Technotrans : Sustainability Report 2023

power to transform

Sustainability Report 2023

Sustainability Report 2023

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Sustainability Report 2023

Dear Readers,

In the fiscal year 2023, technotrans was able to increase its revenue by 10.0% to €262.1 million in a challenging environment, reaching a new all-time high. technotrans demonstrated its resilience and confirmed the successful alignment of the Future Ready 2025 strategy. Sustainability is an integral part of our strategy, and here, too, we were able to achieve a new record. By consistently using self-generated and green electricity, we achieved the lowest CO2 footprint since records began.

Employee Development

A strong and qualified workforce is the driving force behind our innovative products and services. Particularly in the dynamic market environment in which technotrans operates as a technology company, long-term success is inextricably linked to the skills and commitment of our employees. Therefore, we place great importance on the continuous training and professional development of our employees. In fiscal year 2023, we further increased investments in training from an already high level. We are convinced: Our employees are the most valuable part of our company and the key to our sustainable growth.

Sustainable Products

The requirements for our products go far beyond merely meeting technical specifications. The needs of our customers and increasingly demanding regulations reflect the growing importance of the sustainability features of our products. Through intensive research and development,

we ensure our competitiveness and offer our customers products that always meet all legal requirements. However, our own commitment to the sustainability of our products goes far beyond that. By consistently expanding our product portfolio with variants equipped with natural refrigerants and high-efficiency modules, we contribute to sustainability and support our customers in achieving their sustainability goals.

Resource Protection

The quality of technotrans products is a feature particularly valued by our customers. High quality is not only evident in the high reliability of our products but also in their longevity. With their long lifespan and high recyclability, our products help minimize the use of raw materials. With the switch to recyclable packaging material at our Meinerzhagen site, we achieved further progress in reaching the goals of the Future Ready 2025 strategy.

Outlook

technotrans is strongly and securely positioned for the megatrend of decarbonization and the associated electrification, as well as the increasing importance of efficient processes. The strong growth rate of 76% in our focus market Energy Management is proof of this.

Dear readers,

technotrans is ready for the future, and with our Future Ready 2025 strategy, we continue to ensure sustainable success and profitability. We are committed to resolutely pursuing our ESG goals and further developing towards a sustainable economy.

Michael Finger

Robin Schaede

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Content

_ Sustainability in 2023	Page 03
_ Key figures of the technotrans Group	Page 06
_ Business model and reporting	Page 07
_ Sustainability management	Page 07
_ Stakeholder dialogue	Page 08
_ Materiality	Page 09
_ Environmental matters	Page 10
_ Employee matters, training and qualification	Page 26
_ Social matters	Page 32
_ Respects for human rights	Page 32
_ Combating of corruption and bribery	Page 33
_ Sustainability key figures of the Group	Page 35

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2023 financial year: Financial highlights of the technotrans Group

262.1

Revenue

(PY: 238.2 m )

Technology: 199.6	(PY: 180.2	)
Services: 62.5	(PY: 58.0	)

14.2	5.4 %
EBIT	EBIT margin
(PY: 14.3		(PY: 6.0 %)
Technology: 5.2	(PY: 7.3	Technology: 2.6 % (PY: 4.1 %)
Services: 9.0	(PY: 7.0	Services: 14.4 % (PY: 12.0 %)

13.3 %	12.8	56.0 %
ROCE	Free cash flow	Equity ratio
(PY: 13.3 %)	(PY: -3.7 )	(PY: 56.0 %)

0.62	1.24	1,598
Dividend proposal	Earnings per share	Employees
(PY: 0.64 )	(PY: 1.29 )	as of Dec 31, 2023
		(PY: 1,500)

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Combined Non-Financial Statement

BUSINESS MODEL AND REPORTING

The technotrans Group is a technology and services group with worldwide operations, with its head office in Sassenberg. The company's core skill involves application-specific solutions for thermal man- agement. The Group parent is technotrans SE. A detailed description of the business model can be found in the Combined Management Report in the section "Basic profile of the Group".

We used recognised frameworks such as the German Sustainability Code (GSC) and the guidelines of the United Nations Global Compact (UDGC), as well as the EFFAS (European Federation of Financial Analyst Societies) performance indicators, as our basis in preparing the Non-Financial Statement. Ad- ditionally, technotrans reports in accordance with the requirements of the EU Taxonomy Regulation.

SUSTAINABILITY MANAGEMENT

technotrans is exposed to a constantly changing environment. That also includes sustainable corporate governance requirements in respect of our stakeholders. We safeguard our long-term successful business development by maintaining a transparent and constructive dialogue and by approaching opportunities and risks responsibly.

At Board of Management level, CEO Michael Finger holds responsibility for the sustainable corporate governance portfolio. It is handled operationally by the Sustainability Management area.

An effective compliance and Risk Management System as well as an effective Internal Control System (ICS) assure the long-term viability and competitiveness of the technotrans Group by satisfying the legal requirements and contributing towards the attainment of achieve strategic targets.

All entrepreneurial decisions throughout the Group conform to the applicable laws as well as internal rules and voluntary commitments. We are a member of Blue Competence, the sustainability initiative of the German Engineering Federation. We mention especially our membership of the UN Global Compact (UNGC). This core worldwide initiative for sustainable corporate governance revolves around ten principles covering human rights, labour standards, environmental protection and anti- corruption. To embed this bigger perspective in the corporate culture at technotrans, the principles have been incorporated into the technotrans Code of Conduct, which is binding for all employees throughout the Group and serves as a corporate compliance guideline, As such, it constitutes a meaningful tool for implementing the sustainability strategy. In addition to setting fundamental standards for cooperation within the company, it defines how to behave towards external stakeholders. It also contains important regulations on issues such as occupational safety, data protection and IT security. All new employees receive a written copy of the code. Awareness of sustainability aspects is also raised through individual target agreements. Updates to the Code of Conduct and other compliance provisions are communicated via the e-learning platform "technotrans Campus" that has been rolled out Group-wide. The current version of the technotrans Code of Conduct can be accessed on our website.

An effective compliance management system according to DIN ISO 19600 has moreover been im- plemented; the Board of Management bears overall responsibility for it. It is an effective means of assuring Group-wide compliance with statutory requirements and voluntarily adopted principles. The managing directors/general managers of the national and international Group companies are likewise obliged to uphold it and are supported in this by local compliance officers. The latter coordinate,

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Combined Management Report

train and monitor application of the compliance regulations and arrange updates as necessary, for example by revising organisational guidelines.

The whistleblower system is an important element of the compliance management system. It serves to identify and rectify breaches of applicable law and internal corporate guidelines. It also guarantees protection for the whistleblower against civil-law,criminal-law and internal consequences or re- prisals. Within their respective responsibilities for compliance and supervision, the Board of Management and Supervisory Board are informed regularly of current compliance topics through an annual compliance report, as well as directly if necessary. Regular checks are also conducted proactively.

A further important component is the Group-wide Risk Management System based on DIN ISO 31000. This helps technotrans to identify and respond early on to potential opportunities and risks in respect of sustainability aspects, for example. It involves regular, prompt reporting to the Board of Manage- ment, among other things. For further information, please refer to the section "Risk Management and Internal Control System" in the Combined Management Report of this Annual Report.

The German Supply Chain Act (LkSG) took effect on January 1, 2023. It requires sustainable and responsible entrepreneurial behaviour along the global value chain. Enterprises are expected to identify potentially negative effects of their activity on human rights and the environment, and if necessary prevent, remedy or mitigate the consequences of such effects. The obligations include for example guarding against child and forced labour and discrimination, protecting against land grabs, upholding labour and health protection, the right to fair pay and to create trade unions, and protecting against environmental breaches. In order to promote the above human rights and environmental protection, the enterprises in question are obliged to meet defined due diligence obligations. These cover their own area of business, the actions of direct contractual partners in the supply chain and also indirect suppliers if any breaches involving them come to light. Enterprises thus bear responsibility along the entire supply chain.

technotrans has already been indirectly affected by LkSG since the 2023 financial year via a number of customers because the provisions of LkSG already applied from the time it came into force for larger enterprises with over 3,000 employees. From January 1, 2024 it also applies directly to enterprises with over 1,000 employees and therefore to technotrans. In order to handle the complexity of global supply chains and suitably implement LkSG and the due diligence obligations that follow on from it, our Group subsidiary gds has developed a software solution that enables technotrans to monitor supply chains effectively in terms of LkSG compliance.

STAKEHOLDER DIALOGUE

We regard the requirements of our stakeholders as highly relevant We identify the needs of key stakeholders through regular dialogue. We use a variety of information sources and dialogue formats to that end, differentiating between internal communications. The latter comprise communications with customers, press relations (PR) and investor relations (IR) activities.

The technotrans website serves as a key information medium for highlighting sustainability as an area in its own right. Internal communications take the form of interviews, intranet, e-mails, discussions and physical and virtual meetings. Employees receive regular updates across all locations, and where necessary are given training and encouragement to share their suggestions and ideas. In its dialogue with customers, technotrans emphasises its added value as an expert system partner for sustainable

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Combined Non-Financial Statement

production processes. Initial contact with counterparts is often made at trade shows or in one-toone talks.

The Investor Relations area is available to facilitate open-handed communications with private and institutional shareholders, investors and analysts. It can call upon Sustainability Management for specialist support as necessary. The dialogue is conducted in bilateral talks and at conferences and road- shows. technotrans pursues a transparent and open information policy with all stakeholders. The findings from these dialogues shape our business activities, the development of new products and services and our sustainability management work.

MATERIALITY

Relevant sustainability topics for the technotrans Group involve on the one hand those that are crucial to business, and on the other hand those where technotrans can contribute to sustainable devel- opment. Activities that have a major impact on the use of resources, the environment and the climate are also relevant. Social aspects such as treatment of employees, regard for human rights and anti- corruption measures are also key aspects of how we do things.

In the following, we present the key non-financial aspects for the technotrans Group that we have also identified from communications with our stakeholders.

Quantitative reporting uses for example the EFFAS performance indicators selected by the GSC, of which we report on 11 out of 16 on the basis of materiality. These indicators are supplemented by internal key figures that are rated as significant for the technotrans Group based on the materiality analysis. They include the strategic sustainability goals as well as the reporting obligations under the EU Taxonomy Regulation. The scope of the key figures is regularly reviewed and gradually broadened. The development of the key figures over time forms the basis for targeted adjustments. A summary table can be found at the end of this report section.

Based on the principle of materiality, we report selected key figures such as energy consumption only for the domestic production locations and for the Taicang (CN) and Mt Prospect (USA) locations.

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Combined Management Report

NON-FINANCIAL ASPECTS

a) Environmental matters

Protecting the environment and climate is an ambitious but important challenge. In developing innovative solutions for its customers, technotrans makes a significant contribution to protecting precious resources throughout the entire product life-cycle. Sustainable environmental, energy and resource management is especially important at the production locations.

Alongside technotrans' own efforts, regulations are creating increasingly tough sustainability requirements for products and their production process. They include the Ecodesign Directive and the F-Gas Regulation. technotrans always assures conformity at an early point in the process and sets itself the goal of reducing the environmental impact of its own activities and products beyond what is required by law.

This drive inspired the xtend product line in the ECOtec.chiller equipment family, for example, which systematically features power-regulated compressors, fans and pumps. This product line came as a timely response to growing demands for energy and therefore cost efficiency. It has been enthusiastically received by customers. In the ECOtec.chiller product family, almost two-thirds of equipment sold is a high-efficiency xtend version.

Resource-light product development

Developing efficient systems and technical processes is one of technotrans' core skills. This expertise is secured and steadily increased through partnerships with universities and research establishments. As a development partner, technotrans uses its innovative capability to find just the right solution in close collaboration with customers. Its aim is always to come up with products and processes that bring added value for technotrans' customers thanks to their resource-saving,environment-friendly

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