MS Industrie : EXTRACTS from the Group's Management Report 2022 (NOT LEGALLY BINDING)

NOT LEGALLY BINDING

Important notes: English translation for convenience purposes only General data format is "TEUR" (Euro thousands),

i.e. TEUR 1.000 = EUR 1.000.000 or EUR 1 million

E X T R ACTS F R O M T H E G R O U P'S M A N AG E M E NT R E P O RT F O R T H E F I N A N C I A L Y E A R 2 0 2 2

MS Industrie AG

You can build stairs to heaven out of stumbling blocks that are put in your way.

Lilli U . Kreßner

Content

FOREWORD	IV
PRODUCT PORTFOLIO	VI
OVERVIEW OF KEY FIGURES	VIII

IV MS INDUSTRIE AGForeword

Dear shareholders, employees and business partners of MS Industrie AG!

Armin Distel and Dr. Andreas Aufschnaiter

Executive Board of MS Industrie AG

In 2022, MS Industrie AG realised a total turnover of around EUR 206.2 million. Compared to the turnover of the previous year (EUR 164.7 million), this represents a very pleasing increase of over +25%. This resulted in particular from a significantly strengthened business in the drive technology segment after the second wave of the Covid 19 pandemic and a revival of market demand in the ultrasonic technology segment.

The development of the various key earnings figures was largely according to plan, but was strongly affected by inflationary effects and supply chain problems in the mechanical engineering sector. The consolidated annual result after income taxes was EUR 1.2 million (previous year: EUR -4.0 million) with a slightly worsened equity ratio of 34.1% (previous year: 37.0%) due to the increased balance sheet total.

We would like to highlight for the readers of this annual report a few key milestones and developments that we believe are significant in assessing the 2022 financial year and the outlook for the future:

•The business situation in the Powertrain Technology segment ("MS Powertrain Technology Group", also abbreviated to "MS PTG") developed very positively again from the middle of 2022. The massive supply chain problems at our main customers in the third quarter, as well as the Covid 19 wave in the first quarter and a few weeks of customer closures due to the Ukraine war, were overcome and PTG generated a positive operating result for the year that was exactly on target.

•In 2022, the MS PTG management succeeded in passing on the significant cost increase and inflation effects - especially for materials and energy - to customers in a comprehensible and timely manner.

•Operationally, the year was characterised by a number of series start-ups of newly acquired products. On the one hand, this involved the machining and assembly of high-precision system components for the truck industry, e.g. valve train components for heavy commercial vehicles of the TRATON Group, and the off-highway sector, and on the other hand the increase in the number of units of a housing for passenger car hybrid drives as a result of the switch to MS PTG as sole supplier.

•A major project in 2022 was the hall expansion at the Trossingen site by around 3,500 sqm of production space, which will be completed in April 2023, as well as the systematic continuation of automation in production.

•In the ultrasonic technology segment ("MS Ultrasonic Technology Group", also abbreviated to "MS UTG"), the area of custom machines for our customers in the passenger carindustry recovered noticeably from around mid-2022. This led to a steadily increasing order backlog, which reached an all-time high at the end of the year. However, the difficulties in procuring components and purchased parts as well as the

Foreword   MS INDUSTRIE AG V

problems with global transport logistics continued throughout the year and led to permanent delays in deliveries, as a result of which a sales volume of around 10 million euros was postponed until 2023.

•The business with ultrasonic series machines based on Industry

4.0 of the "MS sonxTOP" brand developed very positively with a doubling of the business volume - both in terms of incoming orders and turnover. The number of machines installed at customers' sites worldwide is rising steadily, leading to follow-up enquiries and increasing demand for service and tools. After the Covid 19 pandemic was largely overcome, various trade fairs were again held in Europe and North America, including the well-known "K trade fair" in Düsseldorf in October 2022.

•The MS Competence Center built for the Ultrasonic Systems & Components business unit at the Ettlingen site in the Karlsruhe district, with an area of around 1,800 sqm, develops customer- specific solutions for the continuous joining, embossing and perforating of nonwovens and the sealing of packaging. In 2022, the technology was significantly further developed and the first orders were successfully acquired. MS UTG will establish itself here as a technology partner for machine builders serving manufacturers of medical products, hygiene articles, wound dressings, etc. worldwide.

•In autumn 2022, we contributed our remaining minority interest in Elektromotorenwerk Grünhain GmbH to the newly founded Deutsche Elektromotoren Holding GmbH. This in turn acquired 100% of Dietz-Motoren GmbH in Dettingen u. Teck and will in future concentrate on the further expansion of the group for customer-specific electric motors with a sales volume soon to exceed 100 million euros.

At the beginning of 2022, the Group's order backlog amounted to around EUR 118 million and by December 2022 it had increased again significantly to around EUR 144 million, i.e. by around +22%. Despite the unstable international economy as a result of the massive upheavals from the escalated Russia/Ukraine conflict, we expect a very positive development overall for the business segments of the MS Industrie Group.

The price of the MS Industrie share, starting at a level of just under EUR 1.50/share, fell by up to -20% in the course of 2022, but recovered to the initial level by the end of the year. Currently, the share price has visibly improved again to an average of +/- EUR

1.60/share and should continue to develop positively against the background of the very positive long-term order situation of the MS Industrie Group.

Now that we have overcome the various crises and challenges of the last three years, we will concentrate on continuing our steady, organic growth. The best foundations and conditions for this have been created in both segments. We continue to view the war in Ukraine and the international, economic and political changes with concern. As a medium-sized company, we must always retain the flexibility to make adjustments in all directions, in order to be able to counteract any future risks through quick reactions and new entrepreneurial opportunities.

Our special thanks go to all employees of MS Industrie AG, who have once again overcome the challenges of 2022 together with a great deal of strength, perseverance and team spirit.

Yours sincerely,

Dr. Andreas Aufschnaiter

Armin Distel

Munich, 24 April 2023