Earnings, assets and financial position

Fiscal year 2023 was characterized by a persistently challenging environment due to polycrises. The dominant issues included the ongoing war in Ukraine, numerous geopolitical tensions and a largely tight interest rate policy by central banks. The price level, which although slower in its momentum, remains high in many areas, and at times soft demand due to economic conditions, had an impact on the markets and the business of NORMA Group.

In this environment, NORMA Group’s sales amounted to EUR 1,222.8 million, down only slightly by 1.6% on the previous year despite the numerous turbulences in the market (2022: EUR 1,243.0 million). Organic growth amounted to 0.7% and developed in line with the Management Board’s expectations, which were adjusted in November. This was supported in particular by the successful price increase initiatives negotiated during the year. In contrast, currency effects, mainly in connection with the US dollar but also the Chinese renminbi yuan, had a negative impact on sales of -2.4%.

While the EMEA region developed positively overall due to strong demand from the automotive industry and good business in the area of standardized joining technology, the Americas region showed a downward trend compared to the exceptionally good prior-year period. This related to the water business of the subsidiary NDS, on the one hand. Its development in the first half of 2023 was very subdued, but from the third quarter onwards organic revenue showed a more positive trend again. On the other hand, the development of sales in the Americas region was negatively impacted by labor strikes in the automotive industry. Although the Asia-Pacific region achieved positive volume growth, it also fell short of the previous year, mainly due to negative currency effects.

At EUR 97.5 million, the adjusted operating result – adjusted EBIT – was lower than in the previous year by 1.5% (2022: EUR 99.0 million). At 8.0%, the adjusted EBIT margin was exactly the same as in the previous year (2022: 8.0%). In the fourth quarter, the EBIT margin improved significantly compared to the same quarter of the previous year. Despite the slight decline in sales, NORMA Group achieved stable profitability in fiscal year 2023. This is due in particular to measures to increase efficiency in the areas of production and supply chain management. Inflation-related cost increases were also largely offset by targeted cost-cutting measures.

Net operating cash flow developed very strongly. It amounted to EUR 87.3 million in 2023, exceeding the previous year's figure (2022: EUR 65.3 million) and the expectations for 2023 as a whole. The positive development was due to optimized (trade) working capital, partly as a result of further improved inventory management and good receivables management.

NORMA Group’s Management Board is looking ahead to 2024 with the necessary caution due to the challenges that partly continue to prevail in the business environment. Further information on expected developments for 2024 can be found in the FORECAST REPORT

Adjustments

Management adjusts the result for the fiscal year for certain expenses and income in connection with realized M&A transactions in order to manage the Group's operations. The adjustments are made in accordance with the management approach in segment reporting. The adjusted results presented below reflect the management’s view.

In fiscal year 2023 adjustments for acquisition-related expenses in the amount of EUR 0.2 million (2022: EUR 0 million) were made within EBITDA (earnings before interest, taxes, depreciation of property, plant and equipment and amortization of intangible assets). Within EBITA, depreciation of property, plant and equipment from purchase price allocations amounted to EUR 0.8 million in fiscal year 2023 (2022: EUR 1.3 million). In addition, amortization of intangible assets from purchase price allocations in the amount of EUR 20.3 million (2022: EUR 21.2 million) was adjusted within EBIT.

Notional income taxes resulting from the adjustments are calculated using the tax rates of the respective local companies concerned and included in adjusted earnings after taxes.

Table T028 shows the adjusted figures in fiscal year 2023. More detailed information on the unadjusted figures can be found in the NOTES.

Earnings position

Development of sales

Group sales

NORMA Group’s sales amounted to EUR 1,222.8 million in fiscal year 2023, falling short of the previous year (2022: EUR 1,243.0 million) by a slight 1.6%. This includes organic sales growth of 0.7%, which was primarily supported by price increase initiatives. On the other hand, currency effects, mainly in connection with the US dollar, but also with the Chinese renminbi yuan, had a negative impact of -2.4% on sales.

Fiscal year 2023 was characterized by a persistently challenging environment due to polycrises. The dominant issues included the ongoing war in Ukraine, numerous geopolitical tensions and a largely tight interest rate policy by central banks. The continued high price level in many areas and periodically weaker demand due to the economic situation also had a negative impact on the markets and companies. These factors also had an impact on NORMA Group’s business. In addition, the second half of 2023 saw weak development in the Americas region in particular, which was partly due to the work stoppages within the automotive industry in the USA and the prioritization of profitable business. The Asia-Pacific region was also subdued. This was mainly due to negative currency effects in the region, which had a negative impact on sales. In contrast, the EMEA region performed solidly in fiscal year 2023, although the last quarter of 2023 was also more subdued, as is typical for the business.

SJT area (Water Management and Industry Applications) records decline; EJT area (Mobility & New Energy) shows solid development

With its Standardized Joining Technology (SJT) division – and the associated Water Management and Industry Applications business units – NORMA Group generated sales of EUR 506.7 million in fiscal year 2023, 5.3% below the previous year’s figure (2022: EUR 535.3 million). Organic sales growth accounted for 2.8% of this. Negative currency effects had an additional negative impact of 2.6% on sales. Price increase initiatives negotiated with customers counteracted a further decline. The decline is primarily due to lower demand in the industrial business in the Americas and Asia-Pacific regions. In addition, the lower revenue was due to a normalization within the US water business compared to the strong growth in the previous year, which was, however, not as strong after the subdued first half of the year, but organic sales showed a positive trend again in the second half of the year.

In the EJT business, the Mobility & New Energy strategic business unit, sales revenue in fiscal year 2023 amounted to EUR 709.6 million. Compared to the previous year (2022: EUR 698.8 million), this results in an increase in sales of 1.6% (organic: 3.8%). Currency effects dampened growth by 2.2%. The positive development was primarily due to a strong increase in sales in the EMEA region. Price increase initiatives negotiated with customers also had a stimulating effect. In contrast, the Americas region saw an overall decline in the past financial year, which can be attributed to two main effects: On the one hand, the previous year had been characterized by strong positive postponement dynamics. On the other hand, the labor strikes within the US automotive industry in the second half of 2023 had a strong negative impact. In the Americas region, this was only partially offset by price increases negotiated with customers. In the Asia-Pacific region, positive impetus from organic growth was offset by strongly negative currency effects.

Development of earnings

(Adjusted) EBIT, (adjusted) EBITA and adjusted ROCE

The operating result (earnings before interest and taxes, EBIT) amounted to EUR 76.1 million in fiscal year 2023 and was therefore only slightly below the previous year’s figure (2022: EUR 76.5 million). The EBIT margin was 6.2% (2022: 6.2%). EBIT was primarily impacted by additional expenses for employee benefits due to inflation and expenses in connection with the reduction of production backlogs in the EMEA region.

EBIT adjusted for depreciation and amortization from purchase price allocations and acquisition-related expenses fell by 1.5% to EUR 97.5 million in the current reporting year, compared to EUR 99.0 million in the same period of the previous year. At 8.0%, the adjusted EBIT margin was in line with the previous year’s level (2022: 8.0%).

Earnings before interest, taxes and amortization of intangible assets (EBITA) amounted to EUR 100.7 million and were also slightly below the previous year’s figure (2022: EUR 105.6 million). The EBITA margin was 8.2% (2022: 8.5%). Adjusted EBITA of EUR 101.7 million in fiscal year 2022 was 4.8% lower than in the previous year (2022: EUR 106.9 million). The adjusted EBITA margin was 8.3% (2022: 8.6%).

Return on capital employed (ROCE) as a ratio of adjusted EBIT to average capital employed fell to 9.3% in the reporting period 2023 (2022: 9.7%). The year-on-year decline in ROCE was mainly due to lower adjusted EBIT. The decline in ROCE compared to the previous year was mainly due to the increase in average capital employed. The slightly lower adjusted EBIT also had a reducing effect.

Key factors influencing the development of earnings

Cost of materials ratio and gross margin

In fiscal year 2023, NORMA Group’s global purchasing organization was able to achieve significant cost reductions for some important raw materials and supplies. 4 PURCHASING AND SUPPLIER MANAGEMENT

Against this backdrop, the cost of materials fell by 7.9% to EUR 549.6 million in the current reporting year (2022: EUR 597.0 million). The cost of materials ratio (cost of materials in relation to sales) amounted to 45.0% in the 2023 fiscal year, a significant improvement on the previous year (2022: 48.0%). At 45.1%, the cost of materials ratio in relation to total operating performance (sales revenue plus changes in inventories and other own work capitalized) was also lower than in fiscal year 2022 (47.3%).

Gross profit in the fiscal year 2023 reached EUR 668.0 million and exceeded the previous year's figure (2022: EUR 664.4 million) by a slight 0.5%. The gross margin amounted to 54.6%, an improvement of 1.1 percentage points compared to the previous year (2022: 53.5%) This development is primarily due to the lower cost of materials in the past fiscal year. In contrast, the reduction in inventories of finished goods and work in progress by EUR 8.2million (2022: inventory build-up of EUR 15.6 million) had a diminishing effect on the gross margin.

Personnel cost ratio

Personnel expenses amounted to EUR 321.8 million in fiscal year 2023. Compared to the previous year (2022: EUR 309.4 million), this results in an increase of 4.0%. This development is mainly due to inflation-related wage increases. Furthermore, additional expenses for employee benefits in connection with the reduction of production backlogs in the EMEA region also increased personnel expenses in the past fiscal year. Inefficiencies in personnel structure and costs in the EMEA and Americas regions had an additional negative impact on performance. As a result, the personnel cost ratio increased significantly in the current reporting year. It amounted to 26.3% after 24.9 % in fiscal year 2022.

Other operating income and expenses

The balance of other operating income and expenses amounted to EUR -192.0 million in the fiscal year 2023. (2022: EUR -197.8 million). This corresponds to an improvement of 3.0% compared to the previous year. As a percentage of sales, the balance of other operating income and expenses was 15.7% (2022: 15.9%).

While the costs for freight in the logistics area as well as IT and telecommunications fell within other operating expenses mainly as a result of the already largely implemented Group-wide new ERP system, expenses for temporary staff and other personnel-related expenses increased slightly. These are mainly related to the reduction of production backlogs in the EMEA region. The previous year also included higher costs for warranty expenses and contractual penalties, which were not repeated to this extent in fiscal year 2023. Other operating expenses also include costs for marketing and consulting, which were almost on a par with the previous year. NOTES

Other operating income in fiscal year 2023 mainly related to foreign exchange gains from operating activities resulting from currency fluctuations in the European region. Income from the reversal of liabilities and unused provisions were also included. NOTES

NORMA Value Added (NOVA)

NORMA Value Added (NOVA), which also serves as the relevant benchmark for the long-term remuneration of the Management Board, amounted to EUR -43.6 million in fiscal year 2023 and thus decreased considerably compared to the previous year (2022: EUR -27.1 million). The reason for this development was the significantly higher tax rate compared to the previous year as well as the noticeable increase in the weighted average cost of capital (WACC).

Financial result

The financial result amounted to EUR -22.7 million in the fiscal year 2023, a significant deterioration compared to the previous year (2022: EUR -12.6 million). The financial result was mainly impacted by the significantly higher net interest expense compared to the previous year. This was due to a noticeable increase in interest expenses from liabilities to banks, which resulted from a tight interest rate environment in the USA and Europe. NOTES.

Income taxes

In the reporting period, the tax expense at Group level amounted to EUR 25.5 million (2022: tax expense EUR 24.7million). Measured against a pre-tax result of EUR 53.5 million (2022: EUR 63.9 million), this results in a tax rate of 47.8% (2022: 38.7%). The adjusted tax rate in fiscal year 2023 was 41.3% (2022: 35.2%). The reasons for the increase were non-creditable withholding taxes and non-deductible expenses as well as unrecognized deferred tax assets on losses.

Profit for the period and appropriation of profit

The profit for the period amounted to EUR 27.9 million in fiscal year 2023 and was therefore lower than in the same period of the previous year (2022: EUR 39.2 million). Based on an unchanged number of shares compared to the previous year of 31,862,400, this results in earnings per share of EUR 0.87 (2022: EUR 1.23) after deduction of the profit for the period attributable to non-controlling interests.

Adjusted profit for the period amounted to EUR 43.9 million in fiscal year 2023 (2022: EUR 56.0 million). This results in adjusted earnings per share of EUR 1.37 (2022: EUR 1.75) after deduction of the profit for the period attributable to noncontrolling interests.

The Management Board and Supervisory Board will propose to the Annual General Meeting on May 16, 2024, that a dividend totaling EUR 14.3 million be distributed from the commercial net profit of NORMA Group SE of EUR 27.3 million. This is equivalent to a dividend of EUR 0.45 per no-par value share entitled to a dividend. In fiscal year 2023, the proposed payout ratio amounts to 32.7% of the adjusted net profit and is thus in the corridor between 30% and 35% according to NORMA Group’s sustainable dividend strategy.

Development of sales and earnings in the segments

EMEA

External sales in the EMEA region increased by 5.2% to EUR 514.7 million in fiscal year 2023 (2022: EUR 489.2 million). Organic sales growth amounted to 5.7%. Translation effects in connection with currencies only had a minor negative impact on the development of revenue in the fiscal year (-0.5%).

Sales growth in the EMEA region was primarily generated by positive business in the EJT area (Mobility & New Energy strategic business unit). Driven by high demand from the automotive industry and successful price negotiations, growth compared to the previous year amounted to 6.8% (organic: 7.1%). Revenue amounted to EUR 388.1 million (2022: EUR 363.5 million). By contrast, sales in the SJT area (strategic business units Water Management and Industry Applications) in the EMEA region only grew slightly by 0.6% (organic: 1.5%) to EUR 121.9 million (2022: EUR 121.2 million) due to subdued demand, reduced product availability and negative currency effects.

Overall, the EMEA region’s share of total sales increased to around 42% in fiscal year 2023 (2022: 39%).

Adjusted EBIT in the EMEA region increased significantly in fiscal year 2023 to EUR 24.3 million (2022: EUR 13.8 million). The adjusted EBIT margin was 4.4% (2022: 2.6%). The reason for the improvement in profitability was the higher level of sales compared to the previous year as well as a reduction in cost-intensive special freight, which had been significantly higher in the previous year due to severe supply bottlenecks, and this had a positive effect on the adjusted EBIT margin. In contrast, the development of the operating result in the EMEA region was negatively impacted by higher personnel costs in connection with the reduction of production backlogs.

Americas

In the Americas region, external sales amounted to EUR 534.5 million in the reporting year 2023, falling short of the previous year (2022: EUR 574.2 million) by 6.9%. Organic sales growth was negative (-4.5%). Currency effects had an additional negative impact of 2.4%.

The decline was caused by weaker US water business, which fell noticeably in the full year 2023 compared to the exceptionally good prior-year period due to a weather-related one-off effect in the first half of 2023. The sales figures for the first half of 2023 fell noticeably compared to the exceptionally good prior-year period. In the second half of 2023, however, positive organic sales growth was achieved again in the US water business. Overall, the quality of earnings was prioritized over pure order growth. Industrial business in the Americas region was also subdued, with sales in the area of standardized joining technologies (SJT, with the strategic business units Water Management and Industry Applications) reaching a total of EUR 332.2 million (2022: EUR 355.2 million). This corresponds to a decrease of 6.5% (organic: -4.0%). In the EJT business (Mobility & New Energy strategic business unit), a lower level of sales was also achieved in the Americas region in fiscal year 2023. This was due to two key developments: In addition to the high comparative figures for 2022, which were driven by catch-up effects in the final months of 2022, several weeks of strikes in the US automotive industry in the second half of 2023 had a negative impact on business performance in the Americas region. The decline in demand could only be compensated to a limited extent by the price increases negotiated with customers over the course of the year. Sales in the EJT segment amounted to EUR 201.3 million after EUR 215.4 million in the previous year. This corresponds to a decline of 6.5% (organic: -4.3%).

The Americas region accounted for around 44% of Group sales in fiscal year 2023 (2022: 46%).

At EUR 63.1 million, adjusted EBIT in the Americas region was below the previous year's figure (2022: EUR 74.4 million). The adjusted EBIT margin for the Americas region was therefore 11.6% (2022: 12.7%). Among other things, currency effects in the US dollar region had a negative impact here. The margin in the Americas region was also negatively impacted by inflation-related higher personnel costs coupled with a significantly lower level of sales, whereas lower prices for selected materials had a positive effect on the adjusted EBIT margin

Asia-Pacific

However, the additional revenue was offset by significantly negative currency effects (-7.4%), meaning that revenue in the Asia-Pacific region fell by 3.3% overall to EUR 173.6 million in fiscal year 2023.(2022: EUR 179.6 million).

Sales revenues in the SJT segment, with the two business units Water Management and Industry Applications, amounted to EUR 52.7 million (2022: EUR 58.9 million). This results in a decline in sales of 10.6% compared to 2022, which is divided into a drop of 4.1% in terms of organic development and -6.6% due to negative exchange rate developments. In the Mobility & New Energy business unit (EJT area), NORMA Group again achieved a significant increase in volume business (organic) thanks to higher demand from the Chinese automotive industry: 8.0%). Influenced by strongly negative currency effects (-7.7%), revenue nevertheless changed only marginally compared to the previous year to EUR 120.2 million (2022: EUR 119.9 million). Growth amounted to 0.3% in total.

The Asia-Pacific region accounted for 14% of Group sales (2022: 14%), remaining stable in fiscal year 2023.

At EUR 19.9 million, adjusted EBIT in the Asia-Pacific region was almost on a par with the previous year (2022: EUR 20.0 million). The adjusted EBIT margin amounted to 10.8% (2022: 10.6%), while higher operating expenses, including in connection with the expansion of production and manufacturing capacities in China, dampened the margin development.

Asset position

Assets

Total Assets

Total assets amounted to EUR 1,493.3 million as of December 31, 2023, a decrease of 4.3% compared to the previous year (Dec 31, 2022: EUR 1,560.7 million).

Non-current assets

Non-current assets amounted to EUR 890.9 million at December 31, 2023. Compared to the previous year’s reporting date (Dec 31, 2022: EUR 924.5 million) this corresponds to an decrease of 3.6%. The goodwill included in this figure decreased by 1.9% to EUR 394.8 million due to currency effects (31 Dec 2022: EUR 402.3 million), and other intangible assets fell by 13.8% to EUR 169.0 million (Dec 31, 2022: EUR 195.9 million). Here too, currency translation effects were the main reason for the decrease in the past fiscal year. In contrast, property, plant and equipment increased by 4.2% to EUR 308.4 million (Dec 31, 2022: EUR 295.8 million). In fiscal year 2023, a total of EUR 61.3 million (2022: EUR 53.2 million) was invested in fixed assets (property, plant and equipment and intangible assets, excluding leases). NORMA Group’s investment activities in fiscal year 2023 resulted in a higher investment ratio than in the previous year (2023: 5.0%; 2022: 4.3%). In addition to the construction of a new plant for water management products in the USA, investments were made in the expansion and further development of production facilities in Europe. These included, in particular, locations in the UK, Eastern Europe and Germany. In addition, part of the investment volume in the fiscal year 2023 also related to the strategic expansion of production capacity at the Changzhou, Qingdao and Wuxi production sites in China. PRODUCTION AND LOGISTICS

Non-current assets accounted for 59.7% of total assets as of the reporting date in 2023 (Dec 31, 2022: 59.2%). NOTES

Current assets

Current assets amounted to EUR 602.4 million as at December 2023, and were thus 5.3% below the level of the previous year’s reporting date (Dec 31, 2022: EUR 636.2 million). The decline was primarily due to the significant reduction in inventories. These decreased compared to the previous year (2022: EUR 250.8 million) 12.2% and amounted to EUR 220.1 million as at the current balance sheet date.

Trade receivables and other receivables amounted to EUR 184.5 million as of December 31, 2023, corresponding to corresponding to a decrease of 1.0% compared to the previous year's figure (Dec 31, 2022: EUR 186.3 million). This is mainly due to higher selling prices and higher receivables as of the reporting date.

Cash and cash equivalents amounted to EUR 165.2 million, as at December 31, 2023 (Dec 31, 2022: EUR 168.7 million).

At 40.3%, current assets as a percentage of total assets decreased slightly compared to the previous year’s reporting date (Dec 31, 2022: 40.8%).

(Trade) working capital

(Trade) working capital (inventories plus receivables less payables, in each case mainly trade payables) amounted to EUR 230.9 million as of December 31, 2023, and therefore only changed slightly (0.2%) compared to the previous year’s reporting date (Dec 31, 2022: EUR 230.4 million). The working capital ratio (trade working capital in relation to sales) was 18.9% as of December 31, 2023 (Dec 31, 2022: 18.5%)

Liabilities

Equity ratio

Group equity of NORMA Group amounted to EUR 693.4 million as of December 31, 2023, a decline of 1.7% compared to the previous year (Dec 31, 2022: EUR 705.4 million). The consolidated equity ratio rose to a level of 46.4% as of the reporting date of fiscal year 2023 (Dec 31, 2022: 45.2%). While negative currency effects from the translation of foreign business operations and the dividend payment made in 2023 totaling EUR 17.5 million (2022: EUR 23.9 million) reduced equity, the profit for the period of EUR 27.9 million increased equity.

Net debt

Net debt (financial liabilities including derivative hedging instruments in the amount of EUR 0.5 million less cash and cash equivalents) amounted to EUR 345.4 million at the end of December 2023. Compared to the previous year, (Dec 31, 2022: EUR 349.8 million) the reduction of 1.2% or EUR 4.4 million was mainly due to net cash inflows from the sum of cash inflows from operating activities and net cash outflows from the procurement and sale of non-current assets and from the dividend payment. This was offset by the current interest expenses for loans in the 2023 financial year, the increase in lease liabilities due to additions in the area of right-of-use assets and the valuation-related increase in liabilities from derivatives. In addition, cash-neutral negative net currency effects on foreign currency loans, cash and cash equivalents had an increasing impact on net debt.

Financial liabilities

NORMA Group’s financial liabilities fell by 1.5% to EUR 510.6 million as of the reporting date in 2023 (Dec 31, 2022: EUR 518.4 million). The main reason for this was the repayment of loans in fiscal year 2023. The reduction in

liabilities from ABS and factoring in the area of other financial liabilities and exchange rate effects also lowered financial liabilities. This was offset by the increase in liabilities from leases, which resulted from additions in the area of right-of-use assets due to newly concluded leases. These exceeded the changes due to repayments (payment of lease installments). NOTES

In the third quarter of 2023, NORMA Group successfully completed refinancing by taking out a new promissory note loan with a sustainability component in the amount of EUR 120 million. Loans totaling EUR 124.6 million were repaid in the fiscal year 2023 and loans amounting to EUR 119.4 million were taken out.

Gearing (net debt in relation to equity) was unchanged at 0.5 as of the reporting date in 2023 (2022: 0.5).

Leverage (net debt excluding hedging derivatives in relation to adjusted EBITDA for the past twelve months) was 2.2 and remained at the same level as in the previous year (Dec 31, 2022: 2.2). The leverage relevant for the financing agreements was also 2.2 as of the reporting date December 31, 2023 (December 31, 2022: 2.2)

Assets not recognized in the balance sheet

NORMA Group’s trademark rights and patents to the brands it holds as well as customer relationships, if acquired externally, are recognized in the balance sheet under intangible assets. However, important influencing factors for a successful business are also the awareness and reputation of these brands among customers and their trust in NORMA Group products. The trustful customer relationships based on NORMA Group’s long-established distribution network are equally important. In addition, NORMA Group’s workforce makes an important contribution to the Company’s success with its extensive experience and specific expertise, so that the knowledge gained over many years in the areas of research and development and project management is also seen as a competitive advantage. The values listed are not recognized individually in the balance sheet, but are partly reflected in goodwill and other assets.

Financial position

Financing measures

NORMA Group constantly monitors risks from changes in exchange and interest rate changes and limits them, among other ways, by using derivative hedging instruments. Furthermore, NORMA Group generally strives to achieve a diversification of its financing instruments in order to reduce risks. This also includes the prolongation of repayment obligations and an even distribution of the maturity profile. Most of the supply and service relationships between individual currencies are hedged at matching maturities over the course of the year.

NORMA Group had successfully refinanced its bank credit lines in fiscal year 2019, thus creating further financial security and even greater flexibility for the future. The credit agreement has a total volume of initially EUR 300 million, including a revolving facility of EUR 50 million and a flexible accordion facility. An additional EUR 50 million revolving facility was agreed under the existing credit agreement in October 2021. The refinancing was concluded with a banking syndicate consisting of ten international banks. In addition, a sustainability component links the financing conditions to NORMA Group’s commitment in the area of corporate responsibility. In 2023, as in the previous year, NORMA Group was able to achieve a positive sustainability scoring, which enabled further savings with regard to the credit margin to be realized. After exercising the two extension options from the syndicated loan agreement in fiscal years 2020 and 2021, all components of the loan agreement will be available to NORMA Group through at least 2026. This ensures maximum financing flexibility.

The commercial paper program that has been in place since 2019 and is used for short-term liquidity management, had been utilized in the amount of EUR 0 million as of December 31, 2023 (Dec 31, 2022: EUR 25 million). As of December 31, 2023, EUR 0 million (Dec 31, 2022: EUR 43 million) had been drawn from the revolving credit facilities. Promissory note loan tranches in the amount of EUR 56.35 million were also repaid as scheduled. To refinance this and for general corporate financing, NORMA Group issued a promissory note with a sustainability component in August 2023. The promissory note with a total volume of EUR 120 million was issued in tranches with three, five and seven years as well as fixed and variable interest components. NORMA Group’s gross debt (liabilities to banks) decreased slightly from EUR 465 million as of December 31, 2022, to EUR 456 million as of the end of 2023.

NORMA Group uses interest rate hedges to hedge interest rate risks that could arise from the external financing components. As of December 31, 2023, the average interest rate of the gross debt (excluding derivatives) was 5.19%. The maturity profile of NORMA Group, based on the promissory note loans I (2013), II (2014), III (2016) and IV (2023) and the syndicated bank loan (2019), as of December 31, 2023 was as shown in the following graphics G029: MATURITY PROFILE BY FINANCIAL INSTRUMENT and G030: MATURITY PROFILE BY CURRENCY.

As of the reporting date in 2023, NORMA Group has complied with all key figures contained in the credit agreements (financial covenants: net debt in relation to adjusted Group EBITDA).

Concrete future financing steps depend on the current changes in the financing markets and acquisition potentials.

Cash flow

Net operating cash flow

In fiscal year 2023, NORMA Group generated net operating cash flow (adjusted EBITDA less changes in working capital and investments from operations) of EUR 87.3 million (2022: EUR 65.3 million). The main driver of this positive development was optimized working capital management. In contrast, investments increased significantly compared to the previous year.

Cash flow from operating activities

Cash flow from operating activities increased significantly to EUR 118.9 million in fiscal year 2023 (2022: EUR 76.6 million)l. NOTES

Cash flow from investing activities

The cash outflow from investing activities amounted to EUR 59.8 million in fiscal year 2023 (2022: EUR 44.5 million). It mainly includes outflows for the acquisition of intangible assets and property, plant and equipment, including the expansion and modernization of production sites.

Investments in the EMEA region included the expansion of production capacities for electromobility applications in Poland, capacity expansions in the area of fluid systems in Serbia, and investments in a new mold concept in the UK. In addition, further investments were made in the modernization of fully automated production lines at the Maintal site. This included the area of clamp production in fiscal year 2023.

Investments in the Americas region continued to include the construction and expansion of a new site for Water Management products on the US East Coast, as well as further capacity expansions in the areas of Water Management and electromobility and plant modernizations.

In the Asia-Pacific region, we continued to invest heavily in strategic expansion. This included the expansion of production capacity at the Changzhou site. Localization projects were also implemented in other regions in China and India and investments were made in preparing individual sites for the implementation of customer specific projects.

Cash flow from financing activities

The cash outflow from financing activities increased by 6.3% to EUR 57.9 million in the 2023 fiscal year (2022: EUR 54.5 million). This was primarily due to higher net loan disbursements compared to the previous year and higher interest payments. In contrast, fewer dividends were paid to NORMA Group SE shareholders in fiscal year 2023 (2023: EUR 17.5 million; 2022: EUR 23.9million). Similarly, the payments for lease liabilities and repayments of hedging derivatives in the cash outflow from financing activities in fiscal year 2023 were lower than in the previous year.