is 8.4 % (previous year: 8.5 %).

The margin before taxes and PPA is 8.6 % (previous year: 8.7 %).

Consolidated net income after minority interest amounted to EUR 30.3 million in the period under review (previous year: EUR 34.0 million), while earnings per share amounted to EUR 8.0 (previous year: EUR 9.0 per share).

Personnel expenses increased year-on-year due to a higher headcount and amounted to EUR 63.9 million (previous year: EUR 57.8 million).

Depreciation and amortisation increased in financial year 2023, from EUR 6.9 million to EUR 7.6 million.

Other expenses also increased year-on-year from EUR 84.8 million to EUR 91.7 million. The rise in other expenses is mainly attributable to increased marketing activities in the first half of 2023. The share in revenue that was expended on marketing measures amounted to 5.7 % in the Einhell Group (previous year: 3.9 %).

The financial result of EUR -3.5 million (previous year: EUR -2.6 million) is lower than in the previous year. This includes financial income amounting to EUR 7.1 million (previous year: EUR 7.5 million) and financial costs in the amount of EUR 10.6 million (previous year: EUR 10.1 million). Financial costs include the surge in refinancing costs in some countries with high interest rates, expenses for currency hedging etc. Increases in the interest rates for various currencies also had a negative impact here.

3 Personnel and HR services

On 30 June 2023, the Einhell Group had 2,536 employees worldwide (previous year: 1,956).

The increase in headcount was caused primarily by the acquisition of the new companies in Thailand and Vietnam. The number of employees as at 30 June 2023 was 449 in Thailand and 66 in Vietnam.

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Half year report as at 30 June 2023

4 Financial performance and net assets

The material items in the statement of financial position as at 30 June 2023 and 30 June 2022 are as follows:

5 Investments

In the period under review, the Einhell Group's CAPEX without Thailand and Vietnam amounted to EUR 5.9 million (previous year: EUR 2.6 million). The majority of this was spent on operating and office equipment and advance payments on assets under construction. As in previous years, investments in product development are shown under Other operating expenses and Personnel expenses in the Consolidated statement of income.

6 Current assets and liabilities

Goods inventories decreased significantly since the previous year to EUR 358.9 million (previous year: EUR 476.9 million). After the availability of goods stabilised considerably, the high inventories that had been built up to counter the supply shortages over the last months are now being gradually reduced.

Trade receivables are stated net of allowances for bad debts. At EUR 219.0 million, trade receivables are at the prior-year level (previous year: EUR 214.4 million). Receivables outstanding correspond to the revenue of 2.1 months.

Derivative financial assets have decreased substantially over the previous year to EUR 7.3 million (previous year: EUR 86.2 million) as the derivatives for currency hedging showed much higher fair values in the previous year.

At EUR 29.1 million, other non-financial assets were also clearly below the previous year's level (previous year: EUR 44.9 million). The largest item here is VAT receivables, which decreased by EUR 17.7 million compared to the previous year.

Cash and cash equivalents amount to EUR 21.8 million (previous year: EUR 7.5 million).

Compared to the prior-year period, liabilities to banks decreased from EUR 296.7 million to EUR 177.9 million due to the substantial decline in stocking levels.

7 Group structure

7.1 Incorporation of EINHELL Operations GmbH

In June 2023, Einhell Germany AG founded EINHELL Operations GmbH in Budapest/Hungary. Einhell Germany AG owns 100 % of the shares in this company. The Group intends to manufacture mainly batteries at this site in order to reduce the dependency on the Chinese market.

7.2 Acquisition of Swisstec Sourcing Vietnam JSC Further, Einhell Germany AG acquired 100 % of the shares in the Vietnamese company Swisstec Sourcing Vietnam Joint Stock Company headquartered in Thu Dau Mot City/Vietnam, which was included in the consolidated financial statements from 1 April 2023. The company is an established distributor of screws, fastening fixtures and a range of hand-heldtools, the main customers of which are European and Canadian DIY retail chains.

The purchase price allocation has not yet been fully completed as at the reporting date, which is why the consolidation in the Group is based on preliminary figures. The subsidiary was fully consolidated for the first time as at 30 June 2023.

The purchase price and the amount of goodwill realised at the time of acquisition are as follows:

The amount of goodwill in EUR changed as at the reporting date due to currency effects. In addition to the existing workforce, the goodwill also reflects the Einhell Group's improved presence in the fields of accessories and hand-held tools and the access to the Vietnamese procurement market which is part of our second source strategy aimed at reducing our dependency on the Chinese procurement market.

The purchase price for Swisstec Sourcing Vietnam JSC includes an earn-out component of EUR 2.6 million at the time of acquisition, which will be paid out over a period of three years and is determined based on the annual EBT. The estimate of the earn-out is based on the current planning and is theoretically unlimited to the top. The remainder of the transferred consideration is to be paid out in cash. On the reporting date, no payments had been made towards the purchase price and the full amount of the consideration was recognises under liabilities in the statement of financial position as at 30 June 2023.

The most important items included in the consolidated financial statements as at the time of first-time consolidation are as follows:

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