Metall Zug : Half Year Report 2023

Dear shareholders,

The Metall Zug Group generated net sales of CHF 228.4 million in the first half of 2023 (H1 2022: CHF 324.4 million). Taking into account the divestment and acquisition effects of CHF - 120.1 million (- 37.0 %), particularly the no longer incurred sales from the Schleuniger Group (Wire Processing Business Unit), and the currency effect of CHF - 6.8 million (- 2.1 %), this equates to pleasing organic growth of 9.5 %. A high order backlog as at December 31, 2022, and an easing on the procurement side favored this growth in the first half of 2023.

EBIT for the reporting period came to CHF 7.6 million and was thus lower than in the same period of the previous year (H1 2022: CHF 23.5 million). The main reason for this is the no longer incurred EBIT contribution from the Schleuni- ger Group, which was deconsolidated in August 2022 (Wire Processing ­Business Unit, H1 2022: CHF 13.7 million). In addition, a strong EBIT decline compared with the first half of 2022 in the Medical­ Devices Business Unit (by CHF 5.9 mil- lion), as well as the continued inflationary environment with rising salary and material costs put a strain on the Group result.

The financial result amounted to CHF 8.7 million (H1 2022: CHF 2.2 million) and includes the pro rata net income of the V-ZUG Group, in which Metall Zug holds a stake of around 30 %, and the Komax Group, in which Metall Zug has held a 25 % stake since the end of August 2022. Net income fell to CHF 13.3 million (H1 2022: CHF 19.1 million).

At CHF 6.9 million, cash flow from operating activities developed favorably in the first half of 2023 despite the lower operating result (previous year: CHF - 13.4 million). This is mainly attributable to the reduction in accounts receivable, which were at a high level at the end of the year. In contrast, inventories were further increased, primarily due to the growing project business of Belimed Life Science.

The net cash position (cash and cash equivalents and securities less short- and long-term financial liabilities) came to CHF 1.1 million as at June 30, 2023, and was therefore CHF 13.6 million lower than at December 31, 2022 (CHF 14.7 million), following the distribution of cash dividends of CHF 15.7 million. In addition to the effect of the cash dividends, the decrease was mainly the result of continued large investments in real estate projects by the Technology-

GROUP REPORT

cluster & Infrastructure Business Unit, as well as the acquisition of an operating property in Mannheim, Germany, by Haag­ -Streit GmbH. The Metall Zug Group still has a solid balance sheet, with shareholders' equity of CHF 514.5 million, which translates into an equity ratio of 72.7 %.

Infection Control: Clear Sales Growth in All Segments The Infection Control Business Unit (Belimed Group) generated net sales of CHF 88.5 million (H1 2022: CHF 73.1 mil- lion). Taking into account the acquisition effect of 2.6 % associated with the acquisition of Amity Ltd (UK) in the previous year and a foreign currency impact of - 5.0 %,this equates to organic growth of 23.5 %.

At the beginning of this year, Belimed benefited from a high order backlog from the end of 2022. Therefore, the ­"Equipment" area displayed strong growth in the first half of 2023, most prominently in the Chinese market, albeit in comparison to a previous year marked by problems on the procurement side. The "Service" area also recorded solid growth thanks to price increases and the fact that equipment in hospitals was used more regularly again following the COVID-19 pandemic. The "Consumables" area recorded a positive trend primarily due to the acquisition of Amity. The "Digitalization" segment also continues to grow.

At CHF - 3.7 million, EBIT for the first half of 2023 is above the prior-year level (H1 2022: CHF - 4.6 million), but remains in negative territory. Inflation-related salary increases and additional costs in the research and development area impacted the result in the first half of 2023. However, it must be taken into account that the previous year included a positive onetime effect amounting to CHF 1.6 million from the release of a provision for a legal case that was no longer required. Without this one-time effect, Infection Control recorded an improvement in EBIT.

Belimed was able to successfully integrate Amity into the Group as an independent organization, meaning that the expansion of the chemicals business is gaining momentum. Thus, the entire Belimed Protect range was newly launched onto the market. The in-house formulation creates sustainable added value for customers thanks to shorter cycle times and the use of fewer chemicals.

Belimed China has received multiple awards for its cleaning and disinfection equipment for the Central Sterile Supply­ Department in accordance with the "China's Medical ­Equipment Industry Data Result 2022" report published by Health News. The acknowledgement and award presentation took place at the China Medical Devices Industrial Data Release Conference 2023 in Shanghai.

In the Digitalization area, Belimed has set itself the goal of linking 1 000 customer devices via the cloud during the current year, and is on course to do so. The cloud connection will give customers access to new features and the latest train- ings. Moreover, it is also possible to provide customers with faster and better support during a service call, thus shortening­ equipment downtime.

Medical Devices: Challenges in the US market and increased investments in R&D lead to lower result

In the first half of 2023, the Medical Devices Business Unit (Haag­-Streit Group) posted lower year-on-year net sales in the amount of CHF 93.9 million (H1 2022: CHF 105.9 million). Adjusted for currency effects of - 2.7 % and the divestment effect from the sale of Clement Clarke International Ltd., Harlow (UK), of - 4.7 %, organic sales declined by - 3.9 %.

The lower net sales are mainly attributable to the important US market. After record-high sales and order intakes in the previous year, the business unit was confronted with a con-

GROUP REPORT

trary development this year. Distributors reduced their high inventories in the first half of the year, which led to a temporary restraint in orders and deliveries. As a result, the development of sales in the second half of the year will most likely be below the previous year's level as well. On the other hand, demand for simulators and microscopes developed favora- bly. However, deliveries of microscopes were delayed due to capacity and supply chain bottlenecks.

EBIT came to CHF 12.6 million in the first half of 2023 (H1 2022: CHF 18.4 million), which is significantly lower than in the previous year. The lower net sales, a changed product mix and the significantly higher strategic investments in research and development were the main reasons for the considerably lower EBIT. Cost-saving measures introduced in other areas could not fully compensate for the decline in profits. In addition, EBIT in the first half of 2022 included an extraordinary contribution from the partial release of a provision for pension obligations at a subsidiary in the UK amounting to CHF 2.5 million. The adjusted decrease in EBIT therefore amounts to CHF - 3.4 million, respectively - 21.3 %.

On the product side, Haag-Streit received excellent feedback from the market regarding the image quality of the IM 910 imaging module. Demand for the Anterior Suite for the

Eyestar­ 900 is also developing positively in line with expecta- tions. Digitalization is making progress as planned in all areas of product development.

Technologycluster & Infrastructure: Three Major

Projects Are Progressing; Change in Operational

Management

The Technologycluster & Infrastructure Business Unit's EBIT came to CHF 0.8 million in the first half of 2023 and was thus slightly lower than in the same period of the previous year (H1 2022: CHF 1.0 million).

The development of Tech Cluster Zug remains highly dynamic, characterized by the three ongoing major projects SHL­ -­Südtor, Project Pi and CreaTower I. In general, however, there are challenges arising from the development of construction costs, which require adjustments to the original project budgets.

As of 2026, the SHL-Südtor building will serve as the new international headquarters and production site for SHL ­Medical.

The site will offer space for around 350 employees­ and extensive capacity for the production of drug delivery systems. The planning application for preparatory work, i.e. site installations, demolition and remediation of contaminated sites, was submitted in July 2022 and the corresponding work began in ­February 2023. The building construction is scheduled to start in September 2023.

With regard to the Project Pi wooden high-rise, which will primarily offer affordable accommodation, project planning is expected to resume at the end of the third quarter of 2023. However, due to the "added value initiative" ("Mehrwert-­ Initiative") in Zug, which was approved in June 2023 and calls for more affordable housing in Zug, it is uncertain when the development plan will be discussed in the legislative branch of Zug city council.

The CreaTower I building will serve as the new headquarters for VZ Depository Bank and provide 400 to 500 workplaces. A particularly innovative part of the project is the planned arched ceiling construction, which was developed by the Research Group at ETH Zurich. In certain places, it requires considerably less material thickness, so that up to 65 % less concrete and 80 % less steel are expected to be needed versus conventional construction methods. The preliminary contract for CreaTower I was signed in June 2023.

GROUP REPORT

With a usable area of 1 500 m2, an affordable cultural space is being created in Hall 11 on the Tech Cluster Zug site. In future, the hall will be temporarily used by creative artists as a studio, a display area for Kunsthaus Zug, and for events. Founded in April, the non-profit organization Kunst Cluster Zug is responsible for sponsorship. The canton of Zug and city of Zug will also contribute to the costs. It is scheduled to open at the end of 2023.

The round of talks "Zukunft Industrie Zug (ZIZ)" (Future of Industry in Zug) was held on July 5, 2023, on the theme of "Die Zukunft des Wohnraums - Kann man in der Schweiz nicht mehr bauen?" (The Future of Living Space - Is it No Longer Possible to Build in Switzerland?). The discussion covered whether there really is a housing shortage, what kinds of apartments are missing and where, and why the property sector does not seem to be able to meet the increasing demand.

On July 1, 2023, Christina Annen took over the role of CEO of the Technologycluster & Infrastructure Business Unit from Beat Weiss. Christina Annen holds a degree in construction engineering from ETH and has undergone further training in the area of business management. She most recently worked for pom+ Consulting Ltd. as Head of the Construction Trustee Service Unit for over two years. At the same time, Beat Weiss replaced Martin Wipfli as Chairman of the Board of Directors of Tech Cluster Zug AG and Urban Assets Zug AG.

Reporting Segment Others

The Belimed Life Science Group, Gehrig Group AG and Metall Zug AG (Corporate) are grouped together in the ­Others reporting segment. The reporting segment posted net sales of CHF 50.1 million in the first half of 2023 (H1 2022: CHF 33.8 million) and an operating result of CHF - 2.1 million (H1 2022: CHF - 5.0 million).

Belimed Life Science achieved significantly higher net sales in the first half of 2023 than in the same period of the previous year. This can be attributed to the high order backlog from the end of 2022, which increased again slightly in the first half of 2023 thanks to a continued gratifying order intake. This development benefited from sustained high market dynamics in the pharmaceutical industry, driven by relocalization efforts to reduce dependencies in the production of critical drugs and vaccines, as well as the approval of mRNA-based vaccines in the area of oncology. The "Service" segment also recorded growth.

The overall positive mood continues to be overshadowed by the difficult delivery situation for certain electronic components and ongoing shortage of skilled workers at all sites. In addition, higher energy and salary costs had a negative impact on the result for the first half of 2023. The gross margin continued to be negatively affected by inflation in the first half of 2023 owing to long project lead times. Thanks to the higher level of sales, the operating result (EBIT) in the first half of 2023 is in positive territory, and thus above the level of the same period in 2022.

Belimed Life Science was able to successfully complete the expansion of vertical integration by insourcing the manufacture of components and pressure vessels in Sulgen in the first half of the year. This will enable significantly shorter delivery times in future thanks to more efficient project handling.

Last year, the latest version of the proven PST.2 sterilization system was presented at the "Achema" world trade fair in Frankfurt. This further development of the existing PST and BST steam sterilizers was successfully launched onto the market in April 2023. The PST.2 combines the advantages of the modular concept of the BST with the customizable devices