Annual Report of OSRAM Licht Group Fiscal Year 2020 Contents About this Report 1 A Combined Management Report A.1 Business and Environment 3 A.2 Business Performance in 2020 9 A.3 Events After the Reporting Date 32 A.4 Report on Expected Developments and Associated Material Risks and Opportunities 33 A.5 Takeover-related Disclosures, Remuneration Report, Treasury Shares, Corporate Governance Declarations, Non-financial Group Report, and the Managing Board’s Closing Statement on the Dependency Report 47 A.6 OSRAM Licht AG 53 B Consolidated Financial Statements of OSRAM Licht AG for Fiscal Year 2020 According to IFRS B.1 Consolidated Statement of Income 58 B.2 Consolidated Statement of Comprehensive Income 59 B.3 Consolidated Statement of Financial Position 60 B.4 Consolidated Statement of Cash Flows 62 B.5 Consolidated Statement of Changes in Equity 64 B.6 Notes to the Consolidated Financial Statements 65 C Statements and Further Information C.1 Responsibility Statement 133 C.2 Independent auditor’s report 134 C.3 Report of the Supervisory Board 140 C.4 Corporate Governance 148 C.5 Non-financial Group Report 169 C.6 Independent Auditor’s Limited Assurance Report 195 C.7 The Managing Board’s Closing Statement on the Dependency Report 198 Acknowledgments 199 1 About this Report This annual report contains the combined management report and the consolidated financial statements of OSRAM Licht AG and its subsidiaries (‘OSRAM Licht Group,’ ‘OSRAM,’ or ‘we’) for the year ended September 30, 2020, as well as further information. It complies with the annual financial reporting require- ments of section 114 of the Wertpapierhandelsgesetz (WpHG—German Securities Trading Act). The combined management report includes the management report for OSRAM Licht AG in addition to the information on the OSRAM Licht Group. The combined management report also contains the › C.4.2 Remuneration Report S Page 157 and the › C.4.1 Corporate Governance Declaration (incl. Corporate Governance Report). S Page 148 The combined management report—especially the › A.4.1 Report on Expected Developments – contains S Page 33 forward-looking statements that are based on current management estimates regarding future developments. These statements do not constitute a guarantee that these expectations will prove correct. The future per for- mance of the OSRAM Licht Group depends on numerous risks and uncertainties, many aspects of which are outside OSRAM’s sphere of influence. In particular, these include, but are not limited to, the circumstances described in › A.4.2 Report on Risks and Opportunities. As a result, material variances, both negative and S Page 35 positive, could arise between OSRAM’s actual results, profits, and performance and those forecast in our forward-looking statements. OSRAM does not plan and does not assume any separate obligation to update the forward-looking statements over and above regulatory requirements. OSRAM’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations issued by the International Accounting Standards Board (IASB), as adopted by the European Union (EU). Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft has audited the consolidated financial statements and the combined management report. The unqualified audit opinion can be found in › C Statements and Further Information. S Page 132 Fiscal year 2020 for the OSRAM Licht Group and OSRAM Licht AG began on October 1, 2019, and ended on September 30, 2020. This document is a convenience translation of the original German-language document. Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Unless otherwise stated, the number of employees is given in thousands of full-time equivalents (FTEs) as of the reporting date. Cross-references in the text › Internal cross-reference (within the document) ›› External cross-reference (to another document or via the Internet) OSRAM Licht Group—Annual Report 2020 A Combined Management Report 2 Combined 1) Management Report A A . 1 3 A . 5 47 Business and Environment Takeover-related Disclosures, A.1.1 Business Activities and Structure of Remuneration Report, Treasury OSRAM Licht Group 3 Shares, Corporate Governance A.1.2 Performance Management 7 Declarations, Non-financial Group Report and the Managing Board’s Closing Statement on the Dependency Report A . 2 9 A.5.1 Takeover-related Disclosures 47 Business Performance in 2020 A.5.2 Remuneration Report 51 A.5.3 Treasury Shares 52 A.2.1 Overall Assessment by the A.5.4 Corporate Governance Declaration 52 Managing Board of the Current A.5.5 Non-financial Group Report 52 Economic Situation 9 A.5.6 The Managing Board’s Closing A.2.2 Events and Developments Responsible Statement on the Dependency Report 52 for the Course of Business 12 A.2.3 Results of Operations 17 A.2.4 Financial Position 23 A.2.5 Net Assets 27 A.2.6 Reconciliation of Key Performance Indicators 29 A . 6 53 OSRAM Licht AG Disclosures in Accordance with the HGB A.6.1 Business and Operating Environment 53 A.6.2 Results of Operations 53 A . 3 32 A.6.3 Net Assets and Financial Position 54 Events After the Reporting Date A.6.4 Opportunities and Risks 55 A.6.5 Outlook 55 A . 4 33 Report on Expected Developments and Associated Material Risks and Opportunities A.4.1 Report on Expected Developments 33 A.4.2 Report on Risks and Opportunities 35 1) The combined management report includes the management report of OSRAM Licht AG in addition to the information on the OSRAM Licht Group. A.1 Business and Environment A.1 Business and Environment A COMBINED MANAGEMENT Report 3 _ A.1 Business and Environment A . 1 Business and Environment A.1.1 Business Activities and Structure of OSRAM Licht Group A.1.1.1 Business Model OSRAM can look back on an almost 115-year history as an international lighting manufacturer. We are currently undergoing a transformation from a lighting manufacturer into a high-tech photonics company. In addition to lighting, we are increasing our focus on sensors, visualization, and light-based treatments. Our mainly semi- conductor-based products find wide-ranging use in our specialist fields of mobility, safety, connectivity, and health and well-being. Sample applications range from virtual reality, autonomous driving, and high-tech smartphones to intelligent and connected lighting solutions in buildings and the indoor cultivation of plants. In fiscal year 2020, the operating activities covered by our business model were essentially organized into three business units: Opto Semiconductors, Automotive, and Digital. These three business units together with the Group headquarters constituted the OSRAM Licht Group (continuing operations) in the past fiscal year. In its continuing operations, OSRAM employed a total of around 21.4 thousand people as of September 30, 2020 (previous year: 23.5 thousand). Opto Semiconductors (OS) Measured in terms of revenue, the OS Business Unit is one of the world’s leading providers of opto semicon- ductors, which are crucial elements in lighting, visualization, and sensor technology. OS offers a wide range of LEDs in the low-power, mid-power, high-power, and ultra-high-power classes that are used in general lighting, automotive, consumer, and industrial applications as well as infrared, laser, and optical sensors. The main markets for these components are the automotive sector, smartphones, wearables, general lighting, lighting for plants, industrial lighting, and projection. OS and Nichia have been the global leaders in the highly competitive opto semiconductor market for many years. In addition to Lumileds, the relevant competitors in this segment primarily come from Asia and include companies such as Samsung, Sanan, Everlight, Seoul Semiconductor, and MLS. Our APAC reporting region was the largest regional market for sales of OS products, followed by EMEA. OS employed around 10.4 thousand people as of September 30, 2020 (previous year: 11.4 thousand). Automotive (AM) The AM Business Unit develops and produces lamps, light modules, and sensors, which it sells to original equipment manufacturers and their suppliers in the automotive industry and to the spare parts market (after- market). This includes products based on traditional lighting technologies as well as LED-based solutions. The LED and laser technology-based automotive system (or module) original equipment manufacturer business was operated by our subsidiary OSRAM CONTINENTAL in the past fiscal year. There are only a small number of international competitors in the automotive lighting market. AM is the global market leader for automotive lighting. Its main competitors are Lumileds, Tungsram, and Nichia. AM employed around 5.2 thousand people as of September 30, 2020 (previous year: 5.7 thousand). OSRAM Licht Group—Annual Report 2020 A COMBINED MANAGEMENT Report 4 _ A.1 Business and Environment Digital (DI) The DI Business Unit handles all of OSRAM’s business activities that will benefit the most from the growing use of digital technologies. It focuses on smart devices and solutions for the Internet of Things (IoT). The digital capabilities range from electronic components and lighting systems to hardware and software for high-performance light management and IoT solutions beyond lighting. The DI Business Unit includes the Digital Systems (DS) segment, which consists of traditional electronic ballasts and LED drivers, LED modules, light engines (a combination of an LED module and the related electronic control gear), and light management systems (including sensor-based and software-based value-added services, such as indoor location solu- tions). The DI Business Unit also includes the Specialty Lighting segment with specialty lamps and lighting systems for stages, cinemas, and studios and in smart LED-based plant cultivation systems (smart farming), as well as lighting solutions for medical and industrial applications, such as high-intensity UV lamps and LED illumination for clothing.