Risk and Opportunity Report

NORMA Group is exposed to a wide range of risks and opportunities that can have a positive or negative short-term or long-term impact on its financial, asset and earnings position. NORMA Group SE’s risk and opportunity management is therefore an integral part of the company’s management - at both the Group management level and at the level of the individual companies and functional areas. Due to the fact that all corporate activities are associated with risks and opportunities, NORMA Group considers identifying, assessing, and managing opportunities and risks to be a fundamental component of executing its strategy, securing the short and long-term success of the company and sustainably increasing shareholder value. In order to achieve this over the long term, NORMA Group encourages its employees in all areas of the company to remain conscious of risks and opportunities. A detailed description of the current assessments of the opportunities and risks of the NORMA Group can be found in the 2021 Annual Report 2021. 2021 Annual Report

Risk and Opportunity Profile of NORMA Group

As part of the preparation and monitoring of the risk and opportunity profile, NORMA Group assesses opportunities and risks on the basis of their financial impact and probability of occurrence. The financial impact of opportunities and risks is assessed on the basis of the effect on the Group’s earnings and liquidity. The following four categories are used with reference to the potential maximum average annual impact in the period under review of the risk management system:

Low: up to EUR 5 million

impact

on earnings or liquidity

Moderate: more than EUR 5 million and up to EUR 15 million impact on earnings or liquidity

Significant: more than EUR 15 million and up to EUR 30 million impact on earnings or liquidity

High: more than EUR 30 million

impact on earnings or liquidity

The interval used relates the financial impact of a risk or opportunity to the EBIT of the Group or a segment if the respective risk or opportunity relates solely to a specific segment. The assessment of opportunities and risks whose financial impact has an effect on line items in the Consolidated Statement of Comprehensive Income below EBIT is also performed in relation to EBIT. The presented impact always reflects the effects of countermeasures initiated. The probability of individual risks and opportunities occurring is quantified based on the following four categories:

Unlikely: up to 5

%

probability of occurrence

Possible: more than 10

%

and up to 25

%

probability of occurrence

Likely

: more than 25% and up to 50% probability of occurrence

Very likely: more than 50

%

probability of occurrence

Compared to the risks and opportunities assessment published in the 2021 Annual Report, the only changes with regard to the probability of occurrence or financial impact of the risks are in the areas of economic and cyclical risks and raw material prices.

The corona pandemic - particularly against the backdrop of continuing high infection rates and further waves of the pandemic - continues to impact global economic and cyclical development. It can therefore be assumed that the economy will continue to be adversely affected in part or in the long term, particularly as a result of direct and indirect potential macroeconomic effects on the global value and transport chains. These could be caused, among other developments, by possible shortages of personnel and further possible lockdowns, especially in China. Continuing material bottlenecks, significantly rising inflation rates and the interest rate increases already observed could have a significant negative impact on economic growth and even lead to a recession. The Russia-Ukraine war also made a significant contribution to further material shortages in the first half of the year - especially with regard to the production facilities located in Ukraine. As a result, NORMA Group’s customers also reduced their production volumes at least temporarily. Further effects of the Russia-Ukraine war on the global economy and the overall economic developments cannot be fully assessed at present. Nevertheless, NORMA Group currently classifies economic and cyclical risks as likely (Annual Report 2021: possible), however the financial impact, taking countermeasures into account, continues to be moderate.

There is still an increased risk situation in the area of raw material prices, in particular due to currently persistent or potentially further rising inflation, driven among other factors by gas and energy prices. Overall, the realization of risks in the area of raw material prices is therefore still regarded as very likely. Taking countermeasures already implemented and planned into account, the potential financial impact is now assessed as moderate (2021 Annual Report: low).

Although the overall risk situation in the macroeconomic environment remains high, there has been no significant change in the risk assessment for the following areas:

The business activities with original equipment manufacturers for passenger cars and commercial vehicles as well as customers in the aftermarket segment continue to represent the most important end markets for NORMA Group in terms of sales. The current market situation with reduced vehicle production - among other factors due to the still prevailing supply bottlenecks, in particular for semiconductors and microchips - also has an impact on NORMA Group’s sales. Overall, however, the industry-specific risks are still assessed as possible. Taking the countermeasures taken as well as planning assumptions made into account, the potential financial impact with regard to industry-specific risks continues to be classified as moderate.

The current macroeconomic situation suggests further inflation risks, which could have a corresponding effect on NORMA Group in the form of an increase in interest rates for financing and thus higher financing costs for debt capital. NORMA Group continues to assess interest rate risks as probable. Taking the countermeasures taken in the area of financial management into account, the financial impact associated with potential changes in interest rates continues to be assessed as low.