Business development

The business performance of Norma Group SE essentially corresponds to that of the Group and is described in detail in the chapter ECONOMIC REPORT.

The result of NORMA Group SE determined in accordance with the German Commercial Code (HGB) is mainly influenced by the business development and the results of the affiliated companies. These are mainly reflected in the income from dividends and profit transfers as well as currency effects, allocations from license management and the interest result.

Key financial control parameters with regard to the individual company NORMA Group SE are earnings before taxes and retained earnings to ensure the ability to pay dividends on an ongoing basis. For this reason, NORMA Group monitors and optimizes the ability of its subsidiaries to pay dividends. This is of particular relevance as the adjusted consolidated net income is the decisive factor for the amount of the dividend distribution to the shareholders. NORMA Group aims for a payout ratio of approx. 30% to 35% of the adjusted consolidated net income.

Earnings before taxes amounted to EUR 9,488 thousand in the reporting year (2022: EUR 17,503 thousand). Earnings before taxes developed significantly weaker than forecast, mainly due to the loss absorption of NORMA Group Holding GmbH amounting to EUR -8,510 thousand.

Earnings position

NORMA Group SE generated earnings after taxes of EUR 8,056 thousand in 2023 (2022: EUR 13,763 thousand).

At EUR 5,805 thousand, the Company generated EUR 115 thousand more in sales from license fees for the NORMA Group brand (2022: EUR 5,690 thousand).

Other operating income fell to EUR 16,136 thousand in 2023 (2022: EUR 20,156 thousand). in particular due to the decline in income from currency translation (EUR 1,193 thousand; previous year: EUR 4,259 thousand) and the lower prior-period income of EUR 225 thousand (2022: EUR 376 thousand). The latter mainly resulted from the reversal of provisions. The item also included income in the amount of EUR 14,560 thousand (2022: EUR 14,132 thousand) for licenses used by subsidiaries but held by other Group companies. In this case, the Company assumed the distribution of the license income.

Compared to the previous year, personnel expenses fell by EUR -1.314 thousand from EUR -7,465 thousand to EUR 6,151 thousand. The change resulted mainly from the severance payment to a former member of the

Management Board. The average number of employees in the reporting year was 25 (2022: 26 employees). In addition, reference is made to the separate disclosure of Management Board remuneration in the Group’s Remuneration Report.

Other operating expenses in the amount of EUR -25,836 thousand (2022: EUR -31,028 thousand) included in particular expenses for license fees in the amount of EUR -14,560 thousand (2022: EUR -14,132 thousand), which are distributed by the Company to the subsidiaries as license holders. The decrease in expenses was mainly due to lower consulting expenses (M&A consulting, services of NORMA Group Holding GmbH, legal advice) in the amount of EUR -2,068 thousand (2022: EUR -3,998 thousand). In addition, expenses from currency translation decreased compared to the previous year to EUR -1,292 thousand (2022: EUR -5,820 thousand).

In the reporting year income from investments resulting from a dividend distribution of NORMA Pennsylvania, Inc. amounted to USD 38,000 thousand (EUR 34,681 thousand; 2022: USD 10,000 thousand or EUR 9,502 thousand).

Due to the current profit and loss transfer agreement with the subsidiary NORMA Group Holding GmbH, corresponding income in the amount of EUR 22,377 thousand was received. In the reporting year, there was a loss from profit and loss transfer amounting to EUR -8,510 thousand, in particular due to considerably lower dividend revenues of NORMA Group Holding GmbH. For more details, please refer to the earnings development in the Group Management Report. SEGMENT DEVELOPMENT EMEA

In the 2023 reporting year, the decline in loans to affiliated companies resulted in lower income from loans of financial assets in the amount of EUR 191 thousand (2022: EUR 1,416 thousand). Other interest and similar income increased by EUR 465 thousand to EUR 1,287 thousand (2022: EUR 822 thousand) mainly from the higher cash pool receivables from NORMA Group Holding GmbH. Interest and similar expenses increased from EUR -3,912 thousand by EUR -4,147 thousand to EUR -8,059 thousand, mainly due to the new promissory note loan.

Earnings before taxes decreased by EUR 8,015 thousand to EUR 9,488 thousand (2022: EUR 17,503 thousand). Income taxes for NORMA Group SE amounted to EUR -1,432 thousand (2022: EUR -3,740 thousand) and mainly relate to tax expenses for previous years, in particular due to transfer price adjustments in the Group. Earnings after taxes amounted to EUR 8,056 thousand in the reporting year (2022: thousand 13,763).

The Annual Financial Statements as of December 31, 2023, show retained earnings of EUR 27,300 thousand (2022: EUR 36,768 thousand). The proposal to distribute EUR 14,338 thousand for fiscal year 2023 and to carry forward EUR 12,962 thousand forward to new account will be made to the Annual General Meeting on May 16, 2024. This would mean that a cash dividend of EUR 0.45 per share will be paid.

Asset and financial positions

The asset and capital structure of NORMA Group SE is strongly influenced by the holding function of the Company within the Group.

Compared to the previous year, total assets increased by EUR 23,389 thousand to EUR 554,252 thousand (2022: EUR 530,863 thousand).

The assets side of the balance sheet consisted of 77.1% or EUR 427,449 thousand (2022: 86.3% or EUR 458,292 thousand) from financial assets, including shares in affiliated companies and loans. Shares in affiliated companies decreased slightly from EUR 425,487 thousand to EUR 425,449 thousand. Total loans to affiliated companies decreased by EUR 30,805 thousand to EUR 2,000 thousand (2022: decline by EUR 26,019 thousand to EUR 32,805 thousand), due to repayments from NORMA Pennsylvania Inc. USD 19,500 thousand (EUR 17,821 thousand; previous year: USD 25,000 thousand; EUR 25,082 thousand) and from NORMA Group Holding GmbH EUR 14,000 thousand (previous year: EUR 5,000 thousand).

In addition, at EUR 124,936 thousand as at December 31, 2023, receivables from affiliated companies were EUR 55,742 thousand higher than in the previous year (22.5%; 2022: EUR 69,194 thousand or 13.0%). In particular, this included receivables from NORMA Group Holding GmbH in the amount of EUR 115,247 thousand (2022: EUR 31,248 thousand) from the cash pool agreement. This was offset by the elimination of receivables from the profit and loss transfer agreement; in the previous year, the Company had receivables from NORMA Group Holding GmbH of EUR 22,377 thousand.

In addition to cash and cash equivalents of EUR 524 thousand (2022: EUR 596 thousand), NORMA Group SE had the above-mentioned credit balances from the cash pool with the subsidiary NORMA Group Holding GmbH in the amount of EUR 115,247 thousand (2022: EUR 31,248 thousand).

On the liabilities side, liabilities to banks increased by EUR 26,398 thousand to EUR 209,804 thousand (2022: EUR 183,406 thousand), in particular due to the placement of a new promissory note loan in the amount of EUR 120,000 thousand. The partial repayments of the first and third promissory note loans (EUR 56,032 thousand; 2022: EUR 8,500 thousand) and the full repayment of the revolving credit facility (2022: EUR 15,000) and the Commercial Papers (2022: EUR 25,000 thousand) had an opposing effect.

Liabilities to affiliated companies increased by EUR 7,087 thousand to EUR 12,909 thousand in the reporting year (2022: EUR 5,822thousand), mainly from the liability from profit and loss transfer to NORMA Group Holding GmbH in the amount of EUR 8,510 thousand (previous year: Receivables from profit and loss transfer EUR 22,377 thousand).

Equity fell from EUR 330,231 thousand to EUR 320,763 thousand in the reporting year. The decrease of EUR 9,468 thousand was due to the dividend distribution of EUR -17,524 thousand and, conversely, the net profit of EUR 8,056 thousand generated in the 2023 fiscal year. At 57.9%, the equity ratio was below the previous year's level (2022: 62.2%), mainly due to the changes in liabilities to banks and the associated higher balance sheet total. Retained earnings remained unchanged from the previous year at EUR 45,000 thousand.

Pension provisions have decreased to EUR 3,643 thousand (2022: EUR 4,320 thousand), mainly due to the first-time allocation to the reinsurance policy in the previous year and its increase by EUR 667 thousand in the reporting year as well as the updated actuarial assumptions.

The 2018 G mortality tables published by Prof. Dr. Klaus Heubeck were used as the basis for calculation. In the year under review, the average market interest rate of 1.82% p. a. set by Deutsche Bundesbank for the past ten

years was applied (2022: 1.78% p. a.) was used as a basis. In accordance with section 2 sentence 2 HGB, a residual term of 15 years was assumed. The salary and pension trends were 0.0% and 2.2% respectively (2022: 2.0% and 2.2% respectively) and no staff turnover was assumed.

At EUR 3,452 thousand, other provisions were EUR 94 thousand lower than in the previous year (2022: EUR 3,546 thousand).

Financial position

Due to its function as the ultimate holding company of NORMA Group, the financial position of NORMA Group SE is significantly dependent on the financial position of its direct and indirect subsidiaries. In this context, the NORMA Group SE financial requirements for the performance of its Group-wide functions and the maintenance of its ability to pay dividends are mainly covered by the funds received in the course of the IPO, the promissory note loans raised, revolving credit lines and commercial papers, ongoing profit transfers and distributions as well as royalties from its subsidiaries. There is a profit and loss transfer agreement with NORMA Group Holding GmbH, which also has cash inflows from its subsidiaries.

The external financing of NORMA Group as well as the intra-Group financing of the Group companies were also carried out via external banks as well as NORMA Group Holding GmbH and other foreign Group companies.

In the reporting year, the Company repaid promissory note loans in the amount of EUR 56,032 thousand as scheduled (2022: EUR 8,500 million). To refinance this and for general corporate funding, the Company placed a new promissory note loan in the amount of EUR 120,000 thousand in the reporting year.

In addition, NORMA Group SE together with NORMA Group Holding GmbH has a Senior Facilities Agreement with a bank consortium including comprehensive credit lines. NORMA Group had already successfully refinanced its bank credit lines in fiscal year 2019, thereby creating further financial security and even greater flexibility for the future. The loan agreement has an initial total volume of EUR 300,000 thousand. This includes a revolving facility of EUR 50,000 thousand and a flexible accordion facility.

In October 2021, an additional revolving facility of EUR 50,000 thousand was agreed under the existing credit agreement. As at December 31, 2023, the committed credit line of NORMA Group SE (2022: EUR 15,000 thousand) was repaid in full.

As at December 31, 2023, the commercial paper program (2022: EUR 25,000 thousand), which is used for short-term liquidity management, was repaid in full.

The primary objective of NORMA Group SE’s financial management is to ensure liquidity for current business transactions at all times. Cash and cash equivalents amounted to EUR 524 thousand at the end of 2023 (2022: EUR 596 thousand). In addition, NORMA Group SE had assets from the cash pool with the subsidiary NORMA Group Holding GmbH in the amount of EUR 115,247 thousand (2022: EUR 31,248 thousand).

As of the 2023 balance sheet date, NORMA Group met all financial covenants (net debt in relation to adjusted Group EBITDA) contained in the loan agreements. Due to the solid financial position of NORMA Group SE and its direct and indirect subsidiaries, the Company was able to meet the obligations due at all times during the fiscal year.

Overall statement of the Management Board

In the year under review, NORMA Group SE achieved retained earnings of EUR 27,300 thousand (2022: EUR 36,768 thousand), taking the net profit of EUR 8,056 thousand (2022: EUR 13,763 thousand) into account. As expected, it was thus possible to ensure the ability to distribute the profit.

NORMA Group SE remains committed to a sustainable dividend policy with a payout ratio of approximately 30% to 35% of the adjusted consolidated net income, provided that the economic situation permits this.

Opportunities and risks

NORMA Group SE acts as the holding company that manages NORMA Group. Its development as well as its risks and opportunities therefore mainly depend on the business development of the companies affiliated with the Group. NORMA Group SE is integrated into the Group-wide opportunity and risk management system. For detailed information, please refer to the chapter Group Opportunity and Risk Management. The description of the internal control system for NORMA Group required under Section 289 (4) of the German Commercial Code (HGB) is also provided there.

NORMA Group SE generates its income mainly from license, profit and loss transfer and investment income of its direct and indirect subsidiaries. Due to its holding function, NORMA Group SE is therefore exposed to the risk of receiving lower investment income as a result of declining profits of the subsidiaries or lower royalty income as a result of lower sales of the NORMA Group companies. In case of increasing profits or higher sales revenues of the subsidiaries, NORMA Group SE will receive higher investment income or higher license income.

In the coming fiscal year as well, geopolitical conflicts and wars as well as economic sanction measures could continue to have a negative impact on the global economy and – directly or indirectly – on NORMA Group’s business activities. This could have a major impact on global supply chains, which could lead to a reduction in sales in the affected markets and to increased energy and raw material prices.

Due to the solid financial position of the NORMA Group companies and the possibility to control distributions of the subsidiaries, the opportunities and risks in connection with investment and license income are assessed as possible with a positive effect on earnings.

Forecast / Outlook

For fiscal year 2024, NORMA Group SE expects a moderate increase in license income for the subsidiaries’ brands and the NORMA Group brand compared to 2023. The expenses from licenses for the Group subsidiaries as license holders are also expected to be slightly higher accordingly. The Management Board of NORMA Group assumes that personnel expenses and other cost factors will also increase slightly compared to previous years.

However, this forecast is made under the assumption that no significant negative effects will occur in connection with geopolitical conflicts and wars as well as economic sanctions that could lead to a strong weakening of the global economy and to significant pressure on the business development of NORMA Group. The potential influencing factors in connection with external risk factors from armed conflicts or climate change are discussed in the FORECAST REPORT of the Group.

Taking into account an expected profit transfer from NORMA Group Holding GmbH (2023 loss absorption) as well as the interest result for the year 2024, earnings before taxes are expected to be slightly higher compared to 2023. In this context, it is assumed that the retained earnings and the Company’s ability to pay dividends will continue to be secured.