KUKA : annual financial statements and management report for fiscal 2021 (with explanatory report of the Executive Board concerning the disclosures according to articles 289 para. 4 and para. 5 HGB)

KUKA AKTIENGESELLSCHAFT

SUPERVISORY BOARD REPORT

CONSOLIDATED FINANCIAL REPORT und

ANNUAL FINANCIAL STATEMENTS 2021

SUPERVISORY BOARD REPORT

CONSOLIDATED FINANCIAL REPORT OF KUKA AKTIENGESELLSCHAFT

• 01 Fundamental information about the Group

  • 01 Group structure and business activities

  • 01 Systems division

  • 01 Robotics division

  • 02 Swisslog division

  • 02 Swisslog Healthcare division

  • 02 China division

  • 02 Markets and competitive positions

  • 03 Group strategy

  • 05 Financial management system

  • 07 Achievement of targets

  • 08 Research and development

  • 12 Procurement

• 13 Economic report

  • 13 Macroeconomic and industry conditions

  • 16 Business performance

  • 20 Financial position and performance

  • 31 Notes to the annual financial statements of KUKA Aktiengesellschaft

  • 36 Sustainability at KUKA

• 39 Forecast, opportunity and risk report

  • 39 Opportunity and risk report

  • 48 Forecast

• 53 Internal control and risk management system

• 55 Disclosures in accordance with section 289a sentence 1 and section 315a sentence 1 of the German Commercial Code (HGB) including accompanying explanations

ANNUAL FINANCIAL STATEMENTS OF KUKA AKTIENGESELLSCHAFT

• 60 Balance sheet

• 61 Income statement

• 62 Notes

  • 89 Corporate bodies

  • 92 Schedule of shareholdings

• 95 Responsibility statement

• 96 Independent Auditor´s Report

Supervisory Board report

Dear Shareholders,

After an economically difficult year in 2020, we can look back on a very successful year in fiscal 2021. Despite the ongoing coronavirus pandemic and other challenges, such as global supply shortages of commodities and components, the speed of KUKA's turnaround within one year is remarkable. Once again, it became clear that Automation & Robotics are key topics for the future and that the demand for KUKA products and solutions is unbroken and will continue to grow.

Fiscal 2021 was a busy year for the Supervisory Board and its committees. Due to the large number of topics, the Supervisory Board and its committees held significantly more meetings than in a normal year. The topics were and are of great importance to KUKA, with the result that intensive support and involvement by the Supervisory Board and its committees were appropriate and necessary. Of particular note in this respect are, for example, discussion of a growth strategy for the coming years (Winning 2025), analysis of the ongoing coronavirus pandemic and its impact on KUKA, discussion and evaluation of the squeeze-out proposal announced by Midea Group in November 2021, and the personnel decisions concerning the Management Board of KUKA Aktiengesellschaft.

The outstanding performance and commitment of KUKA Group employees deserve special mention. As a result of the coronavirus pandemic, working conditions and work procedures in fiscal 2021 again differed from those in normal years. With great dedication and a high degree of flexibility, they ensured that customer orders were processed even under difficult circumstances, that supply chains were maintained and that important development projects were continued.

In the year under review, the Supervisory Board performed the duties incumbent upon it by law, the Articles of Association and the Rules of Procedure in full. The Supervisory Board and its committees monitored and advised the Management Board in its management of the company on the basis of regular and detailed reporting by the Management Board. Furthermore, there was an intensive exchange between the Chairman of the Supervisory Board and the Chairman of the Management Board as well as a regular exchange between the Chairs of the Audit Committee and the Strategy and Technology Committee and the members of the Management Board. In this way, the Supervisory Board was always informed about the business policy, corporate planning, corporate risks and situation of the company and the Group as a whole.

Cooperation between the Supervisory Board and the Management Board was constructive.

The Supervisory Board performed its duties in plenary sessions, committee meetings, telephone and video conferences, and by means of circular resolutions. Due to the coronavirus pandemic and the associated travel restrictions, the meetings of the Supervisory Board and its committees in the reporting period were held exclusively in virtual form by means of video conferencing.

Changes to the Management Board and Supervisory Board

The Management Board of KUKA Aktiengesellschaft currently consists of its Chairman Peter Mohnen (CEO) and Alexander Tan (CFO). Andreas Pabst was a member of the company's Management Board until June 30, 2021. Alexander Tan was appointed as the company's new CFO with effect from July 1, 2021.

During the reporting period, there was no cause to alter the quota for female Management Board members, which is currently set at 0 percent.

The Supervisory Board members representing the shareholders were elected by the Annual General Meeting on June 6, 2018. The employee representatives on the Supervisory Board were elected on April 10, 2018, in accordance with the provisions of the German Co-Determination Act (MitbestG), and with effect from the conclusion of the Annual General Meeting on June 6, 2018. The following changes have been made to the Supervisory Board since the last Supervisory Board report:

• - Dr. Chengmao Xu resigned from his office with effect from January 17, 2021.

• - Lin (Avant) Bai was elected as a member of the Supervisory Board by the Annual General Meeting on May 21, 2021; he had previously been appointed to the Supervisory Board by court order on February 23, 2021.

At the time the report of the Supervisory Board was submitted, the Board was thus composed of the following members:

With four females out of a total of twelve acting members, the proportion of women on the Supervisory Board amounted to 30 percent at the end of the year under review.

Supervisory Board meetings

In 2021, the year under review, five ordinary and six extraordinary Supervisory Board meetings were held. Furthermore, one resolution was passed by written circulatory procedure.

The first extraordinary meeting of the Supervisory Board was held on March 3, 2021; it dealt with the new compensation system for the Management Board and the reappointment of the Management Board members.

The first ordinary meeting of the Supervisory Board took place on March 24, 2021. First, the nomination of Mr. Lin (Avant) Bai as a member of the Supervisory Board was resolved by the 2021 Annual General Meeting as well as his appointment to the Strategy and Technology Committee. The Management Board then reported on the situation of the company and the Group. The Supervisory Board meeting was centered on the 2020 annual financial statements prepared for KUKA Aktiengesellschaft and the Group. In its role as auditor, PricewaterhouseCoopers (PwC) presented a report and the Chairman of the Audit Committee made a statement. Both sets of annual accounts were approved by the Supervisory Board, which meant that the annual financial statements of KUKA Aktiengesellschaft were thereby adopted. The Supervisory Board also had to reach a decision on the proposal regarding appropriation of the 2020 balance sheet profit. Additionally, it adopted the Supervisory Board report for 2020. The Supervisory Board also dealt with the sustainability report pursuant to sections 315b, 315c, 289c of the German Commercial Code (HGB). The Supervisory Board reviewed this report - as the Audit Committee had done in advance - and raised no objections to it. Furthermore, the Supervisory Board addressed the KUKA/Midea dependency report for 2020. The Supervisory Board dealt with other operational issues such as the convening of the 2021 Annual General Meeting with proposed resolutions to the Annual General Meeting, the scheduling of the 2022 Annual General Meeting, the new compensation system for Management Board members, and the compensation of the Supervisory Board.

On April 30, 2021, another extraordinary meeting was held to discuss the reappointment of the Management Board members.

A further extraordinary Supervisory Board meeting was held on May 19, 2021. At this meeting, it was resolved to reappoint Mr. Mohnen as Chairman of the Management Board ahead of schedule, to terminate the appointment of Andreas Pabst, and to look for a new CFO. Furthermore, it was decided to initiate the search for a CTO.

On the day of the Annual General Meeting held on May 21, 2021, the Supervisory Board convened for ordinary meetings before and after the Annual General Meeting. At the meeting prior to the Annual General Meeting, the Management Board again reported on the situation of the company and the Group. The Supervisory Board then prepared itself for the Annual General Meeting. In the meeting following the Annual General Meeting, the composition of the Strategy and Technology Committee was discussed and approved. In addition, a report on the internal control