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Mangrove GermanCo I GmbH

Bochum

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

Mangrove LuxCo III S.à r.l.

Luxemburg

Consolidated Financial Statements of Mangrove LuxCo III S.à r.l.

As at and for the period from January 1, 2022 to December 31, 2022

(with the report of the Réviseur d'Entreprises Agréé thereon)

Mangrove LuxCo III S.à r.l., Luxembourg

2, rue Edward Steichen, L-2540 Luxembourg

Registered in Luxembourg Trade and Companies Register No. B236258.

Key figures of Mangrove Group

(EUR million)	01/01/2022 - 12/31/2022	01/01/2021 - 12/31/2021
Order intake	1,291.9	1,099.3
Order backlog	803.5	614.6
Results of operations ^*
Revenue	1,077.2	931.7
EBITDA ¹⁾	64.5	89.4
as % of revenue	6.0	9.6
Normalized EBITDA ²⁾	90.6	62.6
as % of revenue	8.4	6.7
EBIT	7.1	30.0
as % of revenue	0.7	3.2
Profit or loss for the period	-37.7	-40.6

Net assets	12/31/2022	12/31/2021
Total assets	1,033.9	950.7
Equity ³⁾	-132.9	-100.3
as % of total assets	-12.9	-10.6
Working capital (reporting date)	83.1	115.8

Financial position ^*	01/01/2022 - 12/31/2022	01/01/2021 - 12/31/2021
Cash Flow from operating activities from continuing operations	80.2	30.1
Free Cash Flow from continuing operations	46.7	0.6
Capital expenditure on property, plant and equipment	25.6	24.0
Full-time equivalents (reporting date) excluding vocational trainees and inactive employment contracts	4,817	4,829

^*) Only continuing operations.

¹⁾ EBITDA is not a defined financial indicator under IFRS. EBITDA is defined as earnings before interest and tax ("EBIT") and depreciation and amortization. EBITDA as presented herein differs from EBITDA as defined in the Indentures governing the Notes.
²⁾ Normalized EBITDA covenant view is defined as EBITDA after eliminating certain non-recurring items. Normalizations to EBITDA mainly include restructuring expenses and other exceptional items as shown in chapter 6.5 of the management report.
³⁾ Including non-controlling interests.
Please note that the financial statements have been prepared in euros (EUR). All amounts have been rounded using standard rounding rules. Adding together individual amounts may therefore result in a difference in certain cases.

Mangrove Group Management Report

1. Fundamental information about the Group

1.1 Company information

Mangrove LuxCo III S.à r.l., Luxembourg, hereinafter also referred to as "Mangrove LuxCo III" or the "company" is a public limited liability company (Société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 2, rue Edward Steichen, L-2540 Luxembourg, and registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés Luxembourg) with registration number B236258. Sole shareholder of the company is Mangrove LuxCo II S.à r.l., Luxembourg, which itself is a direct subsidiary of Galapagos LuxCo I S.à r.l., Luxembourg. The Company was incorporated on July 11, 2019. The purpose of the Company is the acquisition, holding and disposal of interests in Luxembourg and/or foreign companies and undertakings as well as the administration, development and management of such interests.

1.2 Acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful Refinancing on October 9, 2019

With an effective date October 9, 2019, Mangrove LuxCo IV S.à r.l., Luxembourg, a 100 percent subsidiary of Mangrove LuxCo III, bought 100 percent of the shares in Galapagos BidCo S.à r.l., Luxembourg and all its subsidiaries (together "Galapagos BidCo Group"). Galapagos BidCo S.à r.l., Luxembourg, was 100 percent shareholder of the shares in Kelvion Finance GmbH, Germany including all of its subsidiaries (together "Kelvion Group") and in ENEXIO Management GmbH, Germany including all of its subsidiaries (together "ENEXIO Group") at the acquisition date. Before the acquisition of Galapagos BidCo Group, the Company did not have any operational activities.

The Acquisition was consummated in connection with the balance sheet restructuring transaction of the Galapagos Group, the former shareholder of Galapagos BidCo S.à r.l., which has resulted in a major recapitalization of the operating business of the Mangrove LuxCo III, Mangrove LuxCo IV and the newly acquired subsidiaries (collectively, the "Mangrove Group"), a deleveraging of the Mangrove Group's balance sheet and access to new debt facilities and instruments with longer tenors (the "Restructuring"). In connection with the Restructuring, the Company issued EUR 356,233,492 in aggregate principal amount of 7.775 percent senior secured fixed rate notes due 2025 (the "New Notes").

In preparation of the aforesaid acquisition of Galapagos BidCo Group the Company incorporated or acquired the following direct and indirect subsidiaries: Incorporation of Mangrove LuxCo IV S.à r.l., Luxembourg on July 11, 2019 and indirectly via the participation in Mangrove LuxCo IV S.à r.l. the following holding entities in Germany were acquired on October 9, 2019: Mangrove GermanCo I GmbH, Germany and Mangrove GermanCo II GmbH, Germany.

In the following, Mangrove LuxCo III and its consolidated direct and indirect subsidiaries is referred to as "Mangrove Group" or "the Group".

1.3 Description of the business

The Mangrove Group is a leading global manufacturer of heat exchangers and other cooling & heating products. The Group is active in multiple end markets such as Refrigeration, HVAC (Heating, Ventilation, Air Conditioning), Data Center, Power, Heavy & Light Industry, Chemicals, Oil & Gas, Food & Beverage and Marine. In those markets, the "new Group" services a broad, diversified and long-standing customer base in more than 130 countries.

1.3.1 Segment Reporting

The former segment "ENEXIO" continues to be in the process of being wound down. ENEXIO, manufacturer of power plant and industry cooling systems as well as wastewater treatment solutions, consisted of three business units: Dry Cooling Systems (DCS), Service Solutions and Water Technologies (WT). After the strategic decision was taken to exit the DCS business and to either sell or integrate the Service and Water business into Kelvion Group, one part of the DCS business (DCS Heller) was successfully sold at the end of 2020 and on October 20, 2021 closing in connection with the share purchase and transfer agreement for the shares of ENEXIO companies comprising the Service business took place. Furthermore, on January 3, 2022 the same was executed in connection with the shares of ENEXIO companies comprising the Water business. On March 23, 2022 the Group signed an asset-/share purchase agreement for certain parts of the DCS business (DCS Air Cooled Condenser) comprising the stake in an Indian Joint Venture as well as certain assets (intellectual property in Germany and one production line in China). After these transactions, only parts of the Dry Cooling business remain with the Group, until the continuing wind-down of this activity has been completed. The declining importance of the ENEXIO Business is also reflected in its decreasing volume, which represented in FY 2021 already less than 10 Percent and in FY 2022 less than 1 Percent in terms of Mangrove Group. Overall, the contribution of the segment ENEXIO to revenue and normalized EBITDA of the Group is no longer significant for the Group's earnings position.

1.3.2 The four segments of Mangrove Group

The four segments of Mangrove Group focus on distinct technologies and product portfolios:

―	Kelvion Refrigeration Technologies (RT) focuses on component business for refrigeration applications with significant growth potential in the data center industry. RT supplies a wide range of standard and customized heat exchangers for cooling and removing heat from different types of data centers (hyperscale, colocation, modular etc.) using both air and liquid cooling methods. The data center market consists of cooling solutions such as air conditioning, chilling units, economizer systems, liquid cooling systems, control systems and includes services such as consulting, installation & deployment and maintenance and support. The heat exchanger solutions are also used in the refrigeration market in cold chain warehouses, supermarkets, non-residential buildings, and industrial production. Product offering includes air cooled condensers which reject heat from refrigeration systems and are often sold as part of a package of equipment with air coolers. RT's customized air coolers are design-to-order units for industrial or OEM solutions for food processing and distribution facilities. Product offering includes also customized radiators and dry coolers which are mainly used for power and industrial applications. Improving the energy efficiency of commercial and industrial refrigeration equipment is essential for end users looking to reduce carbon footprint and operating costs.
―	Kelvion Machine Cooling Systems (MCS) is a leading player in heat exchangers for power and engine applications with substantial growth opportunities by leveraging its global installed base. MCS supplies heat exchangers for power generation, power transmission, large engine applications (marine and off-highway) and green applications like biomass, green hydrogen, or renewable energies. The business is mostly with OEM, e.g., for large engine manufacturers, but MCS also engages in smaller projects, like solar, wind or solar photovoltaic. Product offering includes charge air coolers, which cool down combustion-air coming from the turbocharger before entering the engine. MCS' shell and tube double safety heat exchangers assure the secure handling of safety-critical media. Product offering also includes box coolers which are fitted in the sea chest of small and medium-sized vessels.
―	Kelvion Thermal Solutions (KTS), is Kelvion's largest segment, focusing on project business for demanding applications in the Oil & Gas, Chemicals Industries and, like RT, with significant growth potential in high tech data center business as well as green tech applications such as hydrogen and Carbon Capture and Storage (CCS). KTS' engineering expertise plays a key role in differentiation against competitors. High degree of geographical diversification with sites in all key region, including Europe, NAFTA, Latin America, China and MEA. Product offering includes air fin coolers typically used for very large cooling requirements in different industries, e.g., Oil & Gas and Chemicals, as well as air dryers which are used to remove humidity from an air stream in various process industries. KTS' shell & tube heat exchangers are used to heat, cool, or condense water and other media in different process industries. The focus of the BU has shifted in the recent years from Oil & Gas and Petrochemicals to high and green tech business. KTS represents mainly the former segment "Kelvion Thermal Engineered Solutions" ("TES").
―	Kelvion Plate Heat Exchangers (PHE) provides a broad range of plate heat exchangers for a wide variety of applications in terms of pressure and temperature demands for a wide range of customer industries, ranging from HVAC and Refrigeration to Food & Beverages, Chemicals, Power, and Industrials. Product offering includes fully welded plate heat exchangers which are used to save energy in demanding high pressure and temperature applications, as well as brazed plate heat exchangers, often used for environmentally friendly heat pump applications. PHE's gasketed heat exchangers have the highest efficiency and flexibility and are used in a variety of industries as well as for heat recovery applications.

In contrast to the project driven segment KTS, the three segments RT, MCS and PHE represent the component type business of the Group and form together "Kelvion Products" ("KP"). All four segments hold strong favorable market positions in their respective markets. MCS and PHE are among the Top 3, RT amongst the Top 5 and KTS is niche-market leader.

In addition to the above segments there is the fifth Service segment, which is a virtual segment, i.e., Service is not separated from the four segments but managed globally and centrally across segments.

2. Objectives and strategies

2.1 Overall strategy and objectives of the Mangrove Group

The Mangrove Group bases its strategy on a combination of technological leadership, global manufacturing, and sales network as well as a broad product portfolio. Offering one of the broadest product portfolios in the heat exchangers industry, the company continues to strengthen its competitiveness with new product development, optimization projects, manufacturing footprint re-organization, growth initiatives and dedicated operational restructuring measures. These programs aim at adapting the segments to the challenging and dynamic market developments. The overall target is to generate profitable and sustainable growth over the next years and to maximize value creation for the Group.

2.2 Develop innovative products

We believe that Mangrove Group has one of the broadest product offerings in the market for heat exchangers, including shell & tube, finned tube, plate and shell and tube heat exchangers and a strong pipeline of product innovations to address future market demands. It is planned to grow the business further based on a strong product portfolio and a long-standing innovation tradition with many recognized brands. To maintain the technology leadership, Mangrove Group strives to continue the joint research and development efforts with customers and research institutes. For further details on R&D please refer to the following chapter "3. Research and development".

2.3 Strategy and objectives of Kelvion

2.3.1 Kelvion - organizational set up is supporting the strategy

Kelvion's regional organizational setup includes Front-End Sales teams in order to drive the international expansion. Front-End Sales teams are backed by "Global Sales & Solutions" teams, who represent the application engineering teams of Kelvion, that are specialized to cover defined industrial markets and are providing support and application expertise with a strong focus on key accounts and industries. This setup allows combining the advantages of a local presence in the market, like the close contact to clients, knowledge of local restrictions and technical specifications, with the advantages to centrally pool specific market segment and application know-how. Thereby the Front-End Sales teams are also able to widen the product offerings to cover regional "white spots" (market areas in which Kelvion is not or not sufficiently present).

Global Sales & Solutions with its industry specific focus continuously optimizes business processes as for example stringent key account coordination, technical process development, project support etc. and acts as a bridge between the segments and Front-End Sales.

The segments Refrigeration Technologies, Machine Cooling Systems, Plate Heat Exchangers and Kelvion Thermal Solutions are responsible for manufacturing and product line management (e.g., charge air coolers, radiators, etc.), executing the manufacturing footprint re-organization as well as targeting cost and lead-time reductions by consolidating, standardizing and modularizing today's various product lines. In close cooperation with Front-End Sales and Global Sales & Solutions the product areas are also driving the development of innovative products to address future market demands.

2.3.2 Kelvion - "High Five" "H5" Strategy

Segment focused recovery program for a post COVID-19 world

In FY 2020 the Group faced two major challenges; (1) still high exposure to the Oil & Gas markets with decreasing demand due to lower oil prices than in prior years and (2) a significant delay in its growth plans as a result of the COVID-19 pandemic. Furthermore, Kelvion's former value creation program "FF100" expired in 2020.

Therefore, management of the Group initiated a recovery program for a post COVID-19 world in mid-2020 which focused on the four segments of Kelvion. This overall strategy for 2025 is called High Five. "High" represents the company's ambitions, and "five" equals the number of years, the number of our corporate values as well as the five segments of Kelvion.

When in 2020 the COVID-19 turned the world upside down, the Group had to adapt quickly to the 'new normal' and management had to rethink the overall strategy for Kelvion promptly. The bad economic environment forced the Group to reset its focus as it had to fulfill certain financial obligations to its lenders. High Five is the strategic key for achieving this. The program aims to build in long term a sustainable company based on a global presence and excellent products.

In the High Five Strategy Management decided to clearly split initiatives into

―	growth initiatives and
―	cost reduction initiatives.

Management identified five major areas of improvement. One big driver of High Five is the data center industry, as this market has proven to be very resilient even through the pandemic. In 2021, the company has started the series production for data center hyper scalers in Europe and Americas and has continuously increased its capacity and efficiency ever since. Kelvion has been successfully gaining new Hyper Scalers as customers and developing solutions with increased performance. When the High Five was developed the target was to make data center business having a double-digit share of the Group's revenue by 2025, leveraging unique multi-product offerings. Alongside data centers, service continues to be a major growth driver of High Five. The Group strengthens its Service Business share, exploring the sizeable opportunities through its huge installed base and excellent customer relationships. Furthermore, the Group shifted its business focus to more "green" and less "fossil" energy. Since 2020 the company has reduced its focus on fossil fuel power generation market and is becoming a global player in the energy transition growth. Due to the demand, Kelvion is growing near term its market share for heat pumps, Hydrogen, LNG and carbon capture. Dedicated teams have been established, protoypes for strategic customers build and production capacity increased to serve the demand of new and already existing customers. E.g., the European heat pump business is rapidly growing since 2020 due to legislative challenges and the market is expected to expand further. Based on the expected demand for brazed heat exchangers, Kelvion has increased the capacity so that the output can be tripled compared to 2020.

Furthermore, the strategy considers global factory improvement by operational excellence and further establishing our business in North America and Mexico (NAFTA) & Asia-Pacific (APAC) markets. Digitalized, seamless processes across the entire value chain are one important key driver to reaching these goals.

Complimentary to the High Five growth initiative, management started cost reduction initiatives in 2020. The delayed growth perspectives caused by the COVID-19 pandemic and by lower demand from the Oil & Gas sector due to low oil prices forced the Group in 2020 to react immediately to protect its earnings and cash position and to secure its long-term financing. In 2020 and 2021 various contingency measures were executed throughout the whole Group which helped to secure earnings and cash in the short-term. In addition, management identified levers to substantially improve its cost structure and defined holistic cost initiatives executed in the years 2020 to 2022 to protect the earnings and cash positions of the Group, including an overhead restructuring program, the reorganization of unfavorable production sites, the relocation of productions to low-cost countries as well as a program to increase the efficiency of productions.

Updated H5 business plan in late 2022

In the second half of 2022 the Group entered into the annual process to update the High Five Strategy. For this purpose, the team has reviewed current data on market development and trends, as well as current position of competitors. Based on the analysis all top strategic initiatives for each segment have been refined, with focus on top-line growth-initiatives, operational excellence, product innovation roadmap and process improvements. Overall, the High Five Strategy was confirmed by the update in combination with a continued strong customer demand in all segments and therefore remained basically unchanged.

3. Research and development

As a manufacturer of specialized and customized products, we believe that our continued emphasis on research and development is critical to our future profitability. Although the pace of new innovations in the heat exchanger industry is slower than in other sectors, we invest substantial resources in developing new products and applications.

Our research and development efforts, which we undertake on business unit level, are directed mainly towards innovative new products, including products for green tech and high tech solutions, and development of new applications, manufacturing technologies, joining and robotic technologies to respond to anticipated customer needs and include joint development with customers. In addition, we cooperate with more than 60 universities and research institutions in eight countries, including renowned partners such as Fraunhofer Institutes (e.g. Fraunhofer ISE, Fraunhofer ICT), University of Kassel, Technical University of Dresden, Nuremberg Institute of Technology Georg Simon Ohm, Helmholtz-Zentrum Dresden-Rossendorf, Research Council for Refrigeration Technology, all in Germany, Sintef Energy Research in Norway, the Stellenbosch University in South Africa, Politecnico di Milano in Italy and the French government-funded technological research organization CEA (Commissariat à l'énergie atomique et aux énergies alternatives). These partners carry out basic and applied research for us in areas such as thermodynamics, fluid dynamics, etc.

4. Internal management system

4.1 Management structure

Mangrove Group divides its operating activities into the four Kelvion segments RT, MCS, PHE and KTS. All segments have a distinct management team that is responsible for the strategic development and operational business of the segment. In addition, the management of Mangrove Group has established two separate shareholder committees, one for Kelvion Thermal Solutions and one for Kelvion Products. These two committees are composed of representatives of the shareholders of Mangrove Group and third-party experts. The committees supervise the results of operations and financial position of the respective segments and support the segment management in strategic developments. Meetings of the shareholder committees with the respective segment management are held in regular intervals.

4.2 Basis of information

Group reports are prepared with the aid of standard applications that are precisely tailored to the needs of Mangrove Group and subject to continuous enhancement. Standard reports prepared based on unified data are used throughout the Group to report net assets, financial position, and results of operations. These standard reports are supplemented by special analysis as well as analysis and reports related to specific businesses and strategic measures. Corporate planning - which covers the current budget plus three planning years - is based on the same reporting and consolidation system that is used for the reporting of actual figures as well as the risk reporting.

5. Report on economic position

5.1 Macroeconomic environment - The global economy in 2022

As a global engineering company, Mangrove Group considers gross domestic product (GDP) and hence the International Monetary Fund's (IMF's) assessments of the global growth to be a benchmark for its own development. The objective for Mangrove Group's growth is to exceed that of the global economy and of its key markets.

After the outbreak of the COVID-19 global pandemic in 2020 and the resulting deep recession which led according to the IMF to a growth contraction in that year of -3.1 percent, the global growth rebounded in 2021 to 6.2 percent. According to the IMF's , the strong rebound in 2021 had been driven by several factors, including the development of the multiple vaccines, the adaption of the global economy to the subdued overall mobility and the fiscal support in some countries in 2021.

The IMF has repeatedly revised growth expectations for 2022 downward

According to IMF's January 2022 WEO, the global economy entered 2022 into a weaker position as expected in the October 2021 WEO as countries have reimposed mobility restrictions against the spread of the Omicron COVID-19 variant (e.g., China) and as rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated. Accordingly, the expected global growth for the year 2022, as per the January 2022 WEO, was reduced by 0.5 percentage points to 4.4 percent.

In July 2022, the IMF published a WEO with further reduced growth expectations of 3.2 percent in 2022. The outlook of the IMF has deteriorated, largely because of Russia's invasion of Ukraine-causing a tragic humanitarian crisis in Eastern Europe-and the sanctions aimed at pressuring Russia to end hostilities.

According to the IMF the crisis unfolded while the global economy was on a mending path but had not yet fully recovered from the COVID-19 pandemic, with the war adding to the series of supply shocks that have struck the global economy over the course of the pandemic, contributing to more shortages. In addition to the war, frequent and wider-ranging lockdowns in China caused new bottlenecks in global supply chains. According to the IMF's July 2022 WEO global output contracted in the second quarter, based on the mentioned downturns in China and Russia as well as lower than expected consumer spending in the US. Spillover effects from the war in Ukraine result in further reduced growth expectations in Europe.

In the WEO, issued in October 2022, the IMF's global growth projection for 2022 of 3.2 percent remained unchanged while growth projection for 2023 has been reduced from 2.9 to 2.7 percent compared to July's WEO. According to the IMF more than a third of the global economy would contract in 2022 or 2023, while the three largest economies - the United States, the European Union, and China - would continue to stall. The Russian invasion of Ukraine has led to a severe energy crisis in Europe which hampers the economic activity and drives up inflation sharply. This has triggered rapid and synchronized tightening of monetary conditions by central banks around the world aimed at restoring price stability, but which will in turn impact global growth negatively. The WEO expects inflation to peak in late 2022 but to remain elevated for a longer period than previously expected.

IMF's January 2023 WEO reports that the global fight against inflation, Russia's war in Ukraine, and a resurgence of COVID-19 in China weighed on global activity 2022, but that the third quarter was surprisingly strong in numerous economies, in many cases driven by stronger-than-expected private demand and business investments. For the fourth quarter IMF estimates that most - though not all - major economies have slowed down, with US growth remaining strong, based on continuously strong consumer spend. In China activity slowed in fourth quarter amid multiple large COVID-19 outbreaks. In April IMF estimates 2022 global growth rate at 3.4 percent, which is 0.2 percentage points higher than projected in October 2022. For the advanced economies the estimate is 2.7 percent (+5.4 percent in 2021) and for the emerging market and developing economies 4.0 percent (+6.8 percent in 2021). China's growth is estimated for 2022 at 3.0 percent after 8.4 percent in 2021.

5.2 Industry overview and sector specific development of key markets of the Group in 2022

After the key markets for heat exchangers showed in 2018 and 2019 a continued growth trend, the unexpected and deep recession of the world economy caused by the COVID-19 pandemic in 2020 and the low oil price level had negatively impacted all industries and regions the Group is active in. Beginning with fourth quarter 2020 and continuing in the year 2021 the Group experienced a rebound of customer demand which resulted in a strong increase in order intake. Customer demand in 2022 continued to be strong, driven by most industries and regions the Group is active in.

Heat exchangers, which are used for heat transfer from one medium to another without mixing the media, are used across a broad range of applications, including the power, Oil & Gas, Food & Beverages, HVAC, Marine, Chemicals and Other Industries. Heat exchange plays a crucial role in thermal processes across many industrial applications, with no other technology currently capable of supplanting the basic principle of thermal transfer. From a technology perspective, there are four basic types of heat exchangers/heat removal devices: shell and tube heat exchangers, plate heat exchangers, finned tube heat exchangers and cooling towers.

Heat exchangers represent a persistent technology with limited risk of substitution and a diversified exposure across end-markets. The stable long-term growth outlook of around 3-4 percent in underlying Mangrove end-markets is supported by global megatrends. There is a wide span of different business models that reflect this diversity in end-markets. The mission critical character of heat exchangers brings about protected niches with high switching barriers. Key success factors are engineering competence, cost competitiveness and customer proximity. In consequence, the overall heat exchanger market is characterized by a high fragmentation with only few multi-regional or global players offering a comprehensive product- and technology portfolio.

A further economic outlook is provided in the chapter 7. "Report on outlook, risks and opportunities".

5.3 Course of business

The Group prepared its financial budget for 2022 in the fourth quarter of FY 2021 and approved it in mid-December of 2021 as part of the update of its H5 Strategy review. The budget 2022 was based on the growth expectations according to the IMF World Economic Outlook (WEO) from October 2021 regarding the development of the global economy as well as estimates and expectations on the markets for heat exchangers provided by a leading strategic consulting firm in 2020 and further external sources regarding outlook from the second half of 2021 on the development of key markets Mangrove is operating in. The planning year 2022 had to be reduced against the original H5 plan from late 2020 as it had to foresee a longer recovery period due to ongoing constraints in the supply chain (availability, material price inflation) in the global economy which also impacted the supply chain of the Group.

Given the high uncertainty on the global economic outlook as (1) the global economy entered a weaker position than previously expected (WEO, January 2022) and (2) the war in Ukraine that has triggered a costly humanitarian crisis (WEO, April 2022) the Group had developed in addition to the Budget 2022, two additional scenarios of an outlook on revenue and earnings for 2022.

Budget 2022 - the upper case

The original Budget for 2022 represents "the upper case" and foresees revenue around 16% higher than in FY 2021 and an adjusted EBITDA in the range of EUR 80 million (excluding the budgeted positive impacts from IFRS 16 of around EUR 16 million).

Forecast 2022 - the base case

The full year forecast for FY 2022 which the Group prepared in April 2022 ("the base case") was based on the following core assumptions (1) revenue are expected to be around 3% lower compared to the budget to reflect supply shortages mainly in the segments RT, MCS and PHE, (2) a reduced Gross Margin (-1.5 percentage points vs. budget) reflecting the continuous pressures from increasing commodity prices and (3) has foreseen positive contributions from counter measures, (4) direct impact from ending its operations in Russia. In this forecast the adjusted EBITDA of the Group was expected to be ahead of prior year, i.e., reaching levels ahead of EUR 70 million. Free cash flow in this forecast was expected to be reduce in FY 22 as well, but providing the Group the necessary liquidity to maneuver through FY 22 and beyond.

Illustrative down-side scenario

Given the uncertainty on future development of the global economy the Group had analyzed an illustrative down-side scenario using the following assumptions when modeling the impacts. (1) Revenue ~9%/6% lower than budget/prior year, reflecting a down-turn in global demand from the crisis, (2) lower Gross Margin by 3.5/2.0 percentage points versus budget/prior year and (3) included positive impacts from the counter measures as described above. In this illustrative scenario adjusted EBITDA of the Group would drop into a range around EUR 55 million. Free cash flow in this illustrative down-side scenario would be lower compared to the forecast but the Group would still have sufficient liquidity to maneuver through FY 22 and beyond and would adhere to its Minimum Liquidity Covenant also in this illustrative down-side scenario. For more details on financial covenant compliance please refer to chapter 7.6 "Risk reporting to use of financial instruments/Liquidity risk".

2022 order intake and revenue exceed expectations and adjusted EBITDA is firmly above Budget and previous year - based on a strong second half of the Full Year

The Group's order intake recovery of the year 2021 continued in fiscal 2022, with a strong order intake increase of +18 percent from EUR 1,099.3 million to EUR 1,291.9 million (+22 percent adjusted for the arbitration award for a legacy Power project in South Africa in the year 2021 of EUR 38.7 million). The 2022 increase was driven by a significant upswing in demand especially driven by the regions North America, Asia Pacific and Middle East, and several large data center orders as well as COVID-19 related catch-up effects in Oil & Gas and Marine. In addition, it needs to be considered that "ENEXIO, Holding and Consolidation" contributed in the year 2021 an order intake of EUR 45.9 million while in 2022 order intake decreased to EUR -22.2 million, mainly due to the continuous wind-down of the ENEXIO business and including the negative impact of consolidation. Consolidated order intake for the four Segments only - excluding the legacy project as well as ENEXIO - has increased by 27.3 percent.

The order intake in segment RT (+15 percent compared to PY) was mainly driven by the increasing data center business in North America. The segment MCS (+28 percent vs. PY/ +22 percent adjusted for the reallocation of product lines between the segments) had the largest growth in the rebounding Marine business. Segment PHE (+9 percent vs. PY / +16 percent adjusted for the reallocated product lines) has benefited in particular from the extraordinary heat pump market expansion in Western Europe. The growth of Segment KTS (+42 percent vs. PY / +39 percent adjusted for the reallocated product lines) is mainly associated with its rapidly growing data center business as well as the rebounding Oil & Gas business. Adjusted for the arbitration award the increase is +59 percent (+55 percent adjusted for the reallocated product lines). For more details on the order intake development per segment, please refer to chapter 6.2 "Order intake and order backlog" of this report.

Despite the high order intake of the year 2022, the Group's business continued to face pressure from external market factors as described above. As explained earlier the Group has revised the H5 strategy in late 2021 and reduced the financial budgets for FY 22 and FY 23 primarily due to the challenges to the supply chain (availability and price). As reported in the unaudited consolidated interim Financial Statements January 1 to March 31, 2022, in the first four months of FY 22 the Group realized less revenue than budgeted due to material shortages that struck some plants of the Group. Mainly in the segments RT and PHE, e.g., the lead times for fans increased significantly across all suppliers and product ranges, in some cases with planning requests for more than a year in advance. Furthermore, gross margin came under further pressure due to increasing material prices. The Group has been increasing prices to customers since the second half of FY 2021. However, they have come into effect only with a time-lag. The invasion of Russia into Ukraine and the frequent and wide-ranging lockdowns in China have caused new bottlenecks in global supply chains, which have also impacted the Group.

With the high 2021 order backlog and the strong 2022 order intake 2022 turning into sales, the revenue for the Group for the months of May to December 2022 was significantly increased to an average of EUR 97 million per month, compared to an average of EUR 74 million for the first four months of 2022. Based on the high revenue level in the second half of the year and particular Q4 the Group has reached an annual revenue of EUR 1,077.2 million which is 16 percent above PY level of 931.7 million (+20 percent adjusted for the legacy Power project in South Africa). The revenue growth of the Group has therefore exceeded in 2022 the growth of the global economy of 3.4 percent, adjusted for the global inflation estimated by the IMF in its April WEO at 8.7 percent. The main driver of the Group's revenue growth has been the industry HVAC & Refrigeration (+43 percent), with its progressing large hyperscale- and crypto-mining data center projects of the segments KTS and RT in North America and Western Europe which mirror the strong order intake in this industry since the second half of 2021. High absolute and relative growth has also been achieved in the industries Marine (+49 percent), Chemicals (+35 percent) and Other Industries (+24 percent) and in the regions North America (+64 percent) and Western Europe (+21 percent). All segments of the Group have contributed to the revenue growth. The segments RT and PHE could, however, have achieved even higher revenues, but were hampered by the ongoing global challenges in material and labor availability. While price increases to customers have been implemented, the positive impacts were partly offset by orders at old conditions. The profitability of the segments RT and PHE has been diluted in 2022 by executed orders from the previous year which were not fully covering the increased material prices, as well as by lower utilization levels of some sites. However, this impact was heavily reduced in the second half of 2022 as pricing changes took hold and prior year orders diminished. While RT continued to be burdened in the second half of 2022 by under-absorption in some sites, PHE was able to improve utilization levels. MCS's good performance has been driven in 2022 mainly by higher revenue and subsequent positive utilization effects as well as price adjustments turning into improving margins. KTS has been benefitting strongly from high order backlog levels turning into a significantly higher revenue and profit. Based on the high order intake and a lagging increase of revenue the order backlog of the Group has grown from EUR 614.6 million at the end of 2021 by 38 percent to EUR 803.5 million. For more details on the revenue development per segment, please refer to chapter 6.3 "Revenue" of this report.

Based on the successful implementation of the countermeasures, the strong revenue and increasing profitability in the second half of 2022 the Group has compensated for the weaker start of the year and has reached a level of EUR 92.3 million of adjusted EBITDA (adjusted normalized EBITDA, management view), exceeding the Budget in the range of EUR 80 million (both excluding the positive impacts from IFRS 16).

6. Results of operations, financial position and net assets

6.1 Results of operations

Subsequently, only continuing operations will be described, except explicitly stated otherwise.

In line with the new structure of the Mangrove Group with the four Kelvion segments independently responsible for their respective markets and applications, the comments on the operational performance per industry and region are shown separately for RT, MCS, PHE and KTS.

6.2 Order intake and order backlog

6.2.1 Order intake and order backlog of the Mangrove Group

The table below sets out the order intake and order backlog for the year 2022:

Order Intake

(EUR million)	2022	2021
RT	321.1	280.4
MCS	203.1	158.4
KTS	516.8	364.7
PHE	273.1	249.9
ENEXIO, Holding and consolidation	-22.2	45.9
Group Total	1,291.9	1,099.3

Order Backlog

(EUR million)	2022	2021
RT	152.9	110.9
MCS	98.2	72.8
KTS	410.2	301.3
PHE	147.3	119.4
ENEXIO, Holding and consolidation	-5.1	10.2
Group Total	803.5	614.6

Please note that the order intake for 2021 of Segment KTS includes order intake related to a legacy project that was settled in 2021 of EUR 38.7 million which cannot be considered as recurring order intake.

6.2.2 Order intake and order backlog of the segment RT

Order intake of segment RT has increased from EUR 280.4 million in 2021 by EUR 40.7 million to EUR 321.1 million in 2022. This is an increase by +15 percent. RT's 2022 growth was mainly driven by the North America region and RT's dominating customer industry HVAC & Refrigeration, which includes mainly cooling applications for cold storage, refrigeration as well as data center, which was the biggest driver of the growth in 2022. HVAC & Refrigeration has contributed 83 percent of the annual growth in 2022, which is almost proportionate to this industry's business share in RT.

Based on the high order intake and a lagging increase of revenue (as explained in the revenue section below) the order backlog of RT has grown from EUR 110.9 million at the end of 2021 to EUR 152.9 million (+38 percent) at the end of 2022.

6.2.3 Order intake and order backlog of the segment MCS

Order intake of segment MCS has increased in 2022 compared to the year before from EUR 158.4 million by EUR 44.7 million to EUR 203.1 million (+28 percent). Adjusted for the reallocation of product lines between MCS, PHE and KTS the increase in 2022 was +22 percent.

MCS is mainly focused on the industries Marine, Power and Other Industries. From a regional perspective Western Europe, Asia Pacific as well as North America are MCS' largest sales markets.

After MCS' Marine business had suffered in 2020 from reduced maritime trade and shipbuilding activity related to the global pandemic, the orders especially from the largest markets in Asia Pacific and Western Europe rebounded in 2021 (+32 percent) and further grew in 2022 (+61 percent).

Driven by the increasing order intake MCS' order backlog has increased by +35 percent from EUR 72.7 million at the end of 2021 to EUR 98.2 million at year end of 2022.

6.2.4 Order intake and order backlog of the segment KTS

Order intake of segment KTS has increased in 2022 compared to previous year by EUR 152.1 million to EUR 516.8 million, which is an increase of +42 percent or, adjusted for the reallocation of product lines between MCS, PHE and KTS, an increase of +39 percent. Excluding the arbitration award for a legacy Power project in South Africa of EUR 38.7 million in 2021 the order intake in 2021 was EUR 326.0 million and has increased in 2022 by 59 percent (+55 percent adjusted for the reallocated product lines).

KTS' high order intake level in 2022 is mainly associated with the two largest Industries HVAC & Refrigeration (+173 percent) as well as Oil & Gas (+51 percent), where also the number of large projects increased considerably compared to previous year.

Based on the high order intake growth and the timeframe to execute the orders the order backlog at the end of 2022 has reached a level of EUR 410.2 million, which represents an increase of +36 percent, compared with year end 2021.

6.2.5 Order intake and order backlog of the segment PHE

Order intake of the segment PHE has increased in 2022 compared to previous year by EUR 23.2 million (+9 percent) to EUR 273.1 million. Adjusted for the reallocation of product lines between MCS, PHE and KTS the increase in 2022 was +16 percent. PHE's product range of heat exchangers are used in various applications which makes it the most diversified segment having notable revenue in all of Mangrove's seven major industries. Based on the high level of diversification, PHE's increase in order intake was broad based, with all industries, except Power and Chemicals, and five out of seven regions exceeding previous year's level.

The biggest absolute growth came from PHE's largest industry, HVAC & Refrigeration (+13 percent), and specifically from the brazed plate heat exchangers which continue to participate in the booming market for heat pumps in Western Europe and especially Germany.

The largest order for PHE in 2022 was for gasketed plate heat exchangers for a data center in the US. The order backlog of PHE has grown from EUR 119.4 million at the end of 2021 to EUR 147.3 million (+23 percent) at the end of 2022.

6.3 Revenue

6.3.1 Revenue of the Mangrove Group

The table below sets out the revenue for the year 2022:

Revenue

(EUR million)	2022	2021
RT	274.5	242.5
MCS	179.3	142.9
KTS	413.5	294.4
PHE	243.4	208.5
ENEXIO, Holding and consolidation	-33.5	43.4
Group Total	1,077.2	931.7

Please note that the revenue for 2021 of Segment KTS includes revenue related to a legacy project that was settled in 2021 of EUR 38.7 million which cannot be considered as recurring revenue.

6.3.2 Revenue of the segment RT

Revenue of segment RT has increased from EUR 242.5 million in 2021 by EUR 32.0 million (+13 percent) to EUR 274.5 million in 2022. Despite an initially weaker start of the year in Americas and ongoing supply chain challenges, RT has grown considerably based on significant price increases and volume growth.

6.3.3 Revenue of the segment MCS

Revenue of segment MCS has increased in 2022 compared to previous year from EUR 142.9 million by EUR 36.4 million (+25 percent) to EUR 179.3 million. Adjusted for the reallocation of product lines between MCS, PHE and KTS the increase in 2022 was +20 percent.

The industries with the highest revenue, Power, Marine and Other Industries covered in the year 2022 98% of the total revenue of this segment. From a regional perspective Western Europe, Asia Pacific as well as North America are MCS's largest sales markets.

6.3.4 Revenue of the segment KTS

Revenue of segment KTS has increased in 2022 compared to previous year from EUR 294.4 million by EUR 119.1 million (+40 percent) to EUR 413.5 million. Adjusted for the reallocation of product lines between MCS, PHE and KTS the increase in 2022 was + 37 percent). Excluding the arbitration award for a legacy Power project in South Africa of EUR 38.7 million, the revenue has increased by +62 percent (+57 percent adjusted for reallocation of the product lines).

This increase mirrors the strong order intake throughout the second half of 2021 and 2022 mainly driven by KTS' expanding data center business as well as the regaining of strength of the Oil & Gas markets as described in the order intake section above.

6.3.5 Revenue of the segment PHE

Revenue of segment PHE has increased in 2022 compared to previous year from EUR 208.5 million by EUR 34.9 million (+17 percent) to EUR 243.4 million. Adjusted for the reallocation of product lines between MCS, PHE and KTS the increase in 2022 was +25 percent.

PHE's revenue growth was driven by the increasing volume of brazed plate heat exchangers for the booming heat pump industry as well as the expanding service business, which have overcompensated other declines.

6.4 Consolidated Statement of profit and loss of the Mangrove Group FY 2022

(EUR million)	2022	2021
Revenue	1,077.2	931.7
Cost of sales	-892.2	-749.1
Gross profit	185.1	182.7
Selling expenses	-76.0	-78.7
Research and development expenses	-14.0	-12.1
General and administrative expenses	-86.4	-80.2
Other income	28.6	45.5
Other expenses	-29.8	-26.1
Other financial income	-	-
Other financial expenses	-0.4	-1.2
Earnings before interest and tax (EBIT)	7.1	30.0
Interest income	0.4	6.7
Interest expenses	-56.1	-58.4
EBT	-48.6	-21.7
Income taxes (income + / expenses -)	12,6	-18.8
Loss after tax from continuing operations	-36,0	-40.6
Profit or loss after tax from discontinued operations	-1.7	-
Profit or loss for the period	-37,7	-40.6
of which is attributable to owners of the company	-37,8	-40.4
of which is attributable to non-controlling interests	0.1	-0.2

Group Revenue strongly increased by 15.6 percent in 2022 mainly driven by the industry HVAC & Refrigeration (data center business as main driver) in Kelvion's two largest regions Western Europe and North America. Development of revenue per segment is described in the chapter 7.1 "Revenue". The lower Gross Margin level of 17.2 percent in 2022 compared to 2021 (19.6 percent) is mainly caused by lower margins in Kelvion Products due to lower utilization levels at some sites in RT and PHE and executed orders from PY which are not fully covering current cost increases.

Lower FY 2022 EBIT (EUR 7.1 million) has resulted due to extraordinary costs of EUR 27.7 million, mainly caused by restructuring initiatives, severance and impairment of assets.

When excluding special items, as further described in the following chapter 6.5 "Reconciliation EBIT to EBITDA and normalized EBITDA", the Group was able to deliver a normalized EBITDA of EUR 92.3 million per the management view.

Gross profit totaled EUR 185.1 million (FY 2021: EUR 182.7 million). The decrease in Kelvion's Gross Margin by 2.4 percentage points is caused by lower margins in Kelvion Products due to lower utilization levels at some sites in RT and PHE and executed orders from PY which are not fully covering current cost increases.

The total of Selling expenses, Research and development expenses and General and administrative expenses as percentage of revenue ("SG&A-ratio") is 16.4 percent in FY 2022 and 18.3 percent in PY. The material improvement of the SG&A-ratio is driven by the increasing in revenue in 2022. Also, SG&A excluding one-off expense in absolute terms reduced against PY mirroring the various efficiency and restructuring measures undertaken in prior years that offset higher SG&A from wage inflation and increased revenue volume of Kelvion.

Other income and expenses: Other income totals up to EUR 28.6 million in 2022 (FY 2021: EUR 45.5 million). The decrease is mainly driven by the re-assessment of provisions relating to the wind-down of the ACC business of ENEXIO recognized in FY2021. Other expenses amount to EUR 29.8 million in 2022 (FY 2021: EUR 26.1 million) mainly resulting from losses from exchange rate difference of 17.4 EUR million (FY 2021: EUR 7.2 million) which decreased broadly in line with gains from exchange rate differences. Overall, the balance is compensated by of Other Income and Other expenses (FY 2021: gain of 19.4 million) mainly due to the reversal of provisions as explained above.

Interest income and expenses: Interest income total up to EUR 0.4 million in 2022 (FY 2021: EUR 6.7 million). The decrease is mainly driven by the result of arbitration award of Kelvion's Medupi project and is therefore not repeatable in FY2022. Interest expenses are EUR 56.1 million in FY 2022 (FY 2021: EUR 58.3 million), mainly consisting of interest expenses (including the release of capitalized financing cost) relating to the Senior secured Notes amounting to EUR 33.1 million (FY 2021: EUR 33.6 million), interest on PECS of 11.4 million (FY 2021: 11.4 million), interest expenses on liabilities to banks mainly for the usage of the SGF of 5.8 million (FY 2021: EUR 7.0 million), and other interest expenses amounting to EUR 3.4 million (FY 2021: EUR 6.5 million).

Income taxes total up to EUR 12.6 million tax income (FY 2021: EUR 18.8 million - tax expense). Despite negative earnings before tax (EBT), the Group has incurred current tax expenses of EUR 11.0 million and a net deferred tax income of EUR 23.6 million (FY 2021: EUR -6.3 million, thereof current tax expenses EUR 12.6 million and a net deferred tax expenses of EUR 6.3 million). Current taxes mainly relate to the positive EBT in several legal entities that cannot be offset with losses in other jurisdictions. Furthermore, not all the interest expense of the Group can be offset with local EBT, e.g., in Germany with its interest limitation rules.

Overall, the profitability of the Group is still behind the expectations of management. However, the Group realized a satisfying profitability when considering the challenging market environment in FY 2022 and excluding the extraordinary expenses mainly for restructuring and similar expenses (for details please refer to the chapter "6.5 Reconciliation EBIT to EBITDA and normalized EBITDA") and the PPA amortization of the current financial year.

6.5 Reconciliation EBIT to EBITDA and normalized EBITDA

(EUR million)	2022	2021
EBIT	7.1	30.0
Depreciation and Amortization	57.4	59.4
EBITDA	64.5	89.4
Normalizations	27.7	-24.6
Adjusted normalized EBITDA, management view	92.3	64.8
Adjusted normalized EBITDA Margin, management view in % of revenue	8.6	7.0
Normalizations	-1.6	-2.3
Adjusted normalized EBITDA, covenant view	90.6	62.6
Adjusted normalized EBITDA Margin, covenant view in % of revenue	8.4%	6.7

The table above sets out three important key performance indicators ("KPIs") of the Mangrove Group, i.e: (1) Earnings before interest, taxation, depreciation & amortization ("EBITDA"), (2) the normalized EBITDA ("nEBITDA") per the management view and (3) the normalized EBITDA as defined for covenant testing purposes in the Revolving Credit Facility agreement (for further details please refer to chapter "6.9 Leverage ratio and financial performance key indicators, management of capital employed" in this report). The adjusted normalized EBITDA per the management view is presented because it is a relevant measure to assess the sustainable operational and financial performance of the Group and therefore is adjusted for certain one-time, non-recurring or PPA related items that are not expected to impact the Group going forward and thus aids in an understanding of EBITDA in a given period. The adjusted normalized EBITDA is the key figure used by management to steer the company. nEBITDA per the management view is broadly in line with nEBITDA as defined for covenant testing purposes in the RCF facility agreement and other financing documents.

The normalizations of the Mangrove Group and main category of adjustments are summarized in the following table:

(EUR million)	Group total
2022
EBITDA	64.5
KTS Carve-out	3.5
Site reorganization & production FTE adjustment	12.0
EBITDA after exceptional Items	80.0
Reorganization and Restructuring	3.6
Consulting expenses	4.1
Impairment of assets	8.7
Legal fees	1.1
Other normalizations, net	8.8
Effect from IFRS 16	-14.1
Adjusted normalized EBITDA, management view	92.3
FX	1.3
Other normalizations, net	-3.0
Adjusted normalized EBITDA, covenant view	90.6

(EUR million)	Group total
2021
EBITDA	89.4
Overhead restructuring program (baselining)	1.0
Site reorganization & production FTE adjustment	3.9
EBITDA after exceptional Items	94.3
Reorganization and Restructuring	4.9
Consulting expenses	5.9
Medupi	-19.7
TESCO	5.7
Wind Down Enexio DCS	-17.7
Sales ENEXIO WT / ENEXIO SE	1.7
Other normalizations, net	4.1
Effect from IFRS 16	-14.5
Adjusted normalized EBITDA, management view	64.8
FX	-1.9
Other normalizations, net	-0.4
Adjusted normalized EBITDA, covenant view	62.6

The line Impairment of asset include allowances for Trade receivables and impairment of inventories incurred in 2022.

6.6 Employees ^{^*} by segment

	12/31/2022	12/31/2021
RT	1,291	1,237
MCS	756	721
KTS	1,528	1,181
PHE	908	818
Global Sales and Holding	315	754
ENEXIO	19	118
Total	4,817	4,829

^* Full-time equivalents (FTE) excluding vocational trainees and inactive employment contracts

The total number of employees for Mangrove Group as of December 31, 2022 amounted to 4,817 full-time equivalents (FTE) compared to 4,829 FTE as of December 31, 2021.

6.7 Financial position and net assets

Capital structure

The Group's equity as of December 31, 2022 decreased, as compared to December 31, 2021 from negative EUR 100.2 million to a negative EUR 132.8 million. The decrease was primarily due to the loss generated in the fiscal year 2022 amounting to EUR 37.7 million (2021: EUR 40.6 million). The other comprehensive income has decreased in 2022 to EUR 3.0 million (2021: increase by EUR 8.6 million). The movement of other comprehensive income comprises unrealized actuarial gains of EUR 8.2 million (2021: positive EUR 2.6 million) net of deferred taxes on pension plans and loss from foreign currency translations of EUR 5.2 million (2021: positive EUR 6.0 million). The non-controlling interests increased by EUR 0.2 million to EUR 1 million including changes in consolidation group positive EUR 1.2 million and payout dividends to non-controlling parties EUR 0.9 million. Tracking preferred equity certificates ("TPECs") increased to EUR 159.2 million (2021: EUR 147.9 million), including an interest of 11.4 million.

When assessing the equity ratio of the Group (2022: -12.9 percent of total assets; 2021: -10.5 percent of total assets) as of December 31, 2022 the tracking preferred equity certificates ("TPECs") of EUR 159.2 million (2021: EUR 147.9 million) need to be taken into account (see further details to the equity structure chapter "6.1 Equity" in the Notes). Including the TPECs, the equity ratio of the Group as of December 31, 2022 was a sufficient 2.55 percent of total assets (2021: 5.0 percent of total assets).

Non-current assets

Non-current assets amount to EUR 463.9 million and decreased by EUR 1,1 million compared to the previous year.

Non-current assets are decreased mainly due to the PPA amortization EUR 13.4 million of other intangible assets which include acquired intangible assets such as brands, customer bases as well as acquired technology. Deferred tax assets increased compared to previous year by EUR 12.7 million. Capital expenditure (additions of EUR 25,6 million in the year 2022) exceed depreciation, impairments and disposals in property, plant and equipment, resulting in an increase of EUR 0.8 million to EUR 150.0 million in this position.

Current assets and liabilities

Total Current assets represent 54.8 percent (2021: 50.1 percent) of total assets. Total current assets as of the reporting date increased compared to previous year by EUR 90.8 million to EUR 566.7 million. Major fluctuations in current assets relate to inventories, trade receivables and contract assets (more details are set out in the following chapter "Trade working capital") which increased by EUR 44.5 million, as well as cash and cash equivalents, which increased by EUR 40.4 million to EUR 112.5 million (more details are set out in the following chapter "6.8 Cash Flow Statement of continuing operations").

Total current liabilities increased by EUR 136.6 million to EUR 540.5 million, mainly driven by an increase in trade payables and advances received by EUR 73.5 million (more details are set out in the following chapter "Trade working capital"), in current bank loans by EUR 50.7 million (mainly due to an increase of revolving credit facility of EUR 50.6 million).

Non-current liabilities

Non-current bonds mainly include liabilities originated by the acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful refinancing on October 9, 2019. We also refer to our explanations in the chapter "Fundamental information about the Group".

Non-current provisions decreased by EUR 8.6 million from EUR 27.3 million to EUR 18.7 million at end of 2022. The reduction results mainly from the utilization of litigation provisions (- EUR 3.1 million) and a disposal of ENEXIO wind-down provision (- EUR 4.5 million).

Capital expenditures

The capital expenditures amount to EUR 34.8 million in the year 2022 (2021: EUR 33.2 million). The majority of the capital expenditure relates to investments in new products (EUR 14.1 million; 2021: EUR 16.4 million), investments in internationalization and growth (EUR 8.2 million; 2021: EUR 7.6 million), replacements of equipment and machinery (EUR 6.0 million; 2021: EUR 5.8 million) and rationalization through new technical equipment (EUR 2.1 million; 2021: EUR 2.1 million).

The biggest portion of the capital expenditures was spent for projects in Western Europe (EUR 17.5 million; 2021: EUR 20.0 million), followed by North America (EUR 8.9 million; 2021: EUR 4.4 million), Asia-Pacific (EUR 3.7 million; 2021: EUR 5.3 million), and Eastern Europe & Commonwealth of Independent States (CIS) (EUR 3.5 million; 2021: EUR 3.2 million. In terms of capital expenditures by segment the largest spend was in Segment KTS (EUR 15.3 million; 2021: EUR 5.4 million), followed by the Segments PHE (EUR 5.7 million; 2021: EUR 10.5 million), RT (EUR 4.1 million; 2021: EUR 4.5 million) and MCS (EUR 2.4 million; 2021: EUR 2.8 million). The capital expenditure for Holding and consolidation of EUR 6.4 million in the year 2022 (2021: EUR 10.0 million) included mainly capital expenditures in connection with the investments into the buildings.

Trade working capital

Group Total (EUR million)	2022	2021
Inventories	178.7	167.7
Trade receivables	192.1	160.6
Contract assets	31.3	25.6
Total assets	402.1	353.9
Accounts payables	166.5	152.4
Advanced payments	145.0	85.7
Total liabilities	311.5	238.1
Trade Working Capital	90.6	115.8

2022 (EUR million)	RT	MCS	KTS	PHE	ENEXIO, Holding and consolidation	Group total
Segment trade working capital	19.5	17.8	-15.9	74.0	-4.8	90.6

2021 (EUR million)	RT	MCS	KTS	PHE	ENEXIO, Holding and consolidation	Group total
Segment trade working capital	24.4	15.9	6.3	76.1	-6.9	115.8

The trade working capital for Mangrove Group has closed at year end 2022, on a low level of EUR 90.6 million, which is EUR 25.2 million EUR below the EUR 115.8 million at year end 2021.

Major part of the trade working capital of Mangrove at year end 2022 relates to the component business driven segments PHE (EUR 74 million), RT (EUR 19.5 million) and MCS (EUR 17.8 million), whereas the trade working capital of the project business-oriented segment KTS has negative trade working capital EUR 15.9 million. The working capital of ENEXIO, Holding and consolidation was recorded at EUR -4.8 million. The biggest movements from year end 2021 to year end 2022 have been recorded at KTS (reduction of EUR 22.2 million due to high advance payments on projects received and increasing in trade receivables).

The increase in inventories on Group level (EUR 11.1 million) is partially driven by the increase in KTS segment (EUR 19 million) and decrease in PHE segment (EUR 4.2 million).

As mentioned above, the low level of trade working capital of the Group at the end of 2022 is driven by the segment KTS, where high advance payments were collected on major projects mainly in the US, which is also reflected in the Group's high level of advance payments of EUR 145.0 million at year end 2022 (increase of 59.3 million). This increase, together with the higher overall level of accounts payables (increase of EUR 14.0 million), which have been mainly driven by the described higher activity at the end of 2022 compared to 2021, has led to the low working capital level at year end 2022.

6.8 Cash Flow Statement of continuing operations

Overview of cash flow statement

(EUR million)	2022	2021
Cash flow from operating activities - continuing operations	80.2	30.1
Cash flow from investing activities - continuing operations	-33.5	-29.5
Cash flow from financing activities - continuing operations	-6.4	-22.2
Total cash flow attributable to discontinued operations	0.0	0,6
Effects of foreign exchange fluctuation	0.7	1.7
Total Changes in unrestricted and restricted cash	41.1	-19.3
Cash and cash equivalents at beginning of period	72.0	91.3
Change in unrestricted cash and cash equivalents	36,5	-19.2
Change in restricted cash and cash equivalents	4.0	-0.1
Cash at the end of the period	112.5	72.0

Cash flow from operating activities - continuing operations - increased from EUR 30.1 million in 2021 to EUR 80.2 million in fiscal year 2022. This cash-flow is driven by an EBITDA of EUR 64.5 million and a EUR 25.1 million lower trade working capital. These positive impacts are partially offset by tax payments of EUR 8.3 million.

Cash flow from investing activities - continuing operations - increased from EUR -29.5 million in 2021 to EUR -33.5 million in 2022 which shows high investment activity on the level of 2021. The cash out in 2022 relates to the acquisition of property, plant and equipment as well as to intangible assets of EUR -34.8 million. The proceeds from the disposal of non-current assets and assets held for sale amount to EUR 1.3 million.

Cash flow from financing activities - continuing operations - decreased from EUR -22.2 million in 2021 to EUR -6.4 million. In the current year, the financing cash flow primarily consists of interest payments (EUR -41.7 million, FY 2021: EUR -18.1 million), payments from finance lease (EUR -12.7 million, FY 2021: EUR -20.0 million), as well as proceeds from revolving credit facility (EUR 50.0 million, FY 2021: EUR 15.0 million). The higher interest payments in FY2022 relate to the deferral of the payment of interest on the Senior Secured Notes in December 2021 (EUR 14.2 million) and lower interest on the Senior Guarantee Facility.

6.9 Leverage ratio and financial performance key indicators, management of capital employed

Leverage ratio

On October 9, 2019 the Group has entered into the following financing agreements in the course of financing the acquisition of Galapagos BidCo Group: EUR 65,000,000 Revolving Credit Facility Agreement ("RCF", "RCF Facility Agreement"). EUR 260,000,000 Senior Guarantee Facility Agreement ("SGF", "SGF Facility Agreement"), EUR 260,000,000 Cash Collateral Loan Agreement ("Cash Collateral Loan Agreement") and EUR 356,233,492 Senior Secured Fixed Rate Notes ("SSNs" "SSN Indenture").

More details on these agreements are included in the chapter 3. "Financial risk management" to the consolidated financial statements. These agreements define Total Net Debt, consolidated EBITDA and Leverage Ratio of the Group. Consolidated EBITDA as defined in both Agreements equals the consolidated EBITDA used for the Financial Covenant of the minimum EBITDA. Leverage Ratio is calculated by dividing Total Net Debt through consolidated EBITDA.

Management actively monitors the Leverage Ratio of the Group, which is an important financial key figure for Mangrove Group. The degree of the Leverage Ratio determines the margins under the RCF Agreement and Guarantee Agreement, respectively. According to the RCF Facility Agreement and the SGF Facility Agreement the margins as of December 31, 2022 amount to 3.50 percent (prior year: 4.25 percent) (RCF Facility Agreement) and 2.30 percent (prior year: 3.00 percent) (SGF Facility Agreement), respectively.

Financial key performance indicators

Securing a sustainable increase in enterprise value of the Mangrove Group is the overriding goal. To pursue this target management focuses on the identified key drivers for value creation: growth and operating efficiency. In this respect, revenue and earnings are the most important key performance indicators. The reported EBITDA figure is normalized for income and expenses that are non-recurring in terms of their nature or extent as describe further above. To obtain a meaningful picture of the overall situation additional performance indicators are determined and reported on regular intervals.

Order intake is analyzed on a weekly basis whereas Revenues are analyzed by region and customer industry on a monthly basis in order to identify emerging market trends as early as possible. To react quickly to the developments of the markets, the segments are required to provide regular forecasts for the year as whole for the key performance indicators revenue and (normalized) EBITDA. In addition, these reports include forecasts with respect to other performance indicators such as order intake and EBIT. Since March 2020 the Group monitors its order intake as well as its sales funnel more frequently as one important early indicator when assessing the impacts from the corona crisis that was still ongoing at the date of this report. For more details, please refer to the following chapter "7. Report on outlook, risks and opportunities".

Management of capital employed

Resources are allocated within the Mangrove Group primarily on the basis of strategic and medium-term planning. This provides the framework for preparing key decisions on core technologies, sales markets, and other strategically important variables.

Acquisitions and expansion investments are assessed not only on the basis of key performance indicators showing potential returns, but also in terms of their importance for achieving the Group's strategic goals. The key economic criterion for evaluating rationalization and expansion investments is the net present value of future cash flows associated with these investments. The payback period (i.e. the time until the initial cash out from the investment has been recovered) is also calculated as an additional benchmark for assessing the risk arising from changing economic conditions.

Working capital is another key element of capital employed. Working capital management begins before an order is accepted with the payment terms that are offered or negotiated.

Project- and activity-based management

In addition to general management with the aid of the key performance indicators described above, Mangrove Group has established individual assessment and approval procedures for customer and investment projects, utilizing specific thresholds for different hierarchy levels. Customer projects are evaluated primarily based on their expected margins (gross margin on a fully absorbed cost basis) and of their commercial and contractual risk profile, with a particular emphasis on cash flow. Project management is also backed up by extensive project control not only at operating unit level but also - depending on the size of the project involved - at segment or group level in the form of a separate reporting system for major contracts. In many cases, the findings gained from this analysis provide suggestions for improving internal processes, which can be used in subsequent projects. At group level, the analysis focuses on deviations between the calculated and the expected or realized contract margin.

Compliance

Compliance - which is defined as measures to ensure adherence to legal, statutory, and internal requirements, as well as their observance by group companies - is a key management and supervisory task at Mangrove Group. For this purpose, Kelvion Products and Kelvion Thermal Solutions have implemented a compliance organization. They are respectively headed by a Chief Compliance Officer, who reports in this function to the respective Management Boards as well as Shareholder Committees. Furthermore, Company Compliance Managers have been appointed for each operating company. A Compliance Committee is also maintained for both segments to advise the Chief Compliance Officer and to coordinate compliance related processes and measures across the Group. Mangrove Group's extensive compliance program is rounded off by classroom and web-based training sessions for the group employees.

7. Report on outlook, risks and opportunities

7.1 Forward-looking statements

The following report on outlook, risks and opportunities sets out the perspective of Group management on the expected development of Mangrove Group including the significant risks and opportunities. The outlook covers a period of one year, which is in line with the internal management system of the Group whereas the Risks and Opportunities are managed based on a two-year-assessment.

This report includes forward-looking statements with respect to the Mangrove Group's financial condition, result of operations and business plan. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in these statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and the Mangrove Group's actual results of operations, financial condition and liquidity and the development of the industry in which it operates may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition, even if the Mangrove Group's results of operations, financial condition and liquidity, and the development of the industry in which it operates, are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

Mangrove Group has implemented a continuous forecasting process that we believe facilitates the Group's ability to identify opportunities as they arise and react in a similar way to unexpected risks. The Risks and Opportunities section sets out the main risks and opportunities we believe the Mangrove Group is facing which are relevant to the performance of the Group.

7.2 Outlook for 2023

7.2.1 Sector specific outlook 2023 and beyond - positive outlook ^{^*} on an attractive market growing at 3-4 percent p.a. globally

^* Excluding (1) impacts from the COVID-pandemic mainly on the supply chain and (2) the Russian invasion

Mangrove Group's growth plans are founded on several major global trends:

1. The continuous growth of the world population

2. The growing middle class in developing countries

3. The growing demand for energy

4. The increasing demand for eco-friendly, sustainable and energy-efficient products ("green tech")

5. The increasing demand for cooling of data centers ("high tech")

According to the United Nations (UN) the world's population of 8.0 billion people in 2022 and is projected to increase to 9.7 billion in 2050 (see World Population Prospects 2022). Resulting from a growing population, the world is expected to recognize a continued trend towards urbanization, as already seen in past decades. According to UN studies, a continuing population growth and urbanization are projected to add 2.5 billion people to the world's urban population by 2050, with nearly 90 percent of the increase expected to be concentrated in Africa and Asia. That means that in the future, more energy will have to be produced to meet the growing energy demand. To make these energy needs affordable, efficient production-processes in various heat exchangers end-user markets are expected to be essential. Moreover, the further urbanization will in parallel likely lead to more and more people living and working in cities which require energy efficient buildings and infrastructure and enable growth for the heat exchanger solutions we provide for the Power sector.

There is an increasing trend towards renewable power generation, which often has a lower demand for heat exchangers per installed unit, as it does not contain a steam cycle. Due to the smaller and more decentral structure of renewable energy plants they tend to be smaller, however in total figures more plants require heat exchangers.

Based on a market analysis from mid-2022 all segments offer a positive post-COVID market outlook with the long-term average annual growth rate in underlying Mangrove end-markets (Refrigeration, Power, HVAC, Oil & Gas etc.) expected at around 3-4 percent, using 2021 as base year. Apart from the Oil & Gas industry, where the recovery was lagging behind, all of Kelvion's end-markets returned to pre-COVID levels in the second half of 2021. The anticipated end-market expansion is broad based and includes industries with lower expected growth, like Oil & Gas, Power and Marine and industries with higher growth, including HVAC, Refrigeration and Food & Beverages. Much faster growth is anticipated for end-markets like high tech (e.g., data center, block chain technology, edge computing etc.) and green tech (e.g., Hydrogen, LNG and Carbon Capture Storage).

From a regional perspective, the growth in emerging markets and China is expected to be above Europe and NAFTA across end-markets. All Kelvion segments have a favorable market position: typically, among top 35 players, leading positions in their respective segments and end-customer markets (e.g., MCS overall, KTS in AFCs). The overall market share is ~5 percent and leaves headroom for potential share (re-)gains based on the market analysis mentioned above.

7.2.2 Global economic outlook 2023

Financial budgets for FY 2023 and beyond are based on the October 2022 World Economic Outlook (WEO) from October 2022

As described in the section about the macroeconomic environment in this report, Mangrove Group as a global engineering company considers global growth in gross GDP and the corresponding forecasts to be a benchmark for its own performance.

The Group prepared its financial budget in the fourth quarter of FY 2022 and approved it mid-December 2022 as part of the update of its H5 Strategy in late 2022 as explained. This budget 2023 is based on the growth expectations according to the IMF World Economic Outlook (WEO) from October 2022 regarding the development of the global economy as well as estimates and expectations on the markets for heat exchange provided by a leading strategic consulting firm in 2022 and further external sources regarding outlook from the second half of 2022 on the development of key markets Mangrove is operating in. For details on the Macroeconomic environment and the IMF WEO from October 2022 please refer to chapter 5.1 "Macroeconomic environment - The global economy in 2022".

In the WEO, issued in October 2022, the IMF's global growth was expected to slow from an estimated 3.2 percent in 2022 to 2.7 percent in 2023, with the global economy experiencing a number of turbulent challenges. Inflation being on a very high level, tightening financial conditions in most regions, Russia's invasion of Ukraine strongly destabilizing the global economy, and the lingering COVID-19 pandemic all weighing heavily on the outlook. For the advanced economies the 2023 growth estimate was 1.1 percent (+2.4 percent in 2022) and for the emerging market and developing economies 3.7 percent (+3.7 percent in 2022). China's growth was estimated for 2023 at 4.4 percent after 3.2 percent in 2022.

The World Economic Outlook (WEO) from April 2023 raises growth expectations for 2023

In IMF's April 2023 WEO the estimated growth for 2022 has been increased to 3.4 percent (+0.2 percentage points) and for 2023 to 2.8 percent (+0.1 percent), reflecting positive surprises and greater-than-expected resilience in numerous economies. Nevertheless, global growth is projected to remain below the historical (2000-2019) annual average of 3.8 percent. While the global fight against inflation and Russia's war in Ukraine weighing on the economic activity, the reopening of China paving the way for a faster-than-expected recovery. The decline in growth is driven by advanced economies, while growth in emerging market and developing economies are estimated by the IMF to have bottomed out in 2022. Growth in China is expected to pick up with the full reopening in 2023. The IMF expects the global inflation to fall from 8.7 percent in 2022 to 7.0 percent in 2023.

Further information on political and global economic risks is also provided in the section Risks and Opportunities.

7.2.3 Outlook Revenue and Earnings 2023

Budget 2023

The budget foresees order intake growing in 2023 by 1 percent to a level of around EUR 1,300 million and a revenue which strongly expands by around 19%, to reach the same level. The adjusted EBITDA (management view, including normalizations and excluding IFRS 16) is expected to exceed prior year.

The budgeted revenue increase is broad based with all segments contributing, based on the high order backlog and expected order intake. Amongst the segments the strongest revenue growth is anticipated for KTS followed by PHE, RT and MCS. For RT and KTS the data center business is expected to be the main growth driver, while for MCS good market opportunities are seen in the Marine and Rail sectors, as well as in the continued investments in grid stability in the EU & USA. For PHE the heat pump market is foreseen to contribute a large share to the expanding revenue. The budget offers significant headroom to the financial covenants.

Good start to the year 2023

In the first three months of the year the Group can report a strong order intake that clearly exceeds previous year and budget, and which includes several large orders for green tech and high tech and also for conventual applications. Revenue and adjusted normalized EBITDA for the Group exceed previous year and budget. The higher profitability of the Group is driven by higher gross margin levels as well as SG&A savings.

Based on the good start to the year 2023 and under the assumption that the overall economic situation will not deteriorate in the further course of the year, management of the Mangrove Group forecasts adjusted normalized EBITDA to exceed Budget.

7.3 Risk report

7.3.1 Risk management system

All group companies are integrated into segment-specific risk management systems. Quarterly and size-related ad hoc risk reports ensure that segment management decision-makers are informed promptly about material existing risks and potential risks affecting future development.

The basic principles of an orderly risk management system and the related workflows are documented in segment-wide risk guidelines. These guidelines also document mandatory risk reporting and management requirements.

Risk management instruments are supplemented by a reporting system encompassing evaluated risk reports, consolidated financial projections, monthly consolidated financial statements, and regular meetings between the shareholder committees and the respective segment management.

The specific requirements of Mangrove's project businesses are addressed by risk boards at the level of the respective shareholder committees. Before a binding quotation is submitted or an agreement is signed, the commercial and contractual terms of potential orders are examined in detail by specialists from various departments so that risks that cannot be managed are avoided. The risk management system therefore already comes into play before risks arise, in the form of a critical examination of the opportunity and risk profile of quotations. No agreement may be signed if the profile is inappropriate.

The risk management system is not only designed to identify risks that endanger the Group's continued existence at an early stage, as required by law; it also captures all risks that might have a material adverse effect on the operating result of a segment or Mangrove Group.

To identify risks that could endanger the continued existence of Mangrove Group as a going concern, all issues are assessed for their financial materiality (on a gross basis, i.e., excluding any risk-mitigating measures) and probability of occurrence.

The following criteria are used to determine materiality:

Insignificant	No material impact on financial and earnings position
Moderate	Noticeable impact on financial and earnings position
Considerable	Material or even critical impact on financial and earnings position

This makes it possible to classify both risks and opportunities in accordance with their impact on the Group.

Adequate provisions have been recognized for all identifiable risks arising from the Group's operating activities provided that the recognition criteria for liabilities have been met. The following section provides details of existing risks. Risks that are not yet known or currently regarded as insignificant may also have an adverse effect on business activities.

7.3.2 Risks

Legal risks

Mangrove Group's ability to leverage its growth and earnings potential depends on it using the opportunities that arise, although this in turn is associated as a matter of principle with business risks. Taking calculated risks is therefore part of the corporate strategy. To meet the objective of sustainably increasing enterprise value, it is necessary, as far as possible, to enter into only those risks that are calculable and matched by greater opportunities. This requires active risk and opportunity management, which avoids inappropriate risks, monitors and manages risks entered into, and ensures that opportunities are identified and utilized in good time.

The strategic and medium-term planning are key components of the way in which Mangrove Group manages opportunities and risks. These processes are used to prepare decisions on core technologies and markets, along with the corresponding allocation of resources. The objective is to ensure stability by diversifying and by concentrating on markets of the future. At the same time, developments that may jeopardize Mangrove Group's continuing existence can be identified at an early stage.

Opportunities and risks arising from significant operational decisions - for example whether to take on orders or to implement capital expenditure projects - are assessed and hence actively managed by the relevant departments and decision-makers at all group levels in a decision-making process that takes materiality criteria into account.

A number of claims have been brought arising out of the financial restructuring as described below (the "Restructuring"). However, as with any dispute, the outcome of these proceedings cannot be guaranteed. In the opinion of Management, the ultimate liabilities resulting from such claims will not materially affect the consolidated financial position of the Group, but it might be possible that the conclusion of such proceedings may result in future income or expenses if the amounts that have been accrued for them are higher or lower than required.

On October 9, 2019, Mangrove LuxCo IV S.à r.l. acquired the shares in Galapagos BidCo S.à r.l. as described elsewhere in these notes (e.g. chapter 1.2 "Acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful Refinancing on October 9, 2019"), associated preferred equity certificates and any intercompany payables owed by Galapagos BidCo S.à r.l. to its former parent company Galapagos S.A. The acquisition was made in connection with the Restructuring, which was completed on October 9, 2019.

A number of sets of internationally recognized advisors were involved in the Restructuring and management believes that the Restructuring was fully legally effective and complied with all obligations, including under the applicable finance documents.

The following claims have been brought which arise out of the Restructuring:

―	Galapagos BidCo S.à r.l. has commenced proceedings in England against inter alios the Security Trustee under the Intercreditor Agreement which effected the Restructuring, the trustee which held rights on behalf of the Galapagos Senior Notes and each of the plaintiffs in the New York, German and Luxembourg proceedings described below, requesting that the English Court makes a series of declarations inter alia that the Restructuring complied with the terms of the Intercreditor Agreement. The English proceedings do not contain any claim for damages. A challenge to the jurisdiction of the English Court to hear this claim was lodged by two of the defendants in these proceedings and was heard in December 2020. This challenge was dismissed by the English Court on 19 January 2021. The trial commenced on 9 March and concluded on 23 March. A judgment is expected before summer 2023.
―	A claim in the Supreme Court of the State of New York by a beneficial holder of the Galapagos Senior Notes ("NY Claimant") against inter alios Galapagos Holding (former indirect parent of Galapagos BidCo S.à r.l.) and certain of its subsidiaries (now being subsidiaries of Mangrove Group) relating to the Restructuring. The plaintiff alleges that the Restructuring wrongly deprived it of value by diverting assets away from the Group and releasing certain guarantees. The plaintiff seeks: (i) damages; and (ii) a reversal of the steps taken to affect the Restructuring. In addition, the plaintiff seeks a declaration that the release of liabilities under the Galapagos Senior Notes Indenture pursuant to the provisions of the former Intercreditor Agreement applying to certain liabilities of the Group was invalid (in other words, that this part of the Restructuring also be reversed). The Supreme Court of the State of New York decided on 22 July 2020 to stay this action pending a decision from the English Court as to its jurisdiction in these matters (as referred to above). The plaintiff indicated that it intended to appeal this decision, but no substantive appeal was actually served. Following the decision by the English Court on 19 January 2021, the proceedings in New York are still stayed.
―	On October 31, 2019 main insolvency proceedings were opened over the assets of Galapagos S.A. in Düsseldorf, Germany. Two appeals were lodged at the German Federal Supreme Court on the jurisdiction of the Düsseldorf insolvency court. Following such appeals, on December 17, 2020, the German Federal Court of Justice referred certain legal questions concerning matters of European insolvency law (and, consequently, the jurisdiction of the Düsseldorf court in such insolvency proceedings) to the Court of Justice of the European Union for determination. The Court of Justice of the European Union rendered its decision on 24 March 2022, which confirmed that the German courts did not have authority to appoint the administrator on 23 August 2019, given that the European regime applied to the UK at this time. Following this decision, on 30 June 2022 the English insolvency court made a winding-up order with regard to Galapagos S.A., and has therefore asserted its jurisdiction over the insolvency proceedings (after it had stayed the insolvency proceedings in England in August 2019 due to the court in Düsseldorf, Germany, claiming its jurisdiction). The German Federal Court of Justice rendered its decision (based on the Court of Justice of the European Union decision) on 8 December 2022, declaring that since the English courts did not make their winding-up order prior to the Brexit transition period, i.e. 31 December 2020 such that the German courts are no longer bound by the EU Insolvency regulation when considering proceedings opened in England, the German courts had retrospective authority to appoint the administrator on 23 August 2019. Thus, the German insolvency proceedings remain in place, alongside the competing equivalent English proceedings.
―	The purported administrator of Galapagos S.A., Luxembourg (former 100 percent shareholder of Galapagos BidCo S.à r.l.) has brought a claim against Mangrove LuxCo IV S.à r.l. and Galapagos BidCo S.à r.l. in Luxembourg detailing his allegations that the Restructuring (i.e. the refinancing of Galapagos Group and the sale of Galapagos BidCo S.à r.l. to Mangrove Group) involved a fraudulent exercise of a Luxembourg share pledge and that it should, therefore, be unwound. However, no steps have been taken by the administrator to progress this claw back action. In addition to the main claim, following the administrator's application the Luxembourg Court granted an ex parte "preservation order" whereby a trustee was appointed to prevent an actual or de facto liquidation of Galapagos BidCo S.à r.l. This escrow order has been successfully appealed and set aside by the Luxembourg Court. This decision was then appealed by the administrator, but this appeal was rejected by the Court. A further appeal was then made by the administrator to the Luxembourg Cour de cassation which overturned the Court of Appeal's decision to set aside the escrow order on the basis that share pledge enforcements cannot be challenged under Luxembourg law. The matter was referred back to the Luxembourg Court to consider the position on the merits. The Luxembourg Court of Appeal decided that the administrator had not demonstrated that any fraudulent action took place and it therefore dismissed the appeal. The consequence of these various actions is that there is no escrow order in place. Finally, the administrator has brought a separate action challenging the 2021 restructuring of the assets of Galapagos BidCo S.à r.l. This action raises similar allegations to those made in the claw back action. The Luxembourg Court has yet to order a timetable for Mangrove LuxCo IV S.à r.l. and Galapagos BidCo S.à r.l' to file their defense.
―	Following an application of the purported administrator of Galapagos S.A., the District Court of Düsseldorf, Germany, had issued an injunction (einstweilige Verfügung) against Mangrove LuxCo IV S.à r.l., ordering an escrow agent to hold the shares in Galapagos BidCo S.à r.l. This order was successfully appealed and, consequently, the injunction was lifted in June 2021. Further, by the same plaintiff, a main proceeding (Hauptsacheverfahren) has been initiated against inter alios Mangrove LuxCo IV S.à r.l. A first hearing took place in February 2023 with a decision announced for May 2023.

Based on legal advice of leading international law firms based in the UK, Luxembourg, Germany and the US (privilege in respect of which is not waived) Management assesses the risk from the above-mentioned ongoing litigation as well as future litigation as follows: 1) The risk that the Restructuring would be unwound is considered remote; and 2) The risk of having to pay damages to former holders of the Galapagos Senior Notes or any other third party is considered unlikely.

In the unlikely event of successful damage claims against the Company or any of its subsidiaries, the RCF Facility Agreement, the SGF Facility Agreement, the Cash Cover Loan Facility Agreement and the Mangrove Notes Indenture will permit the Group to incur up to EUR 100 million of new indebtedness only for these purposes which will rank senior to the Mangrove Senior Notes. Therefore, Management is confident to be able to fund such claims from new indebtedness and/or cash available.

Performance risks

The performance risks presented below could take a wide variety of forms. The elements of Mangrove 's risk management system are designed to help identify emerging risks before they materialize, so that appropriate measures can be implemented on a case-by-case basis to avoid negative effects on the Group's financial position and results of operations. As a rule, potential business performance risks are minimized by avoiding significant dependencies and ensuring a balanced mix of fixed and flexible capacities.

Risks from macroeconomic trends

The Mangrove Group sees risks in connection with macroeconomic trends. If a downturn in the economy would again lead to a reduction in order intake to below the level of the pre-COVID fiscal year 2019, this could have a negative impact on earnings due to capacity underutilization and capacity adjustment measures. Due to the Group's regional and industry diversification, and the fact that it is structured for flexibility, the probability of this significant risk occurring is considered to be low in the longer term but a medium to high in shorter term. The risks and challenges in connection with the global economy are explained in more detail in chapter 7.2.2 "Global economic outlook 2023". This risk is rated as medium overall. As mentioned in chapter 7.2.3 "Outlook Revenue and Earning" the potential adverse impacts, including high inflation and the resulting rise in interest rates, Russia's invasion of Ukraine, and the ongoing COVID-19 pandemic, are difficult to assess at this point of time and may impact the Group's revenue and earnings going forward.

Country risk

Although country-specific conflict situations that may result in risks to the Group are monitored continuously as part of the risk management process, the potential risks arising from such situations are difficult to quantify. This general risk is rated as medium overall.

Country risk - exposure to Russia

In the financial year 2022, Russia accounted for around 3 percent (around EUR 30 million) of total Kelvion revenue and Ukraine and Belarus together accounted for around 0.1 percent of total Kelvion revenue.

Accordingly, management does not consider Kelvion's exposure to these regions to be material. In addition, the Group has received in the past occasional large contracts through European or Asian EPCs in Kelvion Thermal Solutions. In October 2022, the Group took the decision to completely withdraw from any trading with Belarus. Whilst the Group had minimal trading in the region it was decided to, as a matter of Group wide policy, not to undertake any trade.

Diverse product and customer structure provides resilience in case of fluctuation in specific markets

Mangrove Group's markets have a diverse product and customer structure. This diversification moderates the impact on total demand of fluctuations in specific submarkets. Mangrove Group considers the probability of a global decline in demand to be low in the longer term. However, as described in the paragraph above "Risk from macroeconomic trends", Mangrove Group sees a certain down-turn risk in the short term which is rated as medium overall.

Risk from execution of projects

A significant proportion of Mangrove Group's business consists of projects that depend on the financing available to their customers. A general decline in demand or a shortage of credit could make it more difficult to implement such projects. For the same reason existing orders could be deferred or even canceled. If such risks were to occur on a global level, they would have a material impact on Mangrove Group's financial position and results of operations. The probability of such risks occurring globally is considered to be low. This risk is rated as medium overall due to Mangrove Group's diversified customer markets.

Customer pricing risks

On the sales side, future prices will depend to a considerable extent on general economic trends. Any fall in capacity utilization in the industry could also have a significant negative impact on price levels and therefore on the financial position and results of operations of Mangrove Group. Due to the Group's regional and industrial diversification, the probability of such a risk is considered to be medium overall.

Risk of material price increases and limited availability of materials

Mangrove Group processes a number of materials, such as steel, copper, aluminum, and titanium. Purchase prices for these metals may fluctuate significantly depending on market conditions. Long-term supply agreements are entered into with selected suppliers in order to lock in the procurement prices used as the basis for costing orders. However, the potential risks arising from such situations are difficult to quantify. Given the high commodity price increases in the above materials since 2021 and the therefore already significantly increased product prices of Mangrove Group the risk of further material price increases is rated medium overall. However, Management of the Group is confident to be able to mitigate the impacts from these prices increases to a major extent as described in earlier chapters.

Risk from long-term engineering orders

Long-term engineering orders are a significant element of Mangrove Group's business. Some of these contracts entail particular risks, as they involve assuming a significant portion of the risk associated with the project's completion. In addition, they may provide for warranty obligations that remain in force for several years after the project's acceptance. Technical problems, quality problems at subcontractors, and missed deadlines may lead to cost overruns. There is therefore an extensive risk management system in place at group and segment level to closely monitor order-related risks. This comes into play before binding quotations are submitted. Adequate provisions have been recognized for all foreseeable risks in this area. This could give rise to both risks and opportunities in relation to the financial position and results of operations. As a whole, this issue is rated as a low to medium risk.

Availability of dedicated and qualified employees

Dedicated and qualified employees are a critical success factor for Mangrove Group. The Group has various staff policy measures in place to counter the risk that it will be unable to fill vacant positions adequately or that it will lose skilled employees. The measures aim to position Mangrove Group as an attractive employer and foster employees' long-term loyalty to the Group. The probability of this significant risk occurring is considered to be medium. This issue is rated as a medium risk overall.

Potential delays in the delivery of products or whole projects from the COVID crisis or the Russian invasion mitigated by force majeure clauses

The impacts from the corona virus or from the Russian invasion might result in delays in the delivery of products or whole projects to some of our customers. All material delivery and project contracts include "force majeure" clauses. Therefore, management of the Group does not expect material damage claims from potential delays in the delivery of products or whole projects. Where necessary the Group has notified its customers about the corona virus outbreak being a "force majeure".

Environmental risk

Only very limited properties in our portfolio entail risks relating to environmental contamination. These risks are countered through appropriate measures and covered by adequate provisions. As a whole, environmental risks are rated as a low.

Tax risks

The applicable national tax legislation may affect the use of loss carryforwards as well as non-deductible interests carried forward and thus the recoverability of the deferred tax assets recognized in the consolidated financial statements and current taxation.

Moreover, in Germany and abroad, there is considerable uncertainty regarding future changes to, and the application of, tax legislation as a result of tighter public-sector finances, the resulting pressure for reform, and tangibly greater scrutiny by the tax authorities.

The tax risks presented could have a material effect on Mangrove Group's financial position and results of operations. The occurrence of material negative effects is considered to be relatively unlikely and the impact would be moderate. So, the risk is rated as a low to medium risk.

7.4 Report on opportunities

7.4.1 Overall assessment of opportunities

A key task of the opportunity and risk management system is to systematically evaluate internal and external information to identify opportunities at an early stage and appropriately assess the potential they offer. Specific measures are then developed to convert opportunities into actual economic success.

Planning of the Group's economic development is based on certain assumptions regarding the development of the performance parameters described below. If these parameters develop more positively than expected overall, this could have a corresponding effect on Mangrove Group's financial position and results of operations.

7.4.2 Performance opportunities

The company continues to strengthen its competitiveness with further executing sales and manufacturing footprint re-organization and optimization projects, growth initiatives and dedicated operational restructuring measures. Permanently optimized and adapted direct and indirect cost structures and the streamlined business processes will enable the organization to quickly react to upcoming opportunities.

The company is expected to continue to generate additional business volume by continuously enlarging the market reach, covering with the broad product line the existing white spots and thereby to participate in the growth of these markets. The standardization and improvement of the segment's ERP and sales tools landscape will enable the organization to further optimize the business processes. The future growth will also be driven by the improved regional service setup by which Kelvion can leverage the large installed base of products.

New opportunities in renewables/green energy, and data center market areas arise and constitute attractive strategic options to further develop product offering and business models. From the aging fleet of conventual power plants an increase in repair and replacement of aging or damaged equipment is expected in the short and medium term, including more frequent routine maintenance interval needs and customers' challenge to increase plant efficiencies and reduce emissions.

Mangrove Group considers the probability of the performance opportunities exceeding the planning assumptions and therefore having a material positive impact on net assets, financial position, and results of operations to be material.

7.5 Internal control system and risk management system relevant for the consolidated financial reporting process

Mangrove Group's internal control systems (ICS) (hereafter referred to as "Mangrove Group's ICS") is based on the COSO (Committee of Sponsoring Organizations of the Treadway Commission) framework and comprises the risk management system (RMS) as well as other principles, measures, and rules (other components of the ICS). The Board of Management of Kelvion have the responsibility to define the scope and structure of the ICS at its discretion. Internal Audit is responsible for independently reviewing the functionality and effectiveness of the ICS in the Group and, to comply with the task, has comprehensive audit and inspection rights. In addition, the external auditors conduct a risk-orientated audit to verify the effectiveness of those parts of the ICS that are relevant to financial reporting. While the RMS aims at identifying and classifying risks, the components comprising the rest of the ICS serve primarily to prevent or mitigate risk using control measures.

Mangrove Group's accounting-related ICS comprises the principles, methods, and measures to ensure appropriate accounting. It is continuously being refined and aims to ensure the consolidated financial statements of Mangrove.

It is generally true of any ICS that regardless of how it is specifically structured there can be no absolute guarantee that it will achieve its objectives. Regarding the accounting-related ICS, there can therefore only ever be relative, but no absolute certainty, that material accounting misstatements can be prevented or detected.

Group Finance manages the processes of group accounting and management reporting. Laws, accounting standards, and other pronouncements are continuously analyzed as to whether and to what extend they are relevant and how they impact financial reporting. The relevant requirements are defined by Group Accounting Manual, for example, communicated to the relevant units and, together with the financial reporting calendar that is binding throughout the Group, forms the basis of the financial reporting process. In addition, supplementary process directives such as Intercompany Policy, standardized reporting formats, IT systems as well as IT-based reporting and consolidation process support the process of uniform and compliant group accounting. Where necessary, we also draw on the services of external service providers, for example, for measuring pension obligations. Group Accounting ensures that these requirements are complied with consistently throughout the Group.

In addition to Mangrove, all group companies are integrated into the ICS.

The following key principles of Mangrove Group's ICS must be applied in all business functions: clearly defined areas of responsibility, the separation of functions in all areas of activity, dual signature policies, compliance with policies and guidelines, instructions and procedural requirements (manuals), obligation to obtain comparative offers before awarding contracts, protection of data from unauthorized access, and the holding of training sessions to ensure uniform procedures within the Group.

Key measures and rules that are relevant for financial reporting and are designed to ensure uniform accounting at all subsidiaries are: accounting manuals, a uniform chart of accounts, consolidation and calculation manuals, the approval of entries using the dual control principle, and the fact that certain entries can only be made by selected persons. To prevent errors, standardized IT systems are used in Mangrove Group's accounting, controlling, and finance functions in all Group companies. All guidelines and IT systems are updated on a continuous basis to reflect legal and business requirements.

Overall, Mangrove Group's internal control system has been implemented in such a way as to ensure reliable financial reporting.

7.6 Risk reporting to the use of financial instruments

With regards to its assets, liabilities and planned transactions, Mangrove Group is particularly exposed to liquidity risks, credit risks, interest risk and the risk of changes in exchange rates. Financial risk management aims to limit these risks through ongoing operational and finance activities. Depending on the risk assessment, we use selective derivative or non-derivative instruments to mitigate risks. However, Mangrove Group uses derivatives exclusively as hedging instruments i.e., not for trading or speculative purposes. The following risk areas of liquidity, currency, and credit risks are evaluated and rated as medium overall. Hedge accounting is not applied.

Financial risks

As a global group, Mangrove Group is in the normal course of business exposed to various financial risks such as liquidity, currency, interest rate, procurement market and credit risks that could affect its net assets, financial position and results of operations. It is company policy to use derivative financial instruments to reduce the risks associated with operating activities and the resulting financing requirements. The Group does not invest in derivatives for trading purposes.

The various risk classes and risk management systems are outlined below:

Risk management is carried out centrally on corporate level. Group Treasury identifies, evaluates and hedges (economically rather than in the sense of IAS 39.71) financial risks in close co-operation with the Group's management and operating units. Treasury operations are conducted within a framework of policies and guidelines.

The Group is being rated by Standard & Poor's as well as Moody's. In December 2020 Standard & Poor's lowered Mangrove Group's rating to 'CCC+' (negative outlook). The previous rating of B- was given in December 2019, shortly before the outbreak of the global pandemic. In February 2021 the Group received the initial rating 'Caa1' (negative outlook) from Moody's. In July 2022 Moody's lowered Mangrove Group's rating to 'Caa2' (stable outlook). The ratings by the agencies reflect, besides other factors, metrics like financial leverage, profitability, cash flow and its ability to remain in compliance with its financial covenants. The ratings have been impacted in the past years by the global recession in connection with COVID-19 which affected some of the Group's end markets, including Oil & Gas and Power, as well as by renewed supply chain disruptions, persistently high inflation and the significant slowdown of global growth. In management's view, the successful implementation of the cost reduction initiatives (as described in chapter 2.3.2 "Kelvion - "High Five" "H5" Strategy"), the strong order intake growth and increased profitability of the Group especially in the second half of 2022 offer the opportunity to improve the rating in the future.

Liquidity risk

Constant monitoring of liquidity

Liquidity risk is the risk that Mangrove Group is not able to meet its financial obligations as they fall due. Mangrove Group manages its liquidity risk on a consolidated basis with cash provided from operating activities being a primary resource of liquidity in addition to debt. The operating units forecast their cash and currency requirements to the central treasury function. The Mangrove Group maintains sufficient liquidity reserves at all times by efficient cash management structures such as cash pools, concentration accounts and revolving financing facilities.

In general, the liquidity status is monitored by Group Treasury on a daily basis. Additionally, a rolling 13 weeks bottom-up (i.e., all entities of the Group reporting their forecast into the central cash forecast of the Group) liquidity forecast, produced on a weekly basis. This cash forecast has consistently delivered reliable forecast results and is an important tool for management when steering the liquidity of the Group.

Financial covenants

The Group has entered into a multi-currency revolving credit facility agreement (RCF) of EUR 65 million, dated October 9, 2019 with a syndicate of seven banks. On a monthly basis the Group is obliged to deliver a liquidity report to the bank syndicate. The liquidity amount is required to be above a Minimum Liquidity Amount (as defined in the RCF) throughout the term of the RCF (Minimum Liquidity Covenant). The RCF states that on each quarter date the Consolidated EBITDA and the Total Net Leverage, as defined in the RCF must exceed certain amounts as set out in the revolving facility (Minimum EBITDA Covenant and Total Net Leverage Covenant). The first covenant test date was March 31, 2020. On December 31, 2022, EUR 65.0 million had been drawn under the RCF. The same covenants must also be complied with under the terms of the senior guarantee facility agreement of EUR 260 million also dated October 9, 2019 (SGF) entered basically into with the same bank syndicate. The Mangrove Group and certain of its bank syndicate members also entered into a cash cover loan agreement dated October 9, 2019 and a multilateral guarantee facility agreement also dated October 9, 2019 which was repaid in full in 2020. Each of those agreements contains the Minimum Liquidity Covenant, the Minimum EBITDA Covenant and Total Net Leverage Covenant and the below comments equally apply to these agreements.

The ratio of net debt to consolidated EBITDA as defined in the RCF, is an important financial ratio (debt ratio) used in the Mangrove Group.

Financial covenants - reset effective December 21, 2022

With effective date December 21, 2022, the Group agreed with the lenders to reset the financial covenants set forth in the facility agreements and make certain additional amendments including, but not limited to, a reduction of the total commitments under and as defined in the Senior Guarantee Facility Agreement from EUR 260 million to EUR 190 million.

The Group originally requested a reset of the financial covenants as a result of the continued impact of the ongoing COVID-19 pandemic and Russia's invasion of the Ukraine in February 2022 on the Group's business and operations. Management believed at that time that the effects of these external factors on the Group's operations may impact the company's ability to, among other things, meet the upcoming covenant tests. Whilst operating performance has remained positive and the company has met the covenants tests for the relevant period, aforementioned external factors have continued to impact the external markets in which the Group's business operates. As such the company felt it was prudent to continue with the resetting of the financial covenants which included resetting the net leverage and minimum EBITDA covenants. In addition, certain other technical amendments were made under each of the Facility Agreements. Please refer to chapter 5.3 "Course of business" for more details on the development of the Group's business in 2022.

No short-term debt maturities

Mangrove Group's position is supported by an absence of short-term debt maturities because all credit facility agreements (bond and revolving) include full debt repayment on the respective maturity dates (2024 to 2025).

Currency risk

The results are impacted by both transaction and translation currency effects.

Transaction currency impacts

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the GBP and the US Dollar. Transaction currency effects occur when the subsidiaries incur costs or earn revenues in a currency different from its functional currency.

To manage a foreign exchange risk arising from future commercial transactions, recognized assets and liabilities, entities in the Group use forward contracts transacted by Group Treasury. Foreign exchange risk arises when future commercial transactions, recognized assets and liabilities are denominated in a currency that is not the entity's functional currency. Group Treasury is responsible for managing the net position in each foreign currency by using external forward currency contracts.

The uniform group guidelines for central currency management used within Mangrove Group require all group companies to hedge foreign-currency items as they arise in order to fix prices on the basis of hedging rates. Currency risks are hedged for recognized hedged items, unrecognized firm commitments, and highly probable forecasted transactions. The hedging periods are determined by the maturity of the hedged items and are usually up to 12 months. But in exceptional cases they may exceed that period significantly. Nevertheless, changes in exchange rates may affect sales opportunities outside the Eurozone.

Affiliated group companies based in the Eurozone are obliged to tender to Mangrove Group's central treasury unit all outstanding exposures relating to transactions in goods and services in major transaction currencies. Most of these exposures are passed on directly to banks at matching maturities, depending on the hedging objective of the derivatives and the related accounting treatment: They may also be hedged as part of a portfolio. The hedging of financial transactions and transactions conducted by subsidiaries outside the Eurozone is also closely coordinated with the central treasury unit. Although the transactions are hedged, the company does not apply hedge accounting in its group financial statements.

Translation currency impacts

The Group has certain investments in foreign operations whose net assets are exposed to foreign currency translation risk. Translation currency effects occur when intercompany transactions between group subsidiaries outside the Eurozone are translated in Euros using the exchange rates prevailing during the relevant period. Such FX effects from intercompany transactions in non-Euro currencies are recorded in the consolidated income statement apart from Kelvion India Private Ltd., where hedging of a net investment in a foreign operation is applied for Intercompany liability.

Interest rate risk

Major part of corporate finance liability in Mangrove Group has fix interest rate terms. The minor part of corporate liability is exposed to the interest rate volatility. Only central treasury is permitted to enter into derivative contracts.

Credit risk

Financial instruments are exposed to credit risk in that the other party of the contract may fail to fulfill its obligations. The counterparty limit system used by Mangrove Group's central treasury unit aims to continuously assess and manage the counterparty's default risk. A maximum risk limit has been defined for each counterparty, which in most cases is derived from the ratings from recognized credit rating agencies and credit default swaps (CDSs). Appropriate action is taken if the individual limit is exceeded.

The financial standing of potential customers is ascertained before orders are accepted using an internal risk board procedure. Active receivables management, including nonrecourse factoring, nonrecourse financing, and credit insurance, is also performed. In the case of export transactions, confirmed and unconfirmed letters of credit are used alongside sureties, guarantees, and cover notes, including from export credit agencies. In addition to local monitoring by the subsidiary in question, Mangrove Group also oversees the main credit risks at group management level so that any accumulation of risk can be better managed.

Since trade receivables are usually due from a large number of customers in different sectors and regions, there is no concentration of risk. Valuation allowances take account of specific credit risks.

So as to reduce the credit risk involved, derivative financial instruments are only entered into with reputable financial institutions whose creditworthiness has been classified as reliable by the Group treasury department under the counterparty limit system described above. This is also monitored continuously.

The maximum exposure for the financial assets is limited to their carrying amount.

8. Events after the end of the reporting period

No events after the end of the reporting period 2022 were identified.

9. Disclosures relevant for takeovers - Change of Control Clause

The indenture of the senior secured rate notes of EUR 356 million states a change of control clause that upon occurrence of a change of control the company will make an offer to each holder to repurchase all or any part of the holder's note at a purchase price in cash equal to 101 percent of the principal amount of notes repurchase plus accrued and unpaid interest and additional amounts, if any, to the date of purchase.

The RCF Facility Agreement well as the SGF Facility Agreement determine that in case of a change of control, the parent notifies the agent (agent notice) the wish of continuing the facilities with the lenders. Each of the lenders will notify within 30 days after receipt of the agent notice, its willingness to continue the facilities, or should this not be the case, to demand mandatory prepayment and cancellation of its participation in the facilities.

The facilities shall be continued between the obligors and those lenders, which did not deliver a change of control prepayment notice.

Luxembourg, April 28, 2023

Matthew Crill

Joakim Lindström-Formicola

Consolidated Statement of Financial Position of Mangrove Group, Luxembourg

As of December 31, 2022

Assets

(EUR thousand)	Notes ^*	12/31/2022	12/31/2021
Goodwill	5.1	125,275	125,275
Other intangible assets	5.2	82,193	95,647
Right of use assets	5.2	63,035	63,980
Property, plant and equipment	5.3	150,000	149,271
Equity-accounted investments	5.4	-	1,000
Other non-current financial assets	5.5	1,167	282
Deferred tax assets	7.7	42,268	29,587
Total non-current assets		463,938	465,042
Inventories	5.7	178,709	167,673
Trade receivables and other receivables	5.8	216,955	182,747
Current income tax receivables	7.7	2,844	5,169
Other current financial assets	5.5	21,050	15,826
Other current assets	5.6	34,680	32,459
Cash and cash equivalents	5.9	112,454	72,024
Total current assets		566,692	475,898
Assets held for sale	4.0	3,231	9,745
Total assets		1,033,861	950,685

¹ The Notes are an integral part of these consolidated financial statements

Equity and liabilities

(EUR thousand)	Notes ^*	12/31/2022	12/31/2021
Subscribed capital	6.1	12	12
Capital reserves	6.1	3,472	3,472
Retained earnings	6.1	-143,100	-107,082
Accumulated other comprehensive income	6.1	5,810	2,588
Equity attributable to the shareholder of the company		-133,806	-101,010
Non-controlling interests	6.1	956	748
Equity of the total group		-132,850	-100,262
Preferred Equity Certificates	6.2	159,230	147,879
Equity and Preferred Equity Certificates		26,380	47,617
Non-current provisions	6.3	18,735	27,321
Non-current employee benefit obligations	6.4	28,458	39,631
Non-current bonds	6.5	347,464	346,047
Non-current financial liabilities	6.7	51,871	52,797
Other non-current liabilities	6.9	358	401
Deferred tax liabilities	7.7	20,058	27,489
Total non-current liabilities		466,944	493,686
Current provisions	6.3	57,162	51,358
Current employee benefit obligations	6.4	30,785	26,794
Current bank loans	6.6	72,441	21,768
Current financial liabilities	6.7	34,567	32,198
Trade payables	6.8	166,500	152,359
Current income tax liabilities	7.7	4,056	3,779
Other current liabilities	6.9	175,026	115,706
Total current liabilities		540,537	403,962
Liabilities held for sale	4.0	-	5,420
Total equity and liabilities		1,033,861	950,685

¹ The Notes are an integral part of these consolidated financial statements

Consolidated Statement of Profit or Loss of Mangrove Group, Luxembourg

For the period January 1 - December 31, 2022

(EUR thousand)	Notes ^*	2022	2021
Revenue	7.1	1,077,238	931,742
Cost of sales		-892,166	-749,088
Gross profit		185,072	182,654
Selling expenses		-76,007	-78,698
Research and development expenses		-13,963	-12,113
General and administrative expenses		-86,366	-80,161
Other income	7.2	28,571	45,512
Other expenses	7.3	-29,831	-26,057
Other financial income		-	46
Other financial expenses		-358	-1,192
Earnings before interest and tax (EBIT)		7,118	29,991
Interest income	7.6	396	6,657
Interest expenses	7.6	-56,072	-58,384
Profit or loss before tax from continuing operations		-48,558	-21,736
Income taxes (income (+) / expenses (-))	7.7	12,567	-18,829
of which current taxes		-11,019	-12,561
of which deferred taxes		23,586	-6,268
Profit or loss after tax from continuing operations		-35,991	-40,565
Profit or loss after tax from discontinued operations	4.0	-1,709	-
Profit or loss for the period		-37,700	-40,565
of which attributable to owner of the company		-37,778	-40,398
of which attributable to non-controlling interests		78	-167

¹ The Notes are an integral part of these consolidated financial statements

Consolidated Statement of Comprehensive Income of Mangrove Group, Luxembourg

For the period January 1 - December 31, 2022

(EUR thousand)	Notes ^*	2022	2021
Profit or loss after tax from continuing operations		-35,991	-40,565
Profit or loss after tax from discontinued operations		-1,709	-
Profit or Loss for the period		-37,700	-40,565
Items, that will not be reclassified to profit or loss in the future:
Actuarial gains or losses on pensions and other post employment benefits from continuing operations	6.4	11,092	3,326
Tax on actuarial gains or losses on pensions and other post employment benefits from continuing operations	7.7	-2,883	-737
Total actuarial gains or losses on pensions and other post employment benefits, net of tax		8,209	2,589
Items, that will be reclassified subsequently to profit or loss when specific conditions are met:
Exchange rate differences on translating foreign operations from continuing operations		-5,229	6,016
Exchange rate differences on translating foreign operations from discontinued operations		0	0
Total exchange rate differences on translating foreign operations		-5,229	6,016
Other comprehensive income or loss		2,980	8,605
Total comprehensive income or expense		-34,720	-31,960
of which attributable to owner of the company		-34,556	-31,528
of which attributable to non-controlling interests		-164	-432

¹ The Notes are an integral part of these consolidated financial statements

Consolidated Statement of Cash Flows of Mangrove Group, Luxembourg

For the period January 1 - December 31, 2022

(EUR thousand)	Notes	01/01/2022 - 12/31/2022	01/01/2021 - 12/31/2021
Profit or loss for the period		-37,700	-40,565
Change in income taxes	8.7	-12,567	18,829
Minus profit or loss after tax from discontinuing operations	5.1	1,709	0
Loss before tax from continuing operations		-48,558	-21,736
plus net interest expenses	8.6	55,676	51,727
Earnings before interest and tax (EBIT)		7,118	29,991
Depreciation. amortization. impairment losses. and reversal of impairment losses on non-current assets	8.5	57,391	59,434
Other non-cash income and expenses		-1,000	-22,369
Employee benefit obligations (payments)	7.4	-685	-557
Change in provisions	7.3	1,987	-49,171
Gains/Losses and disposal of non-current assets		667	-2,254
Inventories including unbilled construction contracts	6.6	47,018	-17,187
Trade receivables	6.7	-36,216	26,077
Trade payables	7.8	14,230	12,165
Other operating assets and liabilities	6.5	-2,014	5,149
Tax payments	8.6	-8,281	-11,182
Cash flow from operating activities of continuing operations		80,215	30,096
Cash flow from operating activities of discontinuing operations	5	-615	-300
Cash flow from operating activities		79,600	29,796
Proceeds from disposal of non-current assets and assets held for sale		1,287	3,675
Payments to acquire property, plant and equipment and intangible assets ^*	6.2 6.3	-34,769	-33,223
Cash flow from investing activities of continuing operations		-33,482	-29,548
Cash flow from investing activities of discontinuing operations	5	-	925
Cash flow from investing activities		-33,482	-28,623
Proceeds from revolving credit facility		50,000	15,000
Payments from finance leases	7.7	-12,706	-20,016
Other transactions and financing with affiliated companies		-2,785	-1,494
Net proceeds from (to) banks		846	2,371
Interest payments		-41,734	-18,098
Cash flow from financing activities of continuing operations		-6,379	-22,237
Cash flow from financing activities of discontinuing operations	5	-	-
Cash flow from financing activities		-6,379	-22,237
Effect of exchange rate changes on cash and cash equivalents		691	1,745
Change in cash and cash equivalents		40,430	-19,319
Unrestricted cash and cash equivalents at beginning of period		71,972	91,135
Change in unrestricted cash and cash equivalents	6.8	36,459	-19,163
Unrestricted cash and cash equivalents at end of period		108,431	71,972
Restricted cash and cash equivalents at beginning of period		52	208
Change in restricted cash and cash equivalents		3,971	-156
Restricted cash and cash equivalents at end of period		4,023	52
Cash and cash equivalents at end of period	6.9	112,454	72,024

^* Excluding capitalized leased assets (2022: KEUR 12,379 / 2021: KEUR 17,108)

Consolidated Statement of Changes in Equity of Mangrove Group, Luxembourg

As of December 31, 2022

		Accumulated OCI
	Note	Subscribed capital	Capital Reserve	Profit or Loss for the period	Total actuarial gains or losses on pensions and other postemployment benefits, net of tax	Total exchange rate differences on translating foreign operations
Balance at Dec 31, 2020		12	3,472	-66,684	-2,493	-3,789
Profit / Loss for the period		-	-	-40,398	-	-
Foreign currency translation		-	-	-	-	6,281
Change in actuarial gains (losses), net of tax		-	-	-	2,589	-
Total Other comprehensive income or loss	6.4	-	-	-	2,589	6,281
Total income		-	-	-40,398	2,589	6,281
dividend paid		-	-	-	-	-
Balance at Dec 31, 2021		12	3,472	-107,082	96	2,492
Change of consolidation group	5.1			1,760
Loss for the period				-37,778
Foreign currency translation						-4,987
Change in actuarial gains (losses), net of tax	6.4			0	8,209
Total Other comprehensive income or loss				0	8,209	-4,987
Total income				-37,778	8,209	-4,987
Dividend paid
Balance at Dec 31, 2022		12	3,472	-143,100	8,305	-2,495

	Accumulated OCI
	Equity attributable to the shareholder of the company	Noncontrolling interests	Equity of the group
Balance at Dec 31, 2020	-69,482	2,109	-67,373
Profit / Loss for the period	-40,398	-167	-40,565
Foreign currency translation	6,281	-265	6,016
Change in actuarial gains (losses), net of tax	2,589	-	2,589
Total Other comprehensive income or loss	8,870	-265	8,605
Total income	-31,528	-432	-31,960
dividend paid	-	-929	-929
Balance at Dec 31, 2021	-101,010	748	-100,262
Change of consolidation group	1,760	1,249	3,009
Loss for the period	-37,778	78	-37,700
Foreign currency translation	-4,987	-242	-5,229
Change in actuarial gains (losses), net of tax	8,209	0	8,209
Total Other comprehensive income or loss	3,222	-242	2,980
Total income	-34,556	-164	-34,720
Dividend paid	0	-877	-877
Balance at Dec 31, 2022	-133,806	956	-132,850

Notes to the Consolidated Financial Statements of Mangrove Group, Luxembourg

1. General information

1.1 Company information

Mangrove LuxCo III S.à r.l., Luxembourg, hereinafter also referred to as " Mangrove LuxCo III " or the "company" is a public limited liability company (Société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 2, rue Edward Steichen, L-2540 Luxembourg, and registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés Luxembourg) with registration number B236258. Sole shareholder of the company is Mangrove LuxCo II S.à r.l., Luxembourg, which itself is a direct subsidiary of Galapagos LuxCo I S.à r.l., Luxembourg. The Company was incorporated on July 11, 2019. The purpose of the Company is the acquisition, holding and disposal of interests in Luxembourg and/or foreign companies and undertakings as well as the administration, development and management of such interests.

1.2 Acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful Refinancing on October 9, 2019

In the following, Mangrove LuxCo III and its consolidated direct and indirect subsidiaries is referred to as "Mangrove Group" or "the Group".

1.3 Description of the business

1.3.1 Segment Reporting

Mangrove Group operates through the four Kelvion segments, "Kelvion Refrigeration Technologies" ("RT"), "Kelvion Machine Cooling Systems" ("MCS"), "Kelvion Plate Heat Exchangers" ("PHE") and "Kelvion Thermal Solutions" ("KTS"). The former segment "ENEXIO" continues to be in the process of being wound down. ENEXIO, manufacturer of power plant and industry cooling systems as well as wastewater treatment solutions, consisted of three business units: Dry Cooling Systems (DCS), Service Solutions and Water Technologies (WT). After the strategic decision was taken to exit the DCS business and to either sell or integrate the Service and Water business into Kelvion Group, one part of the DCS business (DCS Heller) was successfully sold at the end of 2020 and on October 20, 2021 closing in connection with the share purchase and transfer agreement for the shares of ENEXIO companies comprising the Service business took place. Furthermore, on January 3, 2022 the same was executed in connection with the shares of ENEXIO companies comprising the Water business. On March 23, 2022 the Group signed an asset-/share purchase agreement for certain parts of the DCS business (DCS Air Cooled Condenser) comprising the stake in an Indian Joint Venture as well as certain assets (intellectual property in Germany and one production line in China). After these transactions, only parts of the Dry Cooling business remain with the Group, until the continuing wind-down of this activity has been completed. The declining importance of the ENEXIO Business is also reflected in its decreasing volume, which represented in FY 2021 already less than 10 Percent and in FY 2022 less than 1 Percent in terms of Mangrove Group. Overall, the contribution of the segment ENEXIO to revenue and normalized EBITDA of the Group is no longer significant for the Group's earnings position.

1.3.2 The four segments of Mangrove Group

The four segments of Mangrove Group focus on distinct technologies and product portfolios:

―	Kelvion Refrigeration Technologies (RT) focuses on component business for refrigeration applications with significant growth potential in the data center industry. RT supplies a wide range of standard and customized heat exchangers for cooling and removing heat from different types of data centers (hyperscale, colocation, modular etc.) using both air and liquid cooling methods. The data center market consists of cooling solutions such as air conditioning, chilling units, economizer systems, liquid cooling systems, control systems and includes services such as consulting, installation & deployment and maintenance and support. The heat exchanger solutions are also used in the refrigeration market in cold chain warehouses, supermarkets, non-residential buildings, and industrial production. Product offering includes air cooled condensers which reject heat from refrigeration systems and are often sold as part of a package of equipment with air coolers. RT's customized air coolers are design-to-order units for industrial or OEM solutions for food processing and distribution facilities. Product offering includes also customized radiators and dry coolers which are mainly used for power and industrial applications. Improving the energy efficiency of commercial and industrial refrigeration equipment is essential for end users looking to reduce carbon footprint and operating costs.
―	Kelvion Machine Cooling Systems (MCS) is a leading player in heat exchangers for power and engine applications with substantial growth opportunities by leveraging its global installed base. MCS supplies heat exchangers for power generation, power transmission, large engine applications (marine and off-highway) and green applications like biomass, green hydrogen, or renewable energies. The business is mostly with OEM, e.g., for large engine manufacturers, but MCS also engages in smaller projects, like solar, wind or solar photovoltaic. Product offering includes charge air coolers, which cool down combustion-air coming from the turbocharger before entering the engine. MCS' shell and tube double safety heat exchangers assure the secure handling of safety-critical media. Product offering also includes box coolers which are fitted in the sea chest of small and medium-sized vessels.
―	Kelvion Thermal Solutions (KTS), is Kelvion's largest segment, focusing on project business for demanding applications in the Oil & Gas, Chemicals Industries and, like RT, with significant growth potential in high tech data center business as well as green tech applications such as hydrogen and Carbon Capture and Storage (CCS). KTS' engineering expertise plays a key role in differentiation against competitors. High degree of geographical diversification with sites in all key region, including Europe, NAFTA, Latin America, China and MEA. Product offering includes air fin coolers typically used for very large cooling requirements in different industries, e.g., Oil & Gas and Chemicals, as well as air dryers which are used to remove humidity from an air stream in various process industries. KTS' shell & tube heat exchangers are used to heat, cool, or condense water and other media in different process industries. The focus of the BU has shifted in the recent years from Oil & Gas and Petrochemicals to high and green tech business. KTS represents mainly the former segment "Kelvion Thermal Engineered Solutions" ("TES").
―	Kelvion Plate Heat Exchangers (PHE) provides a broad range of plate heat exchangers for a wide variety of applications in terms of pressure and temperature demands for a wide range of customer industries, ranging from HVAC and Refrigeration to Food & Beverages, Chemicals, Power, and Industrials. Product offering includes fully welded plate heat exchangers which are used to save energy in demanding high pressure and temperature applications, as well as brazed plate heat exchangers, often used for environmentally friendly heat pump applications. PHE's gasketed heat exchangers have the highest efficiency and flexibility and are used in a variety of industries as well as for heat recovery applications.

In contrast to the project driven segment KTS, the three segments RT, MCS and PHE represent the component type business of the Group and form together "Kelvion Products" ("KP"). All four segments hold strong favorable market positions in their respective markets. MCS and PHE are among the TOP 3, RT amongst the Top 5 and KTS is niche-market leader.

2. Reporting and Accounting principles

2.1 Going-concern basis of accounting

Preparation of consolidated financial statements

With effective date December 21, 2022, the Group agreed with the lenders to reset the financial covenants, to which the budget 2023 offers sufficient headroom. In the first three months of the year 2023 the Group can report an order intake and a financial performance that exceeds previous year and budget 2023. Based on the good start to the year, management of the Group expects the financial performance for the full year to exceed budget. With current market conditions and business performance, the Group does not see any current risk to complying with future covenant requirements and consequently the management does not see any risk to the going concern of the Group. Based on actual planning the Group will be at every time and in the upcoming year in the position to meet all its financial obligations.

Therefore, the consolidated financial statements of Mangrove Group have been prepared on a going-concern basis.

2.2 Basis of presentation

The presented consolidated financial statements cover the period from January 1, 2022 to December 31, 2022 with the prior period from January 1, 2021 to December 31, 2021.

The consolidated financial statements of Mangrove Group - which comprise the consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of cash flows, consolidated statement of changes in equity and the notes to the consolidated financial statements - include Mangrove LuxCo III and its direct and indirect subsidiaries (hereinafter referred to as "Mangrove Group" or the "Group"). The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU. All IFRS standards and interpretations in effect for fiscal years beginning on or after January 1, 2022, have been applied.

The consolidated financial statements are prepared in euro (EUR), the functional currency of the group, and presented in thousand of euros (EUR thousand) or in millions of euros (EUR million). Due to rounding, figures presented may result in differences of EUR 1 thousand in certain cases.

To improve the clarity of presentation, various items in the consolidated balance sheet and consolidated income statement have been aggregated and are explained accordingly in the Notes. Assets and liabilities are classified into current and non-current items. Current assets are expected to be realized within 12 months after the reporting period and current liabilities are due to be settled within 12 months after the reporting period. The consolidated income statement is prepared using the cost of sales method.

The consolidated statement of cash flows is prepared using the indirect method for cash flows from operating activities and the direct method for cash flows from investing and financing activities.

The accounting and measurement principles are presented and explained in detail in Note 2.8. The consolidated financial statements were authorized for issue by the Board of Managers on April 28, 2023.

2.3 First-time adoption of new accounting pronouncements

The Group applied for the first time all standards and amendments, which are effective for annual periods beginning on January 1, 2022. The impact on the consolidated financial statements of the Group is not significant. The Group has not early adopted any other standard, interpretation or amendments that were issued but are not yet effective.

2.3.1 Accounting regulations applied for the first time in the year 2022

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Amendments to IFRS 16 (Effective April 1, 2021)

In response to the ongoing impact of the COVID-19 pandemic, IFRS 16 Leases was amended on March 31, 2021 to provide a one-year extension of the practical expedient to assist lessees in accounting for COVID-19-related lease concessions. The amendments extend the practical expedient to lease concessions that reduce lease payments originally due on or before June 30, 2022. Previously, only lease concessions that reduce lease payments that are or were due on or before June 30, 2021, were within the scope of the relief.

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Amendments to IAS 37 (Effective January 1, 2022)

Clarification that the cost of fulfilling a contract includes all directly attributable costs. The cost of fulfilling the contract includes both the incremental costs of fulfilling that contract (such as direct wage and material costs) and an allocation of other costs that relate directly to fulfilling contracts. In addition, it is clarified that before a provision for an onerous contract is established, an entity should recognize any impairment loss that has occurred on assets used in (previously: dedicated to) fulfilling the contract.

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Amendments to IFRS 3 (Effective January 1, 2022)

In accordance to the amended framework, references to the framework in various standards, including IFRS 3, have been adjusted. The rules for accounting for business combinations are not changed in substance. The amendments are to be applied to business combinations for which the acquisition date is on or after January 1, 2022. Earlier application is permitted.

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Improvements to IFRS 2018 - 2020 (Effective January 1, 2022)

The Annual Improvements to IFRS amended the following standards:

―	In IFRS 1, the option was opened for first-time adopters of IFRS 1.D16 (a) to measure cumulative translation differences at the amounts recognized by the parent.
―	The amendment to IFRS 9 clarifies which fees are to be included in the 10 percent test (IFRS 9.B3.3.6) with regard to the assessment of whether a financial liability is derecognized. Only fees paid or received between the entity as borrower and the lender are included.
―	In IFRS 16, the presentation of the reimbursement of leasehold improvements has been removed in explanatory example 13 to IFRS 16.
―	In IAS 41, the prohibition on including tax payments in the fair value measurement is removed.

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Amendments to IAS 16 (Effective January 1, 2022)

The amendment prohibits entities from deducting the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Clarification of the definition of the costs of testing. Revenue and cost that relate to items produced that are not an output of the entity's ordinary activities must be presented separately. Disclosure of the line item in the statement of comprehensive item that includes such revenue.

2.3.2 Accounting regulations not applied in advance of their effective date

The following standards and amendments to existing standards of possible relevance to the Group, which were adopted into EU law (endorsement mechanism) but are not yet mandatory, have not been applied early:

―	IFRS 17 Insurance Contracts (including Amendments) (Effective January 1, 2023) IFRS 17 replaces IFRS 4 and for the first time sets out standard requirements for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts and investment contracts with discretionary participation features. Under the IFRS 17 measurement model, groups of insurance contracts are measured based on the expected value of discounted cash flows with an explicit risk adjustment for non-financial risks as well as a contractual service margin that results in the recognition of profit in line with the provision of services. The amendments add a transition option aimed to improve the usefulness of comparative information presented on initial application of both IFRS 17 and IFRS 9 and introduce the option of applying a "classification overlay approach". This option can be applied when IFRS 17 and IFRS 9 are applied simultaneously for the first time and no "restatement" of a financial asset with regard to the comparative information of IFRS 9 in 2022 is made.
―	Amendments to IAS 1 and IFRS Practice Statement 2 (Effective January 1, 2023) The amendment to IAS 1 requires that only "significant" accounting policies are presented in the notes. To be material, the accounting policy must be related to significant transactions or other events and there must be a reason for its presentation. A reason may be, for example, that the method has been changed, it is an option, the method is complex or highly judgmental, or it has been developed in accordance with IAS 8.10-11. The amendments to Practice Statement 2 accordingly indicate how the concept of materiality is applied to the disclosure of accounting policies. Thus, in the future, company-specific disclosures are to be given priority over standardized disclosures.
―	Amendments to IAS 8 (Effective January 1, 2023) The amendment to IAS 8 clarifies how entities can better distinguish changes in accounting policies from changes in estimates. For this purpose, it is defined that an accounting estimate always relates to a measurement uncertainty of a financial figure in the financial statements. In addition to input parameters, an entity also uses valuation techniques to determine an estimate. Valuation techniques can be estimation techniques or valuation techniques.
―	Amendments to IAS 12 (Effective January 1, 2023) The amendments address previously existing uncertainties in the accounting for deferred taxes in connection with leases and disposal or restoration obligations.

The amendments clarify the application of the already existing "initial recognition exemption" (IAS 12.15) and result in the recognition of deferred taxes, e.g. on leases accounted for by the lessee and on disposal or restoration obligations. This is therefore an exemption to the "initial recognition exemption" for narrowly defined cases.

These new standards and amendments to existing standards will be applied by the Group starting in fiscal 2022 or later. No material impacts are expected.

2.4 Accounting pronouncements not yet endorsed by the EU

In previous years, and in fiscal year 2022, the IASB issued the following standards and amendments to existing standards of relevance to the Group, which still have to be adopted into EU law (endorsement mechanism) before they become applicable:

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Amendments to IAS 1 (Effective January 1, 2023)

The amendments to IAS 1 concern a limited adjustment to the assessment criteria for classifying liabilities as current or non-current.

It is clarified that the classification of liabilities as current depends on the entity's rights at the reporting date to defer settlement of the liability for at least twelve months after the end of the reporting period: If such rights exist, the liability is classified as non-current. The right to defer settlement of the liability must be substantial. If the entity has to meet certain conditions in order to exercise such a right, these conditions must be met at the reporting date; otherwise, the liability is classified as current.

For the classification of a liability, it is irrelevant whether management intends or expects that the liability will actually be settled within twelve months after the balance sheet date. The only decisive factor for classification is the right existing at the balance sheet date to defer settlement of the liability for at least 12 months. This also applies in the event of settlement within the value recovery period.

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Amendments to IFRS 16 (Effective January 1, 2024)

The Amendments to IFRS 16 shall clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. It requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease.

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Amendments to IFRS 10 and IAS 28

The amendments address a known inconsistency between the requirements of IFRS 10 and IAS 28 (2011) in the case of the disposal of assets to an associate or joint venture or the contribution of assets to an associate or joint venture.

IFRS 10 requires a parent to recognize the full amount of the gain or loss on disposal of a subsidiary in profit or loss when control is lost. In contrast, the currently applicable IAS 28.28 requires that the gain or loss on disposal of a disposal transaction between an investor and an investment accounted for using the equity method - whether an associate or a joint venture - be recognized only to the extent of the other's interest in the entity.

In the future, the entire gain or loss on a transaction is to be recognized only if the assets sold or contributed constitute a business as defined by IFRS 3. This applies regardless of whether the transaction is structured as a share or asset deal. If, on the other hand, the assets do not constitute a business, only pro rata income recognition is permitted.

The IASB has postponed the date of first-time application of the amendments indefinitely.

2.5 Impact of the introduction of a global minimum tax rate by the OECD (Pillar Two)

To address concerns about the unequal distribution of profits and unequal tax levies of large multinational corporations, various agreements have been reached at the global level, including an agreement by over 135 countries to introduce a global minimum tax rate of 15 percent. In December 2021, the OECD published a draft legal framework, followed by detailed guidance in March 2022, to be used by individual countries that are signatories to the agreement to amend their local tax laws. Once the changes in tax laws are in place or will soon be in place in the countries where the Group operates, the Group may be subject to the minimum tax.

At the date of authorization of the consolidated financial statements for issue, the tax legislation related to the minimum tax is not applicable or soon to be applicable in any of the countries in which the Group operates. The Board closely monitors the progress of the legislative process in each country in which the Group operates. As of December 31, 2022, the Group did not have sufficient information to determine the potential quantitative impact.

2.6 Basis of consolidation

Consolidated entities

The consolidated financial statements comprise the financial statements of Mangrove LuxCo III and its direct and indirect subsidiaries as of December 31, 2022. The financial statements of the subsidiaries are generally prepared for the same reporting period as the parent company, except of the Indian subsidiary, consistently applying group IFRS accounting policies. The financial year ends due to local Indian commercial law on March 31, each year. This company was incorporated in the consolidated financial statements of Mangrove Group on the basis of interim financial statements.

All intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated.

The consolidated financial statements of Mangrove Group include Mangrove LuxCo III and all material companies which Mangrove LuxCo III controls directly or indirectly. Companies are consolidated as of the date on which control is obtained by Mangrove LuxCo III. They are deconsolidated as of the date on which control is lost.

In addition to the ultimate parent company, 55 companies were consolidated.

The scope of consolidation changed as follows:

Number of companies	2022	2021
Consolidated Group as of January 1	55	61
Acquisition	4	3
Merger	1	6
Liquidation	1	1
Deconsolidation	2	2
Consolidated Group as of December 31	55	55
Domestic companies Luxembourg	4	5
Foreign companies	51	50

A list of companies included in the consolidated financial statements and of all companies, in which Mangrove LuxCo III has interests in, is provided in Note 13.

Subsidiaries

Subsidiaries are entities controlled by the company. Control is assumed, when the following three criteria are fulfilled: (1) the parent company holds decision-making power over the relevant activities of the investee, (2) the company has rights to variable returns from the investee and (3) the parent company can use its decision-making power to affect the variable returns. The fulfillment of these criteria is assessed based on corporate governance and potential supplementary agreements.

Acquisitions include the following companies: ENEXIO ACC GmbH, Kelvion Management GmbH, Thermal Solutions Germany GmbH and TESCO Management SCA .

The ongoing optimazition of the group structure reduced the number of subsiduaries to a minimum. In 2022, one consolidated company (Mangrove HoldCo S.à r.l.) was liquidated. In addition one consolidated company was merged. The Kelvion Thermal S.A.S. was merged into Kelvion Thermal Soutions S.A.S.

In 2022 the two consolidated companies ENEXIO Water Technologies GmbH and ENEXIO UK Ltd. were sold and deconsolidated. For further details see Note 4. "Non-current assets held for sale and discontinued operations".

Companies that are dormant or do not have significant impact on the financial position and results of operation of the Group are not included in the consolidated financial statements.

A total of three (prior year: three) companies are not consolidated. The aggregate assets, equity, revenues and earnings of these companies are not material to the consolidated financial statements. The subsidiaries are recognised at cost as non-current other financial assets. Management deems the influence to the Group as absolutely insignificant and hence, the disclosure required under IFRS has not been made due to materiality reason. The disclosure of this information is not suitable to communicate additional information.

Control over subsidiary Galapagos BidCo S.à r.l.

As described in more detail in section "9.3 Litigations", the purported administrator of Galapagos S.A. ("GSA"), Luxembourg (former 100 percent shareholder of Galapagos BidCo S.à r.l., "GBG") brought a claim in Luxembourg against Mangrove LuxCo IV S.à r.l. (Mangrove) and GBG. An ex parte order of the Luxembourg Court was granted on November 27, 2019 at the request of the purported administrator of GSA placing the shares of GBG in escrow and appointing a Luxembourg based law firm as escrow trustee (the Trustee). The Escrow Order has as its primary purpose the preservation of the GBG shares as an asset, primarily by preventing an actual or de facto liquidation of GBG, pending separate determination of the main proceedings brought by GSA (which contest the transfer of the shares in GBG under a Luxembourg pledge enforcement). This escrow order was successfully appealed and set aside by the Luxembourg Court. This decision was then appealed by the purported administrator, but this appeal was rejected by the Court. A further appeal has been lodged by the purported administrator to the Luxembourg Cour de cassation which overturned the Court of Appeal's decision. The matter was referred back to the Luxembourg Court of Appeal to consider the position on the merits but was dismissed. The consequence of these various actions is that there is no escrow order in place. Finally, the administrator has brought a separate action challenging the 2021 restructuring of the assets of Galapagos BidCo S.à r.l. This action raises similar allegations to those made in the claw back action. The Luxembourg Court has yet to order a timetable for Mangrove LuxCo IV S.à r.l. and Galapagos BidCo S.à r.l' to file their defence.

Following an application of the purported administrator of Galapagos S.A., the District Court of Düsseldorf, Germany, has issued an injunction (einstweilige Verfügung) against Mangrove LuxCo IV S.à r.l., ordering an escrow agent to hold the shares in Galapagos BidCo S.à r.l. This order was successfully appealed and, consequently, the injunction was lifted in June 2021. Further, by the same plaintiff, a main proceeding (Hauptsacheverfahren) has been initiated against inter alios Mangrove LuxCo IV S.à r.l. A first hearing took place in February 2023 with a decision announced for May 2023 (reference is made to section "9.3 Litigations").

The intention of the Escrow Order is not to interfere with the ordinary course of business of GBG or of the Group and as such where matters are in the ordinary course of business and the Trustee is requested to vote the GBG Shares to approve such actions. Therefore, the Company as the parent company holds (1) decision-making power over the relevant activities of GBG, (2) has rights to variable returns from the investee and (3) can use its decision-making power to affect the variable returns. Furthermore, the imposition of the Escrow Order has been contested by Mangrove.

Interests in associated companies and joint ventures

Associated are those entities in which the Group has significant influence, but no control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group has joined control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Interests in associated companies and joint ventures are accounted for using the equity method and at cost in case the company is not material. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group's share of profit or loss and OCI of equity accounted investees, until the date on which significant influence or joint control ceases for those that are accounted at equity.

Two associated companies are accounted at cost since they are not material.

Management deems the influence of the associated companies to the financial position of the Group as insignificant.

2.7 Currency translation

The Mangrove Group companies prepare their annual financial statements on the basis of their respective functional currencies.

Foreign currency transactions entered into by companies included in the consolidated financial statements are translated into the functional currency at the exchange rate prevailing at the transaction date. Monetary assets and liabilities are translated at the applicable exchange rate at each reporting date. Exchange rate gains and losses resulting from these items are generally reported in the income statement under other income or expenses. Non-monetary items measured in terms of historical acquisition or production cost in a foreign currency are translated using the exchange rates at the dates of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates as of the date when the fair value was determined.

All financial statements of companies whose functional currencies differ from the reporting currency are translated into the reporting currency used in the consolidated financial statements. The assets and liabilities of the companies included in the consolidated financial statements are translated at the middle rates prevailing at the reporting date. The income statements of these companies are translated at the average rates for the period under review. If these average rates are not a reasonable approximation of the actual transaction rates, the income statements are translated at the relevant transaction rates. Any translation differences are recognised and subsequently adjusted in other comprehensive income.

The following material foreign exchange rates are used for the currency conversion:

Currency	Currency Description	Closing rate 31.12.2022	Closing rate 31.12.2021	Average rate 2022	Average rate 2021
AED	United Arabian Emirates Dirham	3.919005	4.167139	3.876138	4.343565
BRL	Brazil Real	5.638600	6.310100	5.439904	6.377890
CNY	China Yuan Renminbi	7.358200	7.194700	7.078800	7.628231
CZK	Czech Republic Koruna	24.116000	24.858000	24.565930	25.640488
GBP	British Pound	0.886930	0.840280	0.852761	0.859604
PLN	Poland Zloty	4.680800	4.596900	4.686107	4.565179
RUB	Russian Ruble	77.299300	85.300400	71.990555	87.152718
USD	US Dollar	1.066600	1.132600	1.053049	1.182740
ZAR	South African Rand	18.098600	18.062500	17.208629	17.476550

2.8 Significant accounting and valuation policies

Consolidation methods

Acquired companies are accounted for using the acquisition method. The consideration paid is measured on the basis of the fair value of the assets received, the liabilities assumed from the seller, and the equity instruments issued at the transaction date. The identifiable assets acquired and liabilities and contingent liabilities assumed in the business combination are recognised at their fair value at the transaction date, irrespective of any non-controlling interests. Any contingent consideration agreed is recognised at fair value at the acquisition date. Subsequent changes in fair value are recognised in profit or loss.

The excess of cost over the share of the fair value of the company's net assets acquired is recognised as goodwill. If, after a further examination, cost is lower than the share of the fair value of the subsidiary's acquired net assets measured at fair value, the difference is recognised directly in profit or loss.

Transaction costs related to business combinations are expensed within the period they occur.

Non-controlling interests are measured at their proportionate share of the acquiree's identifiable net assets at the date of acquisition. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Where a subsidiary is disposed of, such that control is no longer held, the entity is removed from the consolidation as at the date when control ceases.

If individual group companies have a different reporting date, they are included on the basis of interim financial statements as of the respective reporting date.

Goodwill

Determination of Goodwill

Goodwill arising from business combinations in which a Mangrove Group company acts as the acquirer is recognised as an intangible asset. Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired and liabilities assumed in a business combination. It comprises workforce, sustainability of the business, further evolutionary technology leadership and strategic premium.

Impairment of Goodwill

Goodwill is tested for impairment at the level of Mangrove Group's segments, which have been identified as cash-generating units. For the purposes of impairment testing, the goodwill arising from the recognition of business combinations is allocated to the segments and segments that are expected to benefit from the synergies generated by the business combination. If more than one segment (or business unit) profits from an acquisition, the allocation is carried out using an appropriate allocation key.

Goodwill will be tested for impairment at least annually and in situations of impairment indications. The recoverable amount of a segment or business unit is compared with its carrying amount including goodwill. The recoverable amount corresponds to the higher of internal value in use and fair value less costs of disposal. Until the date this consolidated financial statement was prepared, there was no indication that the goodwill might be impaired.

The recoverable amount of a segment or business unit is compared with its carrying amount including goodwill. The recoverable amount corresponds to the higher of internal value in use and fair value less costs of disposal and is calculated annually at the end of the fiscal year using a discounted cash flow method.

An impairment loss initially reduces the carrying amount of goodwill. Any amount exceeding goodwill is allocated proportionately to the carrying amounts of non-current non-financial assets. These reductions in the carrying amounts are treated as impairment losses in the profit and loss statement.

Other intangible assets

Other intangible assets include both internally generated and purchased assets. Internally generated intangible assets comprise capitalized development costs. In addition to contract-based rights, purchased intangible assets mainly contain technologies, brand names, and customer relationships. Technologies, brand names, and customer relationships are usually acquired in connection with acquisitions. Internally generated and acquired intangible assets are recognised at cost. If the useful life of an intangible asset can be determined, following its initial recognition, the asset is amortized on a straight-line basis over its useful life. Acquisition cost and conversion cost includes borrowing costs as long as the criteria are met. In financial years 2021 and 2022 no borrowing costs have been capitalized.

The carrying amount of an intangible asset is reviewed in case it is likely to be impaired by events or changes in circumstances. Intangible assets with an indefinite useful life are tested for impairment at least once a year. This requires the recoverable amount of the assets to be determined. The recoverable amount corresponds to the higher of internal value in use and fair value less costs of disposal. If the carrying amount is higher than the recoverable amount, the asset is impaired to the recoverable amount. Previously recognised impairment losses are reversed if the reasons for the impairment no longer apply. Impairment losses are reversed up to a maximum of the amortized historical cost.

Property, plant and equipment

Items of property, plant and equipment are recognised at cost less accumulated depreciation and any impairment losses, plus reversals of impairment losses. Cost also includes borrowing costs as long as the recognition criteria are met. In financial year 2022 no borrowing costs have been capitalized. Land is not subject to scheduled depreciation. All other assets are depreciated over the expected useful life of the assets.

Expenses for major regular maintenance are amortized over the remaining useful life of the asset concerned or over the period to the next maintenance date.

The carrying amount of items of property, plant and equipment is reviewed in case it is likely to be impaired by events or changes in circumstances. An impairment test is performed by comparing the asset's carrying amount with its recoverable amount. The recoverable amount is defined as the higher of internal value in use and fair value less costs to sell (net realizable value). Fair value is primarily determined on the basis of the current local market price for used machinery or commercial real estate. If the carrying amount exceeds the recoverable amount, an impairment loss is recognized. To assess impairment, assets are grouped at the lowest level for which separate cash flows can be identified. If the reason for the impairment subsequently ceases to apply, the impairment loss is reversed up to a maximum of the amortized historical cost.

Leases

At inception of a contract, Mangrove Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Leases as a lessee

At commencement or on modification of a contract that contains a lease component, Mangrove Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component. The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that Mangrove Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

―	fixed payments, including in-substance fixed payments;
―	variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
―	amounts expected to be payable under a residual value guarantee; and
―	the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Mangrove Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Leases as a lessor

At inception or on modification of a contract that contains a lease component, Mangrove Group allocates the consideration in the contract to each lease component on the basis of their relative standalone prices.

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the consideration in the contract.

The Group applies the derecognition and impairment requirements in IFRS 9 to the net investment in the lease. The Group further regularly reviews estimated unguaranteed residual values used in calculating the gross investment in the lease.

Other financial assets

Other financial assets include investments in unconsolidated subsidiaries and other equity investments, other securities, financial receivables (except trade receivables), derivative financial instruments, bonds and bank loans.

According to IFRS 9 Shares in unconsolidated subsidiaries are allocated to the "fair value through other comprehensive income" (FVOCI) measurement category. A financial asset is measured at fair value through OCI if the objective of the business model is achieved by collecting contractual cash flows and selling financial assets. Mangrove Group has opted to recognize future changes in their fair value through other comprehensive income in the statement of comprehensive income and to continue to classify them as equity upon the derecognition of the financial instrument. As for new instruments, Mangrove Group can opt to make use of this option on an instrument-by-instrument basis upon recognition, but it must continue to do so thereafter.

Financial assets included within the fair value through OCI category are initially recognised and subsequently measured at fair value. Movements in the carrying amount should be recorded through OCI. The fair value assessment of the the investements was insignificant.

According to IFRS 9 Financial receivables are measured at amortized cost using the effective interest method. The effective interest method has no effect as the financial receivables are short-term. According to IFRS 9 the sold receivables need to be remeasured as Fair value through profit and loss. Due to the recoverability of sold trade receivables the fair value is equal to the amortized costs.

Derivative financial instruments are used exclusively for hedging purposes, in particular to economically hedge currency risk which arises mainly from sales and procurement transactions. Fair value changes are carried at fair value through profit and loss. Hedge Accounting in the sence IFRS 9 is not applied.

Embedded financial derivatives are separated from their host contracts, which are not measured at fair value through profit or loss, if the economic characteristics and the risk of the embedded derivative are not closely related to the economic characteristics and risks of the host contract. Separable embedded derivatives are measured at fair value at initial recognition and at each subsequent reporting date. The fair value of the embedded derivatives is calculated using a standard option price model. For the valuation, the credit spread used is calibrated to make the model reproduce the current market price at the valuation date. Following initial recognition, changes in fair value is recognised through profit or loss. Mangrove Group has identified certain options embedded in the indentures and hence, separated it from the host contract.

Financial assets or groups of financial assets, which are not measured as amortized costs, are tested for indications of impairment at each reporting date. Impairment losses are recognised in the income statement. If one or more events occurred after initial recognition of the asset and there is objective evidence that the expected future cash flows decline, financial assets are impaired. Objective evidence of impairment may be, for example, significant financial difficulties of the debtor or payment default. In the case of financial assets measured at amortized cost (e.g. unquoted equity instruments), the impairment loss corresponds to the difference between the carrying amount of the financial instrument and the present value of the future cash flows discounted at the original effective interest rate.

Financial assets are recognised as soon as Mangrove Group receives a cash payment or has the right to receive cash flows. In the case of regular sales of non-derivative financial assets, the settlement date (i.e., the delivery date of the financial assets) is decisive. Assets are derecognised as soon as the right to receive cash payments or other financial assets expires as a result of payment, waiver, statutory limitation, offsetting, or any other factor. The same applies if the right is transferred to another person, with the risks passing in full to the acquirer. In the case of regular way sales of non-derivative financial assets, the settlement date is taken to be the date of derecognition, in line with the principle used for recognition.

If the reasons for impairment no longer apply, impairment losses on financial assets - with the exception of equity instruments - are reversed to income up to the amount of the amortized cost / net realizable value that would have applied if no impairment loss had been charged.

Inventories

Inventories are recognised at cost and measured at the lower of cost and net realizable value. Acquisition cost is calculated at average cost or using the first-in, first-out (FIFO) method. Production cost includes direct costs plus materials and production overheads, depreciation, and production-related administrative costs. Net realizable value is calculated as the estimated sale proceeds less costs incurred until completion and selling expenses. Previously recognised impairment losses must be reversed if the reasons for the impairment no longer apply. Impairment losses are reversed up to a maximum of the amortized historical cost.

Acquisition cost and conversion cost include borrowing costs as long as the criteria are met. In financial years 2021 and 2022 no borrowing costs have been capitalized.

Trade receivables

Trade receivables include no interest component and are recognised with their principal amount less appropriate allowances for bad debts. Trade receivables are measured as amortized costs. The gross carrying amount is not calculated by the effective interest method as all of Group's trade receivables are short-term.

The Group uses an allowance matrix to measure the expected credit losses of trade receivables and contract assets. Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime expected credit losses. Exposures within each credit risk grade are segmented by geographic region and the loss rate is calculated for each region based on actual credit loss experience over the past three years. These rates are multiplied by scalar factors (gdp growth rates) to reflect differences between economic conditions during the period over which the historical data has been collected, current conditions and the Group's view of economic conditions over the expected lives of the receivables.

Trade receivables sold to financial services companies under factoring agreements are derecognised once the majority of risks and rewards have been transferred to the financial services company. According to IFRS 9 this amount has to be remeasured as fair value through profit and loss because these are no longer categorized as hold-to-collect when sold. For factored receivables the principal is regularly paid earlier by the factoring bank than cash would have been obtained from the customer. For factored receivables the principal is regularly paid earlier by the factoring bank than cash would have been obtained from the customer. Due to the recoverability of sold trade receivables the fair value is equal to the amortized costs.

The Group does not consider the risk profile of its trade and other receivables to have changed materially as a result of the COVID-19 pandemic.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and cash deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in fair value.

Obligations under pension plans

Obligations under pension plans relate to post-employment benefit obligations. Defined benefit obligations are calculated using the projected unit credit method. The present value of these obligations reflects expected future salary and pension trends, since the entitlements earnable in the period up to the retirement age depend on those. The pension obligations are measured on the basis of actuarial reports by independent actuaries.

In order to provide those pension benefits, financial assets are held in long-term funds outside Mangrove Group and qualifying insurance policies. As long as as the entitlements are funded by such external assets (plan assets), their fair value is offset against the present value of the defined benefit obligation. The resulting net amount is reported under non-current employee benefit obligations or other non-current financial assets (net carrying amount).

Actuarial gains and losses from the remeasurement of the net carrying amount are recognised in other comprehensive income of the year in which they arise and are reported in other comprehensive income after adjustment for tax effects. This also applies to the recognition of the difference between the actual returns on plan assets and the expected return calculated using the discount rate. Net interest - comprising interest income on plan assets and interest cost on the defined benefit obligation - on the net carrying amount is recognised in interest expenses. Current and past service cost for the period as well as gains and losses from settlements are recognised in the respective functional areas as cost.

Other employee benefit obligations

Other employee benefit obligations comprise other long-term benefits and all short-term benefits. The short-term obligations from short-term employee benefits are expected to be paid in full not later than 12 months after completion of the rendered service. They include wages, salaries, social insurance contributions, paid vacation, and profit-sharing schemes. They are recognised as an expense simultanously as the work is performed. Any expenditure in excess of the payments already made is reported as a deferred liability at the reporting date. Other long-term employee benefits, such as jubilee payments or partial retirement arrangements, are recognised at the actuarial present value of the obligation at the reporting date. Securities are pledged to the beneficiaries to protect vested partial retirement credits against the employer's insolvency. The fair value of these securities is offset against the corresponding liability.

Provisions

Provisions for uncertain liabilities are recognised in case of a legal or constructive obligation to a third party, a future outflow of resources is likely, and if the expected settlement value can be estimated reliably. The present value of the settlement amount is recognised if the time value of money is material. Amounts are discounted at the market rates for the appropriate maturity and currency. The interest unwinding costs are presented under interest expense.

Warranty Provisions

The cost of creating warranty provisions is included in the cost of sales when revenue is recognized. The provision is measured on the basis of both the warranty cost actually incurred in the past and on the evaluated overall risk inherent in the system or product. Provisions are also recognised if a claim is made under a warranty and a loss is likely. Recourse claims against suppliers are capitalized if their services are subject to a warranty and it is highly likely that the claim can be enforced. The group does not identify any performance obligations on the sence of IFRS 15.

Provisions for onerous contracts

Provisions for expected losses from onerous contracts are recognised if the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs also include the unavoidable overheads needed to meet the obligations.

Provisions for restructuring

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicity. Future operating losses are not provided for.

Financial liabilities

Financial liabilities in particular include derivatives, preferred equity certificates, bonds, liabilities to banks and liabilities under finance leases. They are initially recognised at fair value less transaction costs. They are subsequently measured at amortized cost using the effective interest method. Liabilities under finance leases are initially measured at the lower of the fair value of the leased asset and the present value of minimum lease payments.

Other liabilities

The recognition and subsequent measurement of other liabilities is the same as for financial liabilities, with the exception of advance payments and the gross amount due to customers for contract work. Advance payments are stated at their principal amount. Please see the information provided on the recognition of construction contracts for the measurement of the gross amount due to customers for contract work.

Contract assets and liabilities

Other contract assets are recognized if the contract costs incurred and the gains recognized exceed the progress billings and advance payments received or due. Advance payments on orders and the gross amount due to customers for contract work are carried under "contract liabilities". Advance payments on orders are statet at their nominal amount. If the advance payments received or due exceed the capitalized costs and recognized gains, less the progress billings at the reporting date, they are reported as a liability under contract liabilities.

Trade payables

Trade payables also include liabilities for goods received or services rendered that have not yet been invoiced, as there is only slight uncertainty of the amount of the liability. Trade payables are recognised at amortized costs. This corresponds to the settlement amount in the case of liabilities due within one year.

Revenue Recognition

The Mangrove Group reports revenue according to three revenue types, namely construction contracts, sale of goods and services and service agreements:

―	Revenues from construction contracts are recognized over time in accordance with IFRS 15 ("percentage-of-completion method") since the customer obtains control through their specifications over the duration of the contract and because the Mangrove Group is entitled to reimbursement of the costs incurred so far, plus an appropriate margin, if the customer cancels a contract. The percentage-of-completion is determined using the cost-to-cost method, which is derived from the ratio of contract costs incurred to the total estimated contract costs as of the reporting date. Contract costs include direct costs plus materials and construction overheads, depreciation, production-related administrative costs, and such other costs that are specifically chargeable to the customer under the terms of the contract. Adjustments are made for variations in contract work, claims, and incentive payments insofar as these will probably result in revenue that is capable of being reliably estimated. Changes in estimates or differences between the estimated cost and the actual cost have a direct impact on recognized earnings from construction contracts. In addition, estimation limits must be observed. In line with this method, construction contracts are measured at the amount of the contract costs incurred as of the reporting date plus the profit attributable to the proportion of work completed. The costs incurred and the related profits are reported under contract assets, less progress billings and advance payments received or due. If, while a performance obligation is being satisfied, the contract costs incurred are not proportionate to the progress of the performance of said contract, revenues will be recognized only to the extent of the contract costs incurred ("zero-profit-method"). A profit is only recognized when the contract costs incurred are matched by corresponding progress of the performance of the contract. Contract costs are recognized as an expense in the period in which they are incurred. If it is foreseeable that total contract costs will exceed contract revenue, the expected loss is recognized as an impending loss according to IAS 37.
―	Revenue from the sale of goods and services is recognized when such goods are transferred to the customer, or when services were carried out, and the contractual performance obligations are therefore met. Performance obligations are satisfied as the customer obtains control over the goods sold to them, i.e. when they can direct the use of and obtain essentially all the remaining benefits from the goods.
―	Revenue from service agreements is recognized over the period in which the service is performed. If only the sale of spare parts is involved, revenue is recognized at a specific point in time.

Revenue is measured at the fair value of the consideration received or to be received. Customer bonuses, discounts, or rebates reduce the amount of revenue recognized. Payments for differences in the overall contract, claims, and premiums are included in the contract revenue as variable components. The amount of such payments is calculated at contract inception using the "expected-value" method -if there are several different possible amounts - or the "most likely amount" method - if there are just two possible amounts. The effects of significant financing components can be ignored when determining the amount of revenue to be recognized if the vendor expects, at contract inception, that the period between the transfer of a promised good or service to the customer and the date of payment will be one year or less. Discretion must be applied when judging whether revenues are to be recognized "over time", as well as with regard to the allocation of the transaction price to the performance obligation. Where stand-alone selling prices are not directly observable, these are estimated.

The Group uses various input and output methods to ensure that revenues from contracts with customers are faithfully represented. The portion of revenues which fall under the IFRS 15 requirements with respect to revenue recognized over time is around 35% each year. Almost two thirds of revenue, around 65% of sales of goods and services, is recognized at a point in time.

Research and development

Research expenditures are recognised immediately as an expense.

Development costs that are designed to significantly enhance a product or process are capitalized if completion of the product or process is technically and economically feasible, the development is marketable, the expenditures can be measured reliably, and adequate resources are available to complete the development project.

Development expenditure is capitalized only if the expenditure can be measures reliably, the product or process is technically feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset.

Development costs that are required under construction contracts are capitalized as part of the cost of the asset.

Government grants

Government grants are recognised at fair value provided that Mangrove Group meets the conditions necessary to receive the grant. Government grants to cover expenses are recognised over the period in which the costs for which the grants were awarded are incurred. Government grants for capital expenditure are deducted from the cost of purchasing the corresponding asset.

Income Tax

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or related items are recognised directly in equity or in other comprehensive income (OCI).

Current Tax

Current tax comprises the expected tax payable or tax receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured on the reporting date using tax rates that have been enacted or substantively enacted by the end of the reporting period. Current tax also includes any tax arising from dividends.

Deferred taxes

Deferred taxes are recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amount used for taxation purposes. Deferred taxes are not recognised for:

―	Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that effects neither accounting nor taxable profit or loss;
―	Temporary differences related to investments in subsidiaries, associated and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
―	Taxable differences arising on the initial recognition on goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Such reductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reverse, using the tax rate enacted or substantially enacted at the reporting date.

Single assets held for sale, discontinued operations and disposal groups

A single non-current asset is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. The Group reports assets and liabilities as a disposal group, that will be disposed of by sale or otherwise in a single transaction, which collectively meet the held for sale criteria as specified in IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations". The Group reports the assets and liabilities of a disposal group separately in the balance sheet line item "assets held for sale" and "liabilities held for sale", respectively. Unless a disposal group qualifies for discontinued operations reporting, the revenues and expenses of the disposal group remain within continuing operations until the date of disposal. The Group reports the results of a disposal group that also qualifies as a component of the Group as discontinued operations if it represents a separate major line of business or geographical area of operations. The Group reports the results of discontinued operations in the period in which they occur separately within the consolidated statement of income as "discontinued operations (net of tax)". In the consolidated statement of cash flows the cash flows resulting from discontinued operations are presented separately from cash flows resulting from continuing operations; prior year presentation has been adjusted accordingly. In order to present the proportion of income/loss attributable to discontinued operations, net sales and expenses arising from intercompany transactions are recognised provided that these transactions will not continue after the disposal of the discontinued operations.

On initial classification as held for sale, non-current assets are recognised at the lower of the carrying amount and fair value less costs to sell and depreciation and amortization ceases. A disposal group is initially measured in line with the respective IFRS standards to determine the carrying amount of the disposal group which is then compared to the fair value less costs to sell of the group in order to recognize the disposal group at the lower of both amounts. An impairment loss initially reduces the carrying amount of goodwill. Any amount exceeding goodwill is allocated proportionately to the carrying amounts of non-current nonfinancial assets. These reductions in the carrying amounts are treated as impairment losses in the in the profit and loss statement.

2.9 Estimates and management judgement

Judgement was applied in the determination of excluding subsidiaries from or including subsidiaries into consolidation.

Preparation of financial statements requires management to make judgements, assumptions and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and contingent liabilities as of the balance sheet date, as well as the reported amounts of revenues and expenses during the period under report. While these estimates are based on management's best knowledge of current events and circumstances, actual results may ultimately differ from the estimates set forth. Estimates and the underlying assumptions are subject to ongoing review. Revisions to estimates are recognised prospectively.

Factors that may cause amounts to fall below estimates might include a deterioration in the global economy, movements in exchange rates and interest rates, as well as material litigation and changes in environmental or other legislation. Production errors, the loss of key customers, and rising borrowing costs may also adversely affect the Group's future performance.

The major areas subject to considerable estimating uncertainty, or to particular discretion in the application of accounting and measurement methods, are presented in the following notes disclosure:

Measurement of property plant and equipment, and intangible assets

Measurement of property plant and equipment, and intangible assets involves the use of estimates for determining the fair value at the acquisition date, provided they were acquired in a business combination. Furthermore, the expected useful lives of these assets must be estimated. The determination of the fair values of assets as well as the useful lives of the assets is based on management's judgement.

Determination of impairments of property, plant and equipment, and intangible assets

The determination of impairments of property, plant and equipment, and intangible assets involves the use of estimates that include, but are not limited to, the cause, timing, and amount of the impairment. Impairment is based on a large number of factors, such as changes in current competitive conditions, expectations of growth in the heat exchanger industry, increased cost of capital, changes in the future availability of financing, technological obsolescence, discontinuance of services, current replacement costs, prices paid in comparable transactions, and other changes in circumstances, which indicate that an impairment exists. The identification of impairment indicators, as well as the estimation of future cash flows and the determination of fair values for assets (or groups of assets) require management to make significant judgements concerning the identification and validation of impairment indicators, expected cash flows, applicable discount rates, useful lives, and residual values.

The carrying amounts of intangible assets, items of property, plant and equipment, and groups of cash-generating units with goodwill are reviewed if they are likely to have been impaired by events or changes in circumstances. In addition, indefinite-lived intangible assets and cash-generating units with goodwill are tested for impairment at least once a year. The impairment test compares the asset's carrying amount against its recoverable amount ("impairment test") . The recoverable amount is defined as the higher of internal value in use and fair value less costs of disposal (net realizable value) . An estimate of fair value less costs to sell is only required if the value in use is less than the carrying amount. If the carrying amount exceeds the recoverable amount, an impairment loss in the amount of the difference is recognized. In this case, the impairment loss is first deducted from the goodwill of the cash- generating unit with goodwill. Any amount exceeding goodwill is allocated proportionately to the carrying amounts of non- current nonfinancial assets. Fair value less costs of disposal is generally the benchmark for measuring the impairment of segments classified as "held for sale".

The valuations of other intangible assets, which were performed as part of the impairment test, are based on management assumptions. Previously recognized impairment losses are reversed if the reasons for the impairment no longer apply, except in the case of goodwill. Impairment losses are reversed up to a maximum of the amortized historical cost.

In total, impairments amounting to EUR 3,114 thousand for property, plant and equipment and intangible assets were to be recorded in FY 2022 (prior year: EUR 1,543 thousand).

Leases

The Group uses estimates and judgements that affect the determination of the lease term - e.g. determining the enforceable period and whether a lessee is reasonably certain either to exercise a renewal option or not to exercise a termination option. The Mangrove group determines the lease term at the commencement date. As a lessee, the group is required to reassess the lease term on the occurrence of a significant event or change in circumstances that is within its control and directly affects whether it is reasonably certain to exercise (or not to exercise) an option included in the original contract. Both lessees and lessors revise the lease term if there is a change in the non-cancellable period. This requires ongoing monitoring and increases financial statement volatility.

Lease payments are discountinued at the rate implicit in the lease if that rate can readibly be determined. Otherwise, discounting is at the incremental borrowing rate. The incremental borrowing rate, which is mainly applied, is based on the risk adjusted interst rates and detmined for the respective lease terms and currencies.

Scope of consolidation

Judgement was applied in the determination of excluding subsidiaries from consolidation on the basis of materiality (see Note 2.6).

Impairment

The Group recognises loss allowances for ECLs on financial assets measured at amortised cost, debt investments measured at FVOCI and contract assets. The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12-month (a) ECLs debt securities that are determined to have low credit risk at the reporting date; (b) and other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. Loss allowances for trade receivables (including lease receivables) and contract assets are always measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment, that includes forward-looking information. The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Group considers a financial asset to be in default when (a) the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or the financial asset is more than 90 days past due.

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data: (a) significant financial difficulty of the debtor or it is probable that the debtor will enter bankruptcy or other financial reorganization.

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI. The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

Recognition and measurement on deferred tax assets and income tax uncertainties

Mangrove Group operates in a large number of countries and is therefore subject to different tax jurisdictions. Calculating tax liabilities requires management to make various estimates. Management believes that it has made a reasonable estimate of tax uncertainties. However, no assurance can be given that the actual outcome of these uncertainties will correspond to the estimates made. Any deviations may have an impact on the level of tax liabilities or deferred taxes in the year of the decision.

When assessing the recoverability of deferred tax assets, management judges the extent to which realization of the deferred tax assets is sufficiently likely. The question of whether the deferred tax assets can actually be realized depends on whether sufficient future taxable income can be generated against which the temporary differences or tax loss carryforwards can be offset. Management therefore analyzes the times at which the deferred tax liabilities reverse, and expected future taxable income. Management forecasts whether deferred tax assets can be realized on the basis of expected future taxable income. Deferred tax assets decline if the estimate of planned taxable income decreases, tax benefits available as a result of tax strategies are reduced, or the amount or timing of future tax benefits is restricted by changes in law (see Note 7.7).

IFRIC 23 clarifies the application of the recognition and measurement requirements of IAS 12 when there is uncertainty about the income tax treatment. For recognition and measurement, estimates and assumptions must be made, e.g. whether an estimate is made separately or together with other uncertainties, a most likely amount or expected amount for the uncertainty is used and whether changes have occurred compared to the previous period. The risk of detection from tax authorities is irrelevant for the recognition of uncertain balance sheet items. Accounting is based on the assumption that the tax authorities are investigating the matter in question and that they have all relevant information at their disposal.

Recognition and calculation of construction contracts

Identification and definition of performance obligation, as well as timing of revenue recognition are based on managements estimates. Further the recognition of construction contracts using the percentage of completion method is based on management's estimates of the cost to complete the contracts. Changes in estimates or differences between the estimated cost and the actual cost to complete have a direct effect on recognised earnings from construction contracts. The operating units continuously review the estimates and adjust them if required.

Obligations under pension plans

The present value of pension obligations depends on actuarial assumptions. These assumptions comprise discount rates, expected wage and salary increases, as well as the pension growth rate and mortality rates. These assumptions can differ significantly from actual future outcomes as a result of changes in market and economic conditions, and can therefore have a material effect on the level of the obligation and the related expenses.

The discount rate of the net carrying amount is calculated at the end of each year. This is the rate used to calculate the present value of future cash outflows expected to be required to settle the obligation. In order to calculate the discount rate, Mangrove Group uses the interest rate on high-quality corporate bonds denominated in the same currency in which the benefits are paid and whose terms to maturity correspond to those of the pension obligations.

Other significant assumptions relating to pension obligations are based on market conditions (see Note 6.4.1).

Litigation

In some cases, Mangrove Group companies are parties to litigation. The outcome of this litigation could have a material effect on Mangrove Group's net assets, financial position, and results of operations. Management regularly analyzes current information on these legal disputes and recognizes provisions for probable obligations including legal costs. Both internal counsels and external lawyers make this assessment. When deciding on the need to recognize provisions, management takes into account the probability of an unfavorable outcome and its ability to estimate the amount of the obligation with sufficient reliability. Material litigations described in Note 9.3.

Determination of fair value of financial instruments

The level of management judgement, required in establishing the fair value of financial instruments for which there is a quoted price in an active market, is usually minimal. Similarly there is little subjectivity or judgement required for instruments valued using valuation models which are standard across the industry and where all input parameters are quoted in active markets (e.g. for foreign exchange rate derivatives). The level of subjectivity and degree of management judgement required is more significant for those instruments valued using models and techniques where some or all of the parameter inputs are less or not observable. Management judgement is required in the selection and application of appropriate parameters, assumptions and modelling techniques. This applies especially in establishing the fair value of the embedded derivatives.

3. Financial risk management

Mangrove Group applies guidelines and instruments, to manage and hence largely limit or hedge financial risks throughout the Group.

The objectives with regard to protecting assets, eliminating gaps in security, and improving efficiency in identifying and analyzing risks are clearly defined, as are the relevant organizational structures, powers, and responsibilities. The guidelines are based on the principles of system security, separation of functions, transparency, and immediate documentation.

Mangrove Group is exposed to currency, interest rate, commodity price, credit, and liquidity risk in the course of its ordinary activities. Mangrove Group's financial risk management aims to reduce this risk through the appropriate use of derivative and non-derivative hedging instruments and avoids on principal concentrations of risk.

Currency risk

The Mangrove Group has significant assets and liabilities outside the Eurozone, particularly in China, USA, South Africa, Brazil, India, Poland, Czech Republic as well as Great Britain. These assets and liabilities are denominated in local currency. When the net asset values are converted into euro, the currency fluctuations result in period to period changes in those net asset values. The equity position of the Group reflects these changes in net asset values.

The Mangrove Group also has transactional currency exposures which arise mostly from sales or purchases in currencies other than the functional currency. In order to mitigate the impact of currency exchange rate fluctuations for the operating business, all companies are required to economically hedge foreign currency items, as they arise in order to fix prices on the basis of hedging rates. Currency risks are economically hedged for recognized assets and liabilities, unrecognized firm commitments, and highly probable forecasted transactions, when denominated in another currency than the functional currency of the company. The hedging periods are determined by the maturity of the economical hedged items and are usually up to twelve months but may also exceed that period significantly in exceptional cases.

Hedge Accounting in the sense of IFRS 9 is not applied.

All economic hedging transactions - to the extent being legally permissible - are handled by Mangrove Group Treasury. The group companies report their exposures to Group Treasury, which enters on behalf of the respective companies into corresponding derivative transactions with banks. The economical hedging transactions are closely monitored by Mangrove Group Treasury.

Besides the hedging requirement, currency fluctuations may affect business opportunities outside the Eurozone.

Interest rate risk

The Mangrove Group is exposed to interest rate risks which mainly relate to debt obligations, as the Group borrows funds at both fixed and floating interest rates. The interest rate risk is monitored by using the cash flow sensitivity of the Group's cash flows due to floating interest loans.

Commodity price risk

As part of its operating activities, Mangrove Group requires various raw materials, whose purchase prices can be subject to substantial fluctuations depending on the market situation. Long-term supply agreements have been entered into with various suppliers in order to reduce commodity price risk.

Credit risk

The credit risk refers to the risk that counterparties may default on their contractual obligations resulting in a financial loss to the Mangrove Group. In general Mangrove Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral in form of advanced payments where appropriate, as a means of mitigating the risk of financial loss from defaults.

The Mangrove Group monitors the exposure and the credit ratings of its existing and potential counterparties continuously. Companies active in the component business use credit limits to assess their counterparty default risk, whereas a maximum risk limit is defined for each party. In most cases this limit is derived from recognized credit rating agencies and credit default swaps if available. Appropriate action is taken if the individual limit is exceeded. Companies active in the project business ascertain the financial standing of potential customers on a case by case basis using all available financial information. Before a project order is accepted the assessment is additionally reviewed in an internal risk board procedure.

An appropriate credit management, including a credit insurance, is also conducted to reduce credit risk. In the case of export transactions, confirmed and unconfirmed letters of credit are used alongside sureties, guarantees, and cover notes, including from export credit agencies.

Trade receivables consist of a large number of customers, spread across different industries and regions. Hence there is no concentration of risk. Valuation allowances take account of specific credit risks.

The following table provides information about the exposure to credit risk and ECLs for trade receivables and contract assets as at 31 December 2022:

Risk Cluster	Gross carrying amount	Weighted average loss rate	Loss allowance kEUR
Western Europe	52,306	0.53%	278
Asia Pacific	38,552	1.71%	660
North America	71,654	0.35%	247
Rest of World	22,114	0.84%	185
Total	184,626	0.74%	1,370

The movement in the allowance for impairment in respect of trade receivables and contract assets during the year was as follows:

(EUR million)	12/31/22	12/31/21
Opening Balance	10.5	16.3
Additions	3.4	5.3
Utilization	-3	-11.1
Closing Balance	10.9	10.5

Derivative financial instruments are concluded only with financial institutions with high credit-ratings assigned by international credit-rating agencies so as to reduce the credit risk involved.

The Mangrove Group does not have any critical credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies and also typically are lenders to the Group. Therefore, credit quality of financial assets which are neither past due nor impaired is assessed to be good. The maximum exposure to credit risk of financial assets is the carrying amount.

Liquidity risk

Mangrove Group is exposed to liquidity risk in a way that it may be unable to meet payment obligations because it has insufficient cash funds at its disposal. To manage Mangrove Group's short, medium and long-term funding and liquidity requirements the management has established an appropriate liquidity risk control framework consisting inter alia of a multi-year financial plan and a rolling month-by-month cash forecast. The Group manages the liquidity risk by maintaining adequate reserves, banking facilities, and reserve borrowing facilities as well as by monitoring forecasted cash flows at regular intervals.

The cash flow from operating activities is the most important source of liquidity. In order to optimize borrowing and the use of cash funds within the Group, cash pools in various countries are established. The cash pools automatically balance the accounts of the participating companies every day by crediting or debiting a target account. This prevents separate cash investments and borrowings by these companies to a large extent.

The following table shows the undiscounted contractually agreed interest and principal payments for financial liabilities, including derivative financial instruments with negative fair values:

2022		Cash flows
(EUR thousand)	Carrying amount	<1 year	1-2 years	2-3 years
Bank Loans	72,441	72,441	-	-
Bonds	363,807	28,909	28,909	28,909
Trade payables	166,500	166,500	-	-
Other financial liabilities	281	281	-	-
Tracking preferred equity certificates	159,230	-	-	-
Liabilities to affiliated companies	2,494	716	1,778	-
Currency derivatives not included in a recognized hedging relationship	4,016	4,016	-	-
Liabilities under finance leases	63,304	13,852	9,586	10,960

2022	Cash flows
(EUR thousand)	3-4 years	4-5 years	> 5 years
Bank Loans	-	-	-
Bonds	371,818	-	-
Trade payables	-	-	-
Other financial liabilities	-	-	-
Tracking preferred equity certificates	-	-	159,230
Liabilities to affiliated companies	-	-	-
Currency derivatives not included in a recognized hedging relationship	-	-	-
Liabilities under finance leases	9,411	6,634	35,206

2021		Cash flows
(EUR thousand)	Carrying amount	< 1 year	1-2 years	2-3 years
Bank Loans	21,768	21,768	-	-
Bonds	362,914	28,909	28,909	28,909
Trade payables	153,600	153,600	-	-
Other financial liabilities	270	270	-	-
Tracking preferred equity certificates	147,879	-	-	-
Liabilities to affiliated companies	2,204	716	1,488	-
Currency derivatives not included in a recognized hedging relationship	2,161	2,161	-	-
Liabilities under finance leases	63,493	13,524	9,586	9,364

2021	Cash flows
(EUR thousand)	3-4 years	4-5 years	> 5 years
Bank Loans	-	-	-
Bonds	371,818	-	-
Trade payables	-	-	-
Other financial liabilities	-	-	-
Tracking preferred equity certificates	-	-	147,879
Liabilities to affiliated companies	-	-	-
Currency derivatives not included in a recognized hedging relationship	-	-	-
Liabilities under finance leases	7,406	6,781	43,886

All financial liabilities outstanding as of December 31, 2022, are included in the above table on the basis of expected contractual cash flows. Projected figures for future new liabilities are not taken into account. Foreign currency amounts are translated at the closing rates. In the case of financial liabilities that can be repaid at any time, it is assumed that they will be repaid within one year.

Despite the uncertainty caused by the COVID-19 pandemic and the related supply chain issues, the Group considers that it has the ability to generate sufficient cash inflows, such that the liquidity risk of the Group is low, as minimum operating cash requirements will not be breached. Forecast scenarios are updated regularly and the Group has the ability to act to boost liquidity if necessary.

The payment comprises accrued interest and redemption.

Credit lines and guarantees are discussed in Note "9.2 Other financial obligations".

Foreign currency sensitivity analysis

Mangrove Group companies are always exposed to foreign currency risk if their cash flows are denominated in a currency other than their own functional currency. Foreign currency risk is economically hedged using suitable instruments, thus largely offsetting fluctuations arising from the economical hedged item and the economical hedging transaction over their term.

The foreign currency risk presented in the sensitivity analysis results from the following transactions:

―	Currency derivatives that are terminated for hedging of previously unrecognized economical hedged items, i.e., for contractually agreed or expected transactions. These hedging derivatives are affecting profit or loss by exchange rate risk.
―	Unsecured foreign currency transactions
―	The translation of foreign currency receivables or liabilities at the closing rate has a direct effect on earnings.

The major part of the foreign currency cash flows is settled in the currency pairs that are named in the following table. The foreign currencies are included as relevant risk variables in the foreign currency sensitivity analysis. The figures show the sensitivity of a 10 percent increase or decrease in the foreign currency in relation to the base currency:

(EUR thousand)		Nominal amount		Profit/loss for the year
Base currency	Foreign currency			2022
			+10 %	-10 %
EUR	CNY	28,812	2,615	-3,197
EUR	USD	108,924	-3,006	3,514
EUR	GBP	9,377	785	-959
USD	CNY	26,060	1,927	-2,355
EUR	PLN	10,212	-430	525
EUR	CZK	10,783	979	-1,196
BRL	USD	3,811	-175	214
EUR	AED	3,955	-359	439
EUR	CNH	0	0	0

(EUR thousand)		Nominal amount		Profit/loss for the year
Base currency	Foreign currency			2021
			+10 %	-10 %
EUR	CNY	40,186	2,954	-3,611
EUR	USD	33,164	-2,057	2,473
EUR	GBP	18,042	1,336	-1,633
USD	CNY	15,881	969	-1,184
EUR	PLN	15,257	-908	1,110
EUR	CZK	12,032	859	-1,050
BRL	USD	3,811	-175	214
EUR	AED	3,284	-245	299
EUR	CNH	2844	258	-316

The calculation has been performed on a nominal underlying of EUR 210,078 thousand (prior year: EUR 155,929 thousand).

The nominal amount relates to all contractually agreed foreign currency cash flows as of the reporting date which are translated into euros at the closing rate.

The potential fluctuations in the profit or loss for the year result primarily from unhedged currency

Interest rate sensitivity analysis

An interest rate sensitivity analysis presents the effects of changes in market interest rates on interest payments, and interest income and expenses. A sensitivity analyses is not done due to the following assumptions and instruments:

―	Non-derivative fixed-income financial instruments are only subject to balance-sheet interest rate risk if they are measured at fair value. Mangrove Group measures such financial instruments at amortized cost.
―	Non-derivative variable rate financial instruments whose interest payments are not included as hedged items in an economical hedging relationship that is recognized as a cash flow hedge are subject to interest rate risk both in the income statement and in cash flow (cash flow interest rate risk and interest rate risk recognized in profit or loss). The issued fixed rate senior secured bond is the only material financial instrument. Thus, no interest rase rate sensitive analysis is applicable.
―	Embedded derivatives that were separated from the bonds do not include material interest rate risk due to a change in fair value which derives from various early redemption options.
―	Currency derivatives are not subject to material interest rate risk and therefore have no effect on interest rate sensitivity.

Capital management

Mangrove Group's capital management covers both equity and liabilities. An objective is to maintain sufficient and equal levels of working capital, current assets, and current liabilities. Due to the broad product range and the activities on global markets, under normal economic conditions Mangrove Group generates predictable and sustainable cash flows.

Working capital is another key element of capital employed. Working capital management begins before an order is accepted with the payment terms that are offered or negotiated.

The capital structure is monitored with various key financial indicators of which the total net leverage ratio is one of the key financial indicators. The ratio of total net debt to consolidated EBITDA as defined in the RCF, is an important financial ratio (debt ratio) used in the Mangrove Group, especially for the covenants calculations, as described in above sections of this report.

(EUR thousand)	12/31/2022	12/31/2021
Financial Liabilities (as defined in the financial covenants)	-453,386	-404,964
Plus: Cash and Cash Equivalents	108,529	71,572
Total Net Debt	-344,857	-333,392
Consolidated adjusted EBITDA LTM	-90,630	-62,553
Total Net Leverage Ratio	3.81	5.33

Legal risks associated with the acquisition of Galapagos BidCo Group

The acquisition of Galapagos BidCo Group was consummated in connection with the balance-sheet restructuring transaction of the former Galapagos Group on October 9, 2019 (the "Restructuring"). A number of claims have been brought arising out of the Restructuring. More information on legal risks is included in Note "9.3 Litigation".

4. Non-current assets held for sale

Sale of Disposal Group real estate

The disposal group real estate was defined as asset held for sale in 2021 and includes the partial sale of a real estate site in France. More than half of the industrial site (including several old buildings and one new building) should be sold. The sale is rescheduled for the year 2023. The net identifiable assets are composed as follows:

2022 (in thousand EUR)	Disposal group real estate
Other intangible assets
Property, plant and equipment	3,231
Other financial assets
Deferred tax assets
Inventories
Trade receivables and other receivables
Other operating assets
Other financial assets
Cash & cash equivalents
Assets held for sale	3,231
Provisions
Liabilities
Deferred tax liabilities (DTL)
Liabilities held for sale
Net identifiable assets	3,231

Sale of ENEXIO Water business

In 2020, management has decided to exit the ENEXIO Water business and the ENEXIO Service business with a sale. Buyers were found for both business areas in 2021 and corresponding share purchase and transfer agreements were concluded. ENEXIO Water Business was sold in January 2022. The net identified assets of disposed group were composed as follows:

2022 (in thousand EUR)	Disposal group WATER-Business
Other intangible assets	0
Property, plant and equipment	249
Other financial assets	863
Deferred tax assets	107
Inventories	2,602
Trade receivables and other receivables	1,345
Other operating assets	254
Other financial assets	30
Cash & cash equivalents	1,049
Assets held for sale	6,499
Provisions	-2,557
Liabilities	-2,665
Deferred tax liabilities (DTL)	-198
Liabilities held for sale	-5,420
Net identifiable assets	1,079

The loss after tax from discontinued operations was recognized within EUR 1,709 million.

5. Consolidated statement of financial position disclosures: Assets

5.1 Goodwill

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in business combinations. Goodwill is tested for impairment annually at the end of the fiscal year and whenever there is any indication of a potential impairment. The units to which the goodwill is allocated represent the smallest identifiable groups of assets that generate cash flows that are largely independent of cash flows from other (groups of) assets and the lowest level within the Group at which the goodwill is monitored for internal management purposes.

In the Mangrove Group, the 4 CGU-segments are coming from four business units Refrigeration Technologies, Machine Cooling Systems, Kelvion Thermal Solutions and Plate Heat Exchangers.

The goodwill arose from the acquisition of the Galapagos BidCo Group on October 9, 2019. Goodwill primarily derives from future growth that is expected with new customers and new technological developments. No goodwill was allocated to the former cash-generating unit ENEXIO, as the economic situation does not justify a goodwill.

The following table shows the allocation of goodwill to the cash-generating units of the Mangrove Group:

	Kelvion				Total
(EUR thousand)	Refrigeration Technologies	Machine Cooling Systems	Kelvion Thermal Solutions	Plate Heat Exchangers
Goodwill as of Dec. 31, 2021	32,746	40,630	18,140	33,758	125,275
Goodwill as of Dec. 31, 2022	32,746	40,630	18,140	33,758	125,275

The recoverable amount of each cash-generating unit of the Group as of December 31, 2022 is determined by calculating an individual value in use by applying the discounted cash flow method taking into account existing business developments as well as long-term expectations. The business plan consists of a detailed planning for the year 2023 as well as a strategic planning for the years 2024 and 2025. This detailed planning has been expanded by two years, of which the year 2026 is a transitional period and the year 2027 is used as terminal value.

The business plan for the Mangrove Group is based on CGU-specific assumptions about the trend in key macroeconomic parameters such as gross domestic product, market share, trends in labor costs, as well as trends in the cost of raw materials and regulatory framework conditions. Based on this, plan key figures are developed for each CGU for the three-year planning period, which are used to derive at net cash flows to complete the planning process prepared by segment's key management and discussed in shareholder committees.

In the base case scenario of the business plan no impairment incurred as shown in the table below.

	Kelvion				Total
(EUR thousand)	Refrigeration Technologies	Machine Cooling Systems	Kelvion Thermal Solutions	Plate Heat Exchangers
Recoverable amount as of Dec. 31, 2022	151,325	106,065	252,956	157,399	667,745
Carrying amount as of Dec. 31, 2022	97,387	94,085	57,101	156,618	405,911
Headroom as of Dec. 31, 2022	53,987	11,261	195,855	781	261,834

Although the estimation of the discounted future cash flows is believed to be appropriate, changes in assumptions or circumstances could require changes in the analysis. The goodwill impairment test as of December 31, 2022 leads to no impairment, as the recoverable amounts of the segments are higher than the carrying amount of the respective segment assets.

The net cash inflows are discounted at a rate equivalent to the weighted average cost of equity and debt capital. To account for the different risk and return profiles of the Mangrove Group's principal businesses, the after-tax cost of capital is calculated separately for each unit and a specific capital structure is defined by benchmarking against comparable companies in the same industry sector. The cost of equity corresponds to the return expected by stockholders, while the cost of debt is based on the conditions on which comparable companies can obtain long-term financing. Both components are derived from capital market information.

The value in use is based on the following key assumptions: For the period beyond the detailed planning horizon, cash flows are based on an extrapolation using a growth rate of 1.50 percent (FY 2021: 1.00 percent). The increase of 0.5 percent is mainly due to the fact that the assumption on the growth rate is inflation driven growth. This underlying growth rate does not exceed the average long-term growth for the markets in which the segments operate. The CGU-specific total cost of capital assumed for discounting is based on a risk-free long-term interest rate of 2 percent and a market risk premium of 7.5 percent. Additionally, beta factors, a borrowing risk premium as well as capital structures were derived from a peer group for each cash-generating unit. Also, unit-specific tax rates were applied.

The following table presents the applied sustainable growth rate and the cost of capital factors used to discount the expected cash flows:

	Sustainable Growth Rate 2022	Weighted average cost of capital 2022
Refrigeration Technologies	1.50 %	10.55 %
Machine Cooling Systems	1.50 %	10.35 %
Kelvion Thermal Solutions	1.50 %	10.85 %
Plate Heat Exchangers	1.50 %	10.73 %

The Group carried out sensitivity analysis in line with IAS 36. The resulting recoverable amounts by varying the sustainable EBIT Margin and the weighted average cost of capital (WACC) simultaneously are presented below.

Refrigeration Technologies, sensitivity analysis of recoverable amount:

in EURk	WACC
EBIT Margin	10.05%	10.55%	11.05%
5.74%	149,478	140,918	133,252
6.24%	160,644	151,325	142,982
6.74%	171,811	161,732	152,712

Machine Cooling Systems, sensitivity analysis of recoverable amount:

in EURk	WACC
EBIT Margin	9.85%	10.35%	10.85%
6.94%	106,059	99,726	94,075
7.44%	112,870	106,065	99,994
7.94%	119,681	112,405	105,914

Kelvion Thermal Solutions, sensitivity analysis of recoverable amount:

in EURk	WACC
EBIT Margin	10.35%	10.85%	11.35%
4.97%	250,481	240,385	231,280
5.47%	263,943	252,956	243,052
5.97%	277,405	265,526	254,823

Plate Heat Exchangers, sensitivity analysis of recoverable amount:

in EURk	WACC
EBIT Margin	10.23%	10.73%	11.23%
8.33%	158,405	149,149	140,852
8.83%	167,248	157,399	148,574
9.33%	176,090	165,650	156,295

The sensitivity analyses shows that an impairment is unlikely to incur when varying certain key assumptions for CGUS RT, MCS and KTS. The sensitivity analysis for PHE shows the risk of impairment in case of drop of EBIT Margin and/or increase in WACC.

5.2 Other intangible assets (including right of use assets)

The carrying amount of other intangible assets changed as follows:

(EUR thousand)	Market- related intangible assets	Customer- related intangible assets	Contract- based intangible assets	Technology- based intangible assets	Internally generated intangible assets	Right of use assets
Jan. 1, 2021
Opening Account	17,564	37,127	1,226	40,013	15,728	64,710
Changes in 2021
Addition	-	397	460	1,111	7,196	17,108
Disposals	-600	-0	-0	-0	-0	-6,876
Amortization	-2,028	-11,542	-526	-6,243	-3,683	-13,428
Impairment	-	-	-	-	-	-
Reclassification	-	-	162	1,350	-1,512	-
Currency translation	2	-634	32	34	13	2,466
Carrying amount at Dec. 31, 2021	14,938	25,348	1,354	36,265	17,742	63,980
Dec. 31, 2021
Cost	19,389	52,758	2,680	43,826	24,745	81,985
Cumulative amortization and impairment losses	-4,451	-27,410	-1,326	-7,561	-7,003	-18,005
Carrying amount	14,938	25,348	1,354	36,265	17,742	63,980
Jan. 1, 2022
Opening Account	14,938	25,348	1,354	36,265	17,742	63,980
Changes in 2022
Additions	-	-0	1.118	2,263	5,785	12,379
Disposals	-	-0	-0	-	0	-1,591
Amortization	-1,979	-8,462	-695	-6,296	-4,936	-12,521
Impairment loss	-	-0	-0	-228	0	-
Reclassification	-	-0	-1,306	1,499	-193	-
Group Internal Transfers	-	-0	-0	-	-	-
Currency translation	-36	-110	9	-132	245	788
Carrying amount at Dec. 31, 2022	12,923	16,776	480	33,371	18,643	63,035
Dec. 31, 2022
Cost	19,389	52,783	1,013	45,407	27,308	85,871
Cumulative amortization and impairment losses	-6,466	-36,007	-533	-12,036	-8,665	-22,836
Carrying amount	12,923	16,776	480	33,371	18,643	63,035

(EUR thousand)	Total
Jan. 1, 2021
Opening Account	176,368
Changes in 2021
Addition	26,272
Disposals	-7,476
Amortization	-37,450
Impairment	-0
Reclassification	-0
Currency translation	1,913
Carrying amount at Dec. 31, 2021	159,627
Dec. 31, 2021
Cost	225,383
Cumulative amortization and impairment losses	-65,756
Carrying amount	159,627
Jan. 1, 2022
Opening Account	159,627
Changes in 2022
Additions	21,545
Disposals	-1,591
Amortization	-34,889
Impairment loss	-228
Reclassification	-
Group Internal Transfers	-
Currency translation	764
Carrying amount at Dec. 31, 2022	145,228
Dec. 31, 2022
Cost	231,771
Cumulative amortization and impairment losses	-86,543
Carrying amount	145,228

Additions to Right of use assets mainly result from leasing additions in the field of land and buildings.

Additions to internally generated intangible assets mainly relate to Computer software.

Regarding Right of use assets according to IFRS 16 see more details in Note "8. Lease".

Other intangible assets have finite useful lives and are amortized on a straight-line basis using the following useful lives:

	Useful life in years
Market-related intangible assets	3 to 20
Customer-related intangible assets	5 to 20
Contract-based intangible assets	1 to 10
Technology-based intangible assets	1 to 20

Amortization of intangible assets is mainly reported in cost of sales and selling expenses respectively. Mangrove Group does not account for other intangible assets with indefinite useful life except for goodwill. Regarding intangible assets that have been pledged or otherwise secured please refer to Note "6.5. Noncurrent bonds".

5.3 Property, plant and equipment

Property, plant and equipment changed as follows:

(EUR thousand)	Land and buildings (owner occupied)	Technical equipment and machinery	Other equipment, operating and office equipment	Total
Jan. 1, 2021
Opening Account	61,187	58,224	26,125	145,536
Changes in 2021
Additions	1,212	16,075	6,772	24,059
Disposals	-201	-463	-200	-864
Depreciation	-4,232	-10,931	-4,678	-19,841
Impairement losses	-	-1,543	-	-1,543
Reclassification	-	-	-	-
Reclassification into asset held for sale	-3,232	-14	-	-3,246
Group internal Transfers	-	55	-24	31
Currency Translation	5,247	2,008	-2,116	5,139
Carrying amount at Dec. 31, 2021	59,981	63,411	25,879	149,271
Dec. 31,2021
Cost	66,701	80,850	45,817	193,368
Cumulative depreciation and impairment losses	-6,720	-17,439	-19,938	-44,097
Carrying amount	59,981	63,411	25,879	149,271
Jan. 1, 2022
Opening Account	59,981	63,411	25,879	149,271
Changes in 2022
Additions	4,862	14,933	5,807	25,602
Disposals	-82	-1,005	-1,314	-2,401
Depreciation	-3,041	-10,524	-5,823	-19,388
Impairment losses	-	-2,755	-131	-2,886
Reclassification	1.793	-1.719	-74	-
Group internal Transfers	-	-	-	-
Currency Translation	42	-9	-231	-198
Carrying amount at Dec. 31, 2022	63,555	62,332	24,113	150,000
Dec. 31, 2022
Cost	71,846	89,751	42,551	204,148
Cumulative depreciation and impairment losses	-8,291	-27,419	-18,438	-54,148
Carrying amount	63,555	62,332	24,113	150,000

The majority of additions in the reporting period comprised projects in Western Europe (EUR 9,265 thousand), in North America (EUR 8,859 thousand), in Eastern Europe (EUR 3,522 thousand) and to a lesser extent in Asia Pacific (EUR 3,496 thousand).

Items of property, plant and equipment are depreciated on a straight-line basis using the relevant residual values and the following useful lives:

	Useful life in years
Buildings and parts of buildings	2 to 50
Technical equipment and machinery, other equipment	1 to 40
Operating and office equipment	1 to 11

Depreciation of property, plant and equipment is mainly reported in cost of sales.

The underlying residual values and useful lives are reviewed at each reporting date and adjusted if necessary.

Regarding property, plant and equipment that have been pledged or otherwise secured we refer to Note 6.5.

Impairment losses in the amount of EUR 1,543 thousand relate to the Asia-Pacific region.

5.4 Equity-accounted investments

The only Equity-accounted investments with shares of 51% in ENEXIO Power Cooling Solutions India Private Ltd., Chennai, Madras, India was sold at the end of 2022.

The following overview presents the key figures for the most relevant / material equity-accounted joint ventures:

(EUR thousand)	12/31/2022	12/31/2021
Revenue	-	13,757
Profit/loss after tax	-	-385

(EUR thousand)	12/31/2021	12/31/2021
Assets
Non-current assets	-	2,327
Current assets	-	15,482
Liabilities
Non-current liabilities	-	-
Current liabilities	-	-14,664

5.5 Other financial assets

Other financial assets are composed of the following items:

(EUR thousand)	12/31/2022	12/31/2021
External sales commissions PoC-contracts	0	79
Miscellaneous other financial assets	1,167	203
Other non-current financial assets	1,167	282
Bank draft	3,076	3,873
Derivative financial instruments	3,130	3,545
Other receivables from non-consolidated companies and other equity investments	47	-2,144
External sales commissions PoC-contracts	876	515
Sundry miscellaneous other financial assets	13,921	10,037
Other current financial assets	21,050	15,826
Total	22,217	16,108

The bank drafts are only attributable to China.

Derivative financial instruments are explained in more detail in Note 6.10.

The maturity structure of other financial assets are as follows:

(EUR thousand)	12/31/2022	12/31/2021
Carrying amount before impairment losses	22,217	16,108
Impairment losses	0	-
Carrying amount	22,217	16,108
of which not overdue at the reporting date	22,217	16,102
of which past due at reporting date	-	6

Sundry miscellaneous other financial assets are not impaired. Regarding trade receivables that have been pledged or otherwise secured refer to Note 6.5.

5.6 Other current assets

Other current assets are composed of the following items:

(EUR thousand)	12/31/2022	12/31/2021
Other receivables from tax authorities	20,885	22,223
Prepaid expenses	9,422	7,078
Retentions from factors	4,373	3,158
Other current assets	34,680	32,459

Receivables from tax authorities primarily comprise VAT and similar tax receivables.

5.7 Inventories

Inventories are composed of the following items:

(EUR thousand)	12/31/2022	12/31/2021
Raw materials, consumables, and supplies	91,963	83,839
Work in progress	53,534	53,080
Finished goods and merchandise	18,159	16,923
Advance payments	15,053	13,831
Total	178,709	167,673

^* These advanced payments economically belong to inventories.

Mangrove Group wrote-down inventories to its net realizable value amounting to EUR 12,984 thousand (2021: EUR 53 thousand). The majority of write-downs in the reporting period comprised restructuring activities (EUR 2,160 thousand), physical inventory differences (EUR 3,303 thousand) and impairments (EUR 3,628 thousand).

Write-ups, following a change in measurement factors, totaled EUR 263 thousand (2021: EUR 49 thousand). Both have been recognized in cost of sales.

Lack of usability is taken into account for work in process and finished goods.

Regarding those inventories that have been pledged or otherwise secured we refer to Note 6.5.

5.8 Trade receivables and other receivables

Trade receivables and other receivables are composed of the following items:

(EUR thousand)	31/12/2022	31/12/2021
Trade receivables and other receivables	185,690	157,120
of which from third parties	184,626	156,784
of which from non-consolidated companies and other equity investments	1,064	336
Gross amount due from customers for contract work	31,265	25,627
Total	216,955	182,747

The average payment period and volume of receivables outstanding are according to common market terms.

Mangrove Group maintains a factoring facility (maximum volume: EUR 30 million). As of the reporting date December 31, 2022 the facility has been utilized by EUR 29.6 million.

The maturity structure of trade receivables and other receivables (without trade receivables from affiliated companies) from third parties is as follows:

(EUR thousand)		12/31/2022	12/31/2021
Carrying amount before impairment losses		195,601	167,243
Impairment losses		10,975	10,459
Carrying amount		184,626	156,784
of which not overdue at the reporting date		138,535	115,853
of which past due at reporting date		46,091	40,931
Past due periods (time bands)	less than 30 days	29,077	19,195
	between 31 and 60 days	4,923	4,319
	between 61 and 90 days	2,765	2,955
	between 91 and 180 days	3,278	6,509
	between 181 and 360 days	2,254	2,760
	more than 360 days	3,794	5,192

Contract balances

The gross amount due from and to customers for contract work is composed of the following items:

(EUR thousand)	12/31/2022	31/12/2021
Capitalized production cost of contract assets	1,121,286	971,507
plus net gain from contract assets	165,541	151,855
less realized losses	-4,450	-4,673
less progress billings and down payments	-1,334,724	-1,138,315
valuation allowance	-329	-734
Total	-52,676	-20,360
Gross amount due from customers for contract work (included in trade receivables)	31,265	25,627
Gross amount due to customers for contract work (included in other liabilities)	-83,941	-45,987
Total	-52,676	-20,360

Progress billings and down payments received on construction contracts amounted to EUR 1,334,724 thousand as of December 31, 2022 (2021: EUR 1,138,315 thousand).

Customer retentions amounted to EUR 2,028 thousand (2021: EUR 293 thousand).

Revenue of EUR 309,347 thousand was recognized within the reporting period from construction contracts (2021: EUR 245,283 thousand).

5.9 Cash and cash equivalents

Cash and cash equivalents comprise cash funds and overnight deposits. Restricted cash consists of cash and cash equivalents in our Russian Group companies amounted to € 3,9 million term deposits and bank deposits and amounts to EUR 98 thousand.

(EUR thousand)	12/31/2022	12/31/2021
Unrestricted cash	108,431	71,972
Restricted cash	4,023	52
Total	112,454	72,024

6. Consolidated statement of financial position: Equity and liabilities

6.1 Equity

Subscribed capital

On July 11, 2019, the company has been founded with a registered share capital of EUR 12,000.00, by issuing 1,200,000 ordinary shares at a price of EUR 0.01. The subscribed capital is fully paid up. The entry in the commercial register under the number B236258 was made on July 11, 2019.

Legal reserve

In accordance with relevant law, the Company is required to transfer a minimum of 5% of its net profit for each financial year to a legal reserve. This requirement ceases to be necessary once the balance on the legal reserve reaches 10% of the issued share capital. The legal reserve is not available for distribution to the shareholders.

Capital reserve

Based on the shareholder resolution dated March 11, 2020, the sole shareholder Mangrove LuxCo II S.à. r.l. contributed EUR 140,000,000 into the capital contribution account (account 115 "apport en capitaux propres non rémunéré par des titres" of the Luxembourg Standard Chart of Accounts) of the Company. With Shareholder resolution as of December 22, 2020 the sole shareholder Mangrove LuxCo II S.à. r.l. acknowledged to convert an aggregated amount of EUR 136,528,353 into tracking preferred equity certificates ("TPECs"). The company issued 13,652,835,300 TPECs, having a value of EUR 0.01 each, representing a total issue of EUR 136,528,353. The subscription of the TEPC's was dated December 31, 2020. Following the TPECs issuance and as security package in relation to certain facilities agreements entered into by the Company (including a EUR 65 million revolving facility, a EUR 260 million facilities agreement and a senior secured note indenture), the Company granted the TPECs pledge to the benefit of the Security Agent and entered into the TPECs pledge agreement for the purpose thereof. The capital reserve as of December 31, 2022 amounts to EUR 3,471,647.

Retained Earnings

Retained earnings comprise the result from previous year and the profit or loss of the current period.

Accumulated other comprehensive income

Changes in equity are reported in accumulated other comprehensive income. These comprise effects from exchange rate gains or losses from the translation of the financial statements of foreign subsidiaries as well as actuarial losses on the measurement of non-current employee benefit obligations for the period, net of taxes.

Non-controlling interests

Non-controlling interests represent the proportional interests in net assets to be allocated to others than the equity holder of the company. In 2022 KEUR 78 (prior year: KEUR 167) loss was attributable to the noncontrolling interests. Non-controlling interest within EUR 0.2 million was increased in 2022. The major changes are driven by increase in consolidation group within 1.5 mEUR. This Increase was partly netted with EUR 0.9 million as dividends payout . The remaining changes are driven by effects of foreign currency fluctuations and income for the period.

6.2 Tracking preferred equity certificates / Shareholder loan

The Company acquired Galapagos BidCo Group on October 9, 2019. Financing of the acquisition was done inter alia by a bridge loan of EUR 140,000,000 provided to the Company by the indirect shareholder Mangrove LuxCo I S.à r.l. on October 9, 2019. The final maturity date for the loan is four years after the date of the transaction, i.e. October 8, 2023. The loan does not accrue interest for the first six months after the transaction date.

After the transaction date Mangrove LuxCo I S.à r.l. transferred the loan agreement and the EUR 140,000,000 loan receivable to its subsidiary Mangrove LuxCo II S.à r.l. which is the sole shareholder of the Company. On March 11, 2020 Mangrove LuxCo II S.à r.l. contributed the loan receivable in the full amount of EUR 140,000,000 to the capital contribution account (account 115 "apport en capitaux propres non rémunéré par des titres" of the Luxembourg Standard Chart of Accounts) of the Company.

With Shareholder resolution as of December 22, 2020 the sole shareholder Mangrove LuxCo II S.à. r.l. to convert an aggregated amount of EUR 136,528,353 into tracking preferred equity certificates ("TPECs"). The company issued 13,652,835,300 TPECs, having a value of EUR 0.01 each, representing a total issue of EUR 136,528,353. As of December 31, 2022 TPECs are recognized at EUR 159,229,983 including an interest of EUR 11,350,815 (2021: EUR 11,350,815). Following the TPECs issuance and as security package in relation to certain facilities agreements entered into by the Company (including a EUR 65 million revolving facility, a EUR 260 million facilities agreement and a senior secured note indenture), the Company granting the TPECs Pledge to the benefit of the Security Agent and entered into the TPECs Pledge Agreement for the purpose thereof.

These TPECs are junior to all other debt of the Group and cannot be withdrawn by the shareholder under the existing financing agreements. Therefore, these TPECs are equity like instruments and are being disclosed in the consolidated balance sheet of the Group between equity and liabilities and are summed up together with the equity to the line item "Equity and tracking preferred equity certificates / shareholder loan".

6.3 Provisions

The following table shows the composition of and changes in provisions in 2021 and 2022:

(EUR thousand)	Guarantees, warranties	Litigations risks	Construction- related	Sundry other provision	Total
Jan. 1, 2021
Opening Account	26,192	26,056	77,668	39,468	169,384
Changes in 2021	-	-	-	-	-
Additions	6,780	3,502	13,800	12,644	36,726
Utilization	-8,044	-18,984	-12,984	-21,077	-61,089
Reversal	-4,230	0	-66,630	-8,848	-79,708
Reclassifications into liabilities held for sale	-657	0	128	210	319
Unwinding of discount	0	0	10,194	0	10,194
Exchange differences	807	30	2,465	189	3,491
Balance at Dec. 31, 2021	20,848	10,604	24,641	22,586	78,679
of which non-current	1,259	8,703	9,463	7,896	27,321
of which current	19,589	1,901	15,178	14,690	51,358
Jan. 1, 2022
Opening Account	20,848	10,604	24,641	22,586	78,679
Changes in 2022
Additions	9,779	2,701	14,600	12,587	39,667
Utilization	-4,953	-6,404	-11,469	-12,636	-35,462
Reversal	-2,650	0	-3,067	-1,510	-7,227
Reclassifications	73	671	-73	-671	0
Exchange differences	-41	81	33	167	240
Balance at Dec. 31, 2022	23,056	7,653	24,665	20,523	75,897
of which non-current	1,229	5,554	9,007	2,945	18,735
of which current	21,827	2,099	15,658	17,578	57,162

Provisions for guarantees and warranties

Provisions for guarantees and warranties relate to warranty commitments for products and equipment, as it is customary in the industry. The guarantees and warranties on which they are based are granted in connection with certain performance criteria relating to products or equipment. Warranties usually have a contractual term of between one and two years from the date on which the products or equipment are accepted. In addition to warranties explicitly agreed under contract, product liability rules apply in many countries and may also stipulate that the manufacturer is liable beyond the contractually defined term of the warranty. In some cases, recourse claims exist in the form of insurance refunds or subcontractor guarantees. The level of provisions is based on management's best estimate.

Litigation risks

Provisions are recognized for risks arising from expected or pending litigation against Mangrove Group companies if it is believed that there is likely to be an unfavorable outcome to the proceedings. Assessments by counsel for the company or legal experts were used to determine the likelihood of such litigation. The probable damages or sanctions have been recognized as a provision.

Construction related provisions

This item comprises the cost of residual work that is incurred after a contract has already been invoiced and the profit from the contract has been recognized. The amount of the expected cost is stated.

Sundry other provisions

Other provisions mainly comprise the following items: Anticipated losses on pending transactions (EUR 1,4 million), purchase price allocation related to contingent liabilities (EUR 3,7 million) as well as remaining other provisions (EUR 15,4 million).

6.4 Employee benefit obligations

Employee benefit obligations are composed of the following items:

(EUR thousand)	12/31/2022	12/31/2021
Obligations under pension plans	23,439	34,229
of which defined benefit pension plans	23,439	34,229
of which defined contribution pension plans	-	-
Other employee benefit obligations	140	143
Partial retirement	698	917
Jubilee benefits	1,449	1,786
Redundancy plan and severance payments	-	-
Other non-current obligations to employees	2,732	2,556
Non-current employee benefit obligations	28,458	39,631
Redundancy plan and severance payments	2,842	2,626
Outstanding vacation, flexitime/overtime credits	7,544	7,650
Bonuses	14,751	12,588
Other current obligations to employees	5,648	3,930
Current employee benefit obligations	30,785	26,794
Total employee benefit obligations	59,243	66,425

6.4.1 Defined benefit pension plans

Mangrove Group employees are offered various benefit options mainly in the form of defined benefit and defined contribution pension plans. The defined benefit pension plan obligations mainly exist in Germany. Mangrove Group grants old-age, disability, and survivors' benefits to many of its employees. New employees are generally only granted benefits that are partly funded by employee contributions.

As part of the general benefits provided all employees have the opportunity to voluntarily defer part of their compensation. Under this arrangement an agreed amount of their salary plus an employer contribution of up to 100 percent of the deferred amount is converted into a pension benefit. A corresponding collective bargaining agreement was entered by the predecessors of the Group in 2002 and revised in 2008. The new pension plan beginning in January 2019 does not only provide for pension payments, but also capital payments and installment payments.

The post-retirement benefits are adjusted by minimum of 1 percent each year, according to the occupational retirement act (§ 16 Betriebsrentengesetz). In 2022 post-retirement benefits are adjusted by 2.2 percent.

In addition to the currently open benefit schemes, there are a number of historical pension schemes in the company. These schemes are generally closed to new employees but are maintained unchanged for employees who were members at the time the scheme was closed.

The pension liabilities are partly covered by reinsurance policies.

All liabilities were actuarially valued as of December 31, 2022.

Mangrove Group views granting pension benefits as an opportunity to foster employee loyalty and engagement. It is therefore an integral part of the remuneration concept and has an appropriate employee contribution component. In connection with this, Mangrove Group observes developments on the human resources market and regularly checks that the benefits it grants are appropriate and in line with the market.

Mangrove Group does not believe that the pension liabilities pose any risks over and above the customary extent and the general risks described above.

Pension provisions and funded status

The changes in the present value of the defined benefit obligation the plan assets and the pension provisions were as follows:

(EUR thousand)	12/31/2022	12/31/2021
Present value of defined benefit obligation as of beginning of fiscal year	34,249	37,609
Current service cost	994	1,056
Interest cost from discounting unwinding on defined benefit obligations	329	171
Actuarial gains or losses	-10,965	-3,324
from changes in demographic assumptions	32	31
from changes in financial assumptions	-11,046	-3,036
from experience adjustments	49	-319
Cash-effective changes	-665	-557
Benefits directly paid in respect of any settlements	-	-93
Payments without settlements	-665	-735
Other changes	-503	-435
Purchase Price Allocation adjustment release	-503	-
Reclassification to discontinued operations	-	-435
Present value of defined benefit obligation as of end of fiscal year	23,439	34,249
Fair value of plan assets as of beginning of fiscal year	20	290
Interest income on plan assets	-	3
Employer contributions	-	-
Actuarial gains on plan assets	-	-2
Losses on settlements	-	-
Payments without settlements	-20	-271
Fair value of plan assets at the end of fiscal year	-	20
Net carrying amount	23,439	34,229

The net carrying amount of the defined benefit obligation changed as follows in fiscal year 2022:

(EUR thousand)	12/31/2022	12/31/2021
Net carrying amount as of beginning of fiscal year	34,229	37,319
Changes through profit or loss	1,323	1,224
Current service cost	994	1,056
Net interest on net defined benefit liability	329	168
Actuarial gains and losses	-10,965	-3,322
from changes in demographic assumptions	32	31
from changes in financial assumptions	-11,046	-3,034
from experience adjustments	49	-319
Cash-effective changes	-644	-557
Employer contributions	-	-
Benefits directly paid in respect of any settlements	-	-93
Payments without settlements	-644	-464
Other changes	-504	-435
Transfer of assets	-	-435
Purchase Price Allocation release	-504	-
Net carrying amount	23,439	34,229

The following overview shows the net carrying amount broken down into plans with and without plan assets:

(EUR thousand)	12/31/2022	12/31/2021
Present value of funded obligations	1,302	1,738
Fair value of plan assets	-	-24
Net carrying amount of funded obligations	1,302	1,714
Present value of unfunded obligations	22,137	32,515
Net carrying amount of unfunded obligations	22,137	32,515
Net carrying amount	23,439	34,229

The following overview shows the present value of the defined benefit obligation broken down into active employees, former employees with vested benefits, and benefit recipients:

(EUR thousand)	12/31/2022	12/31/2021
Active employees	10,030	15,065
Vested terminated employees	9,494	14,082
Pensioners	3,914	5,082
Total	23,439	34,229

Plan assets

On the relevant reporting date, the plan assets to cover the pension obligations amount to 0.

Actuarial assumptions

As of the relevant reporting date, the following weighted actuarial assumptions were used to calculate the present value of the defined benefit obligation relating to pension plans. These assumptions are used to calculate the net pension expenses in the following year:

(Percent)	12/31/2022	12/31/2021
Discount factor	3.7	1.0
Inflation	2.2	1.8
derived: wage and salary increase rate	3.2	2.8
derived: pension increase rate	2.2	1.0

The actuarial measurement factors for German pension plans are established by Mangrove Group in consultation with actuarial experts. The corresponding assumptions for the few pension plans outside Germany are determined taking into account country-specific conditions. The discount rate is established using a recognized method based on the return on high quality corporate bonds determined as of the reporting date, taking into account the currency and maturities of the underlying liabilities.

All other assumptions correspond to the long-term expectations of Mangrove Group. The nominal rate of wage and salary increases is calculated based on expected inflation and a real rate of increase. The rate of pension increases in Germany is also determined based on inflation, provided that the pension adjustments are determined in accordance with the rise in the cost of living. If a firm pension adjustment commitment has been made, this is taken into account accordingly.

On 4 October 2018, Heubeck AG published new mortality tables (Heubeck mortality tables 2018G), for the valuation of all German plans as at 31 December 2022, these tables are used. On this basis, the life expectancy of a 65-year-old pensioner as of the reporting date is 21.63 years for men and 24.97 years for women.

The sensitivities presented below were applied to the discount rate and inflation, which have been identified as actuarial assumptions that have a significant influence on Mangrove Group's benefit obligations. Since the wage and salary increase rate and the pension increase rate are derived from inflation, sensitivity to inflation was used to measure the sensitivity of these assumptions together. The same calculation methods were used for sensitivities as for the recognized provisions. The ranges used to compute the sensitivities of the assumptions are based on the changes that are deemed possible until the next reporting date, given historical experience. The meaningfulness of historical experience for forecasts of future outcomes and neglecting to update a number of assumptions simultaneously may represent limitations of these methods.

An increase of 50 basis points in the discount rate decreases the present value of the defined benefit obligation by 5.56 percent. If the assumed inflation rate declines by 25 basis points, the present value of the defined benefit obligation decreases by 0.17 percent.

Future cash flows

The following benefit payments are expected to be made under the pension plans in the coming years:

(EUR thousand)	2023	2024	2025	2026	2027	2028-2032
Payments under pension plans	1.562	1.038	1.013	1.144	1.076	7.025

The average weighted duration of the pension obligations is:

(Years)	12/31/2022	12/31/2021
Duration	14.5	17.0

6.4.2 Defined contribution pension plans

Various companies operate defined contribution pension plans. Under these plans, the obligation does not lie with Mangrove Group, but with the respective pension funds. Contributions totaling EUR 2.627 thousand (2021: EUR 3,031 thousand) were paid in the fiscal year 2022. Contributions of EUR 11,828 thousand (2021: EUR 19,165 thousand) were paid to state pension insurance schemes. These contributions are recognized as personnel expenses at the same time as the relevant service is rendered.

6.4.3 Redundancy plan and severance payments

The provisions for redundancy plan liabilities and severance payments were mainly accrued for the restructuring of ENEXIO's Dry Cooling Business (announced in 2019) and for an overhead cost reduction program in Kelvion that was communicated to the employees in late 2020. These restructuring and optimization programs were proceeded mainly during 2020 and will be finalized in 2023.

In current financial year additional restructuring, due to relocation of Luvoproduction and K-Bloc Production from Kelvion PHE GmbH to another sites, was announced. Social plan was announced in December 2022 and provision was created accordingly.

6.5 Non-current bonds

The position is made up as follows:

(EUR thousand)	Interest rate in % Dec. 31, 2022	Face value	Maturity	Carrying amount	Accrued interest
Senior Secured Notes	7,775	356,233	9/10/2025	356,233	16,867
Agio (net of contingent liability)				4,139
Debt discount				-12,908
Total bonds (carrying amount)				347,464

(EUR thousand)	Interest rate in % Dec. 31, 2021	Face value	Maturity	Carrying amount	Accrued interest
Senior Secured Notes	7,775	356,233	10.09.2025	356,233	16,867
Agio (net of contingent liability)				4,232
Debt discount				-14,418
Total bonds (carrying amount)				346,047

As of December 31, 2022, the position Senior Secured Notes (SSNs) includes an Agio of EUR 22,273 thousand (2021: EUR 29,933 thousand). The purchase price allocation recognized a contingent liability relating to the SSNs which amounts to EUR 26,412 thousand (2021: EUR 34,165 thousand) as of December 31, 2022. The agio and the contingent liability is amortized by using the effective interest rate method and recorded as an additional interest expense in the interest result. Debt discount is being amortized in interest result using the effective interest rate method. Accrued interests have been recognized as other current financial liabilities.

General remarks

On October 9, 2019 the Company has issued €356,233,492 in aggregate principal amount of New Notes ("SSNs") in connection with the acquisition of Galapagos BidCo Group as described elsewhere in these notes (e.g. in Sections 1. and 4.). The notes are due on the October 8, 2025 at which date the principal shall be payable in full. The notes were issued under an indenture among, inter alia, the issuer, Mangrove LuxCo III S.à r.l. as well as the issuer's subsidiaries that guarantee the notes. Galapagos BidCo S.à r.l. and Kelvion Finance GmbH, and GLAS Trustee Limited act as trustee.

Interest on the notes and right to defer interest payments in cash in 2021 and 2022

The Notes bear interest at a rate of 7.775% per annum and will be payable in cash, semi-annually in arrears on June 15 and December 15 of each year; provided that with respect to the interest periods ending June 15, 2021, December 15, 2021, June 15, 2022 and/or December 15, 2022, the Company may, in its sole discretion, elect (if such election is necessary to ensure compliance with the minimum liquidity covenant and clean-down provision as per the terms of the New RCF on the relevant interest payment date and the twelve months following thereafter) to capitalize part of its interest payments for those periods, with the remainder payable in cash (an "Interest Election").

Following an Interest Election, interest due for the relevant interest period will be equal to an aggregate amount of 9.00% and shall comprise the following elements: (i) 0.25% per annum cash-pay interest; and (ii) 8.75% per annum payment-in-kind interest (increasing the principal amount of the outstanding Notes or by issuing additional New Notes, in each case, in a principal amount equal to an amount corresponding to an interest rate of 8.75% per annum on 100% of the then outstanding principal amount of the Notes).

Right to redeem the notes

At any time prior to the second anniversary of the Restructuring Effective Time, the Issuer will be entitled, at its option, to redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the applicable "make whole" premium described in the Notes Indenture and accrued and unpaid interest to (but not including) the date of redemption. At any time prior to the second anniversary of the Acquisition of Galapagos BidCo Group (i.e. October 9, 2023), the Company will be entitled, at its option, during each calendar year, to redeem up to 10% of the aggregate principal amount of Notes at a redemption price equal to 103.8875% of the principal amount redeemed plus accrued and unpaid interest to (but not including) the date of redemption.

At any time on or after the second anniversary of the Restructuring Effective Time, the Company will be entitled, at its option, to redeem all or a portion of the Notes at a redemption price as described in the Notes Indenture and accrued and unpaid interest to (but not including) the date of redemption. In the event of certain developments affecting taxation, the Issuer may redeem all, but not less than all, of the Notes.

Mandatory repayment upon request in case of change of control

Upon certain events defined as constituting a change of control, each holder of the Notes will have the right to require the Company to repurchase such holders' Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to (but not including) the date of redemption. Following certain public equity offerings by the Parent or any Parent Entity (as defined in the Notes Indenture), the Company will be required to use the net cash proceeds of the relevant public equity offering to make an offer to redeem the Notes at the redemption prices described in the Notes Indenture.

Pledge agreements - securitization of the Notes

In accordance with the notes indenture, various pledge agreements between the banks and selected Group companies have been entered into under which all or a significant portion of the group's assets and shares of consolidated subsidiaries were granted as security for the payment of the Bonds. The assets that serve as collateral are shown in the subsequent table:

(EUR thousand)	2022	2021
Shares pledged	932,530	868,171
Intellectual property	574	1,003
Land and buildings	9,496	7,963
Technical equipment and machinery	40,165	35,643
Inventories	72,662	56,292
Trade Receivables	89,958	81,377
Intercompany receivables	728,057	482,055
Other financial assets	241	275
Cash and cash equivalents	85,053	42,104
Total securities	1,958,736	1,574,883

Pursuant to the security agreements under the Mangrove Finance Agreements, securities will be enforced by the lenders upon occurrence of a so-called acceleration event. An acceleration event requires the existence of a material event of default, which cannot be remedied. Material events of default are for example non-payment of interest or principal, financial covenant is not satisfied or insolvency of Mangrove LuxCo III S.à r.l. As of the reporting date and until the release of this report, no material event of default has been occurred.

Limitations of undertakings, financial covenants and events of default

The indenture also contains limitations about undertakings whereof the main undertakings relate to restrictions concerning substantial business changes, acquisitions, disposals, additional indebtedness and loans, guarantees, dividends and share redemption.

6.6 Bank loans

The maturity of the bank loans is as follows:

(EUR thousand)	31/12/2022	31/12/2021
<1year	72,441	21,768
Total	72,441	21,768

The Group has got an additional multi-currency revolving credit facility (RCF) of EUR 50 million in 2022. The RCF can be drawn for EURIBOR plus 4.25 percentage points. Further detail of the RCF are included in section 3 financial risk management under the header financial covenants.

Additionally, liabilities to banks, other than the RCF, arose mainly in India, China, Brazil and to a minor extent in Germany.

6.7 Other Financial Liabilities

Other Financial liabilities are composed of the following items:

(EUR thousand)	12/31/2022	12/31/2021
Liabilities under finance leases	50,107	51,323
Other non-current liabilities	1,747	1,474
Non-current financial liabilities	51,871	52,797
Accrued interests for bonds	16,343	16,867
Liabilities under finance leases	13,197	12,170
Liabilities from derivatives	4,016	2,161
Other current liabilities	1,011	1,000
Current financial liabilities	34,567	32,198
Total financial liabilities	86,438	84,995

Further information on lease liabilities is given in Note 8.

Derivative financial instruments are explained in Note 6.10.

6.8 Trade payables

Trade payables are as follows:

(EUR thousand)	12/31/2022	12/31/2021
Trade payables	166,500	152,539
of which to non-consolidated companies and other equity investments	-	-

Trade payables are unsecured and are all due within one year.

6.9 Other liabilities

Other liabilities are composed of the following items:

(EUR thousand)	12/31/2022	12/31/2021
Other non-current liabilities	358	401
Payments on account received in respect of orders and construction contracts	60,312	38,961
Gross amount due to customers for contract work	84,664	46,710
Liabilities from other taxes	15,736	16,693
Other liabilities	14,314	13,342
of which social security	3,643	3,345
of which other liabilities to employees	4,036	2,870
Other current liabilities	175,026	115,706
Total other liabilities	175,384	116,107

Payments on account received in respect of orders and construction contracts amounting to EUR 60,312 thousand (2021: EUR 39,961 thousand) are secured.

The gross amount due to customers for contract work is the aggregate amount of orders whose progress billings exceed the capitalized cost plus the contract gains and losses recognized.

6.10 Financial instruments

The following tables provide an overview of the composition of financial instruments as of December 31, 2022 by class within the meaning of IFRS 7 as well as by measurement category.

Trade receivables' measurement in accordance with IFRS 15 (Trade receivables) include primarily capitalized contract costs, PoC-gross profit earned to date and less progress billings. Other financial assets measured in accordance with other IFRS consist mainly of VAT tax receivables, other receivables from tax authorities and prepaid expenses to third party.

The following financial instruments fall under the amortized cost category as these are "hold" to collect contractual cash flows: trade receivables (not tendered), cash, other financial assets (e.g. other operating receivables). Other financial investments are both held-to-collect and for sale. The remeasurement of the investments has not revealed any significant changes to the book value. Financial investments designated as fair value through profit and loss are managed assets on a fair value basis and the business model is neither held-to-collect nor held-to-collect and for sale. Collection of contractual cash flows is incidental to the objective of this model. This category includes mainly derivatives and embedded derivatives.

	Carrying amount
December 31, 2022	Fair value through profit or loss	Designated at fair value through OCI equity instruments	Amortised Cost	Measurement in accordance with other IFRSs	Total
(EUR thousand)
Financial assets
Derivatives	3,130	-	-	-	3,130
Trade receivables and other receivables	-	-	184,626	31,265	216,955
Cash and cash equivalents	-	-	112,454	-	112,454
Other financial assets	-	-	21,979	31,840	53,819
	3,130	-	320,123	63,105	386,358
Financial liabilities
Tracking preferred equity certificates / shareholder loan	-	-	159,230	-	159,230
Derivatives	4,016	-	-	-	4,016
Trade payables	-	-	166,500	-	166,500
Other financial liabilities	-	-	86,438	-	86,438
Non-current bonds	-	-	347,464	-	347,464
Bank loans	-	-	72,441	-	72,441
	4,016	-	832,073	-	836,089

	Carrying amount
December 31, 2021	Fair value through profit or loss	Designated at fair value through OCI equity instruments	Amortised Cost	Measurement in accordance with other IFRSs	Total
(EUR thousand)
Financial assets
Derivatives	3,545	-	-	-	3,545
Trade receivables and other receivables	-	-	157,120	25,627	182,747
Cash and cash equivalents	-	-	72,024	-	72,024
Other financial assets	-	-	15,657	29,365	45,022
	3,545	-	244,801	54,992	303,338
Financial liabilities
Tracking preferred equity certificates / shareholder loan	-	-	147,879	-	147,879
Derivatives	2,161	-	-	-	2,161
Embedded derivatives	-	-	-	-	-
Trade payables	-	-	152,366	-	152,366
Other financial liabilities	-	-	82,834	-	82,834
Non-current bonds	-	-	346,047	-	346,047
Bank loans	-	-	21,768	-	21,768
	2,161	-	750,894	-	753,055

Financial assets and liabilities that are measured at fair value, or for which a fair value is disclosed in the notes to the consolidated financial statements, are required to be categorized according to the fair value hierarchy described in the following.

Categorization within the levels of the fair value hierarchy is based on the measurement of the underlying inputs:

Level 1 inputs: quoted prices (unadjusted) in active markets for identical financial assets and liabilities.

Level 2 inputs: quoted market prices that are observable as direct (prices) or indirect (derived from prices) inputs used to measure fair value and that are not quoted prices as defined by Level 1.

Level 3 inputs: inputs that are not based on observable market data.

The following table shows the categorization of financial assets and financial liabilities into the three-level fair value hierarchy.

	Fair Value
December 31, 2022	Level 1	Level 2	Level 3	Total
(EUR thousand)
Financial assets measured at fair value
Derivatives	-	3,130	-	3,130
Other financial assets	-	-	-	-
	-	3,130	-	3,130
Financial liabilities measured at fair value
Derivatives	-	4,016	-	4,016
Embedded derivatives	-	-	-	-
	-	4,016	-	4,016
Financial liabilities not measured at fair value
Non-current bonds	167,318	-	-	167,318
	167,318	-	-	167,318

	Fair Value
December 31, 2021	Level 1	Level 2	Level 3	Total
(EUR thousand)
Financial assets measured at fair value
Derivatives	-	3,545	-	3,545
Other financial assets	-	-	-	-
	-	3,545	-	3,545
Financial liabilities measured at fair value
Derivatives	-	2,161	-	2,161
Embedded derivatives	-	-	-	-
	-	2,161	-	2,161
Financial liabilities not measured at fair value
Non-current bonds	325,099	-	-	325,099
	325,099	-	-	325,099

Trade receivables, cash and cash equivalents, other financial assets and liabilities have short remaining maturities in general. As a result, their fair values correspond to the carrying amounts.

Regarding Tracking preferred equity certificates / shareholder loan we refer to Note 6.2.

The carrying amount of the trade payables and other current liabilities that are subject to the measurement rules of IFRS 9 corresponds to their fair value. The fair value of fixed-interest liabilities is the present value of their expected future cash flows. They are discounted at the rates prevailing at the reporting date. The carrying amount of variable-rate liabilities corresponds to their fair value.

The fair value of derivatives and embedded derivatives are calculated using quoted exchange rates and yield curves observable in the market. Accordingly, they are categorized within Level 2 of the fair value hierarchy.

The fair value of senior secured notes is categorized within Level 1. Fair Value is calculated according to its quoted (unadjusted) price in active market.

The fair value of other financial assets of shares in non-consolidated subsidiaries and other equity investments is measured on the basis of available financial information, such as transaction prices for financing rounds or business plans to the extent that this information is reliable, or, as an approximation, as cost, which is considered an appropriate estimate of fair value as no more suitable information is available. A review is carried out on a quarterly basis using all information available on the equity investments to establish whether cost is still representative of fair value. This would not be the case, for example, in the event of a significant change in the market in which the equity investments are active. As cost is the sole input factor for fair value, a percentage change in cost results in an equal change in fair value. The estimated fair value would increase (decrease) with any increase (decrease) in cost. A 1% increase (decrease) would not materially affect fair value. Accordingly, they are categorized within Level 3 of the fair value hierarchy.

Derivative financial instruments

The fair value of currency forwards at the reporting date is calculated on the basis of the spot exchange rate, taking into account forward premiums and discounts corresponding to the relevant remaining maturities. Forward premiums and discounts are derived from yield curves observable at the reporting date. The fair value of currency options is calculated on the basis of recognized measurement models. Fair value is affected by the remaining term of the option, the current exchange rate, the volatility of the exchange rate, and the underlying yield curves.

Mangrove Group uses currency forwards as derivative financial instruments to hedge economically foreign currency risk for existing or planned underlying transactions.

The following table presents the notional values and fair values of the derivative financial instruments in use as of the reporting date. The notional value in foreign currency is translated at the closing rate.

	12/31/2022		12/31/2021
(EUR thousand)	Notional value	Fair value	Notional value	Fair value
Assets
Currency derivates not included in a hedging relationship	112,942	1,372	79,392	2,102
Liabilities
Currency derivates not included in a hedging relationship	83,681	2,042	59,869	717

The carrying amounts for the derivatives presented in the balance sheet are gross amounts.

Mangrove Group enters into derivative transactions under netting agreements with banks under the German Master Agreement for Financial Derivatives Transactions. In general, under such agreements, the amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other, in certain circumstances - e.g. when a credit event such as a default occurs - all outstanding transactions under the agreement are terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions. The potential offsetting volume is insignificant.

Income and expenses

The measurement effects from financial instruments have been recognized in profit or loss. The following table shows net income from financial instruments, broken down by the IFRS 9 measurement categories:

	12/31/2022			12/31/2021
(EUR thousand)	Net finance costs	of which interest income/ expense	of which impairment losses/ reversals of impairment losses	Net finance costs	of which interest income/ expense	of which impairment losses/ reversals of impairment losses
Financial assets/liabilities at fair value through profit of loss	1,117	-	-	393	-	-
Financial assets at fair value through OCI	-	-	-	-	-	-
Financial assets at amortized cost	-880	390	-1,270	5,734	6,630	-896
Financial liabilities at amortized cost	-56,775	-54,503	0	-51,666	-52,906	0
Group Total	-56,538	-54,113	-1,270	-45,539	-46,276	-896

7. Consolidated statement of profit or loss for the period January 1, 2021, to December 31, 2022

7.1 Revenue

The revenue of the Mangrove Group is composed of the following items:

(EUR thousand)	2022	2021
From construction contracts	309,348	245,283
From sale of goods and services	594,368	531,048
From service agreements	177,354	158,030
Sales corrections	-3,832	-2,619
Total revenue	1,077,238	931,742
of which from third parties	1,077,238	931,742
of which from non-consolidated companies and other equity investments	0	0

The group further disaggregates its revenues by segments as well as the recognition type of revenues:

2022 (EUR thousand)	RT	MCS	KTS	PHE	ENEXIO, Holding and consolidation	Group total
Products transferred at a point in time	254,954	132,774	82,199	188,157	25,389	683,473
Products and services transferred over time	19,586	46,517	331,308	55,248	-58,894	393,765
Total revenue	274,540	179,291	413,507	243,405	-33,505	1,077,238

2021 (EUR thousand)	RT	MCS	KTS	PHE	ENEXIO, Holding and consolidation	Group total
Products transferred at a point in time	209,495	121,971	86,479	170,346	17,343	605,634
Products and services transferred over time	32,963	20,895	207,966	38,198	26,086	326,108
Total revenue	242,458	142,865	294,446	208,544	43,429	931,742

Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.

	Group total
(EUR thousand)	2022	2021
Contract balances
Receivables, which are included in 'trade and other receivables'	186,890	155,775
Receivables, which are included in 'assets held for sale'	0	1,345
Total Receivables	186,890	157,120
Contract Assets	31,265	25,627
Advance payments received	-60,312	-38,961
PoC credit balances	-84,664	-46,710
Contract Liabilities	-144,976	-85,671

Trade receivables are unconditional claims for payment asserted by the group in respect of services rendered and invoiced. Trade receivables do not generally have an interest component and are due within 30 days as a rule.

Contract assets relate to the group's entitlement to consideration in respect of performance arising from construction contracts that had not been invoiced as of the reporting date. Amounts recognized as contract assets are reclassified to trade receivables as the group obtains an unconditional right to the payment.

Contract liabilities are essentially advance payments from customers for the construction of customer-specific plant and equipment for which revenues are realized over time.

(EUR thousand)	12/31/2022	12/31/2021
Progress billings	1,334,724	1,138,315
Customer retention amounts	2,028	293
Revenue recognized	309,347	245,283

Progress billings and down payments received on construction contracts amounted to EUR 1,334,724 thousand as of December 31, 2022 (2021: EUR 1,138,315 thousand).

Customer retentions amounted to EUR 2,028 thousand (2021: EUR 293 thousand).

Revenue of EUR 309,347 thousand was recognized within the reporting period from construction contracts (2021: EUR 245,283 thousand).

Revenue of EUR 183,6 thousand were recognised in 2022 from performance obligations satisfied (or partially satisfied) in previous periods.

7.2 Other income

Other income is composed of the following items:

(EUR thousand)	2022	2021
Exchange rate gains	12,897	8,982
Income from the reversal of provisions related to the purchase price allocation	1,135	18,455
Income from reversal of impairment of assets	3,518	6,911
Gains on the measurement of foreign currency derivatives	918	2,296
Income from disposal of non-current assets	763	2,655
Miscellaneous other income	9,340	6,213
Total	28,571	45,512

7.3 Other expenses

Other expenses are composed of the following items:

(EUR thousand)	2022	2021
Exchange rate losses	15,133	7,204
Losses on the measurement of foreign currency derivatives	2,248	1,946
Bad debt allowances on trade receivables	4,169	6,801
Other Taxes	1,195	892
Losses on the disposal of noncurrent assets	1,585	401
Impairment of non current assets and assets held for sale	780	3,135
Miscellaneous other expenses	4,721	5,678
Total	29,831	26,057

7.4 Presentation of selected income and expenses by cost type

Cost of materials

The subsequent table shows the cost of materials recognized in profit or loss under the total cost format:

(EUR thousand)	2022	2021
Raw Materials and Supplies	564,898	445,097
Purchased services	39,390	39,245
Total Cost of Material	604,288	484,342

Personnel expenses

The main components of personnel expenses are as follows:

(EUR thousand)	2022	2021
Wages & salaries	226,837	220,365
Severance payments (incl. restructuring)	6,581	3,551
Other personnel expenses	1,613	1,949
Social securities and defined benefit costs	46,108	45,311
Total personnel expenses	281,139	271,176

Average Employees ^* :

	2022		2021
RT	1,264	26.7%	1,223	25.5%
MCS	734	15.5%	724	15.1%
KTS	1,372	28.9%	1,251	26.0%
PHE	838	17.7%	792	16.5%
ENEXIO, Global Sales and Holding	531	11.2%	813	16.9%
Group Total	4,740	100.0%	4,803	100.0%

^* Full-time equivalents (FTE) excluding vocational trainees and inactive employment contracts

7.5 Depreciation, amortization, and impairment losses

Depreciation, amortization, and impairment losses totaling EUR 57,391 thousand (2021: EUR 59,434 thousand) were charged on property, plant and equipment, intangible assets, and financial assets in the reporting period. The amount includes depreciation and amortization on the Purchase Price Allocation amounting to EUR 15,367 thousand (2021: EUR 18,466 thousand). Depreciation, amortization, and impairment losses are mainly included in cost of sales. The amortization of the Right of use asset is amounting to EUR 12,521 thousand (2021: EUR 13,428 thousand). Impairment losses in 2022 amounting to EUR 3,144 thousand (2021: EUR 1,543 thousand). For further details we refer to note 5.1, 5.2 and 5.3.

7.6 Other interest income and interest expenses

Interest income

Interest and similar income are composed of the following items:

(EUR thousand)	2022	2021
Interest income on receivables, cash investments, and marketable securities	250	6,546
of which third parties	203	4,143
of which from non-consolidated companies and other equity investments	47	2,403
Other interest income	146	111
of which third parties	146	111
Total	396	6,657

Interest income on receivables, cash investments, and marketable securities from third parties in 2021 mainly came as a result of the arbitration award of Kelvion's Medupi project. Interest payments on all amounts awarded by the tribunal of EUR 4,039 thousand had been received.

The following table shows the interest income on financial instruments broken down by the IFRS 9 measurement category "Debt instrument" (i.e. loan and receivables measured as amortized costs, excl. factoring), along with the interest income on assets measured in accordance with other pronouncements:

(EUR thousand)	2022	2021
Loans and receivables	396	6,657
of which third parties	349	4,254
of which from non-consolidated companies and other equity investments	47	2,403

Interest expenses

Interest and similar expenses comprised the following items:

(EUR thousand)	2022	2021
Interest expenses on bonds and liabilities to banks	52,625	51,904
of which third parties	41,274	40,553
of which from related parties	11,351	11,351
Interest cost from discount unwinding on pension	332	166
Interest cost from discount unwinding on discounted provisions and other employee benefit obligations	3	3,062
Interest of expense - Finance leases	3,112	2,444
Other interest expenses	0	808
Total interest expenses	56,072	58,384

Interests on bonds incurred (including the release of capitalized financing costs) amounted to EUR 33,183 thousand (2021: EUR 33,565 thousand), on PECs EUR 11,351 thousand (2021: EUR 11,351 thousand), on liabilities to banks EUR 5,837 thousand (2021: EUR 6,956 thousand) and on the revolving credit facility EUR 2,254 thousand (2021: EUR 32 thousand). Interests on liabilities to banks mainly result from guarantee commissions EUR 5,052 thousand (2021: EUR 6,085 thousand).

The following table shows the interest expenses on financial instruments broken down by the IFRS 9 measurement category "Debt instrument" (i.e. financial liabilities measured as amortized costs), along with the interest expenses on liabilities measured in accordance with other pronouncements:

(EUR thousand)	2022	2021
Financial liabilities at amortized cost	55,790	54,154
of which third parties	44,439	42,803
of which from related parties	11,351	11,351
Financial liabilities not measured in accordance with IFRS 9	282	4,230
Total	56,072	58,384

Interest expenses for financial liabilities not measured in accordance with IFRS 9 mainly refer to compounding for provisions and pension obligations.

Interest income generated on advance payments and progress payments received reduces the cost of the asset.

7.7 Taxes on income

The income tax expense is calculated on the basis of Mangrove Group's structure as of December 31, 2022.

The income tax expense referred to continuing operations is composed of the following items:

(EUR thousand)	2022	2021
Current taxes	-11,019	-12,561
- thereof: Luxembourg	-	606
- thereof: Other countries	-11,019	-13,167
Deferred taxes	23,586	-6,268
Total	12,567	-18.829

The expected tax expense for the entire Mangrove LuxCo III S.à r.l. Group (including discontinued operations) is calculated using the tax rate of 24.94 percent (2021: 24.94 percent) which is the applicable corporate income tax rate in Luxembourg.

The amount of deferred tax expense (income) relating to the origination and reversal of temporary differences amounting to EUR 22,787 thousand. In 2022, EUR 2,883 thousand deferred tax expense (2021: EUR 735 thousand deferred tax income) have been recognized directly in other comprehensive income (OCI). The deferred taxes from OCI relate only to pensions.

The following table shows a reconciliation from the expected income tax (by multiplying the earnings before taxes with the nominal corporate income tax rate applicable in Luxembourg) to the effective income taxes recognized in profit or loss:

	2022		2021
	(EUR thousand)	(%)	(EUR thousand)	(%)
Profit (+)/Loss (-) before tax	-48,564		-21,736
Gain (+)/Loss (-) before tax - discontinued operations	-		-
Profit (+)/Loss (-) before tax Mangrove LuxCo III S.à.r.l. Group	-48,564		-21,736
Expected tax income or expense @ 24.94 %	12,112	-24.94	5,421	-24.94
Non tax deductible expense/tax free income	2,979	-6.13	0	0,00
Trade tax additions and deductions	-23,493	48.38	-35,532	163.47
Change in valuation allowances	-596	1.23	-349	1.61
Foreign tax rate differences	7,893	-16.25	-5,037	23.17
Other income tax	3,018	-6.21	15,966	-73.45
Prior year income tax	5,964	-12.28	1,973	-9.08
Change to permanent differences	6,633	-13.66	-	-
Others	-1,934	-4.00	-1,271	5.85
Income tax expense (-)/income (+) and effective tax rate	12,567	-25.88	-18,829	86.63
Income tax income and effective tax rate on continuing operations	12,567	-25.88	-18,829	86.63

Non-tax-deductible expenses refer mainly to the non-deductible interest expense on the level of Kelvion Finance GmbH and Mangrove GermanCo II GmbH.

The foreign tax rate differences are due to different tax rates outside Luxembourg, which vary from between 0.00 percent (UAE) and 34.00 percent (Brazil) (2021: 0.00 percent (UAE) and 34.00 percent (Brazil)).

The tax income driven by tax rate changes mainly relate to the increase of the tax rate for state tax of an American legal entity which led to a higher DTA amount of EUR 3.899 thousand and the decrease of the tax rate for Corporate Income Tax for a Chinese legal entity which led to reduction of DTA of EUR 1.068 thousand.

Taxes relating to other periods amounting to EUR 5,964 thousand (previous year: EUR 1,973 thousand) comprise current taxes and deferred taxes for previous years. It mainly relates to America (EUR 1,486 thousand) and France (EUR 3,126 thousand).

The change in the valuation allowance of EUR 7,893 thousand (prior year: EUR -5,037 thousand) is mainly based on a reassessment of the recoverability of deferred tax assets on tax loss carryforwards. Due to the positive forecast for future business development, it is assumed that the usability of tax loss carryforwards will increase, particularly in the USA (EUR 5,049 thousand) and France (EUR 2,676 thousand).

Deferred tax assets and liabilities as of December 31, 2022 are composed of the following items:

	Deferred tax assets		Deferred tax liabilities
(EUR thousand)	2022	2021	2022	2021
Goodwill	21	17	-	-
Intangible assets	175	77	19,491	29,135
Property, plant, and equipment	1,030	3,159	11,130	8,186
Other non-current financial assets	28	-	4,608	4,976
Non-current assets	1,253	3,253	35,229	42,297
Inventories	12,100	2,722	117	969
Trade receivables	7,526	986	4,628	4,280
Other current financial assets	7,638	7,414	2,491	2,028
Current assets	27,265	11,123	7,235	7,277
Total assets	28,518	14,376	42,464	49,574
Provisions	9,783	13,808	8,687	783
Employee benefits	4,331	4,705	1,597	203
Non-current financial liabilities	17,695	11,753	1,262	561
Noncurrent liabilities	31,809	30,266	11,546	1,547
Provisions	7,706	3,638	848	532
Current financial liabilities	3,639	530	11,937	17
Trade payables	4,081	1,744	3,279	355
Other current financial liabilities	4,575	629	-2,043	868
Current liabilities	20,000	6,541	14,021	1,772
Total liabilities	51,809	36,806	25,567	3,319
Deferred taxes on temporary differences	80,327	51,182	68,031	52,893
Tax loss carryforwards	9,914	3,809	-	-
Offsetting of deferred taxes	-47,972	-25,404	-47,972	-25,404
Recognized deferred taxes	42,268	29,587	20,058	27,489

Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off current tax assets against current tax liabilities and if the deferred taxes relate to income taxes levied by the same taxation authority.

Deferred tax assets include an amount of EUR 9,498 thousand recognized at the US subsidiaries. Of this amount, EUR 5,049 thousand relates to the utilization of deferred taxes on tax loss carryforwards. In addition, deferred tax assets of EUR 2,881 thousand were recognized at a French subsidiary, of which EUR 2,676 thousand relates to the utilization of deferred taxes on tax loss carryforwards. Neither subsidiary generated any tax losses in the financial year 2022.

In addition, deferred tax assets include an amount of EUR 5,515 thousand recognized for companies in the fiscal unity of Mangrove GermanCo II GmbH. Of this amount, EUR 259 thousand relates to the utilization of deferred taxes on tax loss carryforwards. In the fiscal year 2022, the fiscal unity generated a tax loss.

In all cases mentioned, a positive business development is assumed in the future, so that the tax assets recognized as of December 31, 2022 are realizable using the estimated future taxable income

The amount and the expiry period of corporate income tax losses (without discontinued operations) are illustrated as follows:

(EUR thousand)	2022	2021
Within one year	10,912	14,924
Within two years	8,472	9,751
Within three years	4,751	9,443
Within four years	3,833	3,559
Within five years or later	1,228	3,920
Indefinite carryforward	650,922	668,206
Total tax losses carried forward	680,118	709,803

As of December 31, 2022, no deferred tax assets were recognized for corporate income tax loss carryforwards in the amount of EUR 623,169 thousand (2021: EUR 691,638 thousand), thereof interest carryforward in the amount of EUR 152,954 thousand (2021: EUR 100,462 thousand), as their utilization is not sufficiently certain.

As of December 31, 2022, no deferred assets were recognized on deductible temporary differences in the amount of 51,777 thousand Euro (2021: 29,428 thousand Euro).

8. Lease

A lease is an agreement that conveys the right to control the use of an identified asset for a defined period of time in return for a number of payments. The Group is a lessee mainly of land and buildings, machinery, transportation and technical equipment.

Lease accounting since October 9, 2019

With the adoption of IFRS 16, the lessee is no longer required to differentiate between operating and finance leases. As lessee, Mangrove now accounts for nearly all leases, recognizing right-of-use assets for leased assets and liabilities for lease agreements. The following principles are considered:

―	Mangrove exercises the exemption for lease agreements with a maximum term of 12 months from the date of provision and low-value assets. Low-value assets are generally defined as leased with aggregated payments of EUR 20,000 or less.
―	Mangrove separates non-lease components, such as services, from lease payments.
―	Lease liabilities are measured at the present value of the remaining lease payments. Lease payments are discounted at the rate implicit in the lease if that rate can readily be determined. Otherwise, discounting is at the incremental borrowing rate. The incremental borrowing rate, which is mainly applied, is based on risk-adjusted interest rates and determined for the respective lease terms and currencies.
―	A right-of-use asset is initially recognized at the same amount as the lease liability. Differences may arise from lease payments before commencement date and initial direct costs.
―	After capitalization at commencement date, the right-of use asset is measured at cost and depreciated over the lease term using the straight-line method.
―	Extension and termination options are part of a number of leases particularly of real estate. Extension and termination options are taken into account on recognition of the lease liability only if it is reasonably certain that these options will be exercised in the future. When contract terms are being determined, consideration is given to all facts and circumstances that offer an economic incentive for exercising extension options or not exercising termination options. Changes in lease terms arising from the exercise of an extension option or non-exercise of a termination option are only considered when determining lease terms if sufficient certainty exists. Estimates and expectations which are asserted at the commencement date of the lease liability and the right-of-use asset and pertain to future payments not yet determined on the date of provision are assessed continuously during the lease term. If subsequently improved or changed knowledge influences the expected payment profile over time, the lease liability is remeasured.

The following right-of-use assets are recognized under other intangible assets:

(EUR thousand)	Carrying amount Dec. 31, 2021	Addition	Disposal	Amortization	Currency translation	Carrying amount Dec. 31, 2022
Land and buildings	59,197	8,415	-1,149	-10,051	802	57,214
Technical equipment and machinery	1,302	1,691	-104	-499	-2	2,389
Other equipment, operating and office equipment	3,481	2,272	-338	-1,972	-11	3,432
Group Total	63,980	12,379	-1,591	-12,521	789	63,035

The corresponding lease liabilities are explained under financial liabilities (see Note 6.7).

The maturities of the outstanding lease payments comprised the following items:

Maturities of future minimum lease payments

(EUR thousand)	12/31/2022	12/31/2021
Not later than one year	13,852	13,524
Between one and five years	34,102	33,137
More than five years	35,206	43,886
Group Total	83,160	90,546

In addition, the following amounts were recognized in the income statement in 2022 in connection with lease contracts in which Mangrove was the lessee:

Income Statement Impact of Leases

(EUR thousand)	2022	2021
Interest expenses for lease liabilities	3,246	2,444
Income from sublease agreement	-61	-188
Expenses for short-term leases with terms longer than one month and up to 12 months	1,136	985
Expenses low-value asset leases (excluding short-term leases)	121	186
Group Total	4,442	3,427

Cash outflows related to lessee activities in 2022 amounted to: EUR 16,352 thousand (2021: EUR 16,689 thousand).

9. Contingent liabilities, other financial obligations, and litigation

9.1 Contingent liabilities

A Contingent liability is according to IAS 37.10 a "possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arises from past events but is not recognized because:

(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) the amount of the obligation cannot be measured with sufficient reliability.", i.e. uncertainties for which the outcome has not been determined. If the occurrence is probable and the outcome can be estimated reliable, a liability is recorded in the balance sheet. As of December 31, 2022, Mangrove Group has a recognized contingent liability relating to the SSNs which amounts to EUR 26,412 thousand (2021: EUR 34,165 thousand) as of December 31, 2022. This contingent liability was recognized via purchase price allocation..

Several companies of Mangrove Group have issued or instructed the issuance of bank guarantees in favor of customers or lenders. These bank guarantees are not considered to be contingent liabilities because these guarantees are linked to a performance obligation to be rendered by Mangrove Group.

9.2 Other financial obligations

Other financial obligations as of December 31, 2022 related to purchase commitments and bank guarantees.

Purchase commitments

Purchase commitments as of December 31, 2022 can be broken down as follows:

Purchase commitments

(EUR thousand)	12/31/2022	12/31/2021
Inventories	129,717	167,477
Intangible assets	1,984	92
Tangible assets	3,661	6,904
Group Total	135,362	174,473

Bank Guarantees

Mangrove Holding Group companies utilized bank guarantees in the amount of EUR 157.7 million (as of December 31, 2021: EUR 137.6 million). The major part of the lines is granted by a bank consortium (total line EUR 190 million, thereof EUR 134.2 million utilized).

The obligation presented in the following table relates to contingent liabilities for which primary debtors in the underlying transactions (e.g. deliveries) are non-consolidated Mangrove Group companies, and for which bank guarantees were utilized in favor of customers.

Bank guarantees

(EUR thousand)	12/31/2022	12/31/2021
Advance payment guarantees	1,348	864
Warranty guarantees	1,571	1,242
Performance guarantees	1,731	1,643
Other guarantees	205	226
Group Total	4,855	3,975

9.3 Litigation

On October 9, 2019, Mangrove LuxCo IV S.à r.l. acquired the shares in Galapagos BidCo S.à r.l. as described elsewhere in these notes (e.g. chapter "1.2 Acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful Refinancing on October 9, 2019"), associated preferred equity certificates and any intercompany payables owed by Galapagos BidCo S.à r.l. to its former parent company Galapagos S.A. The acquisition was made in connection with the Restructuring, which was completed on October 9, 2019.

The following claims have been brought which arise out of the Restructuring:

―	Galapagos BidCo S.à r.l. has commenced proceedings in England against inter alios the Security Trustee under the Intercreditor Agreement which effected the Restructuring, the trustee which held rights on behalf of the Galapagos Senior Notes and each of the plaintiffs in the New York, German and Luxembourg proceedings described below, requesting that the English Court makes a series of declarations inter alia that the Restructuring complied with the terms of the Intercreditor Agreement. The English proceedings do not contain any claim for damages. A challenge to the jurisdiction of the English Court to hear this claim was lodged by two of the defendants in these proceedings and was heard in December 2020. This challenge was dismissed by the English Court on 19 January 2021. The trial commenced on 9 March and concluded on 23 March. A judgment is expected before summer 2023.
―	A claim in the Supreme Court of the State of New York by a beneficial holder of the Galapagos Senior Notes ("NY Claimant") against inter alios Galapagos Holding (former indirect parent of Galapagos BidCo S.à r.l.) and certain of its subsidiaries (now being subsidiaries of Mangrove Group) relating to the Restructuring. The plaintiff alleges that the Restructuring wrongly deprived it of value by diverting assets away from the Group and releasing certain guarantees. The plaintiff seeks: (i) damages; and (ii) a reversal of the steps taken to affect the Restructuring. In addition, the plaintiff seeks a declaration that the release of liabilities under the Galapagos Senior Notes Indenture pursuant to the provisions of the former Intercreditor Agreement applying to certain liabilities of the Group was invalid (in other words, that this part of the Restructuring also be reversed). The Supreme Court of the State of New York decided on 22 July 2020 to stay this action pending a decision from the English Court as to its jurisdiction in these matters (as referred to above). The plaintiff indicated that it intended to appeal this decision, but no substantive appeal was actually served. Following the decision by the English Court on 19 January 2021, the proceedings in New York are still stayed.
―	On October 31, 2019 main insolvency proceedings were opened over the assets of Galapagos S.A. in Düsseldorf, Germany. Two appeals were lodged at the German Federal Supreme Court on the jurisdiction of the Düsseldorf insolvency court. Following such appeals, on December 17, 2020, the German Federal Court of Justice referred certain legal questions concerning matters of European insolvency law (and, consequently, the jurisdiction of the Düsseldorf court in such insolvency proceedings) to the Court of Justice of the European Union for determination. The Court of Justice of the European Union rendered its decision on 24 March 2022, which confirmed that the German courts did not have authority to appoint the administrator on 23 August 2019, given that the European regime applied to the UK at this time. Following this decision, on 30 June 2022 the English insolvency court made a winding-up order with regard to Galapagos S.A., and has therefore asserted its jurisdiction over the insolvency proceedings (after it had stayed the insolvency proceedings in England in August 2019 due to the court in Düsseldorf, Germany, claiming its jurisdiction). The German Federal Court of Justice rendered its decision (based on the Court of Justice of the European Union decision) on 8 December 2022, declaring that since the English courts did not make their winding-up order prior to the Brexit transition period, i.e. 31 December 2020 such that the German courts are no longer bound by the EU Insolvency regulation when considering proceedings opened in England, the German courts had retrospective authority to appoint the administrator on 23 August 2019,. Thus, the German insolvency proceedings remain in place, alongside the competing equivalent English proceedings.
―	The purported administrator of Galapagos S.A., Luxembourg (former 100 percent shareholder of Galapagos BidCo S.à r.l.) has brought a claim against Mangrove LuxCo IV S.à r.l. and Galapagos BidCo S.à r.l. in Luxembourg detailing his allegations that the Restructuring (i.e. the refinancing of Galapagos Group and the sale of Galapagos BidCo S.à r.l. to Mangrove Group) involved a fraudulent exercise of a Luxembourg share pledge and that it should, therefore, be unwound. However, no steps have been taken by the administrator to progress this claw back action. In addition to the main claim, following the administrator's application the Luxembourg Court granted an ex parte "preservation order" whereby a trustee was appointed to prevent an actual or de facto liquidation of Galapagos BidCo S.à r.l. This escrow order has been successfully appealed and set aside by the Luxembourg Court. This decision was then appealed by the administrator, but this appeal was rejected by the Court. A further appeal was then made by the administrator to the Luxembourg Cour de cassation which overturned the Court of Appeal's decision to set aside the escrow order on the basis that share pledge enforcements cannot be challenged under Luxembourg law. The matter was referred back to the Luxembourg Court to consider the position on the merits. The Luxembourg Court of Appeal decided that the administrator had not demonstrated that any fraudulent action took place and it therefore dismissed the appeal. The consequence of these various actions is that there is no escrow order in place. Finally, the administrator has brought a separate action challenging the 2021 restructuring of the assets of Galapagos BidCo S.à r.l. This action raises similar allegations to those made in the claw back action. The Luxembourg Court has yet to order a timetable for Mangrove LuxCo IV S.à r.l. and Galapagos BidCo S.à r.l' to file their defence.
―	Following an application of the purported administrator of Galapagos S.A., the District Court of Düsseldorf, Germany, had issued an injunction (einstweilige Verfügung) against Mangrove LuxCo IV S.à r.l., ordering an escrow agent to hold the shares in Galapagos BidCo S.à r.l. This order was successfully appealed and, consequently, the injunction was lifted in June 2021. Further, by the same plaintiff, a main proceeding (Hauptsacheverfahren) has been initiated against inter alios Mangrove LuxCo IV S.à r.l. A first hearing took place in February 2023 with a decision announced for May 2023.

10.Other disclosures

10.1 Consolidated cash flow statement disclosures from continuing operations

The reconciliation of movements of liabilities to cash flows arising from financing activities is presented in the following table:

(EUR thousands)		Changes from financing cashflows	Non Cash-effective changes
	Balance at 1/1/2022		Foreign exchange rates	Changes in fair values	Other changes	Balance at 12/31/2021
Non-current financial liabilities (excl. lease liabilities)	1,474	-338	628	0	0	1,764
Current financial liabilities (excl. lease liabilities and accrued interests)	3,161	1,880	-12	0	-2	5,027
Finance Lease liabilities	63,493	-6,570	143	0	6,238	63,304
Bond Liabilities	362,914	-12,706	0	0	13,599	363,807
Total	431,042	-17,734	759	0	19,839	433,902

(EUR thousands)		Changes from financing cashflows	Non Cash-effective changes
	Balance at 1/1/2021	Cash In / Cash Out	Foreign exchange rates	Changes in fair values	Other changes	Balance at 12/31/2022
Non-current financial liabilities (excl. lease liabilities)	1,252	-7,401	7,623	0	0	1,474
Current financial liabilities (excl. lease liabilities and accrued interests)	2,574	-925	1,050	462	0	3,161
Finance Lease liabilities	64,345	-20,016	2,056		17,108	63,493
Bond Liabilities	343,642	0	0	0	19,272	362,914
Total	411,813	-28,342	-10,729	462	36,380	431,042

10.2 Government grants

Government grants of EUR 559 thousand (2021: EUR 673 thousand) were received in fiscal year 2022, mainly EUR 378 thousand (2021: EUR 366 thousand) for research and development.

10.3 Related party disclosures

10.3.1 General information on related parties of the Group

The ultimate controlling party of the Mangrove Group is Mangrove LuxCo III S.à.r.l.

Pursuant to IAS 24 persons or entities that (jointly) control or are (jointly) controlled by Mangrove Group shall be disclosed, unless they are included in the consolidated financial statements.

The disclosure obligation under IAS 24 furthermore extends to transactions with persons who exercise a significant influence on the financial and business policies of the Mangrove Group. A significant influence on the financial and business policies of the Mangrove Group can hereby be based on a shareholding of 20 percent or more of Mangrove, a seat in the management board of Mangrove Group or another key management position on board either of the parent of Mangrove Group or on lower level holding company.

Related parties of the Mangrove Group in accordance with IAS 24 primarily comprise the shareholders of the Mangrove and the subsidiaries of Mangrove Group, which are not consolidated due to materiality reasons.

10.3.2 Transactions with key management personnel

In 2022 the members of the Board of Managers of the parent company earned EUR 9 thousand (2021: EUR 9 thousand) of salaries and attendance fees. Also, at the date of preparation of these consolidated financial statements the parent had not granted loans, advances or other benefits to its managers. In addition, the parent company did not have any pension or guarantee obligations to its members of the Board of Managers.

The total remuneration to key management personnel of the Group is presented in Note 10.4. "Remuneration of Mangrove Group management".

10.3.3 Transactions with subsidiaries

Income and expenses from transactions with Mangrove Group companies and joint ventures or nonconsolidated subsidiaries not included in the consolidated financial statements mainly result from regular deliveries of goods & services and are composed of the following items:

(EUR thousand)	Revenue	Other income	Purchase of goods and services	Other expenses	Interest income	Interest expense
2022
Non-consolidated companies	-	-	-	-	-	-
Joint Ventures and other investments	453	-	-	-	44	-

(EUR thousand)	Revenue	Other income	Purchase of goods and services	Other expenses	Interest income	Interest expense
2021
Non-consolidated companies	600	-	-	-	-	-
Joint Ventures and other investments	4,011	-	-	-	-	-

As of the reporting date, there were the following open items from transactions between Mangrove Group companies and joint ventures or non-consolidated companies not included in the combined financial statements:

(EUR thousand)	Trade receivables	Trade payables	Other financial assets	Financial liabilities and other liabilities
2022
Non-consolidated companies	-	-	2	-
Joint Ventures and other investments	1,064	-	427	-

(EUR thousand)	Trade receivables	Trade payables	Other financial assets	Financial liabilities and other liabilities
2021
Non-consolidated companies	1,064	-	427	-
Joint Ventures and other investments	-	-	2	-

10.3.4 Transactions with shareholders

The sole shareholder Mangrove LuxCo II S.à r.l. granted a loan of EUR 140 million to the Group on October 9, 2019 during the acquisition of Galapagos BidCo Group. The loan did not carry interest for the first six months after inception. On March 9, 2020 the shareholder contributed the loan receivable into the capital contribution account of the Company. With Shareholder resolution as of December 22, 2020 the sole shareholder Mangrove LuxCo II S.à. r.l. acknowledge to convert an aggregated amount of EUR 136,528,353 into tracking preferred equity certificates ("TPECs"). As of December 31, 2022 TPECs are recognized at EUR 159,229,983 including an interest of EUR 11,350,815 (2021: EUR 11,350,815). More details on the TPECS/ shareholder loan are set out in Note 6.2 "Tracking preferred equity certificates / Shareholder".

10.3.5 Transactions with other related parties

The Group incurred advisory costs from a Triton related advisory company amounting to EUR 365 thousand (2021: EUR 491 thousand).

Additionally, the Group has financial liabilities towards Triton Fund IV amounting to EUR 1,343 thousand (2021: EUR 1,062 thousand) as well as EUR 542 thousand (2021: EUR 542 thousand) towards Galapagos MidCo S.à r.l. and EUR 22 thousand (2021: EUR 22 thousand) towards Triton MasterluxCo S.à. r.l.

10.4 Remuneration of Mangrove Group management

The remuneration of the key operating management of Mangrove Group is composed of the following components:

(EUR thousand)	2022	2021
Short term	2,509	2,280
Termination benefits	-	599
Post-employment benefits	58	-
Share-based payments	-	-
Total	2,567	2,879

The remuneration of former members of the key operating management amounts to EUR 0 thousand (2021: EUR 0 thousand).

For more details regarding the share-based payments we refer to Note 10.5

10.5 Share based payments

In 2020 certain management personnel ("co-investors") were invited to participate in the Mangrove Group's Management Incentive Plan ("Mangrove MIP"). This investment takes the form of part-ownership of Mangrove Management Invest S.C.A; an entity which has a part-ownership of Mangrove LuxCo II S.à r.l., the parent company of Mangrove LuxCo III S.à r.l.. In order to participate in the MIP, an initial cash investment was required from the co-investors, which was at not less than the fair value of the investments.

During the year 2022 an additional Management Incentive Plan was launched. Again, certain management personnel were invited to participate in the new Kelvion Thermal Solutions Group's Management Incentive Plan ("KTS MIP"). This investment takes the form of part-ownership of TESCO Management S.C.A; an entity which has a minority of TES LuxCo S.à r.l.. TES LuxCo S.à r.l. is the parent company of the Mangrove's business unit Kelvion Thermal Solutions Group. Similar to the first MIP ("Mangrove MIP") launched in 2020, the investment is structured in a way that the co-investors are taking a part ownership of a holding company via an investment vehicle. In order to participate in the KTS MIP, in a first step the co-investors sold their contribution in the Mangrove MIP at fair value to Mangrove LuxCo I S.à r.l.. In the amount of this receivable from Mangrove LuxCo I S.à r.l., the co-investors received an investment in the new KTS MIP. The initial cash related investment of the co-investors (receivable from Mangrove LuxCo I S.à r.l.) in KTS MIP was not less than to the fair value of the investment in any case.

The nature of both schemes is such that co-investors' investments will only be realised upon "exit" of the Group's current shareholders, with exception of specific events (for example co-investors leaving the employment of the Group). It is anticipated that co-investors will participate in the MIPs until such exit is achieved. The lead investor is permitted to issue further equity, and each co-investor has the explicit right to participate further in the MIPs, such that their investment is not diluted.

In the context of IFRS 2, both MIPs are considered to be equity-settled share-based payment arrangements.

10.6 Company bodies

The board members of Mangrove LuxCo III S.à r.l. are:

Matthew Crill

Joakim Lindström-Formicola

10.7 Shareholder committees

The members of Kelvion's shareholder committee are:

―	Hubertus Mühlhäuser
―	Michael Gahleitner
―	Claus von Hermann

In total, the Group incurred shareholder committee costs amounting to EUR 182 thousand.

10.8 Disclosure of Audit Fees

KPMG Audit, S.à r.l., Luxembourg, and other member firms of the KPMG network, provided the following services during the past two financial years to Mangrove LuxCo III S.à r.l.:

(EUR thousand)	2022	2021
Audit	1,663	2,135
Tax Consulting Services	1,503	1,809
Audit-related services	349	-
Other services	87	93
Total	3,602	4,037

10.9 Companies exempt under § 264 (3) HGB

The following domestic Group companies in the legal form of a corporation have fulfilled the conditions required under § 264 (3) HGB to make use of the exemption provision and therefore waive the preparation of a management report and notes, the audit of the annual financial statements by an auditor and the disclosure of their annual financial statements for the 2022 financial year:

―	Kelvion PHE GmbH
―	Kelvion Machine Cooling Systems GmbH
―	Kelvion Brazed PHE GmbH
―	Kelvion Holding GmbH
―	Kelvion Industriebeteiligungen GmbH
―	Kelvion Insurance Broker and Services GmbH
―	Kelvion Germany GmbH
―	Kelvion Thermal Solutions Germany GmbH
―	Kelvion Thermal Solutions Holding GmbH
―	ENEXIO Management GmbH
―	ENEXIO Germany GmbH
―	Mangrove GermanCo I GmbH
―	Mangrove GermanCo II GmbH

11.Segment reporting

11.1 Disclosures by segment

The Segment Reporting of the Mangrove Group focuses on the four segments "Kelvion Refrigeration Technologies" ("RT"), "Kelvion Machine Cooling Systems" ("MCS"), "Kelvion Plate Heat Exchangers" (PHE") and "Kelvion Thermal Solutions" ("KTS"). These "segments" had previously the status of being Kelvion's "business units". All segments are responsible for its respective markets and applications and focus on a distinct technology and product portfolio.

In the past the business activities of the Mangrove Group were divided into the two segments Kelvion and ENEXIO.

For more details regarding the Segment reporting we refer to Note 1.3.

Keyfigures by segment:

2022 (EUR thousand)	RT	MCS	KTS	PHE	Total of segments	ENEXIO, Holding and consolidation
External revenue	354,227	205,299	474,042	295,056	1,328,624	184,376
Intersegment revenue	-79,687	-26,008	-60,535	-51,651	-217,881	-217881
Total revenue	274,540	179,291	413,507	243,405	1,110,743	-33,505
EBITDA	11,811	23,463	33,187	15,881	84,342	-19,833
Depreciation and amortization	-10,935	-13,439	-8,593	-11,365	-44,332	-13,059
EBIT	876	10,024	24,594	4516	40,010	-32,892
Capital expenditures in assets	4,175	2,413	15,034	5,700	27,322	7,447
Segment trade working capital	19,514	17,822	-15,284	73,991	96,043	-5,454
Segment assets	173,513	194,070	500,582	219,594	1,087,759	-53,898

2022 (EUR thousand)	Group Total
External revenue	1,513,000
Intersegment revenue	-435,762
Total revenue	1,077,238
EBITDA	64,509
Depreciation and amortization	-57,391
EBIT	7,118
Capital expenditures in assets	34,769
Segment trade working capital	90,589
Segment assets	1,033,861

2021 (EUR thousand)	RT	MCS	KTS	PHE	Total of segments	ENEXIO, Holding and consolidation
External revenue	319,327	171,412	355,918	272,793	1,119,450	43,440
Intersegment revenue	-76,869	-28,547	-61,472	-64,249	-231,137	-11
Total revenue	242,458	142,865	294,446	208,544	888,313	43,429
EBITDA	23,990	19,343	45,943	11,018	100,294	-10,869
Depreciation and amortization	-9,435	-14,471	-9,471	-10,094	-43,471	-15,963
EBIT	14,555	4,872	36,472	924	56,823	-26,832
Capital expenditures in assets	4,470	2,793	5,445	10,544	23,252	9,967
Segment trade working capital	24,409	15,909	6,284	76,123	122,725	-6,912
Segment assets	159,767	194,659	207,248	229,387	791,061	159,624

2021 (EUR thousand)	Group Total
External revenue	1,162,890
Intersegment revenue	-231,148
Total revenue	931,742
EBITDA	89,425
Depreciation and amortization	-59,434
EBIT	29,991
Capital expenditures in assets	33,219
Segment trade working capital	115,813
Segment assets	950,685

The financial result EUR -55,682 thousand (2021: EUR -51,727 thousand) is mainly attributable to the Holding company.

Revenue by segment:

(EUR thousand)	RT	MCS	KTS	PHE	ENEXIO, Holding and consolidation	Group total
Sales 2022
Sales from products transferred at a point in time	254,954	132,774	82,199	188,157	25,389	683,473
Sales from products and services transferred over time	19,586	46,517	331,308	55,248	-58,894	393,765
Total revenue	274,540	179,291	413,507	243,405	-33,505	1,077,238

(EUR thousand)	RT	MCS	KTS	PHE	ENEXIO, Holding and consolidation	Group total
Sales 2021
Sales from products transferred at a point in time	209,495	121,971	86,479	170,346	17,343	605,634
Sales from products and services transferred over time	32,963	20,895	207,966	38,198	26,086	326,108
Total revenue	242,458	142,865	294,446	208,544	43,429	931,742

The segment asset recognition and measurement policies are the same as those used by Mangrove Group and described in the accounting policies section. The profitability of the individual segments is measured using "earnings before interest and tax, depreciation and amortization" (EBITDA).

(EUR thousand)	2022	2021
Total Segment EBITDA	69,610	100,294
Depreciation and amortization	-29,600	-43,471
Total Segment EBIT	40,010	56,823
Holding and consolidation	-32,892	-26,832
EBIT	7,118	29,991

11.2 Disclosures by geographic region

In the presentation of disclosures by geographic region, revenue is allocated by the destination of the goods or place of performance of the services, or by customer domicile. Assets are allocated by their location.

Non-current assets (goodwill, property, plant and equipment and intangible assets) by region

(EUR million)	2022	2021
Western Europe	319.6	337.4
Eastern Europe	27.1	26.1
North America	35.2	28.3
Latin America	0.8	0.5
Africa	2.4	2.5
Middle East	0.4	0.5
Asia Pacific	35.1	38.8
Group Total	420.5	434.1

The goodwill and significant parts of the purchase price allocation have been allocated to Western Europe.

As of the reporting date, the carrying amounts of non-current assets (property, plant, and equipment and intangible assets) amounted to EUR 251,801 thousand (2021: 267,570 thousand) in Germany, EUR 35,156 thousand (2021: EUR 25,341 thousand) in the United States of America and EUR 23,302 thousand (2021: EUR 22,166 thousand) in France. There are no relationships with individual customers whose revenue can be considered material in comparison to Mangrove Group's revenue.

Revenue by region

(EUR million)	2022	2021
Western Europe	431.4	379.8
Eastern Europe	87.5	84.9
North America	260.6	158.9
Latin America	35.2	32.1
Africa	29.0	58.9
Middle East	50.5	44.0
Asia Pacific	183.0	173.2
Total revenue	1,077.2	931.7

Revenue by region

In the reporting period, revenue of EUR 244,086 thousand (2021: EUR 150,714 thousand) was attributable to the United States of America, EUR 165,123 thousand (2021: EUR 161,617 thousand) to Germany, EUR 99,933 thousand (2021: EUR 97,152 thousand) to the People's Republic of China.

Major customer

There is no significant reliance on a major customer.

12. Events after the end of the reporting period

No events after the end of the reporting period 2022 were identified.

13. List of companies included in the consolidated financial statements

The following list shows all Mangrove Group companies, joint ventures and associated companies.

Company	Registered Office/Corporate Seat	Country	Capital Share in %
CTI Gulf UAE	Dubai	UAE	49.00
ENEXIO ACC GmbH	Bochum	Germany	100.00
ENEXIO Energy Technology (Beijing) Co. Ltd.	Beijing	China	100.00
ENEXIO Germany GmbH	Bochum	Germany	100.00
ENEXIO Management GmbH	Bochum	Germany	100.00
ENEXIO Power Cooling (China) Co. Ltd.	Langfang	China	100.00
Galapagos BidCo S.á.r.l.	Luxembourg	Luxembourg	100.00
Kelvion AB	Kalmar	Sweden	100.00
Kelvion B.V.	Doetinchem	Netherlands	100.00
Kelvion Brazed PHE GmbH	Nobitz-Wilchwitz	Germany	100.00
Kelvion BVBA	Zele	Belgium	100.00
Kelvion Finance GmbH	Bochum	Germany	100.00
Kelvion FZE	Dubai	United Arab Emirates	100.00
Kelvion Germany GmbH	Bochum	Germany	100.00
Kelvion GmbH	Gaspoltshofen	Austria	100.00
Kelvion Heat Exchangers (China) Co. Ldt.	Wuhu	China	97.39
Kelvion Holding (Pty) Ltd.	Germiston	South Africa	100.00
Kelvion Holding GmbH	Bochum	Germany	100.00
Kelvion Inc.	Catoosa	USA	100.00
Kelvion India Private Limited	Pune	India	100.00
Kelvion Industriebeteiligungen GmbH	Bochum	Germany	100.00
Kelvion Insurance Broker and Services GmbH	Bochum	Germany	100.00
Kelvion Intercambiadores Ltda.	Franco da Rocha	Brazil	100.00
Kelvion K.K.	Tokyo	Japan	100.00
Kelvion Ltd.	Birmingham	Great Britain	100.00
Kelvion Machine Cooling B.V.	Almere	Netherlands	100.00
Kelvion Machine Cooling Sp. z.o.o.	Swiebodzice	Poland	100.00
Kelvion Machine Cooling Systems GmbH	Monzingen	Germany	100.00
Kelvion Management GmbH	Bochum	Germany	100,00
Kelvion Mashimpeks LLC	Moscow	Russian Federation	100.00
Kelvion OÜ	Tallinn	Estonia	100.00
Kelvion PHE B.V.	Belfeld	Netherlands	100.00
Kelvion PHE GmbH	Sarstedt	Germany	100.00
Kelvion Products Inc.	Knoxville	USA	100.00
Kelvion PTE. LTD.	Singapur	Singapore	100.00
Kelvion Refrigeration B.V.	Sint Maartensdijk	Netherlands	100.00
Kelvion S.A.S.	Wingles	France	100.00
Kelvion S.r.L.	Monvalle	Italia	100.00
Kelvion s.r.o.	Nymburk	Czech Republic	100.00
Kelvion Saudi Arabia Ltd.	Al Khobar	Saudi Arabia	100.00
Kelvion Sdn. Bhd.	Subang Jaya, Selangor	Malaysia	100.00
Kelvion Services (Pty.) Ltd.	Germiston	South Africa	74.83
Kelvion Sp. z.o.o.	Opole	Poland	100.00
Kelvion Thermal Solutions (Jiangsu) Co. Ltd.	Changshu	China	100.00
Kelvion Thermal Solutions (Pty.) Ltd.	Germiston	South Africa	74.99
Kelvion Thermal Solutions Germany GmbH	Bochum	Germany	100.00
Kelvion Thermal Solutions Holding GmbH	Bochum	Germany	100.00
Kelvion Thermal Solutions S.A.S.	Nantes	France	100.00
Kelvion Thermal Solutions S.A.U.	Igorre	Spain	100.00
Kelvion Thermal Solutions W.L.L.	Doha	Qatar	100.00
Mangrove GermanCo I GmbH	Frankfurt	Germany	100.00
Mangrove GermanCo II GmbH	Frankfurt	Germany	100.00
Mangrove LuxCo IV S.à r.l.	Luxembourg	Luxembourg	100.00
TES LuxCo SARL	Luxembourg	Luxembourg	92.07
TESCO Management SCA	Luxembourg	Luxembourg	20.00
Non-consolidated companies
Bloksma Asia Ltd.	Hong Kong	China	100.00
ENEXIO Poland Sp z o.o.	Bytom	Poland	63.00
Kelvion Thermal Solutions UK. Ltd.	Fareham	Great Britain	100.00
Other companies
Kelvion KOS Korea Ltd.	Seoul	South Korea	25.00
TPK Mashimpeks	Solnechnogorsk	Russian Federation	34.00

Luxembourg, April 28, 2023

Matthew Crill

Joakim Lindström-Formicola

REPORT OF THE REVISEUR D'ENTREPRISES AGREE

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of Mangrove LuxCo III S.à r.l. and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position as at 31 December 2022, and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2022 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession ("Law of 23 July 2016") and with International Standards on Auditing ("ISAs") as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier ("CSSF"). Our responsibilities under the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the « Responsibilities of "réviseur d'entreprises agréé" for the audit of the consolidated financial statements » section of our report. We are also independent of the Group in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants ("IESBA Code") as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other information

The Board of Managers is responsible for the other information. The other information comprises the information stated in the consolidated report including the consolidated management report but does not include the consolidated financial statements and our report of the "réviseur d'entreprises agréé" thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard.

Responsibilities of the Board of Managers for the consolidated financial statements

The Board of Managers is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted by the European Union, and for such internal control as the Board of Managers determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Managers is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Managers either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Responsibilities of the réviseur d'entreprises agréé for the audit of the consolidated financial statements

The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of the "réviseur d'entreprises agréé" that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

―	Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
―	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
―	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Managers.
―	Conclude on the appropriateness of the Board of Managers' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the "réviseur d'entreprises agréé" to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of the "réviseur d'entreprises agréé". However, future events or conditions may cause the Group to cease to continue as a going concern.
―	Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
―	Obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

Report on other legal and regulatory requirements

The consolidated management report is consistent with the consolidated financial statements and has been prepared in accordance with applicable legal requirements.

Luxembourg, 28 April 2023

KPMG Audit S.à r.l.

Cabinet de révision agréé

Dominique Abdallaoui

2d:Tcc1,

Kelvion Germany GmbH

Bochum

Befreiung nach §§ 264 Abs.3, 264b HGB

GESELLSCHAFTERBESCHLUSS

Alleinige Gesellschafterin der Kelvion Germany GmbH mit Sitz in Bochum und eingetragen im Handelsregister des Amtsgerichts Bochum unter HRB 5552 (im Folgenden die "Gesellschaft") ist die Kelvion Holding GmbH (AG Bochum, HRB 14670), vertreten durch

1. Herrn Mark Bevan, Geschäftsführer

2. Frau Kristina Brauckmann, Prokuristin

Unter Verzicht auf alle durch Gesetz oder Gesellschaftsvertrag vorgeschriebenen Form- und Fristerfordernisse hält die Kelvion Holding GmbH hiermit eine Gesellschafterversammlung der Gesellschaft ab und beschließt mit allen Stimmen:

Der Inanspruchnahme der Befreiungsmöglichkeiten gemäß § 264 Abs. 3 HGB hinsichtlich der Aufstellung des Jahresabschlusses innerhalb der ersten drei Monate des Folgejahres, der Aufstellung eines Anhangs und eines Lageberichts, der Berücksichtigung der ergänzenden Ansatz-, Gliederungs- und Ausweisvorschriften für Kapitalgesellschaften, der Prüfung des Jahresabschlusses durch einen Wirtschaftsprüfer sowie der Offenlegung des Jahresabschlusses für das Geschäftsjahr 2022 wird hiermit zugestimmt.

Die Inanspruchnahme dieser Erleichterungsvorschrift wird im Anhang des Konzernabschlusses der im Handels- und Gesellschaftsregister Luxemburg (Registre de Commerce et de Sociétés Luxembourg) unter der Registernummer B236258 eingetragenen Mangrove LuxCo III S.à r.l. angegeben. Um die weiteren erforderlichen Voraussetzungen für die Befreiung nach § 264 Abs. 3 HGB zu erfüllen, wird dieser Beschluss neben dem vorgenannten Konzernabschluss der Mangrove LuxCo III S.à r.l zum 31.12.2022, in den die Kelvion Germany GmbH einbezogen wird, beim elektronischen Bundesanzeiger offengelegt.

Die Mangrove LuxCo III S.à r.l hat eine Patronatserklärung zugunsten der Mangrove GermanCo I GmbH und der Mangrove GermanCo II GmbH abgegeben, indem sie sich bis zum 31. Dezember 2023 begrenzt bereit erklärt hat, Mangrove GermanCo I GmbH und Mangrove GermanCo II GmbH in der Weise finanziell auszustatten, dass diese stets in der Lage sind, ihren Verpflichtungen gegenüber ihren Gläubigern fristgemäß nachzukommen. Die Mangrove GermanCo II GmbH ist durch die Verkettung von Ergebnisabführungsverträgen zur Verlustübernahme analog § 302 AktG der Kelvion Germany GmbH verpflichtet.

Weitere Beschlüsse werden nicht gefasst.

Bochum, den 25.04.2023

Mark Bevan

Kristina Brauckmann

2e:Tdb8,

Mangrove GermanCo I GmbH

Bochum

Konzernabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

Mangrove Luxco III S.à r.l.

Société à responsabilité limitée

2, rue Edward Steichen, L-2540 Luxembourg

Grand Duchy of Luxembourg

R.C.S Luxembourg B236258

Konzernabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

Ergänzung zum Konzernabschluss zum 31. Dezember 2021	Supplement to the consolidated financial statements as of December 31, 2021
Mangrove Luxco III S.à r.l.
mit Sitz in Luxemburg, geschäftsansässig 2, rue Edward Steichen, L-2540 Luxemburg, eingetragen im Handels- und Unternehmensregister (RCS) Luxemburg unter Nummer B236258	With its seat in Luxembourg, with offices at 2, rue Edward Steichen, L-2540 Luxembourg, registered with the commercial and companies register (RCS) Luxembourg under number B236258
Hiermit stellen wir fest, dass neben der im Anhang angegebenen Firmen ebenfalls die Kelvion Industriebeteiligungen GmbH, Bochum, eingetragen im Amtsgericht der Stadt Bochum unter HRB 938, die Befreiung nach § 264 Abs. 3 HGB zum 31.12.2021 in Anspruch nimmt und auf eine Offenlegung des Jahresabschlusses für das Geschäftsjahr 2021 verzichtet.	We hereby specify that, in addition to the companies listed in the notes, Kelvion Industriebeteiligungen GmbH, Bochum, registered with the commercial register of the Local Court of Bochum under HRB 938, likewise makes use of the exemption option according to section 264 (3) of the German Commecial Code (HGB) and foregoes the publication of its financial statements for the financial year 2021.

Luxembourg, 17 July 2023

Mangrove Luxco III S.à r.l.

Joakim Lindström-Formicola, Manager

Matthew Crill, Manager

2f:Td26d3,

Mangrove GermanCo I GmbH

Bochum

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

Mangrove LuxCo III S.à r.l.

Luxemburg

Consolidated Financial Statements of Mangrove LuxCo III S.à r.l. For the period from January 1, 2021 to December 31,2021

(with the report of the Rèviseur d'Entreprises Agréé thereon)

Mangrove LuxCo III S.à r.l., Luxembourg

2, rue Edward Steichen, L-2540 Luxembourg

Registered in Luxembourg Trade and Companies Register No. B236258.

Table of Contents

Key Figures

Management Report

1. Fundamental information about the Group

2. Objectives and strategies

3. Research and development

4. Internal management system

5. Report on economic position

6. Results of operations, financial position and net assets

7. Report on outlook, risks and opportunities

8. Events after the end of the reporting period

9. Disclosures relevant for takeovers - Change of Control Clause

Consolidated Financial Statements

Consolidated Statement of Financial Position of Mangrove Group, Statements Luxembourg

Consolidated Statement of Profit or Loss of Mangrove Group, Luxembourg

Consolidated Statement of Comprehensive Income of Mangrove Group, Luxembourg

Consolidated Statement of Cash Flows of Mangrove Group, Luxembourg

Consolidated Statement of Changes in Equity of Mangrove Group, Luxembourg

Notes to the Consolidated Financial Statements

1. General information

2. Reporting and Accounting principles

3. Financial risk management

4. Non-current assets held for sale and discontinued operations

5. Consolidated statement of financial position disclosures: Assets

6. Consolidated statement of financial position: Equity and liabilities

7. Consolidated statement of profit or loss

8. Lease

9. Contingent liabilities, other financial obligations, and litigation

10. Other disclosures

11. Segment reporting

12. Events after the end of the reporting period

13. List of companies included in the consolidated financial statements

Key figures of Mangrove Group

(EUR million)	01/01/2021 - 12/31/2021	01/01/2020 - 12/31/2020
Order intake	1,099.3	866.7
Order backlog	614.6	497.5
Results of operations ^*
Revenue	931.7	916.3
EBITDA ¹⁾	89.4	53.6
as % of revenue	9.6	5.8
Normalized EBITDA ²⁾	62.6	67.0
as % of revenue	6.7	7.3
EBIT	30.0	-10.4
as % of revenue	3.2	-1.1
Profit or loss for the period	-40.6	-61.1

Net assets	12/31/2021	12/31/2020
Total assets	950.7	1,001.9
Equity ³⁾	-100.3	-67.4
as % of total assets	-10.6	-6.7
Working capital (reporting date)	115.8	130.8

Financial position ^*	01/01/2021 - 12/31/2021	01/01/2020 - 12/31/2020
Cash Flow from operating activities from continuing operations	30.1	58.9
Free Cash Flow from continuing operations	0.6	38.6
Capital expenditure on property, plant and equipment	24.0	13.5
Full-time equivalents (reporting date) excluding vocational trainees and inactive employment contracts	4,829	5,178

^*) Only continuing operations.
¹⁾ EBITDA is not a defined financial indicator under IFRS. EBITDA is defined as earnings before interest and tax ("EBIT") and depreciation and amortization. EBITDA as presented herein differs from EBITDA as defined in the Indentures governing the Notes.
²⁾ Normalized EBITDA is defined as EBITDA after eliminating certain non-recurring items. Normalizations to EBlTDA mainly include restructuring expenses and other exceptional items as shown in chapter 6.5 of the management report.
³⁾ Including non-controlling interests.

Please note that the financial statements have been prepared in euros (EUR). All amounts have been rounded using standard rounding rules. Adding together individual amounts may therefore result in a difference in certain cases.

Mangrove Group Management Report

1. Fundamental information about the Group

1.1 Company information

Mangrove LuxCo III S.à r.l., Luxembourg, hereinafter also referred to as " Mangrove LuxCo III " or the "company" is a public limited liability company (Société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 2, rue Edward Steichen, L-2540 Luxembourg, and registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés Luxembourg) with registration number B236258. Sole shareholder of the company is Mangrove LuxCo II S.à r.l., Luxembourg, which itself is a direct subsidiary of Galapagos LuxCo I S.à r.l., Luxembourg. The Company was incorporated on July 11, 2019. The purpose of the Company is the acquisition, holding and disposal of interests in Luxembourg and/or foreign companies and undertakings as well as the administration, development and management of such interests.

1.2 Acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful Refinancing on October 9, 2019

In the following, Mangrove LuxCo III and its consolidated direct and indirect subsidiaries is referred to as "Mangrove Group" or "the Group".

1.3 Description of the business

1.3.1 Introduction of new Segment Reporting

The Mangrove Group has operated in the past through two segments, Kelvion and ENEXIO:

•	Kelvion, a leading global manufacturer of heat exchangers and other cooling & heating products.
•	ENEXIO, a leading global manufacturer of power plant and industry cooling systems as well as wastewater treatment solutions.

The segment ENEXIO consisted of three business units: Dry Cooling Systems (DCS), Service Solutions and Water Technologies (WT). After the strategic decision was taken to exit the DCS business and to either sell or integrate the Service and Water business into Kelvion Group, one part of the DCS business (DCS Heller) was successfully sold at the end of 2020 and on 20 October 2021 closing in connection with the share purchase and transfer agreement for the shares of ENEXIO companies comprising the Service business took place. Furthermore, on 3 January 2022 the same was executed in connection with the shares of ENEXIO companies comprising the Water business. Only the Dry Cooling ACC ("Air Cooled Condenser") business remains part of the Group, until the continuing wind-down of this activity has been completed. The declining importance of the ENEXIO Business is also reflected in its decreasing volume, which represents in FY 2021 already less than 10 Percent in terms of Mangrove Group. Overall, the contribution of the segment ENEXIO to revenue and normalized EBITDA of the Group is no longer significant for the Group's earnings position.

The dominating business share of Kelvion is reflected in the new Segment Reporting of the Mangrove Group, which focuses on the new segments "Kelvion Refrigeration Technologies" ("RT"), "Kelvion Machine Cooling Systems" ("MCS"), "Kelvion Plate Heat Exchangers" (PHE") and "Kelvion Thermal Engineered Solutions" ("TES"). These four new "segments" had previously the status of being Kelvion's "business units".

1.3.2 The four segments of Mangrove Group

The four segments of Mangrove Group focus on distinct technologies and product portfolios:

•	Kelvion Refrigeration Technologies (RT) focuses on component business for refrigeration applications with significant growth potential in data centers. RT supplies a wide range of standard and customized heat exchangers for cooling and refrigeration e.g., in cold chain warehouses, supermarkets, non-residential buildings, and industrial production. Product offering includes air cooled condensers which reject heat from refrigeration systems and are often sold as part of a package of equipment with air coolers. RT's customized air coolers are design-to-order units for industrial or OEM solutions for food processing and distribution facilities. Product offering includes also customized radiators and dry coolers which are mainly used for power and industrial applications.
•	Kelvion Machine Cooling Systems (MCS) is a leading player in heat exchangers for power and engine applications with substantial growth opportunities by leveraging its global installed base. MCS supplies heat exchangers for power generation, power transmission and large engine applications (marine and off-highway). The business is mostly with OEM, e.g., for large engine manufacturers, but MCS also engages in smaller projects, e.g., in Oil and Gas. Product offering includes charge air coolers, which cool down combustion-air coming from the turbocharger before entering the engine. MCS' shell and tube double safety heat exchangers assure the secure handling of safety-critical media. Product offering also includes box coolers which are fitted in the sea chest of small and medium-sized vessels.
•	Kelvion Plate Heat Exchangers (PHE) provides a broad range of plate heat exchangers for a wide variety of applications in terms of pressure and temperature demands for a wide range of customer industries, ranging from HVAC and Refrigeration to Food and Beverages, Chemicals, Power and Industrials. Product offering includes fully welded plate heat exchangers which are used to save energy in demanding high pressure and temperature applications, as well as brazed plate heat exchangers, often used for environmentally friendly heat pump applications. TES' gasketed heat exchangers have the highest efficiency and flexibility and are used in a variety of industries.
•	Kelvion Thermal Engineered Solutions (TES), is Kelvion's largest segment, focusing on project business for demanding applications in the Oil & Gas, Chemicals Industries and, like RT, with significant growth potential in high tech data center business as well as green tech applications such as hydrogen and electrolysers. TES' engineering expertise plays a key role in differentiation against competitors. High degree of geographical diversification with sites in all key region, including Europe, NAFTA, Latin America, China and MEA. Product offering includes air fin coolers typically used for very large cooling requirements in different industries, e.g., Oil & Gas and Chemicals, as well as air dryers which are used to remove humidity from an air stream in various process industries. TES' shell & tube heat exchangers are used to heat, cool, or condense water and other media in different process industries. The focus of the BU has shifted in the recent years from Oil &Gas and Petrochemicals to high and green tech business.

All four segments hold strong favorable market positions in their respective markets. MCS and PHE are among the TOP 3, RT amongst the Top 5 and TES is niche-market leader, based on a market analysis from yearend 2020.

2. Objectives and strategies

2.1 Overall strategy and objectives of the Mangrove Group

2.2 Develop innovative products

We believe that Mangrove Group has one of the broadest product offerings in the market for heat exchangers, including Shell & tube, finned tube, plate and shell and tube heat exchangers and a strong pipeline of product innovations to address future market demands. Approximately 360 patents (including applications) and utility models underscore this claim. It is planned to grow the business further based on a strong product portfolio and a long-standing innovation tradition with many recognized brands. To maintain the technology leadership, Mangrove Group strives to continue the joint research and development efforts with customers and research institutes. For further details on R&D please refer to the following chapter "3. Research and development".

2.3 Strategy and objectives of Kelvion

2.3.1 Kelvion - organizational set up is supporting the strategy

Kelvion's regional organizational setup includes Front-End Sales teams in order to drive the international expansion. Front-End Sales teams are backed by five "Global Sales & Solutions" teams-one dedicated team for each of the four segments plus Service. Global Sales & Solutions represent the application engineering teams of Kelvion, that are specialized to cover defined industrial markets and are providing support and application expertise with a strong focus on key accounts and industries. This setup allows combining the advantages of a local presence in the market, like the close contact to clients, knowledge of local restrictions and technical specifications, with the advantages to centrally pool specific market segment and application know-how. Thereby the frontline sales teams are also able to widen the product offerings to cover regional "white spots" (market areas in which Kelvion is not or not sufficiently present).

The segments Refrigeration Technologies, Machine Cooling Systems, Plate Heat Exchangers and Thermal Engineered Solutions are responsible for manufacturing and product line management (e.g., charge air coolers, radiators, etc.), executing the manufacturing footprint re-organization as well as targeting cost and lead-time reductions by consolidating, standardizing and modularizing today's various product lines. In close cooperation with Front-End Sales and Global Sales & Solutions the product areas are also driving the development of innovative products to address future market demands.

2.3.2 Kelvion - "High Five" "H5" Strategy

Segment focused recovery program for a post COIVD-19 world

Therefore, management of the Group initiated a recovery program for a post COVID-19 world in mid-2020 which focused on the Kelvion segments RT, MCS, PHE and TES. This overall strategy for 2025 is called High Five. "High" represents the company's ambitions, and "five" equals the number of years, the number of our corporate values as well as the five segments of Kelvion.

When in 2020 the corona virus pandemic turned the world upside down, the Group had to adapt quickly to the 'new normal' and management had to rethink the overall strategy for Kelvion promptly. The bad economic environment forced the Group to reset its focus as it had to fulfill certain financial obligations to its lenders. "High Five" is the strategic key for achieving this. The program aims to build in long term a sustainable company based on a global presence and excellent products.

In the High Five Strategy Management decided to clearly split initiatives into

•	growth initiatives and
•	cost reduction initiatives.

Management identified five major areas of improvement. One big driver of High Five is the data center industry, as this market has proven to be very resilient even through the pandemic. When the High Five was developed the target was to make data centers business having a double-digit share of the Group's revenue by 2025, leveraging unique multi-product offerings. Alongside data centers, service continues to be a major growth driver of High Five. The Group strengthens its Service Business share, exploring the sizeable opportunities through its huge installed base and excellent customer relationships. Furthermore, the Group shift it business focus to more "green" and less "fossil" energy, global factory improvement and further establishing our business in North America and Mexico (NAFTA) & Asia-Pacific (APAC) markets. Digitalized, seamless processes across the entire value chain are one important key driver to reaching these goals.

H5 business plan 2021 - 2024 from late 2020

The Group developed in the second half of 2020 a business plan until 2024 which was based on the High Five Strategy. This business plan reflected the delayed growth perspectives and lower profitability compared to the "old" business plan that was the basis for the financial covenants that were agreed with the lenders in the course of the refinancing in October 2019. As this revised business plan showed lower profitability throughout the planning horizon compared to the old business plan management entered into negotiations with the lending banks in November 2020 and agreed at the end of December 2020 a material reset (reduction) of the two financial covenants (1) Minimum EBITDA covenant and (2) Total Net Leverage covenant. Furthermore, management agreed certain additional amendments in the definition of the covenants in order to allow the execution of various restructuring measures in 2020 and beyond which are explained in the following section. Further details on the financial covenants and the reset are set out in chapter "7.6 Risk reporting to the use of financial instruments" of this report.

Complimentary to the High Five growth initiative, management started cost reduction initiatives in 2020. The delayed growth perspectives caused by the COVID-19 pandemic and by lower demand from the Oil & Gas sector due to low oil prices forced the Group in 2020 to react immediately to protect its earnings and cash position and to secure its long-term financing. In 2020 and 2021 various contingency measures were executed throughout the whole Group which helped to secure earnings and cash in the short-term. In addition, management identified four levers to substantially improve its cost structure and defined holistic cost initiatives to protect the earnings and cash positions of the Group:

•	Overhead restructuring program - comprehensive program targeting cost savings in indirect personnel and non-personnel cost
•	Site reorganization - Scaling down or (partial) exit of unfavorable production sites
•	Production FTE adjustment - Relocation to low-cost countries - Launch of efficiency program K°Flow (flow production) and further workforce adjustments
•	Other contingencies - e.g., procurement savings (price negotiations and material cost reduction)

The maximum cost (cash outflows) from the execution of the four programs are estimated at up to EUR 29 million in the years 2020 to 2022 and in order to achieve substantial improvements of the cost base of the Group.

The sale of the ENEXIO Heller Dry Cooling business, in December 2020, contributed the majority of cash needed for the aforesaid restructuring projects.

Updated H5 2.0 business plan 2021 - 2025 from late 2021

In the second half of 2021 the Group updated the High Five Strategy by refining the top strategic initiatives for each segment including top-line growth-initiatives, cost reduction initiatives as well as enabler initiatives, like the further rollout of harmonized digitalized processes to further reduce complexity in each segment. Overall, the High Five Strategy was confirmed by the update in combination with strong customer demand in all segments and therefore remained basically unchanged.

This updated High Five Strategy has been the basis for the planning process for the Budget 2022 and the mid-term plan for the years until 2025. The business plan 2021 - 2024 from late 2020 was rolled forward into the new H5 2.0 2021 - 2025 business plan. However, the new H5 2.0 had to foresee a longer recovery period due to ongoing constraints in the supply chain (availability, material price inflation) in the global economy which also impacts the supply chain of the Group, for further details please refer to chapter "5.1 Macroeconomic environment - The global economy in 2021" and chapter "5.2 Industry overview and sector specific development of key markets". As a consequence, the planning years 2022 and 2023 had to be reduced by around 12% and the plan year 2024 by around 5% in terms of profitability, i.e., adjusted EBITDA, whereas planned Order Intake and Revenue remained almost unchanged, i.e., reduced by less than 1%. Further details on the 2022 financial outlook are set out in chapter "7.2 Outlook for 2022" and the corresponding implications to the financial covenants of the Group are set out in chapter "7.6 Risk reporting to the use of financial instruments" of this report.

3. Research and development

Our research and development efforts, which we undertake on business unit level, are directed mainly towards innovative new products and development of new applications, manufacturing technologies, joining and robotic technologies to respond to anticipated customer needs and include joint development with customers. In addition, we cooperate with more than 60 universities and research institutions in eight countries, including renowned partners such as Fraunhofer Institutes (e.g. Fraunhofer ISE, Fraunhofer ICT), University of Kassel, Technical University of Dresden, Helmholtz-Zentrum Dresden-Rossendorf, all in Germany, Sintef Energy Research in Norway, the Stellenbosch University in South Africa, Politecnico di Milano in Italy and the French government-funded technological research organization CEA (Commissariat a l'énergie atomique et aux énergies alternatives). These partners carry out basic and applied research for us in areas such as thermodynamics, fluid dynamics, etc.

4. Internal management system

4.1 Management structure

Mangrove Group divides its operating activities into the four Kelvion segments RT, MCS, PHE and TES. All segments have a distinct management team that is responsible for the strategic development and operational business of the segment. In addition, the management of Mangrove Group has established a shareholder committee for Kelvion. The committee of Kelvion Group is composed of representatives of the shareholders of Mangrove Group and third-party experts. This committee supervises the results of operations and financial position of the respective segments and supports the segment management in strategic developments. Meetings of the shareholder committees with the respective segment management are held in regular intervals.

4.2 Basis of information

Group reports are prepared with the aid of standard applications that are precisely tailored to the needs of Mangrove Group and subject to continuous enhancement. Standard reports prepared based on unified data are used throughout the Group to report net assets, financial position, and results of operations. These standard reports are supplemented by special analysis as well as analysis and reports related to specific businesses and strategic measures. Corporate planning - which covers the current budget plus three planning years - and risk reporting are both based on the same reporting and consolidation system that is used for the reporting of actual figures.

5. Report on economic position

5.1 Macroeconomic environment - The global economy in 2021

According to IMF's April 2021 WEO, the strong rebound in 2021 has been driven by several factors, including the development of the multiple vaccines, the adaption of the global economy to the subdued overall mobility, the fiscal support in some countries in 2021, especially in the United States, on top of an already unprecedented fiscal response in 2020. During 2021 the spread of the highly transmissible Delta variant prevented a full return to normality. Increasing demand combined with pandemic outbreaks and weather disruptions have led to shortages of key input materials and impacted production activity in several countries. The supply shortages alongside the release of pent-up demand and the rebound of commodity prices, have caused consumer price inflation to increase rapidly in many emerging and developing economies (WEO October 2021). Fossil fuel prices have almost doubled in 2021, driving up energy cost. Ongoing supply chain disruptions, clogged ports, land-side constraints, and high demand for goods have also led to broadening price pressure. The supply disruptions continued into the fourth quarter, hindering global manufacturing-especially in Europe and the United States (WEO January 2022). In China, disruptions from COVID outbreaks, power outages, declining real estate investments and the withdrawal of public investments all contributed to a slowdown in the second half of 2021.

IMF's estimated 2021 growth rate for the advanced economies is 5.0 percent (-4.5 percent in 2020) and for the emerging market and developing economies 6.5 percent (-2.0 percent in 2020). China's growth is estimated for 2021 at 8.1 percent after 2.3 percent in 2020.

The IMF sees surging Omicron COVID-19 variant infections in late 2021/early 2022, reimposed mobility restrictions, rising energy prices and supply disruptions and resulting higher inflation as risks on the further path of recovery.

5.2 Industry overview and sector specific development of key markets of the Group in 2021

Heat exchangers, which are used for heat transfer from one medium to another without mixing the media, are used across a broad range of applications, including the power, oil and gas, food and beverages, HVAC, marine, chemicals and other industries. Heat exchange plays a crucial role in thermal processes across many industrial applications, with no other technology currently capable of supplanting the basic principle of thermal transfer. From a technology perspective, there are four basic types of heat exchangers/heat removal devices: shell and tube heat exchangers, plate heat exchangers, finned tube heat exchangers and cooling towers.

Heat exchangers represent a persistent technology with limited risk of substitution and a diversified exposure across end-markets. The stable long-term growth outlook of 3-4 percent (based on a market analysis from yearend 2020, excl. impacts from the corona virus) is supported by global megatrends. There is a wide span of different business models that reflect this diversity in end-markets. The mission critical character of heat exchangers brings about protected niches with high switching barriers. Key success factors are engineering competence, cost competitiveness and customer proximity. In consequence, the overall heat exchanger market is characterized by a high fragmentation with only few multi-regional or global players offering a comprehensive product- and technology portfolio.

A further economic outlook is provided in the following chapter "7. Report on outlook, risks and opportunities".

5.3 Course of business

The Group prepared its financial budgets for 2021 in the fourth quarter of fiscal 2020 and approved them in December 2020.

Due to the uncertainties caused by the global COVID-19-pandemic at the time of planning, management prepared a "base case" scenario and a "lower case" scenario for the 2021 budget.

The base case assumed that the key performance indicators revenue and adjusted EBITDA would be above 2020, i.e. that adjusted EBITDA would reach a level above EUR 70 million. This scenario was based on the following core assumptions: (1) Slow business recovery from Q2 2021 - which would still be below pre-COVID-19 levels, (2) Improvement in revenue, mainly driven by more data center and higher RT business, and (3) Activation of the cost-out program to offset the temporary revenue loss.

As the impact of the coronavirus on the global economy and on the markets in which the Group operates was difficult to estimate at the time of budgeting, management also prepared a "lower case" scenario and adjusted here for lower sales and lower profit compared to the "base case", assuming that there was no business recovery throughout 2021 compared to previous year. This lower case scenario was also the basis for the new financial covenants for the Fiscal Year 2021.

The financial covenants Minimum EBITDA and Total Net Leverage were renegotiated in December 2020 and were based on the above mentioned "Lower Case" scenario. The renegotiated financial covenants included additional headroom to comply with these financial covenants.

2021 order intake exceeds expectations, while corona related frictions delay revenue and profitability growth

Following the COVID-19-related global production curtailment and the associated reduction in production- and freight-capacities in 2020, the strong recovery in demand during 2021 and the resulting imbalances in some sectors of the economy have led to a shortage of certain goods and services available on the market and an associated sharp rise in prices. In fiscal 2021, the Group saw a strong recovery in order intake compared to the Corona crisis year of 2020 of 27 percent, which was driven by a significant upswing in demand in HVAC & Refrigeration but also in other markets, which more than offset the continued restraint in the Oil & Gas sector. Adjusted for the arbitration award for a legacy Power project in South Africa in the year 2021 of EUR 38.7 million, the order intake has increased by 22 percent compared with 2020.

The order intake in segment RT (+49 percent compared to PY) was driven by the increasing demand in Cold Storage, Refrigeration and Data Center business and the regain of some of the lost market share from years before, especially in Asia Pacific. In segment PHE (+23 percent compared to PY) the rebound of the base business, as well as the extraordinary heat pump market expansion in the DACH region contributed to the strong order intake performance. The segment MCS (-6 percent vs. PY/ +7 percent adjusted for the shift of product lines to other segments, for further details please refer to chapter "6.2 Order Intake and order backlog") had challenges within NAFTA and lower OEM business. Segment TES order intake increased by 53% compared to the previous year, including the arbitration award for a legacy project of EUR 38.7 million mentioned above. Adjusted for the arbitration award the increase is +36 percent driven by strong Q3 & Q4 2021 where large Immersion Cooling and Crypto Currency orders in NAFTA and a large Oil & Gas order in Brazil were secured.

In contrast to the order intake, revenue has only increased in 2021 compared to previous year by 1.7 percent from EUR 916.3 million to EUR 931.7 million, which has resulted in an increase of the backlog for the Group by 24 percent from EUR 497.5 million to EUR 614.6 million. Whereas the 2021 revenue includes the arbitration award for the legacy project of EUR 38.7 million. In addition, it needs to be considered that "ENEXIO, Holding and Consolidation" contributed in the year 2020 a revenue of EUR 87.4 million while in 2021 revenue decreased to EUR 43.4 million, mainly due to the sale of ENEXIO Dry Cooling Heller business in December 2020, as well as the further Wind-down of the ENEXIO Dry Cooling ACC business. Consolidated revenue for the four Segments only - excluding the legacy project as well as ENEXIO - has increased by 2.5 percent. The lower level of sales compared with order intake was caused by two factors: Firstly, the COVID-19-related lower order intake in the second half of 2020 which was already anticipated in the planning calculations. In addition, supply chain disruptions in combination with the release of pent-up demand for goods have led to strong price increases and shortages in materials and purchased products required for manufacturing. The combination of low material availability caused by reduced production capacities of the Group's suppliers and supply chain disruptions as well as rapidly increasing prices for purchased goods and services have damped the segment's profitable sales growth in 2021, especially of the segments RT, PHE and MCS which are mostly active in the product business. Biggest challenges being in RT, where fan lead times went up from around 7 to 70 weeks. Despite the development of technical alternatives to mitigate the negative effects, delays in revenue recognition were unavoidable. During the year several global pricing initiatives were implemented to compensate for commodity price increases, however, the exceptionally strong and rapid increase in purchase prices and the unavoidable time lags in translating these into higher selling prices, put pressure on the nEBITDA performance of Kelvion. The Engineered to Order business, where mainly the Business Unit TES is active in, was impacted less, as commodity prices are here considered on case-by-case basis.

Overall, the course of the Group's 2021 business trends between base case and low case scenario. While the 2021 order intake has exceeded the expectations, the described material price increases and low material availability have delayed the revenue and profitability growth.

6. Results of operations, financial position and net assets

6.1 Results of operations

Subsequently, only continuing operations will be described, except explicitly stated otherwise.

6.2 Order intake and order backlog

6.2.1 Order intake and order backlog of the Mangrove Group

The table below sets out the order intake and order backlog for the year 2021:

Order Intake

(EUR million)	2021	2020
RT	280.4	188.8
MCS	158.4	169.0
PHE	249.9	202.5
TES	364.7	239.0
ENEXIO, Holding and consolidation	45.9	67.4
Group Total	1,099.3	866.7

Order Backlog

(EUR million)	2021	2020
RT	110.9	70.8
MCS	72.8	57.7
PHE	119.4	111.7
Kelvion TES	301.3	223.3
ENEXIO, Holding and consolidation	10.2	34.0
Group Total	614.6	497.5

Please note that the order intake for 2021 of Segment TES includes order intake related to a legacy project that was settled in 2021 of EUR 38.7 million which cannot be considered as recurring order intake.

6.2.2 Order intake and order backlog of the segment RT

Order intake of segment RT has increased from EUR 188.8 million in 2020 by EUR 91.6 million to EUR 280.4 million in 2021. This is an increase by +49 percent (+41 percent adjusted for the reallocation of product line Coils with a volume of EUR 13.8 million from MCS to RT). Order intake of this segment is 30 percent higher than in pre-COVID year 2019. All of RT's four major regions, Western Europe, Asia Pacific, North America, and Eastern Europe have contributed to the growth.

The strong business expansion has been mainly driven by RT's dominating customer industry HVAC & Refrigeration, which has contributed 85 percent of the annual growth in 2021, which is proportionate to this industry's business share in RT. This industry includes mainly cooling applications for cold storage, refrigeration as well as data center. The COVID-19-pandemic has driven the demand for frozen food and online grocery shopping as well as for climate-controlled environments, e.g., for medical and pharmaceutical applications, which has resulted in increasing orders for cold storage and refrigeration technology. The growth was also driven by the global data center business, including large orders exceeding EUR 1 million of close to EUR 40 million, and the regain of market shares in new equipment business, especially in Asia Pacific.

Also, RT's second and third largest industries, Power (+21 percent) and especially Other Industries (+107 percent), showed a high order intake growth in 2021.

Based on the high order intake and a lagging increase of revenue (as explained in the revenue section below) the order backlog of RT has increased from EUR 70.8 million at the end of 2020 to EUR 110,9 million (+57 percent) at the end of 2021.

6.2.3 Order intake and order backlog of the segment MCS

Order intake of segment MCS has declined in 2021 compared to the year before from EUR 169.0 million by EUR 10.6 million to EUR 158.4 million (-6 percent). Adjusted for the reallocation of two product lines which were assigned in 2021 to RT and TES the increase is +7 percent, i.e., product line Coils was assigned to RT (order intake in 2021 of EUR 13.8 million) and product line CTI to TES (order intake in 2021 of EUR 8.5 million).

MCS is mainly focused on the industries Power, Marine and Other Industries. From a regional perspective Western Europe, Asia Pacific as well as North America are MCS's largest sales markets.

After MCS' Marine business had suffered in 2020 from reduced maritime trade and shipbuilding activity related to the global pandemic, the demand especially from the largest markets in Asia Pacific and Western Europe rebounded in 2021 (+39 percent). The overall order intake in the industry Power was relatively stable in 2021 (-3 percent), as the lower order intake from the classical fossil Power industry was almost compensated by other activities, like the increasing transformer cooler business, e.g., in connection with high voltage transmission lines.

Despite the reallocation of two product lines to other segments, MCS' order backlog has increased by +26 percent from the corona related relatively low level at the end of 2020 of EUR 57.7 million to EUR 72.8 million at year end 2021. This is mainly due to revenue lagging behind order intake, as also explained in the following revenue section.

6.2.4 Order intake and order backlog of the segment PHE

Order intake of segment PHE has increased in 2021 compared to previous year by EUR 47.4 million (+23 percent) to EUR 249.9 million. PHE's product range of heat exchangers are used in various applications which makes it the only segment that has notable revenue in all of Mangrove's seven major industries. Based on the high level of diversification, PHE's increase in order intake was broad based, with all industries, except Oil & Gas, and five out of seven regions exceeding previous year's level. The low order intake from the Oil & Gas industry (-48 percent) in 2020 and for much of 2021, is reflecting the covid related low oil price during these years.

The biggest absolute growth is coming from PHE's largest industry, HVAC & Refrigeration (+51 percent), and specifically from the brazed plate heat exchangers which participate in the booming market for heat pumps in Western Europe and especially Germany. The second highest absolute increase was achieved in Other Industries (+90 percent), which includes for PHE clients from the cement and paper industry as well as wastewater, and biofuel plants. The largest order for PHE in 2021 was for heat exchangers for a cement plant in Italy.

6.2.5 Order intake and order backlog of the segment TES

Order intake of segment TES has increased in 2021 compared to previous year by EUR 125.7 million to EUR 364.7 million, which is an increase of 53 percent or, adjusted for the reallocation of product line CTI from MCS to TES with a volume of EUR 8.5 million, an increase of 49 percent. Excluding the arbitration award for a legacy Power project in South Africa of EUR 38.7 million the order intake was EUR 326.0 million and has increased by 36 percent (+33 percent adjusted for the reallocated product line).

Segment TES' order intake was characterized in 2021 by the absence of major large project orders in the first half of the year whereas several large orders could be won in the second half, mainly from high-tech customers rather than traditional Oil & Gas customers. In Q3 two large orders from crypto mining customers in North America with a total volume of EUR 32 million have been booked. In Q4 the first large Oil & Gas order of around EUR 22 million was received for a FPSO (floating production storage and offloading unit) in South America. In the same quarter a client placed a large data center order.

In line with TES' strategy to reduce the exposure to Oil & Gas business, the order intake share of this industry has been reduced from 59 percent in 2020 to 32 percent in 2021 (excluding the non-recurring arbitration award mentioned above). This has been achieved by the successful launch of the data center and crypto mining business, which is included in HVAC & Refrigeration (+907 percent), as well as the expansion of the other industries. Also, TES has been selective in contracting new Oil & Gas project orders, because the first projects that came to the markets during 2021 because of increasing oil prices, had low margin levels. The order intake in TES' second largest industry Other Industries (+58 percent) included three large orders exceeding EUR 1 million, with an order from the Scandinavian pulp & paper industry being the largest single order for this industry. Power (+85 percent, adjusted for the non-recurring arbitration award) was driven by 14 large orders, mainly from South Africa, North America, as well as Middle East and Chemicals (+46 percent) by 10 large orders from Eastern Europe, Asia Pacific and North America.

Based on the high order intake growth in the second half of 2021 the order backlog at the end of 2021 has reached a level of EUR 301.3 million (+35 percent, compared with year end 2020) which provides good visibility.

6.3 Revenue

6.3.1 Revenue of the Mangrove Group

The table below sets out the revenue for the year 2021:

Revenue

(EUR million)	2021	2020
RT	242.5	187.4
MCS	142.9	175.0
PHE	208.5	188.8
TES	294.4	277.7
ENEXIO, Holding and consolidation	43.4	87.4
Group Total	931.7	916.3

Please note that the revenue for 2021 of Segment TES includes revenue related to a legacy project that was settled in 2021 of EUR 38.7 million which cannot be considered as recurring revenue.

6.3.2 Revenue of the segment RT

Revenue of segment RT has increased from EUR 187.4 million in 2020 by EUR 55.1 million (+29 percent) to EUR 242.5 million in 2021. Adjusted for the reallocation of product line Coils with a volume of EUR 12.5 million from MCS to RT in 2021, the revenue of RT grew by 23 percent. Even though the revenue expansion was hampered by the low material availability, RT has started in 2021 to benefit from the strong order intake increase and without the challenges from availability of material could have reported even higher revenue.

Traditionally over 50 percent of RT's revenue is generated in Western Europe. This region grew in 2021 by +10 percent, while North America, Asia Pacific as well as Eastern Europe showed over-proportional increases reflecting RT's strategy to expand the data center business (main growth driver for North America) as well as to regain market shares (especially in Asia Pacific), as already mentioned in connection with the order intake increase.

The by far biggest contribution to the increase comes from the HVAC & Refrigeration industry (+30 percent), which is, with a revenue share of over 80 percent, at the same time the core industry for this Segment. RT's revenue in HVAC & Refrigeration was driven by the regions North America, Asia Pacific, as well as Eastern Europe. The high order backlog of this industry is - despite the ongoing challenges in material availability and component lead times - expected to drive RT's revenue going forward. The second highest contributor to the revenue increase after HVAC & Refrigeration was Other Industries (+174 percent) which slightly exceeded in 2021 the Power Industry, where the revenue declined compared to 2020 (-8 percent).

6.3.3 Revenue of the segment MCS

Revenue of segment MCS has declined in 2021 compared to previous year from EUR 175.0 million by EUR 32.1 million (-18 percent) to EUR 142.9 million. Adjusted for the reallocation of two product lines which were assigned in 2021 to RT and TES the decline is -7 percent, i.e., product line Coils was assigned to RT (revenue in 2021 of EUR 12.5 million) and product line CTI to TES (revenue in 2021 of EUR 6.9 million).

The industries with the highest revenue, Power, Marine and Other Industries covered in the year 2021 95% of the total revenue of this segment. From a regional perspective Western Europe, Asia Pacific as well as North America are MCS's largest sales markets.

For MCS both New Equipment as well as Service closed below PY level. New Equipment was impacted by lower charge air cooler business suffering from corona related low order intake from OEM customers since Q2 2020, but which has picked up during 2021. The New Equipment business with closed circuit coolers suffered in 2021 from low order backlog levels at the end of the first corona year 2020.

Looking at MCS' core industries the highest percentage revenue decline was in Other Industries, followed by Power and Marine, which was impacted less.

6.3.4 Revenue of the segment PHE

Revenue of segment PHE has increased in 2021 compared to previous year by EUR 19.7 million (+10 percent) to EUR 208.5 million. However, also in this segment revenue growth was held back by bottlenecks in material availability and external transport capacities.

The sales markets for PHE and RT in terms of industries and regions show some similarities. For both segments HVAC & Refrigeration is the largest sales market and both segments generate about 50 percent of their revenue in Western Europe.

The year-on-year growth of PHE in 2021 was driven mainly by Other Industries, HVAC & Refrigeration as well as Power, and included the realization of a large WPHE (welded plate heat exchanger) as well as Rekuluvo orders (a highly efficient recuperative air pre-heater). For segment PHE five out of seven regions reported revenue increases, Western Europe and Asia Pacific being the biggest growth drivers.

6.3.5 Revenue of the segment TES

Revenue of segment TES has increased in 2021 compared to previous year by EUR 16.7 million (+6 percent) to EUR 294.4 million. Adjusted for the reallocation of product line CTI with a volume of EUR 6.9 million from MCS to TES in 2021 the revenue of TES grew by 4 percent. Excluding the arbitration award for a legacy Power project in South Africa of EUR 38.7 million, the revenue has declined by -8 percent (-10 percent adjusted for reallocation of the product line).

This decline mirrors the low order intake throughout the second half of 2020 and first half of 2021 and especially the lower Oil & Gas revenue (-29 percent), which was to some extent compensated by HVAC & Refrigeration as well as Other Industries. From a regional perspective, the highest negative deviations come from Eastern Europe and Middle East, based on declining activity in backlog projects and the low level of new orders.

However, strong order intake in the second half of FY 2021 and corresponding high backlog will be the basis for a strong increase in revenue in FY 2022.

6.4. Consolidated Statement of profit and loss of the Mangrove Group FY 2021

(EUR million)	January 1, 2021 - December 31, 2021	January 1, 2020 - December 31, 2020
Revenue	931.7	916.3
Cost of sales	-749.0	-737.0
Gross profit	182.7	179.3
Selling expenses	-78.7	-88.1
Research and development expenses	-12.1	-12.3
General and administrative expenses	-80.1	-91.6
Other income	45.5	27.5
Other expenses	-26.1	-24.4
Share of profit (+) or loss (-) of equity-accounted investments	-	-
Other financial income	-	-
Other financial expenses	-1.2	-0.7
Earnings before interest and tax (EBIT)	30.0	-10.4
Interest income	6.6	0.4
Interest expenses	-58.3	-53.6
EBT	-21.7	-63.6
Income taxes (income + / expenses -)	-18.9	-2.0
Loss after tax from continuing operations	-40.6	-65.6
Profit or loss after tax from discontinued operations	-	4.5
of which is attributable to owners of the company	-40.6	-61.2
Profit or loss for the period	-40.4	-61.1
of which is attributable to non-controlling interests	-0.2	0.1

Overall, FY 2021 was a challenging year in terms of profitability. As explained in earlier chapters Order Intake reached record levels whereas revenue lagged behind due to constraints in the availability of material, shortage in labor in some countries as a result of the global COVID pandemic. Revenue increased compared to previous year by only 1.7 percent from EUR 916.3 million to EUR 931.7 million (including the arbitration award for the settlement of a legacy project of EUR 38.7 million). Based on the slightly higher revenue and the same Gross Margin level in 2021 compared to 2020 of 19.6 percent the Group realized a EUR 3.4 million (1.9 percent) higher Gross Profit. The execution of contingency measures, various other cost saving and efficiency initiatives undertaken since FY 2020 and continued throughout FY 2021 has resulted in lower selling and general and administrative expenses. After the negative EBIT of EUR -10.4 million in FY 2020 which was burdened by high extraordinary cost mainly from the various restructuring initiatives undertaken, as well as the amortization of acquired tangible and intangible assets ("PPA amortization") of EUR 19.4 million, the reported EBIT in FY 2021 is at EUR 30.0 million.

When excluding special items, as further described in the following chapter "6.5 Reconciliation EBIT to EBITDA and normalized EBITDA", the Group was able to deliver a normalized EBITDA of EUR 64.8 million per the management view while making its way through a challenging FY 2021 as described earlier.

Gross profit totaled EUR 182.7 million (FY 2020: EUR 179.3 million). While Kelvion had a gross profit amount of EUR 156.6 million (FY 2020: EUR 156.0 million), ENEXIO had a gross profit of EUR 28.6 million (FY 2020: EUR 25.0 million), whereas EUR -2.5 million gross profit (FY 2020: EUR -1.8 million) relate to consolidation. The gross margin of the Mangrove Group in relation of revenue remained stable at 19.6 percent (FY 2020: 19.6 percent). In Kelvion the percentage of gross margin in relation to revenue was 17.6 percent (FY 2020: 18.8 percent) and in ENEXIO it was 64.1 percent (FY 2020: 27.9 percent). The high gross margin in ENEXIO primarily results from project related risk and warranty provisions that could be reversed due to final execution of such projects in the ACC division and therefore will not be repeatable.

The decrease in Kelvion's Gross Margin by 1.2%-pts is due to the fact that previous FY 2020 as well as current FY 2021 are impacted by (1) one-off cost associated with the site reorganization and programs to improve the gross margin that were undertaken in FY 2020 and FY 2021 as well as (2) FY 2020 was impacted by cost of the temporary shut-down of the India plant (~EUR 6.0 million) and other COVID induced losses of ~EUR 1.8 million. Without these costs of one-off nature, the gross margin in FY 2021 in segment Kelvion would have been 19.3 percent after 19.8 percent in 2020. This 0.5%-pts. decrease in gross margin, albeit slightly improved revenue, primarily is driven by strong increases in material prices which could not fully be compensated by (1) price increases to customers which had not come into full effect in 2021 as well as (2) cost reductions from the various contingency, other cost reduction and efficiency measures that were undertaken by management since the outbreak of the COVID-19 pandemic since early 2020 and continued in 2021. Positive impacts on Gross Profit/Gross Margin from the settlement of various legacy projects in FY 2021 were broadly in line with FY 20202 and therefore did not impact Gross Margin in the year over year comparison (FY 2021: ~6.0 million, FY 2020: ~6.6 million).

The total of Selling expenses, Research and development expenses and General and administrative expenses as percentage of revenue ("SG&A-ratio") is 18.3 percent in FY 2021 and 21.0 percent in PY. The material improvement of the SG&A-ratio is driven by high one-off cost in FY 2021 of 17.2 million and in FY 2020 of 28.9 million in FY 2020 which inflated the SG&A spend significantly. Furthermore, revenue slightly increased over prior year which also helped to improve the percentage. Also, SG&A excluding one-off expense in absolute terms reduced against PY mirroring the various efficiency and restructuring measures undertaken in prior years that offset higher SG&A from wage inflation and increased revenue volume of Kelvion.

Other income and expenses: Other income totals up to EUR 45.5 million in 2021 (FY 2020: EUR 27.5 million) which is to a large extent driven by the reversal of provisions related to the purchase price allocation of 18.5 million (FY 2020: 3.0 million) mainly from the re-assessment of provisions relating to the wind-down of the ACC business of ENEXIO. Furthermore, Income from the reversal of bad debt provisions of 6.9 million (FY 2020: EUR 1.9 million) contributed to the significant increase in Other income whereas gains from exchange rate differences (EUR 9.0 million) (FY 2020: EUR 14.2 million) were lower compared to the previous financial year. Other expenses amount to EUR 26.1 million in 2021 (FY 2020: EUR 24.4 million) mainly resulting from losses from exchange rate difference of 7.2 EUR million (FY 2020: EUR 14.9 million) which decreased broadly in line with gains from exchange rate differences, impairment of tangible assets due to reorganization of EUR 3.1 million) (FY 2020: EUR 3.9 million) and bad debt provisions of EUR 6.8 million) (FY 2020: EUR 1.3 million). Overall, the balance of Other Income/Other expenses increased to a gain of 19.4 million (FY 2020: gain of 3.1 million) mainly due to the reversal of provisions as explained above.

Interest income and expenses: Interest income total up to EUR 6.6 million in 2021 (FY 2020: EUR 0.4 million). This consists of interest income from loans & receivables (EUR 6,5 million) (FY 2020: EUR 0.2 million, other interest income (EUR 0.1 million) (FY 2020: EUR 0.1 million). The significant increase in interest income is a result of arbitration award of Kelvion's Medupi project and will therefore not be repeatable. Interest expenses are EUR 58.3 million in FY 2021 (FY 2020: EUR 53.6 million), mainly consisting of interest expenses (including the release of capitalized financing cost) relating to the Senior secured Notes amounting to EUR 33.6 million (FY 2020: EUR 31.3 million), interest on PECS of 11.4 million (FY 0.0 million), interest expenses on liabilities to banks mainly for the usage of the SGF of 7.0 million (FY 2020: EUR 7.7 million), and other interest expenses amounting to EUR 0.8 million (FY 2020: EUR 9.0 million). The increase of around EUR 2.3 million in interest expenses relating to the Senior Secured Notes primarily stem from higher interest due to the deferral of the December 2021 interest payment as the Group exercised its PIK option and accrued the interest (at higher interest rate) in order to protect its liquidity position.

Income taxes total up to EUR 18.9 million tax expenses (FY 2020: EUR 2.0 million - tax expense). Despite negative earnings before tax (EBT), the Group has incurred current tax expenses of minus EUR 12.6 million and a net deferred tax expense of minus EUR 6.3 million (FY 2020: EUR 2.1 million, thereof current tax expenses EUR 4.9 million and a net deferred tax income of EUR 2.8 million). Current taxes mainly relate to the positive EBT in several legal entities that cannot be offset with losses in other jurisdictions. Furthermore, not all the interest expense of the Group can be offset with local EBT, e.g., in Germany with its interest limitation rules.

Overall, the profitability of the Group is still behind the expectations of management. However, the Group realized a satisfying profitability when considering the challenging market environment in FY 2021 and excluding the extraordinary expenses mainly for restructuring and similar expenses (for details please refer to the following chapter "6.5 Reconciliation EBIT to EBITDA and normalized EBITDA") and the PPA amortization of the current financial year.

6.5 Reconciliation EBIT to EBITDA and normalized EBITDA

(EUR million)	2021	2020
EBIT	30.0	-10.4
Depreciation and Amortization	59.4	64.0
EBITDA	89.4	53.6
Normalizations	-24.6	13.3
Adjusted normalized EBITDA, management view	64.8	69.9
Adjusted normalized EBITDA Margin, management view in % of revenue	7.0	7.3
Normalizations	-2.3	0.1
Adjusted normalized EBITDA, covenant view	62.6	67.0
Adjusted normalized EBITDA Margin, covenant view in % of revenue	6.7	7.3

The normalizations of the Mangrove Group and main category of adjustments are summarized in the following table:

(EUR million)	Group total
2021
EBITDA	89.4
Overhead restructuring program (baselining)	1.0
Site reorganization & production FTE adjustment	3.9
EBITDA after exceptional Items	94.3
Reorganization and Restructuring	4.9
Consulting expenses	5.9
Medupi	-19.7
TESCO	5.7
Wind Down Enexio DCS	-17.7
Sales ENEXIO WT/ ENEXIO SE	1.7
Other normalizations, net	4.1
Effect from IFRS 16	-14.5
Adjusted normalized EBITDA, management view	64.8
FX	-1.9
Other normalizations, net	-0.4
Adjusted normalized EBITDA, covenant view	62.6

(EUR million)	Group total
2020
EBITDA	53.6
COVID-19 included losses, net	7.5
Overhead restructuring program (baselining)	11.4
Site reorganization & production FTE adjustment	7.9
EBITDA after exceptional Items	80.4
Reorganization and Restructuring	1.8
Consulting expenses	7.1
Losses from disposal of DC Heller business	2.3
Consulting expenses in course of disposal DC Heller	1.5
First cons. effect Saudi-Arabia	0.6
Other normalizations, net	-10.8
Effect from IFRS 16	-16.0
Adjusted normalized EBITDA, management view	66.9
FX	0.2
Other normalizations, net	-0.1
Adjusted normalized EBITDA, covenant view	67.0

The lines Overhead restructuring program (baselining) and Site reorganization & production FTE adjustment mainly relates to severance cost associated with the overhead restructuring program as well as the site reorganization program of Kelvion Group that are described in more detail in chapter "2.3.2 Kelvion - "High Five" "H5" Strategy". Reorganization and Restructuring represent further restructuring and reorganization measures of the Kelvion Group not included in the aforementioned program. Consulting expenses primarily stem from the various efficiency and other improvement programs run by Kelvion Group, cost following the refinancing in 2019 as well as cost of the reset of the financial covenants of the Group in December 2019. Wind Down Enexio DCS and Medupi relates mainly to positive PPA effects and Medupi related income. The line TESCO comprise cost related to the carve out of a business unit in favor of increasing flexibility for potential exit scenarios.

6.6 Employees ^* by Business Unit

	12/31/2021	12/31/2020
RT	1,237	1,199
MCS	721	735
TES	1,181	1,377
PHE	818	770
Global Sales and Holding	754	899
ENEXIO	118	198
Group Total	4,829	5,178

^* Full-time equivalents (FTE) excluding vocational trainees and inactive employment contracts

The total number of employees for Mangrove Group as of December 31, 2021 amounted to 4,829 full-time equivalents (FTE) compared to 5,178 FTE as of December 31, 2020.

Business Unit RT

Western Europe is with 543 FTE (2020: 545 FTE) the region with the highest number of employees. Most of them are employed in Great Britain, followed by the Netherlands and France.

In Eastern Europe the majority of the 473 FTE (2020: 454 FTE) are working for Kelvion in Poland and the Czech Republic.

The region Asia/Pacific has a total of 135 FTE (2020: 139) all employed at Kelvion in China.

In the region North and Latin America, the total number of employees relates with 86 FTE (2020: 62 FTE) fully to the USA.

Business Unit MCS

In Business Unit MSC, Western Europe is with 307 FTE (2020: 307 FTE) the region with the highest number of employees as well. Most of them are employed in Germany and in the Netherlands.

The Asia/Pacific region has a total of 283 FTE (2020: 285 FTE) mainly employed in China and India.

In North and Latin America, the majority of the 131 FTE (2020:142 FTE) is employed in the USA, followed by Brazil.

Business Unit TES

Highest number of employees in Business Unit TES are also working in the Western Europe region. The total number equals 324 FTE (2020: 446 FTE) most of them employed in France, followed by the Netherlands, Germany and Spain.

In Eastern Europe the majority of the 247 FTE (2020: 241 FTE) is employed in Poland.

Employees working for Kelvion in China and India result in a total of 253 FTE (2020:298 FTE) in the Asia/Pacific Region for Business Unit TES

In the region North and Latin America, the total number of employees relates with 216 FTE (2020: 222 FTE) to North America and with 76 FTE (2020: 107) to Brazil.

The regions of Middle East and Africa have a total of 66 FTE (2020: 64 FTE) primarily consisting of service facilities in South Africa and Qatar.

Business Unit PHE

The majority of employees working in Business Unit PHE are working in the Western Europe region (623 FTE, 2020: 568 FTE). Most of them are employed in Germany.

The Asia/Pacific region has a total of 106 FTE (2020:107 FTE) with branches in India, China and Saudi Arabia.

The total number of employees in North and Latin America relates with 51 FTE (2020: 51 FTE) to the USA and with 18 FTE (2020: 24 FTE) to Brazil.

Global Sales and Holding

The Business Unit ENEXIO, Global Sales and Holding has a total of 872 FTE (2020:1098 FTE). 607 FTE relate to the Global Sales Business, 147 FTE to the Holding Business and 118 FTE to the ENEXIO Business.

Global Sales

The majority of the Global Sales Business employees are working in Western Europe (212 FTE, 2020: 221 FTE). Most of them are employed in Germany, followed France, Italy and Sweden.

123 FTE (2020:123 FTE) are working for Kelvion in the Eastern Europe region, primarily in Russia and Poland.

The 180 FTE (2020:195 FTE) in Asia/Pacific are related to branches in India, China and Singapore.

Another 87 FTE (2020: 88 FTE) working in the Global Sales Business are employed in the regions of North and Latin America & the Middle East.

Holding

All 147 FTE (2020: 148 FTE) working for Kelvion in the Holding Business are employed in Western Europe. Nearly all of them are employed in Germany, followed by few employed in the Netherlands, Great Britain and France.

ENEXIO

118 FTE (2020: 198 FTE) are working for the ENEXIO Business, primarily in Germany, Western Europe. The Region Asia/Pacific relates with 15 FTE (2020: 85 FTE) to the ENEXIO Business.

6.7 Financial position and net assets

Capital structure

The Group's equity as of December 31, 2021 decreased, as compared to December 31, 2020 from negative EUR 67.4 million to a negative EUR 101.0 million. The decrease was primarily due to the loss generated in the fiscal year 2021 amounting to EUR 40.6 million (2020: EUR 61.1 million). The other comprehensive income has increased in 2021 by EUR 8.9 million (2020: decrease by EUR 7.8 million). The movement of other comprehensive income comprises unrealized actuarial gains of EUR 2.6 million (2020: negative EUR 1.9 million) net of deferred taxes on pension plans and income from foreign currency translations of EUR 6.0 million (2020: negative EUR 5.9 million). The non-controlling interests decreased by EUR 1.4 million to EUR 0.7 million. Tracking preferred equity certificates ("TPECs") increased to EUR 147.9 million (2020: EUR 136.5 million), including an interest of 11.4 million.

When assessing the equity ratio of the Group (2021: -10.5 percent of total assets; 2020: -6.7 percent of total assets) as of December 31, 2021 the tracking preferred equity certificates ("TPECs") of EUR 147.9 million (2020: EUR 136.5 million) need to be taken into account (see further details to the equity structure chapter "6.1 Equity" in the Notes). Including the TPECs, the equity ratio of the Group as of December 31, 2020 was a sufficient 5.0 percent of total assets (2020: 6.9 percent of total assets).

Non-current assets

Non-current assets amount to EUR 465.0 million and decreased by EUR 63.7 million compared to the previous year.

The decrease of non-current assets is mainly due to the reduction of other non-current financial assets compared to previous year by EUR 34.8 million to EUR 0.3 million at year end 2021. The reason for the decline is the disposal of the re-imbursement right with a value of EUR 34.5 million in connection with the settlement of a legacy project. Besides, other intangible assets which include acquired intangible assets such as brands, customer bases as well as acquired technology have declined by EUR 16.0 million mainly driven by its (PPA-) amortization. Conceptionally the decrease of acquired intangible assets cannot be offset by additions from reinvestments in these assets. Also deferred tax assets have declined compared to previous year by EUR 15.1 million. Capital expenditure (additions of EUR 24.1 million in the year 2021) exceed depreciation, impairments and disposals in property, plant and equipment, resulting in an increase of EUR 3.8 million to EUR 149.3 million in this position.

Current assets and liabilities

Current assets represent 50.1 percent (2020: 45.6 percent) of total assets. Total current assets as of the reporting date increased compared to previous year by EUR 19.0 million to EUR 475.9 million. Major fluctuations in current assets relate to inventories, trade receivables and contract assets (more details are set out in the following chapter "Trade working capital") which increased by EUR 37.9 million, as well as cash and cash equivalents, which decreased by EUR 19.3 million to EUR 72.0 million (more details are set out in the following chapter "6.8 Cash Flow Statement of continuing operations").

Total current liabilities increased by EUR 58.4 million to EUR 404.0 million, mainly driven by an increase in trade payables by EUR 20.0 million (more details are set out in the following chapter "Trade working capital"), in current financial liabilities by EUR 16.9 million (mainly due to an increase of accrued interest for the bonds of EUR 15.6 million) and current bank loans by EUR 17.0 million. These increases are partially offset by a decrease of current provisions by EUR 19.3 million, caused to a larger extent by the utilization of a provision for a dispute with a customer of EUR 13.6 million, as well as lower provisions for guarantees and warranties (minus EUR 5.4 million). Due to the execution of the overhead cost reduction program mentioned before, the current employee benefit obligation decreased by EUR 9.4 million to EUR 26.8 million. In particular the provision for redundancy plans and severance payments decreased by EUR 9.8 million.

Non-current liabilities

Non-current provisions decreased by EUR 71.4 million from EUR 98.7 million to EUR 27.3 million at end of 2021. The reduction results mainly from the reversal of the provision for a legacy project (minus EUR 49.3 million) and a lower ENEXIO wind-down provision (minus EUR 17.7 million).

Capital expenditures

The capital expenditures amount to EUR 33.2 million in the year 2021 (2020: EUR 21.5 million). The majority of the capital expenditure relates to investments in internationalization and growth (EUR 16.4 million; 2020: EUR 9.3 million), investments in new products (EUR 7.6 million; 2020: EUR 2.2 million), replacements of equipment and machinery (EUR 5.8 million; 2020: EUR 6.1 million) and rationalization through new technical equipment (EUR 2.1 million; 2020: EUR 2.6 million).

The biggest portion of the capital expenditures was spent for projects in Western Europe (EUR 20.0 million; 2020: EUR 13.8 million), followed by Asia-Pacific (EUR 5.3 million; 2020: EUR 3.5 million), North America (EUR 4.4 million; 2020: EUR 2.1 million) and Eastern Europe & Commonwealth of Independent States (CIS) (EUR 3.2 million; 2020: EUR 1.7 million. In terms of capital expenditures by segment the largest spend was in Segment PHE (EUR 10.5 million; 2020: EUR 4.1 million), followed by the Segments TES (EUR 5.4 million; 2020: EUR 2.4 million), RT (EUR 4.5 million; 2020: EUR 4.0 million) and MCS (EUR 2.8 million; 2020: EUR 3.1 million). The capital expenditure for ENEXIO, Holding and consolidation of EUR 10.0 million in the year 2021 (2020: EUR 7.4 million) included mainly capital expenditures in connection with the High 5 Strategic Initiative "Less Complexity - More Digital Processes" and included software projects like the centrally organized Configuration and Calculation Software (CCS)-project, to ensure an efficient offer and order process.

Trade working capital

Group Total (EUR million)	2021	2020
Inventories	167.7	116.2
Trade receivables	160.6	136.1
Contract assets	25.6	63.7
Total assets	353.9	316.0
Accounts payables	152.4	132.4
Advanced payments	85.7	52.8
Total liabilities	238.1	185.2
Trade Working Capital	115.8	130.8

2021 (EUR million)	RT	MCS	TES	PHE	ENEXIO, Holding and consolidation	Group total
Segment trade working capital	24.4	15.9	6.3	76.1	-6.9	115.8

2020 (EUR million)	RT	MCS	TES	PHE	ENEXIO, Holding and consolidation	Group total
Segment trade working capital	14.9	18.1	43.8	54.2	-0.2	130.8

The trade working capital for Mangrove Group has closed at year end 2021, compared to the level of the previous months of around EUR 140 - 150 million, on a low level of EUR 115.8 million, which is also EUR 15.0 million EUR below the EUR 130.8 million at year end 2020.

Major part of the trade working capital of Mangrove at year end 2021 relates to the component business driven segments PHE (EUR 76.1 million), RT (EUR 24.4 million) and MCS (EUR 15.9 million), whereas the trade working capital of the project business-oriented segment TES has been only EUR 6.3 million. The working capital of ENEXIO, Holding and consolidation was recorded at EUR -6.9 million. The biggest movements from year end 2020 to year end 2021 have been recorded at TES (reduction of EUR 37.5 million due to high advance payments on projects received), PHE (increase of EUR 21.9 million mainly from inventories due to increased activity as well as to counter material price increases) and RT (increase of EUR 9.5 million mainly due to higher activity), while MCS has been relatively stable (decrease of EUR 2.2 million). The working capital of ENEXIO, Holding and consolidation declined by 6.7 million, mainly due to the lower working capital level of ENEXIO who's activities were in 2021 in the continued process of being wound down or sold, as described before.

The increase in inventories (EUR 51.5 million) is partially driven by the higher activity during the year 2021 compared to the low revenue levels caused by COVID-19 in 2020. Inventories have been increased in the mainly in the segments RT and PHE to counter the challenges from low material availability as well as increasing commodity prices. On Group level, the described increase in inventories, as well as the higher trade receivables (EUR 24.5 million) is being partially offset by lower levels of contract assets (year on year decrease of EUR 38.1 million).

6.8 Cash Flow Statement of continuing operations

Overview of cash flow statement

(EUR million)	2021	2020
Cash flow from operating activities - continuing operations	30.1	58.9
Cash flow from investing activities - continuing operations	-29.5	-20.4
Cash flow from financing activities - continuing operations	-22.2	-50.9
Total cash flow attributable to discontinued operations	0.6	17,2
Effects of foreign exchange fluctuation	1.7	-3.2
Total Changes in unrestricted and restricted cash	-19.3	1.6
Cash and cash equivalents at beginning of period	91.3	89.7
Change in unrestricted cash and cash equivalents	-19.2	1.6
Change in restricted cash and cash equivalents	-0.1	-
Cash at the end of the period	72.0	91.3

Cash flow from operating activities - continuing operations - amounts to EUR 30.1 million in fiscal year 2021. This cash-flow is driven by an EBITDA of EUR 89.4 million and a EUR 15.0 million lower trade working capital. These positive impacts are partially offset by changes of provisions for litigation and claims (EUR - 15.5 million), for social plan and redundancy payments (EUR -9.8 million), for warranties (EUR -5.4 million), for the ENEXIO Wind-down (EUR -10.6 million), for provisions of defined benefit obligations (EUR -2.7 million) and non cash impacts of EUR -22.4 million mainly due to the settlement of a legacy project (EUR - 15.2 million). The Cash flow from operating activities - continuing operations of EUR 30.1 million has been mainly burdened by the cash outflow from the execution of the four cost reduction initiatives to achieve substantial improvements in the cost base of the Group, as explained in chapter "2.3.2 Kelvion - "High Five" "H5" Strategy", as well by the usage of a litigation provision due to a dispute resolution with a customer.

Cash flow from investing activities - continuing operations - increased from EUR -20.4 million in 2020 to EUR -29.5 million in 2021 which mirrors higher investment activity in FY 2021 following the substantial reductions in capital expenditures in FY 2020. The cash out in 2021 relates to the acquisition of property, plant and equipment as well as to intangible assets of EUR -33.2 million. The proceeds from the disposal of non-current assets and assets held for sale amount to EUR 3.7 million.

Cash flow from financing activities - continuing operations - decreased from EUR -50.9 million in 2020 to EUR -22.2 million. In the current year, the financing cash flow primarily consists of interest payments (EUR - 18.1 million, FY 2020: EUR 40.1 million), payments from finance lease (EUR -20.0 million, FY 2020: EUR 15.2 million), as well as proceeds from revolving credit facility (EUR 15.0 million, FY 2020: EUR 0 million). The lower interest payments relate to the deferral of the payment of interest on the Senior Secured Notes in December 2021 (EUR 14.2 million) and lower interest on the Senior Guarantee Facility.

Cash flow from operating activities - discontinuing operations - in the year 2020 of EUR 17.2 million relates to the Heller Business within the DCS business of the ENEXIO segment. The three Heller subsidiaries were sold with effective date December 31, 2020 and generated a cash-in flow amounting to EUR 17,2 million (net of cash and after related transaction costs).

6.9 Leverage ratio and financial performance key indicators, management of capital employed

Leverage ratio

More details on these agreements are included in Note 3. to the consolidated financial statements. These agreements define Total Net Debt, consolidated EBITDA and Leverage Ratio of the Group. Consolidated EBITDA as defined in both Agreements equals the consolidated EBITDA used for the Financial Covenant of the minimum EBITDA. Leverage Ratio is calculated by dividing Total Net Debt through consolidated EBITDA.

Management actively monitors the Leverage Ratio of the Group, which is an important financial key figure for Mangrove Group. The degree of the Leverage Ratio determines the margins under the RCF Agreement and Guarantee Agreement, respectively. According to the RCF Facility Agreement and the SGF Facility Agreement the margins as of December 31, 2021 amount to 4.25 percent (prior year: 4.25 percent) (RCF Facility Agreement) and 3.00 percent (prior year: 3.00 percent) (SGF Facility Agreement), respectively.

Financial key performance indicators

Order intake is analyzed on a weekly basis whereas Revenues are analyzed by region and customer industry on a monthly basis in order to identify emerging market trends as early as possible. To react quickly to the developments of the markets, the segments are required to provide regular forecasts for the year as whole for the key performance indicators revenue and (normalized) EBITDA. In addition, these reports include forecasts with respect to other performance indicators such as order intake and EBIT. Since March 2020 the Group monitors its Order intake as well as its sales funnel more frequently as one important early indicator when assessing the impacts from the corona crisis that was still ongoing at the date of this report. For more details, please refer to the following chapter "7. Report on outlook, risks and opportunities".

Management of capital employed

Acquisitions and expansion investments are assessed not only on the basis of key performance indicators showing potential returns, but also in terms of their importance for achieving the Group's strategic goals. The key economic criterion for evaluating rationalization and expansion investments is the net present value of future cash flows associated with these investments. The payback period (i.e., the time until the initial cash out from the investment has been recovered) is also calculated as an additional benchmark for assessing the risk arising from changing economic conditions.

Working capital is another key element of capital employed. Working capital management begins before an order is accepted with the payment terms that are offered or negotiated.

Project- and activity-based management

Compliance

Compliance - which is defined as measures to ensure adherence to legal, statutory, and internal requirements, as well as their observance by group companies - is a key management and supervisory task at Mangrove Group. For this purpose a compliance organization was implemented. It is headed by a Chief Compliance Officer, who reports in this function to the respective Management Boards as well as Shareholder Committees. Furthermore, Company Compliance Managers have been appointed for each operating company. A Compliance Committee is also maintained for both segments to advise the Chief Compliance Officer and to coordinate compliance related processes and measures across the Group. Mangrove Group's extensive compliance program is rounded off by classroom and web-based training sessions for the group employees.

7. Report on outlook, risks and opportunities

7.1 Forward-looking statements

This report includes forward-looking statements with respect to the Mangrove Group's financial condition, result of operations and business plan. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and the Mangrove Group's actual results of operations, financial condition and liquidity and the development of the industry in which it operates may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition, even if the Mangrove Group's results of operations, financial condition and liquidity, and the development of the industry in which it operates, are consistent with the forward- looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

Mangrove Group has implemented a continuous forecasting process that we believe facilitates the Group's ability to identify opportunities as they arise and react in a similar way to unexpected risks. The sections Risks and opportunities sets out the main risks and opportunities we believe the Mangrove Group is facing which are relevant to the performance of the Group.

7.2 Outlook for 2022

7.2.1. Sector specific outlook 2022 and beyond - positive outlook ^* on an attractive market growing at ~ 3 percent p.a. globally

^* Excluding (1) impacts from the COVID-pandemic mainly on the supply chain and (2) the Russian invasion

Mangrove Group's growth plans are founded on several major global trends:

1.	The continuous growth in the global population
2.	The growing middle class in developing countries
3.	The growing energy demands
4.	The increasing demand for eco-friendly, sustainable and energy-efficient products ("Greentech")
5.	The increasing demand for cooling of data centers ("Hightech")

According to the United Nations (UN) the world's population of 7.8 billion people in 2020 is rising currently by around 80 million people per year and is projected to increase to 9.7 billion in 2050 (see World Population Prospects: The 2019 Revision). Resulting from a growing population, the world is expected to recognize a continued trend towards urbanization, as already seen in past decades. Today, the most urbanized regions include Americas and Europe. According to UN studies, a continuing population growth and urbanization are projected to add 2.5 billion people to the world's urban population by 2050, with nearly 90 percent of the increase expected to be concentrated in Africa and Asia. That means that in the future, more energy will have to be produced to meet the growing energy demand. To make these energy needs affordable, efficient production-processes in various heat exchangers end-user markets are expected to be essential. Moreover, the further urbanization will in parallel likely lead to more and more people living and working in cities which require energy efficient buildings and infrastructure and enable growth for the heat exchanger solutions we provide for the Power sector.

All segments offer a positive post-COVID market outlook with the long-term average annual growth rate in underlying end-markets (refrigeration, power, HVAC, Oil&Gas etc.) expected around 3-4 percent, based on a market analysis from yearend 2020, after the individual markets recover from the pandemic. Apart from the Oil & Gas industry, which shows first signs of recovery due to increasing oil prices, all of Kelvion's endmarkets returned to pre-COVID levels in the second half of 2021. Kelvion's end-market expansion is broad based and includes industries with lower expected growth, like Oil & Gas, Power and Marine and industries with higher growth, including HVAC, Refrigeration and Food & Beverages. Much faster growth is anticipated for end markets like Hightech (e.g., data centers, block chain technology, edge computing etc.) and Greentech (e.g., Hydrogen, LNG and Carbon Capture Storage).

From a regional perspective, the growth in emerging markets and China is expected to be above Europe and NAFTA across end-markets. All Kelvion Business Units have a favorable market position: typically, among top 3-5 players, leading positions in their respective segments and end-customer markets (e.g., MCS overall, TES in AFCs). The overall market share is ~ 5 percent and leaves headroom for potential share (re-)gains based on a market analysis from yearend 2020.

ENEXIO's largest business unit Dry Cooling is being wound down after it had been operating in a challenging market for the last years. Furthermore the divisions Service Solutions and Water Technologies have been sold in 2021/early 2022. Therefore, no sector specific outlook of ENEXIO is provided here.

7.2.2 Global economic outlook 2022 -uncertain due to (1) the impacts from the COVID-19 virus and (2) the impacts from the Russian invasion into Ukraine

Financial budgets for FY 2022 and beyond are based on the October 2021 World Economic Outlook (WEO) from October 2021

The Group prepared its financial budget in the fourth quarter of FY 2021 and approved it mid-December 2021 as part of the update of its H5 Strategy in late 2020 as explained. This budget 2022 is based on the growth expectations according to the IMF World Economic Outlook (WEO) from October 2021 regarding the development of the global economy as well as estimates and expectations on the markets for heat exchange provided by a leading strategic consulting firm in 2020 and further external sources regarding outlook from the second half of 2021 on the development of key markets Mangrove is operating in. For details on the Macroeconomic environment and the IMF WEO from October 2021 to chapter 5.1 "Macroeconomic environment - The global economy in 2021". As described in more detail in chapter 2.3.2 "Kelvion - "High Five" "H5" Strategy" the planning years 2022 and 2023 had to be reduced against the original H5 plan from late 2020.

The World Economic Outlook (WEO) from October 2021 has materially reduced per the new WEOs from January 2022 and April 2022

The outlook 2022 of the Group at the date of this report is lower than the Budget 2022 and under frequent review as (1) the global economy entered a weaker position than previously expected (WEO, January 25, 2022) and (2) the war in Ukraine that has triggered a costly humanitarian crisis (WEO, April 19, 2022).

According to IMF's January 25, 2022 WEO the global economy entered 2022 into a weaker position as expected as countries have reimposed mobility restrictions against the spread of the Omnicron COVID-19 variant (e.g., China) and as rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated. Global growth is expected to moderate from 5.9 in 2021 to 4.4 percent in 2022 - half a percentage point lower for 2022 than in the October 2021 WEO.

On April 19, 2022 the IMF published a new WEO with further reduced growth expectations from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than in the January 2022 WEO. The outlook of the IMF has deteriorated, largely because of Russia's invasion of Ukraine-causing a tragic humanitarian crisis in Eastern Europe-and the sanctions aimed at pressuring Russia to end hostilities. The IMF explains that the crisis unfolds while the global economy was on a mending path but had not yet fully recovered from the COVID-19 pandemic. In addition to the war, frequent and wider-ranging lockdowns in China-including in key manufacturing hubs-have also slowed activity there and could cause new bottlenecks in global supply chains. This war adds to the series of supply shocks that have struck the global economy over the course of the pandemic, contributing to more shortages. Notably the IMF highlights the high uncertainty around the projections of this WEO given the unprecedented nature of the shock, t Per the IMF growth could slow significantly more while inflation would turn out higher than expected.

Further information on political and global economic risks is also provided in the section Risks and Opportunities.

Impacts on the Group already visible in April 2022

The Group's business, again, is under pressure due to external factors as described above. As explained earlier the Group has revised the H5 strategy in late 2021 and reduced the financial budgets for FY 22 and FY 23 primarily due to the challenges to the supply chain (availability, price). In the first four months of FY 22 the Group realized less Revenue than expected due to material shortages that struck some plants of the Group mainly in the segments RT and PHE, e.g., the lead times for fans increased from 7 weeks to 70 weeks with some suppliers. Furthermore, Gross Margin came under further pressure due to increasing material prices. The Group is increasing prices to customers frequently since the second half of FY 2021 but are coming into effect only with a time-lag. Since the invasion of Russia into Ukraine, a humanitarian tragedy, supply chain constraints have worsened.

Direct exposure to Russia is limited but the impacts on the global economy and consequently the business of the Group cannot be assessed reliably at the date of this report

In respect of the invasion of Russia into Ukraine Management is observing the situation very closely and diligently. A crisis management group has been implemented to collect information about sanctions against Russia and any resulting impact on the Group and to support decision making progresses in relation thereto. Given the fact that the situation is unfolding, management is unable to reliably assess the final potential impact of the conflict and the sanctions at this time based on the information currently available. The conflict and the sanctions might impact POC revenue, cash collections and nEBIT from existing backlog, mainly in the segment TES. The potential adverse impacts of the conflict and the sanctions on the global economy, which is also trying to recover from the COVID pandemic, as well as on the Group's Business Plan, cannot be reliably assessed at this point in time. In the financial year 2021, Russia accounted for around 4 percent (around EUR 35 million) of total Kelvion revenue and Ukraine and Belarus together accounted for less than 1 percent of total Kelvion revenue. Accordingly, management does not consider Kelvion's exposure to these regions to be material. In addition, the Group has occasional large contracts through European or Asian EPCs in Kelvion Thermal Solutions.

Currently there is one large Russian LNG project under execution with a French EPC contractor. The project was booked in 2019. The remaining POC revenue to be realized on this Russian LNG Project after December 31, 2021 is around EUR 7.4 million and the outstanding payments on invoices issued or to be issued after December 31, 2021 are approximately EUR 10.6 million at the date of this report (total of EUR 12 million since December 31, 2021 of which EUR 1.4 million were paid in April 2022). The contractor has verbally informed the Group about his intention to suspend the project effective July 1, 2022. The Group continues to monitor the situation and sanctions closely.

7.2.3 Outlook Revenue and Earnings 2022

Given the high uncertainty on the global economic outlook as described in the previous chapter the Group has developed three scenarios of an outlook on revenue and earnings for 2022.

Budget 2022 - the upper case

The Budget for 2022 foresees Revenue around 16% higher than in FY 2021 and an adjusted EBITDA in the range of EUR 80 million (excluding positive impacts from IFRS 16 of around EUR 16 million). The Group realized Order Intake ahead of expectations in FY 2021 and also the first quarter of FY 2022 Order Intake was higher than budget. That said, the Group is well prepared to achieve its top-line budget at the date of this report. However, the realization of revenue lagged due to material shortages, availability of labor and local shutdowns (e.g., in in China) in the first quarter of FY 22. Furthermore, profitability of the segments RT, MCS and PHE came under pressure as pass through of increasing commodity prices to the customers had not (yet) come into full effect.

Forecast 2022 - the base case

The Group has prepared a full year forecast for FY 2022 in April 2022. This forecast is based on the following core assumptions (1) revenue are expected to be around 3% lower compared to the budget to reflect supply shortages mainly in the segments RT, MCS and PHE, (2) a reduced Gross Margin (-1.5 percentage points vs. budget) reflecting the continuous pressures from increasing commodity prices and (3) has foreseen positive contributions from counter measures, (4) direct impact from ending its operations in Russia. Based on the knowledge at the date of this report adjusted EBITDA of the Group is expected to be ahead of prior year, i.e., the reaching levels ahead of EUR 70 million. Free cash flow is forecast to reduce in FY 22 as well, but the Group will have the necessary liquidity to maneuver through FY 22 and beyond.

Illustrative down-side scenario

Given the uncertainty on future development of the global economy the Group has analyzed an illustrative down-side scenario using the following assumptions when modeling the impacts. (1) Revenue ~9%/6% lower than budget/prior year, reflecting a down-turn in global demand from the crisis, (2) lower Gross Margin by 3.5/2.0 percentage points versus budget/prior year and (3) included positive impacts from the counter measures as described above. In this illustrative scenario adjusted EBITDA of the Group would drop into a range around EUR 55 million. Free cash flow in this illustrative down-side scenario would be lower compared to the forecast but the Group would still have sufficient liquidity to maneuver through FY 22 and beyond and would adhere to its Minimum Liquidity Covenant also in this illustrative down-side scenario. For more details on financial covenant compliance please refer to chapter 7.6 "Risk reporting to use of financial instruments/Liquidity risk".

Outlook 2022 - base case confirmed by current performance - upper case possible

The outlook for 2022 is the base case, i.e., the most recent full year forecast as describe above. However, the Group is striving to close on budget (upper case). Given strong order intake in the first quarter of FY 22, high backlog and countermeasures being implemented the Group can reach budget should the constraints from the global supply chain moderate by mid of FY 2022.

Please note, that the headroom to the financial covenants of the Group already is low under the budget and based on the forecast there is a likelihood to not meet two out of three covenants, i.e., the Minimum EBITDA covenant and the Total Net Leverage Covenant whereas the third covenant, i.e. the Minimum Liquidity Covenant would be complied with even in the illustrative down-side scenario as set out above. Further details on Financial Covenant adherence are set out in chapter 7.6 "Risk reporting to use of financial instruments/Liquidity risk".

7.3 Risk report

7.3.1 Risk management system

The specific requirements of Kelvion's and ENEXIO's project businesses are addressed by risk boards at the level of the respective shareholder committees. Before a binding quotation is submitted or an agreement is signed, the commercial and contractual terms of potential orders are examined in detail by specialists from various departments so that risks that cannot be managed are avoided. The risk management system therefore already comes into play before risks arise, in the form of a critical examination of the opportunity and risk profile of quotations. No agreement may be signed if the profile is inappropriate.

The following criteria are used to determine materiality:

Insignificant	No material impact on financial and earnings position
Moderate	Noticeable impact on financial and earnings position
Considerable	Material or even critical impact on financial and earnings position

This makes it possible to classify both risks and opportunities in accordance with their impact on the Group.

7.3.2 Risks

Legal risks

On October 9, 2019, Mangrove LuxCo IV S.à r.l. acquired the shares in Galapagos BidCo S.à r.l. as described elsewhere in these notes (e.g., chapter 1.2 "Acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful Refinancing on October 9, 2019"), associated preferred equity certificates and any intercompany payables owed by Galapagos BidCo S.à r.l. to its former parent company Galapagos S.A. The acquisition was made in connection with the Restructuring, which was completed on October 9, 2019.

The following claims have been brought which arise out of the Restructuring:

•	Galapagos BidCo S.à r.l. has commenced proceedings in England against inter alios the Security Trustee under the Intercreditor Agreement which effected the Restructuring, the trustee who held rights on behalf of the Galapagos Senior Notes and each of the plaintiffs in the New York and Luxembourg proceedings described below, requesting that the English Court makes a series of declarations that the Restructuring complied with the terms of the Intercreditor Agreement. The English proceedings do not, at this stage, contain any claim for damages. A challenge to the jurisdiction of the English Court to hear this claim has been lodged by two of the defendants in these proceedings and was heard in December 2020. This challenge was dismissed by the English Court on 19 January 2021. Thus, the proceedings are ongoing with a 12-16-day trial to take place in Q1 2023.
•	A claim in the Supreme Court of the State of New York by a beneficial holder of the Galapagos Senior Notes ("NY Claimant") against inter alios Galapagos Holding (former indirect parent of Galapagos BidCo S.à r.l.) and certain of its subsidiaries (now being subsidiaries of Mangrove Group) relating to the Restructuring. The plaintiff alleges that the Restructuring wrongly deprived it of value by diverting assets away from the Group and releasing certain guarantees. The plaintiff seeks: (i) damages; and (ii) a reversal of the steps taken to affect the Restructuring. In addition, the plaintiff seeks a declaration that the release of liabilities under the Galapagos Senior Notes Indenture pursuant to the provisions of the former Intercreditor Agreement applying to certain liabilities of the Group was invalid (in other words, that this part of the Restructuring also be reversed). The Supreme Court of the State of New York decided on 22 July 2020 to stay this action pending a decision from the English Court as to its jurisdiction in these matters (as referred to above). The plaintiff has indicated that it intends to appeal this decision, but no substantive appeal has been served until now. Following the decision by the English Court on 19 January 2021, the proceedings in New York are still stayed.
•	On October 31, 2019 main insolvency proceedings were opened over the assets of Galapagos S.A. in Düsseldorf, Germany. There are two appeals pending at the German Federal Supreme Court on the jurisdiction of the Düsseldorf insolvency court. Following such appeals, on December 17, 2020, the German Federal Court of Justice referred certain legal questions concerning matters of European insolvency law (and, consequently, the jurisdiction of the Düsseldorf court in such insolvency proceedings) to the Court of Justice of the European Union for determination. The Court of Justice of the European Union rendered its decision on 24 March 2022, which confirmed that the German courts did not have jurisdiction to appoint the German administrator on 9 September 2019. Until the German Federal Court of Justice renders its decision (based on the Court of Justice of the European Union decision) the German insolvency proceedings remain in place.
•	Following an application of the purported administrator of Galapagos S.A., the District Court of Düsseldorf, Germany, has issued an injunction (einstweilige Verfügung) against Mangrove LuxCo IV S.à r.l., ordering an escrow agent to hold the shares in Galapagos BidCo S.à r.l. This order was successfully appealed and, consequently, the injunction was lifted in June 2021. Further, by the same plaintiff, a main proceeding (Hauptsacheverfahren) has been initiated against inter alios Mangrove LuxCo IV S.à r.l. and a first hearing is currently scheduled for December 2022.
•	The purported administrator of Galapagos S.A., Luxembourg (former 100 percent shareholder of Galapagos BidCo S.à r.l.) has brought a claim against Mangrove LuxCo IV S.à r.l. and Galapagos
•	BidCo S.à r.l. in Luxembourg detailing his allegations that the Restructuring (i.e. the refinancing of Galapagos Group and the sale of Galapagos BidCo S.à r.l. to Mangrove Group) involved a fraudulent exercise of a Luxembourg share pledge and that it should, therefore, be unwound. . However, no steps have been taken by the administrator to progress this claw back action. In addition to the main claim, following the administrator's application the Luxembourg Court granted an ex parte "preservation order" whereby a trustee was appointed to prevent an actual or de facto liquidation of Galapagos BidCo S.à r.l. This escrow order has been successfully appealed and set aside by the Luxembourg Court. This decision was then appealed by the administrator, but this appeal was rejected by the Court. A further appeal has been made by the administrator to the Luxembourg Cour de cassation and the parties are part way through a hearing as to whether the escrow order should be put back into place.

Performance risks

The performance risks presented below could take a wide variety of forms. The elements of Mangrove's risk management system are designed to help identify emerging risks before they materialize, so that appropriate measures can be implemented on a case-by-case basis to avoid negative effects on the Group's financial position and results of operations. As a rule, potential business performance risks are minimized by avoiding significant dependencies and ensuring a balanced mix of fixed and flexible capacities.

Risks from macroeconomic trends

The Mangrove Group sees risks in connection with macroeconomic trends. If a downturn in the economy would again lead to a reduction in order intake to below the level of the pre-COVID fiscal year 2019, this could have a negative impact on earnings due to capacity underutilization and capacity adjustment measures. Due to the Group's regional and industry diversification, and the fact that it is structured for flexibility, the probability of this significant risk occurring is considered to be low in the longer term but a medium to high in shorter term as explained in more detail in chapter 7.2.2 "Global economic outlook 2022". This risk is rated as medium overall. As mentioned further above, the potential adverse impacts of the Russian / Ukraine conflict and the sanctions on the global economy cannot be reliably assessed at this point in time whereas the direct risks from operations in Russia are considered of less relevance to the Group given the limited importance of business in and to Russia for the Group.

Country risk

Country risk - exposure to Russia

In the financial year 2021, Russia accounted for around 4 percent (around EUR 35 million) of total Kelvion revenue and Ukraine and Belarus together accounted for less than 1 percent of total Kelvion revenue. Accordingly, management does not consider Kelvion's exposure to these regions to be material. In addition, the Group has occasional large contracts through European or Asian EPCs in Kelvion Thermal Solutions.

Diverse product and customer structure provides resilience in case of fluctuation in specific markets

Mangrove Group's markets have a diverse product and customer structure. This diversification moderates the impact on total demand of fluctuations in specific submarkets. Mangrove Group considers the probability of a global decline in demand to be low in the longer term. However, after the world-wide economic depression in connection with the corona virus in 2020 and despite the rebound of the markets during 2021, Mangrove Group sees a down-turn risk in the short term from potentially surging COVID-19 variants and connected reimposed mobility restrictions and supply disruptions. This risk is rated as medium overall.

Risk from execution of projects

Customer pricing risks

Risk of material price increases and limited availability of materials

Mangrove Group processes a number of materials, such as steel, copper, aluminum, and titanium. Purchase prices for these metals may fluctuate significantly depending on market conditions. Long-term supply agreements are entered into with selected suppliers in order to lock in the procurement prices used as the basis for costing orders. However, the potential risks arising from such situations are difficult to quantify. Given the high commodity price increases in the above materials in since 2021 and the therefore already significantly increased product prices of Mangrove Group the risk of further material price increases is rated medium overall. However, Management of the Group is confident to be able to mitigate the impacts from these prices increases to a major extent as described in earlier chapters.

Risk from long-term engineering orders

Availability of dedicated and qualified employees

Potential delays in the delivery of products or whole projects from the COVID crisis or the Russian invasion mitigated by force majeure clauses

Environmental risk

Tax risks

7.4 Report on opportunities

7.4.1 Overall assessment of opportunities

7.4.2 Performance opportunities

As mentioned before the company continues to strengthen its competitiveness with further executing sales and manufacturing footprint re-organization and optimization projects, growth initiatives and dedicated operational restructuring measures. Permanently optimized and adapted direct and indirect cost structures and the streamlined business processes will enable the organization to quickly react to upcoming opportunities.

The new set up of the sales organization of Kelvion since early 2018 is expected to continue to generate additional business volume by continuously enlarging our market reach, covering with our broad product line the existing white spots and letting us participate in the growth of these markets. The standardization and improvement of the segment's ERP and sales tools landscape will enable the organization to further optimize the business processes. The future growth will also be driven by the improved regional service setup by which Kelvion can leverage the large installed base of products.

New opportunities in renewables/green energy, and data-center market areas arise and constitute attractive strategic options to further develop product offering and business models. From the aging fleet of conventual power plants an increase in repair and replacement of aging or damaged equipment is expected in the short and medium term, including more frequent routine maintenance interval needs and customers' challenge to increase plant efficiencies and reduce emissions.

7.5. Internal control system and risk management system relevant for the consolidated financial reporting process

Group Accounting manages the processes of group accounting and management reporting. Laws, accounting standards, and other pronouncements are continuously analyzed as to whether and to what extend they are relevant and how they impact financial reporting. The relevant requirements are defined by Group Accounting Manual, for example, communicated to the relevant units and, together with the financial reporting calendar that is binding throughout the Group, forms the basis of the financial reporting process. In addition, supplementary process directives such as Intercompany Policy, standardized reporting formats, IT systems as well as IT-based reporting and consolidation process support the process of uniform and compliant group accounting. Where necessary, we also draw on the services of external service providers, for example, for measuring pension obligations. Group Accounting ensures that these requirements are complied with consistently throughout the Group.

In addition to Mangrove, all group companies are integrated into the ICS.

Overall, Mangrove Group's internal control system has been implemented in such a way as to ensure reliable financial reporting.

7.6 Risk reporting to the use of financial instruments

Financial risks

The various risk classes and risk management systems are outlined below:

The Group is being rated by Standard & Poors as well as Moody's. In December 2020 Standard & Poor's lowered Mangrove Group's rating to 'CCC+' (negative outlook). The previous rating of 'B-'was given in December 2019, shortly before the outbreak of the global pandemic. In February 2021 the Group received the initial rating 'Caa1' (negative outlook) from Moody's. The ratings by the agencies reflect, besides other factors, metrics like financial leverage, profitability, cash flow and its ability to remain in compliance with its financial covenants. The ratings have been impacted by the global recession in connection with COVID-19 affecting some of the Group's end markets, including oil & gas and energy. While the proactive steps taken to restructure the Group were viewed positively by the rating agencies, the execution risks and associated high cash-outs were seen as a weakening factor for the rating. In management's view, the successful implementation of the cost reduction initiatives (as described in chapter 2.3.2 "Kelvion - "High Five" "H5" Strategy") and the strengthening of the Group offers an opportunity to improve the rating in the future.

Liquidity risk - material risk not to comply with financial covenants due to reduced expectations on profitability per the full year 2022 outlook (forecast)

Constant monitoring of liquidity

Financial covenants - reset effective December 22, 2020

The Group has entered into a multi-currency revolving credit facility agreement (RCF) of EUR 65 million, dated October 9, 2019 with a syndicate of six banks. On a monthly basis the Group is obliged to deliver a liquidity report to the bank syndicate. The liquidity amount is required to be above a Minimum Liquidity Amount (as defined in the RCF) throughout the term of the RCF (Minimum Liquidity Covenant). The RCF states that on each quarter date the Consolidated EBITDA and the Total Net Leverage, as defined in the RCF must exceed certain amounts as set out in the revolving facility (Minimum EBITDA Covenant and Total Net Leverage Covenant). The first covenant test date was March 31, 2020. As of the reporting date no drawing under the RCF take place. The same covenants must also be complied with under the terms of the senior guarantee facility agreement of EUR 260 million also dated October 9, 2019 (SGF) entered basically into with the same bank syndicate. The Mangrove Group and certain of its bank syndicate members also entered into a cash cover loan agreement dated October 9, 2019 and a multilateral guarantee facility agreement also dated October 9, 2019 which was repaid in full in 2020. Each of those agreements contains the Minimum Liquidity Covenant, the Minimum EBITDA Covenant and Total Net Leverage Covenant and the below comments equally apply to these agreements.

The ratio of net debt to consolidated EBITDA as defined in the RCF, is an important financial ratio (debt ratio) used in the Mangrove Group.

Due to the outbreak of COVID-19 in January 2020, the Group faced an increased risk of non-compliance with financial covenants since the second half of FY 2020 which has been mitigated by resetting its financial covenants in December 2020. The aforesaid (original) financial covenants were based on the (original) business plan 2020-2024 which was developed in the second half of 2019 and did not include any negative impacts from the COVID pandemic as well as low oil prices. The Group was able to protect its normalized EBITDA and cash position in FY 2020 but was not able to reach the budgeted growth in FY 2020 per the (original) business plan. Therefore, the Group has revised its strategy in mid of 2020 and has undertaken various material cost reduction programs throughout 2020 A new business plan 2021 - 2024 was developed. For details, please see chapter 2.3.2 "Kelvion - "High Five" "H5" Strategy".

Consequently, the Group requested a reset of the financial covenants in the Facility Agreements. The reset financial covenants include the net leverage and minimum EBITDA covenants. A separate minimum liquidity covenant shall continue to apply without amendment. In addition, certain additional amendments, including the definition of Restructuring Costs (as used in the Facility Agreements), were made to the basis for the calculation of the financial covenants to reflect the new lower business plan. The Group agreed the terms of the amendments to the Facility Agreements as set out in amendment request letters in exchange for a fee payable to those. The amendments are effective as of 22 December 2020.

Financial covenants - material risk to not comply with the Minimum EBITDA Covenant and the Total Net Leverage Covenant due to the reduced most recent forecast

As stated in chapter 7.2.2 the outlook on the global economy is uncertain due to the ongoing COVID-19 pandemic and especially due to the Russian invasion into Ukraine. Management forecasts financial results to be lower than the budget 2022. Therefore, the Group is facing a materially increased risk not to comply with its Minimum EBITDA covenant and its Total Net Leverage Covenant.

If an event of default occurs, the lenders to the Mangrove Group would have the right to request the repayment of their outstanding loans and to cancel their commitments under the RCF, SGF and (due to cross-defaults) other financing agreements, which could lead to a risk of insolvency of Mangrove Group in the absence of any further external assistance. Such further external assistance may, for example, include, but is not limited to, the lenders agreeing to a change in required covenants, a waiver of covenant testing for a defined period, or strategies involving support from the shareholder.

Management of the Group informed the lenders on the potential risk to not adhere to the Minimum EBITDA Covenant or the Total Net Leverage Covenant during FY 2022 in March 2022 and since then is in negotiations how to resolve the situation by way of reset of the financial covenants for the forthcoming financial years 2022 to 2023 and beyond. These discussions are ongoing at the date of approval of these financial statements. The lenders are supportive to find a solution and are willing to consider appropriate short-term measures to facilitate this. Therefore, management of the Group is confident that a solution with the lenders will be found.

Overall, although the Management of the Group considers the risk of insolvency due to a potential breach of the Minimum EBITDA Covenant or the Total Net Leverage Covenant to be remote as of the date of approval of these financial statements, the outcome of negotiations with the lenders remains uncertain and this event or condition indicates that there is a material uncertainty over the Group's ability to continue as a going concern.

No short-term debt maturities

Currency risk

The results are impacted by both transaction and translation currency effects.

Transaction currency impacts

To manage a foreign exchange risk arising from future commercial transactions, recognized assets and liabilities, entities in the Group use forward contracts transacted by Kelvion Treasury. Foreign exchange risk arises when future commercial transactions, recognized assets and liabilities are denominated in a currency that is not the entity's functional currency. Group Treasury is responsible for managing the net position in each foreign currency by using external forward currency contracts.

Translation currency impacts

The Group has certain investments in foreign operations whose net assets are exposed to foreign currency translation risk. Translation currency effects occur when intercompany transactions between group subsidiaries outside the Eurozone are translated in Euros using the exchange rates prevailing during the relevant period. Such FX effects from intercompany transactions in non-Euro currencies are recorded in the consolidated income statement apart from Kelvion Intercambiadores Ltda., Brazil, where hedging of a net investment in a foreign operation is applied for a loan agreement.

Interest rate risk

Mangrove Group is exposed to the interest rate volatility, which may affect the corporate bond issued at floating rate terms. Only central treasury is permitted to enter into derivative contracts.

Credit risk

The maximum exposure for the financial assets is limited to their carrying amount.

8. Events after the end of the reporting period

Impacts from the COVID pandemic and the invasion of Russia into Ukraine

The world economic outlook of the IMF has deteriorated and consequently the Group expects FY 2022 financial results to be lower than expected per the budget. Overall, nevertheless, due to and the related inherent uncertainty the COVID-Pandemic and the invasion of Russia have brought, the ability to prepare a reliable prognosis of the Group's financial performance is limited and therefore, the Group is facing an increased risk to comply with its Minimum EBITDA covenant and its Total Net Leverage Covenant.

Closing of a share purchase and transfer agreement regarding the ENEXIO Water business.

On 07/08 October 2021 a share purchase and transfer agreement was concluded for the shares of ENEXIO companies comprising the Water business. The deal was closed on Jan 03, 2022. The impacts on the earnings and cash position of the Group are not material. In the consolidated financial statements of Mangrove LuxCo III S.à r.l. 2020 and 2021, the assets of the respective ENEXIO companies were classified as "assets held for sale".

Sale of further parts of the ENEXIO ACC business

On March 23, 2022 the Group signed an Asset-/Share purchase agreement with its Indian Joint Venture Partner regarding the sale of the 51% stake in ENEXIO Power Cooling Solutions India Private Limited as well as certain assets (intellectual property in Germany and one production line in China) pertaining to the ACC division of ENEXIO. Closing of this transaction is expected to happen in the second quarter of FY 2022. The net proceeds from the sale are expected in the range of EUR 2 million.

9. Disclosures relevant for takeovers - Change of Control Clause

The facilities shall be continued between the obligors and those lenders, which did not deliver a change of control prepayment notice.

Luxembourg, May 3, 2022

Pierre-Alexandre Lechantre

Joakim Lindström-Formicola

Consolidated Statement of Financial Position of Mangrove Group, Luxembourg As of December 31, 2021

Assets

(EUR thousand)	Notes ¹	12/31/2021	12/31/2020
Goodwill	5.1	125,275	125,275
Other intangible assets	5.2	95,647	111,658
Right of use assets	5.2	63,980	64,710
Property, plant and equipment	5.3	149,271	145,536
Equity-accounted investments	5.4	1,000	1,707
Other non-current financial assets	5.5	282	35,121
Deferred tax assets	7.7	29,587	44,701
Total non-current assets		465,042	528,708
Inventories	5.7	167,673	116,197
Trade receivables and other receivables	5.8	182,747	197,178
Current income tax receivables	7.7	5,169	7,512
Other current financial assets	5.5	15,826	15,290
Other current assets	5.6	32,459	29,392
Cash and cash equivalents	5.9	72,024	91,343
Total current assets		475,898	456,912
Assets held for sale	4.2	9,745	16,251
Total assets		950,685	1,001,871

¹ The Notes are an integral part of these consolidated financial statements

Consolidated Statement of Financial Position of Mangrove Group, Luxembourg As of December 31, 2021

Equity and liabilities

(EUR thousand)	Notes ¹	12/31/2021	12/31/2020
Subscribed capital	6.1	12	12
Capital reserves	6.1	3,472	3,472
Retained earnings	6.1	-107,082	-66,684
Accumulated other comprehensive income	6.1	2,588	-6,282
Equity attributable to the shareholder of the company		-101,010	-69,482
Non-controlling interests	6.1	748	2,109
Equity of the total group		-100,262	-67,373
Preferred Equity Certificates	6.2	147,879	136,528
Equity and Preferred Equity Certificates		47,617	69,155
Non-current provisions	6.3	27,321	98,723
Non-current employee benefit obligations	6.4	39,631	42,672
Non-current bonds	6.5	346,047	342,411
Non-current financial liabilities	6.7	52,797	54,216
Other non-current liabilities	6.9	401	561
Deferred tax liabilities	7.7	27,489	36,310
Total non-current liabilities		493,686	574,893
Current provisions	6.3	51,358	70,661
Current employee benefit obligations	6.4	26,794	36,159
Current bank loans	6.6	21,768	4,404
Current financial liabilities	6.7	32,198	15,186
Trade payables	6.8	152,359	132,408
Current income tax liabilities	7.7	3,779	4,844
Other current liabilities	6.9	115,706	81,935
Total current liabilities		403,962	345,597
Liabilities held for sale	4.2	5,420	12,226
Total equity and liabilities		950,685	1,001,871

¹ The Notes are an integral part of these consolidated financial statements

Consolidated Statement of Profit or Loss of Mangrove Group, Luxembourg For the period January 1 - December 31, 2021

(EUR thousand)	Notes ¹	2021	2020
Revenue	7.1	931,742	916,262
Cost of sales		-749,088	-737,033
Gross profit		182,654	179,229
Selling expenses		-78,698	-88,131
Research and development expenses		-12,113	-12,318
General and administrative expenses		-80,161	-91,629
Other income	7.2	45,512	27,541
Other expenses	7.3	-26,057	-24,431
Other financial income		46	8
Other financial expenses		-1,192	-699
Earnings before interest and tax (EBIT)		29,991	-10,430
Interest income	7.6	6,657	447
Interest expenses	7.6	-58,384	-53,568
Profit or loss before tax from continuing operations		-21,736	-63,551
Income taxes (income (+) / expenses (-))	7.7	-18,829	-2,061
of which current taxes		-12,561	-4,876
of which deferred taxes		-6,268	2,815
Profit or loss after tax from continuing operations		-40,565	-65,612
Profit or loss after tax from discontinued operations	4.1	-	4,496
Profit or loss for the period		-40,565	-61,116
of which attributable to owner of the company		-40,398	-61,180
of which attributable to non-controlling interests		-167	64

¹ The Notes are an integral part of these consolidated financial statements

Consolidated Statement of Comprehensive Income of Mangrove Group, Luxembourg For the period January 1 - December 31, 2021

(EUR thousand)	Notes ¹	01/01/2021 - 12/31/2021	01/01/2020 - 12/31/2020
Profit or loss after tax from continuing operations		-40,565	-65,612
Profit or loss after tax from discontinued operations		-	4,496
Profit or Loss for the period		-40,565	-61,116

Items, that will not be reclassified to profit or loss in the future:

Actuarial gains or losses on pensions and other post employment benefits from continuing operations	6.4	3,326	-2,740
Tax on actuarial gains or losses on pensions and other post employment benefits from continuing operations	7.7	-737	826
Total actuarial gains or losses on pensions and other post employment benefits, net of tax		2,589	-1,914

Items, that will be reclassified subsequently to profit or loss when specific conditions are met:

Exchange rate differences on translating foreign operations from continuing operations	6,016	-5,867
Exchange rate differences on translating foreign operations from discontinued operations	-	-
Total exchange rate differences on translating foreign operations	6,016	-5,867

Other comprehensive income or loss	8,605	-7,781
Total comprehensive income or expense	-31,960	-68,897
of which attributable to owner of the company	-31,528	-68,713
of which attributable to non-controlling interests	-432	-184

¹ The Notes are an integral part of these consolidated financial statements

Consolidated Statement of Cash Flows of Mangrove Group, Luxembourg For the period January 1 - December 31, 2021

(EUR thousand)	Notes	01/01/2021 - 12/31/2021	01/01/2020 - 12/31/2020
Profit or loss for the period		-40,565	-61,116
Plus income taxes	7.7	18,829	2,061
Minus profit or loss after tax from discontinuing operations	4.1	0	-4,496
Loss before tax from continuing operations		-21,736	-63,551
plus net interest expenses	7.6	51,727	53,121
Earnings before interest and tax (EBIT)		29,991	-10,430
Depreciation. amortization, impairment losses, and reversal of impairment losses on non-current assets	7.5	59,434	64,062
Other non-cash income and expenses		-22,369	-
Employee benefit obligations (payments)	6.4	-557	-477
Change in provisions	6.3	-49,171	-2,343
Gains/Losses and disposal of non-current assets		-2,254	97
Inventories including unbilled construction contracts	5.7	-17,187	-13,478
Trade receivables	5.8	26,077	30,336
Trade payables	6.8	12,165	-7,704
Other operating assets and liabilities	5.5 6.9	5,149	4,306
Tax payments	7.7	-11,182	-5,469
Cash flow from operating activities of continuing operations		30,096	58,900
Cash flow from operating activities of discontinuing operations	4.1	-300	-
Cash flow from operating activities		29,796	58,900
Proceeds from disposal of non-current assets and assets held for sale		3,675	1,117
Payments to acquire property, plant and equipment and intangible assets ^*	5.2 5.3	-33,223	-21,466
Cash flow from investing activities of continuing operations		-29,548	-20,349
Cash flow from investing activities of discontinuing operations	4.1	925	17,155
Cash flow from investing activities		-28,623	-3,194
Proceeds from revolving credit facility		15,000	-
Payments from finance leases	6.7	-20,016	-15,162
Other transactions and financing with affiliated companies		-1,494	2,288
Net proceeds from (to) banks		2,371	2,029
Interest payments		-18,098	-40,072
Cash flow from financing activities of continuing operations		-22,237	-50,917
Cash flow from financing activities of discontinuing operations	4.1	-	-
Cash flow from financing activities		-22,237	-50,917
Effect of exchange rate changes on cash and cash equivalents		1,745	-3,156
Change in cash and cash equivalents		-19,319	1,633
Unrestricted cash and cash equivalents at beginning of period		91,135	89,566
Change in unrestricted cash and cash equivalents	5.9	-19,163	1,569
Unrestricted cash and cash equivalents at end of period		71,972	91,135
Restricted cash and cash equivalents at beginning of period		208	144
Change in restricted in cash and cash equivalents		-156	64
Restricted cash and cash equivalents at end of period		52	208
Cash and cash equivalents at end of period	5.9	72,024	91,343

^* Excluding capitalized leased assets (2021: KEUR 17,108 / 2020: KEUR 23,529)

Consolidated Statement of Changes in Equity of Mangrove Group, Luxembourg As of December 31, 2021

		Accumulated OCI
	Notes	Subscribed capital	Capital Reserve	Profit or Loss for the period	Total actuarial gains or losses on pensions and other postemployment benefits, net of tax	Total exchange rate differences on translating foreign operations
Balance at Dec 31, 2019		12	-	-5,504	-579	1,830
Contribution shareholder loan into capital reserve		-	140,000	-	-	-
Conversion capital reserve into tracking preferred equity certificates (TPECs)			-136,528
Loss for the period		-	-	-61,180	-	-
Foreign currency translation		-	-	-	-	-5,619
Change in actuarial gains (losses), net of tax		-	-	-	-1,914	-
Total Other comprehensive income or loss		-	-	-	-1,914	-5,619
Total income		-	-	-61,180	-1,914	-5,619
Balance at Dec 31, 2020		12	3,472	-66,684	-2,493	-3,789
Loss for the period		-	-	-40,398	-	-
Foreign currency translation		-	-	-	-	6,281
Change in actuarial gains (losses), net of tax	6.4	-	-	-	2,589	-
Total Other comprehensive income or loss		-	-	-	2,589	6,281
Total income		-	-	-40,398	2,589	6,281
Dividend paid		-	-	-	-	-
Balance at Dec 31, 2021		12	3,472	-107,082	96	2,492

	Accumulated OCI
	Equity attributable to the shareholder of the company	Noncontrolling interests	Equity of the group
Balance at Dec 31, 2019	-4,241	2,293	-1,948
Contribution shareholder loan into capital reserve	140,000	-	140,000
Conversion capital reserve into tracking preferred equity certificates (TPECs)	-136,528		-136,528
Loss for the period	-61,180	64	-61,116
Foreign currency translation	-5,619	-248	-5,867
Change in actuarial gains (losses), net of tax	-1,914	-	-1,914
Total Other comprehensive income or loss	-7,533	-248	-7,781
Total income	-68,713	-184	-68,897
Balance at Dec 31, 2020	-69,482	2,109	-67,373
Loss for the period	-40,398	-167	-40,565
Foreign currency translation	6,281	-265	6,016
Change in actuarial gains (losses), net of tax	2,589	-	2,589
Total Other comprehensive income or loss	8,870	-265	8,605
Total income	-31,528	-432	-31,960
Dividend paid	-	-929	-929
Balance at Dec 31, 2021	-101,010	748	-100,262

Notes to the Consolidated Financial Statements of Mangrove Group, Luxembourg

1. General information

1.1 Company information

Mangrove LuxCo III S.à r.l., Luxembourg, hereinafter also referred to as " Mangrove LuxCo III " or the "company" is a public limited liability company (Société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 2, rue Edward Steichen, L-2540 Luxembourg, and registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés Luxembourg) with registration number B236258. Sole shareholder of the company is Mangrove LuxCo II S.à r.l., Luxembourg, which itself is a direct subsidiary of Galapagos LuxCo I S.à r.l., Luxembourg. The Company was incorporated on July 11, 2019. The purpose of the Company is the acquisition, holding and disposal of interests in Luxembourg and/or foreign companies and undertakings as well as the administration, development and management of such interests.

1.2 Acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful Refinancing on October 9,2019

In the following, Mangrove LuxCo III and its consolidated direct and indirect subsidiaries is referred to as "Mangrove Group" or "the Group".

1.3 Description of the business

1.3.1 Introduction of new Segment Reporting

The Mangrove Group has operated in the past through two segments, Kelvion and ENEXIO:

•	Kelvion, a leading global manufacturer of heat exchangers and other cooling & heating products.
•	ENEXIO, a leading global manufacturer of power plant and industry cooling systems as well as

wastewater treatment solutions.

1.3.2 The four segments of Mangrove Group

The four segments of Mangrove Group focus on distinct technologies and product portfolios:

•	Kelvion Refrigeration Technologies (RT) focuses on component business for refrigeration applications with significant growth potential in data centers. RT supplies a wide range of standard and customized heat exchangers for cooling and refrigeration e.g., in cold chain warehouses, supermarkets, non-residential buildings, and industrial production. Product offering includes air cooled condensers which reject heat from refrigeration systems and are often sold as part of a package of equipment with air coolers. RT's customized air coolers are design-to-order units for industrial or OEM solutions for food processing and distribution facilities. Product offering includes also customized radiators and dry coolers are mainly used for power and industrial applications.
•	Kelvion Machine Cooling Systems (MCS) is a leading player in heat exchangers for power and engine applications with substantial growth opportunities by leveraging its global installed base. MCS supplies heat exchangers for power generation, power transmission and large engine applications (marine and off-highway). The business is mostly with OEM, e.g., for large engine manufacturers, but MCS also engages in smaller projects, e.g., in Oil and Gas. Product offering includes charge air coolers, which cool down combustion-air coming from the turbocharger before entering the engine. MCS' shell and tube double safety heat exchangers assure the secure handling of safety-critical media. Product offering also includes box coolers which are fitted in the sea chest of small and medium-sized vessels.
•	Kelvion Plate Heat Exchangers (PHE) provides a broad range of plate heat exchangers for a wide variety of applications in terms of pressure and temperature demands for a wide range of customer industries, ranging from HVAC and Refrigeration to Food and Beverages, Chemicals, Power and Industrials. Product offering includes fully welded plate heat exchangers which are used to save energy in demanding high pressure and temperature applications, as well as brazed plate heat exchangers, often used for environmentally friendly heat pump applications. TES' gasketed heat exchangers have the highest efficiency and flexibility and are used in a variety of industries.
•	Kelvion Thermal Engineered Solutions (TES), is Kelvion's largest segment, focusing on project business for demanding applications in the Oil & Gas, Chemicals Industries and, like RT, with significant growth potential in data center business. TES' engineering expertise plays a key role in differentiation against competitors. High degree of geographical diversification with sites in all key region, including Europe, NAFTA, Latin America, China and MEA. Product offering includes air fin coolers typically used for very large cooling requirements in different industries, e.g., Oil & Gas and Chemicals, as well as air dryers which are used to remove humidity from an air stream in various process industries. TES' shell & tube heat exchangers are used to heat, cool, or condense water and other media in different process industries.

2. Reporting and Accounting principles

2.1 Going-concern basis of accounting

Preparation of consolidated financial statements

The consolidated financial statements of Mangrove Group have been prepared on a going-concern basis, which assumes that Mangrove Group will be able to realize its assets and meet all its liabilities and obligations when they fall due. The outlook on the global economy is uncertain due to the ongoing COVID- 19 pandemic and especially due to the Russian invasion into Ukraine. Management forecasts financial results to be lower than the budget 2022. Therefore, the Group is facing a materially increased risk not to comply with its Minimum EBITDA covenant and its Total Net Leverage Covenant.

2.2 Basis of presentation

The presented consolidated financial statements cover the period from January 1, 2021 to December 31, 2021 with the prior period from January 1, 2020 to December 31, 2020.

The consolidated statement of cash flows is prepared using the indirect method for cash flows from operating activities and the direct method for cash flows from investing and financing activities.

The accounting and measurement principles are presented and explained in detail in Note 2.7.

The consolidated financial statements were authorized for issue by the Board of Managers on April 29, 2022.

2.3 First-time adoption of new accounting pronouncements

The Group applied for the first time all standards and amendments, which are effective for annual periods beginning on January 1, 2021. The impact on the consolidated financial statements of the Group is not significant. The Group has not early adopted any other standard, interpretation or amendments that were issued but are not yet effective.

2.3.1 Accounting regulations applied for the first time in the year 2021

•

Amendments to IFRS 9, IAS 39 and IFRS 7, IFRS 4 and IFRS 16 (Effective January 1, 2021)

The amendments in the second phase of the IBOR reform project (amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases) supplement the requirements of the first phase of the project and are generally based on the replacement of a reference interest rate by another reference interest rate. With regard to the presentation of financial instruments, the following aspects are affected in particular:

•

	In the event of changes in contractual cash flows, it may not be necessary to adjust or derecognize the carrying amount of financial instruments on the basis of the adjustments. Rather, under certain circumstances, the option is opened to adjust the effective interest rate to reflect the change in the alternative reference interest rate.
	With regard to hedge accounting, based on the amendments, it is not necessary under certain circumstances to terminate a hedging relationship designated for hedge accounting purposes due to adjustments triggered by the IBOR reform.

•

New risks arising from the reform and, in addition, how the transition to alternative reference rates will be handled are disclosed.

•

In addition to amendments to IFRS 9, IAS 39 and IFRS 7, the IASB adopted minor amendments to IFRS 4 and IFRS 16.

•

Amendments to IFRS 4 (Effective January 1, 2021)

The amendments to IFRS 4 are intended to address the temporary accounting issues arising from the different effective dates of IFRS 9 Financial Instruments and the future IFRS 17 Insurance Contracts. In particular, the temporary exemption from IFRS 9 is thereby extended until 2023 in order to align the effective date of IFRS 9 with the effective date of the new IFRS 17.

•

Amendments to IFRS 16 (Effective June 1, 2020)

•

IFRS 16 contains regulations regarding the recognition of changes in lease payments (including rental concessions) by the lessee. In general, the lessee must assess for each lease whether the lease concessions granted constitute changes to the lease and must remeasure the lease liability as a result. The amendment to IFRS 16 grants a practical expedient when used. This is subject to certain conditions and is limited in time. As a result of the relief, the lessee does not need to account for lease concessions granted in connection with the Covid-19 pandemic in accordance with the rules for lease modifications, but as if they were not lease modifications.

The amendment to IFRS 16 grants a practical expedient when used. This is subject to certain conditions and is limited in time. As a result of the relief, the lessee does not need to account for lease concessions granted in connection with the Covid-19 pandemic in accordance with the rules for lease modifications, but as if they were not lease modifications.

2.3.2 Accounting regulations not applied in advance of their effective date

•	Amendments to IFRS 16 (Effective April 1, 2021) IFRS 16 contains regulations regarding the recognition of changes in lease payments (including rental concessions) by the lessee. In general, the lessee must assess for each lease whether the lease concessions granted constitute changes to the lease and must remeasure the lease liability as a result. In response to the ongoing impact of the COVID 19 pandemic, IFRS 16 Leases was amended on March 31, 2021 to provide a one-year extension of the practical expedient to assist lessees in accounting for COVID 19-related lease concessions. The amendments extend the practical expedient to lease concessions that reduce lease payments originally due on or before June 30, 2022. Previously, only lease concessions that reduce lease payments that are or were due on or before June 30, 2021, were within the scope of the relief.
•	Amendments to IFRS 3 (Effective January 1, 2022) In accordance to the amended framework, references to the framework in various standards, including IFRS 3, have been adjusted. The rules for accounting for business combinations are not changed in substance. The amendments are to be applied to business combinations for which the acquisition date is on or after January 1, 2022. Earlier application is permitted.
•	Amendments to IAS 16 (Effective January 1, 2022) The amendment prohibits entities from deducting the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Clarification of the definition of the costs of testing. Revenue and cost that relate to items produced that are not an output of the entity's ordinary activities must be presented separately. Disclosure of the line item in the statement of comprehensive item that includes such revenue.
•	Amendments to IAS 37 (Effective January 1, 2022) Clarification that the cost of fulfilling a contract includes all directly attributable costs. The cost of fulfilling the contract includes both the incremental costs of fulfilling that contract (such as direct wage and material costs) and an allocation of other costs that relate directly to fulfilling contracts. In addition, it is clarified that before a provision for an onerous contract is established, an entity should recognize any impairment loss that has occurred on assets used in (previously: dedicated to) fulfilling the contract.
•	Improvements to IFRS 2018 - 2020 (Effective January 1, 2022) The Annual Improvements to IFRS amended the following standards: In IFRS 1, the option was opened for first-time adopters of IFRS 1.D16 (a) to measure cumulative translation differences at the amounts recognized by the parent. The amendment to IFRS 9 clarifies which fees are to be included in the 10 percent test (IFRS 9.B3.3.6) with regard to the assessment of whether a financial liability is derecognized. Only fees paid or received between the entity as borrower and the lender are included. In IFRS 16, the presentation of the reimbursement of leasehold improvements has been removed in explanatory example 13 to IFRS 16. In IAS 41, the prohibition on including tax payments in the fair value measurement is removed.
•	IFRS 17 Insurance Contracts (including Amendments) (Effective January 1, 2023) IFRS 17 replaces IFRS 4 and for the first time sets out standard requirements for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts and investment contracts with discretionary participation features. Under the IFRS 17 measurement model, groups of insurance contracts are measured based on the expected value of discounted cash flows with an explicit risk adjustment for non-financial risks as well as a contractual service margin that results in the recognition of profit in line with the provision of services. The amendments to the standard, which refer to specific topics, are aimed at helping entities implement the standard and, at the same time, avoiding a significant loss of useful information

These new standards and amendments to existing standards will be applied by the Group starting in fiscal 2022 or later. No material impacts are expected.

2.4 Accounting pronouncements not yet endorsed by the EU

In previous years, and in fiscal year 2021, the IASB issued the following standards and amendments to existing standards of relevance to the Group, which still have to be adopted into EU law (endorsement mechanism) before they become applicable:

•	Amendments to IFRS 10 and IAS 28 The amendments address a known inconsistency between the requirements of IFRS 10 and IAS 28 (2011) in the case of the disposal of assets to an associate or joint venture or the contribution of assets to an associate or joint venture. IFRS 10 requires a parent to recognize the full amount of the gain or loss on disposal of a subsidiary in profit or loss when control is lost. In contrast, the currently applicable IAS 28.28 requires that the gain or loss on disposal of a disposal transaction between an investor and an investment accounted for using the equity method - whether an associate or a joint venture - be recognized only to the extent of the other's interest in the entity. In the future, the entire gain or loss on a transaction is to be recognized only if the assets sold or contributed constitute a business as defined by IFRS 3. This applies regardless of whether the transaction is structured as a share or asset deal. If, on the other hand, the assets do not constitute a business, only pro rata income recognition is permitted. The IASB has postponed the date of first-time application of the amendments indefinitely.
•	Amendments to IAS 1 (Effective January 1, 2023) The endorsed amendments to IAS 1 concern a limited adjustment to the assessment criteria for classifying liabilities as current or non-current. It is clarified that the classification of liabilities as current depends on the entity's rights at the reporting date to defer settlement of the liability for at least twelve months after the end of the reporting period. If such rights exist, the liability is classified as non-current. The right to defer settlement of the liability must be substantial. If the entity has to meet certain conditions in order to exercise such a right, these conditions must be met at the reporting date; otherwise, the liability is classified as current. For the classification of a liability, it is irrelevant whether management intends or expects that the liability will actually be settled within twelve months after the balance sheet date. The only decisive factor for classification is the existing right at the balance sheet date to defer settlement of the liability for at least twelve months. This also applies in the event of settlement within the value recovery period.
•	Amendments to IAS 1 and IFRS Practice Statement 2 (Effective January 1, 2023) The amendment to IAS 1 requires that only "significant" accounting policies are presented in the notes. To be significant, the accounting policy must be related to material transactions or other events and there must be a reason for its presentation. A reason may be, for example, that the method has been changed, it is an option, the method is complex or highly judgmental, or it has been developed in accordance with IAS 8.10-11. The amendments to Practice Statement 2 accordingly indicate how the concept of materiality is applied to the disclosure of accounting policies. Thus, in the future, company-specific disclosures are to be given priority over standardized disclosures.
•	Amendments to IAS 8 (Effective January 1, 2023) The amendment to IAS 8 clarifies how entities can better distinguish changes in accounting policies from changes in estimates. For this purpose, it is defined that an accounting estimate always relates to a measurement uncertainty of a financial figure in the financial statements. In addition to input parameters, an entity also uses valuation techniques to determine an estimate. Valuation techniques can be estimation techniques or valuation techniques.
•	Amendments to IAS 12 (Effective January 1,2023) The amendments address previously existing uncertainties in the accounting for deferred taxes in connection with leases and disposal or restoration obligations. The amendments clarify the application of the already existing "initial recognition exemption" (IAS 12.15) and result in the recognition of deferred taxes, e.g. on leases accounted for by the lessee and on disposal or restoration obligations. This is therefore an exemption to the "initial recognition exemption" for narrowly defined cases.
•	Amendments to IFRS 17 (Effective January 1, 2023) The amendment is a transition option aimed to improve the usefulness of comparative information presented on initial application of both IFRS 17 and IFRS 9. The amendment introduces the option of applying a "classification overlay approach". This option can be applied when IFRS 17 and IFRS 9 are applied simultaneously for the first time and no "restatement" of a financial asset with regard to the comparative information of IFRS 9 in 2022 is made.

2.5 Basis of consolidation

Consolidated entities

The consolidated financial statements comprise the financial statements of Mangrove LuxCo III and its direct and indirect subsidiaries as of December 31, 2021. The financial statements of the subsidiaries are generally prepared for the same reporting period as the parent company, except of the Indian subsidiary, consistently applying group IFRS accounting policies. The financial year ends due to local Indian commercial law on March 31, each year. This company was incorporated in the consolidated financial statements of Mangrove Group on the basis of interim financial statements.

All intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated.

The scope of consolidation changed as follows:

Number of companies	2021	2020
Consolidated Group as of January 1	61	71
Acquisition	3	-
Merger	6	5
Liquidation	1	2
Deconsolidation	2	3
Consolidated Group as of December 31	55	61
Domestic companies Luxembourg	5	3
Foreign companies	50	58

Acquisitions include the following three companies: Kelvion Projects Holding Holding GmbH, Kelvion Products Inc., TES LuxCo S.à r.l.

A list of companies included in the consolidated financial statements and of all companies, in which Mangrove LuxCo III has interests in, is provided in Note 13.

Subsidiaries

The ongoing optimazition of the group structure reduced the number of subsiduary to a minimum. In 2021, one consolidated company (Kelvion China Co. Ltd.) and one Joint Venture (Wuhan Bloksma Heat Exchangers Co. Ltd.) were liquidated. In addition six consolidated companies were merged. In order to concentrate the US business four US companies (thereof two Rocore companies) were merged into the Kelvion Inc. Moreover, the Kelvion Holding B.V. was merged into Kelvion Refrigeration B.V. and the Kelvion Central Europe Sp.zo.o. was merged into Kelvion Machine Cooling Sp. z.o.o.

In 2021 the two consolidated companies ENEXIO Service GmbH (including the associated company Konsortium ENEXIO Service / Kramer) and ENEXIO Italy S.r.l. were sold and deconsolidated. For further details see Note 4.2 Asset held for sale.

Companies that are dormant or do not have significant impact on the financial position and results of operation of the Group are not included in the consolidated financial statements.

Control over subsidiary Galapagos BidCo S.à r.l.

Following an application of the purported administrator of Galapagos S.A., the District Court of Dusseldorf, Germany, has issued an injunction (einstweilige Verfügung) against Mangrove LuxCo IV S.à r.l, ordering an escrow agent to hold the shares in Galapagos BidCo S.à r.l This order has been appealed (reference is made to section "9.3 Litigations"). Further, by the same plaintiff, a main proceeding (Hauptsacheverfahren) has been initiated against, among others, Mangrove LuxCo IV S.à r.l, the pleading of which has however not yet been served upon the defendants.

Interests in associated companies and joint ventures

The Group's interests in equity accounted investees comprising interests in two joint ventures and two associated companies are accounted at cost since they are not material.

Management deems the influence of the associated companies to the financial position of the Group as insignificant.

2.6 Currency translation

The Mangrove Group companies prepare their annual financial statements on the basis of their respective functional currencies.

The following material foreign exchange rates are used for the currency conversion:

Currency	Currency Description	Closing rate 31.12.2021	Closing rate 31.12.2020	Average rate 2021	Average rate 2020
AED	United Arabian Emirates Dirham	4.167139	4.511117	4.343565	4.194286
BRL	Brazil Real	6.310100	6.373500	6.377890	5.890054
CNY	China Yuan Renminbi	7.194700	8.022500	7.628231	7.872367
CZK	Czech Republic Koruna	24.858000	26.242000	25.640488	26.451421
GBP	British Pound	0.840280	0.899030	0.859604	0.889347
PLN	Poland Zloty	4.596900	4.559700	4.565179	4.442386
RUB	Russian Ruble	85.300400	91.467100	87.152718	82.751929
USD	US Dollar	1.132600	1.227100	1.182740	1.142196
ZAR	South African Rand	18.062500	18.021900	17.476550	18.760077

2.7 Significant accounting and valuation policies

Consolidation methods

Transaction costs related to business combinations are expensed within the period they occur.

Where a subsidiary is disposed of, such that control is no longer held, the entity is removed from the consolidation as at the date when control ceases.

If individual group companies have a different reporting date, they are included on the basis of interim financial statements as of the respective reporting date.

Goodwill

Determination of Goodwill

Impairment of Goodwill

Goodwill is tested for impairment at the level of Mangrove Group's business units, which have been identified as cash-generating units. For the purposes of impairment testing, the goodwill arising from the recognition of business combinations is allocated to the segments and business units that are expected to benefit from the synergies generated by the business combination. If more than one segment (or business unit) profits from an acquisition, the allocation is carried out using an appropriate allocation key.

Other intangible assets

Other intangible assets include both internally generated and purchased assets. Internally generated intangible assets comprise capitalized development costs. In addition to contract-based rights, purchased intangible assets mainly contain technologies, brand names, and customer relationships. Technologies, brand names, and customer relationships are usually acquired in connection with acquisitions. Internally generated and acquired intangible assets are recognised at cost. If the useful life of an intangible asset can be determined, following its initial recognition, the asset is amortized on a straight-line basis over its useful life. Acquisition cost and conversion cost includes borrowing costs as long as the criteria are met. In financial years 2020 and 2021 no borrowing costs have been capitalized.

Property, plant and equipment

Items of property, plant and equipment are recognised at cost less accumulated depreciation and any impairment losses, plus reversals of impairment losses. Cost also includes borrowing costs as long as the recognition criteria are met. In financial year 2021 no borrowing costs have been capitalized. Land is not subject to scheduled depreciation. All other assets are depreciated over the expected useful life of the assets.

Expenses for major regular maintenance are amortized over the remaining useful life of the asset concerned or over the period to the next maintenance date.

Leases

Leases as a lessee

Lease payments included in the measurement of the lease liability comprise the following:

―	fixed payments, including in-substance fixed payments;
―	variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
―	amounts expected to be payable under a residual value guarantee; and
―	the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

Short-term leases and leases of low-value assets

Leases as a lessor

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the consideration in the contract.

Other financial assets

According to IFRS 9 Shares in unconsolidated subsidiaries are allocated to the "fair value through other comprehensive income" (FVOCI) measurement category. A financial asset is measured at fair value through OCI if the objective of the business model is achieved by collecting contractual cash flows and selling financial assets and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding Mangrove Group has opted to recognize future changes in their fair value through other comprehensive income in the statement of comprehensive income and to continue to classify them as equity upon the derecognition of the financial instrument. As for new instruments, Mangrove Group can opt to make use of this option on an instrument-by-instrument basis upon recognition, but it must continue to do so thereafter.

According to IFRS 9 Financial receivables are measured at amortized cost using the effective interest method. The effective interest method has no effect as the financial receivables are short-term. According to IFRS 9 the sold receivables need to be remeasured as fair value through profit and loss. Due to the recoverability of sold trade receivables the fair value is equal to the amortized costs.

For financial assets that are subject to IFRS 9 impairment model, loss allowances are recognized for expected credit losses. At Mangrove, these include trade accounts receivable and contract assets, for which the simplified approach using an impairment matrix is applied. Impairment losses are recognised in the income statement. If one or more events occurred after initial recognition of the asset and there is objective evidence that the expected future cash flows decline, financial assets are impaired. Objective evidence of impairment may be, for example, significant financial difficulties of the debtor or payment default. In the case of financial assets measured at amortized cost (e.g. unquoted equity instruments), the impairment loss corresponds to the difference between the carrying amount of the financial instrument and the present value of the future cash flows discounted at the original effective interest rate.

Financial assets are recognised as soon as Mangrove Group receives a cash payment or has the right to receive cash flows. In the case of regular sales of non-derivative financial assets, the settlement date (i.e. the delivery date of the financial assets) is decisive. Assets are derecognised as soon as the right to receive cash payments or other financial assets expires as a result of payment, waiver, statutory limitation, offsetting, or any other factor. The same applies if the right is transferred to another person, with the risks passing in full to the acquirer. In the case of regular way sales of non-derivative financial assets, the settlement date is taken to be the date of derecognition, in line with the principle used for recognition.

Inventories

Inventories are recognised at cost and measured at the lower of cost and net realizable value. Acquisition cost is calculated at average cost or using the first-in, first-out (FIFO) method. Production costs include direct costs plus materials and production overheads, depreciation, and production-related administrative costs. Net realizable value is calculated as the estimated sale proceeds less costs incurred until completion and selling expenses. Previously recognised impairment losses must be reversed if the reasons for the impairment no longer apply. Impairment losses are reversed up to a maximum of the amortized historical cost.

Acquisition cost and conversion cost include borrowing costs as long as the criteria are met. In financial years 2020 and 2021 no borrowing costs have been capitalized.

Trade receivables

Trade receivables include no interest component and are recognised with their principal amount less appropriate expected credit losses. Trade receivables are measured as amortized costs. The gross carrying amount is not calculated by the effective interest method as all of Group's trade receivables are short-term.

Trade receivables sold to financial services companies under factoring agreements are derecognised once the majority of risks and rewards have been transferred to the financial services company. According to IFRS 9 this amount has to be remeasured as fair value through profit and loss because these are no longer categorized as hold-to-collect when sold. For factored receivables the principal is regularly paid earlier by the factoring bank than cash would have been obtained from the customer. Due to the recoverability of sold trade receivables the fair value is equal to the amortized costs.

The Group does not consider the risk profile of its trade and other receivables to have changed materially as a result of the COVID-19 pandemic.

Cash and cash equivalents

Obligations under pension plans

Actuarial gains and losses from the remeasurement of the net carrying amount are recognised in other comprehensive income of the year in which they arise and are reported in other comprehensive income after adjustment for tax effects. This also applies to the recognition of the difference between the actual returns on plan assets and the expected return calculated usingthe discount rate. Net interest - comprising interest income on plan assets and interest cost on the defined benefit obligation - on the net carrying amount is recognised in interest expenses. Current and past service cost for the period as well as gains and losses from settlements are recognised in the respective functional areas as cost.

Other employee benefit obligations

Other employee benefit obligations comprise other long-term benefits and all short-term benefits. The short-term obligations from short-term employee benefits are expected to be paid in full not later than twelve months after completion of the rendered service. They include wages, salaries, social insurance contributions, paid vacation, and profit-sharing schemes. They are recognised as an expense simultanously as the work is performed. Any expenditure in excess of the payments already made is reported as a deferred liability at the reporting date. Other long-term employee benefits, such as jubilee payments or partial retirement arrangements, are recognised at the actuarial present value of the obligation at the reporting date. Securities are pledged to the beneficiaries to protect vested partial retirement credits against the employer's insolvency. The fair value of these securities is offset against the corresponding liability.

Provisions

Warranty Provisions

Provisions for onerous contracts

Provisions for restructuring

Share based payments

ENEXIO Group has management incentive plans which grant Profit Participation Rights to executive and senior management. The fair value of these rights is calculated on the grant date and on each balance sheet date and recognised as an expense on a straight-line basis over the vesting period with a corresponding increase in provisions. The provision is remeasured at each balance sheet date and at settlement date. Any changes of the provision are recognised as part of income from operations. Relevant ENEXIO management left the group by the end of financial year 2020. Due to the negative development of the ENEXIO group, the carrying amount of the liability including the initial investment of EUR 1.2 million of the participants totals EUR 0.0 million.

Financial liabilities

Other liabilities

Contract assets and liabilities

Contract assets are recognized if the contract costs incurred and the gains recognized exceed the progress billings and advance payments received or due. Advance payments on orders and the gross amount due to customers for contract work are carried under "contract liabilities." Advance payments on orders are stated at their nominal amount. If the advance payments received or due exceed the capitalized costs and recognized gains, less the progress billings at the reporting date, they are reported as a liability under contract liabilities.

Trade payables

Revenue Recognition

The Mangrove Group reports revenue according to three revenue types, namely construction contracts, sale of goods and services and service agreements:

•	Revenues from construction contracts are recognized over time in accordance with IFRS 15 ("percentage-of- completion method") since the customer obtains control through their specifications over the duration of the contract and because the Mangrove Group is entitled to reimbursement of the costs incurred so far, plus an appropriate margin, if the customer cancels a contract. The percentage of completion is determined using the cost-to-cost method, which is derived from the ratio of contract costs incurred to the total estimated contract costs as of the reporting date. Contract costs include direct costs plus materials and construction overheads, depreciation, production- related administrative costs, and such other costs that are specifically chargeable to the customer under the terms of the contract. Adjustments are made for variations in contract work, claims, and incentive payments insofar as these will probably result in revenue that is capable of being reliably estimated. Changes in estimates or differences between the estimated cost and the actual cost have a direct impact on recognized earnings from construction contracts. In addition, estimation limits must be observed. In line with this method, construction contracts are measured at the amount of the contract costs incurred as of the reporting date plus the profit attributable to the proportion of work completed. The costs incurred and the related profits are reported under contract assets, less progress billings and advance payments received or due. If, while a performance obligation is being satisfied, the contract costs incurred are not proportionate to the progress of the performance of said contract, revenues will be recognized only to the extent of the contract costs incurred ("zero-profit method"). A profit is only recognized when the contract costs incurred are matched by corresponding progress of the performance of the contract. Contract costs are recognized as an expense in the period in which they are incurred. If it is foreseeable that total contract costs will exceed contract revenue, the expected loss is recognized as an impending loss according to IAS 37.
•	Revenue from the sale of goods and services is recognized when such goods are transferred to the customer, or when services were carried out, and the contractual performance obligations are therefore met. Performance obligations are satisfied as the customer obtains control over the goods sold to them, i.e. when they can direct the use of and obtain essentially all the remaining benefits from the goods.
•	Revenue from service agreements is recognized over the period in which the service is performed. If only the sale of spare parts is involved, revenue is recognized at a specific point in time.

Revenue is measured at the fair value of the consideration received or to be received. Customer bonuses, discounts, or rebates reduce the amount of revenue recognized. Payments for differences in the overall contract, claims, and premiums are included in the contract revenue as variable components. The amount of such payments is calculated at contract inception using the "expected- value" method - if there are several different possible amounts - or the "most likely amount" method - if there are just two possible amounts. The effects of significant financing components can be ignored when determining the amount of revenue to be recognized if the vendor expects, at contract inception, that the period between the transfer of a promised good or service to the customer and the date of payment will be one year or less. Discretion must be applied when judging whether revenues are to be recognized "over time", as well as with regard to the allocation of the transaction price to the performance obligation. Where stand-alone selling prices are not directly observable, these are estimated.

The Group uses various input and output methods to ensure that revenues from contracts with customers are faithfully represented. The portion of revenues which fall under the IFRS 15 requirements with respect to revenue recognized over time is around 35% each year. Almost two thirds of revenue, more than 65% of sales of goods and services, is recognized at a point in time.

Research and development

Research expenditures are recognised immediately as an expense.

Development expenditure is capitaalized only if the expenditure can measured reliably, the product or proces is technicall and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset.

All other development expenditures are recognised immediately as expenses. Capitalized development expenditures for completed projects are reported at cost less cumulative amortization and impairment losses. Capitalized development costs for intangible assets not yet available for use are tested for impairment once a year.

Development costs that are required under construction contracts are capitalized as part of the cost of the asset.

Government grants

Income Tax

Current Tax

Deferred taxes

•	Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that effects neither accounting nor taxable profit or loss;
•	Temporary differences related to investments in subsidiaries, associated and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
•	Taxable differences arising on the initial recognition on goodwill.

Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reverse, using the tax rate enacted or substantially enacted at the reporting date.

Single assets held for sale, discontinued operations and disposal groups

A single non-current asset is classified as held for sale if it is highly probable that its carrying amount will be recovered principally through a sale transaction rather than through continuing use. The Group reports assets and liabilities as a disposal group, that will be disposed of by sale or otherwise in a single transaction, which collectively meet the held for sale criteria as specified in IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations". The Group reports the assets and liabilities of a disposal group separately in the balance sheet line item "assets held for sale" and "liabilities held for sale", respectively. Unless a disposal group qualifies for discontinued operations reporting, the revenues and expenses of the disposal group remain within continuing operations until the date of disposal. The Group reports the results of a disposal group that also qualifies as a component of the Group as discontinued operations if it represents a separate major line of business or geographical area of operations. The Group reports the results of discontinued operations in the period in which they occur separately within the consolidated statement of income as "discontinued operations (net of tax)". In the consolidated statement of cash flows the cash flows resulting from discontinued operations are presented separately from cash flows resulting from continuing operations; prior year presentation has been adjusted accordingly. In order to present the proportion of income/loss attributable to discontinued operations, net sales and expenses arising from intercompany transactions are recognised provided that these transactions will not continue after the disposal of the discontinued operations.

On initial classification as held for sale, non-current assets are recognised at the lower of the carrying amount and fair value less costs to sell and depreciation and amortization ceases. A disposal group is initially measured in line with the respective IFRS standards to determine the carrying amount of the disposal group which is then compared to the fair value less costs to sell of the group in order to recognize the disposal group at the lower of both amounts. An impairment loss initially reduces the carrying amount of goodwill. Any amount exceeding goodwill is allocated proportionately to the carrying amounts of non-current non- financial assets. These reductions in the carrying amounts are treated as impairment losses in the profit and loss statement.

2.8 Estimates and management judgement

Judgement was applied in the determination of excluding subsidiaries from or including subsidiaries into consolidation.

The major areas subject to considerable estimating uncertainty, or to particular discretion in the application of accounting and measurement methods, are presented in the following notes disclosure:

Measurement of property plant and equipment, and intangible assets

Determination of impairments of property, plant and equipment, goodwill and intangible assets

The determination of impairments of property, plant and equipment, and intangible assets involves the use of estimates that include, but are not limited to, the cause, timing, and amount of the impairment. Impairment is based on a large number of factors, such as changes in current competitive conditions, expectations of growth in the heat exchanger industry, increased cost of capital, changes in the future availability of financing, technological obsolescence, discontinuance of services, current replacement costs, prices paid in comparable transactions, and other changes in circumstances, which indicate that an impairment exists. The identification of impairment indicators, as well as the estimation of future cashflows and the determination of fair values for assets (or groups of assets) require management to make significant judgements concerning the identification and validation of impairment indicators, expected cash flows, applicable discount rates, useful lives, and residual values.

The carrying amounts of intangible assets, items of property, plant and equipment, and groups of cash-generating units with goodwill are reviewed if they are likely to have been impaired by events or changes in circumstances. In addition, indefinite-lived intangible assets and cash-generating units with goodwill are tested for impairment at least once a year. The impairment test compares the asset's carrying amount against its recoverable amount ("impairment test"). The recoverable amount is defined as the higher of internal value in use and fair value less costs of disposal (net realizable value). An estimate of fair value less costs to sell is only required if the value in use is less than the carrying amount. If the carrying amount exceeds the recoverable amount, an impairment loss in the amount of the difference is recognized. In this case, the impairment loss is first deducted from the goodwill of the cash-generating unit with goodwill. Any amount exceeding goodwill is allocated proportionately to the carrying amounts of non-current non- financial assets. Fair value less costs of disposal is generally the benchmark for measuring the impairment of business units classified as "held for sale".

In total, impairments amounting to EUR 1,543 thousand for property, plant and equipment and intangible assets were to be recorded in FY 2021 (prior year: EUR 4,581 thousand).

Leases

Lease payments are discounted at the rate implicit in the lease if that rate can readily be determined. Otherwise, discounting is at the incremental borrowing rate. The incremental borrowing rate, which is mainly applied, is based on risk-adjusted interest rates and determined for the respective lease terms and currencies.

Provisions and contingent liabilities

Scope of consolidation

Judgement was applied in the determination of excluding subsidiaries from consolidation on the basis of materiality (see Note 2.5).

Impairment

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data: (a) significant financial difficulty of the debtor or (b) it is probable that the debtor will enter bankruptcy or other financial reorganization.

Recognition and measurement on deferred tax assets and income tax uncertainties

Recognition and calculation of construction contracts

Obligations under pension plans

Other significant assumptions relating to pension obligations are based on market conditions (see Note 6.4.1).

Litigation

Determination of fair value of financial instruments

Determination of fair value of share-based payments

The fair value of the rights, subject of the share based payments, is calculated on the grant date and on each balance sheet date and recognised as an expense on a straight line basis over the vesting period.

The method to determine the fair value is described in the contract. An observable market price is not available before an exit price has been materialized and therefore a multiple-based model is being applied. Management believes that assumptions used to calculate the fair value of the share based payments are appropriate; any unforeseen changes in assumptions or market circumstances could result in changes in the fair value and could adversely affect balance sheet and income statement.

3. Financial risk management

Mangrove Group applies guidelines and instruments, to manage and hence largely limit or hedge financial risks throughout the Group.

Currency risk

Hedge Accounting in the sense of IFRS 9 is not applied.

Besides the hedging requirement, currency fluctuations may affect business opportunities outside the Eurozone.

Interest rate risk

Commodity price risk

Credit risk

The following table provides information about the exposure to credit risk and ECLs for trade receivables and contract assets as of 31 December 2021:

Risk Cluster	Gross carrying amount	Weighted average loss rate	Loss allowance kEUR
Western Europe	55,920	0.78%	439
Asia Pacific	40,576	1.30%	527
North America	38,558	0.15%	57
Rest of World	21,730	0.83%	181
Total	156,784	0.77%	1,203

The movement in the allowance for impairment in respect of trade receivables and contract assets during the year was as follows:

(EUR million)	12/31/21	12/31/20
Opening Balance	16.3	22.5
Additions	5.3	5.0
Utilization	-11.1	-11.2
Closing Balance	10.5	16.3

Derivative financial instruments are concluded only with financial institutions with high credit-ratings assigned by international credit-rating agencies so as to reduce the credit risk involved.

Liquidity risk

Mangrove Group is exposed to liquidity risk in a way that it may be unable to meet payment obligations because it has insufficient cash funds at its disposal. To manage Mangrove Group's short, medium and longterm funding and liquidity requirements the management has established an appropriate liquidity risk control framework consisting inter alia of a multi-year financial plan and a rolling month-by-month cash forecast. The Group manages the liquidity risk by maintaining adequate reserves, banking facilities, and reserve borrowing facilities as well as by monitoring forecasted cash flows at regular intervals.

The following table shows the undiscounted contractually agreed interest and principal payments for financial liabilities, including derivative financial instruments with negative fair values:

		Cash flows
2021 (EUR thousand)	Carrying amount	< 1 year	1-2 years	2-3 years	3-4 years	4-5 years	> 5 years
Bank Loans	21,768	21,768	-	-	-	-	-
Bonds	362,914	28,909	28,909	28,909	371,818	-	-
Trade payables	153,600	153,600	-	-	-	-	-
Other financial liabilities	270	270	-	-	-	-	-
Tracking preferred equity certificates	147,879	-	-	-	-	-	147,879
Liabilities to affiliated companies	2,204	716	1,488	-	-	-	-
Currency derivatives not included in a recognized hedging relationship	2,161	2,161	-	-	-	-	-
Liabilities under finance leases	63,493	13,524	9,586	9,364	7,406	6,781	43,886

		Cash flows
2020 (EUR thousand)	Carrying amount	< 1 year	1-2 years	2-3 years	3-4 years	4-5 years	> 5 years
Bank Loans	4,404	4,404	-	-	-	-	-
Bonds	343,642	27,697	27,697	27,697	27,697	356,233	-
Trade payables	132,409	132,409	-	-	-	-	-
Other financial liabilities	159	159	-	-	-	-	-
Shareholder Loan	136,528	-	-	-	-	-	136,528
Liabilities to affiliated companies	1,968	716	1,252	-	-	-	-
Currency derivatives not included in a recognized hedging relationship	1,699	1,699	-	-	-	-	-
Liabilities under finance leases	64,345	12,591	10,653	8,416	6,007	5,368	41,670

All financial liabilities outstanding as of December 31, 2021, are included in the above table on the basis of expected contractual cash flows. Projected figures for future new liabilities are not taken into account. Foreign currency amounts are translated at the closing rates. In the case of financial liabilities that can be repaid at any time, it is assumed that they will be repaid within one year.

Despite the uncertainty caused by the COVID-19 pandemic, the Group considers that it has the ability to generate sufficient cash inflows, such that the liquidity risk of the Group is low, as minimum operating cash requirements will not be breached. Forecast scenarios are updated regularly and the Group has the ability to act to boost liquidity if necessary.

The payment comprises accrued interest and redemption. Credit lines and guarantees are discussed in Note "9.2 Other financial obligations"

Liquidity risk - material risk not to comply with financial covenants due to reduced expectations on profitability per the full year 2022 outlook (forecast)

Constant monitoring of liquidity

Financial covenants - reset effective December 22, 2020

The Group has entered into a multi-currency revolving credit facility agreement (RCF) of EUR 65 million, dated October 9, 2019 with a syndicate of six banks. On a monthly basis the Group is obliged to deliver a liquidity report to the bank syndicate. The liquidity amount is required to be above a Minimum Liquidity Amount (as defined in the RCF) throughout the term of the RCF (Minimum Liquidity Covenant). The RCF states that on each quarter date the Consolidated EBITDA and the Total Net Leverage, as defined in the RCF must exceed certain amounts as set out in the revolving facility (Minimum EBITDA Covenant and Total Net Leverage Covenant). The first covenant test date was March 31,2020. As of the reporting date no drawing under the RCF take place. The same covenants must also be complied with under the terms of the senior guarantee facility agreement of EUR 260 million also dated October 9,2019 (SGF) entered basically into with the same bank syndicate. The Mangrove Group and certain of its bank syndicate members also entered into a cash cover loan agreement dated October 9, 2019 and a multilateral guarantee facility agreement also dated October 9, 2019 which was repaid in full in 2020. Each of those agreements contains the Minimum Liquidity Covenant, the Minimum EBITDA Covenant and Total Net Leverage Covenant and the below comments equally apply to these agreements.

The ratio of net debt to consolidated EBITDA as defined in the RCF, is an important financial ratio (debt ratio) used in the Mangrove Group.

Due to the outbreak of COVID-19 in January 2020, the Group faced an increased risk of non-compliance with financial covenants since the second half of FY 2020 which has been mitigated by resetting its financial covenants in December 2020. The aforesaid (original) financial covenants were based on the (original) business plan 2020 - 2024 which was developed in the second half of 2019 and did not include any negative impacts from the COVID pandemic as well as low oil prices. The Group was able to protect its normalized EBITDA and cash position in FY 2020 but was not able to reach the budgeted growth in FY 2020 per the (original) business plan. Therefore, the Group has revised its strategy in mid of 2020 and has undertaken various material cost reduction programs throughout 2020 A new business plan 2021 - 2024 was developed. For details, please see chapter "2.3.2 Kelvion - "High Five" "H5" Strategy" of the management report.

Financial covenants - material risk to not comply with the Minimum EBITDA Covenant and the Total Net Leverage Covenant due to the reduced most recent forecast

As stated in chapter 7.2.2 of the management report the outlook on the global economy is uncertain due to the ongoing COVID-19 pandemic and especially due to the Russian invasion into Ukraine. Management forecasts financial results to be lower than the budget 2022. Therefore, the Group is facing a materially increased risk not to comply with its Minimum EBITDA covenant and its Total Net Leverage Covenant.

Foreign currency sensitivity analysis

The foreign currency risk presented in the sensitivity analysis results from the following transactions:

―	Currency derivatives that are terminated for hedging of previously unrecognized economical hedged items, i.e., for contractually agreed or expected transactions. These hedging derivatives are affecting profit or loss by exchange rate risk.
―	Unsecured foreign currency transactions
―	The translation of foreign currency receivables or liabilities at the closing rate has a direct effect on earnings.

(EUR thousand)

Base currency	Foreign currency	Nominal amount		Profit/loss for the year 2021
			+10 %	-10 %
EUR	CNY	40,186	2,954	-3,611
EUR	USD	33,164	-2,057	2,473
EUR	GBP	18,042	1,336	-1,633
USD	CNY	15,881	969	-1,184
EUR	PLN	15,257	-908	1,110
EUR	CZK	12,032	859	-1,050
BRL	USD	3,811	-175	214
EUR	AED	3,284	-245	299
EUR	CNH	2,844	258	-316

(EUR thousand)

Base currency	Foreign currency	Nominal amount		Profit/loss for the year 2020
			+10 %	-10%
EUR	USD	51,374	-2,425	2,898
EUR	CNY	38,629	3,482	-4,256
EUR	GBP	16,323	505	-618
BRL	USD	10,852	-22	27
USD	CNY	8,662	-264	323
EUR	CZK	8,486	356	-435
EUR	PLN	7,399	607	-737
EUR	AED	6,777	-243	297

The calculation has been performed on a nominal underlying of EUR 155,929 thousand (prior year: EUR 163,486 thousand).

The nominal amount relates to all contractually agreed foreign currency cash flows as of the reporting date which are translated into euros at the closing rate.

The potential fluctuations in the profit or loss for the year result primarily from unhedged currency risks.

Interest rate sensitivity analysis

―	Non-derivative fixed-income financial instruments are only subject to balance-sheet interest rate risk if they are measured at fair value. Mangrove Group measures such financial instruments at amortized cost.
―	Non-derivative variable rate financial instruments whose interest payments are not included as hedged items in an economical hedging relationship that is recognized as a cash flow hedge are subject to interest rate risk both in the income statement and in cash flow (cash flow interest rate risk and interest rate risk recognized in profit or loss). The issued fixed rate senior secured bond is the only material financial instrument. Thus, no interest rase rate sensitive analysis is applicable.
―	Embedded derivatives that were separated from the bonds do not include material interest rate risk due to a change in fair value which derives from various early redemption options.
―	Currency derivatives are not subject to material interest rate risk and therefore have no effect on interest rate sensitivity.

Capital management

Working capital is another key element of capital employed. Working capital management begins before an order is accepted with the payment terms that are offered or negotiated.

(EUR thousand)	12/31/2021	12/31/2020
Financial Liabilities (as defined in the financial covenants)	-404,964	-357,789
Plus: Cash and Cash Equivalents	71,572	89,565
Total Net Debt	333,392	-286,224
Consolidated adjusted EBITDA LTM	-62,553	-66,969
Total Net Leverage Ratio	5,33	4,27

Legal risks associated with the acquisition of Galapagos BidCo Group

4. Non-current assets held for sale and discontinued operations

4.1 Discontinued operations - Sale of the Heller division which is part of the DCS business of ENEXIO

The segment ENEXIO consists of three business units: Dry Cooling Systems (DCS), Service Solutions and Water Technologies (WT). The market for Dry Cooling was on historic lows in 2017 and 2018. Management has decided in 2019 to exit the DCS business with a sale or partial sale of the DCS business as preferred option and a wind-down scenario as an alternative.

ENEXIO Management GmbH as seller and MVM Magyar Villamos Müvek Zrt. as purchaser have signed a sale and purchase agreement ("SPA") dated October 27, 2020 regarding the shares of ENEXIO Hungary Zrt. including ENEXIO Hungary's two Chinese subsidiaries ENEXIO Cooling Systems (China) Co. Ltd. and ENEXIO Cooling Systems Trading (Beijing) Co. Ltd. (Heller disposal group). The contract was subject to closing conditions. The closing of the transaction occured as of December 31, 2020.

(EUR thousand)	Heller disposal group 2020
Other intangible assets	10,837
Property, plant and equipment	7,346
Deferred tax assets	1,617
Inventories	2,797
Trade receivables and other receivables	17,633
Other operating assets	1,930
Income tax receivables	-
Other financial assets	34,915
Cash & cash equivalents	1,144
Provisions	-1,402
Liabilties	-22,562
Net identifiable assets	54,255
Loss from sale of Heller Group	148
Purchase price agreed	54,107
- Non-cash settled purchase price	33,645
- Purchase price received in cash	20,462
- Cash disposed of	-1,144
- Related transaction costs	-2,163
Net cash inflow	17,155

All additions, disposals, depreciation and amortization to intangible assets and tangible assets incurred in the period from January 1st, 2020 to December 31, 2020 within the Heller business have been recognized under assets held for sale. The table below presents the development of intangible and tangible assets of the Heller business as of December 31, 2020 and for the period January 1st, 2020 to December 31, 2020.

(EUR thousand)	intangible assets 2020	tangible assets 2020
Opening Account	10,944	8,024
Addition - first-time consolidation	-	-
Additions	404	752
Disposal	-499	-1,267
Currency translations	-12	-227
Disposal - deconsolidation	-10,837	-7,346
Carrying amount at Dec. 31, 2020	-	-

Due to the sale of the Heller business at year-end 2020, there is no impact on the net assets and financial position from discontinued operations as of December 31, 2021.

Profit and loss statement of the Heller business in the period January 1st, 2020 to December 31, 2020:

(EUR thousand)	Heller disposal group 2020
Revenues	49,658
Expenses	-43,198
Result from operating activities	6,160
Net financial income (+)	-95
Earnings before taxes (EBT)	6,365
Income tax expenses (-)	-1,869
Profit after tax from discontinued operations	4,496

Due to the sale of the Heller business at year-end 2020, there is no impact on the results of operations from discontinued operations as of December 31, 2021.

4.2 Asset held for sale

In 2020, management has decided to exit the ENEXIO Water business and the ENEXIO Service business with a sale. Buyers were found for both business areas in 2021 and corresponding share purchase and transfer agreements were concluded. As both businesses do not meet the criteria for discontinued operation according to IFRS 5.32, all assets were reclassified to assets held for sale and all liabilities were reclassified to liabilities held for sale. The profit and loss statement were not reclassified.

The net identifiable assets are composed as follows:

2021 (in thousand EUR)	Disposal group real estate	Disposal group WATER-Business	Disposal group SERVICE-Business
Other intangible assets	0	0	0
Property, plant and equipment	3,246	249	0
Other financial assets	0	863	0
Deferred tax assets	0	107	0
Inventories	0	2,602	0
Trade receivables and other receivables	0	1,345	0
Other operating assets	0	254	0
Other financial assets	0	30	0
Cash & cash equivalents	0	1,049	0
Assets held for sale	3,246	6,499	0
Provisions	0	-2,557	0
Liabilities	0	-2,665	0
Deferred tax liabilities (DTL)	0	-198	0
Liabilities held for sale	0	-5,420	0
Net identifiable assets	3,246	1,079	0

2020 (in thousand EUR)	Disposal group WATER-Business	Disposal group SERVICE-Business
Other intangible assets	48	643
Property, plant and equipment	2,257	367
Other financial assets	781	-
Deferred tax assets	153	4
Inventories	1,872	607
Trade receivables and other receivables	1,512	6,906
Other operating assets	417	349
Other financial assets	30	-
Cash & cash equivalents	275	30
Assets held for sale	7,345	8,906
Provisions	-1,803	-1,176
Liabilities	-2,036	-6,699
Deferred tax liabilities (DTL)	-247	-265
Liabilities held for sale	-4,086	-8,140
Net identifiable assets	3,259	766

Closing of a share purchase and transfer agreement regarding the ENEXIO Water business

On 07/08 October 2021 a share purchase and transfer agreement was concluded for the shares of ENEXIO companies comprising the Water business. The deal was closed on Jan 03, 2022. In the consolidated financial statements of Mangrove LuxCo III S.à r.l. 2021, the assets of the respective ENEXIO companies were classified as "assets held for sale". The impacts on the earnings and cash position of the Group are not material.

Closing of a share purchase and transfer agreement regarding the ENEXIO Service business

On 20 October 2021 closing in connection with the share purchase and transfer agreement for the shares of ENEXIO companies comprising the Service business took place. In the consolidated financial statements of Mangrove LuxCo III S.à r.I. 2020, the assets of the respective ENEXIO companies were classified as "assets held for sale". The overall impact on the Group's earnings and liquidity position is not material.

Impairment losses on the disposal group

As of December 31, 2020 Impairment losses of EUR 4,302 thousand were incurred on the disposal group at the lower of its carrying amount and fair value less costs to sell, which have been recognized under "Impairment expenses". The impairment losses reduced the carrying amount of intangible assets as well as property, plant, and equipment within the asset held for sale in 2020. In addition, a further EUR 1,592 thousand of impairment losses were recognised as of 31 December 2021.

Sale of Disposal Group real estate

5. Consolidated statement of financial position disclosures: Assets

5.1 Goodwill

In the Mangrove Group, the segment ENEXIO constituted a cash-generating unit until 2020. The larger former segment Kelvion is split into the four business units Refrigeration Technologies, Machine Cooling Systems, Thermal Engineered Solutions and Plate Heat Exchangers.

The following table shows the allocation of goodwill to the cash-generating units of the Mangrove Group:

	Kelvion				Total
(EUR thousand)	Refrigeration Technologies	Machine Cooling Systems	Thermal Engineered Solutions	Plate Heat Exchangers
Goodwill as of Dec. 31, 2020	32,746	40,630	18,140	33,758	125,275
Goodwill as of Dec. 31, 2021	32,746	40,630	18,140	33,758	125,275

The recoverable amount of each cash-generating unit of the Group as of December 31, 2021 is determined by calculating an individual value in use by applying the discounted cash flow method taking into account existing business developments as well as long-term expectations. The business plan consists of a detailed planning for the year 2022 as well as a strategic planning for the years 2023 and 2024. This detailed planning has been expanded by two years, of which the year 2025 is a transitional period and the year 2026 is used as terminal value.

In the base case scenario of the business plan no impairment incurred as shown in the table below.

	Kelvion				Total
(EUR thousand)	Refrigeration Technologies	Machine Cooling Systems	Thermal Engineered Solutions	Plate Heat Exchangers
Recoverable amount as of Dec. 31, 2021	161,153	146,119	95,812	186,879	589,963
Carrying amount as of Dec. 31, 2021	107,587	105,517	66,138	170,443	449,685
Headroom as of Dec. 31, 2021	53,566	40,602	29,674	16,436	140,278

Although the estimation of the discounted future cash flows is believed to be appropriate, changes in assumptions or circumstances could require changes in the analysis. The goodwill impairment test as of December 31, 2021 leads to no impairment, as the recoverable amounts of the business units are higher than the carrying amount of the respective business unit assets.

The value in use is based on the following key assumptions: For the period beyond the detailed planning horizon, cash flows are based on an extrapolation using a growth rate of 1.00 percent. This underlying growth rate does not exceed the average long-term growth for the markets in which the business units operate. The CGU-specific total cost of capital assumed for discounting is based on a risk-free long-term interest rate of 0.1 percent and a market risk premium of 7.5 percent. Additionally, beta factors, a borrowing risk premium as well as capital structures were derived from a peer group for each cash-generating unit. Also, unit-specific tax rates were applied.

The following table presents the applied sustainable growth rate and the cost of capital factors used to discount the expected cash flows:

	Sustainable Growth Rate	Weighted average cost of capital
	2021	2021
Refrigeration Technologies	1.00 %	8.54 %
Machine Cooling Systems	1.00 %	8.49 %
Thermal Engineered Solutions	1.00 %	8.61 %
Plate Heat Exchangers	1.00 %	8.82 %

Refrigeration Technologies, sensitivity analysis of recoverable amount:

in EURk	WACC
EBIT Margin	8.04%	8.54%	9.04%
6.10%	161,286	149,451	139,099
6.60%	173,995	161,153	149,923
7.10%	186,703	172,855	160,747

Machine Cooling Systems, sensitivity analysis of recoverable amount:

in EURk	WACC
EBIT Margin	7.99%	8.49%	8.99%
8.61%	149,501	138,671	129,205
9.11%	157,594	146,119	136,092
9.61%	165,686	153,568	142,979

Thermal Engineered Solutions, sensitivity analysis of recoverable amount:

in EURk	WACC
EBIT Margin	8.11%	8.61%	9.11%
5.09%	93,360	83,991	75,814
5.59%	106,189	95,812	86,755
6.09%	119,017	107,633	97,695

Plate Heat Exchangers, sensitivity analysis of recoverable amount:

in EURk	WACC
EBIT Margin	8.32%	8.82%	9.32%
8.23%	189,980	177,550	166,604
8.73%	200,085	186,879	175,252
9.23%	210,189	196,207	183,900

The sensitivity analyses shows that an impairment is unlikely to incur when varying certain key assumptions.

5.2 Other intangible assets (including right of use assets)

The carrying amount of other intangible assets changed as follows:

(EUR thousand)	Market-related intangible assets	Customer-related intangible assets	Contract-based intangible assets	Technology-based intangible assets	Internally generated intangible assets	Right of use assets	Total
Jan. 1, 2020
Opening Account	19,586	49,299	1,168	45,688	10,821	59,537	186,099
Changes in 2020
Addition	0	0	101	2,370	5,485	23,529	31,485
Disposals	0	0	-5	0	0	-1,296	-1,301
Amortization	-2,024	-12,171	-487	-6,284	-2,510	-14,382	-37,858
Impairment	0	0	0	-360	0	0	-360
Reclassification	0	0	490	-1,883	1,393	0	0
Reclassification held for sale	2	0	-52	-37	0	-604	-691
Currency translation	0	-1	11	519	539	-2,074	-1,006
Carrying amount at Dec. 31, 2020	17,564	37,127	1,226	40,013	15,728	64,710	176,368
Dec. 31, 2020
Cost	19,588	49,298	1,671	46,297	18,238	78,498	213,590
Cumulative amortization and impairment losses	-2,024	-12,171	-445	-6,284	-2,510	-13,788	-37,222
Carrying amount	17,564	37,127	1,226	40,013	15,728	64,710	176,368
Jan. 1, 2021
Opening Account	17,564	37,127	1,226	40,013	15,728	64,710	176,368
Changes in 2021
Additions	0	397	460	1,111	7,196	17,108	26,272
Disposals	-600	0	0	0	0	-6,876	-7,476
Amortization	-2,028	-11,542	-526	-6,243	-3,683	-13,428	-37,450
Impairment loss	0	0	0	0	0	0	0
Reclassification	0	0	162	1,350	-1,512	0	0
Currency translation	2	-634	32	34	13	2,466	1,913
Carrying amount at Dec. 31, 2021	14,938	25,348	1,354	36,265	17,742	63,980	159,627
Dec. 31, 2021
Cost	19,389	40,562	1,880	35,735	17,474	52,950	167,990
Cumulative amortization and impairment losses	-4,451	-15,214	-526	530	268	11,030	-8,363
Carrying amount	14,938	25,348	1,354	36,265	17,742	63,980	159,627

Additions to right of use assets mainly result from leasing additions in the field of land and buildings. Additions to internally generated intangible assets mainly relate to Computer software.

Regarding Right of use assets according to IFRS 16 see more details in Note "8. Lease".

Other intangible assets have finite useful lives and are amortized on a straight-line basis using the following useful lives:

	Useful life
Market-related intangible assets	3 - 20 years
Customer-related intangible assets	5 - 20 years
Contract-based intangible assets	1 -15 years
Technology-based intangible assets	1 - 20 years

5.3 Property, plant and equipment

Property, plant and equipment changed as follows:

(EUR thousand)	Land and buildings (owner occupied)	Technical equipment and machinery	Other equipment, operating and office equipment	Total
Jan. 1, 2020
Opening Account	69,992	66,552	29,389	165,933
Changes in 2020
Additions	775	7,177	5,558	13,510
Disposals	0	-549	-660	-1,209
Depreciation	-4,184	-10,549	-6,890	-21,623
Impairement losses	-3,942	-245	-34	-4,221
Reclassification	1,125	288	-1,413	0
Reclassification into asset held for sale	0	-2,262	-362	-2,624
Currency Translation	-2,579	-2,188	537	-4,230
Carrying amount at Dec. 31, 2020	61,187	58,224	26,125	145,536
Dec. 31,2020
Cost	69,054	65,689	39,823	174,566
Cumulative depreciation and impairment losses	-7,867	-7,465	-13,698	-29,030
Carrying amount	61,187	58,224	26,125	145,536
Jan. 1, 2021
Opening Account	61,187	58,224	26,125	145,536
Changes in 2021
Additions	1,212	16,075	6,772	24,059
Disposals	-201	-463	-200	-864
Depreciation	-4,232	-10,931	-4,678	-19,841
Impairment losses	0	-1,543	0	-1,543
Reclassification into assets held for sale	-3,232	-14	0	-3,246
Group internal Transfers	0	55	-24	31
Currency Translation	5,247	2,008	-2,116	5,139
Carrying amount at Dec. 31, 2021	59,981	63,411	25,879	149,271
Dec. 31, 2021
Cost	66,701	80,850	45,817	193,368
Cumulative depreciation and impairment losses	-6,720	-17,439	-19,938	-44,097
Carrying amount	59,981	63,411	25,879	149,271

The majority of additions in the reporting period comprised projects in Western Europe (EUR 11,529 thousand), in Asia Pacific (EUR 5,339 thousand), in North America (EUR 4,013 thousand) and to a lesser extent in Eastern Europe (EUR 3,133 thousand).

Items of property, plant and equipment are depreciated on a straight-line basis using the relevant residual values and the following useful lives:

	Useful life
Buildings and parts of buildings	2 to 50 years
Technical equipment and machinery, other equipment	1 to 40 years
Operating and office equipment	1 to 11 years

Depreciation of property, plant and equipment is mainly reported in cost of sales.

The underlying residual values and useful lives are reviewed at each reporting date and adjusted if necessary.

Regarding property, plant and equipment that have been pledged or otherwise secured we refer to Note 6.5.

Impairment losses in the amount of EUR 1,543 thousand relate to the Asia-Pacific region.

5.4 Equity-accounted investments

The Equity-accounted investments include shares of 51% in ENEXIO Power Cooling Solutions India Private Ltd., Chennai, Madras, India. The share of profit or loss of equity accounted investees recognized in profit or loss in the current period totals EUR -197 thousand (prior year: EUR -524 thousand). The relevant figures for equity-accounted investments are based on the most recent available annual financial statements.

The following overview presents the key figures for the most relevant / material equity-accounted joint ventures:

(EUR thousand)	12/31/2021	12/31/2020
Revenue	13,757	13,616
Profit/loss after tax	-385	-1,027

(EUR thousand)	12/31/2021	12/31/2020
Assets
Non-current assets	2,327	2,414
Current assets	15,482	13,402
Liabilities
Non-current liabilities	-	-31
Current liabilities	-14,664	-12,438

5.5 Other financial assets

Other financial assets are composed of the following items:

(EUR thousand)	12/31/2021	12/31/2020
Re- imbursement right	-	34,486
External sales commissions PoC-contracts	79	39
Investments in unconsolidated subsidiaries and other equity investments	-	-
Derivative financial instruments	-	208
Miscellaneous other financial assets	203	388
Other non-current financial assets	282	35,121
Bank draft	3,873	3,962
Derivative financial instruments	3,545	2,390
Other receivables from non-consolidated companies and other equity investments	-2,144	-1,989
External sales commissions PoC-contracts	515	1,738
Sundry miscellaneous other financial assets	10,037	9,189
Other current financial assets	15,826	15,290
Total	16,108	50,411

The bank drafts are only attributable to China. The re-imbursement right from the previous year is attributable to the settlement of a legacy power cooling project in South-Africa as described in the subsequent events section in the notes to the financial statements 2020.

Derivative financial instruments are explained in more detail in Note 6.10.

The maturity structure of other financial assets are as follows:

(EUR thousand)	12/31/2021	12/31/2020
Carrying amount before impairment losses	16,108	50,411
Impairment losses	-	-
Carrying amount	16,108	50,411
of which not overdue at the reporting date	16,102	50,341
of which past due at reporting date	6	70
Past due periods (time bands)
less than 30 days	-	-
between 31 and 60 days	-	-
between 61 and 90 days	-	-
between 91 and 180 days	-	-
between 181 and 360 days	-	2
more than 360 days	6	68

Sundry miscellaneous other financial assets are not impaired. Regarding trade receivables that have been pledged or otherwise secured refer to Note 6.5.

5.6 Other current assets

Other current assets are composed of the following items:

(EUR thousand)	12/31/2021	12/31/2020
Other receivables from tax authorities	22,223	18,585
Prepaid expenses	7,078	8,113
Retentions from factors	3,158	2,694
Other current assets	32,459	29,392

Receivables from tax authorities primarily comprise VAT and similar tax receivables.

5.7 Inventories

Inventories are composed of the following items:

(EUR thousand)	12/31/2021	12/31/2020
Raw materials, consumables, and supplies	83,839	54,600
Work in progress	53,080	41,174
Finished goods and merchandise	16,923	13,176
Advance payments ^*	13,831	7,247
Total	167,673	116,197

^* These advanced payments economically belong to inventories.

Mangrove Group wrote-down inventories to its net realizable value amounting to EUR 53 thousand (2020: EUR 1,380 thousand). Write-ups, following a change in measurement factors, totaled EUR 49 thousand (2020: EUR 329 thousand). Both have been recognized in cost of sales.

Lack of usability is taken into account for work in process and finished goods.

Regarding those inventories that have been pledged or otherwise secured we refer to Note 6.5.

5.8 Trade receivables and other receivables

Trade receivables and other receivables are composed of the following items:

(EUR thousand)	12/31/2021	12/31/2020
Trade receivables and other receivables	157,120	133,366
of which from third parties	156,784	133,057
of which from non-consolidated companies and other equity investments	336	309
Gross amount due from customers for contract work (contract assets)	25,627	63,812
Total	182,747	197,178

The average payment period and volume of receivables outstanding are according to common market terms.

Mangrove Group maintains a factoring facility (maximum volume: EUR 25 million). As of the reporting date December 31, 2021 the facility has been utilized by EUR 24.8 million.

The maturity structure of trade receivables and other receivables (without trade receivables from affiliated companies) from third parties is as follows:

(EUR thousand)	12/31/2021	12/31/2020
Carrying amount before impairment losses	167,243	149,371
Impairment losses	10,459	16,314
Carrying amount	156,784	133,057
of which not overdue at the reporting date	115,853	94,877
of which past due at reporting date	40,931	38,180
Past due periods (time bands)
less than 30 days	19,195	18,582
between 31 and 60 days	4,319	5,052
between 61 and 90 days	2,955	3,245
between 91 and 180 days	6,509	3,849
between 181 and 360 days	2,760	3,238
more than 360 days	5,192	4,214

Contract balances

The gross amount due from and to customers for contract work is composed of the following items:

(EUR thousand)	12/31/2021	12/31/2020
Capitalized production cost of contract assets	971,507	1,125,943
plus net gain from contract assets	151,855	140,582
less realized losses	-4,673	-6,850
less progress billings and down payments	-1,138,315	-1,217,515
valuation allowance	-734	-302
Total	-20,360	41,858
Gross amount due from customers for contract work (included in trade receivables)	25,627	63,812
Gross amount due to customers for contract work (included in other liabilities)	-45,987	-21,954
Total	-20,360	41,858

Progress billings and down payments received on construction contracts amounted to EUR 1,138,315 thousand as of December 31, 2021 (2020: EUR 1,217,515 thousand).

Customer retentions amounted to EUR 293 thousand (2020: EUR 9 thousand).

Revenue of EUR 245,283 thousand was recognized within the reporting period from construction contracts (2020: EUR 272,629 thousand).

The Group does not consider the risk profile of its trade and other receivables to have changed materially as a result of the COVID-19 pandemic.

5.9 Cash and cash equivalents

Cash and cash equivalents comprise cash funds and overnight deposits. Restricted cash consists of term deposits and bank deposits and amounts to EUR 52 thousand.

(EUR thousand)	12/31/2021	12/31/2020
Unrestricted cash	71,972	91,135
Restricted cash	52	208
Total	72,024	91,343

6. Consolidated statement of financial position: Equity and liabilities

6.1 Equity

Subscribed capital

Legal reserve

Capital reserve

Retained Earnings

Retained earnings comprise the result from previous year and the profit or loss of the current period.

Accumulated other comprehensive income

Non-controlling interests

Non-controlling interests represent the proportional interests in net assets to be allocated to others than the equity holder of the company. In 2021 EUR 167 thousand net income (prior year: EUR 64 thousand loss) was attributable to the non-controlling interests. The remaining changes are driven by effects of foreign currency fluctuations.

6.2 Tracking preferred equity certificates

The Company acquired Galapagos BidCo Group on October 9, 2019. Financing of the acquisition was done inter alia by a bridge loan of EUR 140,000,000 provided to the Company by the indirect shareholder Mangrove LuxCo I S.à r.l. on October 9,2019. The final maturity date for the loan is four years after the date of the transaction, i.e. October 8, 2023. The loan does not accrue interest for the first six months after the transaction date.

After the transaction date Mangrove LuxCo I S.à r.l. transferred the loan agreement and the EUR 140,000,000 loan receivable to its subsidiary Mangrove LuxCo II S.à r.l. which is the sole shareholder of the Company. On March 11, 2020 Mangrove LuxCo II S.à r.l. contributed the loan receivable in the full amount of EUR 140,000,000 to the capital contribution account (account 115 "apport en capitaux propres non rémunéré par des titres"of the Luxembourg Standard Chart of Accounts) of the Company.

With Shareholder resolution as of December 22, 2020 the sole shareholder Mangrove LuxCo II S.a. r.l. to convert an aggregated amount of EUR 136,528,353 into tracking preferred equity certificates ("TPECs"). The company issued 13,652,835,300 TPECs, having a value of EUR 0.01 each, representing a total issue of EUR 136,528,353. As of December 31, 2021 TPECs are recognized at EUR 147,879,168 including an interest of EUR 11,350,815. Following the TPECs issuance and as security package in relation to certain facilities agreements entered into by the Company (including a EUR 65 million revolving facility, a EUR 260 million facilities agreement and a senior secured note indenture), the Company granting the TPECs Pledge to the benefit of the Security Agent and entered into the TPECs Pledge Agreement for the purpose thereof.

6.3 Provisions

The following table shows the composition of and changes in provisions in 2020 and 2021:

(EUR thousand)	Guarantees, warranties	Litigations risks	Construction-related	Sundry other provision	Total
Jan. 1, 2020
Opening Account	23,089	17,297	89,688	56,844	186,918
Changes in 2020	-
Additions	12,210	10,348	1,209	9,338	33,105
Utilization	-4,981	-1,472	-15,063	-25,539	-47,055
Reversal	-3,779	0	-1,473	-505	-5,757
Reclassifications	207	-62	-265	120	0
Reclassifications into liabilities held for sale	-15	0	-645	-660	-1,320
Unwinding of discount	0	0	8,819	3	8,822
Exchange differences	-539	-55	-4,602	-133	-5,329
Balance at Dec. 31, 2020	26,192	26,056	77,668	39,468	169,384
of which non-current	1,423	11,185	59,943	26,173	98,724
of which current	24,769	14,871	17,725	13,295	70,660
Jan. 1, 2021
Opening Account	26,192	26,056	77,668	39,468	169,384
Changes in 2021
Additions	6,780	3,502	13,800	12,644	36,726
Utilization	-8,044	-18,984	-12,984	-21,077	-61,089
Reversal	-4,230	0	-66,630	-8,848	-79,708
Unwinding of discount	0	0	10,194	0	10,194
Exchange differences	150	30	2,593	399	3,172
Balance at Dec. 31, 2021	20,848	10,604	24,641	22,586	78,679
of which non-current	1,259	8,703	9,463	7,896	27,321
of which current	19,589	1,901	15,178	14,690	51,358

Provisions for guarantees and warranties

Litigation risks

Construction related provisions

In connection with an ongoing legacy (since 2007) project in South Africa, Mangrove Group had accounted for a project related provision amounting to EUR 49.3 million. Regarding this project, the parties agreed on a risk sharing mechanism with GEA AG, the former owner of Kelvion Group in 2014. A corresponding reimbursement right was accounted under non-current sundry miscellaneous other financial assets (refer to section 6.5). In March 2021, a final settlement regarding the project in South Africa was negotiated following a ruling of the arbitration court in South-Africa.

Sundry other provisions

Other provisions mainly comprise the following items: Anticipated losses on pending transactions (EUR 4.5 million), purchase price allocation related to contingent restructuring cost in connection with the winddown of the DCS business of ENEXIO (4.5 million) as well as remaining other provisions (EUR 10.9 million).

6.4 Employee benefit obligations

Employee benefit obligations are composed of the following items:

(EUR thousand)	12/31/2021	12/31/2020
Obligations under pension plans	34,229	37,319
of which defined benefit pension plans	34,229	37,241
of which defined contribution pension plans	-	78
Other employee benefit obligations	143	-
Partial retirement	917	1,193
Jubilee benefits	1,786	1,839
Redundancy plan and severance payments	-	-
Other non-current obligations to employees	2,556	2,321
Non-current employee benefit obligations	39,631	42,672
Redundancy plan and severance payments	2,626	12,366
Outstanding vacation, flexitime/overtime credits	7,650	6,999
Bonuses	12,588	12,432
Other current obligations to employees	3,930	4,362
Current employee benefit obligations	26,794	36,159
Total employee benefit obligations	66,425	78,831

6.4.1 Defined benefit pension plans

The post-retirement benefits are adjusted by minimum of 1 percent each year, according to the occupational retirement act (§ 16 Betriebsrentengesetz).

The pension liabilities are partly covered by reinsurance policies.

All liabilities were actuarially valued as of December 31, 2021.

Mangrove Group does not believe that the pension liabilities pose any risks over and above the customary extent and the general risks described above.

Pension provisions and funded status

The changes in the present value of the defined benefit obligation the plan assets and the pension provisions were as follows:

(EUR thousand)	12/31/2021	12/31/2020
Present value of defined benefit obligation as of beginning of fiscal year	37,609	34,698
Current service cost	1,056	1,156
Past Service Cost - Plan Amendment	-	-
Interest cost from discounting unwinding on defined benefit obligations	171	307
Actuarial gains or losses	-3,324	2,735
from changes in demographic assumptions	31	34
from changes in financial assumptions	-3,036	2,879
from experience adjustments	-319	-177
Benefits directly paid in respect of any settlements	-93	-
Payments without settlements	-735	-717
Reclassification to discontinued operations	-435	-570
Present value of defined benefit obligation as of end of fiscal year	34,249	37,609
Fair value of plan assets as of beginning of fiscal year	290	527
Interest income on plan assets	3	9
Employer contributions	-	-
Actuarial gains on plan assets	-2	-5
Losses on settlements	-	-
Payments without settlements	-271	-241
Fair value of plan assets at the end of fiscal year	20	290
Funded status/ Net carrying amount	34,229	37,319

The net carrying amount of the defined benefit obligation changed as follows in short fiscal year 2021:

(EUR thousand)	12/31/2021	12/31/2020
Net carrying amount as of beginning of fiscal year	37,319	34,171
Changes through profit or loss	1,224	1,455
Current service cost	1,056	1,156
Past Service Cost - Plan Amendment	-	-
Net interest on net defined benefit liability	168	299
Actuarial gains and losses	-3,322	2,740
from changes in demographic assumptions	31	34
from changes in financial assumptions	-3,034	2,884
from experience adjustments	-319	-177
Cash-effective changes	-557	-477
Employer contributions	-	-
Benefits directly paid in respect of any settlements	-93	-
Payments without settlements	-464	-477
Other changes	-435	-570
Transfer of assets	-435	-570
Net carrying amount	34,229	37,319

The following overview shows the net carrying amount broken down into plans with and without plan assets:

(EUR thousand)	12/31/2021	12/31/2020
Present value of funded obligations	1,738	2,182
Fair value of plan assets	-24	-293
Net carrying amount of funded obligations	1,714	1,889
Present value of unfunded obligations	32,515	35,430
Net carrying amount of unfunded obligations	32,515	35,430
Net carrying amount	34,229	37,319

The following overview shows the present value of the defined benefit obligation broken down into active employees, former employees with vested benefits, and benefit recipients:

(EUR thousand)	12/31/2021	12/31/2020
Active employees	15,065	17,862
Vested terminated employees	14,082	14,053
Pensioners	5,082	5,404
Total	34,229	37,319

Plan assets

On the relevant reporting date, the plan assets to cover the pension obligations consisted solely of insurance policies for which there is no quoted market price in an active market.

Mangrove Group has therefore decided to utilize the internal financing effect of the pension provisions and only fund a relatively small proportion of the pension obligations using plan assets.

In fiscal year 2022, no material additions are expected to be made to the plan assets of the pension plans.

Actuarial assumptions

(Percent)	12/31/2021	12/31/2020
Discount factor	1.0	1.0
Inflation	1.8	2.0
derived: wage and salary increase rate	2.8	3.0
derived: pension increase rate	1.0	1.0

On 4 October 2018, Heubeck AG published new mortality tables (Heubeck mortality tables 2018G), for the valuation of all German plans as at 31 December 2021, these tables are used. On this basis, the life expectancy of a 65-year-old pensioner as of the reporting date is 21.42 years for men and 24.8 years for women.

An increase of 50 basis points in the discount rate decreases the present value of the defined benefit obligation by 7.55 percent. If the assumed inflation rate declines by 25 basis points, the present value of the defined benefit obligation decreases by 0.2 percent.

Future cash flows

The following benefit payments are expected to be made under the pension plans in the coming years:

(EUR thousand)	2022	2023	2024	2025	2026	2027-2031
Payments under pension plans	861	1,312	1,132	1,071	1,123	6,270

The average weighted duration of the pension obligations is:

(Years)	12/31/2021	12/31/2020
Duration	17.0	18.0

6.4.2 Defined contribution pension plans

Various companies operate defined contribution pension plans. Under these plans, the obligation does not lie with Mangrove Group, but with the respective pension funds. Contributions totaling EUR 3,031 thousand (2020: EUR 2,943 thousand) were paid in the fiscal year 2021. Contributions of EUR 19,165 thousand (2020: EUR 17,802 thousand) were paid to state pension insurance schemes. These contributions are recognized as personnel expenses at the same time as the relevant service is rendered.

6.4.3 Redundancy plan and severance payments

The provisions for redundancy plan liabilities and severance payments are mainly accrued for the restructuring of ENEXIO's Dry Cooling Business (announced in 2019) and for an overhead cost reduction program in Kelvion that was communicated to the employees in late 2020. These restructuring and optimization programs were proceeded mainly during 2020 and will be finalized in 2023. The restructuring expenses have been recognized within the functional costs of the relevant departments (mainly within the cost of sales and general administrative expenses).

6.5 Non-current bonds

The position is made up as follows:

(EUR thousand)	Interest rate in % Dec. 31, 2021	Face value	Maturity	Carrying amount	Accrued interest
Senior Secured Notes	7,775	356,233	9/10/2025	356,233	16,867
Agio (net of contingent liability)				4,232
Debt discount				-14,418
Total bonds (carrying amount)				346,047

(EUR thousand)	Interest rate in % Dec. 31, 2020	Face value	Maturity	Carrying amount	Accrued interest
Senior Secured Notes	7,775	356,233	9/10/2025	356,233	1,231
Agio (net of contingent liability)				3,703
Debt discount				-17,525
Total bonds (carrying amount)				342,411

Mangrove LuxCo III S.à r.l. issued bonds at the regulated market of the International Stock Exchange (Guernsey) (MANIIILN).

As of December 31, 2021, the position Senior Secured Notes (SSNs) includes an Agio of EUR 29,933 thousand (prior year: EUR 37,417 thousand). The purchase price allocation recognized a contingent liability relating to the SSNs which amounts to EUR 34,165 thousand (prior year: EUR 41,120 thousand) as of December 31, 2021. The agio and the contingent liability is amortized by using the effective interest rate method and recorded as an additional interest expense in the interest result. Debt discount is being amortized in interest result using the effective interest rate method. Accrued interests have been recognized as other current financial liabilities.

General remarks

On October 9, 2019 the Company has issued €356,233,492 in aggregate principal amount of New Notes ("SSNs") in connection with the acquisition of Galapagos BidCo Group as described elsewhere in these notes (e.g. in Note 1. General information). The notes are due on the October 8, 2025 at which date the principal shall be payable in full. The notes were issued under an indenture among, inter alia, the issuer, Mangrove LuxCo III S.à r.l. as well as the issuer's subsidiaries that guarantee the notes. Galapagos BidCo S.à r.l. and Kelvion Finance GmbH, and GLAS Trustee Limited act as trustee.

Pursuant to paragraph (1) of the Notes, the Company elected (the "PIK Election") for the interest period ending on December 15,2021 to pay an aggregate interest of 9.00% per annum on the outstanding principal amount of the Notes in an amount equal to €16,030,507.90 by (i) payment of 0.25% per annum cash interest in the amount of €445,291.87 and (ii) increasing the principal amount of the outstanding Notes by a principal amount corresponding to an interest rate of 8.75% per annum ("PIK Interest") in the amount of €15,585,216.00.

Right to redeem the notes

At any time prior to the second anniversary of the Restructuring Effective Time, the Issuer was entitled, at its option, to redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the applicable "make whole" premium described in the Notes Indenture and accrued and unpaid interest to (but not including) the date of redemption. At any time prior to the second anniversary of the Acquisition of Galapagos BidCo Group (i.e. October 9, 2021), the Company was entitled, at its option, during each calendar year, to redeem up to 10% of the aggregate principal amount of Notes at a redemption price equal to 103.8875% of the principal amount redeemed plus accrued and unpaid interest to (but not including) the date of redemption.

Mandatory repayment upon request in case of change of control

Pledge agreements - securitization of the Notes

(EUR thousand)	2021	2020
Shares pledged	868,171	1,264,111
Intellectual property	1,003	819
Land and buildings	7,963	7,527
Technical equipment and machinery	35,643	33,391
Inventories	56,292	44,032
Trade Receivables	81,377	52,490
Intercompany receivables	482,055	664,290
Other financial assets	275	151
Cash and cash equivalents	42,104	48,735
Total securities	1,574,883	2,115,546

Limitations of undertakings, financial covenants and events of default

6.6 Bank loans

The maturity of the bank loans is as follows:

(EUR thousand)	12/31/2021	12/31/2020
<1year	21,768	4,404
Total	21,768	4,404

The Group has a multi-currency revolving credit facility (RCF) of EUR 65 million, which is partially utilized with an amount of EUR 15 million as of December 31, 2021. The RCF can be drawn for EURIBOR plus 4.25 percentage points. Further detail of the RCF are included in section 3 financial risk management under the header financial covenants.

Additionally, liabilities to banks, other than the RCF, arose mainly in China, India, Brazil and to a minor extent in Germany.

6.7 Other Financial Liabilities

Other Financial liabilities are composed of the following items:

(EUR thousand)	12/31/2021	12/31/2020
Liabilities under finance leases	51,323	52,964
Other non-current liabilities	1,474	1,252
Non-current financial liabilities	52,797	54,216
Accrued interests for bonds	16,867	1,231
Liabilities under finance leases	12,170	11,381
Liabilities from derivatives	2,161	1,699
Other current liabilities	1,000	875
Current financial liabilities	32,198	15,186
Total financial liabilities	84,995	69,402

Further information on lease liabilities is given in Note 8.

Derivative financial instruments are explained in Note 6.10.

6.8 Trade payables

Trade payables are as follows:

(EUR thousand)	12/31/2021	12/31/2020
Trade payables	152,359	132,408
of which to non-consolidated companies and other equity investments	-	-

Trade payables are unsecured and are all due within one year.

In response to the COVID-19 pandemic, many national governments put in place measures to support businesses through the unprecedented market conditions created by the crisis. The measures differed from country to country, however generally related to postponement into the future of amounts payable to the government. Examples of amounts which have been postponed include VAT, payroll taxes and property taxes. Where applicable and permitted, the Group has taken advantage of these measures.

6.9 Other liabilities

Other liabilities are composed of the following items:

(EUR thousand)	12/31/2021	12/31/2020
Other non-current liabilities	401	561
Payments on account received in respect of orders and construction contracts	38,961	30,812
Gross amount due to customers for contract work	46,710	21,954
Liabilities from other taxes	16,693	13,522
Other liabilities	13,342	15,647
of which social security	3,345	4,086
of which other liabilities to employees	2,870	2,618
Other current liabilities	115,706	81,935
Total other liabilities	116,107	82,496

Payments on account received in respect of orders and construction contracts amounting to EUR 39,961 thousand (2020: EUR 30,812 thousand) are secured.

The gross amount due to customers for contract work is the aggregate amount of orders whose progress billings exceed the capitalized cost plus the contract gains and losses recognized.

6.10 Financial instruments

The following tables provide an overview of the composition of financial instruments as of December 31, 2021 by class within the meaning of IFRS 7 as well as by measurement category.

	Carrying amount
December 31, 2021	Fair value through profit or loss	Designated at fair value through OCI equity instruments	Amortised Cost	Measurement in accordance with other IFRSs	Total
(EUR thousand)
Financial assets
Derivatives	3,545	-	-	-	3,545
Trade receivables and other receivables	-	-	157,120	25,627	182,747
Cash and cash equivalents	-	-	72,024	-	72,024
Other financial assets	-	-	15,657	29,365	45,022
	3,545	-	244,801	54,992	303,338
Financial liabilities
Tracking preferred equity certificates / shareholder loan	-	-	147,879	-	147,879
Derivatives	2,161	-	-	-	2,161
Trade payables	-	-	152,366	-	152,366
Other financial liabilities	-	-	82,834	-	82,834
Non-current bonds	-	-	346,047	-	346,047
Bank loans	-	-	21,768	-	21,768
	2,161	-	750,894	-	753,055

	Carrying amount
December 31, 2020	Fair value through profit or loss	Designated at fair value through OCI equity instruments	Amortised Cost	Measurement in accordance with other IFRSs	Total
(EUR thousand)
Financial assets
Derivatives	2,598	-	-	-	2,598
Trade receivables and other receivables	-	-	133,366	63,812	197,178
Cash and cash equivalents	-	-	91,343	-	91,343
Other financial assets	-	-	50,316	26,889	77,205
	2,598	-	275,025	90,701	368,324
Financial liabilities
Tracking preferred equity certificates / shareholder loan	-	-	136,528	-	136,528
Derivatives	1,699	-	-	-	1,699
Embedded derivatives	-	-	-	-	-
Trade payables	-	-	132,408	-	132,408
Other financial liabilities	-	-	67,703	-	67,703
Non-current bonds	-	-	344,530	-	344,530
Bank loans	-	-	4,404	-	4,404
	1,699	-	685,573	-	687,272

Categorization within the levels of the fair value hierarchy is based on the measurement of the underlying inputs:

Level 1 inputs:	quoted prices (unadjusted) in active markets for identical financial assets and liabilities.
Level 2 inputs:	quoted market prices that are observable as direct (prices) or indirect (derived from prices) inputs used to measure fair value and that are not quoted prices as defined by Level 1.
Level 3 inputs:	inputs that are not based on observable market data.

The following table shows the categorization of financial assets and financial liabilities into the three-level fair value hierarchy.

December 31, 2021	Fair Value
(EUR thousand)	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Derivatives	-	3,545	-	3,545
Other financial assets	-	-	-	-
	-	3,545	-	3,545
Financial liabilities measured at fair value
Derivatives	-	2,161	-	2,161
Embedded derivatives	-	-	-	-
	-	2,161	-	2,161
Financial liabilities not measured at fair value
Non-current bonds	-	346,047	-	346,047
	-	346,047	-	346,047

December 31, 2020	Fair Value
(EUR thousand)	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Derivatives	-	2,598	-	2,598
Other financial assets	-	-	-	-
	-	2,598	-	2,598
Financial liabilities measured at fair value
Derivatives	-	1,699	-	1,699
Embedded derivatives	-	-	-	-
	-	1,699	-	1,699
Financial liabilities not measured at fair value
Non-current bonds	-	344,530	-	344,530
	-	344,530	-	344,530

Trade receivables, cash and cash equivalents, other financial assets and liabilities have short remaining maturities in general. As a result, their fair values correspond to the carrying amounts.

Regarding Tracking preferred equity certificates / shareholder loan we refer to Note 6.2.

The fair value of senior secured notes is calculated as the present value of the expected future cash flows. The fair value is estimated a net present value calculated using discount rates derived from quoted yields of securities with similar maturity and credit rating that are traded in active markets. The bond was issued on "The international Stock Exchange" (TISE) in 2019. In principle, the Mangrove LuxCo III S.à r.l. bond is tradable under WKN A2SAU0 or ISIN XS2059543921. However, there is no active market, as there is virtually no trading in the bond. The future cash flow of the preferred equity certificates is expected according to the maturity of the bonds. Market interest rates for the appropriate maturities are used for discounting purposes, this measurement method corresponds to the level 2 of the fair value hierarchy according to IFRS.

Derivative financial instruments

Forward premiums and discounts are derived from yield curves observable at the reporting date. The fair value of currency options is calculated on the basis of recognized measurement models. Fair value is affected by the remaining term of the option, the current exchange rate, the volatility of the exchange rate, and the underlying yield curves.

Mangrove Group uses currency forwards as derivative financial instruments to hedge economically foreign currency risk for existing or planned underlying transactions.

	12/31/2021		12/31/2020
(EUR thousand)	Notional value	Fair value	Notional value	Fair value
Assets
Currency derivates not included in a hedging relationship	79,392	2,102	88,888	1,659
Liabilities
Currency derivates not included in a hedging relationship	59,869	717	47,296	895

The carrying amounts for the derivatives presented in the balance sheet are gross amounts.

Income and expenses

	12/31/2021			12/31/2020
(EUR thousand)	Net finance costs	of which interest income/ expense	of which impairment losses/ reversals of impairment losses	Net finance costs	of which interest income/ expense	of which impairment losses/ reversals of impairment losses
Financial assets/liabilities at fair value through profit of loss	393	-	-	787	-	-
Financial assets at fair value through OCI	-	-	-	-	-	-
Financial assets at amortized cost	5,734	6,630	-896	899	447	452
Financial liabilities at amortized cost	-51,666	-52,906	0	-41,353	-41,142	-
Group Total	-45,539	-46,276	-896	-39,667	-40,695	452

7. Consolidated statement of profit or loss for the period January 1, 2021, to December 31, 2021

7.1 Revenue

The revenue of the Mangrove Group is composed of the following items:

(EUR thousand)	2021	2020
From construction contracts	245,283	272,629
From sale of goods and services	531,048	474,307
From service agreements	158,030	170,774
Sales corrections	-2,619	-1,448
Total revenue	931,742	916,262
of which from third parties	931,742	913,597
of which from non-consolidated companies and other equity investments	0	2,665

The group further disaggregates its revenues by segments as well as the recognition type of revenues:

2021 (EUR thousand)	RT	MCS	TES	PHE	ENEXIO, Holding and consolidation	Group total
Products transferred at a point in time	209,495	121,971	86,479	170,346	17,343	605,634
Products and services transferred over time	32,963	20,895	207,966	38,198	26,086	326,108
Total revenue	242,458	142,865	294,446	208,544	43,429	931,742

2020 (EUR thousand)	RT	MCS	TES	PHE	ENEXIO, Holding and consolidation	Group total
Products transferred at a point in time	151,539	144,983	83,029	151,785	30,489	561,823
Products and services transferred over time	35,864	29,969	194,587	36,970	57,050	354,439
Total revenue	187,402	174,951	277,615	188,755	87,539	916,262

Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.

	Group total
(EUR thousand)	2021	2020
Contract balances
Receivables, which are included in 'trade and other receivables'	155,775	124,948
Receivables, which are included in 'assets held for sale'	1,345	8,418
Total Receivables	157,120	133,366
Contract Assets	25,627	63,812
Advance payments received	-38,961	30,089
PoC credit balances	-47	-22,677
Contract Liabilities	-39,008	-52,766

Trade receivables are unconditional claims for payment asserted by the group in respect of services rendered and invoiced. Trade receivables do not general have an interest component and are due within 30 days as a rule.

Contract liabilities are essentially advance payments from customers for the construction of customer-specific plant and equipment for which revenues are realized over time.

7.2 Other income

Other income is composed of the following items:

(EUR thousand)	2021	2020
Exchange rate gains	8,982	14,205
Income from the reversal of provisions related to the purchase price allocation	18,455	3,027
Income from reversal of impairment of assets	6,911	1,858
Gains on the measurement of foreign currency derivatives	2,296	938
Income from disposal of non-current assets	2,655	949
Miscellaneous other income	6,213	6,564
Total	45,512	27,541

7.3 Other expenses

Other expenses are composed of the following items:

(EUR thousand)	2021	2020
Exchange rate losses	7,204	14,862
Losses on the measurement of foreign currency derivatives	1,946	159
Bad debt allowances on trade receivables	6,801	1,303
Other Taxes	892	1,075
Losses on the disposal of noncurrent assets	401	1,046
Imapirment of non current assets and assets held for sale	3,135	4,442
Miscellaneous other expenses	5,678	1,544
Total	26,057	24,431

7.4 Presentation of selected income and expenses by cost type

Cost of materials

The subsequent table shows the cost of materials recognized in profit or loss under the total cost format:

(EUR thousand)	2021	2020
Raw Materials and Supplies	445,097	436,654
Purchased services	39,245	40,571
Total Cost of Material	484,342	477,225

Personnel expenses

The main components of personnel expenses are as follows:

(EUR thousand)	2021	2020
Wages & salaries	220,365	233,564
Severance payments (incl. restructuring)	3,551	8,092
Other personnel expenses	1,949	1,814
Social securities and defined benefit costs	45,311	42,900
Total personnel expenses	271,176	286,370

Average Employees ^* :

	2021		2020
RT	1,223	25.5%	1,199	22.9%
MCS	724	15.1%	734	14,0%
TES	1,251	26.0%	1,377	26.3%
PHE	792	16.5%	769	14.7%
ENEXIO, Global Sales and Holding	813	16.9%	1,157	22.1%
Group Total	4,803	100.0%	5,237	100.0%

^* Full-time equivalents (FTE) excluding vocational trainees and inactive employment contracts

7.5 Depreciation, amortization, and impairment losses

Depreciation, amortization, and impairment losses totaling EUR 59,434 thousand (2020: EUR 64,062 thousand) were charged on property, plant and equipment, intangible assets, and financial assets in the reporting period. The amount includes depreciation and amortization on the PPA amounting to EUR 18,466 thousand (2020: EUR 19,397 thousand). Depreciation, amortization and impairment losses are mainly included in cost of sales. The amortization of the right of use asset is amounting to EUR 13,428 thousand (2020: EUR 14,382 thousand). Impairment losses in 2021 amounting to EUR 1,543 thousand (2020: EUR 4,581 thousand). For further details we refer to sections 5.1, 5.2 and 5.3.

7.6 Other interest income and interest expenses

Interest income

Interest and similar income are composed of the following items:

(EUR thousand)	2021	2020
Interest income on receivables, cash investments, and marketable securities	6,546	299
of which third parties	4,143	241
of which from non-consolidated companies and other equity investments	2,403	58
Other interest income	Ill	148
of which third parties	111	148
Total	6,657	447

Interest income on receivables, cash investments, and marketable securities from third parties mainly come as a result of the arbitration award of Kelvion's Medupi project. Interest payments on all amounts awarded by the tribunal of EUR 4,039 thousand had been received.

(EUR thousand)	2021	2020
Loans and receivables	6,657	447
of which third parties	4,254	389
of which from non-consolidated companies and other equity investments	2,403	58

Interest expenses

Interest and similar expenses comprised the following items:

(EUR thousand)	2021	2020
Interest expenses on bonds and liabilities to banks	51,904	38,944
of which third parties	40,553	38,944
of which from related parties	11,351	0
Interest cost from discount unwinding on pension	166	247
Interest cost from discount unwinding on discounted provisions and other employee benefit obligations	3,062	2,480
Interest of expense - Finance leases	2,444	2,916
Other interest expenses	808	8,981
Total interest expenses	58,384	53,568

Interests on bonds incurred (including the release of capitalized financing costs) amounted to EUR 33,565 thousand (2020: EUR 31,327 thousand), on PECs EUR 11,351 thousand (2020: EUR 0), on liabilities to banks EUR 6,956 thousand (2020: EUR 7,707 thousand) and on the revolving credit facility EUR 32 thousand (2020: EUR 0 thousand). Interests on liabilities to banks mainly result from guarantee commissions EUR 6,085 thousand (2020: EUR 4,408 thousand).

(EUR thousand)	2021	2020
Financial liabilities at amortized cost	54,154	47,881
of which third parties	42,803	47,881
of which from related parties	11,351	-
Financial liabilities not measured in accordance with IFRS 9	4,230	5,687
Total	58,384	53,568

Interest expenses for financial liabilities not measured in accordance with IFRS 9 mainly refer to compounding for provisions and pension obligations.

Interest income generated on advance payments and progress payments received reduces the cost of the asset.

7.7 Taxes on income

The income tax expense is calculated on the basis of Mangrove Group's structure as of December 31, 2021.

The income tax expense referred to continuing operations is composed of the following items:

(EUR thousand)	2021	2020
Current taxes	-12,561	-4,876
- thereof: Luxembourg	606	-606
- thereof: Other countries	-13,167	-4,270
Deferred taxes	-6,268	2,815
Total	-18,829	-2.061

The expected tax expense for the entire Mangrove LuxCo III S.à r.l. Group (including discontinued operations) is calculated using the tax rate of 24.94 percent (2020: 24.94 percent) which is the applicable corporate income tax rate in Luxembourg.

	2021		2020
	(EUR thousand)	(%)	(EUR thousand)	(%)
Profit (+)/Loss (-) before tax	-21,736		-57,186
Gain (+)/Loss (-) before tax - discontinued operations	-		-6,365
Profit (+)/Loss (-) before tax Mangrove LuxCo III S.à.r.l. Group	-21,736		-63,551
Expected tax income or expense @ 24.94 %	5,421	-24.94	15,850	-24.94
Non tax deductible expense/tax free income	-35,532	163.47	-11,565	18.20
Trade tax additions and deductions	-349	1.61	-332	0.52
Change in valuation allowances	-5,037	23.17	-8,744	13.76
Foreign tax rate differences	15,966	-73.45	1,639	-2,58
Other income tax	-	-	-	-
Prior year income tax	1,973	-9.08	2,923	-4.60
Others	-1,271	5.85	-1,832	2.88
Income tax expense (-)/income (+) and effective tax rate	-18,829	86.63	-2,061	3,24
Income tax income and effective tax rate on continuing operations	-18,829	86.63	-2,061	3.24

Non-tax-deductible expenses refer mainly to the non-deductible interest expense on the level of Kelvion Finance GmbH and Mangrove GermanCo II GmbH.

The foreign tax rate differences are due to different tax rates outside Luxembourg, which vary from between 0.00 percent (UAE) and 34.00 percent (Brazil) (2020: 0.00 percent (UAE) and 34.00 percent (Brazil)).

Deferred tax assets and liabilities as of December 31, 2021 are composed of the following items:

	Deferred tax assets		Deferred tax liabilities
(EUR thousand)	2021	2020	2021	2020
Goodwill	17	41	-	-
Intangible assets	77	360	29,135	45,543
Property, plant, and equipment	3,159	517	8,186	12,962
Other non-current financial assets	-	-	4,976	7,717
Non-current assets	3,253	918	42,297	66,222
Inventories	2,722	11,952	969	409
Trade receivables	986	1,059	4,280	11,125
Other current financial assets	7,414	1,175	2,028	1,848
Current assets	11,123	14,186	7,277	13,381
Total assets	14,376	15,104	49,574	79,603
Provisions	13,808	24,064	783	1,437
Employee benefits	4,705	7,142	203	98
Non-current financial liabilities	11,753	22,098	561	511
Noncurrent liabilities	30,266	53,304	1,547	2,046
Provisions	3,638	4,568	532	623
Current financial liabilities	530	4,089	17	36
Trade payables	1,744	10,026	355	82
Other current financial liabilities	629	5,236	868	9,303
Current liabilities	6,541	23,919	1,772	10,044
Total liabilities	36,806	77,223	3,319	12,090
Deferred taxes on temporary differences	51,182	92,326	52,893	91,693
Tax loss carryforwards	3,809	7,758	-	-
Offsetting of deferred taxes	-25,404	-55,384	-25,404	-55,384
Recognized deferred taxes	29,587	44,701	27,489	36,310

In 2021, EUR 721 thousand deferred tax expense (2020: EUR 431 thousand deferred tax income) have been recognized directly in other comprehensive income (OCI).

The amount and the expiry period of corporate income tax losses (without discontinued operations) are illustrated as follows:

(EUR thousand)	2021	2020
Within one year	14,924	1,066
Within two years	9,751	59
Within three years	9,443	3,621
Within four years	3,559	5,294
Within five years or later	3,920	8,739
Indefinite carryforward	668,206	403,151
Total tax losses carried forward	709,803	421,930

As of December 31, 2021, no deferred tax assets were recognized for corporate income tax loss carryforwards in the amount of EUR 691,638 thousand (2020: EUR 387,233 thousand), thereof interest carryforward in the amount of EUR 100,462 thousand (2019: EUR 45,824 thousand), as their utilization is not sufficiently certain.

As of December 31, 2021, no deferred assets were recognized on deductible temporary differences in the amount of 29,428 thousand Euro (2020:41,488 thousand Euro).

8. Lease

Lease accounting since October 9, 2019

―	Mangrove exercises the exemption for lease agreements with a maximum term of 12 months from the date of provision and low-value assets. Low-value assets are generally defined as leased with aggregated payments of EUR 20,000 or less.
―	Mangrove separates non-lease components, such as services, from lease payments.
―	Lease liabilities are measured at the present value of the remaining lease payments. Lease payments are discounted at the rate implicit in the lease if that rate can readily be determined. Otherwise, discounting is at the incremental borrowing rate. The incremental borrowing rate, which is mainly applied, is based on risk-adjusted interest rates and determined for the respective lease terms and currencies.
―	A right-of-use asset is initially recognized at the same amount as the lease liability. Differences may arise from lease payments before commencement date and initial direct costs.
―	After capitalization at commencement date, the right-of use asset is measured at cost and depreciated over the lease term using the straight-line method.
―	Extension and termination options are part of a number of leases particularly of real estate. Extension and termination options are taken into account on recognition of the lease liability only if it is reasonably certain that these options will be exercised in the future. When contract terms are being determined, consideration is given to all facts and circumstances that offer an economic incentive for exercising extension options or not exercising termination options. Changes in lease terms arising from the exercise of an extension option or non-exercise of a termination option are only considered when determining lease terms if sufficient certainty exists. Estimates and expectations which are asserted at the commencement date of the lease liability and the right-of-use asset and pertain to future payments not yet determined on the date of provision are assessed continuously during the lease term. If subsequently improved or changed knowledge influences the expected payment profile over time, the lease liability is remeasured.

The following right-of-use assets are recognized under other intangible assets:

(EUR thousand)	Carrying amount Dec. 31, 2020	Addition	Disposal	Disposal	DOP
Land and buildings	59,943	13,880	-6,535		-
Technical equipment and machinery	895	648	-31	-	-
Other equipment, operating and office equipment	3,872	2,579	-310		-
Group Total	64,710	17,108	-6,876		-

(EUR thousand)	Amortization	Currency translation	Carrying amount Dec. 31, 2021
Land and buildings	-10,505	2,414	59,197
Technical equipment and machinery	-396	2	1,119
Other equipment, operating and office equipment	-2,527	50	3,664
Group Total	-13,428	2,466	63,980

The corresponding lease liabilities are explained under financial liabilities (see Note 6.7).

The maturities of the outstanding lease payments comprised the following items:

Maturities of future minimum lease payments

(EUR thousand)	12/31/2021	12/31/2020
Not later than one year	13,524	12,591
Between one and five years	33,137	30,444
More than five years	43,886	41,670
Group Total	90,546	84,705

In addition, the following amounts were recognized in the income statement in 2021 in connection with lease contracts in which Mangrove was the lessee:

Income Statement Impact of Leases

(EUR thousand)	2021	2020
Interest expenses for lease liabilities	2,444	2,916
Income from sublease agreement	-188	-295
Expenses for short-term leases with terms longer than one month and up to 12 months	985	1,509
Expenses low-value asset leases (excluding short-term leases)	186	202
Group Total	3,427	4,332

Cash outflows related to lessee activities in 2021 amounted to: EUR 16,689 thousand (2020: EUR 17,411 thousand).

9. Contingent liabilities, other financial obligations, and litigation

9.1 Contingent liabilities

(i)	it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
(ii)	the amount of the obligation cannot be measured with sufficient reliability.",

i.e. uncertainties for which the outcome has not been determined. If the occurrence is probable and the outcome can be estimated reliable, a liability is recorded in the balance sheet. As of December 31, 2020, Mangrove Group does not have any material contingent liabilities.

9.2 Other financial obligations

Other financial obligations as of December 31, 2021 related to purchase commitments and bank guarantees.

Purchase commitments

Purchase commitments as of December 31, 2021 can be broken down as follows:

Purchase commitments

(EUR thousand)	12/31/2021	12/31/2020
Inventories	167,477	70,993
Intangible assets	92	25
Tangible assets	6,904	1,689
Group Total	174,473	72,707

Bank Guarantees

Mangrove Holding Group companies utilized bank guarantees in the amount of EUR 137.6 million (as of December 31, 2020: EUR 238.3 million). The major part of the lines is granted by a bank consortium (total line EUR 260 million, thereof EUR 114.8 million utilized) and in addition there are guarantees utilized from bilateral bank relationships.

Bank guarantees

(EUR thousand)	12/31/2021	12/31/2020
Advance payment guarantees	864	1,696
Warranty guarantees	1,242	688
Performance guarantees	1,643	1,731
Other guarantees	226	-
Group Total	3,975	4,115

9.3 Litigation

The following claims have been brought which arise out of the Restructuring:

•	Galapagos BidCo S.à r.l. has commenced proceedings in England against inter alios the Security Trustee under the Intercreditor Agreement which effected the Restructuring, the trustee who held rights on behalf of the Galapagos Senior Notes and each of the plaintiffs in the New York and Luxembourg proceedings described below, requesting that the English Court makes a series of declarations that the Restructuring complied with the terms of the Intercreditor Agreement. The English proceedings do not, at this stage, contain any claim for damages. A challenge to the jurisdiction of the English Court to hear this claim has been lodged by two of the defendants in these proceedings and was heard in December 2020. This challenge was dismissed by the English Court on 19 January 2021. Thus, the proceedings are ongoing with a 12-16-day trial to take place in QI 2023.
•	A claim in the Supreme Court of the State of New York by a beneficial holder of the Galapagos Senior Notes ("NY Claimant") against inter alios Galapagos Holding (former indirect parent of Galapagos BidCo S.à r.l.) and certain of its subsidiaries (now being subsidiaries of Mangrove Group) relating to the Restructuring. The plaintiff alleges that the Restructuring wrongly deprived it of value by diverting assets away from the Group and releasing certain guarantees. The plaintiff seeks: (i) damages; and (ii) a reversal of the steps taken to affect the Restructuring. In addition, the plaintiff seeks a declaration that the release of liabilities under the Galapagos Senior Notes Indenture pursuant to the provisions of the former Intercreditor Agreement applying to certain liabilities of the Group was invalid (in other words, that this part of the Restructuring also be reversed). The Supreme Court of the State of New York decided on 22 July 2020 to stay this action pending a decision from the English Court as to its jurisdiction in these matters (as referred to above). The plaintiff has indicated that it intends to appeal this decision, but no substantive appeal has been served until now. Following the decision by the English Court on 19 January 2021, the proceedings in New York are still stayed.
•	On October 31, 2019 main insolvency proceedings were opened over the assets of Galapagos S.A. in Düsseldorf, Germany. There are two appeals pending at the German Federal Supreme Court on the jurisdiction of the Düsseldorf insolvency court. Following such appeals, on December 17, 2020, the German Federal Court of Justice referred certain legal questions concerning matters of European insolvency law (and, consequently, the jurisdiction of the Düsseldorf court in such insolvency proceedings) to the Court of Justice of the European Union for determination. The Court of Justice of the European Union rendered its decision on 24 March 2022, which confirmed that the German courts did not have jurisdiction to appoint the German administrator on 9 September 2019. Until the German Federal Court of Justice renders its decision (based on the Court of Justice of the European Union decision) the German insolvency proceedings remain in place.
•	Following an application of the purported administrator of Galapagos S.A., the District Court of Düsseldorf, Germany, has issued an injunction (einstweilige Verfugung) against Mangrove LuxCo IV S.à r.l., ordering an escrow agent to hold the shares in Galapagos BidCo S.à r.l. This order was successfully appealed and, consequently, the injunction was lifted in June 2021. Further, by the same plaintiff, a main proceeding (Hauptsacheverfahren) has been initiated against inter alios Mangrove LuxCo IV S.à r.l. and a first hearing is currently scheduled for December 2022.
•	The purported administrator of Galapagos S.A., Luxembourg (former 100 percent shareholder of Galapagos BidCo S.à r.l.) has brought a claim against Mangrove LuxCo IV S.à r.l. and Galapagos BidCo S.à r.l. in Luxembourg detailing his allegations that the Restructuring (i.e. the refinancing of Galapagos Group and the sale of Galapagos BidCo S.à r.l. to Mangrove Group) involved a fraudulent exercise of a Luxembourg share pledge and that it should, therefore, be unwound. However, no steps have been taken by the administrator to progress this claw back action. In addition to the main claim, following the administrator's application the Luxembourg Court granted an ex parte "preservation order" whereby a trustee was appointed to prevent an actual or de facto liquidation of Galapagos BidCo S.à r.l. This escrow order has been successfully appealed and set aside by the Luxembourg Court. This decision was then appealed by the administrator, but this appeal was rejected by the Court. A further appeal has been made by the administrator to the Luxembourg Cour de cassation and the parties are part way through a hearing as to whether the escrow order should be put back into place.

10. Other disclosures

10.1 Consolidated cash flow statement disclosures from continuing operations

Cash flow from operating activities - continuing operations - amounts to EUR 30.1 million in fiscal year 2021. This cash-flow is driven by an EBITDA of EUR 89.4 million and a EUR 15.0 million lower trade working capital. These positive impacts are partially offset by changes of provisions for litigation and claims (EUR - 15.5 million), for social plan and redundancy payments (EUR -9.8 million), for warranties (EUR -5.4 million), for the ENEXIO Wind-down (EUR -10.6 million), for provisions of defined benefit obligations (EUR -2.7 million) and non cash impacts of EUR -22.4 million mainly due to the settlement of a legacy project (EUR -15.2 million). The Cash flow from operating activities - continuing operations of EUR 30.1 million has been mainly burdened by the cash outflow from the execution of the four cost reduction initiatives to achieve substantial improvements in the cost base of the Group, as explained in chapter "2.3.2 Kelvion - "High Five" "H5" Strategy" of the management report, as well by the usage of a litigation provision due to a dispute resolution with a customer.

Cash flow from operating activities - discontinuing operations - in the year 2020 of EUR 17.2 million relates to the Heller Business within the DCS business of the ENEXIO segment. The three Heller subsidiaries were sold with effective date December 31, 2020 and generated a cash-in flow amounting to EUR 17.2 million (net of cash and after related transaction costs).

The reconciliation of movements of liabilities to cash flows arising from financing activities is presented in the following table:

(EUR thousands)		Changes from financing cash-	Non Cash-effective changes
	Balance at 1/1/2021	flows	Foreign exchange rates	Changes in fair values	Other changes	Balance at 12/31/2021
Non-current financial liabilities (excl. lease liabilities)	1,252	-7,401	7,623	0	0	1,474
Current financial liabilities (excl. lease liabilities and accrued interests)	2,574	-925	1,050	462	0	3,161
Finance Lease liabilities	64,345	-20,016	2,056		17,108	63,493
Bond Liabilities	343,642	0	0	0	19,272	362,914
Total	411,813	-28,342	-10,729	462	36,380	431,042

(EUR thousands)		Changes from financing cashflows	Non Cash-effective changes
	Balance at 1/1/2020		Foreign exchange rates	Changes in fair values	Other changes	Balance at 12/31/2020
Non-current financial liabilities (excl. lease liabilities)	897	355	0	0	0	1,252
Current financial liabilities (excl. lease liabilities and accrued interests)	4,951	-2,725	-10	358	0	2,574
Finance Lease liabilities	58,488	-15,162	-1,437		22,456	64,345
Bond Liabilities	341,460	0	0	0	2,182	343,642
Total	405,796	-17,532	-1,447	358	24,638	411,813

10.2 Government grants

Government grants of EUR 673 thousand (2020: EUR 1,154 thousand) were received in fiscal year 2021, mainly EUR 366 thousand (2020: EUR 193 thousand) for Research and Development, EUR 120 thousand (2020: EUR 86 thousand) for Land and EUR 62 thousand (2020: EUR 361 thousand) for employment programs.

10.3 Related party disclosures

10.3.1 General information on related parties of the Group

The ultimate controlling party of the Mangrove Group is Mangrove LuxCo III S.à.r.l.

Pursuant to IAS 24 persons or entities that (jointly) control or are (jointly) controlled by Mangrove Group shall be disclosed, unless they are included in the consolidated financial statements.

10.3.2 Transactions with key management personnel

In 2021 the members of the Board of Managers of the parent company earned EUR 9 thousand (2020: EUR 9 thousand) of salaries and attendance fees. Also, at the date of preparation of these consolidated financial statements the parent had not granted loans, advances or other benefits to its managers. In addition, the parent company did not have any pension or guarantee obligations to its members of the Board of managers.

The total remuneration to key management personnel of the Group is presented in Note 10.4. "Remuneration of Mangrove Group management" Information regarding the management participation program for certain key personnel of ENEXIO Group is disclosed in Note 10.5. "Share based payments ENEXIO Group".

10.3.3 Transactions with subsidiaries

(EUR thousand)	Revenue	Other income	Purchase of goods and services	Other expenses	Interest income	Interest expense
2021
Non-consolidated companies	600	-	-	-	-	-
Joint Ventures and other investments	4,011	-	-	-	-	-

(EUR thousand)	Revenue	Other income	Purchase of goods and services	Other expenses	Interest income	Interest expense
2020
Non-consolidated companies	375	-	-	-1,210	58	-
Joint Ventures and other investments	2,290	2	-	-	-	-66

(EUR thousand)	Trade receivables	Trade payables	Other financial assets	Financial liabilities and other liabilities
2021
Non-consolidated companies	1	-	2	-
Joint Ventures and other investments	326	-	380	-

(EUR thousand)	Trade receivables	Trade payables	Other financial assets	Financial liabilities and other liabilities
2020
Non-consolidated companies	2	-1	176	-
Joint Ventures and other investments	135	-	383	-35

10.3.4 Transactions with shareholders

The sole shareholder Mangrove LuxCo II S.à r.l. granted a loan of EUR 140 million to the Group on October 9, 2019 during the acquisition of Galapagos BidCo Group. The loan did not carry interest for the first six months after inception. On March 9, 2020 the shareholder contributed the loan receivable into the capital contribution account of the Company. With Shareholder resolution as of December 22, 2020 the sole shareholder Mangrove LuxCo II S.à. r.l. acknowledge to convert an aggregated amount of EUR 136,528,353 into tracking preferred equity certificates ("TPECs"). As of December 31, 2021 TPECs are recognized at EUR 147,879,168 including an interest of EUR 11,350,815. More details on the TPECS/ shareholder loan are set out in Note 6.2 Tracking preferred equity certificates / Shareholder.

10.3.5 Transactions with other related parties

The Group incurred advisory costs from a Triton related advisory company amounting to EUR 491 thousand (2020: EUR 513 thousand).

Additionally, the Group has financial liabilities towards Triton Fund IV amounting to EUR 1,062 thousand (2020: EUR 833 thousand) as well as EUR 542 thousand (2020: EUR 542 thousand) towards Galapagos MidCo S.à r.l. and EUR 22 thousand (2020: EUR 22 thousand) towards Triton MasterluxCo S.à. r.l.

10.4 Remuneration of Mangrove Group management

The remuneration of the key operating management of Mangrove Group is composed of the following components:

(EUR thousand)	2021	2020
Short term	2,280	2,961
Termination benefits	599	-
Post-employment benefits	-	11
Share-based payments	-	-
Total	2,879	2,972

The remuneration of former members of the key operating management amounts to EUR 0 thousand (2020: EUR 0 thousand).

For more details regarding the share-based payments we refer to Note 10.5.

10.5 Share based payments ENEXIO Group

In October 2016 ENEXIO Group established a management incentive program that entitles senior management personnel to purchase Profit Participation Instruments (PPI). On certain events, the participants are eligible to sell their PPIs to Galapagos BidCo. The share-based payment transactions are cash settled. The method to determine the value of the managers' PPI is fixed in detail in the conditions of the participation plan. The value depends upon the current performance of ENEXIO Group.

Since an observable market price cannot be determined the fair value was determined upon a multiple based model. The expected exercise date was assumed on December 31, 2021. The respective expenses are recognized straight line over the (assumed) vesting period taking into account the time value of money.

Due to the negative development of the ENEXIO group, the carrying amount of the liability including the initial investment of EUR 1.2 million of the participants totals EUR 0.0 million.

10.6 Company bodies

The board members of Mangrove LuxCo III S.à r.l. are:

Pierre-Alexandre Lechantre

Joakim Lindström-Formicola

10.7 Shareholder committees

The members of Kelvion's shareholder committee are:

•	Hubertus Mühlhäuser (Chairman since 01.06.2021)
•	Klaus Stahlmann (Chairman until 31.05.2021)
•	Michael Gahleitner
•	Claus von Hermann

In total, the Group incurred shareholder committee costs amounting to EUR 98 thousand.

10.8 Disclosure of Audit Fees

KPMG Luxembourg, Société Coopérative, Luxembourg, and other member firms of the KPMG network, provided the following services during the past two financial years to Mangrove LuxCo III S.à r.l.:

(EUR thousand)	2021	2020
Audit	2,135	2,370
Tax Consulting Services	1,809	1,946
Audit-related services	-	65
Other services	93	57
Total	4,037	4,438

10.9 Companies exempt under § 264 (3) HGB

―	Kelvion PHE GmbH
―	Kelvion Machine Cooling Systems GmbH
―	Kelvion Brazed PHE GmbH
―	Kelvion Holding GmbH
―	Kelvion Insurance Broker and Services GmbH
―	Kelvion Germany GmbH
―	ENEXIO Management GmbH
―	ENEXIO Germany GmbH
―	Mangrove GermanCo I GmbH
―	Mangrove GermanCo II GmbH

11. Segment reporting

11.1 Disclosures by segment

The new Segment Reporting of the Mangrove Group focuses on the four segments "Kelvion Refrigeration Technologies" ("RT"), "Kelvion Machine Cooling Systems" ("MCS"), "Kelvion Plate Heat Exchangers" (PHE") and "Kelvion Thermal Engineered Solutions" ("TES"). These new "segments" had previously the status of being Kelvion's "business units". All segments are responsible for its respective markets and applications and focus on a distinct technology and product portfolio.

In the past the business activities of the Mangrove Group were divided into the two segments Kelvion and ENEXIO.

For more details regarding the new Segment Reporting we refer to Note 1.3.

Keyfigures by segment:

2021 (EUR thousand)	RT	MCS	TES	PHE	Total of segments	ENEXIO, Holding and consolidation	Group Total
External revenue	319,327	171,412	355,918	272,793	1,119,450	43,440	1,162,890
Intersegment revenue	-76,869	-28,547	-61,472	-64,249	-231,137	-11	-231,148
Total revenue	242,458	142,865	294,446	208,544	888,313	43,429	931,742
EBITDA	23,990	19,343	45,943	11,018	100,294	-10,869	89,425
Depreciation and amortization	-9,435	-14,471	-9,471	-10,094	-43,471	-15,963	-59,434
EBIT	14,555	4,872	36,472	924	56,823	-26,832	29,991
Capital expenditures in assets	4,470	2,793	5,445	10,544	23,252	9,967	33,219
Segment trade working capital	24,409	15,909	6,284	76,123	122,725	-6,912	115,813
Segment assets	159,767	194,659	207,248	229,387	791,061	159,624	950,685

Due to the introduction of the new segment reporting as described in note 1.3.1 Introduction of new segment reporting, the prior year figures of the segments were restated according to the new reporting structure.

2020 (EUR thousand)	RT	MCS	TES	PHE	Total of segments	ENEXIO, Holding and consolidation	Group Total

Mangrove GermanCo I GmbH

Bochum

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

Mangrove LuxCo III S.à r.l.

Luxemburg

Consolidated Financial Statements of Mangrove LuxCo III S.à r.l.

As at and for the period from January 1, 2022 to December 31, 2022

(with the report of the Réviseur d'Entreprises Agréé thereon)

Key figures of Mangrove Group

Mangrove Group Management Report

1. Fundamental information about the Group

1.1 Company information

1.2 Acquisition of Galapagos BidCo S.à r.l. and its subsidiaries and successful Refinancing on October 9, 2019

1.3 Description of the business

1.3.1 Segment Reporting

1.3.2 The four segments of Mangrove Group

2. Objectives and strategies

2.1 Overall strategy and objectives of the Mangrove Group

2.2 Develop innovative products

2.3 Strategy and objectives of Kelvion

2.3.1 Kelvion - organizational set up is supporting the strategy

2.3.2 Kelvion - "High Five" "H5" Strategy

Segment focused recovery program for a post COVID-19 world

Updated H5 business plan in late 2022

3. Research and development

4. Internal management system

4.1 Management structure

4.2 Basis of information

5. Report on economic position

5.1 Macroeconomic environment - The global economy in 2022

The IMF has repeatedly revised growth expectations for 2022 downward

5.2 Industry overview and sector specific development of key markets of the Group in 2022

5.3 Course of business

Budget 2022 - the upper case

Forecast 2022 - the base case

Illustrative down-side scenario

2022 order intake and revenue exceed expectations and adjusted EBITDA is firmly above Budget and previous year - based on a strong second half of the Full Year

6. Results of operations, financial position and net assets

6.1 Results of operations

6.2 Order intake and order backlog

6.2.1 Order intake and order backlog of the Mangrove Group

Order Intake

Order Backlog

6.2.2 Order intake and order backlog of the segment RT

6.2.3 Order intake and order backlog of the segment MCS

6.2.4 Order intake and order backlog of the segment KTS

6.2.5 Order intake and order backlog of the segment PHE

6.3 Revenue

6.3.1 Revenue of the Mangrove Group

Revenue

6.3.2 Revenue of the segment RT

6.3.3 Revenue of the segment MCS

6.3.4 Revenue of the segment KTS

6.3.5 Revenue of the segment PHE

6.4 Consolidated Statement of profit and loss of the Mangrove Group FY 2022

6.5 Reconciliation EBIT to EBITDA and normalized EBITDA

6.6 Employees * by segment

6.7 Financial position and net assets

Capital structure

Non-current assets

Current assets and liabilities

Non-current liabilities

Capital expenditures

Trade working capital

6.8 Cash Flow Statement of continuing operations

Overview of cash flow statement

6.9 Leverage ratio and financial performance key indicators, management of capital employed

Leverage ratio

Financial key performance indicators

Management of capital employed

Project- and activity-based management

Compliance

7. Report on outlook, risks and opportunities

7.1 Forward-looking statements

7.2 Outlook for 2023

7.2.1 Sector specific outlook 2023 and beyond - positive outlook * on an attractive market growing at 3-4 percent p.a. globally

7.2.2 Global economic outlook 2023

Financial budgets for FY 2023 and beyond are based on the October 2022 World Economic Outlook (WEO) from October 2022

The World Economic Outlook (WEO) from April 2023 raises growth expectations for 2023

7.2.3 Outlook Revenue and Earnings 2023

6.6 Employees ^{^*} by segment

7.2.1 Sector specific outlook 2023 and beyond - positive outlook ^{^*} on an attractive market growing at 3-4 percent p.a. globally